One third of Latin Americans risk falling into poverty, says UNDP

San Salvador, August 27, 2014.- Although poverty in Latin American and the Caribbean has been cut nearly in half in the last decade, many have been unable to enter into the middle-class: the population at risk of falling into poverty reaches 200 million, according to a new study released by the United Nations Development Programme (UNDP).

UNDP calls attention to the high proportion of Latin Americans whose well-being risks being severely affected in case a crisis hits. These are vulnerable populations, currently the largest group in the region (38%)–more than a third of the regional population. This group is composed of those earning between US$4 and $10 a day, who are neither living in poverty, or on less than US$4 a day (25%), nor have entered into the middle class, earning between $10-50 a day, (34%), according the new study “Profile of social groups in Latin America: the poor, the vulnerable and the middle class”, available in Spanish.

The new analysis was disclosed today, during the regional presentation of the UNDP’s global Human Development Report 2014 titled “Sustaining Human Progress: Reducing Vulnerabilities and Building Resilience,” with President Salvador Sánchez Céren of El Salvador. The study on the vulnerable populations in Latin America complements latest global Human Development Report’s analysis on vulnerability and resilience, launched worldwide in Tokyo on 24 August.

“Clearly, if countries in the region don’t reduce their vulnerability and boost their capacity to recover from financial crises and natural disasters, we will not be able to guarantee—and much less improve—regional progress in social, economic and environmental areas,” said the United Nations Assistant-Secretary General and UNDP Director for Latin America and the Caribbean Jessica Faieta at the event today in San Salvador.

The middle class in Latin American and the Caribbean grew by 82 million people, from 21 percent of the population in 2000 to 34 percent in 2012. Meanwhile, the vulnerable population has also grown slightly: from 35 percent of the Latin-American population in 2000 to 38 percent in 2012, according to UNDP’s analysis based on data from the Center for Distributive, Labor and Social Studies (CEDLAS). UNDP highlights the reduction in the proportion of people living in poverty as a significant regional achievement: from 42 percent in 2000 to 25 percent in 2012.

However, lack of social protection could undermine the region’s poverty reduction achievements, according to UNDP’s new analysis. Of the 200 million vulnerable people in the region, nearly half (98.5 million) are working; more than half of them, 54.4%, are informal workers, 49.6% do not have access to medical services, 46.1% have no retirement pension and 53.2% have no labor contract.

Jessica Faieta also pointed out that, not only in Latin America and the Caribbean but in every region of the world, the pace of social and economic progress is slower now than it has been in the past decade. “It is very clear that using the same policies will not provide the same results. More than ever, the region must invest in universal social protection, particularly in the most critical phases of life, as is the case with children, the elderly and youth entering the labour market.

UNDP’s new study show that, between 2000 and 2012, Peru experienced the greatest decline of people who shifted from living in poverty into a growing middle class, being the country in Latin America and the Caribbean with the highest relative increase in this group (19.1 percentage points). Bolivia was the country with the highest reduction in relative poverty (32.2 points), but with the highest increase in the vulnerable population (16.9 points).

Chile and Argentina reduced poverty as well as vulnerability, a change that corresponded almost entirely with an increase in the middle class. However, the Dominican Republic experienced the exact opposite: the middle class shrunk by almost four points, as a result of increased poverty as well as a rising vulnerable group. Finally, in El Salvador, poverty decreased by 4.2 percentage points, but so did the size of the middle class (by 1.8 points), which caused a combined increase of 6.2 points in the size of the vulnerable population – the fourth largest increase in the region.

In nine of the 18 assessed countries, 20.2 percent of Latin Americans aged 15-24 years neither work nor study. The highest proportion of this group is found in Guatemala (25.1%), and the lowest in Uruguay and Peru (15.3%). Viewed as social groups, among the youth in the vulnerable groups, the highest percentage of those who neither study nor work are found in Chile (26.7%), while among the young poor, the highest proportion of those who neither work nor study are in Uruguay (40.3%).