Latin America's Poor Are More Urban and More Vulnerable

Shoppers jostle for the best prices at the Lo Valledor street market in Santiago, Chile. Urban households that ride the poverty line are particularly sensitive to food inflation. Credit: Max Valencia / FAOby Humberto Marquez (caracas)Monday, December 09, 2024Inter Press Service

CARACAS, Dec 09 (IPS) - Poverty, while declining in Latin America and the Caribbean so far this century, shows a new face, that of the looming vulnerability of the poor as they become less rural and more urban, the United Nations Development Programme (UNDP) says in a new analysis.

“Not only is there more urban poverty, but also a greater percentage of the population is highly vulnerable, that is, they are very close to falling - and any small shock will make them fall - below the poverty line,” Almudena Fernández, chief economist for the region at the UNDP, told IPS.

Thus, “there is a segment of the population that remains above the poverty line, but which is pushed below it by an illness or the loss of household income,” Fernández told IPS from New York.

Rosa Meleán, 47, who was a teacher for 20 years in Maracaibo, the capital of Zulia, in Venezuela's oil-rich northwest, told IPS that “falling back into poverty is like the slides where children play in the schoolyard: they keep going up, but with the slightest push they slide down again”.

Meleán has experienced this in person several times, supporting her parents, siblings and nephews with her salary, falling into poverty when her working-class father died, improving with a new job, her salary liquefied by hyperinflation (2017-2020), leaving teaching to search for other sources of income.

“You have to see what it's like to be poor in Maracaibo, walking in 40 degrees (Celsius) to look for transport, without electricity, rationed water and earning US$25”, the last monthly salary she had as a teacher before retiring five years ago.

And then came the covid-19 pandemic, limiting her new occupations as an office worker or home tutor. She has barely recovered from that blow.

“We live in a time when shocks are more common - from extreme weather events, for example - and we see a lot of economic and financial volatility. We are a much more interconnected world. Any shock anywhere in the world produces a very direct contagion, they are the new normal,” says Fernández.

Shoppers jostle for the best prices at the Lo Valledor street market in Santiago, Chile. Urban households that ride the poverty line are particularly sensitive to food inflation. Credit: Max Valencia / FAO

Poverty falling in numbers

Starting in the 1950s, Latin America and the Caribbean experienced a rapid process of urbanisation, becoming one of the most urbanised regions in the world.

Today, 82% of the population lives in urban areas, compared to the world average of 58%, according to the UNDP.

Over the last two decades, the region has made progress in reducing extreme poverty and poverty in general. Even with setbacks since 2014, it recorded its lowest poverty rate in 2022 (26%), with slight decreases estimated for 2023 (25.2%) and 2024 (25%).

The Economic Commission for Latin America and the Caribbean (ECLAC) indicates in its most recent report that poverty in 2023 will affect 27.3% of the region's population, which it puts at 663 million people this year. This means that “172 million people in the region still do not have sufficient income to cover their basic needs (general poverty)”.

Among them, 66 million cannot afford a basic food basket (extreme poverty). But these figures are up to five percentage points better than in 2020, the worst year of the pandemic, and 80% of the progress is attributed to advances in Brazil, where transfers of resources to the poor were decisive.

ECLAC points out that poverty is higher in rural areas (39.1%) than in urban areas (24.6%), and that it affects more women than men of working age.

Despite the progress, “the speed of poverty reduction is starting to slow down, it is decreasing at a much slower rate. This is a first concern, because the region is growing less,” said Fernández.

She recalled that the International Monetary Fund (IMF) forecasts point to an average economic growth in the region of two per cent per year, “well below the world average. Thus, it will be more difficult to continue reducing poverty”.

A hill overcrowded with informal dwellings in the populous Petare neighbourhood in eastern Caracas. Credit: Humberto Márquez / IPS

Changing face

The proportion of poor people living in the region's urban areas increased from 66% in 2000 to 73% in 2022, and the change is more dramatic among those living in extreme poverty, with the proportion of the urban extreme poor rising from 48% to 68% over the same period.

Tracing this change annually, a UNDP analysis found that urban poverty increased markedly during the commodity crisis of 2014 - and also during the pandemic - “revealing that urban poverty is more likely to increase in times of economic downturn than rural poverty”.

It argues that the post-pandemic rise in the cost of living affected urban households more, pushing households into poverty and worsening the living conditions of those who were already poor.

Urban households are more tied to the market economy than rural households, making them more vulnerable to economic fluctuations and related changes in employment.

In contrast, rural livelihoods allow households to use strategies such as subsistence farming, reallocation of labour, community support or selling assets such as livestock to cope with shocks. These are options that urban residents generally do not possess.

Another salient feature of the new face of urban poverty is that it is often concentrated in informal settlements on the peripheries of cities, where overcrowding and limited access to basic services create additional challenges.

Thus, in the Venezuelan case, “the features of poverty and vulnerability that stand out in urban poverty have to do with the precariousness of public services and the lack of opportunities,” Roberto Patiño, founder of Convive, a community development organisation, and Alimenta la Solidaridad, a welfare organisation, told IPS.

Patiño believes that “the burden of the cost of living and inflation is difficult to bear for people living in poverty in both urban and rural areas, even though in rural areas the food issue may be less serious”.

This is because in rural areas “people have access to smallholdings, to their own crops, and also, being farming areas, food costs tend to be lower than in the city, but health issues and other services such as transport, health and education are very precarious”, the activist pointed out.

Patiño mentioned another mark on the new face of poverty, that of the millions of Venezuelans who migrated to other South American countries in the last decade and who “have not recovered from the pandemic, from an economic point of view, with many of the migrants living in a precarious situation”.

A teenager doing homework in the Delmas 32 slum in Port-au-Prince. Credit: Dominic Chávez / WB

Seeking solutions

The UNDP argues that addressing poverty in urban and rural areas requires differentiated strategies, as policies that work in rural areas, such as promoting agricultural productivity and improving access to assets and markets, do not sit well with the plight of the urban poor.

For them, the cost of housing and food inflation are relevant concerns.

Fernández said that “much of the social policy that was implemented in the region decades ago, which is ongoing, was designed with a very rural poverty in mind, how to help the agricultural sector, how to achieve greater productivity in agriculture, how to meet basic unsatisfied needs in rural areas”.

“Now we must move toward a social policy that focuses a little more on the unsatisfied needs of urban poverty,” she said.

She believes that “urbanisation allows for another series of opportunities. For example, the greater agglomeration of people allows for easier access to services”, although there may also be negative effects such as a more difficult insertion in the labour market or health problems associated with overcrowding.

Among the solutions, Fernández ranked the need for greater economic growth first, “because we are not going to be able to reduce poverty if we do not grow”.

The economist then ranked education, good in quantity (coverage), but which must now focus on quality, in second place, in order to address the digital transition that is underway and the need for more training for workers.

Finally, the need for social protection - and despite slower growth and a tighter fiscal balance across the region, Fernández acknowledges –and investment in protecting people more, with policies and measures that include, for example, care, employability, productivity and insurance.

“It is no longer enough to lift people out of poverty; we have to think about the next step, to continue on this path, so that the population can consolidate, with a stable middle class that has mechanisms so that in times of stress or shock its consumption does not fall sharply,” said Fernández.

In other words, so that those who have their basic needs covered do not have to slide back down the poverty chute with every economic or health shock.

© Inter Press Service (2024) — All Rights ReservedOriginal source: Inter Press Service