With runaway inflation hitting basic food prices particularly hard in Argentina, private estimates are already warning that by midyear a further half-million people will have fallen into poverty in 2022.
“The average in the first half of this year, despite the economic aid provided, will push poverty up to around 39 percent [of the population],” explains Agustín Salvia, the director of the Observatorio de la Deuda Social (“Social Debt Observatory”) of UCA Catholic University.
The expert warns that the figure is only prevented from rising further thanks to the various systems of social assistance that come via money transfers.
According to the data from the INDEC national statistics bureau, poverty in urban centres in the second half of 2021 reached 37 percent of the population – close to 11 million people. A rise to 39 percent would equate to half a million more poor people in the first half of this year.
This means 2,800 people a day – or 83,000 every month – are swelling the ranks of the impoverished and ceasing to belong to the middle class historically representing social mobility in Argentina.
The troubling data arrives within the framework of a country that has suffered from double-digit annual inflation for several years now. Last month’s inflation was 5.1 percent, or 29.3 percent so far this year, with most private economists expecting the final 2022 figure to top 70 percent.
‘Consequence of inflation’
“The current situation marks a new increase in poverty levels as a consequence of the impact of inflation on household incomes. This not only means that there are probably more homes below the poverty line but also worsens conditions for those already poor,” Juan Ignacio Bonfiglio, a researcher with the Observatorio de la Deuda Social Argentina, said in an interview.
In the first three months of the year alone, the income needed to be above the poverty line rose 16.9 percent, with a further 19.7 percent needed to avoid destitution. INDEC’s total wage index, however, increased only 14.3 percent through to March while inflation was 15.3 percent in the same period.
While official wage data has not yet been updated for April, the situation is not favourable. During the first four months of the year, INDEC’s basic shopping-basket to stay above the poverty line rose 23.1 percent and to avoid destitution 26.4 percent, with inflation of 21.3 percent over that period, including a 25.5 percent rise for food and beverages.
Last year’s encouraging reduction of poverty, due to an economic rebound of 10.3 percent, has now been pulverised with the panorama for the rest of the year failing to offer hope.
“Nobody is projecting 2022 inflation below 70 percent. Many of us ask ourselves whether, once the dollar starts moving and public service billing is updated, the dynamics will not be closer to an inflation of 100 percent than 70,” said Guido Lapa, who teaches economics at University of Buenos Aires.
“This has a direct repercussion on poverty because it increases the cost of living and wages, whether formal or informal, lose out against this kind of inflation. On the other hand, the gap between informal and formal earnings is ever wider,” he added.
“With that 70 percent poverty is anyway close to 40 percent, only prevented from reaching or topping that level, I insist, thanks to the systems of social assistance,” agreed Salvia. “In the final balance, we will probably see a new fall in real wages with a low creation of full employment because much of that employment has already been generated and the economy is slowing down.”
The expert says that “social assistance must be maintained in order to preserve political and institutional balance,” warning that without it, Argentina could face greater social unrest.
“There are high levels of consumer spending due to the high inflation but that consumption is fundamentally concentrated in the middle class. The self-employed and informally employed are running behind inflation so that an increase in socioeconomic inequality is to be expected,” said Salvia.
Worryingly, economist Eduardo Fracchia of Austral University estimates that with these levels of inflation and economic activity, “poverty will be close to 50 percent by next year’s elections.”
Poor workers, little protection
The wages of the informally employed rose 10 percent in the first quarter of this year as against 16.9 percent for the shopping-basket needed to stay above the poverty line. The sector represents 23.5 percent of the total workforce, with the self-employed making up 25.9 percent.
“It is common to link poverty to situations of unemployment and economic inactivity, given that in these cases they do not have the working wage which permits them to cover the economic needs of households and thus stay above the poverty line,” said Bonfiglio. “Nevertheless, poverty is also reaching an important percentage of workers, even if for some time the focus has been on falling real wages and household incomes. Since this increasingly affects the workers who are registered, it must be highlighted that this is a key structural element for most poor workers with informal or precarious jobs which in large measure explains the persistence of poverty.”
Unlike other periods in an Argentina of social mobility, such projections warn that having a job today is no guarantee against being poor.
According to a recent report prepared by UCA’s observatory, in conjunction with Caritas Argentinas, 60 percent of Argentines have experienced poverty since 2010.
The document, entitled Radiografía de la pobreza Argentina, ¡es urgente acortar distancia!, also pointed out that throughout the last decade 30 percent of the population has never stopped being poor. It also underlined that one out of every 10 Argentines experience hunger daily.
According to its findings, around 60 percent of the population is working in a “precarious job” or is unemployed.
Another survey released this month, the Monitor del Clima Social del Centro de Estudios Metropolitanos (CEM), detailed that 53 percent of the people surveyed in the Buenos Aires Metropolitan Area (AMBA) had reduced their diets because they did not have enough money to buy food. Just over 60 percent of respondents affirmed that their wage or family income did not allow them to make it to the end of the month.