WASHINGTON D.C. – For the first time ever in Latin America, the population of the middle class is greater than the population of those living in poverty. This represents a record low in income inequality in Latin America. Unemployment has decreased significantly alongside wage equality, reducing poverty and increasing prosperity across the board. Extreme poverty has been nearly cut in half in the past 15 years, from 25 percent to 13 percent of the population. Average real incomes have increased by 25 percent in the region, with the poorest 40 percent of the population experiencing a growth rate almost double the region’s average. This is particularly important in Latin America, as the region experiences some of the highest income inequality in the world.
These data were highlighted by the World Bank’s new report, Shifting Gears to Accelerate Shared Prosperity in Latin America and the Caribbean, published on June 14, 2013. The report noted the significant decrease in inequality in Latin America, but noted that at current rates of growth the region would not reach the two World Bank goals of eradicating extreme poverty and boosting prosperity for the bottom 40% of the population by 2030. The report also proposed ways to maintain and accelerate prosperity in the region. It focused on 4 ways to do this:
1. Maintain an equitable, efficient and sustainable fiscal policy that will foster shared prosperity.
2. Strengthen fair, transparent institutions that deliver quality public goods and services.
3. Enable an environment of well-functioning markets that are accessible for all economic levels of society.
4. Improve risk management both at the macro and household levels.
The report encouraged Latin American countries to take this opportunity to ingrain income equality into their governmental policies, stating that “enabling people who are currently marginalized to improve their living conditions will unleash their inherent economic potential, increasing overall productivity and thus spurring growth.”
Despite these successes, 80 million Latin Americans still live in extreme poverty, and 40 percent of Latin Americans are at risk of falling back into poverty. This underscores the importance of taking steps, whether in government policy or otherwise, towards securing the gains made in fighting income inequality in Latin America.
– Martin Drake