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Immediate cash transfers will help halt the slide into desperate poverty, but universal basic income is needed longterm, the Economic Commission for Latin America and the Caribbean (ECLAC) argues.
The Economic Commission for Latin America and the Caribbean (ECLAC) said Tuesday that to face the socio-economic impacts of the COVID-19 pandemic crisis, governments must guarantee immediate temporary monetary transfers to satisfy basic needs, sustain the consumption of households and achieve a solid and relatively rapid recovery in the region.
ECLAC’s Executive Secretary Alicia Barcena presented at a virtual press conference a special report entitled 'The social challenge in times of COVID-19,' which gives an estimate of the social impact and related challenges that the current crisis would have for the countries of Latin America and the Caribbean in the short, medium and long term.
Barcena also presented the details of the ECLAC proposal for an Emergency Basic Income (IBE) to be implemented immediately and with the possibility that in the future governments will take it into account permanently depending on the situation in their countries.
This is particularly relevant given that overcoming the pandemic will take time and societies will have to coexist with the virus, which will make economic and productive reactivation difficult in the region.
"The pandemic has made visible structural problems of the economic model and the deficiencies of social protection systems and welfare systems that are becoming very expensive for us today. We must, therefore, move towards the creation of a welfare state based on a new social pact that considers the fiscal, social and the productive," Barcena said.
Thinking about permanent transfers would make it possible to move towards a Universal Basic Income that would ensure the right to survival not only of people already living in poverty but also of those broad strata of the population who are very vulnerable to fall into it, Barcena highlighted.
Meanwhile, ECLAC proposed providing an Emergency Basic Income (IBE) equivalent to a poverty line (per capita cost of purchasing a basic food basket and other basic necessities) for six months to the entire population living in poverty by 2020 (i.e., 215 million people or 34.7 percent of the regional population). This would imply an additional expenditure of 2.1 percent of GDP to cover all those who will find themselves in poverty during this year.
According to ECLAC, the increase in poverty and extreme poverty resulting from the social impact and unemployment caused by the pandemic will increase inequalities in all countries of the region, taking into account that large strata of the population were already living in chronic conditions of economic insecurity. So the minimum will be to guarantee the satisfaction of basic needs.
"Income, food security and basic services must be guaranteed to a large group of people whose situation has become extremely vulnerable and who were not necessarily included in the social programs existing before the pandemic," Barcena stressed.
In order to articulate social protection in the short, medium and long term, according to ECLAC, in addition to implementing immediate measures to address the emergency, it is necessary to overcome operational challenges, such as bankarization of the population, complete social registries, update and interconnect them.
In the medium and long term, the exercise of rights must be ensured through the strengthening of the welfare state and the universal provision of social protection, the introduction of a care system, and the gradual implementation and search for sustainable innovative financing mechanisms.
"Building the welfare state and universal social protection systems are key to avoiding another lost decade," ECLAC's executive secretary highlighted at the end of her presentation.