Inequality reduction has slowed in Latin America

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The decline in inequality in Latin America and the Caribbean has slowed in recent years and the current level is an obstacle to sustainable development in the region, the United Nations Economic Commission for Latin America and the Caribbean said on Tuesday.

Inequality is a structural phenomenon that manifests itself via multiple “vicious circuits” and feedback loops, ECLAC said in its “Social Panorama of Latin America 2016” report, released on Tuesday in Santiago.

Although the Gini index for personal income in 2015 averaged a relatively high 0.469 for 17 countries in the region – with zero representing no inequality and 1 being maximum inequality – the rate of the index’s decline fell by half between 2012 and 2015.

The decline in inequality in terms of income distribution observed since 2008 results from the priority that countries give to social development objectives, spurred by a relative improvement in working incomes in the poorest sectors, ECLAC says.

This improvement results from the formalization of employment and a real increase in minimum salaries, as well as an increase in monetary transfers toward the lower-income strata of society, the report says.

Nevertheless, the recent improvements are not necessarily associated with a more equitable division of capital and labor, ECLAC adds.

Income distribution is just one of the dimensions of inequality in the region, warned the report, which also calls attention to the structure of physical and financial assets as a key factor in regional inequality and says that the distribution of wealth is even more unequal than that measured solely by people’s current income.

Women, it says, continue to be overrepresented in the lower-income quintiles and the time they spend each day on work in the home and unpaid activities along with paid work is greater than that of men, thus limiting their economic autonomy.

Women spend up to a third of their time on unpaid work at home, while men only spend 10 percent of their time on such tasks, the report says, noting that unpaid work in the home, which is not included in the GDP, amounts to about one-fifth of the value of overall economic activity.

Ethnic-racial status is another regional inequality factor, the report says, noting that 21 percent of the population – some 130 million people – is of African descent.

This group suffers from deep inequalities in all areas of social development, a situation manifested in higher rates of infant and maternal mortality, teen pregnancy and unemployment and in lower working incomes than non-Afro-descendents.

The report says that social spending reached an historic high in 2015, rising to 10.5 percent of the GDP for the central government and 14.5 percent of the GDP for the public sector, as a regional average.


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