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Social inequality in Ecuador at 10-year high as poverty increases

Published on March 09, 2021

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The current level of social inequality in Ecuador is now just slightly lower than it was in December 2010—a ten-year setback according to the latest figures from the National Institute of Statistics and Censuses (INEC) published this week.

One of the parameters to measure social inequality is how income is distributed within a society. In Ecuador, 32.4% of the population, which is equivalent to 5,673,448 inhabitants of Ecuador, obtained earnings per month of less than $84.05 (the “poverty line”) in December 2020, according to INEC population projections.

In just one year, the number of people falling into this social inequality category rose by 7%; in 2019, a total of 4,316,997 inhabitants of the country earned below the poverty line in 2019 (25% of the population). There are now 1,356,451 earning less than the poverty level.

The current percentage resembles that of December 2010, when 32.8% of the population was considered poor due to income.

The average income of each member of a poor household decreases the more members that family has. A poor self-reliant person earns an average of $53, and a couple survives on $58 a month each. A family with six or more members has $43.7 per month for each one.

Cinthya Delgado, 32, is in that 32.4% of the population considered poor. She began the quarantine in March 2020 with a husband unable to work, a seven-month-old baby to feed and three other older children. The only income for most of last year for this household was the $50 a month bond that the central government gives to families considered poor.

This went up to $130 in April as part of the emergency bonus from the government.

“My husband did not work in quarantine. He is a merchant, he sold water on buses.”

They were difficult moments, says Cinthya, standing in the middle of the cane fence of her Guayaquil house made of cement blocks and surrounded by a dirt patio that turns to mud with every rain.

“When there is no money, we only make two meals, cooked greens or patacones for breakfast and a wet rice with soup for lunch and a snack. If we have more money, we add cheese, egg, or some dry chicken.”

She says that neighbors also helped each other. If one of her neighbors had some protein, they would share it with her, or vice versa. The emergency bonus went to installing internet and paying the first monthly service fees ($22) so that her three school-age children could study and do schoolwork with a single cell phone.

Cinthya’s husband only returned to work in October of last year. Now he distributes beer, and he earns up to $300 a month. However, even when that is added to the $50 bonus, each member of this household only has $58 to live on, a value below the poverty line.

A return to poverty for Ecuador

Poverty and social inequality had been falling in Ecuador since 2000, with slight increases as in the first three years of the current government, but the pandemic and the economic crisis caused the indicators to rebound exponentially last year, when there was a setback to the levels that were seen in 2010.

A study by the United Nations Children’s Fund (UNICEF) indicates that at least 1.8 million people left the middle class and became income poor last year in Ecuador. The figure is higher than the 1.3 million published by INEC.

“This means that people who were in the middle class have fallen back into poverty because they lost their jobs,” says Joaquín González-Alemán, a representative of UNICEF.

The situation changes if other factors such as access to education or health and overcrowding at home are analyzed, which is known as “multidimensional poverty,” and which is also increasing in the country.

In this, González-Alemán explains, other factors that are rights such as having good nutrition, access to water or decent housing are taken into account, apart from income” The more deficiencies you have, the poorer multidimensionally you are,” he says.

The UNICEF ​​study estimates that 3.1 million children and adolescents fell into multidimensional poverty at the end of 2020 in Ecuador, that is, the households in which they live will suffer one or more deprivations in education, health, food, housing, work and social security due to the effects of the pandemic in the country.

Of these, six out of ten live in a situation of extreme multidimensional poverty. They will experience further deprivation of these rights. There are 715,000 households that will go on to live in multidimensional poverty, says the UNICEF ​​study.

The drastic reduction in employment or household income, the increase in child labor and the exit from the educational system influence the increase in this type of poverty, the study adds.

The official INEC figures indicate that 40.2% of the country’s inhabitants are multidimensionally poor (they have deprivation in three or more of the indicators analyzed). It is a setback to 2011, when 40.7% of the population was multidimensionally poor. UNICEF projected that 42.8% of the population fell into this category in 2020.

Unsatisfied Basic Needs (UBN) reaches 32.6%

One of the other ways of measuring poverty in the country is based on the unsatisfied basic needs (UBN) of the population. A person is poor by UBN based on five components: quality of housing, overcrowding, access to basic services, education and economic capacity.

According to the UBN figures released by INEC in December, 32.6% of the population is poor.

The INEC indicates that there is no strict comparability between the 2020 data with those of previous years due to, among other factors, the fact that the sample size was reduced in the last survey carried out. But the agency still publishes the data in conjunction with the previous ones for reference purposes.

Juan Salvatierra, 35, lost his job in March 2020 as an industrial refrigeration technician. He has no children, but he does support his wife and her daughter who was also unemployed when the COVID-19 pandemic began.

“I had been working for ten years, but they suspended me for six months last year,” says Juan, who lives in a cane house on Mount Sinai (in northwest Guayquil), and who does not have access to basic services such as potable water and sewerage.

Juan’s 52-year-old wife, Felisa Santana, limits the family’s diet when there is no income at home.

“I usually buy food for fifteen days, a chicken, fish and two pounds of beef, with that we eat all three,” says Felisa.

Those in need of government bond increase by over 35%

More and more people are now requiring state assistance to complete their income and survive each month. A total of 1,384,859 people received a bonus or a pension from the central government in February, 35.52% more than those who obtained the same in July 2020 (1,021,858) during quarantine for COVID-19.

The monthly investment to cover these bonuses and pensions reached $92.4 million last month, higher than the $77.2 allocated during July 2020.

Since 2017, there had been a minimal decrease in the number of people receiving the monthly government bond, but that number has steadily increased since April of last year.

As part of the negotiations the International Monetary Fund (IMF) held with Ecuador, it asked that some of the money it loaned to the country be used to extend the coverage to 80% of the population that is in the two poorest income segments, says Joaquín González-Alemán, the UNICEF representative in Ecuador.

González-Alemán says that the human development voucher system is only one of the public policy interventions to reduce social inequality. “A large part of the IMF loans have financed these transfers to the poorest people.”

You also have to invest in social services and facilitate people’s access. “It is a question of what social investment you want to make and how it is done in order to lift people out of poverty,” he says.

An investment of 2.4% of the country’s Gross Domestic Product, about $2.6 billion, says González-Alemán, could mitigate the impact of the pandemic. The idea is to activate a complete and essential social protection system to serve families considered poor.

“Access to vaccines, to better nutrition, the opening of child development centers, all of this social investment will result in less inequality,” he adds.

José Gabriel Castillo, director of the Center for Economic Research at the Escuela Superior Politécnica del Litoral, says that social inequality occurs in different areas.

For example, one of the most worrying figures, he adds, is that of chronic malnutrition in children under 5 years of age.

“While the national average level [of chronic malnutrition] is 23%, provinces such as Santa Elena, Pastaza, Bolívar, Chimborazo and Morona Santiago have levels higher than 35%. These levels are particularly persistent in the indigenous population, where chronic malnutrition affects 4 out of 10 children under 5 years of age. The lowest levels of malnutrition are registered in the white population (18.4%) and curiously, in the Afro-Ecuadorian (16%),” says Castillo.

There are also differences between the countryside and the cities. “The economic inequality between households in the urban and rural sectors maintains its gap; rural poverty (by income) exceeded 40% in 2020, while urban poverty remains around 20%,” says Castillo.

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