If you Google ‘what is the most unequal region in the world’ you will find that Latin America and the Caribbean is at the top of the list. Despite having had success in reducing inequality in the early 2000’s, most countries in the region have halted their progress, and the region as a whole has continued to be the most unequal in the world (as measured by the Gini index—a measure of inequality), even before the onset of the COVID-19 pandemic.
Sadly, the pandemic has worsened the region’s situation by exacerbating existing disparities . The World Bank note “Mind the Gap: How Covid-19 is Increasing Inequality in Latin America and the Caribbean” presents the main channels of how the health and economic crises are making large inequalities even larger, and leaving vast segments of the population behind.
The short-term shock is mostly monetary, but the non-monetary effects, such as food insecurity and low education participation, will likely outlive the pandemic itself . Without a doubt low human capital accumulation today means less opportunities tomorrow and a negative long-term outlook for the region. Therefore, policymakers must prioritize efforts that curb losses on human capital.
The crisis has affected everyone, but those with modest livelihoods have higher odds of losing jobs and seeing their income levels drop . The majority of low-income workers were employed in sectors directly affected by social distancing measures. Thus, this group experienced higher job losses and consequently larger declines in labor income.
Highly vulnerable households also suffered from heightened food insecurity. Income losses, coupled with raising food prices, ultimately translated into lower purchasing power and higher food insecurity, particularly among the less well-off. Over half of the most vulnerable households reported experiencing some type of food insecurity–twice the proportion of the most well-off households (Figure 1).
As the initial shock eased, food security improved overall. Still, 1 out of 4 highly vulnerable households continued to be food insecure in August 2020. Recognizing these levels of food insecurity is imperative: malnutrition and food deprivation carry long-term consequences for children and young adults, such as stunting and cognitive deficiencies.
Figure 1. Food Insecurity by household type
All children were affected by school closings with actual learning through remote activities was highly uneven. Data shows that remote learning was particularly challenging for children living in the most disadvantaged areas. By March of 2021, about 120 million of the region’s school-age children had lost or were at risk of losing an entire academic year of in-person education due to school closings. A few months into the pandemic, most children were engaged in some form of remote education, but the quality of learning activities varied greatly. For instance, access to online classes with a teacher was 70 % for low vulnerability households versus only 53 % among the highly vulnerable households (Figure 2).
Limited physical infrastructure, “digital poverty”, and low parental literacy makes it difficult to access the internet, further exacerbating the child development gap. These challenges are present in 2021.
Figure 2. Engagement in learning activities by household type
The consequences of the pandemic in limiting the opportunities for people to escape poverty in the longer term cannot be understated . Many of the region’s children continue to face reductions in their quality-adjusted education level and in their access to nutritious food. They will accumulate relatively low levels of human capital and be unable to achieve their full potential as adults.
Where should governments focus their efforts?
Decisive policy and investment need to be implemented to halt inequality-widening pressures brought on by the pandemic. Given the importance of human capital to breaking intergenerational poverty and reducing inequality, three areas here should be considered critical for governments:
- First, uninterrupted financial support to vulnerable households to prevent them from falling further into poverty or adopting negative coping mechanisms. Financial support is fiscally onerous so the effort should be accompanied by improvements in clear targeting mechanisms.
- Second, continuation labor market policies and economic support to firms in order to preserve employment, avoid skills losses and support people to transition back into the labor force.
- Third, reopening schools and getting kids back into the classroom – with concurrent health monitoring - should be a priority. Given the recognized losses in learning for many children, flexible and enhanced education schemes should be set in place to support them regain some of the lost ground.
The pandemic is putting the region’s poorest and the next generations at great risk. Countries should not let the gains of decades be wiped out without putting up a fight.
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