Alicia Bárcena

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Alicia Bárcena, the executive secretary of the United Nation’s (UN) Economic Commission for Economic Development for Latin America and the Caribbean (ECLAC) has revealed that the COVID-19 induced contraction of the region will perpetuate greater income inequality and plunge more people into poverty.

Speaking at the 24th Annual CAF (Development Bank of Latin America) Conference, Bárcena said this is one of the “harsh realities that we must talk about to reconstruct.”

She continued to note that the region will undergo the worst economic contraction in 100 years, “exports will fall to -23 per cent and 44 million will be unemployed.”

According to Bárcena, poverty will end up affecting 230 million people, which is 45 million more than the current figure. She added that “96 million people will be in extreme poverty in total – many of these are women”.

Moreover, Bárcena some 33 million people will slide into poverty from the middle strata, to the point where eight out of every 10 person in the region (490 million) are going to need a basic income and universal policies. She also asserted that inequality would reach five per cent.

In addition, Bárcena said that 2.7 million Micro, Small and Medium-sized Enterprises (MSMEs) will close. She also disclosed that 40 million households are not connected to nor do they have access to good quality Internet, while 32 million children and adolescents cannot participate in distance learning.

Bárcena emphasised that the pandemic has revealed the fragility of globalisation and multilateralism. She said that this is a systemic crisis affecting both supply and demand, which has shown the urgency of seeking a new development paradigm based on the premise of a big push for economic, social and environmental sustainability.

The ECLAC Executive Secretary said that the region needs progressive structural change.

She posited: “Rather than talking about rebuilding, we must talk about transformation, to elevate productivity, with innovation, but with equality and sustainability at the centre.”

It is possible in this current era, Bárcena stated, to talk seriously about a basic income, the central role of the State, the importance of a political, social and economic compact at a national as well as regional and global level, and about a fair, inclusive and progressive social contract.

She highlighted the importance of promoting a social and representative State – one that does not favour the elite. Bárcena added that Latin America and the Caribbean “is tired of the culture of privilege”, which means that it must move towards a culture of equality.

According to Bárcena: “There must also be accountability to keep us from emerging from this crisis more indebted, poorer, hungrier and angrier, and that social anger must be channeled through a representative State that brings all of society together in a broad dialogue,” she indicated.

She highlighted that ECLAC has proposed various measures to stimulate demand, based on a campaign for the environment and sustainability, with digital infrastructure, greater investment in health.

The regional commission also proposed a basic digital basket at an average cost of one per cent of GDP, and providing subsidies and longer repayment periods and grace periods for loans to MSMEs, as well as implementing redistributive policies to move towards universal social protection, above all with regard to health.

For this to occur, she contended that the region needs a much more progressive and effective taxation system that eliminates tax evasion(which amounts to 6.1 per cent per cent of GDP).

The senior United Nations representative underlined that the governments of Latin America and the Caribbean would not be able to sustain the fiscal outlays that are needed today, thus international co-operation and multilateral agreements are needed to provide society with “global goods such as health, peace, financial stability, climate security and equality.”