Record poverty accentuates inequalities in Brazil; see by state

Considering family income, 47.3 million Brazilians ended last year in poverty. The number is equivalent to 22.3% of the total Brazilian population, the highest percentage in ten years, according to a survey carried out by IMDs (Instituto Mobilidade e Desenvolvimento Social).

“Brazil was on a historic trajectory of poverty reduction, but in the middle of the way, a stone appeared, the pandemic, and we are still seeing its effects”, says economist Paulo Tafner, president of IMDs.

Analyzed in detail, the survey data show that the worsening was widespread.

Almost 11 million people fell into poverty across the country in 2021. To have a dimension of this contingent, it is as if almost all the residents of the city of São Paulo became poor in a year.

More than half of those who lost income, 6.3 million, fell into extreme poverty, where daily life is marked by the lack of food. The year ended with 20 million Brazilians in this condition.

Brazilians from zero to 17 years old are among the most sacrificed. Child poverty jeopardized the future of 19 million children and adolescents at the end of 2021, 35.6% of the total for this segment of the population.

Although poverty has advanced throughout the country and in the most diverse segments, the portion of the population that suffered the most is black —73% of the total— and was concentrated in poorer regions and states, which helped to increase national inequalities.

In the Northeast, 5.5 million fell into poverty last year, bringing the number of poor in the region to 22.8 million, nearly 40% of the population in this part of the country. In the South, the number increased by 400,000, making the poorest people represent 10% of the total population in this part of the country. There the year ended with 3 million people in poverty.

While poverty increased 12.5% ​​in Sergipe, the highest in the country, almost triple the national average, which was 5%, it grew 1.3% in Santa Catarina and 1% in Mato Grosso.

In the assessment of the Imds team, one factor for the fluctuation in income was emergency aid.

Granting a benefit of R$600 in 2020 had the effect of reducing poverty. Last year, however, the aid was suspended and then had the value reduced, in addition to having a cut in the number of beneficiaries. As Covid had not given in, and the economy so little reacted, there was a rebound in poverty.

In Maranhão, the aid reduced poverty in 2020, which started to affect 37% of the population. It is a high level, but it was the lowest percentage of impoverished people from Maranhão in 10 years. Last year, however, the share of the poor rose to 48.5%, almost half of the population, and the worst level in the same ten years — 3.5 million ended 2021 in poverty.

A similar roller coaster took place in Rio Grande do Norte. The share of the poor dropped to 24% in 2020, and jumped to 34.5% last year. Again, floor and ceiling in ten years.

Pernambuco experienced a different phenomenon. There was no drastic reduction in poverty in 2020, but felt the rebound afterwards. The year ended with almost 44% of the population in poverty, 4.2 million people from Pernambuco. It was the first time that the indicator was above 40% in the series. The highest percentage until then had been 38.2% in 2012.

“Low income depends on informal work, predominantly associated with the service sector with physical contact, such as selling food and businesses associated with tourism”, says economist Sergio Guimarães Ferreira, director of IMDS. “The oscillation of the benefit, without the resumption of services, was decisive for the increase in poverty in 2021.”

Guimarães, however, emphasizes that it will be necessary to deepen the analysis of data to assess in more detail the increase in poverty in some places.

This is the case, for example, in metropolitan regions. From 2016 to 2020, the share of the poor fluctuated between 15% and 16% of the total population. In 2020, when the largest cities experienced the lockdown, the rate stood at 15.5%. Last year, however, it rose to nearly 20%, with 3.8 million residents of these urban areas falling into poverty.

“The research may have captured the delay in the resumption of the service sector, which is very important for the economy of urban centers”, says Guimarães.

In the Midwest, symbol of the strength of agribusiness, which benefited from the rise in commodities during the pandemic, poverty recorded an atypical record. Historically, 7% to 8% of the population lives in poverty. At times, the percentage rose to 9%. Last year, however, it was at 11%.

“It would be necessary to expand the scope of the research to better assess the effects of agribusiness on the poorest strata of the population in rural areas”, says Guimarães.

Imds works with the poverty reduction scenario in 2022, with the resumption of the service sector and the payment of Auxílio Brasil, which replaced Bolsa Família.

“There is no evidence so far that there is a structural reversal in the trajectory of poverty reduction in Brazil, so we believe that the country’s robust social assistance network, created over the last decades, associated with the recovery of the economy and employment, will contribute to improving the indicators as of this year”, says Tafner.

A new element that is on the institute’s radar, because it affects purchasing power, is the increase in prices. Historically, inflation is an element that increases poverty.

LESSONS FOR PUBLIC POLICY

In the assessment of the IMDs, the effects on Brazil of the global impact of the pandemic, followed by the consequences of the war in Ukraine, which are also affecting the economy on an international scale, show that public policy in the social area in Brazil needs to assess the creation of new instruments.

“Many families live on such a low income that they can fall below the poverty line if they regularly fail to earn R$2 a day,” says Tafner. “Simple mechanisms such as social insurance to mitigate shocks could prevent these effects.”

Another alternative would be to build a security system for informal workers. “In the pandemic, those who had a formal job were attended to more quickly because they have already organized protection structures”, says Guimarães. “A system for the informal would avoid temporary poverty caused by the sudden lack of work.”

RESEARCH CRITERIA

The IMDS series that account for poverty are based on the per capita family income (per person) calculated from the IBGE’s Pnadc series (Continuous National Household Sample Survey of the Brazilian Institute of Geography and Statistics). The survey started in 2012.

IMDS made a historical poverty line estimating data from the former Pnad (1992-2015) with the current Pandc. In this long-term projection, the 2021 poverty level is comparable to that recorded in 2010, but practically half the indicator in the 1990s, when poverty reached 40% of the population.​

The cut-off line for poverty is the same adopted by the World Bank, living with a daily income of US$ 1.9, about R$ 10, or less.

The regional and state surveys consider the effects on income of the cost of basic food baskets for local consumption. The criteria were developed by IBGE, IPEA (Institute for Applied Economic Research) and ECLAC (Economic Commission for Latin America and the Caribbean). Their values ​​are updated by the INPC, an inflation index that affects the low-income population more.