After a fall in 2020, extreme poverty rose again in Brazil in 2021

After reaching the lowest level in at least 40 years in 2020, the percentage of Brazilians living in extreme poverty grew again in 2021 and returned to the pre-pandemic level.

In the year in which the health crisis was declared and the R$600 Emergency Aid was implemented, the share of Brazilians living on less than US$2.15 a day dropped to 1.95% of the population, according to World Bank data. . This is the lowest percentage ever recorded in the institution’s historical series, which began in 1981.

A survey by the CLP (Centre for Public Leadership) shows that the improvement, however, was reversed the following year, with the end of the benefit payment. According to researcher Daniel Duque, author of the work, social transfers in 2021 were not enough to compensate for the drop in income from work for the most vulnerable.

Based on data from the IBGE (Brazilian Institute of Geography and Statistics), he calculates that extreme poverty was at 7.9% at the end of 2019, fell to 4.2% in the third quarter of 2020 and rose to 8.6% at the end of 2021. The most recent figure represents 18.2 million people.

“Poverty in Brazil, despite being lower in 2020, due to Emergency Aid, reversed the following year, with levels above the period before the pandemic”, says the researcher.

The difference between the researcher’s and the World Bank’s figures for the same period is explained by the inclusion, made by the multilateral institution, of an implicit rent estimate for those who live in their own property, which is non-monetary income. With this, the bank’s numbers show a better situation, although the trend is the same.

In both cases, the same value is considered to draw the extreme poverty line, of US$ 2.15 per day (about R$ 11 at the current exchange rate). Since September, the World Bank has adopted this limit for the extreme poverty range, replacing the US$ 1.90 previously used.

In total numbers, World Bank data show a reduction from 11.37 million in 2019 to 4.14 million people in 2020 below this line. In other words: 7.23 million people came out of this situation in the first year of the pandemic.

The Emergency Aid reached 68 million Brazilians, with the distribution of R$ 355 billion, according to the Ministry of Citizenship.

The suspension of payments in January 2021 has already impacted the income of Brazilians, with the extreme poverty indicator rising to 11.4% in the first quarter of that year. The benefit was paid again until October, the month in which it covered 21 million people, with an average value of R$ 250.

In November of last year, the Auxílio Brasil of R$ 400 was implemented, replacing the Bolsa Família. In October of this year, this program was raised to R$ 600, received by 21 million people.

Also according to the work of the CLP, 28% of Brazilians are below the poverty line of US$ 5.50 (about R$ 30 per day) and 14.5% below the intermediate line of US$ 3.20 ( about R$16 per day).

Fighting poverty in 2023

Duque says that, despite the recent improvement in the job market, the scenario for 2023 is one of concern. He cites, for example, the slowdown in job creation and the format of Auxílio Brasil, which is less efficient and effective than the old Bolsa Família.

One of the differences is the payment to all beneficiaries of the same amount, regardless of family size.

For him, a better design includes a lower basic value with a supplement to overcome extreme poverty and applied to the total number of children in the household. He also advocates a regular adjustment mechanism for these values, preferably linked to changes in food prices.

Currently, President-elect Luiz Inácio Lula da Silva (PT) is trying to find a solution to guarantee the maintenance of the aid at R$ 600.