Argentina - Crisis and Poverty 2003 : A Poverty Assessment, Volume 2. Background Papers
Argentina has gone through a major crisis in the past year, resulting in severe social dislocations, and a reduction of welfare by its poorest. The collapse of the Convertibility Plan, the freezing of bank deposits and the default on foreign debts,...
| Main Author: | |
|---|---|
| Format: | Poverty Assessment |
| Language: | English en_US |
| Published: |
Washington, DC
2013
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2003/07/2539816/argentina-crisis-poverty-2003-poverty-assessment-vol-2-2-background-papers http://hdl.handle.net/10986/14701 |
| Summary: | Argentina has gone through a major
crisis in the past year, resulting in severe social
dislocations, and a reduction of welfare by its poorest. The
collapse of the Convertibility Plan, the freezing of bank
deposits and the default on foreign debts, and the resulting
high inflation, falling output and exchange rate
devaluation, carried with it severe consequences for the
poor. The break with the Convertibility Plan also meant that
the adjustment in the labor market, occurred more through
wages, rather than by an increase in unemployment. Inflation
reduced real wages substantially, and, unlike previous
recessions, unemployment arose largely from the formal
sector, with an increase in employment in the informal
sector. Many of the middle class, faced with both declining
wages and freeze on bank assets, moved into poverty for the
first time, carrying characteristics somewhat different than
the traditional poor, including higher levels of education.
Households appear to cope through a variety of strategies,
including the entry into the workforce of those not
previously employed, and reduced consumption of food, and
other products. The Government's response to move to a
floating exchange rate, and the consequent reduction in real
wages, has provided the basis for a potential recovery. The
reduction in real public sector wages, and pension
obligations with inflation, while nominal revenues
increased, has temporarily provided for an improved fiscal
balance. The government, however, still faces serious issues
in fiscal, and financial sector management. And Government
programs still do not provide an adequate safety net for the
unemployed on a permanent basis. Safety net programs are
costly and duplicate other programs. Smaller, inefficient
programs should be combined. Educational services need to be
maintained, particularly with regard to payment of teachers,
as the welfare effects go beyond the immediate income levels
of teachers; in the health sector, gradual implementation of
an infant and maternal health insurance, and the definition
of, and agreement on provincial health goals (with
monitorable health indicators) seem to be two key initial
steps towards more effective protection for the uninsured
poor, including other chronic inefficiencies in the health
sector. Longer term poverty reduction measures include
policy reforms towards higher levels of employment, access
to basic services by the poor by improving infrastructure,
and, improved human capital, and their productivity. |
|---|