Bonus contributes to a 2.5% reduction in poverty in Ecuador and also influences labor data

The delivery of the Human Development bonus and other social assistance it would have contributed to changing the poverty rates and has even influenced the employment data.

The reduction in poverty registered in Ecuador in 2022 -it fell by 2.5%- would be largely associated with the greater delivery of this bonus, which has also been reported as an achievement of the country by the International Monetary Fund (IMF). ).

Poverty in Ecuador fell from 27.7% in December 2021 to 25.2% in December 2022. This is a drop of 2.5%, according to the latest bulletin from the National Institute of Statistics and Censuses (INEC) published this week. Extreme poverty also fell from 10.5% to 8.2% in the same periodwhich represents a drop of 2.3%.

Where is there more and less poverty in Ecuador?

The line of Poverty stands at $88.72 per month per capita. This means that those who earn less than that amount are considered poor. While the line of extreme poverty is $50 per month per capita. That is, those who earn less than that amount are considered part of the extreme poverty group.

Regarding poverty focused on the rural sector, which has much more critical percentages, there was a significant drop when going from 49.2% to 41% (8.2 percentage points) and extreme poverty, also rural, from 28% to 17.4% (10.6 points).

This improvement, according to the editor of Análisis Semanal, Alberto Acosta Burneo, could be related to the important investment that the Government has made in social aid bonds.

Between 2020 and 2022 social coverage increased going from 3 out of 10 families in a vulnerable situation in 2020 to 8 out of 10 families in 2022. This meant a budget increase of $500 million to $1.2 billion. It is precisely this injection of liquidity that has generated the recovery. Poverty has returned to pre-pandemic levels, explains Acosta Burneo.

Additionally, a rare phenomenon that would also be linked to the delivery of bonuses for vulnerable families has begun to be noticed in labor indicators in the country. In December 2022, the Economically Active Population fell from 8’602,930 to 8’357,837, a reduction of 245,000 people. Normally, the EAP grows year after year, proportionally to the natural population growth. In this sense, this first indicator is strange. In addition, according to surveys carried out by INEC, there is a drop in the level of unemployment and underemployment by more than 300,000. However, these have not gone towards full employment, as this indicator only rose 91,000 positions.

More than $10.5 billion delivered in bonds in two decades to reduce the effects of poverty in Ecuador

Where have all the people who were previously part of the EAP or who were unemployed or underemployed gone?

According to Alberto Acosta Burneo, there are two factors that could have contributed to these figures.

His first hypothesis is that due to the expansion of coverage, people now they are reluctant to report that they have a job for fear that their bonus will be taken away. Thus, they prefer to report that they are not interested in working, which removes them from the EAP.

Additionally, the COVID-19 pandemic prompted a net departure of 182,000 Ecuadorians in 2021 and in 2022 borders on an additional 93,000. (YO)