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The illusion of equality

In spite of the decline of inequality, the country still faces serious social issues

FLÁVIO VELOSO / OPÇÃO BRASIL IMAGENSSatellite dishes amidst the poverty of the Morro Dona Marta shantytown, Rio de JaneiroFLÁVIO VELOSO / OPÇÃO BRASIL IMAGENS

Several surveys have shown that current economic income inequalities (resulting from salaries, pensions, interest rates) have systematically declined in Brazil since the beginning of the last decade. Researchers estimate that – if the current pace is maintained – by 2030 we will have achieved a level of economic inequality similar to that of some developed countries, such as Canada, where the difference in people’s income is low and there is a very high standard of social wellbeing.

However, it is hard visualize this “Canada-like situation in the medium term” when looking out of the window of a car. “Despite this decline, we still rank among the 12 most unequal countries in the world. One percent of Brazilians appropriate themselves of the same income as that of the 50% of the poorest segment of the population, whereas 10% of the wealthy have 40% of the income,” explains Claudio Dedecca, a full professor at the Institute of Economics of the State University of Campinas (Unicamp). The indicators obtained by the survey A desigualdade socioeconômica no Brasil [Social Inequality in Brazil], funded by the National Council for Scientific and Technological Development (CNPq) and by the Office for the Training of University Educated Personnel (Capes), under the coordination of the economist, have indicated the need for a multidimensional approach to inequalities in Brazilian society that take other factors, besides income, into consideration. The methodological development of this survey was incorporated into other projects conducted jointly with professors Walter Belik and Rosana Baeninger, of Unicamp. “The decline of unequal income distribution in the last ten years and how this has led poverty levels to drop is undeniable,” says the economist.

“But we need to talk about inequalities instead of inequality. Low income is only one of the social risks that the poor population is exposed to. We also have to analyze their access to public goods and services, such as education, health care, land, work, food, transportation, sanitation, water, and housing. Poverty is a situation of social and economic fragility of a multidimensional nature,” says Dedecca. “It isn’t enough to battle monetary poverty; we have to reduce the social and economic risks of those who live in extreme poverty. The data of the survey indicates that this group is still highly vulnerable concerning access to the labor market and to social and public services. Reducing these social risks, which is the ultimate objective of growth, was insignificant, and the elements of inequality surveyed in 2003 still exist today,” he explains.

“The poor population has increased its purchasing power; however, they are still outliers in terms of their access to public social services. It is useless to have “Canadian-like” income and no health care, education, housing and sanitation. The results of our survey show high inequality levels for most of the indicators,” says the researcher. “The experience of developed countries has shown that improving income reduces poverty but not inequality,” says economist Celia Kerstenetzky, of Fluminense Federal University, who coordinated the research study O Estado do bem-estar social no Brasil em perspectiva comparada [The State of social wellbeing in Brazil from a comparative perspective]. “Nations with higher standards of living chose to drive consumption to a dignified level, coupled with broad, universal, high-quality social policies.”

Technology enters the modest homes of Rio de Janeiro’s shantytowns

PASCAL DELOCHE / GODONG / OPÇÃO BRASIL IMAGENSTechnology enters the modest homes of Rio de Janeiro’s shantytownsPASCAL DELOCHE / GODONG / OPÇÃO BRASIL IMAGENS

“Certain types of goods and services can be accessed through monetary income, at least in the case of the higher-income segment of the population. Nevertheless, providing some of these goods and services, such as sanitation and public transportation, is something that cannot be individualized. These services have to be provided free of charge, or have to be subsidized, for the low-income population,” says Dedecca. In other words, inequality is not only synonymous with poor income, but also with no access to citizenship and public services, which, for the poorer segment of the population, depends on government action. “Thus, though income transfer programs have lifted 1.3 million people out of dire poverty, the multidimensional indicators reveal that this segment still has a lot of difficulty joining the market or gaining access to basic public services,” says the researcher. In 2009, 3.2 million families were in this situation, yet many of them did not meet the criteria to qualify for State-run programs.

Brazilian social policies have become broader in terms of their scope and coverage ever since the Federal Constitution of 1988 was passed. During the period of instability and economic crisis that the country was going through, social policies advanced in terms of coverage; however, the quality of the services provided by the State was very poor. From 2003, social policies were included in government strategies to a greater extent, as administrations increased investments to improve the quality of the actions and of the programs. “Economic growth, coupled with the increase of formal jobs and a better minimum wage strengthened income distribution mechanisms to the benefit of social policies,” says Dedecca. At first, the narrowing of the income gap was the result of a drop in the income of the wealthier segment of the population, while the lower income segment was more protected by the growth of the minimum wage. “We don’t want to narrow the income gap at the expense of the wealthier segment of the population; we want to bring the low-income population up to higher income levels.”

076-081_Desigualdade_194-1From 2008 onwards, better economic growth conditions, characterized by the narrowing of the income gap and by the drop in monetary poverty levels, resulted from the enhancement of social, work, and income policies, which led to a better balance between these policies and the country’s economic policy. This changed, albeit only in part ,the parameters adopted by technicians and specialists in public budgets. “To this end, we significantly increased federal spending on income transfer programs; nowadays this income transfer accounts for 9% of the country’s GDP. But the distribution from this spending is still inefficient. The Bolsa Família program had an insignificant effect on the improvement of income distribution, even though it did alleviate the lives of people living in extreme poverty,” points out economist Claudio Salm, from UFRJ, author of Políticas sociais em tempo de crise [ Social policies during times of crisis] (published by Editora Brasília, 1990). “The most important element in this process was the increase in the number of jobs, with more and better jobs resulting from economic growth,” he adds.

“It will be necessary to maintain high growth rates for a long time for the government to increase its spending on income generation programs. This is the ‘cake theory’, with social progress being subordinate to economic growth,” says Salm. Dedecca agrees that once the target population had been covered, the progress of poverty fighting programs began to depend on broadening the scope and the benefits of the programs. These factors have certainly require higher spending than the GDP and certainly much higher than the government budget. “But we cannot be restricted to growth and income; we have to find tools to cut reduce through productive insertion and access to good-quality public services,” says the researcher.

Some people disagree. “Access to public services contributes to people’s welfare, but it is undeniable that income is the variable to deal with inequality,” says economist Sergei Dillon Soares, from the Institute of Applied Economic Research (Ipea), who wrote the paper Erradicar a pobreza extrema [Eliminating extreme poverty] (published in Texto para Discussão Ipea, 2011). “After inserting the ‘poor in the market’ as consumers, the time has come to ‘give the market to the poor’ as workers. In other words, poor people have to be viewed more as the protagonists of their histories and less as receivers of government money,” says Marcelo Neri. “We need to give the poor a ‘shock of capitalism.´ The question that the National Survey per Domicile Sample (PNAD) asks is simple: “ How much money do you have in your pocket?” It is the sum of the income from work, the amount of money that the retired pensioner receives, the money paid by the social programs. The ordinary citizen only cares about how much comfort he takes back to his family. And one can see that the poor people’s pockets got proportionally deeper than those of the rich,” he adds.

076-081_Desigualdade_194-2The indicators of the survey conducted by Dedecca’s team call for more caution and a slower pace. “Income transfer programs will always exist in the country. It will take a reasonable amount of time for this income segment to go back to the labor market on its own.” The gap between the income of poor families and the average income of the total number of families is still quite significant. The average per capita income of the poor families is less than 4% of the average value. As for the income stemming from public policies, the poor families get 1.4% of the average value that the total number of families gets. Thus, productive insertion, viewed as the “exit” from income transfer programs, is complex and limited.

“In addition, the indicators show that insertion is not the solution for fragile social fabric; moreover, insertion is a difficult process. One out of every four members of poor families is unemployed, and the ones who do have work hold informal jobs,” says Dedecca. As these people do not have a formal employment relationship, they have fewer income opportunities, less access to credit and bank services, and minimum social protection. Regional differences do not mitigate the difficulties. According to the survey, the density of poverty has no direct relationship with the degree of economic development: the states of Bahia and São Paulo, which have a noteworthy industrial contrast, account for one-fourth of the families that live in dire poverty.

Even the “demographic bonus” (seeBrazil is going through a demographic transition,” in issue 192 of Pesquisa FAPESP), namely, the drop in the birth rate that leads to more job offers, may not materialize if inequality is maintained. “Families are getting smaller, but there are still problems: poor families have a high dependence rate; the proportion of family members of an inactive age is much higher than the Brazilian average, which lowers the possibility of productive insertion,” says the researcher. In addition, many of these families are headed by women and blacks. Gender and race discrimination lower the chances of insertion even more. In the case of women, this is reflected in the time spent on the organization of families, generating two work-days and informal employment.

LEO RAMOSExample of production for own consumption: community vegetable garden in the town of Embu, São Paulo StateLEO RAMOS

Informality usually leads to gender and racial inequality. Exclusion from the formal labor market necessarily implies exclusion from the social protection that derives from the labor market. This is a factor that influences another indicator: the high perinatal infant mortality rate, which is much higher among the poor segment of the population and still growing: from 2003 to 2009, the rate rose from 25.57 deaths per thousand births to 36.90 deaths per thousand births. The lack of access to Social Security is still too complex for any social program to solve: Brazil has more than 9.5 million families with no protection.

There are some positive indicators, although they are not overly encouraging. One of these is the higher number of children from the ages of 4 to 16 enrolled in school, indicating that the new generation is getting an education. However, the educational lag has also increased, indicating that even though education has become more accessible, its quality is still poor. Even the most outstanding achievement, income growth, has a drawback. The purchasing power of this segment of the population has increased, but this has not resulted in better health. There is increasing evidence of poor nutrition and obesity. Poor families have more money to buy food, but their diet is unhealthy and has too many carbohydrates. “Poor families are being influenced by advertising and do not eat properly. This data points to future health problems,” Dedecca warns. Rural families, whose indicators are significantly worse, are at an advantage in this respect, as they produce their own food, with higher nutritional value.

This advantage has led the federal government to encourage local food production as a way of inserting the rural sector into the market. “I don’t reject this idea, but, according to the indexes, this is a highly unfeasible task given the lack of demand and the market’s bad conditions. This practice mitigates rural poverty, but it is not enough to improve the low indicators,” says the researcher. Bad conditions in the big cities are even worse in rural areas. “Brazil mistakenly sees itself as an urban society. But more than 30 million people live in rural areas,” says. “In spite of the transfer of income, public policies in these regions and access to social assets are a very complex issue.”

Housing conditions are precarious in rural and urban regions, even though some numbers are encouraging: most low-income houses nowadays have roofs and walls; indicators related to bathrooms per home and sleepers per bedroom are also positive. “The problem is where these houses are located: most of them are in regions that lack water or sewage treatment services and paved streets. Garbage collection in these regions is virtually non-existent; the use of the proper cooking fuel and the number of refrigerators per household is also below average.” Houses are built without any technical guidance, increasing hazardous situations, already bad enough because many homes are built on unsuitable terrain, such as hillsides. The following housing data is surprising: the similarity of the ratio of poor families and of families within the national average that have lived for more than four years in the same municipality. “This is an indication that migration is not a determining factor of inequality,” say the researchers.

All of these factors question the enthusiastic public exposure given to declining inequality over the last decade. “Nonetheless, the fact that inequality has been reduced – even though this has not produced the expected positive results – shows the existence, for the first time, of growth with distributive capacity,” the researcher adds. “Reproducing the relationship between growth and distribution with better public policies might lead to more significant social and economic results, which might then result in a social transformation that truly reduces inequality, generating stronger social justice and the creation of a true republican State, where citizenship is the common element of the entire society.” Only then will we be able to see ourselves like Canada.