THE EUROPEAN UNION AND LATIN AMERICA AND THE CARIBBEAN IN THE NEW ECONOMIC AND SOCIAL CONTEXT

The United Nations Economic Commission for Latin America and the Caribbean (ECLAC) prepared a new document for the Summit of Heads of State and Government of the Community of Latin American and Caribbean States (CELAC) and the European Union, which was held in Brussels on 10 and 11 June 2015. ” The European Union and Latin America and the Caribbean in the new economic and social context” analyses some descriptive indicators of both contexts of the new economic and social situation.

Point B of the second part – “Social inclusion and equality” – provides important comparative data from both regions, which should be read taking into account the diversity starting point of indicators that were very distant only few decades ago. The description is useful to highlight the main challenges that each region must face. We selected some of the most relevant data.

As it is known, Latin America and the Caribbean is the world’s largest area of inequality. It deteriorates welfare and the potential for economic and social development. Since 2000 many countries in the region made efforts to reduce inequality, even if it still remains. Nevertheless, in Latin America and the Caribbean the inequality has decreased while in the European Union, where the inequality is lower, has remained unabated.

In Latin America indigence and poverty have traditionally been measured starting from the cost of basic needs, which compares the per capita income of each household with the value of the indigence line (the price of a basic food basket) or the poverty line (minimum amount to meet basic needs). The evolution of these indicators since 1990 reveals a positive performance. Poverty has dropped 20 percentage points and indigence 10 percentage points.

The measurement of poverty in the EU is made with a relative criterion that considers a threshold of 60% of average income in the economy. Performing a comparison shows that relative poverty levels in Latin America and the Caribbean countries, around 2013, was almost double(29.5%) that in the 15 countries of the European Union (15.7% ). Only Uruguay has similar or lower levels than in some EU countries (Portugal, Italy, Spain and Greece). With these premises we conclude that the relative poverty of the European Union is the half of Latin America.

The gap in social protection among the European Union and Latin American countries is still very large. In the last decade, the expenditure on social protection has increased in the countries of the European Union as well as in Latin America. Specifically between 2003 and 2012, Latin American countries have increased the average expenditure on social protection by 24%. In the EU it reached 15%. Latin American countries show a relatively steady increase in expenditure from 2003, with a significant acceleration in 2009. In European countries some shrinkage is observed until 2007, followed by a strong recovery in 2008 and 2009. Despite strong policies adjustment in the last three years, investment in social protection in the European Union remained virtually stable. In any case, it must be taken into account that the levels of investment in social protection as a percentage of GDP in Latin America are still far below those observed in the European Union. In the first group of countries, social protection expenditure reached 6.2% of GDP in 2012, while the average of 15 EU countries was almost five times higher (29.1%)

As described in other articles of Recíprocamente.net (see dialogue between Oscar Cetrángolo and Jesus Ruiz-Huerta in the N. 1 Recíprocamente magazine), the document explains the biggest differences between the two regions in the coverage of social security systems, both during the active phase and the retirement: about 2010 in 15 countries of the European Union, the percentage of the working population affiliated to social security systems that guarantee a pension approached universality (91.6%), while In Latin America and the Caribbean less than half of the labor force (46.9%) was affiliated. The gap is similar when the percentage of people of retirement age and who effectively receives a retirement or pension are compared. 92.8% of people of retirement age in the European Union receive a pension, while in Latin America and the Caribbean only half are in that situation (51.7%).

Youth employment shows a much larger increase in the EU than in Latin America,as a result of the crisis of 2008-2009.Considering that, together with formal education, opportunities for employment of young people are a pillar of social inclusion. In Latin America, the urban youth unemployment rate has remained relatively stable (15.1% in 2008 and 14.6% in 2013) while in Europe has risen sharply, from 16.3% in 2008 to 26.1 % in 2013.

Concerning migration, Latin America and the Caribbean has decreased emigration to the main extra-regional destinations, as well as the number of immigrants from overseas. Meanwhile, intraregional migration has increased, usually associated with better economic conditions and employment opportunities in destination countries. Spain remains the main destination for migrants from Latin America and the Caribbean in the European Union. In 2010, remittances from that country to Bolivia, Colombia and Ecuador were among the most important remittances originated in the European Union. However, high rates of unemployment in Spain impacted on these remittances.

See the full document here

The coordination of the document was of Alvaro Calderón, Division of Productive Development and Management, ECLAC. Laura Palacios, Wilson Peres, Miguel Pérez Ludeña, Gabriel Porcile, Laura Poveda, Edwin Fernando Rojas, Sebastián Rovira and Fernando Sossdorf Stephany Scotto, Division of Productive Development and Management; Jürgen Weller, Division of Economic Development; Jose Duran and Sebastian Herreros, Division of International Trade and Integration; Simone Cecchini, Division of Social Development, and José Eduardo Alatorre, Division Sustainable Development and Human Settlements contributed to its preparation. The processing of this material was made with inputs from ECLAC @ LIS2 project – Inclusive political dialogue and exchange of experiences and Euroclima program, financed by the European Commission, and the project Innovations for a sustainable structural change, funded by the Agency of German Cooperation (GTZ).

Lluís Francesc Peris Cancio (Reciprocamente.net)