The Economic Commission for Latin America and the Caribbean proposes Universal Basic Income

The Economic Commission for Latin America and the Caribbean proposes Universal Basic Income

by | May 21, 2020 | News

The Economic Commission for Latin America and the Caribbean, a regional organism of the United Nations Secretariat has declared itself in favour of a new regime of welfare and social protection that includes the gradual, progressive and sustained establishment of universal basic income in the region of Latin America and the Caribbean.

On May 12th, its executive secretary, Alicia Bárcena, presented the 3rd Special Report COVID-19: the social challenge in times of covid-19, which reads:

To address the socioeconomic impact of the crisis, ECLAC proposes that governments guarantee temporary cash transfers to meet basic needs and support household consumption, which will be crucial to achieving a sound, relatively rapid recovery (p. 14)

The Proposal however, is not limited to this emergency programme which would involve at least one cash transfer, equivalent to a poverty line, for 1/3 of the population, but rather:

From a long-term perspective, ECLAC reiterates that these transfers need to be ongoing, should reach beyond those living in poverty and cover broad strata of the population that are highly vulnerable to falling into poverty, such as the low-income non-poor and the lower-middle income strata. This would make it possible to move towards a universal basic income that could be implemented gradually over a period suited to each country’s situation. (p.15)

ECLAC has held the position now for 10 years that the current dominant development style needs to be replaced, as it has brought low economic growth, high social inequality and accelerated environmental destruction. It has been 10 years since ECLAC highlighted that this should be the hour of equality in Latin America and the Caribbean, and as such has been working on developing and deepening far reaching initiatives and proposals aimed towards building a new style of development centred around a core of equality and sustainability.

This is the perspective that corresponds to the proposals for progressive structural change, equality pacts and the initiative for a great environmental push. Through all these years ECLAC has insisted on and reiterated the need for social policies that are universal and with a focus on rights. In this decade there have been different mentions of the importance of guaranteeing income, of the possibilities of basic income as an emancipation mechanism and the possibility of implementing basic income for women as a tool for building their economic autonomy. Now, ECLAC is declaring the need for universal basic income and rates it, beyond the emergency and the short-term, as a strategic objective.

Facing the profound weaknesses in the welfare and social protection regimes that have been laid bare by the pandemic, and the unprecedented growth in the volume of cash transfers that, through different modes, have been implemented by the region’s governments, the interest in basic income has grown exponentially. Its appeal is not only philosophical, but also includes its power and utility for solving practical problems and achieving an immediate, opportune and far-reaching impact.

It has been said many times that the most intense debates are not solved by new arguments, but rather by great outcomes. This seems to be the case for the basic income proposal, a proposal whose debate, analysis and experimentation increased significantly after the great recession of 2008-2009 and which has placed itself, with a previously unknown force up until a few weeks ago, into the public and political spheres of various countries in Latin America and the Caribbean. It is an idea whose time, it seems, has arrived.

The question regarding what would have been the impact and dynamic of the pandemic if instead of having highly precarious and unprotected societies there had been a practical, operating basic income is ever more present. We would surely be talking about a different story in terms of poverty and inequality and uncertainty. Likewise, the physical distancing and home confinement measures involving people that, facing a sudden loss of income had to continue going out into the street to try and earn a survival income, would have been implemented more successfully and with less suffering.

Due to all this, ECLAC highlights the importance of having a universal basic income, within the broad framework of a welfare state and a strong social protection system. That is, basic income as an additional pillar for a new welfare regime, where most importantly the fragmentation, hierarchization and commodification of health services must be overcome, as the same document states.

Regarding the types of policies to be implemented, ECLAC says:

Before the pandemic, the social situation in the region had been deteriorating since 2014 in terms of poverty and extreme poverty, with a slowdown in the pace of inequality reduction.

    • In view of the major persistent gaps that the pandemic has widened, ECLAC reiterates that it is time to implement universal, redistributive and solidarity-based policies with a rights-based approach, to ensure that no one is left behind.
    • From a rights and welfare perspective, emergency responses rooted in social protection must be developed to avoid a serious deterioration in living conditions.
    • Social protection responses must link the short-term measures needed to address the most acute manifestations of the crisis to medium- and long-term measures aimed at guaranteeing the exercise of people’s rights, by strengthening the welfare State and providing universal social protection. (p. 18)

If the covid-19 pandemic is, as Ignacio Ramonet says, a comprehensive social fact, the least that can be done is to learn from it and to understand that social precariousness and the fragility of life cannot be part of the new normal, of the new post-pandemic reality. So much suffering for so many people cannot be and must not be, repeated or assumed to be natural.

This article was originally published in Spanish at Sin Permiso. www.sinpermiso.info

Regional Research Coordinator for the subregional headquarter of ECLAC in Mexico. The opinions stated here may not be those of the United Nations System.

GUATEMALA: ICEFI presents a book on the economic and social effects of a universal basic income in Guatemala from 2019 to 2030

GUATEMALA: ICEFI presents a book on the economic and social effects of a universal basic income in Guatemala from 2019 to 2030

by | Dec 19, 2017 | News

Zone 10 – Guatemala City.

 

With the support of the Swedish Embassy and Oxfam in Guatemala, the Central American Institute for Fiscal Studies (ICEFI) has presented a new book entitled Universal Basic Income: More Freedom, More Equality, More Jobs, More Well-being. A Proposal for Guatemala (2019-2030), was presented in simultaneous events held in Guatemala City and Quetzaltenango. The book explains how inequality is affecting people’s lives and undermining the possibilities of strengthening democracy and development in the world, and Guatemala in particular. In light of this reality, the book proposes a universal basic income (UBI) of Q175 per month (20 €/month) accompanied by increased social spending from 2019 to 2030, which could eliminate extreme poverty and reduce inequality, while generating 4.7 million jobs and potentially boosting economic growth as much as 50%. It also gives scenarios for its financing – including a progressive tax reform – and the main challenges to its effective public administration.

 

When studying social inequality in Guatemala, the book mentions income inequalities, worker insecurity, the scourge of child labor and lack of employment guarantees, the still unaffordable cost of the basic food basket, the acute chronic malnutrition ravaging Guatemalan children (especially indigenous and rural children), the visible discrepancies in women’s political representation in public and private power arenas, widespread poverty and extreme poverty – also more and more wearing the face of indigenous and rural women – and the complex, institutionalized racism permeating all realms of society. All this is reinforced by the overwhelming problems of corruption and lack of transparency, by paltry public spending on the production of universal, quality goods and services, and by a tax policy that lacks legitimacy among the citizenry due to the unfair way in which taxes are collected and certain economic sectors are granted privileges.

 

For ICEFI, this reality requires alternative proposals to help mitigate social inequality and its more harmful effects and build economic, social and fiscal scenarios for underpinning sustainable, inclusive economic development. Together with improved public goods and services, a UBI – understood as a sum of money allocated by the State to each citizen or resident – would have a positive impact on Guatemalan society. With a monthly per-person amount of Q175, the UBI could eliminate extreme poverty and reduce inequality.  The study, which should be considered a seminal work subject to discussion and more in-depth examination, also reveals that a UBI such as the one proposed could generate 4.7 million jobs in the coming years (33% of the working-age population in 2030), spread out over the entire national territory in agriculture, industry, finance, and commerce – an effect that could boost economic growth by close to 50%. Moreover, the related bankarization would promote the formalizing of businesses aimed at providing goods and services to the public. Inequality would be reduced from 0.538 to 0.472, as measured on the Gini index – better than Costa Rica (0.504 in 2014) but still far from what has been recorded for Uruguay (0.379 in 2014).

 

As for taxes, the proposal includes financing mechanisms (with and without tax reform). The tax reform scenario is based on a modernization of the income tax, elimination of tax privileges, and gradual reduction of income and value-added tax evasion. The book also emphasizes that implementation of a public policy such as the one proposed implies a revaluation of the State’s role as the main guarantor of individual rights and booster of development and democracy. Fiscal policy can potentially close the current gap between the economy and citizen well-being.  With a modern fiscal outlook and political agreement for a profound fiscal reform, the country could have the resources for financing a UBI and other public programs aimed at enhancing social well-being, smoothing the way for compliance with the 2030 Agenda for Sustainable Development while driving productive transformation, access to credit and economic formalization.

 

In this book, ICEFI recognizes that a UBI would not solve all the problems the country urgently needs to face as a result of its past and present.  Together with improved public services, however, it could provide a minimum though effective floor of social protection for tackling inequality and all its related phenomena.  At a time when most citizens are unhappy with the current economic and political model, the study can also serve as a basis for debate on alternatives for change.  Discussion of a UBI in Guatemala is expected to bring together small, medium, and large enterprises, merchants, producers and cooperatives, as well as social organizations pushing agendas for development and democracy.

 

The study is available in Spanish.