Covid-19 Exposes Latin America’s Inequality
April 6, 2020
As of April 6, SARS-CoV-2 (the virus that causes Covid-19) has infected almost 1.3 million people globally and killed over 70,000. As with other regions, Latin America is struggling to respond and even quantify the scope of this unprecedented pandemic. Covid-19 was first identified in Latin America in late February after a São Paulo resident returned ill from a business trip in Northern Italy. Since then, the disease has spread to every country in Latin America, and confirmed cases have topped 25,000, although experts fear the actual number could be significantly higher, given very low levels of testing.
Many of the first cases in the region were linked to middle- and upper-class Latin Americans who had traveled abroad and returned home already infected. However, the current spread of the disease in the region and its likely evolution in the coming weeks and months will highlight how the region’s poor are disproportionally susceptible to the pandemic and its economic implications. Many of the poor in Latin America, similar to the poor across the world, are subject to precarious employment, substandard living conditions, and very limited access to reliable health care. Income inequality in Latin America, combined with a stressed health care system, means that low-income citizens are very likely to bear the brunt of the crisis.
Covid-19 and Income Inequality
Of the 20 most economically unequal countries in the world, eight are in Latin America, making it the most unequal region in the world. Three-quarters of Latin Americans are low or lower-middle income, and only 3 percent of Latin Americans are classified as high income. Thirty percent of the region lives beneath the poverty line, and one in five individuals lives in a slum. Sixty percent of Latin Americans are employed in the informal sector, many without access to employment benefits or guarantees. Although several countries in the region have lowered income inequality over the past few years, the richest decile of Latin Americans still owns 71 percent of the region’s wealth.
In March, a wealthy woman from Rio de Janeiro returned from an Italian vacation with symptoms of the virus. Although she suspected she was ill and was being tested for Covid-19, she did not alert her housekeeper, who contracted the disease and died a few days later. For many Brazilians, this case highlighted the cavalier attitude of the Brazilian upper class toward the people that work in their homes. In other parts of the region, significant clusters of the virus have emerged from wealthy people returning from abroad: Seventeen Mexicans were infected during a Colorado ski trip, and a cluster of infections emerged after a wedding at a ritzy resort near Punta Cana where guests made fun of the pandemic by dressing up as nurses.
People in the low or lower-middle strata are more likely to work in the semi-formal or informal economy, including construction, domestic work, and small retail and street sales. Officials in Latin America (and around the world) fear that Covid-19 could spread more rapidly to lower-income people in the informal sector since these are typically jobs that cannot be done from home and involve people who cannot afford to miss work and have few, if any, employment benefits. While the region has better sanitation, access to running water, and vaccination than it did a decade ago (all things that help to mitigate the spread of disease), poor Latin Americans are much less likely to have access to these resources. They are also more likely to live in overcrowded neighborhoods or lack running water, meaning that self-isolation and frequent hand washing and disinfecting are extremely difficult. The rate of respiratory illness is also much higher in poorer neighborhoods, where more residents have underlying conditions such as malnutrition or heightened exposure to pollution, which again could result in higher rates of Covid-19 infection.
The public health care infrastructure, already inaccessible to many poor Latin Americans, is overloaded in the best of times. Latin America invests less in health care infrastructure than most regions in the world, with an annual investment of $949 per capita, far less than the OECD average of $3,973 per capita. While every country in the region has attempted health care reform, many still do not have access to reliable, quality care; approximately one in three Latin Americans, especially those with lower incomes, do not have regular access to health care. Access to health care in Latin America typically requires payment, which means that many poor people may not be able to receive care if they have a suspected or confirmed Covid-19 infection. Some countries already have very few critical care resources, which will be further stretched beyond capacity as the pandemic spreads. Even if care is available in poorer neighborhoods, hospitals and clinics in those areas frequently lack intensive care units or proper equipment to care for those who become critically ill.
Government Responses to the Health Crisis
With their limited resources, many countries in Latin America are already attempting to help their poorest citizens weather the economic effects of the Covid-19 pandemic. For example, El Salvador, Argentina, and Chile, among others, have all approved payments to low-income families or people employed in semi-formal or informal sectors, though the difficulty of distributing this support to people without bank accounts is a key challenge. Other countries have passed job-protection legislation, suspended utility payments and evictions, and enacted other measures to protect the poor and the middle class.
However, several leaders in the region have not seriously implemented policies to deal with the spread of the virus. In Nicaragua, President Daniel Ortega has taken virtually no policy steps, except for leading a “Love in the Time of Coronavirus” parade in mid-March. Brazil’s Jair Bolsonaro and Mexico’s Andrés Manuel López Obrador have been criticized for downplaying Covid-19 and refusing to take national action to stop the spread of the disease. Other countries simply do not have the resources or the expertise to mitigate the spread of Covid-19 effectively. The health care system in Venezuela is already destitute, and most hospitals lack basic supplies and are not able to effectively treat those with Covid-19. Millions have fled Venezuela, and the region’s health care systems are not prepared to support refugees in addition to the resident population. Furthermore, the closure of the Colombia-Venezuela border has forced refugees to cross informally, increasing their exposure to armed groups. Haiti has already faced a serious worsening of its pre-existing political and economic tensions, now compounded by the Covid-19 threat. As the pandemic evolves in Latin America, social unrest could also become a serious issue for the region’s governments.
Although the measures taken by several countries will hopefully relieve some of the disease’s impact on the region’s poor, the spread of Covid-19 has already exposed the fragile state in which the region’s poor exists, and the spread of the virus will only intensify in the coming weeks and months. With the international donor community distracted by its own internal challenges with the Covid-19 crisis, any kind of coordinated international intervention is much less likely, especially in the short timeframe required to effectively stop the advance of the virus. However, the international and regional financial institutions (e.g., the International Monetary Fund, World Bank, Inter-American Development Bank, and Development Bank of Latin America) have all recognized the gravity of the threat that Covid-19 virus poses to the political, economic, and social stability of the region and have already implemented assistance to the health care and financial sectors.
Covid-19 is just beginning to hit Latin America in a significant way, and the eventual impact is very difficult to accurately predict at this early stage. That said, the situation will likely become more critical in the coming weeks as the virus spreads and testing continues. At this point, we do not know how badly the disease will affect severely impacted countries such as Italy and the United States, let alone states in Latin America. However, the pandemic has already exposed serious health care deficits in many countries and has demonstrated that many of the world’s citizens are at high risk during a global health crisis. Countries in Latin America should pay attention to the long-term inequalities present in the region that have been exposed by the pandemic. Although implementing immediate measures to mitigate the pandemic should be the focus now, Latin America will soon need to take serious legislative and policy steps to address these chronic inequalities in the long term, in part so that their poorest citizens are better able to protect themselves during future health crises.
Linnea Sandin is the associate director and an associate fellow for the Americas Program at the Center for Strategic and International Studies in Washington, D.C.
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