A few days ago the document “Social Panorama of Latin America and the Caribbean 2025” was published, published annually by the Economic Commission for Latin America and the Caribbean (ECLAC). One of the sections of the document addresses the question of the extent of poverty in the region, both in terms of income and multidimensionally. In this article, we will focus on measuring monetary poverty. It should be noted that the ECLAC measure differs from national measures because it uses a basic basket of goods and services standardized for the region as a whole.
The report presents poverty results both for the recent situation (2023 to 2024) and for a medium-term horizon (2014-2024). In both temporalities, the results for the region can be considered favorable. In both cases, Mexico’s performance and contribution to the region in terms of poverty reduction also stands out.
Regarding the most recent data, the report indicates that “25.5% of the Latin American population was in income poverty in 2024, which means a decrease of 2.2 percentage points compared to 2023 and more than seven percentage points compared to 2020, the peak year of the COVID-19 pandemic.” Note that these figures imply that the region as a whole went from one in three people living in poverty in 2020 (around 33%), to just one poor person for every four inhabitants in 2024 (a rate of 25%). A considerable advance in a relatively short period of time.
Concerning the results by country in 2024, the report highlights the favorable performance of Mexico and Brazil: “The reduction in the number of people in poverty at the regional level in 2024 is mainly explained by Mexico and, to a lesser extent, by Brazil, which contributed respectively to 60% and 30% of said reduction. In the case of extreme poverty, these countries contributed 49% and 31% of the reduction, respectively.” Thus, Mexico is the country that, individually, has contributed the most to reducing poverty throughout Latin America: three in five people who escaped poverty in Latin America in 2024 were Mexican, as were one in two people who left extreme poverty in the region.
On the other hand, in the medium-term analysis, the report highlights the following: “Between 2014 and 2024, most Latin American countries recorded a downward trend in poverty and extreme poverty rates, and the effect was more marked in total poverty than in extreme poverty. » Further, the report adds: “Mexico stands out as the country that has achieved the most significant reductions in poverty (annualized average of 2.3 percentage points) and extreme poverty (0.8 percentage points). »
It is worth noting that this implies that in just a decade, Mexico has reduced its poverty and extreme poverty rates by 23 and 8 percentage points, respectively. Specifically, Mexico cut its poverty rate in half, from 45.1% in 2014 to just 22.5% in 2024. In contrast, its extreme poverty rate was cut by more than half, from 12.9% in 2014 to just 5% in 2024. Two very significant reductions in just a decade.
The ECLAC report also analyzes the evolution of different sources of household income. This is to try to understand what was the origin of the observed reduction in the regional poverty rate. The result is unequivocal (my emphasis): “The exercise carried out allows us to conclude that, in all countries, income from paid employment was the source which had the greatest impact on variations in poverty, both in reduction and in increase. In countries that have recorded reductions in monetary poverty, this trend has played a predominant role, particularly in those that have presented more pronounced reductions in poverty.
This conclusion is important because it contradicts a widespread idea among certain sectors of the population according to which it is social programs or transfers which explain the reduction in poverty in the region. It’s not like that. In all cases, the most important and effective variable in reducing poverty has been that linked to labor income. Hence the importance of continuing to strengthen this type of income through minimum wage policies, formalization, protection and respect for labor benefits, but also through measures that contribute to the creation of more and better quality jobs. Ultimately, it is becoming increasingly clear that the best policy to reduce poverty in the region is to increase labor income.
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