Issue, No.12 (December 2019)

Poverty Reduction Programmes in 2007 in Uruguay: A Comparative Study of PANES and Food Access Policies

by Rosa Melfi (Sapienza University of Rome)

If absolute poverty is no longer a problem in most European countries since the post-war period, it still plays a huge role in many regions of the world such as Africa, Latin America and a large part of Asia. According to Sen (1985) poverty does not just mean a lack of income; it also means malnutrition, no access to education, social exclusion and discrimination, lack of participation in decision-making, etc. In order to reduce poverty levels, many countries have in recent years begun to implement policies aimed at achieving these goals. According to Fiszbein et al. (2009), among the various policies implemented, CCTs (Conditional Cash Transfers) especially seem to have had the highest impact in achieving the goal of poverty reduction and of improving people’s living conditions. CCTs are programmes that transfer cash to poor households on the condition of satisfying specific criteria. They have become very popular since the 1990s and were first introduced in Brazil and Mexico. Today many Latin American countries have implemented various conditional cash transfer programmes.

This article will focus on policies introduced in Uruguay around 2005-2006 and its effects in terms of poverty reduction among the population as a whole and also specifically among children:

• PANES (Plan de Atención Nacional a la Emergencia Social) is the first anti-poverty programme launched in Uruguay. It lasted from 2005 until 2007, and, according to Manacorda at al. (2009) its aim was to alleviate the economic crisis that affected the country and thus reduce poverty levels. The action plans of this policy were applied through two methods: CCTs for the main part and direct government interventions. The sub-programmes of PANES¹ are:

1. Citizen’s income: It includes one transfer per household when different conditions are met (getting regular check-ups at the doctor, the education of the children, community activities).
2. Building exit routes: the main purpose is to reduce the situations of social emergencies.
3. Working for Uruguay: emergency employment plans that promote environmental improvements and social initiatives in poorer areas of the country.
4. Assistance to the homeless: through the provision of shelter, breakfast and dinner, etc.
5. Habitat improvements: programme for the areas where families receiving PANES benefits live.
6. Microenterprise development program: it aims to finance projects undertaken by small enterprises.

• A second set of programmes was launched in 2007 under the heading of food access policies.These programmes aim to provide access to food for various poor segments of the population. They can be differentiated as follows ² :

1. Food baskets for critical situations, for pensioners and for people with diseases.
2. In-kind food assistance for the malnourished.
3. Food assistance at school.
4. The Food card included in the PANES programme.
5. Other kinds of food assistance.

The following graphs show the effect in terms of extreme poverty reduction of the two policies. The poverty line is defined as 40% of the median value calculated on income distribution. In order to account for economies of scale, the “LIS equivalence scale” ³ has been applied. The reference scenario in this analysis is the poverty rate obtaining if the policy had not been applied. The figures compare poverty rates before PANES/food access programs and after receiving PANES/food access policies.

Figure 1. The effect of PANES and food access policies on poverty levels in 2007 calculated for the entire population.

Source: Luxembourg Income Study (LIS) Database.

Figure 2. The effect of PANES and food access policies on the poverty levels in 2007 calculated for the entire child population ⁴.

Source: Luxembourg Income Study (LIS) Database.

Figure 1 shows the effects of the two programmes on the extreme poverty rate across the overall population. PANES achieves a reduction of about 2% (from 9.2 % to 7.2%) and the food access policies a reduction of about 3% (from 10.1% to 7.2%).

Figure 2 looks at the situation among children only, who are one of the target groups. First, there is a higher level of child poverty (10.08% compared to the overall level of 7.2%); but equally, it shows the higher impact of the two policies in terms of extreme poverty reduction. Without the “PANES effect” child poverty would have been estimated around 13.8% (almost 4% higher), while without the “food access policies effect” the poverty rate would have been estimated to around 16.5% (almost 6.5 % higher).

The overall study thus shows the very significant impact of the two policies on reducing poverty and improving living conditions especially among the child population. This study is illustrative and could be adapted to many other similar programs targeted at alleviating poverty.

¹ The analysis of the policy does not include the food card that is already part of the programme PANES because it has been included in the food access policies.

² See METIS for more detailed information, available at: https://www.lisdatacenter.org/frontend#/database/1/selection.

³ Defined as the square root of the number of family members.

⁴ Defined as the number of people under the age of 17.

References