Poverty and social spending

05 May 2018

Last week we reported the announcement that poverty levels in Peru increased in 2017, for the first time in decades. We also said that this raised questions about the efficacy of government social programmes.

La República has since published useful data on the amounts of money spent on a variety of social programmes. It shows that spending has increased by around four times in the last ten years, but this does not appear to be having much remedial effects in the living standards of the poor who increased last year both numerically and as a proportion of the total population. 

This is likely to lead to further critical examination of the workings of such programmes. Experts consulted by La República point, in the first instance, to three key reasons why increased spending may not be having the desired results:

    • Inadequate targeting may mean that resources are not reaching the people who need them.

    • Oversight of the ways in which resources are channelled is insufficient or non-existent.

    • Programmes are being managed in ways that are inefficient or downright corrupt.

The article goes on to point out that those who seem to be gaining most from social programmes that involve distribution of food and/or milk are the various companies from which the state buys these goods.

The data produced by INEI also underline the point made by organisations like the UN’s Economic Commmission for Latin America, that employment generation is a far more effective means of reducing poverty than conventional social spending programmes. While this is not to argue that such programmes should be scrapped, their success depends crucially on the ability of decentralised authorities to ensure the money is well-spent.

This is also the view of Carolina Trivelli, who ran Peru’s poverty anti-programmes at the beginning of the Humala government. She stresses the crucial role played by the construction industry in boosting urban employment among the poorest sectors, and by agriculture in the rural sector (where more extreme poverty often prevails).

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    The Peru Support Group exists to promote social inclusion, sustainable development and the observance of human rights in Peru. To that end the PSG highlights shortcomings in observance of established norms, whether international or local in nature, in its research, advocacy and publications. In so doing, it underscores the relationships that exist within the political system, how institutions work, and the effectiveness of policies that aim to reduce poverty and inequality within the context of sustainable development.

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