Brazil records lowest poverty levels in over a decade
Social programs and job market improvements contribute to success
By Lucianne Carneiro e Alessandra Saraiva — Do Rio
The year 2023 marked a significant decline in poverty and extreme poverty in Brazil, reaching the lowest levels recorded since 2012, according to data from the Brazilian Institute of Geography and Statistics (IBGE). For the first time since 2012, the proportion of people living in poverty fell below 30%, reaching 27.4% of the population. Meanwhile, those in extreme poverty accounted for 4.4% of Brazilians, a figure that had never dropped below 5% before. The new IBGE report reveals a 14.7% decrease in poverty and a 24.6% drop in extreme poverty.
Experts have described this reduction between 2022 and 2023 as pronounced, significant, and substantial. They attribute this trend to the vibrant job market, social programs like Bolsa Família and the Continuous Cash Benefit (BPC), and the real increase in the minimum wage.
Researchers on the subject believe poverty will continue to decrease in 2024, but caution that much work remains. Despite the reduction in poverty, increased income, and social programs, a significant number of Brazilians remain impoverished, and income inequality persists in the country.
“There is an improvement in the quality of life. This is the positive side, and it is not insignificant. Yet, various marks of inequality remain in income, access to work, education, and health. The inequality indices are very high,” said Francisco Menezes, a policy advisor at ActionAid.
In 2023, 8.7 million people, equivalent to the entire population of the state of Ceará, emerged from poverty, yet 59 million Brazilians remained in this condition. The IBGE uses the World Bank’s poverty line as a reference, defined as a per capita household income of $6.85 per day (based on purchasing power parity, PPP) or R$665 per month.
For extreme poverty, the population decreased from 12.6 million in 2022 to 9.5 million in 2023, meaning 3.1 million people moved out of this category last year. The extreme poverty line is set at a per capita household income below $2.15 PPP per day or R$209 per month.
“Both the job market and social benefits help explain the reduction in poverty. The job market has a greater impact on poverty, while social benefits affect extreme poverty more,” said André Simões, an analyst at IBGE who co-authored this crucial study.
While the decline in poverty was celebrated, the income inequality trend was less encouraging. The Gini index of per capita household income remained at 0.518 in 2023, the same level as in 2022, which is the lowest in the series since it began in 2012. The Gini index, a widely recognized measure of income inequality worldwide, ranges from 0 to 1, with values closer to 1 indicating greater inequality.
In Brazil, in 2023, the total income held by the top 10% highest earners was 3.6 times greater than the income of the bottom 40% earners. According to the IBGE, maintaining this inequality indicator is likely due to the more dynamic job market in 2023, which had a stronger impact on the income of higher-income deciles, as they rely more on labor income.
This inequality, according to the ActionAid Policy Advisor, justifies the discussion of a progressive tax reform targeting ultra-wealthy individuals: “We need to address the structural issues that explain poverty, which is more challenging due to the political process. However, even a slight taxation on the ultra-wealthy could generate significant resources to tackle issues such as the lack of basic sanitation.”
In a period of intense debate over fiscal matters, Francisco Menezes argues that the discussion of public spending should focus on “the quality of resource allocation rather than merely the numbers.”
The IBGE’s Summary of Social Indicators also includes data on the improvement of living conditions in Brazil. The proportion of young people aged 15 to 29 who neither study nor work decreased to 21.2% in 2023, down from 22.3% in 2022, the lowest level since 2012. Although the number of young people in this situation reached a record low, 10.3 million remain.