Estimate of Monetary Poverty for Colombia in Times of the Pandemic.

In this coronavirus emergency, money transfers were established by the national and district authorities (Bogotá, which covers 16% of the total population), of which there are additional ones to the preexisting ones, which will contribute to the fall in income of the most vulnerable population in the country, as a consequence of the closure of the quarantine, necessary to overcome the contagion.

At the national level, on thursday, march 26, an incentive average payment of 280.000 pesos will go to 2.3 million households in the Families in Action program and to 130.000 persons in the youth in Action Program, with money transfers up to 720.000 pesos. For Seniors Program, it will transfer a value of 140.000 pesos to 1.7 million people. In addition, a transfer was established for 3 million families that in principle are not in any of the previous programs with a value of 160.000 pesos. On the other hand, the mayor's office of Bogotá will transfer to 350.000 families a value of 420.000 pesos and to another 150.000 families a value of 150.000 pesos.

A simple and preliminary exercise in calculating the poor in the country from the above figures is as follows. Assuming that the households are made up of 4 people (the data from official sources is 3.7) the previous programs would cover 9.2 million individuals in Families in Action and in the case of households that do not belong to any program, 12 million inhabitants (a part of the destitute, also called extreme poverty, approximately 2 million, would enter here) and in the case of families in Bogotá, 2 million people. Other homeless people who are in special social programs and those on the loose, would be 2 million more.

Adding all the people from the aforementioned programs and assuming that 3 million of them will be given by all the existing crossings, two benefits, for which they will be subtracted, the total number of beneficiaries would be approximately 22 million, which when adding the 2 million homeless people from social programs mentioned above, for a total of 24 million people. It is plausible to remove those who by income manage to overcome the concept of the poor (6 million), although it is also true that outside of Bogotá, there are some poor who are not covered by the national plan.

The calculation subtracting those 6 million is 18 million poor, approximate and preliminary, made in this exercise and shows that monetary poverty represents 37% of the total population in Colombia.

Also, to estimate the informal work of this most vulnerable population, the result of 18 million poor people is subtracted from the 2 million indigent people, who ask for money or species, but do not seek informal work. Can also be removed (information available in the aforementioned programs) young people and older adults, another 2 million, resulting in 14 million inhabitants and this also subtracts an estimated 5 million for women who stay home and school children, which would give 9 million, who are the informal workers of the most vulnerable population. Result that would coincide with some concepts from studies and experts on an approach to measure informality at work corresponding to low income levels.

That result, as a simple arithmetic exercise, is 41% of the working population, which is reported in the official statistics used to calculate unemployment, which is 22 million inhabitants. Percentage that reflects the high participation of low incomes in total work and therefore the inequality in labor income that exists in the country.

This current situation of the coronavirus pandemic that has led to urgent actions taken by the nation and the mayor's office of the capital towards the most vulnerable population, due to compulsory quarantine, also makes it possible to make estimates of the volume of monetary poverty in the country, as is the case of the one presented in this note and the results are 9% higher than the monetary poverty report prepared by official sources, which is 28% of the population. It is also possible to estimate the informal employment of the most vulnerable (41% of total employment).

National and foreign research entities have made estimates, with data as of march, of the economic repercussions on employment and poverty in Latin America as a consequence of this pandemic. Estimates made in various possible scenarios, record a fall between -1.5% and -5% of GDP and an increase in unemployment between 8% and 15% in the year.

This would have a strong impact on the poorest families and on inequality. In fact, they also estimate that with this drop in GDP and this increase in unemployment, the number of people living in poverty would increase between 10% and 15% and income inequality (a broader concept than the labor inequality mentioned above on this note) would increase from two to three percentage points (the Gini coefficient would go from 0.49 to 0.52).

----------------------------

Last Friday, march 27, world stock markets ended in negative territory as investor fears of the spread of the coronavirus prevailed in both Europe and the United States.

The price of oil falls the WTI to US21.9 per barrel (-5.7%), the BRENT to US28.2 a barrel (-3.4%) due to the drop in world demand and persistent disagreement among the major producing countries.

In Colombia, the stock market falls -1.7% and the peso is devalued and reaches a TRM for monday, march 30 of 4.043 per dollar, compared to 3.996 on Friday.