Report: Shutdown may hurt Argentina’s poorest families more than virus

The coronavirus pandemic has forced the Casa Rosada to take a series of drastic measures to halt the spread of the disease, which has already infected close to 600 people in Argentina. However, one report warned this week that the measures would have a severe impact on the nation’s poorest.

“Paralysing productive activity in a country where a high proportion of families generate their income from informal employment will produce higher social costs than those of illness,” the Instituto para el Desarrollo Social Argentino (Idesa) said in a study.

The report, which sites data from a recent household survey from the INDEC national statistics bureau, says that 55 percent of Argentine homes are headed by a registered employee, of which 16 percent are considered poor. In contrast, 22 percent of homes are headed by an unregistered employee (i.e. employed ‘en negro’), of which 43 percent are living below the poverty line. For households headed by a self-employed individual, some 35 percent are poor.

“Data shows that close to half of all families have, as the head of household, someone who works in a registered-dependent relationship. In these cases quarantine is viable as long as an employer continues to pay the wages. To this end, as is the case in developed countries, the State should consider subsidies, especially for smaller companies,” Idesa said in its report.

The institute warned that with close to half of all households living off unregistered work, lack of income – due to confinement or lack of activity – would have a huge impact.

“With the aggravating circumstance that many of them are poor, the lack of income, whether due to reclusion or a drop in economic activity, will almost immediately cause more damage to their health than the coronavirus,” the agency proclaimed.

“Stopping economic activity and isolating the population ... is a remedy that has a much higher social cost than the benefit of avoiding the disease,” the report said.

The institute argued that some developed countries could absorb the costs of a shutdown, given high rates of formal employment and government financing options to help keep businesses afloat, but that this country needed a different approach.