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OECD Secretary-General at the OAS: “The middle class in Latin America is closer to the vulnerable groups than to the affluent"

A report by Organisation for Economic Co-operation and Development (OECD) on Latin America’s economic outlook for 2011 after the global crisis, and the impact of that crisis on the middle class in Latin America, was presented today at the XLIII Lecture Series of the Americas of the Organization of American States (OAS).

In his presentation, the Secretary-General of the OECD, Angel Gurría, explained the main points of the report, which states that, despite the growing Latin American middle class, this group in large part continues to be economically very vulnerable.

"In the region we have the worst income distribution of all continents,” he said. “More than half the people in this group belong to the informal sector, which represents a very serious problem, as they do not have access to health services, unemployment benefits or pensions, and therefore they are at risk of falling below the mean, which is what we call the most vulnerable or deprived group. This indicates to us that the middle class is closer to the vulnerable groups than to the affluent.”

In his opening statement at the Lecture Series, which was held at OAS headquarters in Washington, DC, Secretary General José Miguel Insulza stressed that it is now regular practice to incorporate economic issues in the debates taking place within the institution and highlighted the report’s "novel approach" towards the middle class in Latin America. "It is very important for us to know the condition and characteristics of this sector and the social policies needed to address its needs," he said.

Gurría warned about the risk for countries of the region to be overconfident, given the ability they demonstrated in absorbing the impact of the financial crisis of 2009. He said that despite the good performance of the Latin American economies, informal work, which does not provide social protection to workers, is a permanent risk in all countries, even those that have had sustained growth. In this context, he was critical when referring to income distribution, noting that Latin America is the continent with the worst comparative figures, when measuring the highest and lowest incomes. He further warned about the lack of will by governments of the region to push tax reforms that improve the State’s capability to face socio-economic challenges.

Furthermore, Gurría referred to the policy recommendations contained in the 2011 report, including: reform of public financing to strengthen the social contract and offer better opportunities; the need to improve education systems, "which goes hand in hand with innovation, research and development”; the reduction of economic vulnerability and ensuring that more Latin Americans can move up to higher levels.

The report, presented to an audience that included analysts, diplomats, students and the general public, concludes that to cover future risks, governments must strengthen the position of the middle class through the extension of social protection, promoting upward social mobility through education, and strengthening the social contract to improve the quality of public services.

The Development Centre of the OECD, established in 1962, brings together 39 countries including 25 OECD member countries and 14 emerging economies, among which are: Chile, Mexico, Brazil, Colombia, Costa Rica, Peru and the Dominican Republic.

A gallery of photos of the event is available here.

For more information, please visit the OAS Website at www.oas.org.

Reference: E-468/10