The INDEC published Argentina’s official poverty stats for the first semester of 2023 on Wednesday. According to the report, 40.1% of the population is poor — roughly 11.8 million people. In only one year, the rate grew 3.6%. Put in numbers, there are 1.2 million more poor people in Argentina than in the first semester of 2022.

On its own, however, this overwhelming figure fails to fully reflect the recent changes in the country’s social structure nor its more salient features.

Roughly speaking, there are two types of poverty. First, there’s structural poverty — “a 25% of the population who lack decent housing, drinking water or sewage, access to energy, health, and education,” Agustín Salvia, director of the Social Debt Observatory of the Argentine Catholic University, tells the Herald. 

“They have never stopped being poor. In any case, despite [the government’s] social programs, their extreme poverty in income terms has deepened.”

Salvia, one of the leading experts in Argentina, says there is a second group made up of 15% of the population included in what is called “new poverty,” which is very different from the first group. This is the population that over the last 15 years fell from the lower and middle classes into poverty. 

“The people in this group actually have housing and access to basic utilities, as well as some social and educational capital. They obviously do not have enough to cope with inflationary dynamics and the lack of higher-paying jobs,” Salvia said.

Yearly inflation is 124.4% and salaries are falling behind. “Within this population, there is intergenerational deterioration — the younger members are poorer than previous generations were when they had the same age.”

The difference between both sectors — “new” and “structural” poverty — is quite clear for Salvia. “People [in the latter group] are strongly contained by welfare programs,” he said. He also pointed to a specific side-effect of inflation that helps their situation. 

Inflation is entangled with a higher circulation of money. This leads to a greater demand for goods and services and the multiplication of odd jobs in those popular sectors. “It is a vicious dynamic; I would even call it perverse, but it’s also functional,” he says, adding that this doesn´t happen with the middle class.

According to Salvia, employment and work opportunities for them are reduced because there is no more demand for labor, and salaries fall due to this sector of the economy’s high levels of competitiveness. 

Salvia includes formal, independent, and self-employed workers, as well as small businesspeople in this segment. “They struggle every day to survive and have a very high workload,” he said. “They’re the most vulnerable due to the lack of social programs and other policies.”

Formal workers and middle-class self-employed workers are now prone to fall into two categories that used to be exclusive to the informal sector — “the working poor,” the segment of full-time workers who still can’t make ends meet, and the “polyworking” sector, people who have multiple jobs instead of a single full-time occupation.

“There are jobs today, but with lower wages,” he said.

“The middle class is also the segment ripest for social explosion or conflict at this moment,” Salvia said. “The elections, however, give this segment an option through which to express its discontent.”

Salvia states that the first thing a new administration must do to fight poverty is achieve macroeconomic stability. He added that dollarization — proposed by libertarian candidate Javier Milei — is “certainly” not the best option. For Salvia, any stabilization plan will probably mean “adjustments” for income and taxes. However, the incoming government should fundamentally avoid doing anything that implies “a massive loss in jobs.”

“That would be the worst-case scenario and would effectively bring about a strong social convulsion, which I am not sure that our weak democracy is in conditions to support.”