According to estimates by the Catholic University’s Prosperity Center, the people with the worst income decline are those who are already poor, and they have lost one-fifth of their income.
The crisis brought about by the pandemic caused 400,000 people in Portugal to fall into poverty, the risk of poverty rate has increased to 23%, and income inequality has increased. According to estimates by Prosper, the Centre for Prosperity of the Catholic University, Portugal’s richest 5% will now earn 8.3 times that of the rest of the population.
“Everyone’s income distribution has changed, but those below the poverty line are middle-class and become poor,” explained Joanna Silva, director of the center and one of the authors of the study, who is the study a part of. Income distribution data from the INE Living Conditions and Income Survey to simulate the impact of the decline in income last year on different groups, and to conduct it without a crisis. The estimate includes the impact of starting support, such as simplifying layoffs, but does not consider the impact of unemployment.
The study calculated that if there were no pandemics, the national median income would be 10,100 euros and the poverty line would be 6,060 euros. Among the people who just passed the 6,060 euro threshold before the crisis—for this reason they have been included in the middle class—the income of 400,000 people will fall, falling to poverty.
The study retains the imaginary poverty boundary line drawn to define this new distribution in the absence of a crisis. However, official poverty data tend to be more moderate when they are known, because a decrease in income will also lower the poverty line, resulting in a smaller proportion of the population being considered poor.
However, the choice is to remove this artificial filter to reveal the impact of the crisis. “It is precisely because of construction that there will be no poverty, because the median has also fallen,” Joanna Silva explained.
Considering all the income groups that have suffered losses, the rate of decline is not the same. After all, those who fall deeper into the social elevator are the poorest of the poor Portuguese, and they hardly earn one-fifth of their income.
“The Portuguese lost an average of 7% of their income, but if we consider the citizens who have suffered losses, we will find that the middle class loses about 15%, while the poorest people lose 19%”, the economist reports. Prosper.
This conclusion is consistent with the different effects on economic activity. As the Catholic Center’s analysis emphasizes, this has adversely affected more low-wage sectors and more low-skilled workers, as well as economic activities in a particular Algarve region.
Among the low- and middle-income groups who actually suffered losses, their income fell by 16%. As mentioned above, the actual loss of the upper-middle class who lost their income was about 15%. Finally, among the wealthiest people affected by the crisis, income fell by an average of 11% (see table).
Prosper economists estimate that due to changes in income distribution, inequality has increased by 9%, and the richest 5% in Portugal now have incomes 8.3 times that of the remaining 95% of the population (7.6 times in non-crisis periods only).
The research data-“The impact of Covid-19 on poverty and inequality in Portugal, and the mitigation of protection policies”-also reflected the impact of the support measures taken during the first childbirth last spring, and concluded that if not Her, everything will be worse.
According to simulations, in just eight weeks, the poverty rate will immediately increase by 22%, almost as much as the weight of the pandemic that will eventually disappear during the entire month of 2020 (the growth rate will be 25%, the second calculation). After measures were taken, the impact of the first state of emergency worsened by 3% during this period.