El Salvador is presented with a significant opportunity to further reduce poverty levels, despite having made notable progress over the past two decades. By 2023, approximately 600,000 Salvadorans, or 9.3% of the population, were still experiencing extreme poverty.
The country has seen improvements in violence reduction and macroeconomic prospects, which have led to its classification as a high-middle-income nation by the World Bank. These advancements provide a chance to alleviate poverty more rapidly, especially for those in extreme conditions. To achieve this goal, there is a need for inclusive growth and enhancements in labor market dynamics and household income.
Globally, improving employment quality is crucial for combating poverty. El Salvador faces challenges like low productivity and disincentives for formal work. As a result, the labor market is marked by informality and high female inactivity rates.
Solidarity support networks play an essential role in addressing poverty in El Salvador. One-fourth of Salvadorans live in households receiving remittances from abroad, while one-fifth receive domestic transfers. These networks are vital for maintaining household well-being; if disrupted, extreme poverty could double.
A report suggests three pillars to tackle poverty and inequality: employment, social protection, and services. Strengthening the macroeconomic context and business environment is necessary to attract investments that create jobs. Improving labor markets' functionality and facilitating access to quality jobs are also critical steps.
In rural areas where extreme poverty is prevalent, policies promoting development and agricultural productivity are crucial. Given fiscal constraints, creating space for targeted social protection programs and enhancing services such as housing access and food security are needed.
From a medium- to long-term perspective, improving educational outcomes across all ages will be essential due to evolving skill demands in the workforce.
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