| Dominican Republic | Mar 08, 2017
Inequality and poverty have persisted throughout the economic boom of recent years. In response, the Dominican government has taken a number of initiatives aimed at reducing poverty by increasing formal employment and boosting access to social services in previously underserved regions.
The natural beauty of the Dominican Republic stands in stark contrast to the deep and enduring poverty facing a large swath of its population. While the economy has posted strong growth in recent years, development has been unequal in nature; the poorest half of the population receives less than 20% of GDP, while the top 10% of Dominicans receive nearly 40%. An estimated 41% of its population lived below the poverty line in 2013, including half of all children.
To combat this persistent problem, a number of public and private initiatives are underway, all operating on a few shared themes: increasing formal employment, giving children and their families more resources, and improving access to the social services needed to improve health and educational outcomes. The global community has long since recognized that the Dominican Republic has been one of Latin America and the Caribbean’s strongest growth performers in the past two decades. Between 1992 and 2000, the economy grew at an average rate of 6.7%, and then from 2001 to 2013 it continued at 5.1% per year, maintaining a strong performance even through financial instability in 2002-2003 and 2008.
Despite this overall growth, the gains have not been evenly distributed. The financial crisis of 2003-2004 disproportionately affected the country’s poor, with the World Bank estimating that 1.7 million Dominicans fell into poverty as a result. In the years since, income growth has risen and inequality (as measured by the country’s GINI index) has fallen slightly, but the effects of the crisis still remain. The proportion of Dominicans living in poverty has dropped from 50% in 2004 to 32.3% in 2015, but mobility for poor Dominican families remains limited. The World Bank reports that just 2% of the Dominican Republic’s population moved up a social class over the past decade, an enormous difference from the 41% who did in Latin America as a whole. The vast gulf between the DR and the region speaks to the lack of available opportunities or social structures for the DR’s most vulnerable.
Stagnant real wages remain one of the most pressing issues and biggest barriers to alleviating poverty. The economic boom of recent years did not increase employment equally between industries; the financial services, telecommunications, and manufacturing sectors contributed greatly to the growth of the economy, but the number of Dominicans employed in these sectors remained low. The service sector, in contrast, has grown in size over the past decade, while real wages have remained stagnant or even fallen.
Compounding this effect is the widespread informality in the Dominican labor market, which often prevents people from accessing social services and leaves them without formal legal protections. To combat this, several programs have been implemented with two central goals: increasing educational levels to create a higher-skilled labor force and increasing formal employment options for young Dominicans. INFOTEP, the Dominican Republic’s National Institute of Technical and Vocational training, is a leader in this mission. Created by federal decree in 1980, it provides vocational training to young adults with the aim of producing a skilled workforce.
The government regards vocational training as an important step in its goal to improve the quality of the nation’s workforce, as investments there have the potential to make a significant impact, even for young adults without an extensive educational background. Though already in operation for more than 30 years, the institute is set to become an even bigger part of the DR’s anti-poverty efforts thanks to a recent USD75 million grant from the World Bank. Announced in 2015, the project aims to provide labor training and internships to more than 40,000 men and women through INFOTEP. The World Bank’s project funding includes a host of other anti-poverty efforts, including improving living conditions for the poorest Dominican families and a campaign to increase social health insurance registration. The effort is spread over a wide area, to better make an impact on rural poverty.
As in many other Latin American and Caribbean countries, rural areas of the Dominican Republic are disproportionately poorer and have less access to social assistance programs than urban areas. Many of the inhabitants are migrant workers living in dwellings that are often unregistered and makeshift in nature. Social registration efforts will have a number of positive effects for these communities; improved recordkeeping will help the Dominican government know what services are needed where, and improved building materials will help mitigate the destructive effects of flooding and landslides. Government officials recognize it is just the first step in a larger process, but sustained anti-poverty efforts such as these are important steps towards forming a more equal and well-developed society.