IMPACT OF THE COVID-19 CRISIS ON EMPLOYMENT AND INCOME IN PARAGUAYAN BORDER CITIESABSTRACT
This paper analyzes the impact of the Covid-19 pandemic on three Paraguayan cities: Asunción, Ciudad del Este and Encarnación. Through qualitative and quantitative data, we have identified different socioeconomic impacts according to factors such as gender, social class and labor market participation. The results also show that negative impacts have been exacerbated in areas where populations have historically relied on cross-border relations.
KEYWORDS: Covid-19; social inequalities; intersectionality; borderlands; Paraguay
RESUMO
Este artigo analisa o impacto da pandemia de Covid-19 em três cidades paraguaias: Assunção, Ciudad del Este e Encarnación. Por meio de dados qualitativos e quantitativos, identificamos diferentes impactos socioeconômicos de acordo com fatores como gênero, classe social e participação no mercado de trabalho. Os resultados também mostram que os impactos negativos foram exacerbados em áreas onde as populações historicamente dependiam de relações transfronteiriças.
PALAVRAS-CHAVE: Covid-19; desigualdades sociais; interseccionalidade; áreas de fronteira; Paraguai
INTRODUCTION
The Covid-19 pandemic has triggered a global economic, health and social crisis that has hit Latin America hard, where about 26 million people lost their jobs in 2020 (Maurizio, 2021). As a result, the region’s already high levels of inequality have been exacerbated, while the recovery has been marked by an increase in precarious and informal occupations, which in turn contributes to the reproduction of these inequalities. Moreover, precisely because of the importance of informality and the low coverage of unemployment insurance in the region, income loss has been a serious problem for a significant proportion of the population.
This paper analyzes the socioeconomic impact of the Covid-19 pandemic on the population of three of the most important Paraguayan cities: Asunción (the capital), Ciudad del Este and Encarnación. Through quantitative and qualitative data, we have identified different impacts according to factors such as gender, social class, labor market participation, and region. For this purpose, we have conducted a survey and a series of focus groups in each city.
The text is divided into six parts. In the second part, we present our analytical approach based on an intersectional perspective that allows us to visualize how pre-existing inequalities based on gender and class regimes, among others, have been exacerbated by the Covid-19 crisis. We also discuss the importance of contrasting effects in territories that, although part of the same national territory - in the case studied, the Republic of Paraguay - have experienced different impacts depending on their model of intra and international integration. In the third section, we provide a brief description of the Paraguayan context in view of the declaration of a public health emergency. In the fourth section, we describe the methods used to collect and analyze data. The main results obtained are presented and discussed in the fifth section, which confirms that the economic impact of the Covid-19 pandemic was not homogeneous, identifying factors associated with greater negative impact on the populations studied. The final section presents the conclusions, highlighting that not only did the pandemic and its containment measures produce and reproduce inequalities, but also that pre-existing inequalities undermined the response to the crisis, creating a vicious circle.
Focusing on Paraguay allows a deeper understanding of how people in contexts with high levels of inequality and lack of social security were affected by both the Covid-19 pandemic and its containment measures. The focus on border cities also highlights the impact of border closures on places where cross-border connections have historically been fluid and where support in transnational networks has been a common coping strategy.
EXACERBATION OF SOCIAL INEQUALITIES AND BORDER DYNAMICS
We are all in the same boat. This was a common refrain in the early months of the Covid-19 pandemic. Press articles, blog posts, religious authorities, and celebrities1 repeated that the health crisis affected all of society equally, that no one was safe until everyone else was safe. While this idea certainly was echoing at the time, and perhaps to some extent even fostered a willingness to help those affected (Resta et al., 2022), it soon became clear that the risks varied considerably depending on one’s position in society. Today, years after the pandemic was declared, we know that certain groups were more affected by mortality, such as the elderly, people with health problems, members of households below the poverty line, immigrants, and ethnic/racial minorities within countries. These developments have led some authors to favor the term syndemic (Bambra ; Lynch; Smith, 2022; Horton, 2021), drawing attention to the biological and social interactions that must be taken into account when analyzing Covid-19 infection and mortality rates.
Mobility restrictions, although necessary to prevent the spread of infection, have had significant socioeconomic costs that have affected people at different positions on the social ladder in many ways. In addition, although governments have stepped in with subsidies and social programs to mitigate the effects of containment measures, not all countries have the resources to protect their economies and citizens from the backlash that the closures of borders, schools, industries, businesses, etc. have caused. In fact, since the beginning of the Covid-19 crisis, the increased vulnerability of the Latin American region due to the lack of infrastructure, the underfunding of social services and the fragmented access of the population to them has been a major concern (Benza; Kessler, 2022).
We see then that, although the crisis had the same global trigger, its impact varied greatly depending on local conditions in terms of access to health care and social protection. In this sense, high levels of informality in the labor market, low coverage of social protection programs, poor housing conditions, as well as low levels of connectivity and access to technology have acted as catalysts of the crisis, making the pre-existing social inequalities much more visible and creating new ones that are based on the previous ones. Indeed, several studies have rightly drawn attention to the increase and exacerbation of social inequalities in the region (Batthyány; Sanchez, 2020; Benza; Kessler, 2021; Bottan ; Hoffmann; Vara Cossio, 2020).
According to Marianne Braig, Sérgio Costa and Barbara Göbel (2013), the inequalities this text focuses on refer to the distances between positions assumed in a context of hierarchically organized access to relevant social goods (income, wealth, land, etc.) and power resources (rights, participation and political position, etc.). Institutional, structural and symbolic factors influence the production of this hierarchical order, creating axes of stratification based on regimes of class, gender, race, ethnicity, citizenship or migrant status, and so on. These axes of stratification, in turn, are in an interdependence relation, as indicated by the intersectional approach, which advocates the simultaneous consideration of multiple dimensions that can create vulnerabilities and power imbalances (Crenshaw, 1994). For example, although we know that the increased burden of care resulting from the closure of educational centers in 2020-2021 has fallen mainly on women, not all women have suffered the consequences to the same extent, but those belonging to families from lower social classes were the most affected (Rojas et al., 2024). This perspective allows us to understand how social inequalities are the result of complex processes in which different spheres of social life intertwine, highlighting convergences and divergences within and between social groups.
Our focus on Paraguay confronts us with a country historically marked by deep social inequalities, where there is a significant and permanent division between a small middle and upper class, on the one hand, and a large majority of disadvantaged population, on the other (Caballero Merlo, 2006). The socioeconomic structure is based on a process of capital accumulation that perpetuates and deepens this division, with a tax system that is largely based on indirect taxes. Furthermore, Paraguay is a country where urbanization has occurred through de-ruralization rather than industrialization. This has led to the emergence of a significant informality of urban labor, which has contributed to an ongoing system of surplus extraction between classes that perpetuates existing inequalities and progressively reduces access to goods and services for the majority of the population (Ortiz, 2016). It is important to note that the prevalence of labor informality is particularly pronounced in border areas, where the potential for a border market emerges as a response to a capitalist development model that excludes a significant proportion of the population from formal labor markets (Fogel, 2005).
This text examines the impact of the Covid-19 pandemic on the hierarchies and inequalities that existed prior to the crisis. It also considers how these inequalities have influenced the state’s capacity to respond to the health and economic challenges posed by the pandemic. Our analysis also includes a geographical dimension, comparing data from three cities that, although sharing the characteristic of proximity to international borders, differ in their form of national and international integration. In two of the three cases, the border directly shapes multiple, strong and historical social networks, as we will see. The term borderlands, coined by Michiel Baud and Willem van Schendel (1997, p. 216), accurately describes a scenario of “intense interactions in which people on both sides work out everyday accommodations based on face-to-face relationships”. As distant urban centers of the country’s capital, the populations of Ciudad del Este and Encarnación have developed strong ties with their neighbors across the border. In this sense, although the analysis concentrates on the Paraguayan context, the focus on border areas allows us to recognize that in these cases it was not only the measures decreed by the Paraguayan government that affected the local population, but also the actions and restrictions imposed on the other side of the river. In turn, the closure of border crossings as a strategy to contain the spread of Covid-19 has had strong impacts that have affected certain population groups more intensely.
THE PARAGUAYAN CONTEXT AND THE DECLARATION OF A STATE OF EMERGENCY
Paraguay was one of the first countries in Latin America to declare a total lockdown in early 2020. The first containment measures were taken on March 10, just three days after the first confirmed case of Covid-19 in the country. These measures included the closure of schools at all levels, the cancellation of public events and meetings, the partial closure of borders, and the imposition of a curfew. On March 20, 2020, stricter measures were added to those already in place, and a full movement restriction was implemented. Schools at all levels have had virtual classes for almost two years, since teaching only returned to being 100% face-to-face in the last two months of the 2021 school year. The Government Stringency Index - a composite measure based on nine response indicators, such as school and workplace closures and travel bans, ranging from 0 to 100 - remained above 90 during the period from March 23 to May 24, above 80 until October 4, and then slowly declined, remaining around 50 until mid-2021, with occasional increases (Mathieu et al., 2020).
Despite being a country with a centralized government, the local situation and the severity of containment measures varied somewhat from region to region. In part, this was due to decisions made by neighboring countries. For example, while the bridge connecting Ciudad del Este to the Brazilian city of Foz do Iguaçu was closed by decision of the Paraguayan government between March and October 2020 (for seven months),2 the border between Encarnación and the Argentine city of Posadas remained closed for 19 months (March 2020 to October 2021),3 and the entry points to Clorinda, an Argentine city near Asunción, for 21 months (until December 2021),4 in the latter cases due to restrictions imposed by Argentina. In turn, the different periods of closure, combined with the different levels and models of integration that these cities have developed with their border neighbors, were translated into differentiated effects on the inhabitants of these areas.
Ciudad del Este (CDE), for example, has experienced a strong economic impact despite a relatively short period of border closure. This city is a commercial hub in the Triple Border, at the intersection of Paraguay, Brazil and Argentina. While CDE and its Brazilian neighbor Foz do Iguaçu have been described as “interdependent and inseparable twin cities” in which an “economic emporium” has developed, relations with Puerto Iguazú on the Argentine side have been less dynamic (Elmaleh, 2021). The establishment of CDE as a free trade zone in the 1960s soon transformed the then young and small town into an attractive center for the acquisition of duty-free products and international brands that were too expensive or unavailable in neighboring countries. An international trade network then emerged, first with the Brazilian middle class as the main customer, and later as a link of an industrial-scale circuit supplying imported goods (mainly from Taiwan and China) to the informal markets of Brazil. Since then, CDE’s economy has relied heavily on cross-border trade, and a significant portion of the population remains economically dependent on “shopping tourism,” even though changes in the international political economy have reduced triangular trade flows between Paraguay and Brazil (Pinheiro-Machado, 2018).
Encarnación has also developed a strong trade integration with its Argentine neighbor Posadas. However, the asymmetries between these cities are much greater than in the case of CDE and Foz do Iguaçu. In this sense, while CDE and Foz have a ratio close to 1:1 in terms of population, Posadas has three times more inhabitants than Encarnación (see Table 1), which in turn results in an asymmetric supply of public services.
In fact, being 370 km away from the capital, Encarnacenos and Encarnacenas have historically resorted to crossing the bridge to Posadas to receive medical care, especially in complex cases (Fantín, 2008). Therefore, the Covid-19 pandemic not only represented an economic shock for this city and its surroundings, but also exacerbated the lack of health services and disrupted established coping strategies.
In the case of Asunción and the Argentine city of Clorinda, the situation is diametrically opposed to the one just described. As the capital of Paraguay, Asunción not only has ten times the population of Clorinda, but also a wide range of public services, although access to quality services remains highly fragmented and unequal. Crossing the border is not a frequent activity for Asunción’s inhabitants, and the economy of the city does not depend on its foreign neighbors. However, it is important to clarify that Asunción is not directly on the border: there is a small buffer zone between Clorinda and Asunción, in the Chaco region (see Figure 1), where border integration is much more dynamic. This means that the crossing points to Clorinda are actually in the municipalities of José Falcón and Nanawa. Asunción, on the other hand, extends inland in the eastern region of Paraguay, turning its back to the river and the border with Argentina, as evidenced by the development of its metropolitan area.
The government’s rapid response and high population adherence to containment measures in the early months of the Covid-19 pandemic helped contain the infections. In fact, at the beginning of July 2020, Paraguay was internationally recognized as a case of success in the fight against Covid-19 (Bakker; Roy, 2020). However, the strict restrictions could not be maintained for long and had to be relaxed, leading to an increase in infections and deaths. One year later, in mid-June 2021, Paraguay topped the list of countries with the highest per capita mortality, registering 19 Covid-19 deaths per million, compared to 1.82 in India, 1.05 in the United States, 9.32 in Brazil, 11.28 in Peru, and 12.93 in Argentina (Costa et al., 2021; Mathieu et al., 2020).
The socioeconomic consequences of the containment measures have had a strong and lasting impact on the Paraguayan economy, which, after a year of economic stagnation in 2019, expected to see a year of recovery in 2020 (UNDP, 2020). At the level of the labor market, official data show that the employment rate fell by 4.3 percentage points between the second quarter of 2019 and the second quarter of 2020 (from 65.9 percent to 61.6 percent), with a much larger decline for women (6.4 percentage points) than for men (2.0 percentage points) (Reinecke et al., 2020). Although employment started to recover in 2021, it was still characterized, just like in the entire region, by occupations in the informal economy (Maurizio, 2021), a historical feature of the Paraguayan labor market (Reinecke et al., 2020).
Moreover, when this indicator began to improve at the end of 2020, women had more difficulty reentering the labor market, while men quickly returned to pre-pandemic levels. As a result, not only the proportion of women out of the labor market increased, but also the gender disparity in this regard, which rose from 24.7 percentage points in the first quarter of 2020 to 26.8 in the third quarter (Serafini, 2020). However, as we will see in the analysis of our data, gender regimes were not the only factors determining a differentiated impact on populations. Other ones, such as social class, type of labor integration, and area of residence, have influenced the degree of response to the crisis in order to mitigate its negative effects.
METHODS
The study presented a mixed methods design based on two central components: a telephone survey and three focus groups in each city. For the telephone survey, a stratified probability sample of people (18 years and older) residing in Asunción, Ciudad del Este and Encarnación was selected (n=3600 effective cases, segmented into three sample areas of 1200 cases each). This was adjusted for different response rates according to gender, age and social conditions.5 We decided to conduct a survey that would allow both households and individuals to be considered as the unit of analysis. In this sense, while some questions referred to the individual characteristics and conditions of the respondents, others focused on the situation of their households. The survey was conducted in the last months of 2021.
To analyze the impact of the pandemic in terms of social class, and given the difficulties in obtaining reliable data on income, a socioeconomic stratification model was developed. This model estimated the monthly values of per capita income for each household, allowing each unit to be classified according to its position as measured by percentiles. This information was used to group households into three categories (poor population, vulnerable population, and upper and middle class), which made comparisons easier. More details on the construction of the socioeconomic stratification model and the social class variable, as well as the questionnaire and databases used, can be found in Rojas and Lachi (2022).
In the analysis of the quantitative data, we applied comparative distributions and logistic regression models, which allowed us to evaluate the factors associated with the loss and subsequent recovery of employment, as well as the decrease in household income in the context of the hard lockdown in Paraguay. To this end, a number of variables that affect employment and income were considered, such as the gender both of the respondent and of the household main breadwinner, the income level, the access to health insurance, the city of residence and the educational level of the main breadwinner.
In order to assess the intensity of the abovementioned factors on three types of events (1: loss of employment and/or reduction in working hours; 2: recovery of employment after losing it; and 3: reduction in household income due to the Covid-19 pandemic), three binary logistic regressions were developed, in which the actual occurrence of these situations (dependent variables) was classified as “1” and their non-observance as “0”. The relation between these variables and each of the associated factors (independent variables) makes it possible to demonstrate - through odds ratio coefficients - the incidence and intensity concerning a reference value. The application of this methodology is similar to that developed by Juan Ignacio Bonfiglio, Agustín Salvia and Julieta Vera (2020) for the case of the Metropolitan Area of Buenos Aires.
These multivariate models were constructed considering that it is expected that structural characteristics related to the gender of the respondent or the primary breadwinner, as well as to the area of residence or to labor and economic conditions, have an impact on the probability of losing a job, regaining a job, and experiencing a decrease in household income. In other words, the proposed logistic regression model seeks to assess the extent to which the various demographic, socioeconomic, and work characteristics of the household and/or the respondent predict the risks associated with job and income loss during lockdown.
In addition, we conducted three focus groups in each city to obtain qualitative and more detailed information about the impact of the Covid-19 pandemic on different population groups. Due to the focus of this text, we mainly use results from group interviews with people whose employment situation was negatively affected by the pandemic.
RESULTS AND DISCUSSION
Paid work: loss and recovery
In all three cities, more than 50% of respondents who reported being economically active at the onset of the pandemic experienced a negative impact on their employment status. And although Asunción was the city where the highest percentage of respondents lost their jobs due to the pandemic, it was also the place where the recovery was fastest. Ciudad del Este, on the other hand, had the highest percentage of respondents who were still unemployed at the time of the survey (November-December 2021). However, given that self-employment and informality are salient features of the Paraguayan labor market, it is also necessary to consider those who reported working fewer hours or having fewer clients, a response that was more common in CDE and Encarnación (see Figure 2).
Impact on paid work (% of economically aclive respondents). Population of Asunción, Ciudad del Este y Encarnación, 18 years and older (2021)
When analyzing the impact on employment by groups within each city, our data confirm some trends already observed by other studies in the region (e.g., Benza; Kessler, 2022). In this sense, although men and women showed a similar level of job losses, women were still experiencing greater difficulties in terms of job recovery at the time of our survey (last months of 2021), as can be seen in Figure 3.
Job loss and recovery as of December 2021, by sex (% of economically active respondents). Population of Asunción, Ciudad del Este y Encarnación, 18 years and older.
It is important to recognize that the recovery of employment or the reactivation of income-producing activity may not always be a reliable indicator of economic stability, as it can often mask situations of significant vulnerability. As a worker shared in a focus group:
I owned a bakery before the pandemic. I produced and sold my own goods. The pandemic had a significant impact on my business, and, in order to survive, I was forced to sell everything I had. Now I am producing my goods again, but I only sell them at traffic lights. (Worker, focus group in Asunción, March 2022)
The logistic regression models addressed the observations made in the comparative reading. Table 2 shows the incidence and strength of several factors that affected the likelihood of job loss or hours reduction due to the Covid-19 pandemic in the three cities, as well as in each city individually. The factors considered were city, gender, economic status, and health insurance coverage.
When considering all three cities together, the geographic factor of residing in Ciudad del Este or Encarnación, as opposed to residing in Asunción, does not have a statistically significant effect. However, there is a relative worsening situation observed in Ciudad del Este, with a 10% greater probability of losing one’s job or working fewer hours compared to Asunción. Additionally, no major negative differences were found between women and men.
In terms of the economic impact of the pandemic, it is clear that the most disadvantaged sectors of society were disproportionately affected. The population living under poverty6 had a 78% higher likelihood of losing their jobs or experiencing reduced work hours due to the pandemic, in comparison to those in the middle and upper classes. Similarly, those in vulnerable positions7 had a 51% higher probability of job loss or reduced hours compared to those in higher income brackets. Data indicates that the impact of the pandemic on employment is more severe for those in lower-income groups.
Similarly, having health insurance appears as the single most important factor in protecting jobs and hours worked.8 Individuals without this benefit were 2.9 times more likely to experience job loss or reduced hours compared to those with health insurance. The impact of the pandemic on the sustainability of employment and working hours is evident among those who do not have access to contributory mechanisms of social protection: health insurance is often used as a proxy for formality, although it also includes those who have private health insurance.
The breakdown of results by city reveals similar findings to those identified for the entire sample. Notably, the lack of health insurance in Asunción is an even more significant factor associated with job loss or reduced working hours, with a 3.49 times higher probability compared to those who have the benefit. The impacts were more pronounced in Encarnación, where individuals in the lower-income groups were almost three times more likely to lose their jobs or have work hours reduced than those in the middle-upper classes, while those in the vulnerable group were twice as likely to lose their jobs or have work hours reduced than the reference group. In summary, in the case of Encarnación, belonging to economically disadvantaged sectors and not having health insurance (interpreted as a proxy for informality) were factors that particularly accentuated the effects of the pandemic on job retention and working hours.
Within the sub-universe of people who lost their jobs due to the Covid-19 pandemic, it was interesting to know the incidence of the same structural factors used in the previous model (city, gender, economic status and health insurance) in order to identify their potential role as barriers to employment recovery. For this purpose, a logistic regression model was developed and applied only to those who lost their jobs due to the pandemic. The dependent variable used was the state of not regaining employment and remaining unemployed (value “1”), as opposed to the state of having lost employment and later regaining employment or being placed in another job (value “0”). The results for the three cities together and for each of them are presented in Table 3.
When analyzing the phenomenon of job loss and the obstacles to economic recovery, clear differentiating factors can be observed. Economic activity recovery was more difficult for those who lost jobs in Ciudad del Este, with a 2.33 times higher probability of remaining unemployed compared to those in Asunción. People experiencing poverty who lost their jobs were 2.59 times more likely to remain unemployed than those who lost their jobs but belonged to the middle and upper classes. This phenomenon was not observed for those in the vulnerable class when considering all three cities. Women were 60% more likely than men to be unable to regain their jobs. Additionally, those without health insurance faced a 92% greater difficulty in recovering their jobs compared to those with insurance.
A city-by-city analysis shows that the recovery process differs from the general trend described above. In Asunción, women were more affected, with a 2.66 times higher probability of not recovering their jobs compared to men.
In Encarnación, women who lost their jobs faced only slightly more obstacles than men in recovering economic activity. This difference (15%) is not even statistically significant. Additionally, those belonging to the vulnerable stratum had a notably higher possibility of recovering economic activity (73%) than those in the middle and upper sectors. This aspect suggests a differentiated dynamic in the local labor market for intermediate informal occupations. There are unique elements that distinguish the recovery process from the general trend described above.
Finally, in Ciudad del Este, all structural factors had a negative impact on job recovery to varying degrees. Women faced 46% more difficulties than men, and those without health insurance were twice as likely to not recover compared to those with the benefit. This accentuation was also observed across economic status gradients. Individuals from the vulnerable stratum were 2.65 times less likely to recover compared to those in the middle-upper classes. Among the poor, the probability of not recovering was 5.39 times higher than that of the reference group.
Household income variation
These unequal effects are even more obvious when analyzing changes in household income. Across the studied cities, the trend is clear: while households in percentiles 1 to 70 (classified as poor and vulnerable population, as described in Rojas and Lachi (2022) were more affected by the reduction in income during the period of hard lockdown (March-October 2020), households in the 71st percentile and above (middle and upper classes) showed greater stability (Figure 4a). The application of the survey almost two years after the implementation of the containment measures in Paraguay allowed us to call into question the long-term effects on household income. We have found that about half of the people whose incomes were reduced during the tightening of containment measures were still living in the same circumstances, and that some of them had experienced further reductions in incomes (Figure 4b). Furthermore, although only a small percentage reported an increase in income between March and October 2020, for the majority this situation has remained or their incomes have continued to increase, suggesting a worsening of income inequality.
Variatian in hausehold income during the period of hard lockdown. Asunción, Ciudad del Este and Encarnación (2021)
Recovery of hausehold income as of December 2021 for those who declared variation during the period of hard lockdown. Asunción, Ciudad del Este and Encarnación
In order to analyze the role of structural factors in the income decline situation during the pandemic, we applied a logistic regression model similar to the one used in the previous section (Table 4). In this case, the dependent variable was classified as “1” for those who reported that their household income decreased, and “0” for the remaining cases (those who increased or maintained their income, as well as those who did not know). Aiming to assess the impact of variables at the population level, we considered the gender, education level and health insurance of the main breadwinner as the reference person in the household.
Geographic differences in income reduction are evident when considering all cities as a whole. Households in Ciudad del Este showed a 37% higher incidence compared to those in Asunción, and in Encarnación this level rises even higher, reaching 86%. The economic condition is a relevant factor, with 62% of poor households affected compared to those from the middle and upper classes. Vulnerable households experienced a 47% higher worsening than the reference group. Having a main breadwinner with health insurance is the most discriminating factor, which is to be expected since it is a proxy for formal employment. Households with an uninsured main breadwinner are 2.3 times more likely to lose income than households whose main breadwinner has health insurance.
There are some unexpected results in addition to the aforementioned ones. Female-headed households reported a 26% smaller drop in income than male-headed households. One possible explanation for such phenomenon is that in two-parent households where the man is the main breadwinner, the woman is more likely to reduce or cease her participation in the labor market due to having more care responsibilities in the context of the restrictive measures imposed by the pandemic. This may have a negative impact on household income. Female-headed households are often single-parent households. As the sole breadwinners in the household, these women had no choice but to remain active in the labor market.
On the other hand, households headed by individuals with secondary education have experienced the greatest reduction in income, with a 55% decrease compared to those headed by individuals with a university education. Meanwhile, households headed by individuals with a primary education have been impacted by only 7% more than those headed by individuals with a university education. The pattern’s replication by city reveals a disparity in Encarnación. In this city, the impact of the income decrease among the poor was much more noticeable (3.24 times greater than that observed among the middle-upper classes), becoming the most significant structural factor. Likewise, the evidence indicates that the impact is greater on lower levels of education. Households headed by individuals with primary education experienced a 56% decline, while those with secondary education experienced an 85% decline, compared to households headed by individuals who attended university.
We have confirmed the slow or failed recovery of the lower social classes through data from focus groups. During the discussions held in the first quarter of 2022, interviewees elaborated on their difficulties. They noted that their incomes remained low and that food inflation forced them to continue implementing palliative measures, such as reducing meat consumption.
The pandemic has ended, but for me almost nothing has changed.
(Worker, focus group in Ciudad del Este, March 2022)
We poor people have yet to fully recover, and now the food prices are increasing. It seems that things will never be the same as they were before.
(Worker, focus group in Asunción, March 2022)
TENSIONS OVER BORDER CLOSURES
In line with what was seen in the previous sections, it is in the border areas that the population reports the negative effects related to the closure of international crossings. In this regard, more than half of those people interviewed in CDE (52.3%) and Encarnación (54%) attributed the reduction in their income to the border closures, compared to only 6.3% in Asunción. It is not surprising, therefore, that the population of the first two cities was less supportive of this containment measure: while 87.3% of the population of Asunción stated that the border closure was necessary to contain the spread of Covid-19, this percentage dropped to 69.8% in Encarnación and 66.3% in CDE, data that are consistent with the numerous demonstrations that took place in these two cities to demand the opening of their international bridges.9
According to the focus group accounts, individuals in the lower percentiles perceived the border closure as unfair. They pointed out that those people working for big companies were able to cross the border to purchase goods, while retail and informal traders were not allowed to do so. This unequal application of restrictions reinforced the existing inequality between small and large traders.
We were hungry and we closed [the bridge] because the truckers were working. We closed it so they could not cross. They were working normally as if there was no pandemic. For their bosses, there was no pandemic. That’s when we decided to close the bridge. The retail workers joined in, all the vendors. (Female worker, focus group in Encarnación, April 2022)
In addition, the contrast between the cities reveals the different models of cross-border integration mentioned above, where the divided/shared history (Randeria, 1999) of Encarnación is striking. Furthermore, extreme situations were created for the inhabitants of this city due to their high dependence on the health services of neighboring Posadas.
Being so dependent on the Argentines made me feel very helpless. There came a time when I felt trapped in my own country … It came to a breaking point when a neighbor died, and the next day his wife, and we had no intensive care unit, nothing. People were dying all the time, and the government was doing nothing, and Argentina was not opening up, and I said, “We’re alone”. (Worker, Encarnacion focus group, April 2022)
Faced with the inadequate capacity of the state to provide for its citizens, Paraguayans have historically resorted to a variety of strategies to meet their needs. But these practices may soon reach the limit, as the pandemic has shown. When the borders were closed, when many people experienced a reduction or loss of income and were deprived of their cross-border strategies, the crisis was aggravated, resulting in the exacerbation of inequalities based on social class, labor insertion and region of residence.
In turn, the long-awaited reopening of borders did not lead to a recovery of previous trade levels. As a study carried out by the Mercosur Social Institute (ISM, 2021) points out, the entire system was modified. In addition, the less favorable exchange rate differential with Argentina, which had already been a problem since 2018, was reinforced, affecting Paraguayan cities that depended on tourist purchases from the neighboring country (UNDP, 2020). A similar situation occurred in Ciudad del Este, which even before the pandemic was already experiencing lower levels of sales due to the decrease in purchasing power of the Brazilian population (ISM, 2021).
An analysis of the border areas on both sides of the river also reveals uneven effects. In the case of Encarnación/Posadas, for example, the border closure benefited local businesses in the Argentine city, since residents were unable to shop in Encarnación. The province of Misiones, noticing the difference in its income, asked the Argentine government for a differentiated tax regime that would allow lower import taxes and greater competitiveness for local businesses, thus discouraging the systematic shopping of the Argentine population in Encarnación (ISM, 2021). The reduction in trade caused by the closure of the border has thus led to deeper changes that will have an impact far beyond overcoming the crisis caused by the pandemic.
CONCLUSIONS
Inequalities are deeply entrenched throughout the region. Although the last two decades have seen a reduction in poverty and inequality in Latin America, this trend has been reversed due to the impact of the Covid-19 pandemic (Acevedo et al., 2022). Paraguay is no exception in this regional panorama.
In this article, we have offered an analysis of quantitative and qualitative data that help us to understand how existing inequalities were exacerbated. In this sense, we have described how certain population groups experienced the health crisis, while at the same time identifying the factors associated with a higher risk of suffering the negative effects of the pandemic. Although virtually the entire Paraguayan population had to adapt to containment measures during the most severe phases of the quarantine, our data showed that the economic impact of these measures was not homogeneous across the population. Households in the lowest income percentiles, people working informally, and those dependent on cross-border trade were particularly affected by the loss of jobs and income. Moreover, two years after the imposition of the containment measures, these groups were still far from full recovery.
Undoubtedly, the main predictor of the negative economic consequences of quarantine measures is the lack of access to social security. This measure, which is considered a proxy for informal employment, underscores the importance of having services that can provide a safety net in the face of crises such as the one unleashed by the Covid-19 pandemic. Despite being evident globally, it is even more so in Paraguay, a country where about 70% of the working population works informally (Reinicke et al., 2020), 73% of the population has no health insurance, and only about 20% has ips insurance (Gómez; Escobar, 2021). Given this scenario, it is not surprising that the negative effects of the pandemic were so widespread. Faced with the loss of income and without unemployment insurance, or with significant health expenses without the minimum guarantees of basic coverage, the Paraguayan population has had to face an economic, health and social crisis. Added to this the lack of public services in places far from the capital and the impossibility of resorting to traditional coping strategies - such as crossing the border to access health services -, the scenario is even more complex.
In this sense, our analysis has shown that the Covid-19 pandemic and its containment measures not only produced and reproduced inequalities, but also undermined the response to the crisis, creating a vicious circle.
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See “Paso Falcón-Clorinda: la reapertura es un alivio para sector transportista internacional” (2021). It should also be noted that initially the daily number of crossings was limited and subject to certain restrictions. Only in April 2022 was the crossing possible without quotas and continuously and permanently, 24 hours a day (“Argentina libera los pasos fronterizos de Falcón y Nanawa: el tránsito será permanente y sin cupos”, 2022).
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5
With a confidence level of 95% and P=Q, the error for the whole sample is 1.63%. Under the same parameters, the sampling error for the individual sample areas of Asunción and Ciudad del Este is 2.82% and for Encarnación 2.81%.
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6
To classify individuals by income, those living in households at the lower 25th percentile were considered part of the “poor” population.
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7
Respondents whose households were located between the 26th and the 70th centile of the income distribution were defined as belonging to the “vulnerable” population.
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8
Individuals with health insurance are primarily formal salaried workers who actively contribute to the compulsory social security system (Instituto de Previsión Social, ips) along with their dependent family members. This group also receives short- and long-term social protection benefits.
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9
See “Comerciantes piden ‘a bocinazos’ la apertura inteligente de las fronteras” (2020); ROA (2020a, 2020b); “Paseros mantienen bloqueo a aduanas en Encarnación” (2020); “Protestas logran reapertura del puente y se genera esperanza para la economía” (2020).
Data availability
Data citations
Rojas, Raquel; Lachi, Marcello. Socioeconomic Impacts of the Covid-19 Pandemic and its Containment measures on Paraguayan Border Cities. GESIS Data Archive, 2022. Available at: <Available at: https://doi.org/10.7802/2432 >. Accessed on: Oct. 18, 2024.
Publication Dates
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Publication in this collection
20 Jan 2025 -
Date of issue
Sep-Dec 2024
History
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Received
01 Feb 2024 -
Accepted
03 Sept 2024
Source: 
Chart elaborated by the authors. Source: Survey: Socioeconomic Impacts of the Covid-19 Pandemic and its Containment measures on Paraguayan Border Cities. Gesis Data Archive, 2022.
Chart elaborated by the authors. Source: Survey: Socioeconomic Impacts of the Covid-19 Pandemic and its Containment measures on Paraguayan Border Cities. Gesis Data Archive, 2022.
Chart elaborated by the authors. Source: Survey: Socioeconomic Impacts of the Covid-19 Pandemic and its Containment measures on Paraguayan Border Cities. Gesis Data Archive, 2022.
Chart elaborated by the authors. Source: Survey: Socioeconomic Impacts of the Covid-19 Pandemic and its Containment measures on Paraguayan Border Cities. Gesis Data Archive, 2022.