Social Protection, Poverty and Inequality: the Latin American Experience
Social Protection, Poverty and
Inequality:
the Latin American Experience
Simone Cecchini
Social Development Division
Economic Commission for Latin America and the Caribbean (ECLAC)
Asia Public Policy Forum: Poverty, Inequality and Social Protection
Jakarta, Indonesia, 29-30 May 20113
Over the last 30 years, the socio-economic performance of Latin America has been much weaker than East Asia’s (1) GROSS NATIONAL INCOME PER CAPITA, ANNUAL RATE OF GROWTH, 1980-2011
Over the last 30 years, the socio-economic performance of Latin America has been much weaker than East Asia’s (2) UNEMPLOYMENT RATE, 1990-2009
Over the last 30 years, the socio-economic performance of Latin America has been much weaker than East Asia’s (3) EXTREME POVERTY HEADCOUNT, $1.25 PPP A DAY LINE, 1981-2008 EAP/LAC ratio: 6.5 EAP/LAC ratio: 2.2
Latin America is a middle-income region.. GROSS DOMESTIC PRODUCT PER CAPITA (PPP DOLLARS), BY WORLD REGIONS AND GROUPINGS, 2011 38,582
40000 35000 30000
a it p a
25000
c r e p
20000
rs a ll 14,306 o
15000
d 11,582 P
11,019 P P
10000
7,266
3,2955000
2,219
Sub- South Asia East Asia & Middle East Latin Europe & High Saharan Pacific & North America & Central Asia income:
Africa Africa Caribbean OECD
.. ..but it is the region with the most unequal income distribution in the world GINI COEFFICIENT, BY WORLD REGIONS AND GROUPINGS, 2011
Source: Prepared by the author, on the basis of ECLAC (2013), Social Panorama of Latin America 2012; OECD Income Distribution and Poverty database;
World Development Indicators 2013.However, since 2002 Latin America has succeeded in reducing poverty and –even more impressively– inequality, one of the region’s most intractable problems GINI COEFFICIENT, LAC AND EAP COUNTRIES, AROUND 2002 AND 2011
0.65 Increase in inequality
GTM
0.6 HON
BRA DOM PRY COL
0.55 PAN BOL
CHI CRI
11 ARG
0.5
20 MEX
CHN
d
NIC MYS
n u
ECU PER
ro
0.45 SLV a
FJI PHL
VEN THA URY
0.4 KHM
LAO MNG
VNM
0.35 TMP Decrease in inequality
0.3
0.3
0.35
0.4
0.45
0.5
0.55
0.6
0.65 around 2002 Source: Prepared by the author, on the basis of ECLAC (2013), Social Panorama of Latin America 2012 and World Development Indicators 2013.
What factors explain the declines in poverty
and inequality in Latin America?
Economic growth with job creation in the formal • sector Higher (and more progressive) taxes and social • investment Positive impact of social protection programmes • Adoption of counter-cyclical policies • Demographic and labour participation trends • Broader access to education and health •Social protection in LAC: leaving behind structural adjustment policies Policies in the 1980s and 1990s Recent policies Central role of the market in providing and assigning goods and services
Recognition of the role of the state in correcting market asymmetries Privatization and decentralization of social services
Increasing social expenditure Poverty reduction policies based on emergency criteria Adoption of comprehensive poverty reduction policies: strengthening capacities
Male-breadwinner model Different policy subjects, considering
differences based on gender, age, ethnicity, geography Informal mechanisms: lobbying and favouringTowards a covenant based on social rights
Current approaches to social protection in LAC APPROACHES TO SOCIAL PROTECTION IN LATIN AMERICA AND THE CARIBBEAN, AROUND 2009
Approach Main characteristics Countries
Non-contributory social protection Ecuador, Guatemala, Honduras,
1. Assistance and access to
targeted to the poor Jamaica, Paraguay, Peru, Dominican
social promotion
(CCT programmes) Rep., Trinidad and Tobago Non-contributory social protection Plurinational State of Bolivia,
2. Intermediate between
targeted to the poor Colombia, El Salvador, Mexico and
assistance and access to social
(CCT programmes) Panama
promotion and social
Beyond CCTs, include other non
guarantees
contributory social protection policies (targeted and universal, pensions and health) and attempt to progressively link different components
Include various transfers and Argentina, Brazil, Chile, Costa Rica
3. Social guarantees
services as part of non-contributory and Uruguay social protection; Growing linkages between contributory and non-contributory social protection policies;
Attempt to create comprehensive social protection systems
Right-based social protection in LAC RIGHTS-BASED APPROACH AND SOCIAL GUARANTEES IN LATIN AMERICA Country Constitutional Rights-based Explicit recognition of approach guarantees social rights to social protection
Argentina Yes Yes
Bolivia (Plurinational State of) Yes Yes Yes Brazil
Yes Yes Yes Chile
Yes Yes Colombia
Yes Yes Yes Costa Rica
Yes Yes Cuba
Yes Yes Ecuador
Yes El Salvador
Yes Yes Guatemala
Yes Yes Mexico
Yes Yes Panama Paraguay Peru Uruguay
Yes Yes Venezuela (Bolivarian Republic of) Yes
Welfare regimes in LAC LATIN AMERICA: SOCIAL INVESTMENT INDICATORS AND SOCIAL PROTECTION, HEALTH AND EDUCATION COVERAGE, AROUND 2010 (Simple averages for each group of countries)
Indicator Group I Group II Group III Latin America Argentina, Brazil, Colombia, Mexico, Bolivia (Plurinational Chile, Costa Rica, Venezuela State of), Dominican
Panama, (Bolivariana Republic Republic, Ecuador, El Uruguay of) Salvador, Guatemala, Honduras, Nicaragua, Paraguay, Peru
Social investment Public per capita social 1 275 734 249 672 investment (dollars at 2005 constant prices) Public social investment as a
21.3
12.4
11.4
14.9 percentage of GDP Social protection coverage Workers affiliated to social
62.6
49.7
25.8
42.2 security (percentages) Percentage declaring out-of- 23,3 35,1 72,1 49,7 pocket health expenditure
Steady growth of non-contributory social protection in LAC CCT COVERAGE CCT INVESTMENT (Percentage of total population) (Percentages of GDP)
0.38
25.0
0.4
0.36 19.5 20.3 0.29 18.2 18.7
20.0
0.3
0.26
15.4
13.5
0.21
15.0
0.2
10.0
5.7
0.1
0.06
5.0
0.0
0.0 2000 2005 2008 2009 2010 2011 2012
2000 2005 2008 2009 2010 2011 SOCIAL PENSIONS COVERAGE (Percentages of population aged 65 and above)
42.0
40.7
40.0
38.3
37.2
38.0
35.8
36.0
33.2
34.0 Source: Prepared by the author, on the basis of
32.0 ECLAC, Database of non-contributory social
30.0 protection programmes in Latin America and the Caribbean [online] http://dds.cepal.org/bdptc/ and 2008 2009 2010 2011 2012 http://dds.cepal.org/bdps/
In several countries the number of CCT beneficiaries is
greater than the number of extremely poor persons
LATIN AMERICA (17 COUNTRIES): COVERAGE OF CONDITIONAL CASH TRANSFER PROGRAMMES (CCT), 2006/2009
(as percentage of the poor and indigent population) Source: Cecchini and Madariaga (2011). Note: CCT coverage in relation to the poor and indigent does not take into account inc lusion and exclusion errors.
Impact of non-contributory social protection
on human capacities
Increased consumption of food and purchases of clothes • Positive impacts on education (school enrollment andattendance) , health (medical check-ups, vaccinations) and
o
nutrition Doubts regarding the quality of education and health services o No negative effects noticeable on labour insertion • But informal and unstable jobs continue to be the most common o Child labor •
Children tend to combine work and school attendance o Empowering women • Increased self-esteem and position of women in communities, but reproduction of
traditional gender roles and little consideration of work-life balance strategies
Impact of non-contributory social protection
on poverty and inequality (1)
CCTs IN BRAZIL, CHILE, MEXICO AND LAC AVERAGE, MAXIMUM MONTHLY PER CAPITA AMOUNTS AS PERCENTAGES OF POVERTY/EXTREME POVERTY LINES AND MONTHLY DEFICITS OF THE POOR/EXTREMELY POOR, AROUND 2008
Maximum monthly per capita amounts of the transfers
Dollars Programme % extreme % poverty line % monthly deficit, % monthly deficit, poverty line extremely poor poor
Urban Rural Urban Rural Urban Rural Urban Rural
Bolsa Família,
24
46
53
20
25 97 122
48
53 Brazil
Chile Solidario
26
58
76
29 43 164 216 91 135
Oportunidades
41
45
63
23 27 193 220 78 103 , Mexico LAC (simple
16
29
35
15
20
81
98
40
53 average of 12 countries)
Impact of non-contributory social protection on poverty and inequality (2) LATIN AMERICA (15 COUNTRIES): DISTRIBUTION Relieving rather than •
OF PUBLIC SPENDING IN SOCIAL ASSISTANCE AND EXAMPLES OF DIRECT MONETARY TRANSFERS OF SOME CCTs, overcoming poverty a BY INCOME QUINTILES, 2005-2008 (%) o re
100
Impact is concentrated on u it d n
Oportunidades
90
poverty gap and severity e
(Mexico , 2008 ) p x e
80
indicators (good targeting) f
Familias en Chile Solidario Acción o
(Chile, 2006) e (Colombia, 2008)
70
o g
Impact on the incidence of ta n
60 Total social
poverty depends on coverage rce assistance e
50
p and the amount of the transfer e v ti
40
la Bono de Desarrollo
(e.g. Argentina, Brazil, Ecuador, u
Humano (Ecuador, 2008) m
30
u Mexico, Uruguay)
C
20 Primary
o Sustainability of results income
10
depends on time horizon of
20
40
60 80 100
transfers and on strengthening
Cumulative percentage of population
beneficiaries’ capacities Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on special tabulations of surveys of homes in the respective countries.
Institutional factors that favor the sustainability
and effectiveness of the programmes
State policy and self-financing- Legal and institutional frameworks that are clear
- and specific
Synergies between political support, technical • capacity and resource availability Accountability and citizen participation
- mechanisms
o Audits, external evaluations, social control, complaint system
Transparent beneficiary registers • o
Protecting private data
Final remarks
- LAC’s gradual shift of social protection
towards a more inclusive and rights-based model is an epochal change
- Targeting is used as an instrument; it is no longer a goal of
social policy
- Challenge is providing stable funding for universal social protection
• Institutional coordination is required for social protection reform
• Cash transfer programmes are acting as a gateway into social
protection- – Maintain clear objectives and functions, avoid transforming CCTs into a "Christmas tree"
- Social protection policies need to strengthen their linkages with
active labour market policies