What is the Future of Bolsa Família?

downloadBolsa Família is often promoted as a model of good practice for social protection programmes in the developing world. As a Brazilian, in the short period of time that I’ve worked on international social protection, I’ve been surprised by how famous Bolsa Família is around the world and how it has inspired similar programmes around the world. But, despite its great reputation internationally, in Brazil it is nowhere near as well regarded, and its future is uncertain.

Compared to Brazil’s main social security schemes, Bolsa Família is rather small and, unlike others, it is not an entitlement: households living in poverty do not have the right to access the programme. And, as Kidd and Huda (2012) have argued, Bolsa Família has a limited impact on poverty and inequality when compared to the country’s minimum wage pensions. Indeed, Bolsa Família doesn’t do a great job in reaching the poorest members of society, missing out around 50% of intended beneficiaries.[1]

As Brazil goes through turbulent times, the debate on Bolsa Família has gained momentum once again. If we disregard the nonsensical parts of the discussion – such as the unfounded belief that many have about the poor being lazy and unfit to make decisions for themselves[2] – the main debate centres around improving the programme’s efficiency, which in Brazil means removing the “undeserving”. It is as if the programme only needed some tweaking to be put right. There are definitely positive things about the programme, but much more can be done than just improving “efficiency”. A key objective should be to transform Bolsa Família into an entitlement that is accessible by all citizens, when in need.

Recently, Ricardo Paes de Barros – a respected economist and one of the creators of the programme (who also has links to the new government) – indirectly supported[3] the idea of using alternative selection mechanisms to target Bolsa Família’s beneficiaries, such as the proxy means test.[4] He believes that this will improve the programme’s efficiency by removing the “undeserving” (inclusion errors). Although this may sound simple and sensible, implementing PMTs and other targeting mechanisms entails many problems that need to be taken into account (see Kidd and Wylde (2011) for a discussion). Given that the PMT causes high targeting errors, Paes de Barros’s ideas may actually make targeting worse: comparatively, Bolsa Família’s exclusion and inclusion errors are already better than programmes using PMTs in Latin America and elsewhere.[5] Indeed, Paes de Barro’s proposals are likely to move Bolsa Família even further away from being an entitlement, given the arbitrary nature of PMT selection.

In contrast, the main focus of reforms to Bolsa Família should be on ensuring that it guarantees to all households in need a steady and predictable source of income, especially considering the current macroeconomic conditions the country is facing. In other words, our focus should be on the many millions of deserving families who are eligible for Bolsa Família but are denied assistance, rather than on excluding those that are deemed “not worthy” (in particular given that the vast majority of these supposed “inclusion errors” still have very insecure livelihoods).

Although Brazil has reached a historical low in its poverty rate – in 2014 it was 8.5%[6] – the country is far from eradicating poverty. This is especially true in rural areas of the North and Northeast regions, where the poverty headcount remains unacceptably high. Furthermore, given the current economic context, the situation will not improve in 2015 and 2016. Brazil is facing a second consecutive year of negative growth of 3% of GDP or higher; unemployment is at over 11%, 7 percentage points higher than in December 2014; annual inflation hit the two-digit mark in 2015; and there is the current chaotic political situation, which will create even more uncertainty in coming years. Furthermore, a high proportion of the population feels economically insecure, even if they are not officially regarded as “poor”.

The political future of Bolsa Família is also uncertain. Despite the government recently increasing transfer values, the President has already made it clear that it should not be a permanent programme, thereby rejecting the key notion of social security programmes as entitlements, as implied by the Federal Constitution. By conceptualising Bolsa Família as a temporary mechanism to tackle poverty, the new government ignores the fact that it plays a key role in alleviating the poverty of millions of households and provides them with some minimum level of income security.

One option is to transform Bolsa Família into a comprehensive and inclusive child benefit, ensuring that all children receive a minimum level of support from the State. Currently, Bolsa Família is a household benefit for the poor that pays a minimum to the poorest households and an additional variable component for children in poor households, based on the age and number of children in a family. Yet, in addition to Bolsa Família, two other cash transfer programmes target children: the Salário Família (Family Wage), which is paid to formal economy workers with children younger than 14; and, Brazil’s income tax deduction, a tax credit that is calculated based on the number of children in a family. Together, these three programmes cover approximately 70% of all children. Still, many of those missing out are the poorest children. In the absence of a comprehensive child benefit, much of the burden on tackling child poverty is placed on the national old age pension system.

One way forward would be to combine the three programmes and expand coverage to ensure that all children are effectively protected. This would be a key additional component to other schemes in Brazil that address other life-cycle risks, such as the old age, survivors’ and disability benefits and unemployment programmes. The idea is not new, Soares and Souza (2012) have shown that unifying the three programmes and equally redistributing its budget to all children at no additional cost could already potentially reduce the number of children living in extreme poverty. But, if the budget were to increase just 0.5% of the GDP,[7] extreme child poverty would reduce by over a third. The effectiveness of Bolsa Familia would be significantly enhanced, as all children living in poverty would be included. Yet, Brazil does not seem to be moving any closer to generating greater inclusion.

So, rather than thinking about cutting Bolsa Familia or excluding the supposed “inclusion errors”, the new Brazilian government should be moving towards creating an entitlement for all children. Not only would it impact on child poverty and inequality, but it would also further strengthen the social contract, which is essential at this time of political turbulence. Too many people feel excluded by Bolsa Familia – including those living in extreme poverty – so moving to greater inclusion, while improving the effectiveness of the programme, can only be positive.

diloa-athiasDiloá Bailey-Athias joined Development Pathways in February this year. He is an applied economist with research interests in the field of public policy – especially in development and environmental economics. Since joining Development Pathways, Diloá has been researching social protection programmes in varying contexts across a number of  developing countries including Brazil. 

[1] Sampini, M., & Tornarolli, L. (2012). The growth of conditional cash transfers in Latin America and the Caribbean: did they go too far? Policy Brief No. IDB-PB-185. Washington DC: Inter- American Development Bank.

[2] There are many biased arguments that critique Bolsa Familia solely because of its association to a party (the Workers’ Party), which has recently fallen into disgrace due to corruption scandals.

[3] See a recent interview to a Brazilian newspaper (link in Portuguese).

[4] Currently, Bolsa Família simply asks applicants their income which is cross-referenced with available databases. But, because quotas are set for each municipality, many of the most vulnerable families are excluded (see Kidd 2016 for further discussion).

[5] Sampini, M., & Tornarolli, L. (op. cit.).

[6] Poverty headcount estimates use $3.10 PPP per person per day as the poverty line – which is around R$6 or 21% of the national minimum wage – and should be regarded as very low for a country such as Brazil.

[7] The analysis is based on 2009 data.

Also published on Medium.

3 Responses to “What is the Future of Bolsa Família?”

  1. Daniel Melo Reply

    Dear author, just a small remark on footnote #6: R$ 6 is not 21% of the Brazilian national minimum wage, which is currently R$ 880 since 1st January 2016 and due to revision 1st January next year.

    • Development Pathways Reply

      Sorry for not being clear. The minimum wage is given per month and the R$6 is per day. So, if the MW is R$880 per month, then daily it corresponds to (880×12)/365 ~ R$29. Thus, 21% is just over R$6. Diloá

  2. Very interesting to see how the Bolsa Familia continues to be seen as a short-term scheme. There is a similar picture in the Philippines where the longevity “4Ps” conditional cash transfer (modelled on the Bolsa Familia) is in question. For example, the new Secretary of the Department implementing the scheme recently challenged the idea that it should be legislated: “It is a pantawid [subsistence] program. Why would you institutionalize a stop-gap measure? … We should legislate long-term economic initiatives that will create more sustainable jobs and livelihood.” See more here: http://www.gmanetwork.com/news/story/571046/news/nation/incoming-dswd-chief-opposes-4p-institutionalization

Leave a Reply

Your email address will not be published. Required fields are marked *