Bolivia instituted a universal pension and also has a grant for all children entering primary school. Despite all the hype around poor relief conditional cash transfers in Latin America, the ideology underpinning social protection in the continent is shifting. While conditional cash transfers are targeted at the poor – with the result that the majority of the poor are excluded (see here for an explanation) – a growing number of social protection programmes in Latin America are being introduced that are underpinned by a more inclusive and progressive vision of social policy.
In a recent edition of our Pathways’ Perspectives we explained how the main social security scheme in Brazil is the old age pension rather than the much-vaunted Bolsa Familia. It is the old age pension that mainly impacts on poverty and inequality in Brazil, not Bolsa Familia, which, at best, ameliorates poverty for a minority of poor families. Brazil’s old age pension system provides almost universal coverage and, increasingly, other Latin American countries are implementing similarly inclusive schemes that aim to reach broad sections of the population, whether they be poor, near-poor, middle class or, in some cases, the rich. A few examples are:
- Argentina, in 2009, instituted a new child allowance which, combined with its existing family allowances, ensures that 85% of children aged 0-18 years benefit from social security; in addition, its pension system reaches 93% of older people (mainly through contributory pensions);
- Bolivia instituted a universal pension – the Renta Dignidad – in 2007 and also has a grant for all children entering primary school;
- Chile’s pension reform of 2008 means that almost all older people now receive a pension;
- Ecuador’s tax financed old age pension is growing rapidly and currently reaches around 65% of older people; when contributory pensions are taken into account, overall coverage will be much higher;
- Mexico’s new tax-financed pension system is expected to reach 70% of over-65s in 2013, with many others benefitting from contributory pensions;
- In Venezuela, pension coverage increased by 600% under Chavez and now reaches almost allolder people;
- Uruguay has long provided almost universal pension coverage, mainly through a contributory system.
In many cases, the size of these inclusive schemes – in terms of GDP – dwarfs the poor relief conditional cash transfers. While the largest poor relief programmes – such as Bolsa Familia and Mexico’s Oportunidades – cost no more than 0.4% of GDP, Bolivia’s old age pension costs 1.09% of GDP, Brazil’s pension 1.5% of GDP, and Argentina’s child allowance 0.53% (with substantially more paid in other family allowances that, together, make coverage almost universal).
The transformation in the nature of social security in Latin America is related to political changes across the continent. As the two articles below explain, politics in Latin America has gradually been moving to the left. Following the fall of right-wing dictatorships in the 1980s and 90s, democracy in most Latin American countries took decades to mature. But, as democracy has become embedded citizens have increasingly voted for left-wing politicians, an unsurprising trend given the high levels of poverty and inequality in Latin America. As this article describes, the new left-wing governments in Latin America are committed to higher levels of social spending, with some using their natural wealth to increase taxes and promote greater re-distribution.
Since poor relief conditional cash transfers, or CCT, are typical examples of neoliberal social security – see my blog here and Pathways Perspective no. 10 – it is unsurprising that the right-wing governments that emerged in the early years of democracy established CCTs as an instrument for reducing social unrest. But, as democracy has strengthened an alliance of poor people and the middle class have begun voting for politicians promoting inclusive schemes. As a result, social security schemes that are inclusive entitlements are becoming the largest programmes in the region, surpassing the better-known poor relief CCTs.
However, as one of the articles notes, progress to a more inclusive social security system has not been smooth, with the continent experiencing some steps backward. Last year’s coup in Paraguay led to a significant reduction in the size of its new old age pension (with the new neoliberal government restricting it to over-72s). And, in Peru, while the current President won the last election by promising a universal pension, once in power he backtracked and implemented a poverty-targeted version.
Yet, despite setbacks, the overall direction of travel in Latin America is towards a more progressive and inclusive form of social security. It is important, therefore, that the myths about Latin America propagated by the advocates of poor relief CCTs are challenged since the misrepresentation of the region’s social security is distorting policy debates in other developing countries. So, the next time you hear neo-liberals claiming that Bolsa Familia is Brazil’s biggest social security programme, you’ll be able to correct them.