Download SHAPING THE FUTURE OF SOCIAL PROTECTION: José Luis Machinea ACCESS, FINANCING

SHAPING THE FUTURE OF
SOCIAL PROTECTION:
ACCESS, FINANCING
AND SOLIDARITY
José Luis Machinea
Executive Secretary
Economic Commission for
Latin America and the Caribbean
THIRTY-FIRST SESSION OF ECLAC
Montevideo, Uruguay, 20-24 March 2006
Background and the Reforms of the 1990s
¾
The welfare State founded upon the concept of a
labour-based society has not lived up to expectations
ƒ Limited coverage, which is a factor in social exclusion
ƒ Income inequality carries over into social protection
¾
The reforms of the 1990s sought to improve financing
and access by:
ƒ Creating a closer link between employment and protection
based on the formalization of the labour market
ƒ Placing more emphasis on incentives and efficiency than
on solidarity
Despite the reforms, non-contributory
coverage has not increased since 1990
LATIN AMERICA: COVERAGE IN 1990 AND 2002
(% of employed persons paying contributions)
80
70
COUNTRIES WHERE
C.Rica
Chi
Arg*
Méx
60
Coverage c.2002
COVERAGE IMPROVED
50
Bra
El Sal
40
Average
30
Ecu*
Bol*
20
Nic
10
COUNTRIES WHERE
COVERAGE WORSENED
0
0
10
20
30
40
Coverage c.1990
50
60
70
80
Inequity in the structure of contributions
LATIN AMERICA AND THE CARIBBEAN:
EMPLOYED WORKERS WHO CONTRIBUTE (c. 2002)
Average coverage: 38.7%
68,2%
54,9%
45,4%
32,3%
21,9%
1
Urban
21,7%
2
3
Urban
Rural
4
5
Urban
Q5
Formal Informal (rich)
20,4%
6
Q1
(poor)
18,9%
7
8
Men
Women
(% working age
population)
In summary
On average,
¾ 4 out of every 10 employed persons pay into the
social security system
¾ 4 out of every 10 persons over 70 receive
income through retirement or other pensions
¾ 4 out of every 10 persons live in poverty
A high degree of heterogeneity among the
countries of the region
Social protection:
a change in approach
¾
¾
¾
Employment should no longer be seen as the only
mechanism for access to social protection
Need to strike a better balance between
incentives and solidarity
New forces of change in demographics,
epidemiological patterns and family structure
A new social covenant is needed in
order to universalize social protection
Content of a new social covenant
Explicit, guaranteed and enforceable
rights
¾ Definition of levels and sources of
financing (solidarity mechanisms)
¾ Development of a framework of social
institutions
¾
Economic and social rights in public policy
¾ Three
dimensions of economic
and social rights:
ƒ ethical
ƒ procedural
ƒ content
Work to build genuine social citizenship.
Sources of financing
¾ Challenges
for social protection
systems:
ƒ Increase non-contributory financing:
boost tax collection and reallocate
expenditure
ƒ Include a solidarity component within
the contributory scheme
Public revenues
LOW LEVEL OF TAX REVENUES
(% GDP, 2004)
40%
35%
Total: 20.8%
Tax revenues+SS: 17.5%
30%
25%
20%
15%
10%
5%
Other revenues
Venezuela
(RB)
Uruguay
Rep.
Dominicana
Perú
Paraguay
Panamá
Nicaragua
México
Honduras
Haití
Guatemala
Ecuador
El Salvador
Tax revenues
Costa Rica
Colombia
Chile
Brasil
Bolivia
Argentina
0%
Social security contributions
Capital revenues
Sectoral proposals
¾
The document develops a series of
proposals regarding:
ƒ Health-care systems
ƒ Pension systems
ƒ Anti-poverty social programmes
Reforms are non-replicable processes
Challenges for social protection in health
¾ Striking
inequity in access to health
services in the region
Inequity: out-of-pocket spending on health
Public spending on health
as % of GDP
8
7
COL
CUB
6
OECD
PAN
5
4
3
URY
2
1
CRI
BRB DMA
ARG
GUY GRD
BOL
VCT
NIC
SUR HND
SLV
BRA
JAM LCA
KNA
PRY
ATG
HTI
MEX
CHL
BLZ
LAC
VEN
DOM
PER GTM
ECU
TTO
0
0
10
20
30
40
50
Out-of-pocket spending on health as a
percentage of total spending on health (%)
60
Challenges for social protection in health
¾ Striking
inequity in access to health
services in the region
¾ Demographic, epidemiological and
technological transitions
Incidence of disease
DALYs per 1,000 inhabitants
300
250
Latin America and the Caribbean
World
average
150
OECD,
highincome
100
8
200
98
112
Lowincome
Highincome
Middleincome
45
35
39
115
120
103
29
27
39
108
50
29
0
Latin
America
and the
Caribbean
12
Group I (communicable)
Group II (non communicable)
Group III (accidents, violence)
101
108
26
Challenges for social protection in health
Striking inequity in access to health
services in the region
¾ Demographic, epidemiological and
technological transitions
¾ Problems with the coordination of
subsystems in terms of financing and
service delivery
¾
Moving towards universalization
The health reform agenda should include (1)
1. Integration of public and social security
systems:
ƒ
Solidarity: Access to services regardless of
contributions, payment capacity and individual
risk levels
ƒ
Efficiency: Improved risk management and
avoidance of duplications
2. Establish benefits with universal coverage
and guaranteed entitlements (health needs)
The health reform agenda should include (2)
3.
4.
Policies on the organization and delivery of services
ƒ
Separation of financing from service provision
ƒ
Coordination of the supply of health-care services
ƒ
Improvement of payment mechanisms
ƒ
Regulation and oversight
Policies on public health and the expansion of
primary care
ƒ
Strengthening of primary-care prevention and
treatment
ƒ
Decentralization
Challenges for pension systems
¾
Ageing of the population and limited
contributory and non-contributory
pension coverage
50
Latin
America
Perú
República
Dominicana
Uruguay
Venezuela
(RB)
Paraguay
Panamá
Nicaragua
México
Honduras
Guatemala
El Salvador
Ecuador
Costa Rica
Colombia
Chile
Brasil
Bolivia
Argentina
Percentage of individuals receiving
retirement or other types of pensions
Pension coverage: Only 4 out of every 10
persons over 70 receive some sort of pension
100
90
80
70
60
42
40
30
20
10
0
Challenges for pension systems
Ageing of the population and limited
contributory and non-contributory
pension coverage
¾ Segmented contributory systems with
financing difficulties
¾ Difficulty of reaching a consensus on
parametric reforms in PAYG systems
¾ Limited coverage of non-contributory
systems
¾
Pension reform agenda
1.
Strengthen non-contributory pensions
Non-contributory pensions for over-65s to cut the
poverty rate in half
COST OF PENSION BENEFITS EQUIVALENT TO ONE POVERTY LINE
(As percentage of GDP)
6
Cost of targeted pension
Cost of universal pension
5
4
3
0,9 2.2
2
Venezuela (R.B.)
Uruguay
Rep. Dominicana
Paraguay
Panamá
Nicaragua
México
Honduras
Guatemala
Average LAC
El Salvador
Ecuador
Costa Rica
Colombia
Chile
Bolivia
Argentina
0
Brasil
1
Pension reform agenda
1.
Strengthen non-contributory pensions
2.
Reform PAYG systems
3.
ƒ
Emphasis on contributory solidarity
ƒ
Promotion of participation in contributory system (e.g., a closer
link between contributions and benefits)
ƒ
Financial viability (notional or parametric reforms)
ƒ
Standardization and unification of pension systems
Supplement with individual capitalization
ƒ
Diversify economic, financial and demographic risks
ƒ
Transition costs
ƒ
Industrial organization
ƒ
Gender equity (labour market and life tables)
Context for social programmes
Poverty limits the exercise of citizenship
and the enforceability of rights
¾ Poverty runs counter to equality of
opportunity for present and future
generations
¾ Multidimensionality of poverty has given
rise to a broad range of programmes
¾
Challenges for anti-poverty social programmes
Alleviate poverty in the short run
¾ Break the cycle of intergenerational
poverty transmission (human capital)
¾ Create a framework of social
institutions:
¾
ƒ
ƒ
ƒ
ƒ
Intersectoral coordination and integration
Transparency and evaluation
Continuity and consistency
Engagement of civil society
Proposals for enhancing conditional transfer
and employment programmes
1. Share the programme-generated workload within
the household (CCT)
2. Incorporate social capital criteria
3. Proactive role for the State in incorporating
beneficiaries into the programmes
4. Ensure supply of health and education services
to match programme-induced increase in
demand (CCT)
5. Explicit exit rules
6. Strengthen skills-building in employment
programmes
In summary
¾
¾
¾
¾
The job of universalizing and improving social
protection is yet to be completed
Employment alone is not enough to universalize
coverage
Greater complementarity between solidarity and
incentives
The contributory and non-contributory systems need
to be integrated
Reforms in the context of a social pact in which rights
are the normative horizon and economic inequalities
are constraints to be overcome
SHAPING THE FUTURE OF
SOCIAL PROTECTION:
ACCESS, FINANCING
AND SOLIDARITY
José Luis Machinea
Executive Secretary
Economic Commission for
Latin America and the Caribbean
THIRTY-FIRST SESSION OF ECLAC
Montevideo, Uruguay, 20-24 March 2006