1. SHAPING THE FUTURE OF SOCIAL PROTECTION: ACCESS, FINANCING AND SOLIDARITY Andras Utholl Officer-in-Charge Social Development Division THIRTY-NINTH MEETING OF THE PRESIDING OFFICERS OF THE REGIONAL CONFERENCE ON WOMEN IN LATIN AMERICA AND THE CARIBBEAN Mexico City, 11-12 May 2006

2.  The welfare State founded upon the concept of a labour-based society has not lived up to expectations  Limited coverage, which is a factor in social exclusion  Income inequality carries over into social protection  The reforms of the 1990s sought to improve financing and access by:  Creating a closer link between employment and protection based on the formalization of the labour market  Placing more emphasis on incentives and efficiency than on solidarity Background and the Reforms of the 1990s

3. Despite the reforms, non-contributory coverage has not increased since 1990 COUNTRIES WHERE COVERAGE IMPROVED COUNTRIES WHERE COVERAGE WORSENED LATIN AMERICA: COVERAGE IN 1990 AND 2002 (% of employed persons paying contributions)

4. Urban Rural Urban Formal Urban Informal Men Women (% working age population) Q5 Q1 (rich) (poor) Inequity in the structure of contributions

5. On average  4 out of every 10 employed persons  4 out of every 10 employed persons pay into the social security system  4 out of every 10 persons over 70  4 out of every 10 persons over 70 receive income through retirement or other pensions  4 out of every 10 persons  4 out of every 10 persons live in poverty A high degree of heterogeneity among the countries of the region

6. NEW DEMANDS FOR SOCIAL PROTECTION  Social protection is essential in order for democratically elected governments to ensure that economic development becomes a positive force for all.  Social protection must be politically and financially viable (combining efficiency and solidarity).  Change in approach: employment should no longer be seen as the only mechanism for access to social protection. A new social covenant is needed in order to UNIVERSALIZE SOCIAL PROTECTION through:  Achieving efficiency and solidarity in the financing of benefits  Dealing proactively with changes in demographics, epidemiological patterns and family structure  Neutralizing sources of discrimination: In the definition of employment vs labour (roles) In the labour market In social protection systems

7. THE REFORMS MUST BE REFORMED, AND THERE IS NO ONE-SIZE-FITS-ALL SOLUTION  This calls for a social covenant in order to:  Define explicit, guaranteed and enforceable rights  Define levels and sources of financing Contributory – Non-contributory  Integrate solidarity mechanisms  Develop a framework of social institutions Social policy management Coordination of supply of services

8. Social protection: a change in approach  Labour should not be perceived in the short or medium term 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

9. Content of a new social covenant  Explicit, guaranteed and enforceable rights  Definition of levels and sources of financing (solidarity mechanisms)  Development of a framework of social institutions

10. Promoting a social covenant Compatible with a fiscal covenant Democracy Fiscal responsibilities With minimum guarantees Modify the tax burden Improve the productivity of public delivery of socially valued and/or public goods Highlighting the role of education Universal secondary education Reduce rural/urban gap and differences between socioeconomic levels Narrow the gaps between elite and public education Pre-school for the poor Learning to learn School insurance More and better jobs Address productive heterogeneity Pro-employment investment Human resources approach Reduce discrimination Improve or supplement labour relations with demands of innovation and the business cycle Retraining Unemployment insurance Universal, solidarity-based and efficient social security Reform public/private mix Incorporate solidarity into financing to improve access without sacrificing savings or insurance Improve contingent risk protection Finance housing for the poor Improving social cohesion Promote citizen participation in matters of collective interest Improve governance by modifying incentives for investment in privatized basic social services and upgrade their regulatory framework

11. Sources of financing  Challenges for social protection systems:  Increase non-contributory financing by boosting tax collection and reallocating expenditure  Include a solidarity component within the contributory scheme

12. Public revenues LOW LEVEL OF TAX REVENUES (% GDP, 2004)

13. Working towards universal social protection in health implies recognizing:  Sharp inequities in access to and quality of services  That the lack of integration between public and private social security sectors spawns inefficiencies and risk selection (skimming)  The process of demographic, epidemiological and technological transition

14. Inequity: out-of-pocket spending on health

15. Incidence of disease DALYs per 1,000 inhabitants

16. The health reform agenda must include:  Steps towards the integration of subsystems: In financing: Integrating solidarity-based contributory and non-contributory mechanisms (public and social security) Defining benefits with universal coverage and guaranteed enforceability (health needs) In provision: Separating financing and provision functions Improving payment, regulatory and supervisory mechanisms Promoting integration into the network of public providers Public/private mix  Public health more focused on:  Primary health care, preventive and curative medicine, and promotion  Defining universal programmes on the basis of morbidity and mortality  Improving checks and cross-checks

17. Challenges for pension systems  Ageing of the population and limited contributory and non-contributory pension coverage  Segmented contributory systems with financing difficulties  Difficulty of reaching a consensus on parametric reforms in PAYG systems  Limited coverage of non-contributory systems

18. Pension coverage: Only 4 out of every 10 persons over 70 receive some sort of pension

19. The pension-system reform agenda should include measures for:  Increasing coverage through the non-contributory component  Targeted pension benefits can halve the poverty rate at an average cost of 0.9% of GDP  Reforming the contributory system  Contributory solidarity  Financial viability Discretionary parametric reforms Notional accounts  Treating individually-funded accounts as a complementary mechanism  Differing modalities - transition costs  Industrial organization  Promoting system convergence  Promote equity by standardizing and validating benefits  Make benefits portable, thereby facilitating labour mobility

20. 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)

21. Promoting a social covenant CTP Compatible with a fiscal covenant Democracy Fiscal responsibilities With minimum guarantees Modify the tax burden Improve the productivity of public delivery of socially valued and/or public goods Highlighting the role of education Universal secondary education Reduce rural/urban gap and differences between socioeconomic levels Narrow the gaps between elite and public education Pre-school for the poor Learning to learn School insurance More and better jobs Address productive heterogeneity Pro- employment investment Human resources approach Reduce discrimination Improve or supplement labour relations with demands of innovation and the business cycle Retraining Unemployment insurance Universal, solidarity-based and efficient social security Reform public/private mix Incorporate solidarity into financing to improve access without sacrificing savings or insurance Improve contingent risk protection Finance housing for the poor Improving social cohesion Promote citizen participation in matters of collective interest Improve governance by modifying incentives for investing in privatized basic social services and upgrade their regulatory framework

22. BACKGROUND  Poverty limits people’s ability to exercise their citizenship and to demand their rights.  A number of factors perpetuate the intergenerational transmission of poverty.  The multidimensionality of poverty has given rise to a wide range of projects and other measures.  The document focuses attention on:  Emergency job-related programmes  Conditional transfer programmes.

23. IN SOME COUNTRIES CONDITIONAL TRANSFER PROGRAMMES (CTP) ARE IMPORTANT PROGRAMMEBeneficiaries / Population (%) Spending / GDP (%) “Bolsa Familia” (Brazil, 2003) 16.00.28 Chile Solidario (Chile, 2002) 6.50.10 Familias en Acción (Colombia, 2001) 4.00.30 Superémonos (Costa Rica, 2000) 1.10.02 Programa de Asignación Familiar PRAF (Honduras, 1990) 4.70.02 Programme of Advancement through Health and Education (PATH) (Jamaica, 2002) 9.10.32 Oportunidades (former Progresa) (Mexico, 1997) 25.00.32 Red de Protección Social Mi Familia (Nicaragua, 2000) 1.20.02

24. Challenges for anti-poverty social programmes  Alleviate poverty in the short run  Break the cycle of intergenerational poverty transmission (human capital)  Create a framework of social institutions:  Intersectoral coordination and integration  Transparency and evaluation  Continuity and consistency  Engagement of civil society

25. Proposals for these programmes  Share the programme-generated workload within the household (CTP)  Incorporate social capital criteria  Proactive role for the State in incorporating beneficiaries into the programmes  Ensure that supply of health and education services match programme-induced increase in demand (CTP)  Adaptability to context changes (explicit exit and entry rules)  Strengthen skills-building in employment programmes Supplement human capital training with the promotion of productive policies

26. Promoting a social covenant Compatible with a fiscal covenant Democracy Fiscal responsibilities With minimum guarantees Modify the tax burden Improve the productivity of public delivery of socially valued and/or public goods Highlighting the role of education Universal secondary education Reduce rural/urban gap and differences between socioeconomic levels Narrow the gaps between elite and public education Pre-school for the poor Learning to learn School insurance More and better jobs Address productive heterogeneity Pro- employment investment Human resources approach Reduce discrimination Improve or supplement labour relations with demands of innovation and the business cycle Retraining Unemployment insurance Universal, solidarity-based and efficient social security Reform public/private mix Incorporate solidarity into financing to improve access without sacrificing savings or insurance Improve contingent risk protection Finance housing for the poor Improving social cohesion Promote citizen participation in matters of collective interest Improve governance by modifying incentives for investment in privatized basic social services and upgrade their regulatory framework

27.  Three dimensions of such rights:  ethical  procedural  content Economic and social rights in public policies Work to build genuine social citizenship

28. In summary  The job of universalizing and improving social protection is yet to be completed  Employment alone cannot universalize coverage  Greater complementarity between solidarity and incentives  Reforms should include integration of contributory and non-contributory systems Reforms within the context of a social covenant in which rights constitute the normative horizon and economic inequalities are constraints to be overcome

29. SHAPING THE FUTURE OF SOCIAL PROTECTION: ACCESS, FINANCING AND SOLIDARITY Andras Utholl Officer-in-Charge Social Development Division THIRTY-NINTH MEETING OF THE PRESIDING OFFICERS OF THE REGIONAL CONFERENCE ON WOMEN IN LATIN AMERICA AND THE CARIBBEAN Mexico City, 11-12 May 2006