The future of social protection

Clarisa Hardy

The social progress made in recent years in Latin America appeared in conjunction with universal social policies and increased social spending directed towards the poorest sectors in areas such as education, health, social infrastructure and connectivity, as well as basic services (sanitation, drinking water and energy). The speed and intensity of the poverty reduction process, however, are not only functions of increases in social spending towards the poor, but of ensuring that this spending is effectively distributed, through different formulas known as “conditional transfer programs”: monetary subsidies linked to nutritional, health, education and housing programs.

With the reduction in poverty levels, attention must be paid to vulnerability as a new social phenomenon. For large sectors of the population who today are above the poverty line, the risk of impoverishment is always present due to circumstances beyond their control. These circumstances include: precarious or lost employment, changes to family structures under single-breadwinner households (usually women), dependency conditions such us infancy, old age, illness or accidents. The risks of impoverishment are exacerbated in times of crisis.

Given this scenario, targeting policies only towards poverty is not effective. Rather, social policies should be progressively universalised towards vulnerable sectors. Depending on the country, these might represent 50 to 70 per cent of the low-income population. This, in turn, requires raising social spending, not only as a percentage of overall public expenditures, but in absolute, per capita terms. The way forward is through:

A new fiscal pact in favour of equity
In a region which has the highest levels of inequality in the world (not only through the general distribution gap between rich and poor, but also due to the growing gap between the richest 10 per cent and the rest of the population), and whose tax burden is very low, the current challenges cannot be met without a new fiscal pact in favour of equity. A broad political and social agreement is required to achieve a “pact for equity”, which explicitly accepts a progressive and countercyclical fiscal policy: an agreement on how much and how to link increases in social spending to increases in growth, as well as keeping social spending steady during periods of recession.

Institutionalised systems of social protection
We must go from emergency policies or special programs to institutionalised systems of social protection that are not subject to the whim of governments of the day and that are funded according to a logic of guaranteed rights. New economic and social dynamics require that social protection be available throughout the different stages of a person’s life cycle, making families the recipients of social protection, and not its providers (as is currently the case, disproportionately punishing women – for their domestic responsibilities – and limiting their possible entry into the workforce).

Place employment and labour policies at the centre
The importance that income plays in families’ conditions places employment and labour policies at the centre of the social protection system (as opposed to the current Latin American experience, where social protection initiatives replace employment and labour policies, leading to loss of sustainability over time). What is required is: a) guaranteed family income; b) incentives promoting formal employment for young people and women; c) legislation protecting maternity/paternity (based on tripartite funding); d) unemployment insurance associated with training (based on tripartite funding); e) strengthening and linking labour market intermediation and skills training to the education system.

Guarantee equality of opportunity
A rhetorical equality of opportunity is not sufficient; it must be guaranteed. Key to ensuring this goal are guaranteed rights in education and health such as: a) early childhood protection (from conception to entry into the educational system, which as well as leveling the playing field, leads to an increase in falling birth rates); b) at least twelve years of compulsory education with guaranteed universal quality standards; c) increasing accessibility (grants and state-guaranteed loans) and guaranteeing the quality of postsecondary education, be it technical or university; d) guaranteed access to healthcare, suited to diverse demographic and epidemiological needs.

Strengthen pension systems
It is essential to strengthen the support pillars in pension systems. These include: a) guaranteed minimum pensions for seniors outside the pension system or with minimal savings; b) child bonus programs encouraging motherhood (state-funded contributions to pensions for working mothers); c) state-funded contributions to pensions for young workers, thereby encouraging hiring of youth.

Clarisa Hardy is an adviser to the president of Chile and former Chilean minister for planning