Juan R. de Laiglesia OECD Development Centre•CCTs: poverty gap fall of 18% in Brazil (Satyro and...
Transcript of Juan R. de Laiglesia OECD Development Centre•CCTs: poverty gap fall of 18% in Brazil (Satyro and...
Institutional innovations in social protection
Can they fill the coverage gap?
Juan R. de Laiglesia
OECD Development Centre
International conference on Social Cohesion and Development
Paris, 20 January 2011
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New social protection instruments and coverage gaps
• Nearly all countries in the world have statutory social security programmes, but
most have limited scope and coverage
• Alongside these are a number of social assistance instruments and these have
evolved dramatically in the past 20 years:
From general subsidies to the prices of food and energy (gas, fuel)…
to a series of new policy interventions: cash transfers (conditional and unconditional), workfare
• Poverty-focused social protection innovations are not sufficient because coverage
gaps also exist among the non-poor
• Need instruments that bridge social assistance and social insurance
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Outline
1 Coverage gaps in social protection
2 Innovations and the extension in coverage
A look at pensions in Latin America
Conclusion
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The coverage gap – work injury insurance
Source: World Social Security Report 2010/11, ILO.
0
20
40
60
80
100
No
rth
Am
eric
a
We
ste
rn E
uro
pe
CIS
Ce
ntr
al a
nd
Ea
ste
rn
Eu
rop
e
Latin
Am
eric
a &
Ca
rib
be
an
Mid
dle
Ea
st
No
rth
Afr
ica
Asi
a &
Pa
cific
Su
b-S
ah
ara
n A
fric
a
Legal employment injury coverage (mandatory)
0
20
40
60
80
100
No
rth
Am
eric
a
We
ste
rn E
uro
pe
CIS
Ce
ntr
al a
nd
Ea
ste
rn
Eu
rop
e
Latin
Am
eric
a a
nd
the
Ca
rib
be
an
Mid
dle
Ea
st
No
rth
Afr
ica
Asi
a a
nd
th
e P
ac
ific
Su
b-S
ah
ara
n A
fric
a
Effective coverage (pensioners)
Active contributors (working age population)
Estimates of legal coverage (working age population)
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Challenges in coverage
Multiple challenges posed by informality
• Registration to verify entitlement
• Contribution to finance the system
• Verifiability of income
Responses:
• Provide systems for uncovered/informal workers (e.g. Mexico’s Seguro Popular)
• Rely on self-insurance for formal workers (e.g. Unemployment Insurance Savings Account)
• Provide universal benefits (means-tested or not)
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Institutional innovations
• Innovations from the South:
• Conditional Cash Transfers
• Workfare / Employment guarantees
• Unemployment Insurance Savings Accounts
• Unbundling of social protection
Health, Old age, Income support, Workfare
• Rapid expansion of cash transfers to the poor:
• Means-tested (proxy vs direct)
• Conditional
• Social pensions
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Is new better?
• Performance:
• Generally good (or potentially good)
• UISA in Chile: 22 % coverage vs 6.7% of unemployed before reform
• CCTs: poverty gap fall of 18% in Brazil (Satyro and Soares, 2009)
30% in Mexico (Skoufias, Davis and de la Vega 2001)
• but relative to narrow objectives (poverty vs inclusion)
• Cost effective (especially low administrative cost)
• Mechanics:
• Targeting/Self selection: Lower costs, political consensus
• De-linking from employment relationship and unbundling
• Individualisation of the social contract
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Is lack of coverage an issue for poor, informal workers?
Zoom down on pension coverage:
How often do workers in the formal and informal sectors contribute to their
pension scheme?
Sample: Bolivia, Brazil, Chile and Mexico
Data: National household surveys data (ECH 01-02, PNAD 96-06, CASEN 94-06,
ENIGH 98-06)
Informality: Labour contract or carteira de trabalho (BRA)
Coverage: Total contributors BRA and CHL, affiliates BOL and MEX
Middle sectors: 50% and 150% of the household-adjusted median
income per head
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Low coverage is evident also among middle sectors
Note: Percentage of affiliates (Bolivia and Mexico) or contributors (Brazil and Chile), over workers (14-64 years)
Contributory pension coverage rate by income level
0 10 20 30 40 50 60 70 80
Disadvantaged
Middle Sectors
Affluent
2006 CHL 2006 BRA 2006 MEX 2002 BOL
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Middle income workers are not mostly formal
Note: Percentage of total middle sectors’ workers (0.5 – 1.5 median household adjusted income)
Middle sectors‘ workers by employment category
0.0
0.2
0.4
0.6
0.8
1.0
2002 BOL 2006 BRA 2006 CHL 2006 MEX
Pe
rce
nta
ge
Formal employees Self Employed (with tertiary education completed)
Non Agricultural Self-employed Non Agricultural Informal Employees
Agricultural Self-employed Agricultural informal employees
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Informality reduces severely pension coverage
Note: Percentage of affiliates (Bolivia and Mexico) or contributors (Brazil and Chile), over middle-sectors’ workers (14-64 years)
Middle sectors’ workers pension coverage rate
0
10
20
30
40
50
60
70
80
90
100
Formal Informal
BOL 2002 BRA 2006 CHL 2006 MEX 2006
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Informal workers are heterogeneous
Note: Percentage of affiliates (Bolivia and Mexico) or contributors (Brazil and Chile), over middle-sectors workers (14-64 years)
Pension coverage rate of the informal middle sectors
0
5
10
15
20
25
30
35
40
45
Self Employed (with tertiary education
completed)
Non Agricultural informal employees
Non Agricultural self-employed
Agricultural self-employed
Agricultural informal employees
BOL 2002 BRA 2006 CHL 2006 MEX 2006
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Coverage is ‘regressive’ among informal workers
0
5
10
15
20
25
30
35
Disadvantaged Middle Sectors Affluent
BOL 2002 BRA 2006 CHL 2006 MEX 2006
Pension coverage rate of informal workers by income level
Note: Percentage of affiliates (Bolivia and Mexico) or contributors (Brazil and Chile), over workers (14-64 years)
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Determinants of contributing to the pension system
Brazil (2006) Chile (2006)
I IV V I IV V
Income (log) [0.23***] [0.14***] [0.08***] [0.08***]
Income * formal [-0.15***] [-0.01*]
Income * independent [0.19***] [0.14***]
Income * independent (HE) [0.07***] [0.11***]
Income * informal salaried [0.12***] [0.06***]
Independents [-0.88***] [-0.99***] [-0.84***] [-0.99***]
Independents (HE) [-0.64***] [-0.69***] [-0.69***] [-0.75***]
Informal workers [-0.88***] [-0.99***] [-0.77***] [-0.92***]
Controls for
Educational attainment No Yes Yes No Yes Yes
Sector No Yes Yes No Yes Yes
Household composition Yes Yes Yes Yes Yes Yes
Pseudo R² 0.12 0.69 0.69 0.03 0.55 0.55
N 163660 163652 163652 96748 96520 96520
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A recap on independents in Brazil and Chile
• Work status, income and pension coverage
Key Results
• Household income (+), as in Packard et al. (2002) and Auerbach et al. (2007)
• Household income (++) among not formal workers
• Compulsory affiliation of independents raises overall coverage…
but does not break the link income-contributions
Other results
• Women less likely to contribute (by 5%)
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How well do social pensions do?
0 20 40 60 80 100
Disadvantaged
Middle Sectors
Affluent
Disadvantaged
Middle Sectors
Affluent
Disadvantaged
Middle Sectors
Affluent
Disadvantaged
Middle Sectors
Affluent
Mex
ico
C
hile
B
razi
l B
oliv
ia
Contributory Non Contributory Contributory & Non Contributory
Note: Data for 2006 except Bolivia 2004. No data are available for non-contributory pensions in Brazil and Mexico.
Source: Based on National Household Surveys.
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Policy recommendations: pensions (ex post and ex ante)
Minimum pensions: old affiliates, agricultural informal
Universality vs. Looser eligibility
ECLAC (2006), Levy (2008), Pages (2010), Dethier et al., (2010)
Affiliation: Independents with tertiary education
Compulsory for independent workers vs. Opt-out
Flexibility (contributions, withdrawals)
Hu and Steward (2009)
Public co-funding: Middle-sectors informal workers with savings
Matching defined contributions
Holzman et al. (2009)
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Limitations of targeted benefits
• Targeted benefits
• Means tests and vulnerability
• Integration with contributory schemes in middle income countries and with other
social assistance schemes in low-income countries
• Universality
• Subsidised social insurance (Subsidised or Matched contributions)
Thank you