Social Insurance (Pensions and Health), Labour Markets and Coverage in Latin America

In the last quarter-century, particularly the last 15 years, virtually all 20 countries of Latin America have reformed their social insurance health programmes, and most of them have undertaken structural reforms to privatize totally or partially their pension programmes, albeit with considerable differences in their models, scope, depth and speed. Around 2004, coverage in health programmes averaged 41 per cent of the total population (below the International Labour Organization/ILO minimum norm of 75 per cent), ranging from 7 to 34 per cent in 10 countries, and had stagnated or decreased in nine. Coverage in pension programmes averaged 31 per cent of the labour force—26 per cent in private systems and 39 per cent in public systems (both above the ILO minimum norm of 20 per cent); however, this exhibited a declining trend. The transformation of the labour market toward increasing informality and flexibilization has had an adverse impact on coverage and the above-mentioned reforms, and past and current social insurance policies have not adapted to the changing labour market. This paper, divided into four parts, analyses the relationship between the labour market, social insurance (pensions and health) and coverage of the labour force and the population in Latin America.

The first part briefly describes changes in the labour market toward increasing informality and labour flexibilization that have resulted in jobs without social insurance coverage; examines the difficulties in incorporating the informal sector (self-employed, domestic servants, employees in microenterprises, and so on) and the rural population (including peasants); and identifies potential factors that could explain coverage differences between countries.

The second part evaluates the impact of external factors and the system itself, as well as reforms on various aspects of coverage: overall statistical coverage of both pension and health insurance programmes before and after the reforms; inequalities in coverage by income, gender, geographic area and indigenous peoples; and coverage of the poor by social assistance and the elderly by social insurance pensions.

The third part outlines policies to extend coverage to the excluded sectors, particularly informal and rural; compares divergent approaches of international and regional organizations (such as the ILO, International Social Security Association, Economic Commission for Latin America and the Caribbean, Pan-American Health Organization, World Bank and Inter-American Development Bank) and identifies common objectives; specifies policies to incorporate excluded groups and reduce inequalities by income, gender, geographic area and among indigenous peoples, and to protect the poor and the elderly.

The fourth part draws policy lessons from the Latin American experience for other developing countries.