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Journal Article

IDS Bulletin Vol. 39 Nos. 2

Informal Employment and Pension and Healthcare Coverage by Social Insurance in Latin America

Published on 1 May 2008

This article describes Latin America’s social insurance systems for pension and healthcare in the context of the region’s shift in labour with decreasing formal employment and expanding informality.

The analysis demonstrates that social insurance coverage (on pensions and healthcare) is higher where informality is lower and vice versa; identifies key explanatory factors for low and unequal coverage; and suggests policy recommendations for expanding coverage. By way of introduction, this section briefly explains key features of the pension and healthcare systems and their coverage in the 20 countries of Latin America (based on Mesa-Lago 2008a).

All countries have social insurance pensions for old-age, disability and survivors. Structural reforms in ten countries (Argentina, Bolivia, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Mexico, Peru and Uruguay) shifted from the traditional defined benefit, pay-as-you-go and public administration (‘public systems’), to defined contribution, fullyfunded individual accounts and private administration (‘private systems’), albeit with diverse models and degrees of privatisation. The other ten countries maintain the traditional public systems and several have implemented non-structural (‘parametric’) reforms to strengthen them financially (Brazil, Cuba, Ecuador, Guatemala, Haiti, Honduras, Nicaragua, Panama, Paraguay and Venezuela).

Pension coverage of the labour force by social insurance averaged 31 per cent in Latin America in 2004; in the least developed countries coverage ranged from 9 per cent to 19 per cent. Coverage in private systems was 26 per cent, compared with 39 per cent in public systems (based on surveys averages were 36 per cent and 41 per cent, respectively). Coverage fell in all ten structurally reformed private systems and the average declined from 38 per cent before the reform to 26 per cent in 2004.

Most countries in the region have three health sectors:

  • Public, which legally should protect the uninsured population (the majority in 12 countries) but in practice seldom accomplish that task, and it is extremely difficult to estimate the population with access
  • Social insurance sickness and maternity benefits, comprising a principal programme and often separate schemes for special labour groups, covering 41 per cent of the total population but ranging from 8 per cent to 88 per cent; this is the main provider in eight countries
  • Private, the smallest sector but expanding, which covers 11.5 per cent of the population ranging from 1 per cent to 25 per cent in various countries.

Brazil and Cuba have a public system and no social insurance; the former also has a sizeable private sector that is banned in the latter; in Haiti social insurance is incipient. Healthcare reforms began in Chile in 1981 and have been implemented in virtually all countries, albeit with different scope, depth and speed; most reforms have pursued an expansion of the private sector. Health coverage of the total population by social insurance averaged 41 per cent in 2004, a decline from 52 per cent in 1990; in the least developed countries coverage ranged from 7 per cent to 17 per cent; in 75 per cent of countries between the reform and 2004 coverage either stagnated or declined.

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This article comes from the IDS Bulletin 39.2 (2008) Informal Employment and Pension and Healthcare Coverage by Social Insurance in Latin America

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Mesa-Lago, C. (2008) Informal Employment and Pension and Healthcare Coverage by Social Insurance in Latin America. IDS Bulletin 39(2): 79-86

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Authors

Carmelo Mesa-Lago

Publication details

published by
Institute of Development Studies
doi
10.1111/j.1759-5436.2008.tb00448.x

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Region
Latin America

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