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Preliminary Version




Social Protection in an Insecure Era:

A South - South Exchange on Alternative Social Policy

Responses to Globalization




Report on the SU/TCDC, UNDP Inter - Regional Workshop




Santiago, Chile

May 14th - 17th, 2002




Versions available in (.html), Word (.doc) and Acrobat (.pdf) format at videos.cep.cl/sw2002


  1. 1 Social Protection in an Insecure Era:
  2. 2 A South - South Exchange on Alternative Social Policy
  3. 3 Responses to Globalization
  4. 4 Summary and Main Conclusions
  5. 5 Introduction:
  6. 6 Opening Session:
  7. 7 Introductory session:
  8. 8 First Session: ¯Social Protection in a Globalized World: A New Social Contract on the Agenda?”
    1. 8.1 ILO, Guy Standing
  9. 9 Second Session: ¯Mercosur/Chile after the liberal experience in Latin America: rebuilding a welfare state for the new world?”
    1. 9.1 Brazil, Sonia Draibe
    2. 9.2 Argentina, Alberto Barbeito
    3. 9.3 Uruguay, Josπ Manuel Quijano
    4. 9.4 Chile, Manuel Riesco
    5. 9.5 Other LA Presentations
  10. 10 Third Session: ¯Asia: Social Protection after the Recent Crisis”
    1. 10.1 Chairperson: Huck - ju Kwon, Korea, UNRISD, Geneva
    2. 10.2 Neung - Hoo Park, Director, Department of Social Security Research, Korea Institute for Health and Social Affairs (KIHASA), Ministry of Health and Social Affairs, Republic of Korea
    3. 10.3 Filomeno III Santa Ana, Social Watch and Asia Coordinator, Action for Economic Reforms, Philippines
    4. 10.4 Liu Yutong, Social Security Specialist, Ministry of Labour and Social Security, China
    5. 10.5 Sudarno Sumarto, The SMERU Research Institute, Jakarta, Indonesia
    6. 10.6 Y.M. Raja Dato Zaharaton, Deputy Director - General, Economic Planning Unit, Prime Ministerês Department, Malaysia
  11. 11 Fourth Session: ¯Arab States And Africa: Social Protection in Turbulent Times”
    1. 11.1 Joseph Ewane Ejuba, Director, Regional Office for Africa, International Social Security Association (ISSA), Abidjan, Ivory Coast
    2. 11.2 Lambert Gbossa, Deputy Director, ILO Regional Office for Africa, Abidjan, Ivory Coast
  12. 12 Closing Session: Plenary, Workgroup Reports and General Discussion
    1. 12.1 A new social contract in the making for countries in the South?
      1. 12.1.1 Sonia Draibe, University of Campinas, Brazil
        1. Social policy and economic policy
        2. Conditions and scope of Social Policy: the basis for a new social contract
        3. The Institutions of Social Policy
    2. 12.2 Second Commission: New levels required in overall social budgeting?
      1. 12.2.1 Barbara Stallings, Director of the Economic Development Division of the UN Economic Commission for Latin America and the Caribbean, ECLAC
    3. 12.3 From privatization to public - private collaboration for Social Protection?
      1. 12.3.1 MarÍa del Carmen Feijo„, Executive Secretary, National Council for Social Policies Coordination of the Presidency, Argentina
    4. 12.4 Final remarks by Mr Thierry Lemaresquier, UNDP Resident Representative in Chile.


Summary and Main Conclusions


A three - day workshop entitled ¯Social Protection in an Insecure era: A South - South Exchange On Alternative Social Policy Responses To Globalization” took place in Santiago, Chile, between the 14th and the 16th May 2002 (See videos.cep.cl/sw2002). This inter - regional workshop was organized by UNDP - Chile. It was co - sponsored by the Chilean Ministry of the Presidency and relevant Chilean policy - research centres and universities. Its organization was made possible thanks to support from the Ford Foundation the OSDE Foundation (Argentina) and UNDPês Special Unit for Technical Cooperation Among Developing Countries, and to the collaboration of the Friedrich Ebert Foundation.

The workshop was a follow up of similar initiative that took place in Beirut, Lebanon, between the 27th February and the 1st March 2001, and a result of a two year long consultative process initiated by the SU/TCDC to assist southern countries address the risks of globalization by formulating inclusive and equitable social protection policies. (See www.tcdcwide.net/SSPGnet and SU/TCDC Concept Paper) (WEBLINK). The workshop brought together 70 policy makers, researchers and civil society leaders from Argentina, Bolivia, Brazil, Chile, China, Colombia, Costa Rica, Egypt, Indonesia, Korea, Malaysia, Peru, Philippines, Uruguay and Venezuela. (See list of participants at videos.cep.cl/sw2002).

The objectives of the workshop were to: (a) provide a forum for the exchange of experiences on social policy responses to globalization, focusing on social protection and social budgeting policies, (b) identify capacity gaps and "good practices", and (c) reach consensus on the main elements of an inter - regional framework for follow up.

The workshop was opened by the Chilean Under - Secretary of the Presidency, the Representative of the Officer - in - Charge of the SU/TCDC, the chairman of the OSDE Foundation and the UNDP Under - Resident Representative in Chile, and was well covered by the media. The presentations were organized around three substantive themes: (1) conceptual debates on the impact of globalization on social policy making in the South, (2) regional overviews on the status and challenges to social protection and social budgeting policies, and (3) country level practices and policies related to formal and informal social protection and social budgeting. The workshop featured the joint involvement by UN initiatives in social protection, with presentations from the ILO, ECLAC, UNDESA, UNRISD, and the UN Commission on Socio - Economic Security and participation by resident official from UNESCO and UNICEF. The final day was devoted to small group discussions to identify the main elements of an inter - regional programme (See agenda at videos.cep.cl/sw2002).

The workshop included a special effort to enhance Mercosur and Latin American involvement and exchange of regional overviews and practices. These efforts developed during some months and included the commissioning of country papers from Argentina, Brazil, Chile and Uruguay, the realization of preliminary meetings and the assistance of sizable and representative delegations from LA to the workshop.

There was a wide involvement of Chilean policy - research centres and universities, as well as social organizations, both in the preparatory activities, where two preliminary seminars were held in the preceding months, as in the workshop itself. After the inter - regional workshopês closure, a special session was dedicated to present and discuss the main conclusions of the event to representative authorities from the social protection industry and social organizations, and specialists from academy and government. Another meeting was held to present the workshopês main conclusions to a representative assembly of union leaders and public in general.

The workshop opened with a landmark keynote speech by ILOês Guy Standing, who made a powerful and comprehensive critique of the conceptual framework that has sustained prevailing social protection policies. In particular, his speech criticized the means - tested conditionality of liberal social protection schemes, as opposed to the concept of social protection as a human right. His views were sharply rebutted by ECLACês Barbara Stallings, who praised the workshopês commitment to both social protection and social budgeting, and stressed the need of certain focalization of social protection efforts in countries in the South, considering their severe resource limitations. Ensuing comments by participants generated a lively critical debate that went on all along the workshopês duration.

The workshop discussed several good practices in the South and pushed the debate beyond temporary, ex post social protection measures, such as "social funds", to more comprehensive and inclusive social policies and related fiscal reforms. The workshop discussed regional papers from China, Indonesia, Korea, Malaysia and the Philippines, in Asia; the Arab countries and Africa; and Argentina, Costa Rica, Brazil, Chile and Uruguay, in LA (see Agenda and Reports at videos.cep.cl/sw2002).

The workshopês main conclusions were ordered around three main questions:

à      The need of new social contracts in countries in the South, that ensures the right to an adequate social protection for a majority of citizens that are now both more insecure due to globalization and, under protected by current schemes. The workshop recognized the fact that prevailing social protection schemes have, on the one hand, developed private social protection industries that, although not without problems, attend the upper income fifth or quarter of citizens and, on the other hand, focalization of public services and spending in the poorest fifth of the population, has to a certain extent alleviated their plight. Regarding the vast majority of the population, meanwhile, prevailing social protection schemes have proved quite ineffectual and are in urgent need of reform.

à      New levels required in overall public social budgeting. The workshop recognized that overall social expenditure in many countries in the South has recovered significantly, up to duplicating or more, in some cases, during the last decade. Even during the present global crisis, many countries in the South have managed to maintain and even increase their social expenditure. Notwithstanding, the current levels of public social expenditure seem insufficient, even in the best cases analyzed, and severely limited in most cases, to provide adequate social protection for the majority of populations. Regardless of the need of better usage of available funds, the workshop stressed the need to open new sources of fiscal revenue to ensure consistent increases in social protection, including better and increased taxing policies.

à      From privatization to public - private collaboration in social protection. Experience in countries analyzed in the workshop show that privatization of social protection, stressed by prevailing policies, even though it has generated significant private social protection services and funding, has resulted in severe deterioration of public services and diminished public social spending, upon which the vast majority of the population still depend. On the other hand, insufficient or ill conceived regulation has created severe inefficiencies in private social protection and in the public - private relation, usually resulting in high costs and discrimination against low income and high risk affiliates from the private social protection industry. The workshop stressed the need of a new way of thinking regarding public - private relation in regard to social protection, that stresses the need of a vigorous impulse to redevelop high quality, efficient, massive public services, and adequate regulation of both the private social protection industry and itês relation to the public sector, that ensures efficient operation of both.

New Deal type policies were strongly suggested as the best alternative for navigating the present turbulences and avoiding massive collapses as recently experienced by countries present in the debate. Centrality of social protection in such economic policy, and itês virtue of attending both the needs of the majority, while efficiently providing the means for economic recovery, was urged by participants, and by the specialists and UN agencies dedicated to both social and economic matters.

Participants urged to generate wide national consensus regarding these conclusions. Extending this dialogue and further opening it to the academic community in the countries in the South, seemed desirable and important to support this purpose. Follow up initiatives in this direction were urged, including widening the electronic inter - regional network already in place for the initiative, to which the workshop has contributed with the planned publication of the relevant materials and edited video of the main debates, all of which are available at the workshopês site (videos.cep.cl/sw2002) and UNDP sites.


A three - day workshop entitled ¯Social Protection in an Insecure era: A South - South Exchange On Alternative Social Policy Responses To Globalization” took place in Santiago, Chile, between the 14th and the 16th May 2002 (See videos.cep.cl/sw2002). This inter - regional workshop was organized by UNDP - Chile following an initiative from UNDPês Special Unit for Technical Cooperation Among Developing Countries (SU/TCDC). It was co - sponsored by the Chilean Ministry of the Presidency and relevant Chilean policy - research centres and universities. Its organization was made possible thanks to support from the Ford Foundation, the OSDE Foundation (Argentina) and (SU/TCDC), and to the collaboration of the Friedrich Ebert Foundation.

The workshop was a follow up of similar initiative that took place in Beirut, Lebanon, between the 27th February and the 1st March 200, and a result of a two year long consultative process initiated by the SU/TCDC to assist southern countries address the risks of globalization by formulating inclusive and equitable social protection policies. (See www.tcdcwide.net/SSPGnet and SU/TCDC Concept Paper) (WEBLINK). The workshop brought together 70 policy makers, researchers, experts and civil society leaders from Argentina, Bolivia, Brazil, Chile, China, Colombia, Costa Rica, Egypt, Indonesia, Korea, Malaysia, Peru, Philippines, Uruguay and Venezuela. (See list of participants at videos.cep.cl/sw2002). Participants represented diverse stakeholders: governments, independent policy research institutions and NGOs. Discussion during the first two days took place in plenary sessions. An opening session was followed by five sessions organized around regional topics. The third day focused on small group discussions and a final plenary meeting that concluded the workshop. Two additional meetings were held, dedicated to discuss the topics of the workshop, one with the host countryês authorities from government, social organizations and social protection industry, and another to present the matter to public at large (see the main speeches of these special sessions at http://cep.cl/sw2002/SW2002_Movies.html).

The objectives of the workshop were three fold: (a) to provide a forum for the exchange of experiences on social policy responses to globalization, focusing specifically on social protection policies, (b) to identify capacity gaps and ¯good practices” in this field in the South, and (c) to reach a broad consensus on the main elements of a programmatic inter - regional framework for follow up.

Opening Session:

In the opening session the UNDP/TCDC Officer - in - Charge Representative, the UNDP Under - Resident Representative in Chile, the CEO of sponsoring OSDE Foundation and the Chilean Under - Secretary to the Presidency gave opening speeches. They mentioned the workshopês sponsors, described the preliminary work done, delineated itês objectives and emphasized five points. First, that besides itês positive aspects, globalization has increased insecurity and vulnerability for the majority of populations in the South. Second, that after over two decades of experience in countries in the South with the Bretton - Woods Institutionsê recommended social protection schemes, both their virtues and, specially their serious limitations, have become quite evident, and the latter have made them insufficient to cope with the above mentioned consequences of globalization. Third, that Southern countries need to enhance a concerted process of South - South collaboration in response to the collective challenges imposed by globalization. Fourth, that inclusive and equitable, as well as efficient, social policy and social protection policies are investments that will ensure social, economic and political stability to both the Northern and Southern countries. Fifth, that social protection, as an aspect of social policy, is gaining new meaning and importance within the context of globalization and the new world order, as advances in the matter during the last decade, and even during the ongoing world crisis in many countries well prove. Finally, all speakers agreed that this workshop was timely and urged the participants to continue their work on the subject.

Mr. Cosmas Gitta, SU/TDC, New York, Official, representing SU/TDC Officer in charge, opened the workshop welcoming all participants and chaired the opening session. He remembered the UN Millennium goals, as well as the Buenos Aires 1978, United Nations international Conference on Technical Cooperation among Developing Countries as a background for the workshopês explicit inspiration: to envision a more inclusive form of globalization, to make globalization, not only the engine for expanded markets, but also as an imperative to expand peoplesê choices by building caring societies (read Gitta, Cosmas, Opening Speech).

Mr. Eugenio Ortega, UNDP Under - Resident Representative in Chile, after welcoming all participants, mentioned how the workshop had been made possible mainly thanks to the generous support of the Ford Foundation and the OSDE Foundation (Argentina). The latter made possible to enhance the Mercosur and Latin American (LA) participation, including the commissioning of four regional reports from Argentina, Brazil, Chile and Uruguay. He also mentioned additional support for the workshop given by SU/TCDC and Friedrich Ebert Foundation, who enhanced LA labour participants, as well as Arcis University and Chilean computer companies who made possible both the filming and later publication in the internet of the workshopês main moments. He mentioned the sponsorship of the Chilean Government, as well as a long list of universities and academic centres from the host country, all of which participated in the workshopês two preliminary meetings, through which the Chilean paper was prepared. He stressed the important participation of UN organizations in Chile in all this work, particularly ECLAC, ILO and UNESCO. Mr. Ortega made a special mention of Centro de Estudios Nacionales de Desarrollo Alternativo, CENDA, the workshopês main organizer by commission from UNDP (read Ortega, Eugenio, Opening Speech or watch his speech at http://cep.cl/sw2002/SW2002_Movies.html).

Mr. Gonzalo Martner, Under - Secretary to the Presidency of Chile, made a comprehensive and critical summary of the condition and challenges of social protection in Chile today. He stressed the large deficits in the matter inherited by the democratic governments of the 90s, from the preceding dictatorship; the important effort to overcome these through large increases in public social expenditure and other reforms, in the last decade, even during the recent, crisis affected years; the large gaps still remaining to be covered, between the social protection expectations and needs of the population and the possibilities to satisfy them, including difficulties posed by the political and constitutional binds still left behind by Pinochetês Constitution (see Gonzalo Martner at : http://cep.cl/sw2002/SW2002_Movies.html ).

Mr. Rodolfo Gonzˆlez, CEO of OSDE Foundation, Buenos Aires, speaking in behalf of the workshopês main sponsors, mentioned that his experience, as founder and chairman of Argentinaês largest private health insurer, a non profit organization, pointed towards the importance of private social protection initiatives that could well complement state efforts in the matter. He stressed the importance of introducing good administrative practices, many of them developed and practiced in the private entrepreneurial world, to the public social protection industry (see Rodolfo Gonzˆlez at: http://cep.cl/sw2002/SW2002_Movies.html).

Introductory session:

Mr. Manuel Riesco, Director, School of Economics, Universidad ARCIS and of CENDA, Chile, Coordinator of the workshop, welcomed all participants and introduced the Agenda. Mr. Jaime Ruiz - Tagle, senior adviser in the Chilean Ministry of Planning, moderator of the workshop, explained the procedures of the workshop.

First Session: ¯Social Protection in a Globalized World: A New Social Contract on the Agenda?”

The first session was entitled: ¯Social Protection in a Globalized World: A New Social Contract on the Agenda?” and it was chaired by Mr. Francisco Durˆn, Vice - Minister of Social Development, Ministry of Health and Social Development, Venezuela, who enhanced his roll improvising a precise and detailed summary of the whole session, at the end of the same. The session was opened by the workshopês keynote address, delivered by Mr. Guy Standing, Director, In - Focus Programme on Socio - Economic Security, International Labour Office, ILO, at Geneva. Comments were made by Mr. Huck - ju Kwon, Research Coordinator, United Nations Research Institute for Social Development, UNRISD, Geneva; Dr. Barbara Stallings, Director of the Economic Development Division of the UN Economic Commission for Latin America and the Caribbean, ECLAC, and; Ms. Vivienne Taylor, Deputy Executive Director, Commission on Human Security, New York

ILO, Guy Standing

(For his complete paper see: http://cep.cl/sw2002/Informe_Principal/SW2002_Standing_Report.doc)

(To watch his speech, use a QuickTime enabled browser to see: http://cep.cl/sw2002/SW2002_Movies.html)

Mr. Standing delivered a vibrant speech, not at all lacking in poignant criticism, irony and certain landmark quality, entitled ¯Globalisation: The Eight Crises of Social Protection”.

Mr. Standing introduced his theme with a definition of social protection from a historical point of view, as a broader concept than the original ¯social security” concept that addressed mainly state transfers, whereas social protection includes social services, community initiatives, private, commercial or voluntary schemes, etc. He also introduced the even broader an contemporary concept of ¯socio - economic security”, that is also about the ¯economic protection of the social” embedding the economy in society through structures of systems of regulation, protection and distribution that limit social and economic insecurity, reduce inequalities and provide patterns of opportunity.

He posed two questions and a vision: What sort of society would we want to leave for our children or for your children, behind a veil of ignorance? What is it that should be equalized in the Good Society of the 21st century? His vision of the Good Society is one where people live in an environment in which individual action and reflection is backed by collective agency, in what he calls collective, or cooperative, individualism, based on real freedom, and based on equal basic security, or what might be called complex egalitarianism.

The ironies of globalization, in his view, pose several contextual challenges for social protection policies, and condition the options that should be considered. These ironies derive from a non-stable situation where the three systems that embed the economy in society, the regulatory system, the social protection system and the redistributive system, turn incompatible with the underlying economic and technological system. Thus, some countries have been de-globalized by globalization, having their export sectors decimated and their state enfeebled or destabilized; capital mobility has raised in absolute terms and relative to labour mobility, increasing pressures that result in more unequal social income; perversely, at the same time the now more needed redistributive system turns feebler as the effective tax of capital declines or disappeared while taxes on labour and consumption increase; subsidies on wage goods have been cut while subsidies for capital have multiplied; government policies are increasingly ¯harmonized” in the above mentioned direction; social solidarity has been eroded; economic activity has ¯in formalized”; there has been a de centration or erosion of the centre of institutions at all levels, giving enhanced powers to local elites and making policies more discretionary; it has been an era of re - regulation in a pro - individualistic and often anti collective sense, where governments have deliberately set out to steer social behaviour by adjusting fiscal policies.

Social protection is fundamentally about providing income security. For this, obviously, we need a reasonable idea of what counts as income, as well as what counts as security. Accordingly, we should think in terms of what we might call social income. In any society, every individual has some source of income, or dies. It is of limited use to consider social protection and socio - economic security as if there were no social groups or •classesê. A new stratification may be presented in descending order based on average social income: The elite at the zenith of the globalizing economy, a tiny minority of absurdly rich people whose impact on social and economic policies and political developments is out of all proportion to their number and they have all sorts of security; the proficians, mixture of professionals and technicians, the new craftsmen of the global flexible economy, at least partially detached from state - based social protection systems; the salariat of civil services, large corporations, para - statials and other bureaucracies, with a high degree of labour security, detached from state protection systems, see their future in terms mainly of private insurance benefits and earnings from investments; the core workers or who used to be called the working class, for whom welfare states were built in the first place, and that have dwindled in number, in relative terms and increased their insecurity; flexi workers, including all non - regular salaried workers and informal workers, highly insecure and relatively increased in number; the unemployed, whose numbers and insecurity have risen extraordinarily while the level of benefits has been cut, duration of entitlement shortened and conditions for it tightened; the detached, a growing minority, cut off from the mainstream of benefits, lingering in poverty, anomic and threatening.

In the above-presented framework, Mr. Standing enumerated what he calls the eight crisis of social protection:

I.               A linguistic crisis: by which he means concepts have been cleverly worded so as to become misleading regarding their real meaning, such as for example social safety net (quite stiff to fall into and quite prone to let one fall through, meaning reality giving crumbs of comfort to the means tested poor) and active labour market (which means that giving unemployment benefits funds to individuals assumed to be entitled to receive them as a right, is replaced by the state telling people what they must do in order to receive some moderate state benefit, directing them to training or job schemes) or targeting (where in fact means tested or other selected benefits rarely reach those most in need, due to low take - up rates, stigma, administrative inefficiencies and so on, being worse than silly in poor countries where administrative structures required do not exist).

II.             A Fiscal Crisis: derived essentially because social security schemes that were designed for industrial society based on regular full time employment are put to strain in all societies that do not correspond to that model. Governments have responded by targeting benefits, that is, generating a process of explicit and implicit disentitlement.

III.           A Legitimation Crisis: derived from the erosion of the social solidarity basis of the welfare state. The working class is no longer expected to be the majority, the core stratum has been shrinking, while the three above groups detached by fortune and the ones below detached by misfortune. The political clout of the groups has thus changed.

IV.           A Moral Crisis: a sentiment spread that the state benefits encouraged behaviour and situations they were actually supposed to overcome, creating what became known as mortal hazards and adverse selection. It lead politicians to accept three categories: the deserving poor, to be offered a residual safety net; the undeserving poor, to be offered the carrot and the stick of workfare and/or conditional low transfers and, the transgressive poor, from whom public order must be enforced. Categorising people in this way is arbitrary, unnecessarily judgmental and inequitable. Nevertheless, it has resulted in greater income insecurity for those on the margins of society. The most striking outcome of the trichotomy is that those perceived as deserving are offered conditional assistance that smacks of charity, rather than a right, those who are undeserving are offered a route to social decency and social •inclusionê, and those who transgress are offered social •exclusionê through prison, hard labour, stigmatization, summary justice, and even the prospect of social tagging.

V.             A Social Dumping Crisis: With globalisation, there has been a tendency, whether justified or not, for policymakers to indulge in social policy competitiveness. Intent on attracting or retaining foreign capital, they are resorting to social dumping. On the contrary, lower social protection standards and subsidies for low - wage labour are issues that should creep up the international trading regime agenda, as aspects of unfair trading practices before the WTO. But whatever the future, the tendency to indulge in social dumping has weakened the state benefit share of social income, and thereby contributed to income insecurity.

VI.           A Governance Crisis: An emerging governance crisis arises from the fact that increasingly, as a result of privatization of various social protection policies, countries are finding that there are oligopolistic, if not monopolistic, private providers of services that scarcely bother to conceal their tendency to indulge in opportunistic profiteering. This means there is a growing need for regulatory instruments, which are not easy to construct if the country is economically weak or small.

VII.         A Work Crisis: The desire of policymakers to roll back state - based social protection, to make it more selective and conditional, to privatize benefits and services, and to tie entitlements more to the performance of labour has created a fundamental dilemma, which could become the most subversive •crisisê of all. What should count as ¯work” to gain entitlement?

VIII.       A Social Justice Crisis: The biggest global challenge to social protection systems is that, quite simply, they do no offer the prospect of income security and social protection for the poor and near - poor. In sum means - tested benefits •targetedê on the poor are impoverishing and stigmatising, and are likely to be eroded because they are for the voiceless or weak groups. As Titmuss tersely concluded long ago, benefits specifically for the poor will be poor benefits.

Mr. Standing suggests a direction towards an alternative to third wayism, citing T.H. Marshall he pointed out that the 18th century was when civil rights became established as the legitimate goal of social reform, the 19th century was when political rights became legitimized, and the 20th century was when social rights became recognized. One may predict that the 21st century will be the century of economic rights. The fundamental economic right is or should be the right to equal basic security. This requires basic income security, achieved in some way or another. However, in order to enable the vulnerable and less well - endowed to retain basic security, there must also be equal Voice representation security, at the collective and individual levels. Finally, the policies and institutions of social protection, regulation and redistribution must be based on the legitimation of all forms of work, not just labour. It is a vision of diversity. Basic security should be what is equalized, where security is defined in terms of freedom from morbidity, freedom from controls that fail the paternalism test, and equal good opportunity to pursue our individual sense of occupation.

Mr Standing concludes that the eight crises of social protection are unlikely to be resolved in the near future. We will have to learn to live with the linguistic crisis, and learn to respond to the deluge of euphemisms that threatens to take the place of objective analysis. The fiscal crisis reflects a failure of nerve, since there is no evidence that societies cannot afford a comprehensive system of social protection. The legitimation crisis is a political challenge, and can surely be met by seeking out a rationale for a new universalism and sense of social solidarity. The moral crisis must be countered with scorn and an appeal to renew the march to freedom; paternalism will not be accepted for long. The social dumping crisis will almost certainly run up against the pressure to extend the international trading system.

The governance crisis is already moving in a positive direction, in that the "associational" revolution that is taking place around the world is creating institutions and interest organizations that are demanding to be part of the system of governance. The work crisis is also moving in a very positive direction, in that it has become manifestly absurd to link entitlements to social protection only to the performance of labour and in that governments are trying to reduce social spending, so that they are expecting citizens to undertake more of the social services that for many decades had been presumed to be the responsibility of the state. Finally, the social justice crisis is fuelling the sense of social anger spreading around the world, and forcing politicians and social policy analysts to look to first principles. ¯It is distribution, stupid!”

Mr. Standingês keynote speech was immediately and sharply countered by Ms. Barbara Stallings, Director of the Economic Development Division of the UN Economic Commission for Latin America and the Caribbean, ECLAC.

(To watch her speech, use a QuickTime enabled browser to see: http://cep.cl/sw2002/SW2002_Movies.html)

In her comments, Ms. Stallings praised the workshopês commitment to both social protection and social budgeting, and stressed the need of certain focalization of social protection efforts in countries in the South, considering their severe resource limitations. She considered Mr. Standingês speech clear and powerful exposition of an Euro - centred social policy conception, because his views could make sense in countries rich enough to effectively afford social protection as a universal citizenship right, a non conditional scheme, backed mainly by States with no really serious fiscal constraints. On less rich countries, on the contrary, she said, targeting public social protection schemes made in fact a lot of sense, while upper social groups could well cover their social protection needs out of private insurance schemes. She also stressed that in these other countries it all starts with jobs, that is, with economic growth, and consequently, social policy should not impair economic growth and needed not to, if intelligent and appropriate fund mobilization and allocation strategies were employed. She questioned the ¯imminent feasibility” and even the desirability what Mr. Standing sees as his proposed new approach towards solving the crisis he mentioned.

Nevertheless, she appreciated Mr. Standing point in saying that the structural change regarding the increased instability of jobs should make us rethink the locus where social protection policies should be centred. She also underlined her agreement on the points raised by Mr. Standing on inefficiency of current, targeting and means testing based, schemes stigmatization of beneficiary groups, and the inequalities deriving from the privatized part of social services.

She cited a recent revision of the results of globalization and structural reforms in LA, published by ECLAC. Although it found a number of benefits, the report points out that problems in employment are being exacerbated, and problems in inequality which are tremendous in this region of the world at best are not being dealt with and at worse are being also made worst. She mentioned having concluded that the social agenda must be brought to the centre of the concerns of policymakers in the coming years and decades. Of course it is necessary to keep economics in mind and figure out how this social initiatives are going to be financed.

In LA, in her view, there are both similarities and differences among the countries regarding the current state of social protection. The differences are both quantitative and qualitative, for example, vast differences in the level of social expenditure from country to country, ranging from over a little over fifty dollars per person per year in Honduras and Nicaragua, in the one end, to somewhere around seventeen hundred dollars in Argentina (1997), with an overall average slightly over five hundred dollars a year on a per - capita basis. Also, big differences may be found in social expenditure relate to GDP, ranging from 4% in certain Central American countries, up to 23% in Uruguay. There are also big differences in the composition of social expenditure, with a certain correlation to expenditure, because the larger the expenditure the larger the proportion of such expense that goes to long standing social security systems such as education, health and pensions, for example. There is also a more subtle difference regarding targeting vs. a more universal kind of approach to social protection.

There are also similarities in LA regarding social protection: an increased awareness of the importance of these problems, not just as a moral issue but also as contribution to the economic (and political) future of the countries. During the 1990s this awareness has translated into an important increase in social expenditure, about 50% on the average on a per - capita basis. No cyclical expenditure seems good news during the recent crisis. Employment is recognized as the basic family income (80% of it according to ECLAC). That means important emphasis in economic growth and competitiveness as necessary if not by any means sufficient aspect of better social situation. Also emphasis on small firms, as they generate most the employment. Also, that public and private sectors, thus raising questions about regulations, must solve these problems jointly improved management techniques and other issues, but a matter that must be taken into advantage.

The main challenges of the new social contract for the region are, according to Ms. Stallings diagnosis: a) it all starts with jobs, more and better quality ones, this meaning higher wages, better working conditions and unemployment insurance and benefits; b) support in other ways to improve the quality of lives, such as better education, housing, health care and, of course, pensions; c) mechanisms to provide income for those who cannot work; d) we need to find adequate financing, both public and private, for it all and make a strong political commitment to make it available, even if it hurts some interests.

A quite lively debate followed, with the comments of Ms. Vivienne Taylor, Deputy Executive Director at UN Commission on Human Security, and Mr. Huck - ju Kwon, Research Coordinator, United Nations Research Institute for Social Development, UNRISD and many other participants.

(To watch their speeches, use a QuickTime enabled browser to see: http://cep.cl/sw2002/SW2002_Movies.html),

Both Mr. Taylor and Mr. Kwon, on the other hand, tended to agree with many of Mr. Mr. Standingês general views.

Ms. Taylor, who comes from South Africa, disagreed with Mrs. Stallings perception of Euro - centrism, in Mr. Standingês speech. She agreed with Ms. Stallings that economic growth was needed, but on the other hand insufficient for an adequate social protection. She said poverty, infectious deceases, conflict and HR violations cripple the survival and dignity of millions of people today; communities and peoples are unevenly affected by globalization. These problems are not adequately addressed by conventional approaches alone. At a time when we may witness both the contradictory pressures and the eight crisis exposed by Mr. Standing, it must be asked why, despite national policies and international programs, poverty and alienation remain persistent features for a large number of people. Perhaps the assumptions that underpin current approaches to security or insecurity must be revised. Equity is at the heart of the eight issues raised by Mr. Standing, she said. We need to engage to see what is happening within poverty itself, we need to carefully look into financing arrangements to address social problems, the economic infrastructure and tax subsidies that are provided. Great inequities may be found in the tax systems and the arrangements that exist within our national contexts. When talking about social budgeting and the need of a new social contract, Ms. Taylor argued, the breaches in equity must be addressed so existing problems may not be perpetuated.

Ms. Taylor talked about the concept of Human Security. Is it a new fashionable term that is being promoted? It is not just a concept, she said. It is about the everyday experience of people who are living in abject poverty and whose security, both in the economic and the social, political and cultural sense, is being violated. It means more than looking at territoriality and conflicts across regions. It means engaging with what is happening within countries, what is happening to people. There is a direct link between human security and social protection and the need for a new social contract.

Mr. Kwon said that globalization might in fact increase social protection, as it did in northern countries of Europe with open economies, but only on the condition that appropriate action is taken in that direction. Regional cooperation seems crucial to avoid ¯beggar thy neighbour” policies denounced by Mr. Standing. But the main issue in internal commitment to social protection, that make it centre stage, both for economic policy and democratic enhancement. Trouble is not social policy deteriorating economic competitiveness, but rather, for example, not providing adequate funding for social policy. Social policy is entwined with economic policy and democratic processes, and social freedom is entwined with economic freedom and political freedom.

The general debate opened by Mr. Standingês keynote speech went on during the whole of the workshop, with many participants referring to it. One of the views about it stated that it was perhaps ripe time to go on the offensive, much in the tone set by Mr. Standing, against social protection policies that have dominated the agenda during the last three decades.

Second Session: ¯Mercosur/Chile after the liberal experience in Latin America: rebuilding a welfare state for the new world?”

The session was chaired by Senator Eduardo Suplicy, from Brazil, and the panellists were Ms. Sonia Draibe, from the University of Campinas, UNICAMP, Brazil; Mr. Alberto Barbeito, from Centro Interdisciplinario para el Estudio de PolÍticas Pìblicas, CIEPP, Argentina; Mr. Josπ Quijano, Director, Consultora Alianza Cooperativa Internacional, ACI, Uruguay; Mr. Antonio Floriano Pesaro, National Secretary, Programme Bolsa Escola, Brazil and; Mr. Manuel Riesco, Director, School of Economics, Universidad ARCIS/CENDA, Chile.

Brazil, Sonia Draibe

(for her complete paper see: http://cep.cl/sw2002/Informe_Brasil/SW2002_Brasil_Informe.doc)

(To watch his speech, use a QuickTime enabled browser to see: http://cep.cl/sw2002/SW2002_Movies.html)

Ms. Draibe remembered Brazil is a large country, with 170 million inhabitants, with a federal government structure. Federalism is accentuated, which means, for example that third tier, municipal, government level, is autonomous in the same degree as the other two levels, it can impose taxes. Sometimes federalism is more competitive than cooperative, which means that municipal, states and federal governments can make the same type of educational offer. Only pacts may avoid duplication and efforts in this sense are quite recent. Basic education has been decentralized since a long time, with central government not offering basic education since the beginning of the republic, while it does offer university education. Municipals and states roughly share basic (eight years) schools by half, and states offer most of the secondary education.

Brazil is as country of great differences. It is the LA country with the worst income distribution, and one of the worst countries in the world in this respect, since long, long ago, having remained as such for the last thirty or forty years. Regional differences are also great. Labour market is large and informal market larger still. Unemployment has been high during the last eight years, topping 7% - 8% nationwide and reaching up to 19% in certain urban areas.

Brazil has built a form of welfare state, since the 1930s and by 1980 it encompassed wide services in almost every aspect of social policy, expending over 15% of GDP. Unemployment protection was added since 1988. Financing is out of the budget, but it relays in an important degree on social contribution type of taxation. There are salary-based contributions for education, for training and other purposes, in addition to social security as such. Contributions make up almost half of the overall social budget. There is a high degree of forced links of expenses of governments at all levels to defined purposes; for example, state governments must spend 25% of their income in basic education and since 2000, 17% of their income in health care. This is important in fluctuations evidenced by social expenditure in Brazil over time.

Public services take account for most of education and health care. Since the 1970s, though, when overall offer of these services explodes, private participation has grown significantly. In education, the middle class massively takes their children out of the public schools and into private ones in basic education, and in health the upper 40% of the population has private insurance of some type, even though everyone has a right to use the public health system. In this sense, privatization has occurred in Brazil through the growth of the private social protection sector, alongside the public one.

By the 1980s, exclusion from the system was quite high, coverage of the educational system was under 90% even in the basic level, and the operation of the enormous social protection machinery was crossed by clientelism, resource appropriation and other bad practices. Thus the newly elected democratic governments of the eighties opened a wide reform agenda for social protection.

There have thus been two reform cycles in this area; one in the 1980s highly influenced by the democratization process and another in the second half of the 1990s, when economic adjustment takes place. The first reform wave generated actors, culture, and flags and left an important mark in the whole of the system, both in its basic conception as in its form. It also determines in part the second wave of reform of the 1990s. For example, Brazil did not privatize in the 1990s following the neo - liberal model, its public educational and health services. Previous public - private relation was maintained. Maybe even a return to the public schools by children of the middle class took place in some degree, due to impoverishment. The 1980s reform must be understood in this background. For example, Brazil created in the 1980s a universal, free public health system for 150 million people. In Swedish style, without money, but they did it. So in the 1980s there was no power, liberal or conservative, capable of regressing these systems, rather, they perfected them. The system is expensive and perfecting the system is one of the main goals of policy now.

There are profound modifications although. False universalism (with wide exclusion) was changed introducing targeting into the system, to reduce poor peopleês waiting lists and quality of service gaps, while maintaining itês universal conception. Bolsa Escola is an example, a focalized program to ensure the poor access and permanence in universal schooling. The right is there but now it is more practical.

The Brazil has an adverse tradition against direct money transferrals to families. The church opposed direct transferrals as well. That people would be corrupted by those transferrals and so on. Now many programs of direct transferrals have been installed, that total 1.5% or so of GDP for 2002 in expenditures.

Regarding unemployment insurance, roughly 40% of the unemployed presently receive this benefit, and expenses in this item amount to almost 0.5% of GDP.

The central system grew fast in two moments, in the 1930s and in the 1970s, both times under dictatorships. Decentralization was thus not a neo - liberal agenda but a democratic one. Decentralization without resources may be destructive but it was not the Brazilian case.

The overall results are not great in the above mentioned problems, but many results have been obtained in determined points of the system: social expenditure grew from 15% back in 1980 to 22% of GDP today; more children attend school, almost universally in basic level; health care has improved as well, with better coverage, specially in those programs where coverage was worse; there is a bit more of justice in the provision of services, not quite documented as yet.

All expected results have not been attained, for sure. For example, redistributive impact of Brazilian Social expenditure is still very low. Racial differences in education remain more or less unchanged for forty years, even though everybody has improved their education.

Better focalization in certain programs is needed; a learning process in this respect is under way, in a country without a tradition in this respect. Experiments are under way, as well, with electronic means to improve control of benefits delivered.

In respect to regional differences, results are mixed. Some programs have positively altered the previous inequality, for example with per - capita redistribution of health resources. Municipal schools of small poor local governments are still terrible, in many respects, when compared with the best state schools.

Summarizing, Brazil has made large efforts during the 80s and the 90s, in order to widen and modernize the social policy institutions, together with an increase of over 30% in public social expenditure. Brazil has attained important results but still has a big agenda of difficulties in this area. Important modifications have taken place in the national social protection system, a sort of inflexion point that has taken pace mainly in the institutional and organizational level of social policies and programs.

Many of the remaining problems, though, have little to do with design or quality of execution of social policies, but rather stem out of structural unemployment, income inequality and poverty, all of which impose very strong limits to social policy, and by itself is not capable of overcoming such paramount difficulties, as good at it may be in itself. In the case of Brazil almost dissociation between economic policy objectives and social policy objectives has been experienced in recent years.

Ms. Draibe stressed, finally, the importance for the improvement of the social situation of the country, that economic growth may be recovered, unemployment reduced, employment increased and informality reduced, and that certain levels of certain minimum levels of protection for informal workers may be defined.

Argentina, Alberto Barbeito

(For his complete paper see: http://cep.cl/sw2002/Informe_Argentina/SW2002_Argentina_Informe.doc)

(To watch his speech, use a QuickTime enabled browser to see: http://cep.cl/sw2002/SW2002_Movies.html)

Argentinaês Mr. Alberto Barbeito entitled his presentation ¯Social insecurity as public Policy”, implying that the reforms of the Argentinean welfare state that took place in the last decades reflect a deep change in the overall social equilibrium of the country.

The previous system had taken shape in the late 1940s under Per„n, with a Bismarckian orientation, but built over the strong mutualist tradition of previous immigrant community based systems. The pension system was formed in the early 1950s by consolidating the old mutualist, fund based, system and established a universal pension equivalent to 82% of latest salaries or incomes, with 60 and 55 as retirement age for dependant men and women, respectively, and 65 and 60 years for independents. Thirty years in activity, with 15 years contributions were also required. The system was complemented by ¯family allowances” that included money transfers to active workers families on a per child basis. By the early 1990s, the system was severely under funded, and relied increasingly upon general taxation.

The traditional educational and health system, for their part, were universal. The basic educational level depended mainly on the provincial governments (80%) and private schools, while the secondary level was mainly dependent on the central government (45%) over provinces (26%) and private schools (29%). Private schools depended highly on state subsidies as well. Universities were almost entirely national (90%). As in the case of pensions, the educational system was severely under funded by the late 1980s, and this condition reflected in the deteriorating wages and installations within the system. The health system was formed by a public, general taxation dependent, system, belonging mainly to the provinces (60% of all hospital beds), a ¯social works” system, salary - contribution dependent system, belonging to unions and a private system, that included both clinics and other health services and insurance or ¯pre - payment” companies. The old system did not consider unemployment benefits, as this was not traditionally a problem in Argentina.

During the 1990s Argentina embarked in a drastic reform process, inspired in the tendencies by then current. Almost all state companies were privatized, tariffs were lowered as well as Mercosur formed, the peso was welded to the dollar, the labour legislation was eased in favour of companies. Unemployment raised to previously inexperienced levels and employment turned increasingly precarious and informal. Income distribution deteriorated significantly, widespread poverty and even indigence appeared as a social malaise. The Argentinean welfare state was at the same time severely ¯retrenched”, ironically, by an elected government of the same Peronist party that had originally established the welfare state[1].

Public expenditure in Argentina, at 1/3 of GDP, as well as public social expenditure (PSE) that accounts for roughly half of it, although far from developed countries, remained high by LA standards, with a notorious pro - cyclical behaviour, that is, it decreases during recessions. The latter may be explained in part because itês financing is highly dependent in wages and consumption taxation. About 37.3% of PSE goes to pensions, 23.3% to education and 23% to health care. Programs that imply direct money transferrals, including family allowances and employment programs, account for about 2% of GDP. Population aging, increased educational coverage and rising in health costs have incidence in PSE. Universal programs, such as public health, have been decentralized almost entirely to provincial governments.

Wage contributions were drastically reduced during the 1990s, from over 33% to fewer than 18%. On the other hand, an important part of wage contributions were redirected to the new AFJP private pension system. On the other hand, VAT tax was generalized and significantly increased, whereas a greater proportion of it was redirected to the central government. Thus, a high burden was tossed to the provinces, which bear most of the cost of universal programs and lost much of the contributions to finance them. In part, the resulting deficit was covered directly by contributions from the families to education and health, which increased from 2.6% to 4.2% and from 7.9% to 9.8% of family budgets, respectively, from 1985/86 to 1996/97.

The educational reform of the 1990s addressed two main issues: decentralization of secondary education to the provinces, where basic level was already decentralized, and general improvement and extension of obligatory education to 10 years, to which the federal Law of Education, enacted in 1992 was oriented. The law reaffirmed gratuity of education at all levels. The law also established an important increase in public expenditure dedicated to education, at least 20% per year, or an increase of 50% in relation to GDP, starting from the 1992 level of 4% of GDP. After 7 years, although not all the objectives of the law have been accomplished and results have been uneven depending on the regions, a large increase in expenditure and school enrolment in effect took place. Overall enrolment increased at a 2.64% annual clip, and in the superior level, that rate was 8.25%, between 1980 and 2000. Public expenditure in education increased 3.13% yearly during the same years, and 6.75% between 1991 and 2000, with university expenditure increasing 9.5% annually, during the last decade. Public educational expenditure reached 4.9% of GDP by 1999. This effort, though, was not enough to recover the previous deterioration of both the educational facilities and teachers and other educational workers salaries. Thus, militancy of teachers in fact increased during the nineties, and their initial salaries are still about 40% of the mean salary in the rest of the economy, while 11.6% of basic level and 4.2% of medium level, teachers, live below poverty line.

The health care reforms of the 1990s pursued decentralization and de - concentration of health care providers, self-management in public hospitals, deregulation of the system of union dependent ¯social works”, expansion of private health insurance institutions, and transformation of the medical assistance program for the elderly (called PAMI). The result has been a deterioration of union dependent ¯social works”, as employment contributions decreased due to increase in informality and decrease in employer contributions, and thus a growing number of workers drifted to the public hospitals. Even though public expenditure in health care increased at a 5% annual rate during the decade, it has not been enough to absorb the additional pressure on the public health system. The most affected ¯social work” has been the PAMI, which is the largest, serving the elderly and also dependent on diminished employers contributions. Over half a million affiliates to PAMI migrated to other, less deteriorated, systems, thus aggravating PAMIês ordeal. The result of all the above has been a segmentation of the population from the health care point of view, with the upper income segments relying increasingly in the private health care insurers and providers, while the majority of the population has seen ¯social works” deteriorate or been obliged to migrate to the public system.

The pension reform, on its part, although less radical than the Chilean version, has been one of the main the pillars of the Argentinean economic reforms of the 90s. The new Argentinean pension system is ¯mixed”, where the public, pay - as - you - go, system, remained partially in place, alongside the new, privately administered, individual capitalization AFJP system that was put into place. The notable case, in Argentina, is how minister again Domingo Cavallo, one of the main instigators of the AFJP system, ended up seriously impairing the same, when, desperate for cash and economic stimulus during the final days of his demise, grabbed 100% of the pension funds for government financing and reduced worker contributions from 11% down to 5%. The massive devaluation that followed Mr. Cavalloês and the whole of the governmentês, ousting by the end of 2001, drastically reduced the dollar amount of the previously ¯pesificated” pension funds. Even before the final crisis, by 2000, the AFJP system had reduced the effective contributors down to 47% of affiliates, and exhibited huge administrative costs, half of which went to propaganda and sales expenses, a similar phenomena as the one experienced in Chile (see below). The pension reform in Argentina is now seriously jeopardized and at this point, it makes good sense that the privatization of pensions was only partial in this country.

Unemployment benefits were not contemplated in traditional Argentinean welfare state, as mentioned before, because the problem was not of great relevance then. Starting in 1991 with the enacting of the national Employment Law, 1.5% of employer contributions were relocated from family allowances to the new National Fund for Employment, that finances the ¯unemployment insurance”. The same law promoted ¯flexible” hiring with less contributions and created minimum employment programs. Further laws enhanced ¯flexibility” in hiring. By 2000, some 125.000 workers out of 1.38 million unemployed, that is 9% of the unemployed, were obtaining a benefit equivalent to 26.9% of average non-farm salary (259 Argentinean pesos (A$)/month when the average non farm salary was 964 A$/month, until 2001 the equivalent in US dollars). In 2002, the government established an emergency plan, that delivers monetary subsidies of A$ 100 to A$ 200 to families where the house head is unemployed, suggesting she or he completes her or his education. The results of the plan are still uncertain. Parallel to the above, some ¯active” type of employment plans have been enacted, as well as ¯minimum employment” programs such as the ¯Planes Trabajar”, whose members have been notorious in recent street demonstrations. Impact evaluation of such plans is ¯undisclosed” for the time being.

Mr. Barbeito presented some social protection proposals that are currently being discussed in Argentina, in the line of universal income. For example, the National Front Against Poverty (FRENAPO, is the Spanish acronym) has presented in parliament a demand that has thousands of signatures in behalf, that proposes: a) An unemployment benefit of A$380 per month for every unemployed person b) a A$60 monthly allowance to all homes, for every son and a similar amount for every elder without a pension.

Also Mr. Barbeito expressed his criticism to ¯focalization” policies that take a lot of trouble selecting the poorest among the poor, while at the same time promotes ¯simplifying” taxes for the rich, establishing a uniform and low income tax. He suggested doing exactly the opposite. For a start, he suggested a ¯citizens pension” to which everybody should be entitled. He also made proposals for health and education, which are already universal and mostly free.

Uruguay, Josπ Manuel Quijano

(For his complete paper see: http://cep.cl/sw2002/Informe_Uruguay/SW2002_Uruguay_Informe.doc)

(To watch his speech, use a QuickTime enabled browser to see: http://cep.cl/sw2002/SW2002_Movies.html)

Mr. Quijano started his presentation stating that Uruguay is considered a leader in LA in respect both to social protection and equitable income distribution. Since 1985, furthermore, when democracy was reinstalled in the country, household income has risen by 50%, the poor have reduced from 37% down to 15.5% and indigence is less than 1%. Real wages, after falling 50% between 1970 and 1985, during the dictatorship, recovered 17.5% between 1985 and 1998, and have since then decreased slightly. Pensioners, meanwhile, who are a part of one out of two urban households, increased their incomes greatly since a national plebiscite held in 1989 voted overwhelmingly to index pensions to wages. All this determined that income distribution, already good by LA standards, bettered significantly since 1990. Income of the upper 10%, by 1999, had decreased to less than 27% in Uruguay meanwhile in Argentina it raised to 37%, in Chile to 40.3% and in Brazil to 47.1%. Lower 40% received 21.6% of income in Uruguay, 15.4% in Argentina, 13.8% in Chile and 13.1% in Brazil, the same year.

The above results have been attained while unemployment has remained high during thirty years, over 10% most of the time, and is now reaching 15% levels. Precarious employment has also increased.

Public expenditure in general, that by 1999 reached 31.4% of GDP and public social expenditure, that topped 22.8% of GDP, by far the highest in LA, explain in part the above results. Brazil and Argentina also have social public expenditure over 20%, while Chile, for example, expends 16.6% in social items. A huge portion of Uruguayês public expenditure, though, goes to pensions (16.3% of GDP), while health and education show lower levels of expenditure than Chile, in relation to GDP [2].

Pensions in Uruguay have a long history, reaching back to 1829. As early as 1919 Uruguay passes the law for pensions, that did not require contributions for the elderly to receive their pensions. Since 1995, pensions are organized in a mixed public - private scheme. Pensioners are entitled to a state pension, financed by contributions into the public system, and a supplementary pension from individual capitalisation fund, privately administered by the AFAP system. Out of four surviving AFAP one is state owned and cares for 37% of affiliates and 55% of the fund. The public system, on its part, includes six institutions, where the Banco de Previsi„n accounts for 80% of all pensions. Wide differences in pensions can be appreciated, though, among the different institutions. Contributions to the system are threefold: employers contribute 12.5% of salaries, workers contribute 15% additionally, part of it for the public system and part for AFAP and; the state contributes with 7% of VAT tax and additional resources if they are needed. It must be remembered that the Banco de Previsi„n attends not only pensions but also health and unemployment [3]. Unemployment insurance benefits include receiving during six months, renewable, 50% of the last six monthsê pay, plus 20% if the beneficiary is married or has dependants, with a minimum of 40 dollars and a maximum of 624 dollars. Over 15% of the unemployed in a given month are covered by the unemployment insurance [4].

The overall balance of the Banco de Previsi„n Social (BPS) in 2000 shows incomes from contributions equivalent to 8.38% of GDP, expenses (in pensions, health, disability, unemployment, family allowances, etc.) by 15% GDP and government supplement of 6.66% GDP, including 7% VAT [5].

Coverage of the Uruguay pension system is practically universal, reaching 97.6% of the occupied workforce (OW) if affiliates of BPS (87% of OW) are added to affiliates to other state ¯cajas” such as bank employeesê and others. The AFAP system in Uruguay is, as said, complementary to the above, and affiliates cover around 50% of the occupied workforce, of which roughly half contribute regularly. Other characteristic of the Uruguay AFAP system - apart that, as said, the state owns the largest AFAP - is that all contributions are collected by the BPS, thus lowering operative costs. Even then, AFAP operative costs per affiliate are 5 times over similar costs in the BPS. The public AFAP, for itês part charges commissions that are 7% under the mean of the system, which is 1.95% of wages [6], while the smaller private AFAP charge commissions that exceed the mean by 5% - 18%.

The Uruguay health system traditionally presented a public - private mix, where the private health institutions, that are mainly health cooperatives, account for roughly 2/3 of coverage and expenses. Highly regulated health mutuals, called Instituciones de Asistencia Mπdica Colectivizada (IAMC), account for roughly 50% of coverage, infrastructure and expenses, and benefit from salaried contributions collected by the BPS. The common knowledge in Uruguay is ¯[public] hospitals for the poor, [IAMCês] sanatoriums for the rest” and it is quite accurate, considering that in Montevideo, for example, public hospitals attend 50% of the poorer segments and only 13% of the better off, while IAMCês attend 25% of the former and over 70% of the latter. Other institutions care for 10% of both segments, while the remaining, 15% of the poorer and 6% of the better off, have no coverage. The public sector also attends the armed forces and other higher income public servants. IAMCês have been having a rough time lately, due to high indebt ness and other problems, all stemming from the difficult times of their salaried affiliates, and they are losing ground, though, to private mobile and other services designed for high-income brackets.

The Uruguay educational system offers relatively good quality of public education with high coverage, over 80% - 90% of the target population in all levels, with astonishingly low public expenditure, relative to GDP. Uruguay public expenditure in education is 2.2% of GDP, while in Chile, for example, the same item tops 4.2% of GDP, plus 3.5% of GDP disbursed by the families. Educational coverage is also higher in Uruguay that in the rest of LA, although school desertion is a problem.

Chile, Manuel Riesco

(For his complete paper see: http://cep.cl/sw2002/Informe_Chile/SW2002_Chile_Informe.doc)

(To watch his speech, use a QuickTime enabled browser to see: http://cep.cl/sw2002/SW2002_Movies.html)

Mr. Riesco said that after 20 years of experiments with liberal social protection (social protection) schemes in Chile, the virtues and especially, the serious limitations and absences of such schemes, have become quite clear by now. Broadly speaking, the main disadvantage of the private social protection schemes seems to be that they have remitted their benefits to the upper quarter of the population. And even for them, they pose some quite serious problems. Regarding the vast majority of the population, on the other hand, the private social protection schemes have proved, in fact, to be quite ineffectual indeed.

On the other hand despite the fact that strategies like focalisation of a diminished public social spending on the poorest have allowed improvement in general quality of life indicators, the growing differences in income has resulted in persistent and even increasing equity gaps.

In Chile, during the last decade, a substantial effort has been made regarding the recovery of the undermined and under funded welfare institutions. The great cut in public social spending during the dictatorship, in particular in health an education, resulted in a general detriment of the services and on an even worst impact over the salaries of the civil servants involved in this sectors. However and despite the above-mentioned efforts, public spending - as per capita or related to GDP - has not yet recovered the levels that it used to have, and this is still probably the main problem of the sector and its workers, even considering the need for a modernisation of the social protection institutions.

The situation regarding pubic spending in pensions has been different. Great amounts of public resources have been poured into the sector to compensate the deficit created with the introduction of the private schemes, reaching figures that are much higher than those required by the previous system, and constitute by far for the largest portion of overall public social spending.

Unemployment protection in Chile is the worst - off area within the social protection components. The public resources allocated to the traditional unemployment protection schemes have been negligible even during the present economic crisis, where besides, more stringent eligibility criteria have been put in place. On the other hand, new private unemployment insurance schemes have introduced some improvements with respect to the traditional time - related ones, as well some elements of solidarity. However the private unemployment schemes is not designed to be effective enough in periods of massive unemployment, and has certainly been completely ineffective during the current crisis, because it was activated starting in 2002.

The above notwithstanding, the liberal reforms have resulted in the rise of an important private social protection industry, that cares for needs in the referred areas, financed in an important part directly by the families. These private systems, though, concentrate their benefits in the upper income segments and do not address the problems of the majority, introducing elements of inequity. On the other hand, important deficiencies may be found in the regulatory framework of the private systems and their relation with the public system. Important market distortions, high costs for the users and relevant global inefficiencies stem from these problems.

However, there seems to be enough accumulated evidence over which a different approach may be built, regarding the co existence of the public and private systems, one that considers not only overcoming the imperfections of the traditional public system, but also the serious failures of the private sector in the funding and the provision of the welfare benefits. The idea that prevailed during the past decades, that privatization is the master key to solve all problems has proven inaccurate. Perhaps it would be reasonable to advance now towards a more regulated development of both sectors, with a continued strong recovery and improvement of the public sector, aiming to develop a universal, more equitable and good quality social protection system.

On the other hand it seems inevitable to attend the issue of the size of the public spending dedicated to social protection, out of which the major part goes to financing the deficit resulted from the private pension schemes. Chile spends in social protection below the average of more developed LA countries, and far below developed countries. Considering that today the public social expenditure absorbs a great proportion of the overall national budget, the discussion leads inevitably towards the level of Public Spending and hence the Taxation system, as asserted recently by the Chilean Minister of Finance: •With the current tax rate it is only possible to enforce a social policy for the poorest quintile, yet the second quintile is also extremely poor...also middle class has to be satisfied [in their needs], but that is impossible with the current tax rates. For full university grants, adequate pension retiring schemes, a different tax rate is needed

The social protection in our countries will not improve out of the imposition of risk prevention models, or other technocratic strategies. The improvement of the social protection system stems out of the historic evolution of our society, and as such they should be approached.

Until the decade of 1970 Chile had been able to develop social protection systems, public and others, that, despite their many flaws and lacks, were considered in LA as fairly good in terms of level of coverage and quality. The neo-liberal social protection schemes were imposed in Chile under the military dictatorship in the context of the integration of the country to the process of globalisation by then advancing at a furious pace.

The changes in social protection took place in the middle of a long internal historical cycle characterised by political turbulence and tumultuous social and economic changes, throughout which the Chilean society suffered deep sociological transformations. Such cycle started back in the 1960s and only now seems to be finally closing up.

The traditional agrarian relations have been wiped out almost entirely; the public sector has been considerably reduced, as well as traditional tariff-protected industrial monopolies. On the other hand, the salaried employment in private business has increased more than in the rest of LA, even though a great proportion of them are temporary or informal jobs, with high degrees of instability.

As a result of all this social changes, the insecurity of the population has increased parallel to the demand for an adequate social protection.

The political situation has been undergoing quite a change as well, as of lately, and that has not been detached from recent advances in human rights matters. The situation of the world evolves rapidly, as well, and the less than can be said is that globalization is confronting ever - increasing problems, and that its moment of peak is quite over.

In this context, the idea of a new social contract, underpinned by full democracy, a more effective regulation of the economy, and a more equitable distribution of wealth, decent work, and an adequate social protection for everybody, appears as a good alternative. Mr. Riesco expressed hopes that this will be the path Chile will choose to follow. On the contrary, he said, the insistence in recipes that mainly take into account a tiny, privileged, segment of society, only herald violence and instability.

Other LA Presentations

The Latin American presentations included as well the very interesting Brazilian Bolsa Escola program, that provides cash benefits to families according to number of schoolchildren, with ample coverage and significant impact both in family allowances and school retainment rate. The program was presented in the seminar by the head of the respective government agency, Mr. Floriano Pesaro. (For his complete paper, see: http://cep.cl/sw2002/Informe_Brasil/SW2002_Brasil_Bolsa_Esc.doc).

Also present in the debate, during most of the workshop, was he idea of a citizenês income, forcefully presented and argued by Senator Eduardo Suplicy, from Brazil and suggested as well in ILO •s Guy Standingês keynote speech. Senator Suplicy quite convinced all participants about the importance, efficiency and feasibility of the initiative, even though it was quite apparent that some time must go by before it is included in the social protection agenda in a central place.

(For Senator Suplicyês complete paper on the subject, see: http://cep.cl/sw2002/Informe_Brasil/SW2002_Suplicy.doc and http://cep.cl/sw2002/Informe_Brasil/SW2002_Suplicy_Eng.doc).

Third Session: ¯Asia: Social Protection after the Recent Crisis”

Chairperson: Huck - ju Kwon, Korea, UNRISD, Geneva

(For his complete paper, see: http://cep.cl/sw2002/Informe_Asia/SW2002_Korea_Kwon.doc)

(To watch his speech, use a QuickTime enabled browser to see: http://cep.cl/sw2002/SW2002_Movies.html)

Mr. Kwon introduced the session explaining that a current idea about social protection in Asian countries was not precise, being this idea that Asian countries did not have significant social protection schemes or spending before the recent crisis, where they dramatically increased them. He said that in these countries the state was traditionally more a regulator than a provider of social protection, so looking only at direct social spending by the state prior to the crisis severely understated the actual state of social protection in the region. Before the crisis, though, social protection was considered only part of the economic considerations, but that way of thinking changed significantly during the crisis.

He distinguished three groups of countries in the Asian region: northeast Asia, based in social insurance, solidarity, principle; southeast Asia, based in provident fund, individualist responsibility and; a third group of countries with less developed welfare systems.

The economic crisis reformulated the ideas about social protection in Asia. Traditionally, in Southeast Asia, social protection systems were fragmented, with the first group getting social protection being the state employees, followed later on by various other groups comprising most of the population, including peasants, who got their social protection out of more than 400 funds, in some cases. Southeast Asia responded to the crisis in a diverse form. Korea extended the employment insurance to cover most of the unemployed; integrated national health insurance and introduces solidarity among groups; given the former, strong emphasis was made on ¯active” type job programs. Now Korea faces the challenges of financial sustainability (containment of spending, modernizing the financing system), effective implementation and inclusion of informal sector. Malaysian responses were different. They strengthened their provident fund system instead of reforming it, and now face the challenge of dependency on economic growth and growing inequality. The provident fund system depends on how much you have saved.

As for the future, Mr. Kwon insisted, the global challenge in the region is how we make social policy instrumental to social inclusion, economic growth and to democratic development.

Finally Mr. Kwon explained an important regional social policy research that UNRISD is accomplishing.

Neung - Hoo Park, Director, Department of Social Security Research, Korea Institute for Health and Social Affairs (KIHASA), Ministry of Health and Social Affairs, Republic of Korea

(For his complete paper, see: http://cep.cl/sw2002/Informe_Asia/SW2002_Korea_Park.doc)

(To watch his speech, use a QuickTime enabled browser to see: http://cep.cl/sw2002/SW2002_Movies.html)

Mr. Park presented his paper, specially requested to describe social protection for the unemployed in Korea during the recent crisis. He explained how Korea had been on the track of uninterrupted economic growth for three decades when crisis hit the country in 1997. Per capita income, for example, had increased from $105 in 1965 to $11,380 in 1996. The economy recorded a minus 6.7 percent growth, and the unemployment rate climbed from 2.0 percent to 6.8 percent in 1998, peaking at 8.4% in the 1st quarter of 1999. The number of the unemployed increased to 1.5 million, and more than one million people fell below the poverty line.

In response to the economic crisis, the Korean government, NGOs, and society at large have closely cooperated to overcome the unemployment problem. The government strengthened the existing labour market programs and initiated new ones, while NGOs and local governments adopted a wide range of active approaches towards the unemployment problem.

After two yearsê struggle against the difficulty, the Korean economy began to recover from the deep recession. The unemployment rate declined to the region of 4 percent, and the rate of economic growth rose to exceed 9 percent in 2000. Against this backdrop, Korea may seem to have pulled through the economic crisis. However, the economic crisis left a deep footprint in Korean society, which poses a new challenge for this country.

Although both the poverty rate and the unemployment rate are declining back to pre - crisis lows, the income distribution indicators are still far beyond their previous levels. Traditionally Korea was known for its relatively good income distribution. This means that although the problem of absolute poverty is much attenuated, the problem of relative poverty will continue for a while. However, the impact of the economic crisis was less severe on the distribution of consumption than on the distribution income.

The Employment Insurance Program (EIP) was established in July 1995 as a comprehensive system intended to reduce the risk of unemployment, the risk of losing income as a result of unemployment, and the risk of skill obsolescence. For these purposes, EIP incorporates not only its traditional function of providing unemployment benefits to the unemployed but also the functions of promoting the structural adjustment of industries, preventing unemployment, promoting job security activities to increase employment, and promoting vocational ability development activities for workers.

 At the time of its inception, EIP was confined to cover •regular workers in firms with 30 or more employeesê. Since then, the coverage of EIP has been expanded continuously to include workers in smaller firms and non - regular workers. This process was accelerated by the economic crisis. In January 1998, the program was expanded to cover firms with 10 or more workers and, in March 1998, firms with five or more employees. Since October 1998, EIP came to cover workers in all firms across the country with the exceptions of old age and very young part - timers and sectors such as government and teachers who have special programs of their own.

Despite these expansions, however, only a relatively small proportion of the working population is insured under EIP. As of January 1998, when the crisis just began, there were 12.5 million paid workers among a total of 19.7 million working population, and among these paid workers were only 5.1 million workers eligible for EIP, of whom only 83 percent were actually insured. This can be attributable to the fact that the program is applied neither to the self - employed nor to unpaid family workers who occupy a large share in Koreaês employment composition. For these reasons, only a small fraction of the unemployed was entitled to EIP benefits during the time of the economic crisis. As little as 11.7 percent of the unemployed could get benefits from the EIP in 1999 [7]. However, some unemployed people were more likely to be benefited from the program than were others. The percentage of beneficiaries varied significantly by age, level of education and firm size. The proportion of older and more educated unemployed workers who receive benefits tended to be much higher than their younger and less educated counterparts. In contrast, there was not much difference in the percentage of beneficiaries between men and women.

Active labour market policies (ALMPs), on the other hand, include a broad range of measures including training programs, employment subsidies targeted to certain groups, and direct job creation. In Korea, ALMPs were negligible before the crisis, when the unemployment level was kept low. After the economic crisis, however, ALMPs are being regarded as core social policies. A large number of unemployed workers have participated in these programs. In both 1998 and 1999, roughly one fifth of the unemployed attended a training course. In Korea, public works programs were set up as a measure of direct job creation in 1998. In principle, these programs are targeted at unemployed people who do not have an extra source of income and who are not entitled to unemployment insurance or training allowances. As far as the number of participants is concerned, the effect of public works programs has been significant. The number of individuals participated in these programs was 440,000 in 1998 and further increased to 780,000 in 1999.

In order to secure the minimum standard of living, the Government has made a new social assistance policy and enacted the "National Basic Livelihood Security Act" in September 1999. It has been enforced as of October 2000 with one year of preparation. Living expenses are provided for these households regardless of their age and ability to work in order to secure the basic livelihood for the low - income class earning less than the minimum cost of living. The number of recipients for living expenses is fluctuating around 1.5 millions, which is almost 3% of total population.

The government expenditures on ¯unemployment measures” as a percentage of GDP has increased from a negligible level in 1997 to 2.2 percent in 1998 and 3.2 percent in 1999. Total budget for labour market measures (that is, excluding livelihood protection and social overhead capital from the above numbers) reached 2.7% in 1999, out of which 70% went to active measures and 30% to employment insurance. In other words, the budget for employment insurance by itself peaked at 0.81% of GDP [8].

The total spending on the unemployed, however, is much bigger than these figures when retirement allowances are taken into account. The Labour Standards Act requires the employer to establish a retirement allowance fund whereby an average wage of more than 30 days shall be paid for each year of consecutive years of employment as a retirement allowance to a retired worker. As a result, most unemployed people were eligible to get their retirement allowance when they were dismissed during the economic crisis. In fact the amount of retirement allowance was much more than the amount of benefits paid by EIP. Even before the economic crisis, the retirement allowance was major income source for the retired workers, which explains in part why EIP had not been developed until 1995. The retirement allowance spending as a percentage of GDP was just above 1 percent before the crisis. In 1998, however, due to the mass unemployment occurred in the wake of the crisis, the amount spent on retirement allowance increased rapidly to occupy 5.2% of GDP. To be sure, the retirement allowance has helped many retired or unemployed workers overcome their economic difficulties. However, because the retirement allowance is more generous to higher rank workers, it could worsen the income equality of the retired workers.

In spite of all the effort, some portion of the unemployed is still excluded from the social protection programs. As of June 1999, more than one third, 39 per cent of the unemployment was not participating in any social protection program. Only 13.5 per cent of total unemployment received the unemployment benefit by EIP, which should be ground program for the unemployed, while 22.6 per cent of the unemployed were participating in the public works, which is a temporary labour market policy.

Filomeno III Santa Ana, Social Watch and Asia Coordinator, Action for Economic Reforms, Philippines

(For his complete paper, see: http://cep.cl/sw2002/Informe_Asia/SW2002_Phillipines_Report.doc)

(To watch his speech, use a QuickTime enabled browser to see: http://cep.cl/sw2002/SW2002_Movies.html)

Mr. Santa Ana started by saying that he agreed with Mr. Kwonês classification of the Philippinesê social protection systems as relatively less developed within the Asian countries. Although, he said, at least on paper, there are a good number of programs.

As a background, he remembered poverty is very high in the Philippines and it has increased during the crisis, since 1997. Policymakers agree that poverty is mainly a result of the failure in sustained growth, because the economy has roller coasted through a boom and bust sequence over two decades. Nevertheless, the role of economic growth in reducing poverty should not be exaggerated, because while growth is good for the poor it is not good enough, as a disproportionate portion of it goes to the upper income sectors of the population. High level of population growth, at 2.3% a year one of the highest in Asia, is also a difficult challenge. Unemployment hovers above 10% and among the employed a significant number work few hours, or belongs to the informal sector. While globalization in the long run may have a positive impact in employment, itês the short run effect on labour dislocation, volatility and precariousness seems predominant.

Mr. Santa Ana analyzed a few aspects of the social protection situation. First of all he referred to coherence and focus. While the Philippines indeed has, as said, quite a number of social protection programs, a certain lack of focus and incoherence in them can be noticed. The present social protection plans make of poverty reduction their overall framework and this seems indisputable. A certain linguistic crisis seems to be present though. Poverty reduction and social protection of course overlap, but is not the same thing and a certain tension between the two may be present.

A second problem put forward by Mr. Santa Ana is the problem of adequacy. Social protection programs have a narrow base of beneficiaries that in some cases excludes the most poor. For example, few workers on minimum wage benefit from the unemployment insurance system. In general the benefits of social protection schemes are inadequate. Heath insurance is small, minuscule. Workers and employers have to resort on private insurance, their own savings or help from their families. Retirement pensions are negligible and inflation has taken a large bite on them. Many employers, furthermore, collect the workers contributions but do not pay a cent to the social insurance fund, or simply do not enrol their workers in the social security system. The World Bank estimates that employerês compliance ranges between 35% and 55%. The problem of social financing is an obvious but a waiting issue. The above-mentioned low coverage and inadequacy problems are related to the financial constraint. The low tax effort in the Philippines complicates matters, mainly because of tax evasion. All this result in chronic budget deficits that hampers social expenditure.

A third problem, Mr. Santa Ana said, is weak institutions. Regulatory institutions are soft in enforcing laws and rules. Thus, many do not comply with the minimum wage law and other labour standards. The embezzlement of social insurance funds is likewise rampant. In the case of state owned enterprises, for example agencies in charge of managing social funds, waste, corruption and inefficiency are abetted by the lack of an incentive system based on performance. The mismanagement has resulted in the diminution of the real assets available in the referred funds. Besides, the management of these agencies is highly politicised and it has been a practice to use the funds to promote the political and personal agenda of the ruling administration. In most cases this has led to the plunder of resources.

A fourth problem addressed by Mr. Santa Ana is what he called tradeoffs. The politicization of social protection has also led to the adoption of populist but questionable policies. Among these, he mentioned the general house and electricity subsidy programs of which the upper classes are main beneficiaries. Limiting the benefits for them, though, faces quite a resistance, because they command resources and political clout. While the rationale of such subsidies may be understood, the opportunity cost of the money invested in them is huge and it could be better spent in other programs with a higher impact in poverty. Another example of these tradeoffs is the allocation and investment of social security funds, of which half went to subsidize loans for itês members, whose rates for housing and others are 5% to 6%, while the market interest rate tops 17%. Thus the long-term yield of the funds is hampered by short term benefits that usually only the higher income beneficiaries of the system may have the chance to use in their behalf. At the same time the total amount of benefits, some 40 billion Philippines pesos (US$ 770 billions) in 2001, with an increase of 17%, outstrip the contributions, thus making it necessary to limit the benefits or increase the contributions.

The final issue addressed by Mr. Santa Ana being globalization, he said the pressure of this process also constrains the choices to strengthen and expand social protection. Policymakers are, for example, more concerned about closing the fiscal gap and balancing the budget to please foreign investors and creditors than to find resources to finance poverty reduction and social protection goals. Although it is important in the Philippines context to have a fairly balanced budget, given that the country has a very low savings rate, this nonetheless should not obstruct the main goal, the central goal that is reducing poverty. So the tension between fiscal equilibrium and poverty reduction and social protection should be addressed and the bias should be on the side of the social protection and poverty reduction programs. Another example of the pressure of globalization is the outcome of the privatization campaign as part of the globalization process, particularly the privatization of the social sectors. The result in the Philippines is the loss in efficiency and welfare gains for consumers, the reverse of what privatization purports to achieve.

As a conclusion, contributions to social security funds have to increase to insure the financial sustainability of benefits and pension funds. Revenues have to increase, mainly through a more efficient tax administration, to finance a social development program. Fiscal resources have to be shifted, and some subsidies have to be gone and everything has to become more sensitive to equity goals.

The picture is not complete without addressing the question of why the country, and the world for that matter, is facing an insecure era. Globalization has two levels, mainly globalization as a fact and globalization made by human choices. The choices done by the global and national elites, in many cases without accountability, transparency and participation, have to be submitted to thorough examination and criticism. In this context, an alternative agenda for social protection in the Philippines and elsewhere cannot be de linked from the political strategy.

Liu Yutong, Social Security Specialist, Ministry of Labour and Social Security, China

(For his complete presentation, see: http://cep.cl/sw2002/Informe_Asia/SW2002_China_Report.doc)

(To watch his speech, use a QuickTime enabled browser to see: http://cep.cl/sw2002/SW2002_Movies.html)

Mr Yutong described the countryês social protection system as including social insurance programmes, covering pension, sickness, unemployment, work injury, maternity and social assistance program for low - income households, etc. Over the past decade, all these programs have undergone major reforms, including changes in coverage, financing, and administrative structure. For instance, enterprise re - employment centre is one of such emergence during Chinaês transition from planned economy to market economy in the past decade.

Reforms introduced in the early 1990s changed the structure of industrial production. The economy was opened up to allow new private enterprises and joint ventures with foreign partners. Between 1990 and 2000, aggregate employment in state - owned enterprises (SOE) and collective enterprises declined by 42 million, some 30 percent, while employment in private corporations and among the self - employed rose by 38 million. It is widely expected that Chinaês entry into the World Trade Organization will lead to further declines in the public sectors, which employ 96 million urban people in 2000. It may have a similar impact on the township and village enterprises. The Chinese social protection system is also affected by major demographic changes in the coming years. This macro - economic and demographic shifts have great implications for the development of Chinaês social protection system, meaning the countryês employer - liability system will have to be replaced by actual social protection programs.

Total social insurance spending is still modest relative to the economy as a whole. Pension spending in 2000 equalled 2.4 percent of gross domestic product. All social insurance spending combined equalled 2.7 percent of GDP.

China's social insurance system was instituted in early 50s. The basic model of this system was the combination of social insurance with enterprise liabilities. Where enterprises were unable to pay the benefits, subsidies were provided from the funds. In 1991, the State Council promulgated important reforms and in 1999, new reforms have laid down the framework for the current pension insurance system, which may be summarized as follows:

à      Scope of coverage. The basic pension insurance system for urban enterprise workers is applicable to all kinds of enterprises and their employees as well as the individual workers in urban areas. At the end of 2001, this scheme covered over 100 million working employees.

à      Contribution rates. Provincial governments determine contribution rates for employers. In 1998, the national average contribution rate for enterprises was 20.64%. Individuals also pay a certain percentage of their wages. The prescribed individual contribution rate is normally in the range of 4% to 8%.

à      Individual accounts. 11% of the contributory wages is accredited into the individual accounts.

à      Statutory retirement age. The statutory retirement ages are 60 for males, 55 for female employees who are engaged in managerial or professional work and 50 for female workers who undertake production or supplementary work. There are now 30 million retirees under the system.

à      Formulae for the basic pension. Employees at retirement ages and who have paid their contribution for more than 10 years are entitled to a pension with two components ® the basic pension benefit and the individual account pension benefit. The basic pension benefit is 20% of the workersê average wages in respective localities in the previous year and the individual account benefit is 1/120 of the accumulation in the account.

à      Indexing mechanism. The State raises the pension level according to increases of wages and consumer prices on regular, normally annual basis.

à      Fund pooling at provincial level. Currently, most localities are practicing fund pooling at city or county level with solidarity mechanism in place.

This system is complemented by a pension insurance system for rural areas, instituted in 1991 and as now covers 82.25 million rural people, paying pension to more than 500,000 rural people. Enterprises also have an employer sponsored supplementary pension system.

The current medical insurance system in China was instituted in early 1950s. The public medical care system was applied only to State organizations and institutions under which all costs of medical treatment; medicines and hospitalization were covered by government budgetary allocation. As a matter of fact, it was a free medical care system. The labour insurance medical care system was applied to State owned enterprises under which all costs of medical treatment; medicine and hospitalization were borne by enterprises concerned. Half of the medical care costs of the workers' direct family members might also be reimbursed under the system. This scheme, however, has the following shortfalls:

à      The State and enterprises undertook all the obligations while the individuals bore no medical care costs.

à             No mechanism for curbing medical costs;

à      Little medical cost pooling among enterprises as well as among industries;

à      The scope of coverage was limited. Foreign funded enterprises, stock companies, private enterprises and individual businesses were not covered by the medical insurance system.

            In view of these problems, localities since 1980s have experimented reform measures. In 1993, the Chinese government initiated a medical insurance system that combined costs pooling with individual accounts.

Basic principles of the new system are: basic medical benefit level, wide coverage, cost sharing and combining social pooling with individual accounts. Basic level means that benefits provided should be compatible to the productivity level and contribution rates determined by the affordability of government financial budget and enterprises. Wide coverage means the system shall cover all kinds of employers and their employees in urban areas. Costs sharing means to change the old practices under which all costs were borne by the State and enterprises and replace them by the system where employers and the individuals share costs. Combination of social pooling with individual accounts under the system means to set up both the pooling funds and individual accounts. Pooling funds are to cover costs of serious diseases and hospitalization while the individual accounts cover out patient cost.

Retirees are not required to pay medical insurance contribution and preferential treatment is provided to them in the amount put into their individual accounts and percentages of costs paid by retirees themselves. Medical assistance is provided to civil servants. Enterprise supplementary medical insurance schemes are set up in special sectors. Contribution to the schemes is less than 4% of the total payroll.

China is also reforming the structure of its health service system. One challenge that it has not yet been addressed is the need to develop reimbursement policies that assure an equitable distribution of provider costs between the national health insurance programme and the supplemental health programmes that the government is encouraging.

The unemployment insurance programme dates to 1986, when it was established with the objective of assisting in the job search of those laid off from state - owned enterprises. Originally, the programme paid a benefit scaled to the employeeês previous wage. In the mid 1990s, the benefit was changed to a flat rate that was set by the governmental unit responsible for administering benefits. In 1999, coverage was expanded to include all urban private sector employers, the contribution rate was increased and an employee contribution was established. Under the current regulations, employees whose permanent registration is in a rural area do not pay the employee share of the contribution. Provinces have the option of further extending coverage to the self - employed. Unemployment insurance has always been financed through pooled funds financed by wage contributions.

The Chinese unemployment insurance system features generally low benefits that tend to be available for a long period of time. Benefits must be below the minimum wage level but above the level established as the minimum urban living standard, both of which are also set be the local jurisdiction. Benefits can continue for up to two years, depending on the length of service prior to the unemployment spell. Beneficiaries need to be unemployed and available for work to continue to receive benefits, although these requirements have proven difficult to enforce.

The unemployment system ended 2000 with aggregate reserves equal to 1.6 times that yearês benefit payments. As will be noted subsequently, however, the phasing out of the reemployment service centres is likely to increase unemployment insurance benefit payments significantly. The additional dislocations that may result from Chinaês joining the WTO could further increase the demand for unemployment benefits. It is not clear that these possibilities are being given the consideration they deserve in the financial planning of many local governments.

The state also provides work injury insurance, maternity insurance and minimum living guarantee programs. In 2001, this last programme served 12 million people and spent 6 billion Yuan. Spending in 2002 is projected to rise to 10 billion Yuan, distributed among 15 million people. It is estimated that the programme reached about one - half of the urban poor in 2001. Reemployment service centres are also in operation.

China is facing similar problems to many other countries. The demographic pressures are such that China has become one, if not the, fastest aging population in the world. By 2050 there will be only three workers for every retiree, compared to about ten now. Information problems are also paramount. It is important to note that the solidarity fund mechanism is a temporary measure. Once the objective of provincial pooling will be achieved, the solidarity funds at the provincial and local level will be of no use. But until provincial pooling is fully implemented, every effort should be given to increasing the social redistribution capability of the social insurance system.

Sudarno Sumarto, The SMERU Research Institute, Jakarta, Indonesia

(For his complete paper, see: http://cep.cl/sw2002/Informe_Asia/SW2002_Indonesia_Report.ppt)

(To watch his speech, use a QuickTime enabled browser to see: http://cep.cl/sw2002/SW2002_Movies.html)

Mr. Sumarto entitled his presentation ¯Experiences from Crisis social protection Programs in Indonesia” and addressed five topics: background and social impact of the crisis, social protection safety net programs in response to the crisis, the programs implementation, assessment on the programsê impact on social welfare, and concluding remarks and lessons.

Before the Asian crisis, Indonesia had experienced rapid economic growth during ten years, at a7% - 8% annual rate. Sustained economic growth was followed by improvement in living standards. Infant mortality rate fell, basic instruction facilities also expanded significantly. Indonesia was regarded as a success story in many aspects of development. And then beginning in August 1997 Indonesia suffered a deep overall crisis that quickly went over to the political sphere. The impact of the crisis was also very significant. Poverty increased by about twelve percentage points, from 15.7% of the population in 1996 to about 27% in 1999; not to mention that in addition to this 27%, another 15% is vulnerable poverty, meaning it is barely above the poverty line. Unemployment also increased from 4.7% in 1997 to 6.4% in 1999. In terms of annual increase of GDP and other economic indicators, this was considered to be one of the deepest economic shocks in modern economic history, with a drop in GDP growth of over 14% (negative). Prices also skyrocketed.

It must be noted, Mr. Sumarto said, that government economic safety net programs had not been traditionally important in Indonesia, where social spending was largely focused in social services and families and communities provided social insurance. Exceptions to this are the social security schemes mandated for employees in medium and large enterprises, public servants and military, which covered less than 30% of the labour force. It is also important to note that during the crisis people relied on themselves, family and communities for coping with it. A survey carried out in 1998 about how people coped with the crisis found that reducing expenditures, indebt ness and selling assets such as cattle, motorcycles, etc.

At the onset of the crisis, an important concern was whether social achievements and poverty reduction could be sustained. Moreover, there was some warning about the looming social impact of the crisis and this prompted the government of Indonesia to react rapidly and institute a plan to sustain incomes and assure access to social services for the poor and newly poor. Two types of poor are identified, the so-called old poor, meaning the 15% who were poor before the crisis and those who became poor during this time.

The social safety net programs were insuring affordable prices for the poor, supplementing purchasing power among poor households through emergency employment creation, preserving the access of the poor to critical social services, particularly health and education, and sustaining local economic activities through enhancing already existing regional programs.

There are five different programs, starting from food security to education and health. As told, the crisis resulted in an price increase for basic goods of about 180%, so even though food was there, many households were now not able to purchase it. The government thus instituted the so-called ¯cheap rice ¯subsidy, that gave about 20 kilos per household per month at a very low price, distributed according to the household income statistics available. For households so poor that could not afford purchasing even the low priced rice, the communities helped them to do so. In education there was a program rather similar to the Brazil Bolsa Escola program, that is, giving scholarships for basic and medium low-income households, to keep their children staying at school. In the health system, there are six help programs, starting with medical services, nutrition services, etc.

In terms of budget allocations to these programs, during the fiscal year of 1998 - 1999, the government allocated about 15 trillion rupee (US$ 1.7 billion), about 12% of the total government budget. During the second year of the crisis the government reduced these programs, due to both fiscal restraint but also to the fact-findings showed the social impact of the crisis was not as wide as expected. In year 2000, the government spent only about 5 trillion rupee (US$ 565 million) or about 2.5% of total government expenditure for that year.

Each program had itês own administrative scheme, implemented by different agencies, starting with the Ministry of Education and Health, to the Ministry of Settlement and Regional Infrastructure.

The question is how effective the social safety net program was in reaching the poor. Each program had itês own target in reaching poor households. The highest coverage was found in the subsidized rice program, where about 52% of the poor households received the benefit. Also, meanwhile, about 37% of the non-poor households also received the benefit, meaning there were huge leakages in this case. A similar leakage can also be observed in other programs, especially in the ¯Bolsa Escola” type program and also medical services.

Mr. Sumarto presented several tables that measured the programs detailed performance in terms of their goals. His findings show that all of the programs indeed suffered both from leakages and under coverage, meaning the latter the proportion of the poor under covered by the programs. In any case, all the programs covered over 20% of the poor. On the other hand, the assessments showed that the programs helped the no poor from falling into poverty and also helped the poor in their coping with the crisis. On the other hand, the program was too small to help people escape from poverty.

The main lessons were, on Mr. Sumartoês view, were the following: a) the programs had a positive impact in household consumption, however, only the rice program significantly reduced the probability of non poor households from falling into poverty; b) as said, the impact of the programs was too small to help people escape from poverty, so; c) despite of the programsê impact in alleviating some of the worst effects of the crisis, they are not an effective instrument for income redistribution; d) geographical targeting was hampered by the lack of complete and acceptable data (he remarked that a similar case was happening in Argentina , where the real impact of the crisis could not be precisely assessed because of the lack of a monitoring system in place for that purpose); e) safety net spending must rise during the crisis, and informal coping mechanisms help but are often not enough.

Some ideas for future action suggested by Mr. Sumarto were: a) the crisis has provided an opportunity to rethink Indonesiaês strategies so to make development sustainable and inclusive of the whole of society; b) Indonesia was quite ill prepared to deal with the impact of the crisis; c) Indonesia should develop a social safety net in a much smaller scale and scope, with sufficient flexibility, so that it may be expanded quickly when the need arises and; d) this to be balanced by a stronger formal social security system.

Indonesia, as many countries, is decentralizing power, but as no clear strategy is in place for funding and other arrangements in the new structure. Work should be done in that direction.

Y.M. Raja Dato Zaharaton, Deputy Director - General, Economic Planning Unit, Prime Ministerês Department, Malaysia

(For her complete presentation, see: http://cep.cl/sw2002/Informe_Asia/SW2002_Malaysia_Report.doc)

(To watch her speech, use a QuickTime enabled browser to see: http://cep.cl/sw2002/SW2002_Movies.html)

Ms. Zaharaton said that Malaysia has always viewed social development as inseparable from economic development and the importance of ensuring the integration of economic and social policy is becoming increasingly apparent. Malaysia enjoyed rapid growth in the past 3 decades, on average of 7 per cent annually. With an average population growth of 2.5 per cent, per capita income has increased almost ten times from US$370 in 1970 to US$3,500 in 2000. This rapid growth was achieved in the environment of low unemployment and inflation rate. Malaysia has been enjoying a full employment level since the early 1990s and the inflation rate is very much under control.

Growth is also accompanied by greater distribution of wealth. Poverty rate has now reduced to 7.5 per cent compared to 49 per cent in 1970 due to aggressive poverty eradication and empowerment programmes undertaken.

Malaysia is a nation of great savers. The national savings rate, as a percentage of the GNP has always been high and is in the region of 35 per cent currently. Malaysia also practice prudent fiscal policies. For 5 years between 1993 to1997, the Federal Government account was in surplus. However, the Government adopted deficit financing to finance economic recovery and stimulus packages when Malaysia was affected by the 1997/98 Asian financial crises. External accounts are also currently experiencing surpluses and the country has ample international reserves to support our exchange rate.

Based on the latest census, population reaches 23 million, out of which 66 per cent is Bumiputera or the indigenous people, 25 per cent Chinese and 7 per cent Indians. Population is expected to increase to 29 million by 2010, with an average growth rate of 2.2 per cent per annum, after taking into account the demographic structure, age cohorts as well as the fertility and mortality rates. The proportion of the population in the 15 years and below age group is expected to grow at a lower rate and comprise nearly 30 per cent of total population in 2010. In contrast, the working - age population, i.e. 15 - 64 years, will increase from 63 per cent in 2000 to 66 per cent in 2010, implying the need to create more employment opportunities as well as increased provision of education and training. Accordingly, the dependency ratio will decline to 52 in 2010. The country is considered young by international standards. Currently, median age is 24 years, which means that half of the population is 24 years and below. Even by the 2010, median age will be just 27 years.

The Federal Government subscribes to the policy that revenue must always cover operating expenditure. For development expenditure, it has to be financed through non - inflationary methods, which can generate future economic productive capacity so that revenue may be collected to pay the debt. Since 1998, the Federal Government accounts are in deficit. However, once the economy stabilizes and the private sector fully recovered, it will revert to balance budget.

Through the years, concerted efforts have been undertaken towards increasing productivity and efficiency in the use of labour as well as strengthening the human resource base for sustained economic growth. Human resource development has been and will continue to be given high priority in ensuring the availability of a highly skilled and trainable workforce. For the future, to ensure growth and resilience of the economy, there will be increasing investment in human capital, with greater emphasis on nurturing creativity to provide the impetus for the knowledge - based economy.

Although women account for nearly half of the working age population, their participation in the labour force is relatively low. Various efforts are being undertaken to mobilize this available pool of resource such as encouraging employers to provide the necessary support facilities and introducing new and flexible working arrangements.

Since independence, social development programmes were implemented to integrate the population, especially the indigenous segment, into the modern economy as quickly as possible and redistribute the wealth of the nation. Programmes to improve the quality of life of the population through the provision of essential social services such as primary health care and education were implemented.

The Government had to sequence a mix of economic and social policies to ensure that economic and social goals are simultaneously met.

Sufficient budgetary allocations have been provided since the 1st Malaysia Plan to the social sector to ensure that all groups have the opportunity and means to participate in the growth process. Allocations to the social sector have been steadily increasing, that is from 17.7 per cent of the total development allocation during the 1st Plan to 34.1 per cent during the 8th Plan.

As part of the Governmentês efforts to improve the quality of life of the people through increasing their incomes and moving them out of poverty, specific poverty eradication programmes have been and will continue to be implemented. Some of the programmes implemented include provision of basic amenities and housing assistance, childcare, supplementary food as well as programmes on attitude change and improvement of self - esteem and increasing self - reliance. The target is to reduce the incidence of poverty to 0.5 per cent by year 2005.

Since independence and through the implementation of various policies and programmes, the Government played an active role in delivering essential social services directly to the people. There has been tremendous improvement in the quality of life of the population as seen in the quality of life indicators from the 2nd Malaysia Plan till the 7th Malaysia Plan. Improvements in the quality of life of the population have been more a result of social policies than economic growth alone.

Recent proposals by international financial institutions, to introduce social safety net programmes as a means to soften the impact of the recent economic and financial crisis, was viewed by Malaysia as a short - term palliative measure.

Various social protection programmes do exist in Malaysia. These programmes usually refer to: old - age transfers (pension) such as the EPF and the Pension Fund; transfers related to sickness and invalidity such as SOCSO; transfers related to unemployment such as Employer Liability Scheme; social assistance (or welfare). The first three only benefit those who have previously contributed while social assistance does not require previous contribution. The are no unemployment benefits in Malaysia. Severance pay, which at the most amounts to one month of wages per each year of work, is the only payment received by retrenched workers.     

The Employees Provident Fund Act, 1991, governs the Employees Provident Fund. The scheme applies compulsorily to employees, defined as those who are employed under a contract of service. The employers and employees contribution amount to 23 per cent of salaries, of which the employee contributes 11 per cent and the employer, contributes 12 per cent. Self - employed persons and pension able employees can choose the amount of contribution, subject to a minimum of RM20 per month. The contributions are accumulated in individual accounts and subdivided into three accounts: Account 1: 60 per cent (for retirement, investment); Account 2: 30 per cent (for housing, education, computer purchase); Account 3: 10 per cent (for medical care).

The SOCSOês scheme operates under the social insurance principle, which provides social security protection to workers. The Employees Social Security Act of 1969 governs SOCSO. The scheme is compulsory to all employees earning a wage below RM2000 per month when they first become liable for coverage. Such employees continue to be covered when the wage exceeds RM2000 but are deemed to earn RM2000 per month. Employees earning over RM2000 when they are first liable are excluded from compulsory coverage but may join voluntarily, in agreement with the employer.

Contributions for employment injury benefits represent 1.25 per cent of the average assumed wage and are entirely at the employerês charge. Contributions for invalidity benefit amount to 1 per cent of the average assumed wage and are shared equally between the insured person and the employer.

The Pension Fund is a trust fund, financed through the general revenue and taxes, which provides retirement benefits to public sector employees both at Federal and State levels. This Fund is governed by Provision 147(1) of the Federal Constitution, provides for pension allowances to be paid to the employees in the public sector, upon their retirement.

The compulsory retirement age of a public sector employee is 55 years, after which the pensioner is entitled for full pension if he has completed 25 years and above, a gratuity payment and golden hand shake of 3 months of last drawn salary in lieu of 3 months of accumulated leave.

Upon the demise of the pensioner, his spouse or handicapped child is allowed to receive the monthly pension for a period until the spouse or the handicapped childês death. Under this scheme also, civil servants are eligible for outpatient treatment at government clinics and hospital, for himself, his parents, his wife and children who are below 21 years of age.

Under Workerês Compensation Scheme, coverage is provided for manual and non - manual workers earning below RM500 per month. Benefits provided under the Scheme are for temporary/permanent disablement, death and medical benefits.

Through the Sickness, Maternity and Termination of Employment Benefits programme, workers working under a contract of service and earning below RM1250 per month are provided with sick leave, maternity leave and benefits, medical care and termination of employment benefits.

The Armed Forces Provident Fund provides benefits for armed forces personnel. Benefits include retirement benefits at the age of 55, medical and death benefits as well as discharge from service benefits.

Social welfare benefits are provided for the poor, the elderly and the disabled. Benefits include disabled allowance of RM200 per month, old age allowance of RM135 per month, school assistance of RM180 - RM220 per month, child grants of RM80 per child per month (up to maximum of RM350 per family), general assistance of RM80 - RM350 per family per month, business launching grant of a lump sum of RM2,700 and foster child allowance of RM250 per child per month (up to a maximum of RM500 per family).

With technical assistance from UNDP, a study was undertaken to analyze the existing social protection schemes (particularly EPF and SOCSO) with a view to improving their adequacy of the benefits, expanding coverage and improving their administration. The study indicated the following: a) the need to extend coverage to include the self - employed. This is in view of the fact that with the introduction of ICT, the member of self - employed will eventually increase; b) the need to further extend the range of benefits to include sickness and maternity benefits to meet ILO standards; c) The need to continuously review and restructure schemes to ensure that social protection schemes are able to provide adequate, accessible and affordable protection for all. Follow - up action on the above is being undertaken with further assistance from UNDP.

Social protection programmes such as the EPF, SOCSO and the Pension Fund have been established with the intention of ensuring that employees, on the age of retirement or in the event of sickness and disability do not become wards of the state. In essence, they begin contributing towards ensuring that they are taken care of during old age and are able to maintain a reasonable level of quality of life. For those who are elderly, poor, disabled and have no dependents, social assistance is provided by the Government to ensure that they are also able to enjoy a reasonable level of quality of life, Ms. Zaharaton concluded.

Fourth Session: ¯Arab States And Africa: Social Protection in Turbulent Times”

à       Chairperson: Cosmas Gitta, Outreach Adviser of the Special Unit for Technical Cooperation among Developing Countries (SU/TCDC), UNDP, New York

Mr. Gitta introduced the session indicating that Mr. Ejuba would give a brief overview regarding social protection in Africa; itês main problems and a few solutions. He underlined the importance of support stemming from international and regional conferences on the matter.

Joseph Ewane Ejuba, Director, Regional Office for Africa, International Social Security Association (ISSA), Abidjan, Ivory Coast

(For his complete presentation, see: http://cep.cl/sw2002/Informe_Africa/SW2002_Africa_Ejuba.doc)

(To watch his speech, use a QuickTime enabled browser to see: http://cep.cl/sw2002/SW2002_Movies.html)

Mr. Ejuba said that in Africa social protection was a new name for the very traditional concept of solidarity, a fundamental value in African culture, in families, clans and small communities, long before European colonization and industrialization. By 1960 colonial powers had introduced social security in a number of territories, and independence gave this a new impulse. There are differences in French speaking and English speaking Africa. Whereas French-speaking countries adopted social security schemes, most English speaking countries adopted provident funds or schemes providing lump sum payments with retirement. During the early years of existences, social security in Africa played a mayor role in the economy and social development of the respective countries. They provided benefits in cash and medical care to those most affected by development and were most useful in the process. The income not spent in benefits was spent for the most part in development projects, which created jobs and stimulated economic growth. The difficult period for social protection started with the economic crisis, during the 1970s and 80s, and the structural adjustment programs imposed by the international financial institutions. The programs contributed to increase unemployment due to closure or restructuring of enterprises. The insolvency of employers, especially in the public sector added to the damage. All this eroded financial support for social security schemes. As elsewhere in the world, there is a high degree of interdependence between social security and the economy. During periods of high inflation and unemployment, social security schemes often experience financial crisis and can no longer fulfil their objectives. The institutions that imposed the adjustment programs did not take into consideration the role of social security, its objectives and potential in the countries in question. Neither policymakers nor managers of social security institutions have been involved in the negotiations concerning the structural adjustment programs. In Sub - Saharan Africa the income per - capita today is less than that in 1970. It is worse relative to other countries. In 1960 it was nine times inferior to other zones. Today it is ten times inferior, according to UNDP report of 2001. This report confirms that the number of African poor rose from 217 million in 1987 to 310 million in 1999. This is just to illustrate that the structural adjustment programs did not solve the problems of poverty in Africa. It was supposed economic development would induce an improvement in well-being. More than forty years later this expectations have not materialized. In fact in many Sub - Saharan African countries social protection coverage is 10 to 15% of the working population. There is obviously a lack of political pressure from those most affected and there are serious limitations in the benefits that social protection may provide. It is also the unwillingness or inability of governments to assume potentially costly commitments.

A few of the main difficulties today relate in the first place with low coverage. This is due in the first place to the fact many African countries do not have a social security policy which would define the forms of protection to be provided to the various groups of the population. The absence of such policies give room for fragmented and incoherent measures which do not make good use of the many resources available in implementing national priorities. As regards to benefits and population coverage in other countries, there is a great gap between social security policies and social, cultural and economic realities. The legacy of the initial schemes in some cases hampered the harmonious development of social security schemes, because it established routines, vested interests, acquired rights and has made some resistant to change and obstruction. Due to lack of interest in social security policies most countries have not amended laws that have been enforced for the past thirty or forty years. This means that the contribution is stagnant and has not followed the economic and social trends. Consequently in some countries the contribution in cash is almost insignificant and the benefits themselves are becoming unpopular. Public benefits in some countries have problems due to scarce resources than cannot meet the original objectives. The initial objectives were mother and child welfare, the education of children, control infant mortality and increased diseases. It is sometimes alleged that these schemes have been a complete failure in Africa. Using Nigeria as an example, the annual contribution rate when the scheme was introduced in 1960 was 96 Naira a year. At that time the exchange rate between the dollar and the Naira was such that, compared to the present day, if you consider a person on welfare thirty years ago that person would now have lost at least one hundred dollars, because of the erosion of the currency. In many countries national finance has appropriated the income from social security contributions that have been considered as a cheap source of borrowing by government anxious to solve their cash problems, often in detriment of their fundamental commitments to the insured population. It should also be pointed out to poor management and corruption in social security institutions. Some try to distract these from their initial objectives. Sometimes it is the ministers of finance and labour who do this, as members of the board of social security institutions. They sometimes incur in high administrative expenses, poor investments and very low benefits. These problems are often aggravated by the inexistence of a mechanism to monitor the performance of these institutions. In addition to these problems, there are the general social and economic problems such as illiteracy, bad communications infrastructure, etc. Mention should be made to the lack or inadequacy of banking, telecommunications and other services, in rural areas. In fact in some countries roads become quite useless during the rainy season. Social security agents cannot have access to their customers, resulting in delays in contributions and payment of benefits. This is aggravated by the legal system and shortcomings of local administration. Some countries in the region are in the grips of conflicts, which result in social and economic instability. There are also disasters and epidemics. The shortage of resources cannot support the social welfare system in the long run. Social measures should be made on the impact of the HIV epidemic that is already having a dramatic effect on the national economies of the continent and a negative impact in the financial viability of social security schemes. Another problem is the lack of bilateral and multilateral social security agreements, which would protect immigrants within the region.

The declaration of Human Rights says that every person is entitled to social security. The text refers to right to medical care and essential social services in the case of sickness, maternity, disability, death or unemployment and special assistance during motherhood and childhood. In addition to this, the international convention on economic, social and cultural rights recognizes the right of every person to social security, including social insurance. Enforcing the right is a fair commitment. For it, in the first place it is necessary to define national social security policies with strategies for the various groups and areas to be insured. Such a policy must regulate synchronize and harmonize social security measures, so to make them complimentary, not competitive, thereby contributing to an optimal use of the scarce resources available. It would be advisable to establish a national control structure, comprising representatives of the various stakeholders of these systems. Such a structure would aim at a better accountability, better governance and increased transparency in the social security system, putting in place mechanisms for limiting abuse, corrupt practices and so on. Regional coordination and harmonization is as well necessary. Better social statistics are important. Lastly, improvement and expansion of current schemes should be accompanied by measures taken by the state to improve the quality of services required for the proper functioning of social security.

Social security should in the future aim to correct as much as possible the inconsistencies between development and social security resources for people and the management of excluded groups who make the majority of the population. A major concern is coverage for informal sector in urban and rural areas. Current economic trends resulting in increased unemployment.

Mr. Ejuba concluded that measures to expand coverage might be combined depending on national context. It should be the role of individual countries themselves, democratically decided and a mix of public and private involvement. Many obstacles hamper expansion of coverage but political will and the commitment of the community may overcome them. The primary problem to address is to define a national policy on national social security. Expansion and improvement will be slow and gradual and dependent on the evolution of national economy and to how it will be possible to reconcile economic and social policy with the aim of serving the right of every citizen.

Lambert Gbossa, Deputy Director, ILO Regional Office for Africa, Abidjan, Ivory Coast

(For his complete paper, see: http://cep.cl/sw2002/Informe_Africa/SW2002_Africa_Gbossa.doc)

(To watch his speech, use a QuickTime enabled browser to see: http://cep.cl/sw2002/SW2002_Movies.html)

Mr. Gbossaês presentation dealt with the African context: fifty three states, eight hundred million people, several languages, many schemes working at continental level, with the public sector dominating the economy since the 1960s, with a weak private sector up until the 1980s. The social protection schemes were developed in the usual three pillars: private, contribution based and social assistance financed by general taxes. Because of the weakness of the private sector, only the public workers were effectively affiliated. There was strong economic growth at the period and the pension funds accumulated a lot of reserves. The money disappeared due to economic crisis, mismanagement, political interference and lack of governance. Unique party systems prevailed. Then came the structural adjustments of the 1980s and 1990s. Employment shrunk and became more precarious, public enterprises were privatized while at the same time the private sector did not develop accordingly. Presently there is a strong need for rehabilitate schemes for the formal sector, reform it to enhance coverage, that at times does not go beyond 3% of the population; address the problem of the informal sector that accounts for near 90% of the workforce; the link between the salary and social protection, where only when you have a salary you are in the scheme. The idea is to replace salary with revenue more in general. Also a need for public - community shared responsibility. A new African and global context must be taken into account, such as the millennium goals that established specific targets as reducing poverty by half. New resources may stem out of them. In some countries more than 50% of the population live on less than one dollar a day, problems such as war, HIV, economic crisis, regional integration and others plague the region. Poor countries are more prone to war and epidemic, and all problems are aggravated. While food and emergency programs are delivered simultaneously they must be taught living skills. Employment, social protection, social dialogue and fundamental rights are in fact all related to each other. So there is an employment agenda to promote social protection, as employment expansion as well means social protection expansion. Community based schemes and statutory schemes should be linked. Micro enterprise, micro credit and micro insurance are all related and should be treated as such and with human rights.


During the discussion, on the previous presentations, Ms. Draibe emphasized the need to differentiate the different regions and groups of countries. The need to understand and not to violent some communitarian ways African countries, for example, confront their social protection problems, instead of reading them with and Occidentalized mind. On the other hand, she said, once communitarian systems have been disrupted by capitalism, perhaps Asian experience show an interesting path to integrate the social different groups in a rapidly modernizing environment.

Closing Session: Plenary, Workgroup Reports and General Discussion

Chairperson: Sergei Zelenev, Chief, Social Analysis and Policy Unit, Division for Social Policy and Development, DESA, UN, New York

A new social contract in the making for countries in the South?

Sonia Draibe, University of Campinas, Brazil

(To watch her speech, use a QuickTime enabled browser to see: http://cep.cl/sw2002/SW2002_Movies.html)

Ms Draibe summarized the groupês conclusions indicating that the matter was treated in three levels: the overall relation between policy, economic policy and social policy; the management of institutions of social policy and; the main concepts and matters of social protection in our countries.

Social policy and economic policy

On the first point, the new social contract assumes a new vision on the relation between state and markets, a new approach regarding citizenês rights and new modalities in economic policy, in the direction of economic growth with employment growth and income redistribution.

Past experiences in countries in the South indicates that under a new social contract the role of the state must change both in the economic sphere as in the social policy. Employment must be central in such a redefinition.

Insistence was made in the idea that social policy could not replace such a social objective in economic policy. In other words, although improved, and improvements are to be made, social policy by itself is incapable of replacing or solving problems generated by economic dynamics. It is well known that economic growth does not always generate enough employment or income redistribution, but on the other hand, without economic growth, social policy becomes quite unsatisfactory in itês results.

By itês nature, public social expenditure in some situations such as the present one, may generate a virtuous relation between dynamic economic growth and widened social protection. Social protection may play the double role of satisfying social needs but also make the economy more dynamic and generate employments. Such a relation may be better taken into advantage. Thus, the group concludes that there is wide space nowadays in the globalized world for the reproduction of the ¯New Deal”, maybe internationally concerted among nations.

For it, adequate and non-inflationary forms of social budgeting are required that make increased social expenditure compatible with fiscal equilibrium. Progressive and efficient taxing policies and transparent allocation of public resources are thus needed to avoid irresponsible populism that has been a negative experience in many countries in the past.

Conditions and scope of Social Policy: the basis for a new social contract

The new social contract requires comprehensiveness and flexibility; active policies, active citizenship, reinforcement of the social organizations; it involves public and private sectors; requires the inclusion of classic forms of social intervention to avoid collective risk; it must move towards universal forms of protection. It assumes very active policies that may rapidly reduce the stock of accumulated social problems.

Certainly, the institutions of social policy will be strong when they take into account the diversity and heterogeneous character of our societies, regarding race, gender and mainly culture. That is, that they may support a social contract centred in human rights and rights of different groups, conferring voice to the poor and excluded.

Education and health must be central in the new social contract, both conceived as rights of citizens in the widest possible form. Finally, an effective system of social protection must and may incorporate forms such as citizenês income or basic income, as well as reaffirmation of the right to employment and employment protection that may not be replaced by the former.

The Institutions of Social Policy

The new social protection system requires significant reinforcement of the state social institutions so they may be capable of: elevating the state regulatory coordination of social protection in all public organisms and between public and private institutions; increase the capability of public institutions to articulate multiple interests, embed social actions in civil society and promote alliances that may sustain them; improve the management capability of social policy organisms, improving the qualification of bureaucracy and technical staff.

Second Commission: New levels required in overall social budgeting?

Barbara Stallings, Director of the Economic Development Division of the UN Economic Commission for Latin America and the Caribbean, ECLAC

(To watch her speech, use a QuickTime enabled browser to see: http://cep.cl/sw2002/SW2002_Movies.html)

The second commissionê report was presented by ECLACês Barbara Stallings, who chaired the group. She divided her summary in three points: issues underlying resource mobilization and allocation, second the mobilization of resources per se and third the allocation of resources in the public domain.

Regarding the first point, they suggested a wide definition of social protection, including jobs, to be considered a human right to be attended with resource constraints to be taken into account, to avoid making it a simple wish list. That social protection policy should not impair growth. Local conditions vary widely and must be taken into account as well. New problems such as aging, globalization induced job precariousness, increasing health costs, etc., pose new challenges moreover.

The main question addressed in the group discussion was: How are we going to pay? They suggested the answer is a joint responsibility of many groups, international, and private, state, local and individuals. What are the goals? Who will be responsible? International community may contribute resources, especially debt relief for the poorest countries. It would be nice if translational corporations operating in the South would pay their taxes. Direct transfers from developed countries may play a part. Public sector should fight corruption, inefficiency and evasion.

But it is also necessary to raise taxes, especially in ways that not interfere with investment. Taxes on distributed earnings, VAT, are efficient in collecting, they are regressive, but can be compensated partially with progressive expenditure of the same recollection. Reallocating revenues is always possible, for example, limitation of purchase of arms within regions, through regional agreements on the mutual security. Multiyear plans are good, eliminating rigidities o annual budgeting.

Learning from successful examples elsewhere is always important. Western Europe and Southeast Asia for example, may give good examples to follow.

Avoiding beggar thy neighbour type of policies through regional agreements seems important.

The private sector must also participate, paying their taxes, but also complementing social protection schemes.

Resource allocation should give priority to social expenditure, getting finance ministers and social ministers together understanding the importance of social expenditure for economic development and vice versa. Care and flexibility must be considered regarding targeting.

From privatization to public - private collaboration for Social Protection?

MarÍa del Carmen Feijo„, Executive Secretary, National Council for Social Policies Coordination of the Presidency, Argentina

(To watch her speech, use a QuickTime enabled browser to see: http://cep.cl/sw2002/SW2002_Movies.html)

Ms. Feijo„ said that differences among countries wary widely with respect of the pertinence of the title of the commissionês question.

In countries such as Argentina, Uruguay and Chile, social protection systems evolved based on salary contributions, the role of the state and also community and family networks. During long time public - private collaboration in this sense was the norm, with different roles and weights being assumed by one or the other during long periods. During the 1990s, however, and before in some countries, the Washington consensus type of thought implied a rupture in the former equilibrium, both deteriorating social protection schemes and also the basic identities for satisfying basic needs that it had ensured. It seems that the main disequilibrium stems from the rupture of the salaried society that occurred. This model varies from country to country, for example, even dynamic employment generating sectors such as agricultural or fish export exports are built upon insecure or temporary salary relations. Over confidence in communitarian systems, on the other hand, as a replacement for state guarantied social rights, was questioned as not valid except for determined societies or groups.

The commission dedicated good part of the discussion to the consideration of senator Suplicyês proposal of a basic citizenês income. In general, even though many problems were detected in the proposal, there was general acceptance to the idea that it was part of good practice to confront part of the problem in the present conditions.

During neo - liberal reforms, and in the countries that mostly applied this kind of schemes, the public sector was left competing in a highly deteriorated, under funded, form, ¯with a hand tied behind itês back”, and intentionally so, to make possible the development of a sometimes highly unregulated private sector in social protection. Some of this scheme is still in place, even though a wide reaction seems to be taking place, especially in countries like Argentina where the private sector in social protection is now in the verge of collapse.

The previous way of thinking, where private was synonym of efficiency and public of inefficiency, should now be replaced by another, that recognizes the inefficiencies of the private sector as well as the prevailing fortitudes of the public sector that still covers most of social protection needs of the ample majority of the population even in the countries where the privatization effort has been more radical. Some form of new equilibrium that recovers both sectors as actors directed towards ensuring adequate social protection in the framework of collaborative action that by no means disavows the principal responsibility of the state in providing adequate living conditions to the population.

Final remarks by Mr Thierry Lemaresquier, UNDP Resident Representative in Chile.

(To watch his speech, use a QuickTime enabled browser to see: http://cep.cl/sw2002/SW2002_Movies.html)

Mr. Thierry Lemaresquier, UNDP Resident Representative in Chile closed the workshop. First of all he emphasized the clear perception by participants of the crisis situation of social protection in the majority of countries and regions in the world, and the need to collectively think about itês dimensions and responses various countries are giving to it.

He considered the meeting as being a good analysis of the deepness of the crisis but also regarding the emergence of a new paradigm that recognizes citizens rights to social protection not in the social rights form traditional in the twentieth century but a reinvention of such rights, probably the most forgotten ones during recent decades. In other words, this is a new dimension to be demanded on development, based on criteria such as universality, equity, sustainability and others. The discussions fit within the framework of the conferences of recent years such as the Social Summit of 1995 and other initiatives.

He remarked that in this meeting, although it is a relatively small one, we had the presence of several important international networks that work on a global and country level, such as the UN network, represented by itês centre and two regional commissions, the research UNRISD network, the UNDP network, the ILO network, and the new Human Security network. This symbolizes the platform that is starting to move to make possible a dialogue among the different actors of this complex equation. The South®South dialogue has showed itês fruitful potential. He thanked the participants, the main sponsors, the Ford Foundation and the OSDE Foundation and the UNDP/TCDC.

He finished remembering that in 1996 the UNDP Human Development Report was dedicated to economic development and from it various demands on growth were set. One of the observations of that report was that it was indeed possible that, during certain periods of time, economic growth and human development could move in opposite directions, but not in the long run. What is being said now is that economic growth and social protection should as well move in the same direction. Even risk evaluation business agencies are adding political and social dialogue considerations to the evaluation of country risk rankings. Tax compliance by transnationals, for example, could be also considered in the future in such evaluations.

A reform agenda is being delineated, that draws attention by its scope and by the need to give it a follow up. He remembered the Beirut meeting that preceded this one and committed his intent to continue in these efforts.

The results of the meeting, as ordered by the titles of the closing session reports: the urgency of a new social contract that embed social protection into the heart of public policy; the need of new levels of responsible social expenditure to make it possible and moving from privatization on to public - private collaboration in social protection; seem a good platform for the future, M. Lemaresquier concluded.



[1] The notorious Argentinean monetary policy poses a paradox of itês own: the dollar - peso pegging was established in the 1990s by Minister Cavallo, to end an hyperinflation process he himself had induced as minister during the 1980s to liquefy widespread indebt ness out of the debt crisis of the 1980s, and again Cavallo was called upon when the dollar - peso fixed rate was dragging Argentina over the abyss. Only this time he couldnêt make it.

[2] ¯Pensions” in this paperês concept, for Uruguay, include family allowances, unemployment benefits and others that in Chile, for example add up to about 3.9% of GDP. Also, transitory and permanent disability is included in the concept, while in Chile it is accounted in health expenses, and adds up to. On the other hand, it must be remembered that most pension contributions are included as incomes and most pensions paid as expenses, in the Uruguay case. Meanwhile in Chile, all pension contributions go to AFPs and are not considered as state income, and pensions, though mainly public still, are reduced gradually, as the AFP System cares all new pensioners. By year 2000 contributions to AFPs amounted in Chile to 3.8% of GDP, and AFP funded benefits to 2.2% of GDP. In health, Chile has a similar situation as Uruguay, because 80% of the population contributes to the public system and are cared by it, so both numbers are considered in the budget. In strict sense, public social expenditure should be corrected by the above factors to make a better comparison between countries.

[3] That is, the 27.5% of salaries that is the total contribution must be compared with the Chilean 19.5 - 20% that includes pensions (10%), health (7%) and disability insurance plus AFP fees (2.5 - 3%) plus the contribution to the new unemployment insurance, that add up to 3% of wages (2.4% employers, 0.6% employees). In many cases, health contributions to Isapre top 7%, furthermore. Adding up, the result is that Uruguayês 27.5% contribution may be compared to Chilean 23 - 24%. Benefits entitlement in Uruguay, on the other hand, seems quite superior to in the Chilean case.

[4] This compares quite favourably with the 9% and 2% comparable figures in Argentina and Chile, respectively. On the other hand, unemployment benefits are far better in Uruguay than in Chile, where the monetary subsidy is worth only 20 dollars a month initially, going down later to 10 dollars.

[5] In the case of Chile, pension deficit alone amounts for 6.9% of GDP.

[6] The Chilean AFPs, that proportionally attend double number of affiliates, charge a similar, slightly lower, percentage at present.

[7] Such figure does not seem small at all by, for example, Chilean standards. In this last country only 2% of the unemployed were receiving a very small, 20US$ per month, direct subsidy, equivalent to the Korean EIP program.

[8] Comparable Chilean expenditure was a negligible 2 million dollars, in 2001, by which 2% of the unemployed were receiving a very small, 20US$ per month, direct subsidy, for some time. This is the Chilean unemployment program comparable to the Korean EIP program where they spent 0.81% of GDP. ¯Active” job programs by the central government added 25 millions dollars to that amount, adding up to 27 million dollars that year, or 0.038% of GDP. Other ¯minimum employment” programs by local governments were severely restrained by the central government in favor of itês own, ONG based, ¯active” programs. Family allowances and other monetary subsidies for poor families, on the other hand, that may compare to Koreaês, but including pensions for indigent people, added up to another 0.66% of Chilean GDP, in 2001, and may be compared with Korean livelihood protection, where they spent 0.47% of Korean GDP in 1999.

Manuel Riesco,
Aug 24, 2012, 5:16 PM