UNRISDGeneva

September 3, 2010

Fernando FilgueiraUNFPA

A new common sense in the making? Hopes for the new millennium (with

comments on Latin America)

Structure of PresentationWhy universal social protection: evidence, common sense and normative preferencesSocial policy as transformative policyUniversalism as a goal: Agenda, tools, rules of thumb, and the political economyComments on Latin America: risk and protection Past and present divorceComments on Latin America: Conducive political environments. A second crises of incorporation in Latin America?

Social Policy as …

Social policy as an intragenerational an intergenerational distributive pact (equality)Social policy as redistribution of opportunity (equity)Social policy as a response to social risk (security)Social policy as the exercise and fulfillment of basic human rights (citizenship)Social policy as economic policy (investment and efficiency)

The crippling divergence of the end of the century

Neoclassic monoeconomicsRights based approach

Variety of developmental roads in search of a theoryAre there any common threads?

Sound economic policy including fiscal responsabilityStrong developmental states DemocracyDistributional policiesUniversal social policies as inclusionary, egalitarian and economic policy

Why universal social protection

Arguments for universalism:

The more classic arguments: vulnerability, normative and political economyAvoid distortions and moral hazard. Increase automatic stabilizersPolitical cohesion and democratic qualityTargeting where poverty hovers around 50% and above seems counterintuitive.You can and should target high incomes through taxesPoverty and extreme poverty measures through income are highly controversial and can lead to under coverageFiscal restraint, tax effort.

Social policy as transformative policy

Transforming the democracy/capitalism divide

Human rights and global citizenship as the normative pillar of policyA new frontier in basic guarantees redefines our tolerance towards inequalityOpportunity and Outcomes reclaim their inextricable linkPolitics transforms and is transformed by social policy The place of states, markets and families is reconsidered and repositioned

Transforming the gender and generational contract

Time, work and family are transformed and should transform policyIntertemporal sustainability, equity and equality become central to policyClass, gender and generations are integrated into analyses of equity and equalityLabor markets are transformed through social policyThe economy is transformed along lines related to people (gender and generations) and not to market position and access

Average age-specific profiles of per capita yearly consumption and production

0

1

2

3

4

5

6

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90+

Age

Mon

ey

Consumption

Production

Taken and adapted from: OGAWA, Naohiro. PowerPoint presentation at 2009 DOHA Conference on Family and Ageing. United Nations and Qatar Institute

0

1

2

3

4

5

6

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90+

Age

Mon

ey)

Age-specific profiles of per capita consumption and production

Labor income 2004

Labor income 1984

Consumption 2004

Consumption 1984

Taken and adapted from: OGAWA, Naohiro. PowerPoint presentation at 2009 DOHA Conference on Family and Ageing. United Nations and Qatar Institute

Women economic participation in labor market is crippledby a inefficient gender arrangement

AMÉRICA LATINA (PROMEDIOS PONDERADOS, 4 GRUPOS DE PAÍSES) PARTICIPACIÓN LABORAL PARA MUJERES DE 25 A 54 AÑOS POR GRUPOS DE PAÍSES SEGÚN QUINTIL

DE INGRESOS, alrededor de 2007(En porcentajes)

Fuente: CEPAL en base a tabulaciones especiales de las encuestas de hogares de los respectivos países. Los datos de Colombia y Nicaragua corresponden a 2005; Argentina, Chile y México a 2006. Argentina corresponde al Gran Buenos Aires; Bolivia a 8 ciudades principales y El Alto; Ecuador a las áreas urbanas; Paraguay a Asunción y Departamento Central; Uruguay a áreas urbanas

57

3846 42

64

47 51 53

70

58 60 62

7667 68 67

79 78 76 75

010

2030405060708090

ARG, BRA,URU

CHI, CRI, PAN COL, MEX, VEN BOL, ECU,GUA, HON, PY,

RD

Quintil 1 Quintil 2 Quintil 3 Quintil 4 Quintil 5

Curves on unpaid labour are telling of life cycle and class determinants

0:001:002:003:004:005:006:007:008:009:00

10:00

12 a

20

21 a

25

26 a

30

31 a

35

36 a

40

41 a

45

46 a

50

51 a

55

56 a

60

61 a

65

66 a

70

71 a

75

76 y

más

ECUADOR 2007

Quintil I - Hombres Quintil III - Hombres Quintil V - Hombres

Quintil I - Mujeres Quintil III - Mujeres Quintil V - Mujeres

CANTIDAD PROMEDIO DE HORAS NO REMUNERADAS TRABAJADAS POR SEXO Y POR GRUPOS DE EDAD SEGÚN QUINTILES DE INGRESO

(En horas diarias)

URUGUAY, TIEMPO DE TRABAJO REMUNERADO Y NO REMUNARADO POR

SEXO SEGÚN QUINTILES DE INGRESO, 2007(En horas)

Fuente: CEPAL en base a tabulaciones especiales de la Encuesta de Uso del Tiempo

MÉXICO, TIEMPO DE TRABAJO REMUNERADO Y NO REMUNARADO POR SEXO SEGÚN

QUINTILES DE INGRESO, 2002(En horas)

0:001:002:003:004:005:006:007:00

QUINTIL I QUINTIL II QUINTIL III QUINTIL IV QUINTIL V

HOMBRE Ho ras no remuneradasHOMBRE Ho ras remunaradasMUJ ER Ho ras no remuneradasMUJ ER Ho ras remunaradas

0:001:002:003:004:005:006:007:008:009:00

Quintil I Quintil II Quintil III Quintil IV Quintil V

HOMBRE Horas no remuneradasHOMBRE Horas remunaradasMUJER Horas no remuneradasMUJER Horas remunaradas

The sexual division of work is gender and class determined

Universalism as a goal: Agenda, tools, rules of thumb, and the political

economy

Orientations for a basic agendaCreate/Define a first floor of social citizenship based on general revenue and universal entitlementsReform contribution based systems in social security and health care. Two basic rules of thumb; solidarity based expansion of coverage and decreased stratification and segmentationStrengthen labor intensive social services geared towards economies of care with universal predispositionRevamp or create a robust system of unemployment benefits linked to active labor market policies

Central principles and instruments of universalism

Return to a central role of the state as guarantee, regulator and in many cases PROVIDER of social protectionCitizenship based entitlementsGeneral revenue financingNull or reverse stratification in general revenue based benefitsNew balance between cash transfer y service welfareSeek positive distributional effects based on selection of types of benefits and services and broad categories of population with higher representation of vulnerable sectors, not through traditional means tested instrumentsBenefits, transfers and services linking social protection, to market incorporation and fiscal sustainability

The liberal-egalitarian logic of universalism

Close to the cradle it protects based on citizenship entitlements that grow larger as economy expands, as you move ahead in life cycle it seeks market incorporation and basic decomodification, towards the end of life it provides universal basic protection and on top of it allows for the operation of both private-market based optional systems and merit based vertical solidarity insurance systems (or goes for state administered notional capitalization systems)Important role for the market beyond basic protectionNo subsidies to stratified contributory based systems to sustain differential quality in benefits and transfersCrowding out the market in the area of basic protection

The political economy of universalism

Adequate quality of basic protection in order to achieve and sustain a broad distributional coalitionControl strong corporations linked to formal insurance schemesIterative model for building this alternative based on fiscal sustainability and programmed expansion that accompany aggregate productivity gainsMarked increase in the direct tax base to finance universal expansion

The policy options in the medium runIn education: State based model, expanded school time, strong criteria for human and financial resource allocation based on equality of access, opportunity and results. In health care: National health system integrated at the base on universal basic coverage and allowing for private and public supply. Targeted and withcopayment mechanisms for additional benefits. In social security: Universal flat rate monetary transfers for old age and families with children. Notional private and public systems above and beyond that. Monetary transfers for unemployment: targetted non contributory with high replacement rates and short period of time for lower income, contribution based for medium and higher income. Active labor market policies with strong training and retraining components

Additional elements of a basic agenda

We have to break the present day intra and intergenerational and gender distributional dynamics:

Protect social spending in children and womenSpending limitation on old age while putting in place basic universalistic flat rate systems.Limit the use of targeted ad-hoc poverty programsAvoid the creation of captive markets for private health care and social insurance

Comments on Latin America: risk and protection

Past and present divorce

The ISM: the economic and social critique

Protected Population

Protected Entrepreneurs

State, civil service, public

employees

Formal Workers

Rural workers and small producers

Urban Informal Sector

Landed elites

The new model and its market fueled incorporation utopia

Incorporation

Competitive Entrepreneurs

Minimum State

Productive Workers

Rural sectors

Urban Informal Workers

Unregulated internal and external markets

Shortcomings of the market utopia

Percentage of protected population decreases

Fragile or rentist Entrepeneurs

Privatized State (and its

rents)

Vulnerable/protected

Rural sectors

Urban Informal Sector

Financial Capital, Closed Markets, China and India

Workers without protection

Comments on Latin America: Conducive socio-political environments?

A second crises of incorporation in Latin America?

Entry into the modern world; urban and labor market

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80

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% popu la t ion 15 - 64 Labor pa rtic ipa t ion ra te % u rban popu la tion

Women and labor market

54

5658

606264

6668

7072

YR1980

YR1982YR198

4YR1986YR19

88YR199

0YR19

92YR1994YR19

96YR19

98YR2000YR20

02YR2004YR20

06

Consumption and demonstration effects

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50

60

70

80

90

100

YR1995 YR2000 YR2005

ARG COL ECU PRY Household TV

Acces to Household Television Sets (selected countries and unweighted average for 17 countries)

Acces to Communication and Information Technologies (unweighted average for 17 countries)

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5

10

15

20

25

30

35

40

45

YR1995 YR2000 YR2005

Internet users (per 100 people) Mobile phone suscribers (per 100 people)

Personal computers (per 100 people)

La entrada a la modernidad (1)

Democracy: a real new wave

1975 20051985 1995

Argentina, Bolivia1983

Uruguay, 1985

Brasil, Nicaragua, 1990

Panamá, El Salvador, 1994

México, 2000Guatemala, 1996

Paraguay, 1993

Ecuador, 1979

Perú, 1980

Chile, 1989 Honduras, 1998

The invasion of the masses

Proportion of population exposed to e lectoral democracy in Latin

America

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0.1

0.2

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1

1975 1980 1985 1990 1995 2000

Local democracy; the next frontier

An unsustainable divorce: poverty and democracy

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0.8

1

1.2

1975

1980

1985

1990

1995

2000

Proportion of populationexposed to electoraldemocracy in LatinAmericaPopulation below thepoverty line (estimatedavergaes for subperiods)

Incorporation crises: lessons from the past

The so called “shift to the left” in Latin America represents the political expression of what in political sociology was termed in the forties and fifties an incorporation crises. Such crises occur when the need for cooperative interaction in markets and polities and the pressure from below in terms of economic, political and social demands are not being met by the political, social and economic patterns and institutions of incorporation and regulation. The content overflows the continents.

Incorporation crises: lessons from the past

In the postwar period this notion was applied mostly to help explain the emergence of populist leaders, movements and parties. The emergence of a modern working class, the increasing demands of an already small but vocal middle class and the need to make room for large masses of rural migrants in regimes that remained highly elitist politically, limited economically -regarding incorporation into modern labor markets-, and socially exclusionary created political and social tensions in the 40s and 50s. The populist shift that dominated Latin American Politics in these years was its most clear political expression.

Left turns: merely political or developmental shift?

Latin America has been facing a second crises of incorporation, and has recently been having its first political offspring. This is a shift that is born of two parents and sustained by a contingent road companion. The mating that gave birth to the new political realities is that of uninterrupted electoral democracies and the shortcomings (and achievements) of the Washington consensus era. The road companion that sustained and fed this shift in the region was external and economic in nature: the commodity boom and its impact on growth, fiscal situation and room for manouvre.

Merely a political or a possible developmental shift?

But this political offspring is only taking the first unsteady steps towards a full blown developmental shift. The four critical policy areas in which this offspring will be tested are: the welfare regime it creates, the tax systems that is put in place to sustain it, the regulatory model for domestic markets (especially labor markets) and the model of development it chooses regarding the global marketplace.

The fiscal challenge

The fiscal challenge (1)

The tax structure of OECD

The tax structure in Latin America