The Changing Shapes of Latin American Welfare States

Abstract

Latin American welfare states have undergone major changes over the past half century. As of 1980, there were only a handful of countries (Argentina, Brazil, Chile, Costa Rica, and Uruguay) with social policy regimes that covered more than half of their population with some kind of safety net to insure adequate care during their old age and that provided adequate healthcare services. With few exceptions, access to social protection and to healthcare in these countries and others was based on formal employment and contributions from employees and employers. There were very few programs, and those few were poorly funded, for those without formal sector jobs and their dependents. The debt crisis and the ensuing neoliberal reforms then damaged the welfare state in all countries, including these leading nations. Deindustrialization, shrinking of the public sector, and cuts in public expenditures reduced both coverage and quality of transfers and services. Poverty and inequality rose, and the welfare state did little to ameliorate these trends. With the turn of the century, the economic and political situation changed significantly. The commodity boom eased fiscal pressures and made resources available for an increase in public social expenditure. Democracy was more consolidated in the region and civil society had recovered from repression. Left-wing parties began to win elections and take advantage of the fiscal room which allowed for the building of redistributive social programs. The most significant innovation has been expansion of coverage to people in the informal sector and to people with insufficient histories of contributions to social insurance schemes. The overwhelming majority of Latin Americans now have the right to some kind of cash assistance at some point in their lives and to healthcare provided by their governments. In many cases, there have also been real improvements in the generosity of cash assistance, particularly in the case of non-contributory pensions, and in the quality of healthcare services. However, the least progress has been made toward equity. With very few exceptions, new non-contributory programs were added to the traditional contributory ones; severe inequalities continue to exist in the quality of services provided through the new and the traditional programs.