Briefing paper

Briefing paper
Briefing paper
Alicia Bárcena
Executive Secretary
Antonio Prado
Deputy Executive Secretary
Laís Abramo
Chief, Social Development Division
Pascual Gerstenfeld
Chief, Statistics Division
Paulo Saad
Officer in Charge, Latin American and Caribbean Centre (CELADE)Population Division of ECLAC
María Nieves Rico
Chief, Division for Gender Affairs
Ricardo Pérez
Chief, Publications and Web Services Division
The Social Panorama of Latin America is prepared each year by the Social Development Division and the Statistics Division of
the Economic Commission for Latin America and the Caribbean (ECLAC), under the supervision of Laís Abramo and Pascual
Gerstenfeld, respectively, and with participation by the Latin American and Caribbean Demographic Centre (CELADE)-Population
Division of ECLAC, directed by Paulo Saad, and the ECLAC Division for Gender Affairs, directed by María Nieves Rico.
The 2015 edition was coordinated by Laís Abramo, who also worked on the preparation of the text together with Simone
Cecchini, Ernesto Espíndola, Álvaro Fuentes, Pascual Gerstenfeld, Carlos Maldonado, Xavier Mancero, Rodrigo Martínez, Dirk
Jaspers_Faijer, María Nieves Rico, Claudia Robles, Paulo Saad and Varinia Tromben. Bernardo Atuesta, Fabiola Fernández, Nincen
Figueroa, Marco Galván, Carlos Howes, Juan Pablo Jiménez, Carlos Kroll, Ciro Martínez, Tim Miller, Vivian Milosavljevic, Beatriz
Morales, Claudio Moris, Diana Oliva, Katherine Páez, Fabiana Pierre, Gwendoline Peltier, Fabiana del Popolo, Marta Rangel,
María Nieves Rico, Jorge Rodríguez, Ignacio Ruelas, Lucía Scuro, Guillermo Sunkel and Matías Salces prepared substantive inputs
and processed statistical data. Contributions and comments relating to different sections of the document were received from
Vianka Aliaga, María Elisa Bernal, Ricardo Infante, Wilson Peres, Heidi Ullmann, Iliana Vaca Trigo and Jürgen Weller.
Explanatory notes:
-Three dots (...) indicate that data are not available or are not separately reported.
-A dash (-) indicates that the amount is nil or negligible.
-A full stop (.) is used to indicate decimals.
-The word “dollars” refers to United States dollars, unless otherwise specified.
-A slash (/) between years (e.g. 2013/2014) indicates a 12-month period falling between the two years.
-Individual figures and percentages in tables may not always add up to the corresponding total because of rounding.
S.16-00226
Contents
Introduction............................................................................................................................................................7
Chapter I
Poverty and inequality in Latin America..................................................................................................................9
Introduction........................................................................................................................................................9
A. Income poverty..............................................................................................................................................9
1. The evolution of the economic situation in the period of analysis.............................................................9
2. The recent evolution of poverty in Latin America.....................................................................................9
3. The poverty gap and poverty severity in 2010-2014...............................................................................10
4. Factors associated with the evolution of poverty rates in 2010-2014......................................................11
B. Income distribution......................................................................................................................................13
1. The recent evolution of income inequality.............................................................................................13
2. Using additional data to measure income inequality: tax records...........................................................14
3. Educational inequalities by income stratum............................................................................................15
Bibliography.....................................................................................................................................................16
Annex A1..........................................................................................................................................................17
Chapter II
Social spending trends over the business cycle: the importance of maintaining
funding for social policy........................................................................................................................................21
Introduction......................................................................................................................................................21
A. Recent and long-term trends in the region’s public social spending.............................................................21
B. Social spending by sector in the region........................................................................................................22
C. The long-term evolution of social spending in the countries.........................................................................24
D.Social spending and the business cycle........................................................................................................25
E. Financing public social spending when growth is a constraint.....................................................................26
F.Recapitulation..............................................................................................................................................27
Bibliography.....................................................................................................................................................27
Chapter III
Confronting structural divides in the employment market: labour and productive
inclusion policies and programmes.......................................................................................................................29
Summary
Introduction......................................................................................................................................................29
A. Labour inclusion and exclusion in Latin America.........................................................................................29
1. Access divides in the employment market..............................................................................................29
2. Divides in access to rights and social protection.....................................................................................33
3. Income divides.......................................................................................................................................34
B. The urgent need to coordinate labour and productive inclusion programmes..............................................37
1. Support for the labour supply.................................................................................................................38
2. Support for labour demand.....................................................................................................................38
3. Job placement services...........................................................................................................................39
4. Some outcomes of labour and productive inclusion programmes...........................................................40
C. Final considerations: the challenges of including the poor and vulnerable
in the labour market.....................................................................................................................................40
Bibliography.....................................................................................................................................................41
3
Economic Commission for Latin America and the Caribbean (ECLAC)
Chapter IV
Institutionality and social development: overview and challenges........................................................................45
A. Overview of the institutional framework of social development policies
in Latin America and the Caribbean.............................................................................................................45
1. The legal and regulatory dimension........................................................................................................46
2. Organizational characteristics and modes of coordination.....................................................................47
3. The technical and operational dimension...............................................................................................49
4. The fiscal dimension..............................................................................................................................49
B. Coordination challenges: social development, non-contributory social protection,
and policies for particular population segments...........................................................................................50
C. Institutionality of care policies in Latin America...........................................................................................51
D.Concluding remarks.....................................................................................................................................54
Bibliography.....................................................................................................................................................55
Chapter V
The impact of demographic trends........................................................................................................................57
Introduction......................................................................................................................................................57
A. Fewer children, greater longevity and more mobility...................................................................................57
1. A rapid but uneven decline in fertility....................................................................................................57
2. A rapid but uneven rise in life expectancy..............................................................................................58
3. One tenth of the native-born population of some countries lives abroad................................................59
B. Slower growth and ageing populations........................................................................................................60
C. Opportunities and challenges associated with changes to the age structure.................................................61
D.Medium- and long-term policy implications................................................................................................64
Bibliography.....................................................................................................................................................64
Tables
Table I.1
Table A1.1
Table A1.2
Table A1.3
Table IV.1
Table IV.2
Table IV.3
Latin America (15 countries): annual changes in the poverty rate, poverty gap
and squared poverty gap, around 2010-2014............................................................................11
Latin America (18 countries): poverty and indigence indicators, around 2001-2014.......................17
Latin America (18 countries): official poverty and indigence rates by geographical area,
latest two years available...........................................................................................................19
Latin America (18 countries): household income distribution, 2001-2014.................................20
Latin America and the Caribbean (22 countries): type of authority that coordinates
the social cabinet or intersectoral collegial entity in the social area, 2015.................................48
Latin America (19 countries): social spending in three groups of countries
with different social promotion and protection outcomes
(simple averages for each group), around 2010-2014................................................................50
Latin America (13 countries): care policies, around 2015..........................................................53
Figures
Figure I.1
Figure I.2
Figure I.3
Figure I.4
Figure I.5
Figure I.6
Figure II.1
Summary
Figure II.2
4
Latin America: poverty and indigence, 1980-2015....................................................................10
Latin America (15 countries): annual rates of change in earnings, earnings per employed
worker and people employed in poor households, 2010-2014......................................................12
Latin America (16 countries): annual rate of change in the Gini coefficient,
2002-2010 and 2010-2014.......................................................................................................13
Latin America (17 countries): ratio between average incomes in decile 10
and average incomes in deciles 1 to 4, around 2010 and 2014.................................................14
Total income share of the richest 1%, 1993-2014......................................................................15
Latin America (18 countries): educational attainment in the poorest quintile
relative to the richest, by education level, 1997-2013...............................................................16
Latin America and the Caribbean (21 countries): public social spending
and total public spending as shares of GDP, and public social spending
as a share of total public spending, 1991-1992 to 2013-2014...................................................22
Latin America and the Caribbean (21 countries): public social spending
by function, 1991-1992 to 2013-2014......................................................................................23
Social Panorama of Latin America • 2015
Figure II.3
Figure II.4
Figure III.1
Figure III.2
Figure III.3
Figure III.4
Figure III.5
Figure III.6
Figure III.7
Figure III.8
Figure III.9
Figure III.10
Figure III.11
Figure IV.1
Figure IV.2
Figure V.1
Figure V.2
Figure V.3
Figure V.4
Figure V.5
Figure V.6
Figure V.7
Figure V.8
Latin America and the Caribbean (21 countries): public social spending
as a share of GDP and per capita, 1991-1992 to 2013-2014.....................................................24
Latin America and the Caribbean (22 countries) and countries of the Organization
for Economic Cooperation and Development (OECD): tax revenues by type
of tax, 1990, 2000, 2013 and 2014...........................................................................................26
Latin America (18 countries): labour force participation rates by sex
and by vulnerability to income poverty, national totals, 1990-2013...........................................30
Latin America (18 countries): unemployment rates by sex and by vulnerability
to income poverty, national totals, 1990-2013..........................................................................30
Latin America (9 countries): unemployment rate by ethnicity, sex
and geographical area, around 2013..........................................................................................31
Latin America (18 countries): distribution of employed persons aged 15 and over
by productivity and sex, national totals, 1990-2013..................................................................32
Latin America (8 countries and Brazil): occupational categories of employed people
aged 15 and over by race/ethnicity and sex, national totals, around 2013.................................32
Latin America (18 countries): wage earners aged 15 and over with employment
contracts, by vulnerability to income poverty, national totals, 2002-2013.................................33
Latin America (6 countries and Brazil): membership of pension systems among
working people aged 15 and over, by race/ethnicity and sex, around 2013...............................34
Latin America (18 countries): labour earnings of employed people aged 15
and over by sex, national totals, 1990-2013..............................................................................35
Latin America (9 countries): labour earnings by sex, race/ethnicity and years
of education, national totals, around 2013................................................................................35
Latin America (17 countries): population without own individual income,
by income quintile and sex, national totals, 1997-2013............................................................36
Latin America (18 countries): distribution of employed people aged 15 and over
by vulnerability to income poverty, national totals, 1990-2013.................................................36
Latin America and the Caribbean (33 countries): explicit mention of rights
in constitutional or specific legislation, by sectoral issue
and population segment, September 2015................................................................................46
Latin America and the Caribbean (20 countries): year of creation of social
development ministries, 1985-2015..........................................................................................47
Latin America (7 countries): ratio between the lowest and highest socioeconomic
quintiles with respect to the percentage of women aged 19 to 20 years
who are mothers, by area of residence and census year............................................................58
Latin America (9 countries): child mortality by ethnic status, around 2000 and 2010......................59
Latin America and the Caribbean: emigrants as a proportion of the total population.......................60
Latin America: population by age group, 1985-2060.................................................................61
Latin America and the Caribbean: economic impact of age structure changes,
expressed as the estimated annual variation in the support ratio,
2000-2015 and 2015-2030.......................................................................................................62
Latin America and the Caribbean: economic impact of age structure changes
on the education sector, expressed as the estimated annual variation
in the sector’s support ratio, 2000-2015 and 2015-2030...........................................................62
Latin America and the Caribbean: economic impact of age structure changes
on the health sector, expressed as the estimated annual variation
in the sector’s support ratio, 2000-2015 and 2015-2030...........................................................63
Latin America and the Caribbean: economic impact of age structure changes
on the pensions sector, expressed as the estimated annual variation
in the sector’s support ratio, 2000-2015 and 2015-2030...........................................................63
Diagram
Types of labour and productive inclusion programmes..............................................................37
Summary
Diagram III.1
5
Introduction
The 2015 edition of Social Panorama of Latin America analyses poverty trends, as measured by ECLAC. It also examines
changes in income distribution and in other aspects of inequality. With a view to contributing to the development of
public policies to overcome poverty and socioeconomic inequality, this edition examines the latest trends in social
spending and the challenges posed by demographic change, and provides in-depth analysis of persistent gaps in
the labour market, of the challenges facing policies and programmes that foster inclusion in the labour market and
production, and of social development institutions in Latin America.
As in previous editions, chapter I sets out updated figures on poverty and indigence in Latin America. These indicate
that, in 2014, the regional average rates for poverty and indigence remained unchanged from 2013, 28.2% and 11.8%
of the total population, respectively. The number of people living in poverty grew in 2014, reaching 168 million,
of which 70 million were living in extreme poverty. Both the poverty and the indigence rates are projected to rise
in 2015. If these projections are borne out, 175 million people would be considered to be income poor in 2015,
75 million of whom would be living in extreme poverty.
Conversely, there was a slight decrease in average income inequality between 2013 and 2014 in countries where
recent data are available. The comparison between the latest figures with those from the beginning of the 2010s
shows a more significant reduction. Inequality also exists in other areas, such as educational attainment. Despite the
significant increase in the number of students completing primary and secondary education in recent years, in 2013,
80% of young people aged between 20 and 24 in the highest income quintile (the fifth quintile) had completed their
secondary education, compared with barely 34% in the lowest income quintile (the first quintile). At the beginning
of the period under review, the gap was even wider, however.
Chapter II examines recent and long-term developments in social spending, on the basis of official data provided
by countries. This category of spending has continued to increase, albeit at an ever slower rate. In 2013-2014,
regional GDP was 19.5%, but it is expected to stagnate in the face of the lean short-term economic projections. The
functional distribution of social spending, its medium- and long-term evolution, and changes in its composition are
also briefly discussed.
Chapter II also looks at constraints on government financing, specifically the structure and evolution of tax
revenues and the impact of the end of the commodity supercycle, as well as the need to maintain current public
social spending levels and priorities and possible measures that would achieve that.
Chapter III examines some of the structural gaps that remain in the region’s labour market (in terms of access,
income, rights and social protection), despite the progress made in recent years, which has played a key role in
reducing levels of poverty and inequality in the region. It also explores policies and programmes on labour market
inclusion, aimed at extending access to economic opportunities and quality jobs to those living in extreme poverty or
poverty, or vulnerable to falling into poverty. In total, 58 labour market inclusion and income generation programmes,
currently underway in 21 countries in the region, are reviewed. These programmes, which are in the ECLAC database
of non-contributory social protection programmes in Latin America and the Caribbean, seek to improve both the
supply of and demand for work by offering technical and vocational training, establishing equivalences between
academic qualifications, supporting self-employment, creating jobs directly and indirectly, and setting up labour
market intermediation services. However, gender considerations must be mainstreamed into these programmes. Lastly,
lessons learned from evaluations of these programmes, together with their scope and limitations, are discussed from
a perspective of human rights and decent work, and a number of recommendations are put forth.
Summary
Chapter IV analyses existing social development institutions in the region, including government agencies whose
core mandate is to produce and implement development and social inclusion strategies and to overcome poverty. To
this end, various aspects of the social institutions are examined: the legal and regulatory framework; the organizations’
structure and coordination arrangements; technical and operational tools linked to policy implementation; and, lastly,
the nature and amount of resources devoted to social development policies. Particular attention is paid to institutions
responsible for non-contributory social protection and care policies, and to the challenges of guaranteeing the exercise
of universal social rights, of addressing the problems and needs of various population groups, and of honouring the
commitments undertaken by countries in these areas.
7
Economic Commission for Latin America and the Caribbean (ECLAC)
Lastly, chapter V contains a thorough analysis of the rapid demographic changes that Latin America and
the Caribbean have seen, which bring both opportunities and challenges in relation to the achievement of the
Sustainable Development Goals and equality. The impacts of these opportunities and challenges vary depending on
the stage the respective countries have reached in the demographic transition. Analysis shows that, in a large number
of countries, the favourable conditions created by the demographic dividend will persist for a relatively long period,
during which these countries will have time to create or strengthen public policies to capitalize on the opportunities.
Countries which are further along in the demographic transition have already begun to experience rapid population
ageing and face growing demands to ensure that social protection systems have sustainable funding.
Summary
A broad array of policies will be needed to deal with the effects of demographic shifts. In particular, the countries
will need to expand education and employment opportunities for young people, take steps to improve social security,
pensions and health care, create a public care system, and adapt fiscal policies in order to manage transfers in a
balanced manner between the generations. This policy effort must mainstream the rights-based approach and the
gender and life cycle perspectives in keeping with national contexts and taking a long-term view. These challenges
are also addressed in the following chapters.
8
Chapter I
Poverty and inequality in Latin America
Introduction
This edition of the Social Panorama of Latin America uses information available as of 2014 to set out the current
situation regarding poverty and income distribution. According to ECLAC estimates, average poverty and indigence
rates did not vary significantly in the region as a whole between 2012 and 2014, which raises doubts about the
prospects for progress in these areas over the coming years, given the current economic environment. However,
examination of the figures for the individual countries shows that a number of these have made progress in reducing
poverty and indigence indicators, while others have experienced reverses in the same period.
Poverty and indigence declined significantly in the 2010-2014 period, both in the region on average and in most of
the countries considered, mainly thanks to rising household incomes. This took place in a context of improving labour
market indicators (declining unemployment rates, higher earnings, with particularly strong increases in the minimum
wage in a number of countries, and moderate rises in formal working and women’s labour market participation rates)
and expanded public social spending and anti-poverty policies, including cash transfer programmes.
In addition to the usual analyses of factors associated with changes in poverty rates, this chapter presents the
indicators most commonly used to describe income inequality and briefly surveys the findings of some studies of the
subject, while also incorporating further information on the highest-income households.
A. Income poverty
1. The evolution of the economic situation in the period of analysis
The global economy has shown signs of recovery in recent years, although the region’s performance has been less
favourable.1 At 1.2%, the Latin American growth rate in 2014 was lower than both the global average (2.6%) and
the previous year’s rate (2.8%), meaning that the slowdown which had begun in 2011 deepened. Not all subregions
were affected alike: GDP growth rates in 2014 were 0.6% in South America, 0.7% in the English- and Dutch-speaking
Caribbean, 4.0% in Central America and 2.2% in Mexico (ECLAC, 2015a). Furthermore, per capita GDP growth
does not necessarily translate into a similar rise in household incomes, since not all growth has the same quality
and composition.
The average of the official unemployment rates in the region’s countries fell back again, from 6.2% in 2013 to
5.9% in 2014, another record low, in a context of declines in both the employment rate (from 56.9% in 2013 to 56.5%
in 2014) and the participation rate (from 60.6% in 2013 to 60.1% in 2014). The purchasing power of the average
wage increased in most of the countries, although by less than in previous years. The simple average inflation rate
for 20 countries analysed was 8.4% in 2014, as compared to 6.8% in 2013, with inflation picking up particularly
strongly in the Bolivarian Republic of Venezuela (where it was 68.5%) and Argentina (23.9%).
Lastly, GDP is estimated to have contracted by 0.4% in 2015, with per capita output thus declining by some 1.5%.
2. The recent evolution of poverty in Latin America
Latin America had a poverty rate of 28.2% and an indigence rate of 11.8% of the whole population in 2014, a
continuation of the previous year’s levels. The number of poor grew in 2014 to 168 million, of whom 70 million
were indigent. The increase occurred basically among the non-indigent poor, whose numbers rose from 96 million
in 2013 to 98 million in 2014 (see figure I.1).
The economic information is for 2014, the reference year for estimates of poverty, indigence and income distribution. More up-to-date
information is available in ECLAC (2015b).
Summary
1
9
Economic Commission for Latin America and the Caribbean (ECLAC)
Figure I.1
Latin America: poverty and indigence, 1980-2015 a
(Percentages and millions of persons)
60
48.4
50
Percentages
40
43.9
43.8
40.5
33.5
31.1
29.7
30
20
22.6
18.6
28.2
29.2
28.2
28.1
19.3
18.6
12.9
12.1
11.7
11.9
11.3
12.4
11.8
10
0
1980
1990
1999
2002
250
200
Millions of persons
2010
186
150
2011
2012
2013
2014
2015
225
215
204
2008
177
171
175
168
166
164
136
95
100
91
99
72
62
69
67
66
70
70
75
50
0
1980
1990
1999
2002
2008
Indigent
2010
2011
2012
2013
2014
2015
Poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of data from household surveys conducted in the
respective countries.
a stimates for 19 countries of the region, including Haiti. Cuba is not included. The 2015 figures are projections.
Changes in the regional poverty rate are calculated from the variations observed in the countries or projected in
cases where no figures are available for a given year. The number of poor in the region increased by about 2 million
between 2013 and 2014, this figure being the balance resulting from a rise of some 7 million recorded or projected
mainly in the Bolivarian Republic of Venezuela, Guatemala and Mexico and a decline of 5 million occurring mainly
in Brazil, Colombia and Ecuador.
Projections for 2015 show both indicators moving upward. The poverty rate is expected to be 29.2% and the
extreme poverty rate 12.4%, representing increases of 1.0 and 0.6 percentage points, respectively. If borne out, these
projections mean a figure of 175 million income-poor in 2015, with 75 million indigent.
3. The poverty gap and poverty severity in 2010-2014
The poverty rate fell in the great majority of the countries in 2010-2014,2 according to ECLAC estimates. The largest
declines were in Uruguay (at an annual equivalent rate of -14.9%), Peru (-9.8%), Chile (-9.1%) and Brazil (-7.9%).
In the Bolivarian Republic of Venezuela, Honduras and Mexico, the poverty rate rose by between 2% and almost
5% a year (see table I.1).
Analysis of the poverty gap and poverty severity indicators yields a more detailed picture of these changes. The
poverty gap indicator weights the percentage of poor by the average gap between their incomes and the poverty
line; thus, it considers how poor the poor are. The squared poverty gap or poverty severity index shows something
Summary
2
10
Analysis of the 2010-2014 period was based on the regionally comparable estimates traditionally prepared by ECLAC (see annex A1).
Social Panorama of Latin America • 2015
similar, while also considering how this income is distributed among the poor.3 If the gap diminishes by more than
the poverty rate, there has been some alleviation in the severity of need among the poor. A decline in the severity of
poverty that is accompanied by a reduction in the gap and the rate means that the lowest-income individuals among
the poor have attained a relative improvement in their incomes within the group of poor persons.
Table I.1
Latin America (15 countries): annual changes in the poverty rate, poverty gap
and squared poverty gap, around 2010-2014 a
(Percentages)
Bolivia (Plurinational State of) (2009-2013)
Brazil (2009-2014)
Chile (2009-2013)
Colombia (2010-2014)
Costa Rica (2010-2014)
Dominican Republic (2010-2014)
Ecuador (2010-2014)
El Salvador (2009-2014)
Honduras (2010-2014)
Mexico (2008-2014)
Panama (2010-2014)
Paraguay (2010-2014)
Peru (2010-2014)
Uruguay (2010-2014)
Venezuela (Bolivarian Republic of) (2010-2013)
Poverty headcount
ratio (H)
-6.3
-7.9
-9.1
-6.4
0.1
-2.6
-6.6
-2.8
2.3
2.9
-4.5
-6.3
-9.8
-14.9
4.9
Poverty gap (PG)
-7.8
-9.7
-10.5
-8.0
1.1
-4.3
-9.4
-5.5
3.3
2.8
-2.4
-8.6
-12.3
-15.9
6.9
Squared poverty
gap (FGT2)
-9.0
-10.3
-12.3
-9.1
1.3
-4.8
-11.3
-7.3
3.9
2.7
0.4
-10.2
-14.0
-13.7
8.1
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of data from household surveys conducted in the
respective countries.
The information presented in table I.1 shows that poverty reduction overall has usually been accompanied by
reductions in the poverty gap and severity. Over the period analysed, the poverty gap diminished at high annual
rates —and faster than the poverty rate— in eight countries: Uruguay (-15.9%), Peru (-12.3%), Chile (-10.5%) and
Brazil, Colombia, Ecuador, Paraguay and the Plurinational State of Bolivia (declines of between about 8% and 10%).
At the same time, poverty severity diminished in these same countries at an annual equivalent rate of between 9%
and 14%. In all these cases, not only did poverty diminish, but the general situation of the lowest income groups
among the poor improved. Only in Panama did the headcount ratio decline but more slowly than the poverty rate,
while poverty severity remained unchanged, suggesting that the households exiting poverty were the ones with the
highest incomes among the poor.
The poverty rate increased in the Bolivarian Republic of Venezuela, Honduras and Mexico, as did the poverty
gap and severity. In the first two countries, moreover, the relative situation of the poorest was worse at the end of the
period, since the gap as measured by the Foster-Greer-Thorbecke (FGT) method grew more quickly than the headcount
ratio (H). In Mexico, poverty grew but neither the gap nor severity did.
4. Factors associated with the evolution of poverty rates in 2010-2014
The evolution of poverty rates in the period can be studied from two complementary perspectives: one aimed at
determining the impact of rising income and its distribution, and the other at analysing the labour market participation
of poor households.
Taking the first of these approaches, the changes observed in the poverty rate can be broken down into the contribution
of two factors (Datt and Ravallion, 1992): the change in people’s average income and changes in the distribution of
this income. Cumulative changes in poverty rates in 2010-2014 were mainly due to changes in average incomes.
The squared poverty gap indicator takes account of changes in the distribution of per capita income among the poor, so that the further
individuals are from the poverty line, the higher the weights assigned to them.
Summary
3
11
Economic Commission for Latin America and the Caribbean (ECLAC)
From this perspective, income growth accounted for two thirds or more of the decline in poverty in Paraguay, the
Plurinational State of Bolivia, Panama, Peru and Colombia. In another six countries, the share was between 55% and
65% of the total (Ecuador, Argentina, Brazil, Chile, El Salvador and Uruguay. Falling incomes were the main factor
behind the rise in poverty in the Bolivarian Republic of Venezuela, Honduras and Mexico. Only in the Dominican
Republic did the distribution effect prevail, accounting for 64% of the fall in poverty.
Because the labour market is the main source of income for poor households, the second perspective focuses on
the participation of poor households in this market.4 Thus, the change in the total volume of work income received
by all poor households (earnings) is analysed by looking at changes in its two components: the average income
received from this source by each worker in employment (earnings per employed worker) and the number of people
employed in that same group.5
In general, the bulk of the earnings improvement was due to a rise in average earnings per employed worker.
This was the case in Brazil, Ecuador, Paraguay, Peru and Uruguay, where rates of change in earnings per employed
worker passed more or less straight through to total earnings. In other countries, conversely, the improvement
in average income per employed worker went with a rise in the number of employed, so that the total earnings
of the group increased by more than the two components separately. This happened in Chile, Colombia, the
Dominican Republic, El Salvador and the Plurinational State of Bolivia. A peculiarity of the Dominican Republic
was that the rate of growth in the number of employed outstripped growth in average earnings per employed
worker over the period.
The total earnings of poor households fell in the remaining countries, mainly because average earnings per
employed worker declined. In the Bolivarian Republic of Venezuela, Mexico and Panama, however, the fall was less
than the drop in earnings per employed worker, owing to a rise in the total number of employed. In Costa Rica and
Honduras, the drop in earnings per employed worker translated almost directly into a decline in total earnings, as
employment changed little over the period (see figure I.2).
Figure I.2
Latin America (15 countries): annual rates of change in earnings, earnings per employed worker
and people employed in poor households, 2010-2014 a
(Percentages)
12
10
8
6
4
2
0
-2
Earnings per employed worker
Percentage of people employed
Honduras
Venezuela
(Bol. Rep. of)
Costa Rica
Mexico
Panama
Uruguay
El Salvador
Dominican Rep.
Colombia
Ecuador
Brazil
Bolivia
(Plur. State of)
Chile
Paraguay
-6
Peru
-4
Earnings
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of data from household surveys conducted in the
respective countries.
a The data are for 2010-2014 except in the cases of the Bolivarian Republic of Venezuela (2010-2013), Brazil (2009-2014), Chile (2009-2013), El Salvador (2009-2014),
Mexico (2008-2014) and the Plurinational State of Bolivia (2009-2013). The percentage of the population analysed is the same in the first and last year of the period
considered and corresponds to the poverty rate for the first year in each country.
4
Summary
5
12
As of 2013, labour market earnings accounted for 74.1% of the total income of poor households (ECLAC, 2015c).
By way of example, if average earnings per employed worker in poor households improved by 5%, with the number of people employed
remaining unchanged, the result would be a 5% increase in the total volume of poor households’ earnings by the end of the period.
The same would happen if the number of people employed increased by this amount, with average earnings per employed worker
remaining unchanged. Lastly, the same increase in the total earnings of poor households could be achieved by different combinations
of changes (both positive and negative) in the two components.
Social Panorama of Latin America • 2015
B. Income distribution
The most common way of describing and analysing inequality is by considering disparities in income distribution
within the population. However, inequalities manifest themselves in dimensions that go beyond income and
cannot be captured by a single analytical perspective. This section extends the usual income distribution approach,
supplementing it with information on the situation of those in receipt of the highest incomes, and also examining
the differences between the groups at either end of the distribution in respect of education, a dimension that is vital
to equality, individual welfare and countries’ development.
1. The recent evolution of income inequality
The average Gini coefficient for the countries with recent information available fell from 0.497 in 2013 to 0.491
in 2014. When the most recent figures are compared with those from the start of the 2010s, a more substantial
reduction is found. The regional index stood at 0.507 in 2010, so that by 2014 there had been a cumulative fall
of 3.2%, equivalent to 0.8% a year. There were statistically significant changes in the Gini coefficient in 9 of the
16 countries considered during this period.6 The largest reductions were in Uruguay (-2.7% a year), Argentina (-2.3%)
and Ecuador (-2.2%) (see figure I.3).7
Figure I.3
Latin America (16 countries): annual rate of change in the Gini coefficient,
2002-2010 and 2010-2014 a
(Percentages)
1
0
-1
Venezuela
(Bol. Rep. of)
Costa Rica c
Paraguay
Panama
Honduras
Chile
Mexico
Brazil
2002-2010
Bolivia
(Plur. State of)
Colombia
Peru
Dominican
Rep.
El Salvador
Ecuador
Argentina b
-3
Uruguay
-2
2010-2014
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of data from household surveys conducted in the
respective countries.
a The figures are for the years given except in the cases of Argentina (2002, 2009 and 2012), the Bolivarian Republic of Venezuela (2002, 2010 and 2013), Brazil (2001,
2009 and 2014), Chile (2001, 2009 and 2013), El Salvador (2001, 2009 and 2014), Honduras (2002, 2010 and 2013), Mexico (2002, 2008 and 2014) and the Plurinational
State of Bolivia (2001, 2009, 2013).
b Urban areas.
c No information is included for the 2002-2014 period because the data are not strictly comparable.
A complementary way of studying inequality is by the proportion of income received by each of the different
groups into which a population can be divided for analytical purposes. Two groups in particular are considered,
the lowest-income 40% of households and the highest-income 10%, corresponding to deciles 1 to 4 and decile 10
of the per capita income distribution, respectively. The ratio between per capita incomes in each of the groups is
presented as an indicator of the differences in well-being between the two. Between 2010 and 2014, the average
ratio in 17 countries of the region dropped by 10.6%, from 15.6 to 14.0. Despite this decline, the per capita income
of people in the richest decile was 14 times as great as that of those in the bottom four deciles as of 2014. In other
words, for every 100 monetary units of income received on average by the poorest 40% of the population, the
richest 10% received an average of 1,400.
7
Statistical significance was analysed using bootstrap variance estimates.
Alternative indices of inequality bear out the trend of the Gini coefficient for 2010-2014, with annual changes in the Gini coefficient
and the Theil and Atkinson indices having the same sign in 13 of 16 countries.
Summary
6
13
Economic Commission for Latin America and the Caribbean (ECLAC)
As with the other indicators, great heterogeneity is observed, with the ratio ranging in 2014 from a low of 6.6
in Uruguay to a high of 21.4 in Honduras. The ratio fell in 13 of the 17 countries analysed over the period, with
the largest cumulative changes being in Ecuador (-22%), Argentina (-21%), El Salvador and Uruguay (both -20%)
(see figure I.4).
Figure I.4
Latin America (17 countries): ratio between average incomes in decile 10
and average incomes in deciles 1 to 4, around 2010 and 2014 a
25
20
15
10
2010
Honduras
Guatemala
Colombia
Brazil
Paraguay
Dominican Rep.
Panama
Chile
Costa Rica
Mexico
Bolivia
(Plur. State of)
Argentina b
Ecuador
Peru
El Salvador
Venezuela
(Bol. Rep. of)
0
Uruguay
5
2014
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of data from household surveys conducted in the
respective countries.
a The figures are for the years given except in the cases of Argentina (2009 and 2012), the Bolivarian Republic of Venezuela (2010 and 2013), Brazil (2009 and 2014),
Chile (2009 and 2013), El Salvador (2009 and 2014), Guatemala (2006 and 2014), Mexico (2008 and 2014), Panama (2010 and 2014) and the Plurinational State of
Bolivia (2009 and 2013).
b Urban areas.
2. Using additional data to measure income inequality: tax records
In recent years, different empirical studies have used tax data to produce new estimates of inequality in income
distribution. These studies have worked from the premise that household surveys are limited in their ability to capture
very high incomes, with the implication that the estimates derived from them are systematically underestimating
inequality. Tax data, on the other hand, are believed to be a more reliable way of capturing very high incomes and
are available for longer time periods, which makes them particularly useful for historical analysis (Alvaredo and
Piketty, 2014).
In Latin America, inequality measurements based on tax data (or other secondary sources, such as the national
accounts) are still few and far between, but have become more common in recent years.8 On the basis of such
measurements, figure I.5 presents the evolution of the total income share of the richest 1% between 1993 and 2014
in Argentina, Colombia, Uruguay and other countries and regions. Colombia is the country where the richest 1%
has the largest share of total income throughout the series: as of 2010, this segment captured 20.5% of total income
in the country.9 In Argentina and Uruguay, meanwhile, the total income shares of the wealthiest were higher than
in continental Western Europe or South-East Asia. In the latest year with data available, the share of the richest 1%
was 16.8% in Argentina (2007) and 14% in Uruguay (2012). Among developed countries, it is the United States that
displays the largest total income share for the richest.
Tax data can be employed alongside surveys to produce corrected estimates of the Gini coefficient. When the
tax data for the richest 1% are combined with the income captured by surveys for the remaining 99%, the corrected
Gini coefficient for Colombia and Uruguay is put at between 2 and 4 percentage points higher than was estimated
8
Summary
9
14
Studies have been carried out in Argentina (Alvaredo, 2007, 2010 and 2011b), Colombia (Alvaredo and Londoño, 2013; Díaz-Bazán,
2015), Uruguay (Burdín, Esponda and Vigorito, 2015) and Brazil (Souza and Medeiros, 2015), while investigations similar but not
strictly comparable to those cited above have been conducted in Chile (López, Figueroa and Gutiérrez, 2013) and Mexico (Campos,
Chávez and Esquivel, 2014).
In Mexico, the estimated total income share of the richest 1% was 21% in 2012 (Campos, Chávez and Esquivel, 2014). It should be
reiterated, though, that this estimate is not strictly comparable with the other measurements.
Social Panorama of Latin America • 2015
on the basis of surveys alone. In Chile, the inclusion of capital gains increases the corrected coefficient from 0.58 to
0.62 in 2010. If undistributed profits are taken instead of capital income, the Gini reaches 0.67. All these values are
far higher than the 0.55 estimated for 2006-2010 on the basis of the National Socioeconomic Survey (CASEN) alone.10
Figure I.5
Total income share of the richest 1%, 1993-2014
(Percentages of total income)
20
15
10
Colombia
Continental Europe a
2013
2014
2011
2012
2010
2008
2009
2007
2006
2005
2003
2004
2001
2002
2000
1998
Argentina
United States
1999
1997
1996
1995
1993
0
1994
5
Uruguay
South-East Asia b
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of the World Top Incomes Database (WTID) [online] http://topincomes.g-mond.
parisschoolofeconomics.eu/.
a Simple average of the values observed in France, Germany, Italy, Netherlands, Norway, Spain, Sweden and Switzerland.
b Simple average of the values observed in Japan, the Republic of Korea, Singapore and Taiwan Province of China.
Where income concentration is concerned, comparing the corrected and uncorrected estimates yields a similar
trend in Colombia and Uruguay (Burdín, Esponda and Vigorito, 2015; Alvaredo and Londoño, 2013). In Brazil, the
corrected ratio held steady between 2006 and 2012 (values of around 0.7 in all years), by contrast with the findings
obtained from household surveys alone, which show a drop in income concentration between 2006 and 2011.
3. Educational inequalities by income stratum
This section analyses the situation of the different bands in the income distribution as regards education, a dimension
vital to equality, individual welfare and countries’ development.
The region has made substantial progress in increasing education levels: in 2013, 92% of the population aged 15
to 19 had completed primary education (ECLAC, 2015), while the proportion of young people of secondary schoolleaving age who had in fact completed the secondary level rose from 37% in 1997 to 58% in 2013. However, further
progress is needed if the large educational divides between income levels are to be closed, particularly in secondary
and post-secondary education.
Some 80% of 20- to 24-year-olds in the richest quintile had completed secondary education in 2013, as compared
to just 34% in the poorest quintile.11 In other words, the rate of secondary school completion was less than half as
great (42%) in the lowest-income quintile (quintile 1) as in the highest-income quintile (quintile 5). However, these
figures are a palpable advance on the situation in 1997, when the proportion was just 22% (see figure I.6).
The gap in post-secondary education is appreciably greater. As of 2013, 46% of the richest quintile had that level
of education, compared to just 4% of the poorest quintile. Much as with other education levels, the gap tended to
narrow between 1997 and 2013. Educational attainment in the poorest quintile increased as a proportion of that in
the richest quintile, rising from 5% in 2002 to 9% in 2013 for post-secondary education.
10
11
The Gini coefficient based on the CASEN survey was estimated by López, Figueroa and Gutiérrez (2013).
All figures are simple averages for 18 countries of the region.
Summary
To sum up, while the educational attainment gaps between income quintiles have been narrowing, they remain
substantial. In addition, there is a great deal of variation between countries as regards both the size of gaps and their
evolution over time.
15
Economic Commission for Latin America and the Caribbean (ECLAC)
Figure I.6
Latin America (18 countries): educational attainment in the poorest quintile
relative to the richest, by education level, 1997-2013
(Percentages)
45
40
40
35
30
30
25
42
37
24
22
5
5
22
27
20
15
10
5
6
6
7
8
9
5
0
1997
1999
2002
2005
Post-secondary
2008
2010
2012
2013
Complete secondary
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of data from household surveys conducted in the
respective countries.
Summary
Bibliography
16
Alvaredo, F. (2007), “The rich in Argentina during the twentieth century from the conservative Republic to the Peronist
experience and beyond, 1932-2004”, Working Paper, No. 2007/02, Paris School of Economics.
(2010), “The rich in Argentina over the twentieth century, 1932-2004”, Top Incomes over the Twentieth Century.
A Global Perspective, vol. II, A. B. Atkinson and T. Piketty (eds.), Oxford, Oxford University Press.
(2011a), “A note on the relationship between top income shares and the Gini coefficient”, Economic Letters, No. 110.
(2011b), “The rich in Argentina over the twentieth century 1932-2004” [online] https://halshs.archives-ouvertes.
fr/halshs-00588318/document.
Alvaredo, F. and J. Londoño Vélez (2013), “High incomes and personal taxation in a developing economy: Colombia
1993-2010” [online] http://www.commitmentoequity.orgpublications_files/CEQWPNo12%20HighTaxation
DevEconColombia1993-2010_19March2013.pdf.
Alvaredo, F. and T. Piketty (2014), “Measuring top incomes and inequality in the Middle East: data limitations and illustration
with the case of Egypt”, Working Paper, No. 832 [online] http://piketty.pse.ens.fr/files/AlvaredoPiketty2014ERF.pdf.
Burdín, G., F. Esponda and A. Vigorito (2015), “Desigualdad y altas rentas en el Uruguay: un análisis basado en los
registros tributarios y las encuestas de hogares del período 2009-2011”, Desigualdad, concentración del ingreso y
tributación sobre las altas rentas en América Latina, J.P. Jiménez (ed.), Libros de la CEPAL, No. 134 (LC/G.2638-P),
Santiago, Economic Commission for Latin America and the Caribbean (ECLAC).
Campos, M., E. Chávez and G. Esquivel (2014), “Los ingresos altos, la tributación óptima y la recaudación posible”
[online] http://www.cefp.gob.mx/portal_archivos/convocatoriapnfp2014/primerlugarpnfp2014.pdf.
ECLAC (Economic Commission for Latin America and the Caribbean) (2015a), Economic Survey of Latin America
and the Caribbean, 2015 (LC/G.2645-P), Santiago.
(2015b), Preliminary Overview of the Economies of Latin America and the Caribbean, 2015 (LC/G.2655-P), Santiago.
(2015c), Inclusive social development: the next generation of policies for overcoming poverty and reducing
inequality in Latin America and the Caribbean (LC.L/4056(CDS.1/3)), Santiago.
Datt, G. and M. Ravallion (1992), “Growth and redistribution components of changes in poverty measures: Decomposition
with application to Brazil and India in the 1980s”, Journal of Development Economics, vol. 38, No. 2.
Díaz-Bazán, T.V. (2015), “Measuring inequality from top to bottom”, World Bank Policy Research Working Paper,
No. 7237 [online] http://ssrn.com/abstract=2594082.
López R., E. Figueroa and P. Gutiérrez (2013), “La parte del león. Nuevas estimaciones de la participación de los
súper ricos en el ingreso de Chile”, Documentos de Trabajo, No. SDT 379 [online] http://www.econ.uchile.cl/
uploads/publicacion/306018fadb3ac79952bf1395a555a90a86633790.pdf
Souza, P. and M. Medeiros (2015), “Top income shares and inequality in Brazil, 1928-2012”, Sociologies in Dialogue,
vol. 1, No. 1.
Social Panorama of Latin America • 2015
Annex A1
Methodological note
This edition of the Social Panorama of Latin America makes use for the first time of the countries’ official poverty
measurements to report the most recent annual changes (corresponding in most cases to the 2013-2014 period).
As in previous editions, ECLAC measurements are used to analyse the 2010-2014 period in the interests of regional
comparability. Table A1.1 shows estimates by ECLAC and table A1.2 shows official national measurements.
Over the years, more and more countries in the region have developed their own official measurements, using
processes and methodologies appropriate to their circumstances. ECLAC recognizes the usefulness and relevance of
these measurements for tracking the level and evolution of poverty. The inclusion of these figures in this publication
is meant to raise awareness of them and avoid the impression their absence might give, that their reliability was open
to question.
The methodological decisions adopted for national measurements differ, which means that they cannot be
compared or aggregated to estimate regionwide figures.
Accordingly, ECLAC produces estimates that use a common methodological structure in order to achieve the
greatest possible regional comparability. These estimates are arrived at independently of the countries’, even while
employing microdata from the very surveys that official country measurements are based on.
The current ECLAC indigence and poverty lines are based on methodological parameters estimated from spending
and income surveys conducted an average of three decades ago, and work has accordingly been going on to update
them on the basis of the most recent surveys for each country with a view to improving the comparability of the
respective estimates. The process, which will be completed this year, involves updating a number of parameters,
such as the choice of reference stratum, identification of the goods making up the basic food basket and their value,
estimation of the coefficient relating non-food spending to food spending (Orshansky coefficient) and the treatment
given to household and personal income.
Table A1.1
Latin America (18 countries): poverty and indigence indicators, around 2001-2014 a
(Percentages)
Country
Year
Argentina c
2004
2009
2012
2002
2009
2011
2013
2001
2009
2013
2014
2003
2009
2013
2002
2010
2013
2014
2002
2010 e
2013 e
2014 e
Bolivia (Plurinational State of)
Brazil
Chile
Colombia d
Costa Rica
Households
Incidence
(H)
27.3
8.1
3.4
55.5
36.3
31.2
28.4
30.0
19.3
14.1
12.6
15.3
9.7
6.5
42.2
30.4
24.8
23.0
18.6
16.0
15.6
16.4
Incidence
(H)
34.9
11.3
4.3
62.4
42.4
36.3
32.7
37.5
24.9
18.0
16.5
18.7
11.4
7.8
49.7
37.3
30.7
28.6
20.3
18.5
17.7
18.6
Population
Poverty
Squared poverty
gap (PG)
gap (FGT2)
16.0
10.0
4.7
2.9
1.9
1.3
34.4
23.8
19.8
12.7
15.5
9.4
14.3
8.7
17.3
10.7
10.5
6.2
7.6
4.7
6.3
3.6
6.3
3.2
3.9
2.2
2.5
1.3
21.9
12.8
15.2
8.5
11.8
6.4
10.9
5.8
8.4
5.2
6.8
3.8
6.9
4.0
7.1
4.0
Households
Incidence
(H)
11.7
3.0
1.7
31.7
18.2
15.6
13.6
10.0
5.7
5.3
3.9
3.9
3.3
2.3
14.3
9.6
7.3
6.5
7.7
5.8
6.4
6.7
Indigence
Population
Incidence
Poverty
Squared poverty
(H)
gap (PG)
gap (FGT2)
14.9
6.8
4.6
3.8
1.9
1.4
1.7
1.0
0.8
37.1
19.5
13.5
22.4
11.0
7.3
18.7
8.1
4.9
16.8
7.7
4.9
13.2
5.8
3.8
7.0
3.2
2.2
5.9
3.1
2.3
4.6
2.1
1.4
4.7
1.7
1.0
3.6
1.6
1.0
2.5
1.0
0.7
17.8
6.8
3.7
12.3
4.6
2.5
9.1
3.3
1.8
8.1
3.0
1.7
8.2
3.9
2.7
6.8
2.7
1.7
7.2
3.1
1.9
7.4
2.9
1.8
Summary
Poverty b
17
Economic Commission for Latin America and the Caribbean (ECLAC)
Table A1.1 (concluded)
Country
Year
Dominican Republic
2002
2010 f
2013 f
2014 f
2002
2010
2013
2014
2001
2009
2013
2014
2002
2006
2014
2002
2010
2013
2002
2010
2012
2014
2001
2009
2002
2010
2013
2014
2001
2010
2013
2014
2001
2010
2013
2014
2002
2010
2013
2014
2002
2010
2013 g
2002
2010
2013
2014
Ecuador c
El Salvador
Guatemala
Honduras
Mexico
Nicaragua
Panama
Paraguay
Peru
Uruguay c
Venezuela (Bolivarian
Republic of)
Latin America h
Households
Incidence
(H)
42.2
38.0
36.9
33.5
42.6
31.4
28.2
25.6
42.9
41.8
35.5
35.9
52.8
46.7
60.5
70.9
63.3
69.0
31.8
29.3
29.9
33.2
63.0
52.0
30.0
19.3
17.4
16.2
50.7
48.0
35.2
36.9
48.7
29.7
21.1
19.8
9.3
5.0
3.7
2.9
43.3
23.7
27.9
36.1
23.9
21.6
21.7
Poverty b
Population
Incidence
Poverty
Squared poverty
(H)
gap (PG)
gap (FGT2)
47.1
20.9
12.6
41.4
18.7
11.1
40.7
17.7
10.2
37.2
15.7
9.1
49.0
20.8
11.8
37.1
14.2
7.5
33.5
11.6
5.7
31.0
10.5
5.1
48.9
22.7
14.0
47.9
19.4
10.5
40.9
14.9
7.4
41.6
14.6
7.2
60.2
27.0
15.4
54.8
25.5
15.2
67.7
33.1
20.1
77.3
45.3
31.2
69.5
39.3
26.9
74.3
43.3
30.2
39.4
13.9
6.7
36.3
12.8
6.3
37.1
12.7
6.1
41.2
14.2
6.7
69.4
37.1
24.5
58.3
26.1
15.2
36.9
16.8
10.2
25.7
10.6
5.9
23.1
10.1
6.1
21.4
9.6
6.0
59.7
28.7
18.0
54.8
25.4
15.5
40.7
16.6
9.3
42.3
17.7
10.1
54.7
24.7
14.5
34.3
12.7
6.4
23.9
8.1
3.9
22.7
7.5
3.5
15.4
4.5
1.9
8.6
2.3
0.9
5.7
1.6
0.6
4.5
1.1
0.5
48.6
22.1
13.4
27.8
9.9
5.3
32.1
12.1
6.7
43.9
…
14.6
31.1
…
9.1
28.0
…
8.8
28.2
…
8.8
Households
Incidence
(H)
18.2
19.2
18.3
16.6
16.3
11.9
8.9
7.8
18.3
14.1
10.1
10.3
26.9
22.7
38.5
47.1
39.8
45.0
9.1
9.8
10.4
12.1
36.5
25.1
14.4
8.9
8.7
8.1
25.2
26.0
16.8
17.2
20.4
8.0
3.8
3.5
1.3
0.7
0.7
0.6
19.7
9.3
8.9
19.2
12.1
11.8
11.8
Indigence
Population
Incidence
Poverty
Squared poverty
(H)
gap (PG)
gap (FGT2)
20.7
8.8
5.3
20.9
8.2
4.6
20.2
7.6
4.1
17.9
7.0
3.9
19.4
6.9
3.7
14.2
4.6
2.4
10.9
3.2
1.6
9.9
2.9
1.3
22.1
9.5
5.7
17.3
5.7
2.7
12.5
3.5
1.5
12.5
3.5
1.4
30.9
10.7
5.5
29.1
11.3
5.8
46.1
19.1
10.3
54.4
26.6
16.2
45.9
22.9
14.5
50.5
25.5
16.4
12.6
3.5
1.4
13.3
4.1
1.9
14.2
4.2
1.8
16.3
4.5
1.9
42.5
19.2
12.0
29.5
11.7
6.3
18.6
7.6
4.3
12.6
4.6
2.3
12.2
5.3
3.1
11.5
5.3
3.2
31.3
13.7
8.2
30.7
12.9
7.6
19.2
7.1
3.9
20.5
8.0
4.4
24.4
9.6
5.2
9.5
2.7
1.2
4.7
1.3
0.5
4.3
1.1
0.5
2.5
0.6
0.2
1.4
0.3
0.1
0.9
0.2
0.1
0.7
0.2
0.1
22.2
9.2
5.7
10.7
3.9
2.4
9.8
3.9
2.5
…
…
…
…
…
…
…
…
…
…
…
…
Summary
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of data from household surveys conducted in the
respective countries.
a H = headcount ratio; PG = poverty gap; FGT2 = Foster-Greer-Thorbecke squared poverty gap index. ECLAC estimates are designed to ensure the highest possible
degree of regional comparability, the aim being to maintain a common methodological structure for all the countries while drawing on data from the surveys they
use in their own official measurements.
b Includes households (and persons) living in indigence or extreme poverty.
c Urban areas.
d Figures from the National Administrative Department of Statistics (DANE) of Colombia.
e These figures are not comparable with those of previous years, owing to a change in the criterion used to construct the income aggregate.
f Figures from the National Institute of Statistics and Informatics (INEI) of Peru, not comparable with those of previous years.
g Figures from the National Institute of Statistics (INE) of the Bolivarian Republic of Venezuela, not comparable with those of previous years.
h Estimate for 18 countries of the region plus Haiti.
18
Social Panorama of Latin America • 2015
Table A1.2
Latin America (18 countries): official poverty and indigence rates by geographical area, latest two years available
(Percentages of persons)
Poverty
Indigence
Country
Year
Argentina a
2012
...
5.4
...
...
1.5
...
2013 b
...
4.7
...
...
1.4
...
2012
43.4
34.7
61.2
21.8
12.2
41.2
2013
39.1
29.0
59.9
18.8
9.2
38.8
2013
7.8
...
...
3.1
...
...
2014
7.0
...
...
2.5
...
...
Chile
2011
22.2
19.9
37.7
8.1
7.2
14.5
2013
14.4
12.4
27.9
4.5
3.8
9.6
Colombia
2013
30.6
26.9
42.8
9.1
6.0
19.1
2014
28.5
24.6
41.4
8.1
5.1
18.0
2013
20.7
18.2
27.8
6.4
5.1
10.1
2014
22.4
19.5
30.3
6.7
5.2
10.6
2013
41.8
37.9
49.9
9.8
8.0
13.5
2014
35.5
30.9
44.8
7.2
5.4
10.8
Bolivia (Plurinational State of)
Brazil c
Costa Rica d
Dominican Republic
Ecuador
El Salvador d
Guatemala
Honduras d
Mexico e
Nicaragua
Panama
Paraguay
Peru
Uruguay
Venezuela (Bolivarian Republic of)
National
Urban
Rural
National
Urban
Rural
2013
25.6
17.6
42.0
8.6
4.4
17.4
2014
22.5
16.4
35.3
7.7
4.5
14.3
2013
29.6
26.2
36.0
7.1
5.7
9.8
2014
31.8
28.5
37.9
7.6
5.7
10.9
2011
53.7
35.0
71.4
13.3
5.1
21.1
2014
59.3
42.1
76.1
23.4
11.2
35.3
2013
64.5
60.4
68.5
42.6
29.0
55.6
2014
62.8
61.0
65.0
39.7
29.8
51.8
2012
51.6
48.3
62.8
20.0
16.2
32.7
2014
53.2
50.5
62.4
20.6
17.1
31.9
2009
42.5
26.6
63.3
14.6
5.6
26.6
2014
29.6
14.8
50.1
8.3
2.4
16.3
2013 f
26.2
14.2
49.7
11.1
3.1
26.7
2014 f
25.8
13.8
49.7
11.0
3.3
26.3
2013
23.8
17.0
33.8
10.1
5.1
17.6
2014
22.6
16.2
32.0
10.5
4.6
19.2
2013
23.9
16.1
48.0
4.7
1.0
16
2014
22.7
15.3
46.0
4.3
1.0
14.6
2013
11.5
12.0
3.0
0.5
0.5
0.1
2014
9.7
10.1
3.0
0.3
0.3
0.0
2012
25.4
...
...
7.1
...
...
2013
32.1
...
...
9.8
...
...
Summary
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information from the countries. Argentina: National Institute of
Statistics and Censuses (INDEC); Bolivarian Republic of Venezuela: National Institute of Statistics (INE); Brazil: Ministry of Social Development and Hunger
Alleviation; Chile: Ministry of Social Development; Colombia: National Planning Department (DNP); Costa Rica: National Institute of Statistics and Censuses
(INEC); Dominican Republic: Ministry of Economy, Planning and Development; Ecuador: National Institute of Statistics and Censuses (INEC); El Salvador:
Department of Statistics and Censuses (DIGESTYC); Guatemala: National Institute of Statistics (INE); Honduras: National Institute of Statistics (INE); Mexico:
National Council for the Evaluation of Social Development Policy (CONEVAL); Nicaragua: National Institute of Development Information (INIDE); Panama:
Ministry of Economy and Finance (MEF); Paraguay: Department of Statistics, Surveys and Censuses (DGEEC); Peru: National Institute of Statistics and
Informatics (INEI); Plurinational State of Bolivia: National Institute of Statistics (INE) / Economic and Social Policy Analysis Unit (UDAPE); Uruguay: National
Institute of Statistics (INE).
a Urban total, second half of each year.
b First half of 2013.
c The figures correspond to the measurement carried out using the international line of US$ 1.25 per person per day (purchasing power parity, PPP) for indigence
and US$ 2.50 (PPP) for poverty.
d Estimate of poverty and indigence by household.
e The poverty figure is the measurement based on the welfare line, while the indigence figure is based on the minimum welfare line.
f Labour Market Survey of March 2013 and 2014.
19
Economic Commission for Latin America and the Caribbean (ECLAC)
Table A1.3
Latin America (18 countries): household income distribution, 2001-2014 a
Country
Year
Argentina c
2004
2009
2012
2002
2009
2013
2001
2009
2014
2003
2009
2013
2002
2010 d
2014 d
2002
2010 e
2014 e
2002
2010
2014
2002
2010
2014
2001
2009
2014
2002
2006
2014
2002
2010
2013
2002
2010
2014
2001
2009
2002
2010
2014
2001
2010
2014
2001
2010
2014
2002
2010
2014
2002
2010
2013 g
Bolivia (Plurinational State of)
Brazil
Chile
Colombia
Costa Rica
Dominican Republic
Ecuador f
El Salvador
Guatemala
Honduras
Mexico
Nicaragua
Panama
Paraguay
Peru
Uruguay f
Venezuela (Bolivarian Republic of)
Gini
coefficient b
0.578
0.510
0.475
0.614
0.508
0.491
0.639
0.576
0.548
0.552
0.524
0.509
0.567
0.557
0.535
0.488
0.492
0.505
0.537
0.554
0.519
0.513
0.485
0.447
0.525
0.478
0.436
0.542
0.585
0.553
0.588
0.572
0.564
0.514
0.481
0.491
0.579
0.478
0.567
0.528
0.519
0.558
0.533
0.536
0.525
0.458
0.439
0.455
0.422
0.379
0.500
0.394
0.407
Theil index
0.720
0.549
0.457
0.775
0.511
0.459
0.914
0.716
0.646
0.674
0.585
0.537
0.672
0.627
0.572
0.440
0.455
0.462
0.569
0.603
0.482
0.563
0.471
0.401
0.527
0.440
0.356
0.583
0.773
0.728
0.719
0.624
0.623
0.521
0.458
0.534
0.782
0.437
0.616
0.540
0.513
0.673
0.666
0.673
0.556
0.399
0.355
0.385
0.327
0.253
0.456
0.264
0.286
Concentration indicators
Atkinson index
( =0.5)
( =1.0)
0.276
0.452
0.219
0.377
0.189
0.332
0.322
0.553
0.223
0.413
0.206
0.388
0.340
0.536
0.277
0.455
0.253
0.421
0.257
0.418
0.231
0.384
0.217
0.363
0.268
0.447
0.257
0.436
0.238
0.408
0.193
0.349
0.198
0.352
0.206
0.370
0.236
0.404
0.253
0.433
0.217
0.390
0.222
0.370
0.195
0.335
0.167
0.290
0.232
0.423
0.189
0.333
0.157
0.281
0.239
0.401
0.291
0.467
0.265
0.422
0.288
0.476
0.271
0.474
0.265
0.465
0.218
0.372
0.192
0.335
0.207
0.342
0.288
0.469
0.189
0.337
0.266
0.465
0.232
0.411
0.227
0.415
0.265
0.450
0.248
0.416
0.251
0.412
0.231
0.397
0.174
0.311
0.160
0.293
0.169
0.300
0.145
0.262
0.117
0.218
0.201
0.361
0.123
0.233
0.131
0.246
( =1.5)
0.582
0.509
0.454
0.732
0.594
0.568
0.665
0.586
0.548
0.535
0.501
0.475
0.579
0.571
0.541
0.491
0.484
0.507
0.536
0.572
0.532
0.484
0.445
0.390
0.599
0.449
0.385
0.515
0.590
0.534
0.608
0.626
0.625
0.485
0.448
0.443
0.615
0.462
0.616
0.555
0.580
0.606
0.557
0.539
0.526
0.424
0.408
0.406
0.359
0.306
0.501
0.337
0.353
Summary
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of data from household surveys conducted in the
respective countries.
a Calculated from the distribution of personal per capita income in the country as a whole.
b Includes those with zero income.
c Urban total.
d These figures are not comparable with those of previous years, owing to a change in the criterion used to construct the income aggregate.
e These figures are not comparable with those of previous years, owing to a change in the survey used.
f Urban areas.
g Figures from the National Institute of Statistics (INE) of the Bolivarian Republic of Venezuela, not comparable with those of previous years.
20
Chapter II
Social spending trends over the business cycle:
the importance of maintaining funding
for social policy
Introduction
The global economy has been losing momentum following the recovery of 2010, and low trend growth is projected
to persist over the medium term (ECLAC, 2015a). The effects of this slacker growth have been felt in the region
since 2012, weakening the trend towards lower poverty and indigence rates (ECLAC, 2014a).
In a related process, fiscal revenue constraints have reduced the scope for expanding public social spending.
This means there is a need to explore new financing sources and mechanisms that can make social policy
sustainable over time, in order to safeguard the progress made with social development over the past decade and
avoid postponing the measures still needed in areas where progress has been inadequate: eradicating poverty
in its multiple dimensions, reducing inequality in all its guises, expanding social protection, promoting decent
work and moving towards universal coverage of high-quality education and health care, among other challenges
(ECLAC, 2015b).
Accordingly, although the Social Panorama of Latin America continues to work with the idea of “social spending”,
it upholds the concept of “social investment” —taken up in the resolution adopted by the Regional Conference on
Social Development in Latin America and the Caribbean, held in Lima in November 2015— as an important one. At
that Conference, the social development ministers and high-level authorities of the region’s governments reaffirmed
the importance of guaranteeing and protecting the public resources that finance social policy.
A. Recent and long-term trends in the region’s public social spending
Despite the vagaries of the business cycle since the international financial crisis of 2008 and 2009, the regional trend
until 2013 was one of real-term increases in the resources available for funding social services and cash transfers
to households.
These increases were reflected, first, in the scale of social spending as a share of the region’s GDP. From
12.6% of GDP in the early 1990s (the average for the 1991-1992 biennium) it rose systematically, but modestly,
in the following bienniums to reach 17.8% in 2007-2008, when the subprime mortgage crisis began. A strong rise
then left it at 19.6% of GDP in 2009 (a clearly countercyclical increase, as regional GDP dropped by 1.6%) and
19.1% of GDP in 2010.12
In the following biennium (2011-2012), fiscal adjustments in most of the countries entailed a relative decrease in
total public spending, with public social spending particularly affected, so that its GDP share fell back slightly to 19%.
Growth in real-term social spending began to tail off in 2012, owing to the persistent fiscal deficits run by a number
of governments to cope with the international financial crisis and prospects for narrower scope for revenue-raising
as a result of the economic slowdown (ECLAC, 2014b).
In the latest biennium analysed, there appear to have been fresh increases in both overall public spending and
public social spending, with the latter equating to 19.5% of regional GDP (see figure II.1).
Public social spending in the region was markedly procyclical until the mid-2000s. However, a number of
countries began systematic efforts to increase their social investment, spending more on social policies and creating
See ECLAC (2010 and 2012) for details of the fiscal and public policy measures taken by the countries in this period to cope with the crisis.
Summary
12
21
Economic Commission for Latin America and the Caribbean (ECLAC)
or strengthening a variety of programmes, including anti-poverty schemes.13 The move towards greater stability in the
region’s social spending relative to the cycle has also been due to measures progressively implemented to cope with
different external shocks, such as the rise in export commodity prices that began in 2003, a surge in food and fuel
prices from 2008, the global financial crisis (whose greatest manifestations and consequences were seen between
late 2008 and 2009) and the more recent and quite prolonged international uncertainty, which has gone together
with a slowdown in global and regional economic growth (ECLAC, 2014a).
Figure II.1
Latin America and the Caribbean (21 countries):a public social spending and
total public spending as shares of GDP, and public social spending
as a share of total public spending, 1991-1992 to 2013-2014 b
(Percentages)
40
100
35
30
27.1
25
25.1
26.1
28.2
26.4
26.1
20
15
54.0
10
64.8
64.7
64.9
28.9
29.3
90
80
65.8
65.0
66.4
70
60
52.5
50
12.6
13.6
14.3
14.8
15.4
15.9
16.0
16.7
17.8
19.3
19.0
19.5
19951996
19971998
19992000
20012002
20032004
20052006
20072008
20092010
20112012
20132014
46.7
19931994
0
58.4
25.8
29.7
19911992
5
55.0
60.9
24.8
27.4
40
Public social spending as a share of GDP (left scale)
Total public spending as a share of GDP (left scale)
Public social spending as a share of total social spending (right scale)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information from the countries.
a Argentina, Bolivarian Republic of Venezuela, Brazil, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Jamaica,
Mexico, Nicaragua, Panama, Paraguay, Peru, Plurinational State of Bolivia, Trinidad and Tobago and Uruguay.
b Weighted average of the countries.
Accompanying all the above has been an increase in social spending as a share of total public spending, as
this rose from 46.7% in the 1991-1992 biennium to 60.9% in the 2001-2002 biennium, then moved up again
from 2003-2004 (when it was 64.8%) to more than 65% from 2009-2010, reaching 66.4% in 2013-2014. Some
of the increases in this indicator were actually due to contractions in outlays on non-social functions, however.
The region’s public social spending is estimated to have been 0.8% higher in 2014 than in 2013, while non-social
public spending fell by 7.5%, implying that total public spending contracted for the first time since 2002 (-2.1%).
B. Social spending by sector in the region
Although public social spending has risen fairly systematically across the region, this increase has not benefited all
social functions alike.14 For one thing, views differ as to the scale of the returns and yields from spending on the
different social functions. For another, the growth in social spending per sector also depends on a variety of factors:
the degree of institutional development and the coverage of social services at the start of the evaluation period (19911992); long-term spending commitments (relating to pensions, for instance); the pressures different social groups can
exert on the State to induce it to expand certain types of expenditure more quickly; spells of economic contraction
that require extra welfare spending; and changes in the age structure of the population.
13
Summary
Countries such as Brazil and Mexico had already initiated programmes of this nature in the early 1990s, and went on to progressively
increase their coverage and benefits.
14 ECLAC defines social spending as resources devoted to plans, programmes and projects whose purpose is to generate a positive impact
on some social problem, irrespective of the administrative body performing each social function. According to the United Nations
Classification of the Functions of Government (COFOG), the social functions are education, health, social protection, environmental
protection, and housing and community amenities (see Martínez and Collinao, 2010). Analysis of social spending information would
be enhanced if the countries were able to increasingly cross-classify spending with the COFOG and the economic classification (which
distinguishes current spending from gross capital formation).
22
Social Panorama of Latin America • 2015
The rise in social spending of 6.8 percentage points of GDP was largely due to the growth of social security and
social assistance outlays. Progressive population ageing in a large number of the region’s countries has resulted in
a gradual increase in the resources devoted to financing social security benefits. Although many of these resources
are from revenues yielded by contributory social security systems (public-sector or mixed, in these cases), different
countries have gradually introduced solidarity mechanisms for social security financing, leading to an increase of
3.5 percentage points in this spending as a share of GDP (see figure II.2). Regional spending on social security and
assistance is currently in the region of US$ 98 billion a year. This is the social sector whose resources have risen most
in proportional terms, and it accounts for over half the total increase in social spending over the period analysed
(51.3% of the increase as a share of GDP).
Figure II.2
Latin America and the Caribbean (21 countries)a: public social spending
by function, 1991-1992 to 2013-2014 b
(Percentages of GDP)
25
6.8
19.5
20
15
12.6
3.5
1.4
4.9
5
0
9.0
1.9
10
3.0
Total public
social spending
1991-1992
2003-2004
-0.1
5.5
2.7
Education spending
1993-1994
2005-2006
4.2
1.4
Health spending
1995-1996
2007-2008
Social security and
assistance spending
1997-1998
2009-2010
1999-2000
2011-2012
1.4
Housing and
other spending
2001-2002
2013-2014
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information from the countries.
a Argentina, Bolivarian Republic of Venezuela, Brazil, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Jamaica,
Mexico, Nicaragua, Panama, Paraguay, Peru, Plurinational State of Bolivia, Trinidad and Tobago and Uruguay.
b Weighted average of the countries. The differences shown between the 1991-1992 and 2013-2014 bienniums are calculated from unrounded figures and may not
match the differences between the rounded biennial data in the chart.
The other notable increase (of 1.9 percentage points of GDP) was in the education sector, and this was driven
by major efforts to expand primary education coverage and access in the poorest countries and secondary education
access elsewhere, together with more limited growth in the coverage of public post-secondary education. In the last
15 years, this effort has also owed something to the countries’ commitment to the Millennium Development Goals
and the Dakar Framework for Action on Education for All, both agreed in 2000. Spending on education currently
stands at almost US$ 54.5 billion.
The health sector has not benefited so much, as the increase was smaller there than in the above-mentioned sectors
(1.5 points of regional GDP), even though the services it provides, unlike those of the education sector, potentially
benefit people of all ages. When budgets generally or the resources earmarked for social sectors contract, there is
a tendency to freeze health-sector infrastructure investment or reinvestment (capital spending), equipment renewal
and replenishment of medical supplies, creating problems in the public health system that affect the coverage and,
most especially, the quality of services, a situation that cannot be quickly remedied. Even so, the current volume of
funding associated with health-care provision in the region is just over US$ 46 billion.
Summary
The sector receiving least attention has been housing (which includes drinking water, sanitation, community
amenities and, since recently, the environment), despite the persistence of large pockets of substandard housing and
segregation in virtually all the countries and major cities. Spending actually contracted by -0.1 percentage points of
GDP in the last biennium, partly because funding had been increased in the previous period as a tool for creating jobs
and boosting domestic economies, especially in the construction sector. The situation described represents an obstacle
to the development and maintenance of programmes to improve living environments, particularly affects the worst off,
and is indirectly adding to the demands on health systems. As regards the volume of funding, just US$ 15 billion is
currently earmarked for this function in the whole region.
23
Economic Commission for Latin America and the Caribbean (ECLAC)
C. The long-term evolution of social spending in the countries
The region’s countries differ greatly not just in the volume of resources they can channel into the social sectors but
in the macroeconomic effort the public social budget represents. Notwithstanding, and except in specific periods,
all the countries have made efforts to increase public social spending both as a proportion of total public spending
(fiscal priority) and as a share of GDP (macroeconomic priority). By contrast with the early 1990s, the most recent
official figures from the countries indicate that there is hardly a country in the region that spends less than 7% of
GDP on the social sectors (the exception is the Dominican Republic, where the macroeconomic priority given to
outlays on the social sectors diminished in 2011). Only Ecuador, Guatemala, Panama and Peru invested less than
10% of their respective GDP in their social sectors in the 2013-2014 biennium. The countries whose social spending
already exceeded 15% of GDP in the early 1990s have now been joined by El Salvador and Paraguay, with Chile
close behind (see figure II.3).
Figure II.3
Latin America and the Caribbean (21 countries): public social
spending as a share of GDP and per capita,
1991-1992 to 2013-2014 a
(Percentages and 2010 dollars)
A. Public social spending as a share of GDP
(Percentages)
45
40
35
30
Reference:
15% of GDP
25
20
19.5
Reference:
7% of GDP
15
12.6
14.9
10.0
10
CG
1991-1992
1997-1998
BCG
2001-2002
2007-2008
Latin America
(weighted average)
Latin America
(simple average)
El Salvador
Peru
GG
2009-2010
Costa Rica
Cuba
Brazil
Nicaragua
Mexico
Honduras
Uruguay
Venezuela (Bol. Rep. of)
Dominican Rep.
Trinidad and Tobago
Panama
Paraguay
Jamaica
Ecuador
Guatemala
Chile
Bolivia (Plur. State of)
Argentina
0
Colombia
5
NFPS
2011-2012
2013-2014
B. Public social spending per capita
(2010 dollars)
3 500
3 000
2 500
1 841
2 000
1 500
801
1 000
1 201
495
500
1997-1998
2001-2002
2007-2008
BCG
2009-2010
GG
Latin America
(weighted average)
Latin America
(simple average)
El Salvador
Costa Rica
Peru
Cuba
Brazil
Nicaragua
Mexico
Honduras
Uruguay
Venezuela (Bol. Rep. of)
CG
1991-1992
Trinidad and Tobago
Paraguay
Dominican Rep.
Panama
Jamaica
Guatemala
Ecuador
Colombia
Chile
Bolivia (Plur. State of)
Argentina
0
NFPS
2011-2012
2013-2014
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information from the countries.
a CG: central government; BCG: budgetary central government; GG: general government; NFPS: non-financial public sector (coverage in Costa Rica is the total public sector).
Summary
Social spending expressed in percentages of GDP masks an even greater heterogeneity as regards the absolute
volume of resources actually going to the social sectors, which depends heavily on each country’s level of economic
development. In the 1991-1992 biennium, per capita social spending in the region was US$ 801 at 2010 prices, but the
24
Social Panorama of Latin America • 2015
figure more than doubled in 22 years to reach US$ 1,841 in the 2013-2014 biennium. Nonetheless, this spending has
yet to exceed US$ 300 per person in countries such as Guatemala, Honduras, Nicaragua and the Plurinational State of
Bolivia, whereas in Argentina, Brazil, Chile, Costa Rica and Uruguay it approaches or exceeds US$ 2,000 per person.
While per capita social spending has increased in almost all the countries, both in total and at the sectoral level,
these resources do not necessarily benefit alike all the populations that stand in need of them, since spending priorities
are still skewed by people’s stage in the life cycle, place of residence, gender, and ethnic and racial origin, among
other factors, to the detriment of equitable access to public resources and social services.
D. Social spending and the business cycle
Latin America has traditionally evinced a procyclical bias in fiscal policy generally and public spending in particular.15
Previous editions of the Social Panorama of Latin America have shown aggregate regional social spending to be
procyclical relative to economic growth, although a countercyclical tendency was perceived in response to the crisis
of 2008-2009 (see, for example, ECLAC, 2014a). Certain studies have found social spending in Latin America to
have a greater procyclical bias than public spending overall, and have thus called for the core of this spending to be
explicitly protected (Aldunate and Martner, 2006).
ECLAC has called on several occasions for fiscal policy to be given a stronger countercyclical bias, mainly
because a procyclical fiscal policy accentuates the business cycle and can affect people’s social and economic rights
by eroding social spending. This edition of the Social Panorama reiterates that call, but stresses that social spending,
on the whole, should be neutral (acyclical) relative to the business cycle: the provision of high-quality services to
guarantee social rights, such as access to education, health care and social protection, should not depend on the
business cycle. However, considering the size of the gaps that persist in the region in these areas and the need
to take steps towards building universal social protection systems, social spending should be increased in boom
periods, while safeguarding macroeconomic stability. In turn, during economic crises, social spending should be
countercyclical when it comes to the resources needed to secure financing for poverty eradication policies and to
protect jobs.
The countries have applied different strategies to secure financing for social spending. Some have established a
floor for State funding of education or health in their constitutions, examples being Argentina, Colombia, Costa Rica,
Ecuador and Paraguay. Mechanisms of this kind do not do away with the procyclical bias of public spending, however,
as they allow social spending to fall if GDP does (Aldunate and Martner, 2006).
The current economic scenario of falling commodity prices points up warning signs as the fiscal revenues of
several countries in Latin America depend heavily on non-renewable natural resources. Indeed, on average, for the
Plurinational State of Bolivia (hydrocarbons), Chile and Peru (mining) and the Bolivarian Republic of Venezuela,
Colombia, Ecuador and Mexico (oil), the degree of the fiscal dependency on the non-renewable natural resource
sector in the period between 2005 and 2008 was of the order of 30% of total fiscal revenue, representing over
7% of GDP.
This is a cause for concern in the current context of a slowing economy. Fiscal policy measures should be
devised to lock in the social spending levels required to sustainably finance social policies that guarantee rights, and
to strengthen institutions (see chapter IV).
There is an intuitive understanding that a procyclical fiscal policy is one that increases taxes or cuts spending at times of
recession, and cuts taxes or raises spending during expansions. However, these variations may be due to automatic stabilizers, i.e.
alterations in income and spending items over the business cycle that do not depend on specific policy decisions (or discretionary
policies). Some authors (Gali and Perotti, 2003; Kaminsky, Reinhart and Vegh, 2004) argue that a fiscal policy can be classified
as countercyclical or procyclical only if it includes specific discretionary policies, for which the cyclically adjusted balance
has to be used. Others contend that countercyclical or procyclical behaviour should be gauged by considering the two effects
in combination (automatic stabilizers and discretionary policies), for which the primary balance or adjusted primary balance is
employed (Klemm, 2014).
Summary
15
25
Economic Commission for Latin America and the Caribbean (ECLAC)
E. Financing public social spending when growth is a constraint
Fiscal policy in Latin America has traditionally suffered from two major problems: the inadequacy of the resources
made available to finance social policies, and their procyclicality. Although the procyclicality of fiscal policy seems
to have been attenuated in the latest business cycle, resources for financing social policy remain inadequate, and this
is a constraint on efforts to expand the coverage of social policies and improve the quality of provision.
Since 1990, and particularly since 2002, tax revenues have expanded relative to GDP in the region as a result
of four complementary processes: (i) economic growth, which has enlarged the tax base; (ii) reforms in public
administration that have made collection systems more efficient and reduced tax evasion and avoidance; (iii) the
creation of new taxes and reform of existing tax burdens and rates; and (iv) the application of royalties, usufruct charges,
rent appropriation and other retention methods to the exploitation and commercialization of natural resources. The
increase in the total tax burden (including social security) has averaged 7 percentage points of GDP across the region
in the last two decades and represents a relative rise of over 48% in the tax burden, which grew from 14.6% of GDP
in 1990 to 21.7% in 2014.
The composition of fiscal revenues in Latin America has been characterized by a growing share for general
goods and services consumption taxes and, to a lesser extent, by a rise in the share of income and profit taxes (see
figure II.4). Conversely, trade liberalization has led to a decline in specific goods and services consumption taxes.
Figure II.4
Latin America and the Caribbean (22 countries) and countries of the Organization
for Economic Cooperation and Development (OECD): tax revenues
by type of tax, 1990, 2000, 2013 and 2014 a
(Percentages of GDP)
40
35
32.1
30
7.4
25
20
15
10
5
0
14.6
2.0
0.9
4.2
3.0
0.6
3.8
1990
17.2
2.7
0.9
4.1
21.5
21.7
3.7
1.0
3.8
3.7
1.1
3.7
6.3
6.4
4.9
0.6
4.0
0.8
0.8
5.9
6.1
2000
2013
2014
Latin America and the Caribbean (22 countries)
Income and profit
General goods and services
Other
1.2
3.9
34.2
34.2
8.6
9.1
1.3
3.7
1.4
3.5
5.7
6.7
6.8
1.8
1.8
1.9
12.2
12.2
11.5
2000
2013
1990
OECD (34 countries)
Property
Specific goods and services
Social security contributions
Source:Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Organization for Economic Cooperation and Development (OECD),
Revenue Statistics in Latin America and the Caribbean 1990-2013, 2015 [online] http://dx.doi.org/10.1787/rev_lat-2015-en-fr.
a Simple average of the countries.
As regards financing of the State by citizens’ individual contributions, the role played by social security contributions
is something that differentiates the countries of the region. There are countries with highly developed systems of
pensions and allowances, while others have less advanced arrangements.
Summary
Tax revenues have risen in the last two decades, but this increase has been gradual and heavily dependent on
consumption taxes and on revenues raised by taxing firms, especially those in the natural resource sector. This raises
two concerns about the financing of social policies: it is regressive, and it is dependent on commodity prices. With
regard to the first of these considerations, Hanni, Martner and Podestá (2015) argue that the impact of fiscal policy
in improving income distribution remains limited in Latin America: the Gini coefficient is only 3 percentage points
lower after taxes and transfers, while in the countries of the Organization for Economic Cooperation and Development
(OECD) it is 17 percentage points lower. In addition, 60% of the reduction in the Gini coefficient comes from social
spending (social transfers and public pensions), which means that one of the great challenges for the region is to
enhance the redistributive impact of the tax system (by reforming income tax, combating tax avoidance and evasion
26
Social Panorama of Latin America • 2015
and reducing preferential treatment). As for the second consideration, there needs to be a covenant on the governance
of non-renewable natural resources that includes provision for institutional mechanisms (such as stabilization funds)
to ensure that the revenues generated from these resources contribute to sustainable spending and are invested in
education and health care, infrastructure, innovation and technological development, i.e., in sounder foundations
for well-being, capacity-building and innovation in the long term (ECLAC, 2014c).
All these aspects affect the financing of social policies in one way or another. Although there has been an increase
in State resources in all the region’s countries, this has been heterogeneous and inadequate, and there is consequently a
need for a new agenda for tax reforms that “will create virtuous circles that will drive structural change and contribute
to greater equality” (ECLAC, 2014c).
F.Recapitulation
Fiscal policy has traditionally been procyclical in Latin America, and this has also affected spending in the social
area. Furthermore, the inadequacy of the resources available to finance social policy in the region was exacerbated
by the crisis of the 1980s and the adjustment policies that followed, which included a set of measures to reduce the
role of States in the provision of social services and facilitate the involvement of the private sector.
The region’s experience has shown that, notwithstanding the neoliberal promises dispensed in the last decades of
the twentieth century, markets are unable to cover the social protection and capacity-building needs of a large section
of the region’s population, and this has gradually driven governments to enhance their social policies and reformulate
their conception of the role of the State with regard to social problems. Around the year 2000, furthermore, ideas
like safeguarding human, economic, social and cultural rights, full citizenship and social inclusion by increasing the
role of the State in the provision of social services and an expansion of demand began to become firmly established
among the approaches guiding social policy. The corollary of all this has been a fairly systematic increase in the
resources devoted to coping with social policy challenges.
Despite the progressive effort by States to raise public social spending and shield it from the business cycle,
the increases have been more modest in recent years, especially when compared with those in the period of strong
expansion between 2003 and the start of the international financial crisis. Furthermore, the fiscal implications of
the ending of the commodity supercycle and the prospect of low economic growth in future have created a huge
challenge, and the countries are likely to have significant difficulty in sustaining social spending growth despite the
oscillations of the business cycle.
To confront this scenario, it is important for the countries to enhance the countercyclical bias of their fiscal
policy while ensuring that social spending is high enough to cover needs. This means, first, strengthening fiscal
institutions with medium-term fiscal frameworks and targets, planning and results-oriented budgeting (so that spending
is linked to the outcomes of public action) on the basis of a rights approach, and incorporating cyclically adjusted
indicators into public management. Second, there is an increasingly pressing need to safeguard core social spending
by identifying priority policies and programmes (particularly those oriented towards combating poverty and social
exclusion and towards protecting the most vulnerable against the business cycle and other contingencies) and to
ensure the stability of financing for health, education and social protection functions. Lastly, another priority is for
the countries to embark upon tax reforms that can make the system more progressive and reduce fiscal dependence
on rents from the commodity sector.
Bibliography
Summary
Aldunate, E. and R. Martner (2006), “Fiscal policy and social protection”, CEPAL Review, No. 90 (LC/G.2323-P),
Santiago, Economic Commission for Latin America and the Caribbean (ECLAC).
ECLAC (Economic Commission for Latin America and the Caribbean) (2015a) Preliminary Overview of the Economies
of Latin America and the Caribbean, 2015, (LC/G.2655-P), Santiago.
(2015b), Inclusive Social Development: the next generation of policies for overcoming poverty and reducing
inequality in Latin America and the Caribbean (LC.L/4056(CDS.1/3)), Santiago.
27
Economic Commission for Latin America and the Caribbean (ECLAC)
Summary
(2014a), Social Panorama of Latin America, 2014 (LC/G.2635-P), Santiago.
(2014b), Economic Survey of Latin America and the Caribbean, 2014 (LC/G.2619-P), Santiago.
(2014c), Compacts for Equality: Towards a sustainable future (LC/G.2586(SES.35/3)), Santiago.
(2012), Economic Survey of Latin America and the Caribbean, 2012 (LC/G.2546-P), Santiago, October.
(2010), The reactions of the Governments of the Americas to the international crisis: an overview of policy measures
up to 31 December 2009 (LC/L.3025/Rev.6), January.
Gali, Jordi and Roberto Perotti (2003), “Fiscal policy and monetary integration in Europe”, Economic Policy, vol. 37.
Hanni, M., R. Martner and A. Podestá (2015), “The redistributive potential of taxation in Latin America”, ECLAC Review,
No. 116 (LC/G.2643-P), Santiago, Economic Commission for Latin America and the Caribbean (ECLAC), August.
Kaminski, G., C. Reinhart and C. Vegh (2004) “When it rains it pours: procyclical capital flows and macroeconomic
policies”, NBER Working Paper, No. 10780, Cambridge, MIT Press.
Klemm, A. (2014), “Fiscal policy in Latin America over the cycle”, IMF Working Paper, No. 14/59.
Martínez, R. and M.P. Collinao (2010), “Gasto social: modelo de medición y análisis para América Latina y el Caribe”,
Manuales series, No. 65 (LC/L.3170), Santiago, Economic Commission for Latin America and the Caribbean (ECLAC).
OECD (Organization for Economic Cooperation and Development) (2015), Revenue Statistics in Latin America and
the Caribbean 1990-2013 [online] http://dx.doi.org/10.1787/rev_lat-2015-en-fr.
28
Chapter III
Confronting structural divides in the employment
market: labour and productive inclusion policies
and programmes
Introduction
Work is the key to equality, the cornerstone of social and economic integration and a fundamental mechanism for the
construction of autonomy, identity, personal dignity and an enlarged citizenship (ECLAC, 2010a, 2012a and 2014a).
Some 80% of Latin American households’ total income is from work, making this the main route out of poverty and
towards well-being and social protection (ECLAC, 2015a).
However, the world of work can also create and exacerbate inequalities. In Latin America and the Caribbean,
the labour market has traditionally been the link between a very heterogeneous production structure, of which the
low-productivity sector forms a large part, and highly unequal household incomes. The heterogeneity of the production
structure is manifested in labour markets with extensive informality and major divides in employment quality, earnings,
access to social protection and options for upward occupational mobility over the course of people’s working lives.
These inequalities also intersect with the divides between the genders, races, ethnic groups and areas of residence
that have always characterized Latin American societies (ECLAC, 2015a). Deep divides in labour markets and large
differences in access to opportunities, rights and social provision between different population groups are a key
obstacle to efforts to overcome poverty and inequality in the region.
A. Labour inclusion and exclusion in Latin America
Despite the positive evolution of labour market indicators between 2002 and 2013, involving in particular falling
unemployment, rising incomes, increasing formalization and higher female participation rates, Latin American labour
markets are still characterized by deep divides. This situation is compounded by the possible adverse impacts on the
labour market of the low-growth phase the region is currently traversing.
1. Access divides in the employment market
(a) Labour force participation
The labour force participation rate in Latin America rose from 61.2% in 1990 to 65.5% in 2013 as a result of two
opposing trends: a decline of about 4 percentage points in the male labour force participation rate (with a particularly
sharp drop among men who were indigent or highly vulnerable to indigence) and a more than 12 percentage point rise
in female labour force participation.16 Nonetheless, women’s participation rates are still substantially lower than men’s,
with differences of around 26 percentage points in 2013. The more vulnerable the households working-age people live
in, the wider the gaps between men’s and women’s labour force participation rates; i.e. it is precisely the poorest women
who most struggle to enter labour markets, and this is a key obstacle to their efforts to exit poverty (see figure III.1).
One way of capturing social vulnerability in Latin America is to classify the population into large groups in terms of their incomes
expressed as multiples of the poverty line. Since the Social Panorama of Latin America, 2009, ECLAC (2010b) has divided the population
into four categories relative to the poverty line: (1) people with per capita incomes of up to 0.6 poverty lines (defined as “indigent or
highly vulnerable to indigence”), (2) people with per capita incomes of between 0.6 and 1.2 poverty lines (“poor or highly vulnerable
to poverty”), (3) people with per capita incomes of between 1.2 and 1.8 poverty lines (“vulnerable to poverty”) and (4) people with
per capita incomes of more than 1.8 poverty lines (“not vulnerable”).
Summary
16
29
Economic Commission for Latin America and the Caribbean (ECLAC)
Figure III.1
Latin America (18 countries): labour force participation rates by sex and
by vulnerability to income poverty, national totals, 1990-2013 a
(Percentages of the population aged 15 and over)
90
80
65.3
70
69.4
79.9
80.6
80.0
79.9
60.6
56.2
79.0
78.6
73.6
65.5
60 61.2
50
68.6
82.5
82.9
82.2
58.8
53.3
41.1
40
30
20
58.6
49.3
55.2
44.2
40.1
32.9
1990
2002 2007 2010 2013
1990 2002
Both sexes
2007 2010 2013
Male
1990
2002
Sex
2007 2010 2013
Female
Indigent or highly vulnerable to indigence (up to 0.6 poverty lines)
Poor or highly vulnerable to poverty (0.6 to 1.2 poverty lines)
Vulnerable to poverty (1.2 to 1.8 poverty lines)
Not vulnerable (over 1.8 poverty lines)
Total
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted in the respective countries.
a Weighted averages.
(b)Unemployment
The unemployment rate in Latin America has gradually declined since the start of the last decade, with a cumulative
drop of 2.8 percentage points in the period between 2002 and 2013 (see figure III.2), with female unemployment
falling the most.17 As of around 2013, however, the regionwide female unemployment rate (7.2%) remained higher
than the male rate (5.3%). Furthermore, unemployment rates among those in situations of indigence, poverty or
vulnerability remained fairly high in the period analysed. In 2013, the figure was 16.5% among those indigent or
highly vulnerable to indigence, 8.8% among those who were poor or highly vulnerable to poverty, 7.1% among
those who were vulnerable to poverty and just 3.9% among those considered not vulnerable. Women were more
likely to be unemployed than men across all socioeconomic strata.
Figure III.2
Latin America (18 countries): unemployment rates by sex and by vulnerability
to income poverty, national totals, 1990-2013 a
(Percentages of the population aged 15 and over)
25
20.4
20
16.9
10 8.8
10.5
8.2
5.9
4.9
9.0
5
0
16.9
13.1
15
5.4
3.2
1990
9.0
10.2
7.1
6.8
8.0
4.2
7.5
16.5
14.6
15.7
14.0
11.0
8.8
7.1
6.1
3.9
2002 2007 2010 2013
Both sexes
14.9
8.5
4.9
4.9
4.0
2.8
8.3
6.7
7.6
4.4
1990 2002
6.8
5.6
5.6
3.5
8.2
6.4
6.4
4.1
7.2
6.0
5.3
3.3
2007 2010 2013
Male
20.7
17.7
16.3
9.6
8.0
6.5
6.4
3.9
1990
Sex
10.6
11.0
12.4
13.4
9.3
10.2
8.6
9.1
5.1
2002
11.2
8.6
7.2
4.7
2007 2010 2013
Female
Indigent or highly vulnerable to indigence (up to 0.6 poverty lines)
Poor or highly vulnerable to poverty (0.6 to 1.2 poverty lines)
Vulnerable to poverty (1.2 to 1.8 poverty lines)
Not vulnerable (over 1.8 poverty lines)
Total
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted in the respective countries.
a Weighted averages.
Summary
17
30
ECLAC (2015b), though, has estimated that open urban unemployment in Latin America and the Caribbean rose from 6.0% in 2014
to 6.6% in 2015.
Social Panorama of Latin America • 2015
There are also large differences in the region by ethnicity and race and between urban and rural areas.
The unemployment rate of the Afro-descendent population (6.5%) in 2013 was higher than that of indigenous
people (4.2%) and the non-indigenous, non-Afro-descendent population (5.0%). Unemployment rates in urban areas
are higher for women of all ethnic groups, with Afro-descendent women having the highest unemployment (8.8%).
The picture is similar in rural areas, although unemployment rates in general are estimated to be lower there
(see figure III.3).18
Figure III.3
Latin America (9 countries): unemployment rate by ethnicity,
sex and geographical area, around 2013 a
(Percentages of the population aged 15 and over)
8.8
8.3
7.5
7.2
5.8
5.7
4.0
Urban
3.3
6.5
4.2
Female
3.0
5.2
Afro-descendent
4.4
Indigenous
1.9
Rural
Male
5.8
2.2
1.9
Not indigenous or
Afro-descendent
2.7
Not indigenous or
Afro-descendent
6.0
Afro-descendent
4.1
Indigenous
4.8
3.3
Afro-descendent
3.1
5.8
5.0
Indigenous
6.1
5.4
Not indigenous or
Afro-descendent
10
9
8
7
6
5
4
3
2
1
0
Total
Both sexes
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted in the respective countries.
a Simple averages based on information from Brazil, Chile, Ecuador, Mexico, Panama, Paraguay, Peru, the Plurinational State of Bolivia and Uruguay. The Afro-descendent
population is only identified in the surveys of Brazil, Ecuador, Peru and Uruguay.
(c) Employment in low-productivity sectors
Employment conditions in low-productivity sectors are usually unstable and insecure, with little access to
social protection benefits (such as pensions and health care), and low earnings.19 In times of high unemployment or
economic crisis, these workers are very likely to slip into poverty.
Employment in low-productivity sectors in Latin America fell by some 5 percentage points for both men and
women between 2002 and 2013, standing in the latter year at 49.3% of workers of both sexes, as compared to
54.0% in 2002. Nonetheless, a larger proportion of women (53.0%) than of men (46.6%) still worked in such sectors
in 2013 (see figure III.4). This shows that, while women have managed to increase their labour force participation
rates, they are more likely to be working in unstable occupations with unequal access to social protection and
lower wages.20
18
Summary
The low unemployment rates of the indigenous population in rural areas (2.2%) might be explained by the large proportion of ownaccount workers, many of them working in agriculture or the informal sector. It is important for analysis of unemployment rates to be
supplemented by an evaluation of employment quality indicators (ILO, 2007).
19 Employment in low-productivity sectors includes employers and wage earners (professional and technical or otherwise) working in
microenterprises (businesses employing up to five people), unskilled self-employed workers (own-account workers and unpaid family
members without vocational or technical qualifications) and domestic employment. Medium-high productivity sectors include publicsector employees, private-sector employers and employees in businesses with more than five workers, and self-employed professional
and technical workers.
20 Since 2014 there has been a gradual increase in employment in low-productivity sectors among workers of both sexes because of the
increasingly difficult economic conditions and deteriorating labour markets (ECLAC, 2015b).
31
Economic Commission for Latin America and the Caribbean (ECLAC)
Figure III.4
Latin America (18 countries): distribution of employed persons aged 15 and over
by productivity and sex, national totals, 1990-2013 a
(Percentages)
100
90
80
46.1
46.0
49.0
49.4
50.7
48.2
49.1
52.7
52.5
53.4
53.9
54.0
51.0
50.6
49.3
51.8
50.9
47.3
47.5
46.6
1990
2002
2007
2010
2013
1990
2002
2007
Male
2010
2013
70
41.8
41.3
43.8
45.1
47.0
58.2
58.7
56.2
54.9
53.0
1990
2002
2007 2010
Female
2013
60
50
40
30
20
10
0
Both sexes
Low productivity
Sex
Medium-high productivity
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted in the respective countries.
a Weighted averages.
(d) Occupational categories and branches of activity
Occupational categories are an indicator of job quality and stability, as the proportion of own-account workers
and unpaid family workers is indicative of the level of low-quality employment. People living in indigence, poverty
or vulnerability are more likely to be employed as own-account workers (31.6%) and unpaid family members (7.4%).
Many women are in unskilled self-employment and domestic service, and twice as large a proportion of employed
women as of employed men are unpaid family workers. By comparison, men are primarily unskilled self-employed
workers and wage workers. This reveals the persistence of marked occupational segregation by sex that in turn has
consequences for earnings and other employment conditions. There is a larger proportion of wage earners (64.4%)
and employers (6.0%) among the non-vulnerable population.
The occupational structure shows a greater presence of wage earners in urban areas than in rural ones, where
there is a larger proportion of own-account and unpaid family workers. In turn, employment by ethnic origin shows
a larger proportion of own-account and unpaid family workers among the indigenous population, while members
of the non-indigenous population are more likely to be wage earners and employers. According to data from Brazil,
furthermore, there is a larger proportion of own-account workers among the Afro-descendent population than the
rest of the population, while the proportion of Afro-descendent women who are waged domestic workers (18.6%) is
8 percentage points higher than the proportion of non-Afro-descendent women engaged in this work (see figure III.5).
Figure III.5
Latin America (8 countries and Brazil): occupational categories of employed people aged 15
and over by race/ethnicity and sex, national totals, around 2013
(Percentages of the working population aged 15 and over)
A. Latin America (8 countries) a
100
90
80
15.0
3.6
4.2
70
60
9.6
4.6
0.6
39.8
22.6
3.0
9.6
4.8
5.2
4.1
24.3
6.5
2.9
0.4
24.3
7.4
3.4
9.2
24.4
36.9
50
33.6
40
61.6
30
20
40.2
46.6
10
0
Both sexes
Male
Indigenous
65.9
Female
Both sexes
Male
Non-indigenous
Summary
Wage workers
Own account
Domestic employees
Employers
Family or unpaid
32
55.7
31.9
Female
Social Panorama of Latin America • 2015
Figure III.5 (concluded)
B. Brazil b
100
2.2
8.1
90
80
2.8 1.5
1.0
2.4
29.8
27.1
70
3.7
5.5
5.1
1.3
18.6
2.0
6.9
3.1
3.8
10.6
1.1
0.7
22.7
26.1
64.7
65.1
64.1
Male
Female
18.5
23.2
60
50
40
30
64.9
60.2
53.2
20
10
0
Both sexes
Male
Female
Both sexes
Afro-descendent
Non-Afro-descendent
Wage workers
Own account
Domestic employees
Employers
Family or unpaid
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted in the respective countries.
a Simple average based on information from Brazil, Chile, Ecuador, Mexico, Panama, Paraguay, Peru, the Plurinational State of Bolivia and Uruguay. The non-indigenous
population does not include the Afro-descendent population.
b The non-Afro-descendent population does not include the indigenous population.
2. Divides in access to rights and social protection
An important indicator for analysing labour market divides and job quality is the existence of a formal contract of
employment, as this provides access to social benefits and rights such as membership of contributory pension and
health schemes, parental leave, limits on the working day, and overtime and holiday pay, among other things. In Latin
America, the proportion of wage workers with a formal contract of employment rose from 53.4% in 2002 to 57.2%
in 2013. The proportion is higher among non-vulnerable wage earners than among indigent, poor or vulnerable wage
earners (see figure III.6), among men than among women, among mature adult workers than among young or older
ones, and in urban areas than in the countryside.
Figure III.6
Latin America (18 countries): wage earners aged 15 and over with employment contracts,
by vulnerability to income poverty, national totals, 2002-2013 a
(Percentages)
80
70
60
55.3
50
43.6
40
30
20
66.7
64.4
24.2
57.2
53.4
49.4
36.2
17.4
10
0
Indigent or highly
vulnerable
to indigence
(up to 0.6 poverty lines)
Poor or highly
vulnerable
to poverty
(0.6 to 1.2
poverty lines)
2002
Vulnerable
to poverty
(1.2 to 1.8
poverty lines)
2007
2010
Not vulnerable
(over 1.8 poverty lines)
Total
2013
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted in the respective countries.
a Weighted averages.
Summary
Between 2002 and 2013, the coverage of pension and health systems increased significantly among the working
population of Latin America. For pensions, increases over the period ranged from 5.3 percentage points in the first decile
to 14.2 percentage points in the fourth decile. Although there have been improvements, the highest rates of membership
of such systems in 2013 were still among working people in the top deciles of the income distribution: 76.8% among
33
Economic Commission for Latin America and the Caribbean (ECLAC)
working people in the tenth decile as against 15.1% among those in the first decile. That same year, about two thirds
of the working population belonged to health systems (ranging from 64.6% in the first decile to 85.5% in the tenth
decile). At the start of the decade, the figure was less than 50% in the first seven deciles of the income distribution.
Non-indigenous, non-Afro-descendent workers, men and women alike, have the highest rates of pension
system membership. In both Brazil and the other six countries taken for the analysis, membership rates for
Afro-descendants, while substantially lower than the first group’s, are higher than those for the indigenous
population (see figure III.7).
Figure III.7
Latin America (6 countries and Brazil): membership of pension systems among
working people aged 15 and over, by race/ethnicity and sex, around 2013 a
(Percentages)
80
70
70
60
55
50
46
40
43
31
30
47
20
10
0
36
44
34
41
69
71
42
40
44
55
56
28
Not indigenous or
Indigenous
Afro-descendent Not indigenous or
Afro-descendent
Afro-descendent
Simple average (6 countries)
Male
Female
Indigenous
Afro-descendent
Brazil
Both sexes
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted in the respective countries.
a Simple average based on information from Chile, Ecuador, Paraguay, Peru, the Plurinational State of Bolivia and Uruguay. The Afro-descendent population is only
identified in the surveys of Brazil, Ecuador, Peru, the Plurinational State of Bolivia and Uruguay.
3. Income divides
(a) Labour earnings
Analysis of labour earnings, which include wages and self-employment income, reveals both the quality of
employment and the degree of occupational segregation. After stagnating in the 1990s, real-term earnings in the
region rose from 4.1 to 4.9 times the poverty line on average between 2002 and 2013. When the sex of workers is
considered, this change turns out to have been uneven: while women’s average earnings (4.1 times the poverty line
around 2013) are still significantly lower than men’s (5.6 times), the gap narrowed slightly over the period (see figure
III.8).21 This could be because of the increased female participation rate, higher minimum wages and policies to
formalize domestic employment (ECLAC/ILO, 2014b; Amarante and Arim, 2015).22
Earnings also reflect disparities in other dimensions of the world of work, including geographical areas of
residence and the race or ethnicity of working people. Average earnings are higher in urban areas (US$ 470 a month
in 2013) than in rural ones (US$ 192), and there are marked differences by race and ethnicity. The intersection of
ethnicity and race with gender creates a pattern of inequality in which indigenous women are in the lowest positions
on the income scale, even after controlling for education. Among those with eight years of education or more, the
top of the income scale is occupied by non-indigenous, non-Afro-descendent men, followed by Afro-descendent
21
Summary
Monthly earnings are considered here. Part of the differences between men’s and women’s earnings comes from the fact that men
work more paid hours. If this factor is taken into account, a gap remains, albeit a smaller one, between men’s and women’s average
earnings in most of the countries (ECLAC, 2014b).
22 Considering the larger proportion of women in groups with low earnings (ILO, 2010), the rise in the minimum wage recorded recently
in some countries of the region has impacted positively on average female earnings (Maurizio, 2014).
34
Social Panorama of Latin America • 2015
men, then non-indigenous, non-Afro-descendent women, Afro-descendent women, indigenous men and, lastly,
indigenous women (see figure III.9).
Figure III.8
Latin America (18 countries): labour earnings of employed people
aged 15 and over by sex, national totals, 1990-2013 a
(Multiples of the poverty line)
6.0
5.6
5.5
5.0
4.9
5.0
4.6
4.7
4.0
4.1
4.5
4.4
4.3
4.1
4.0
3.0
3.6
3.3
3.5
2.9
4.9
3.1
2.5
2.0
1990
2002
2007
Female
2010
Total
2013
Male
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted in the respective countries.
a Weighted averages.
Figure III.9
Latin America (9 countries): labour earnings by sex, race/ethnicity
and years of education, national totals, around 2013 a
(Multiples of the poverty line)
7
Non-indigenous,
non-Afro-descendent men (6.6)
6
Afro-descendent men (5.8)
5
Non-indigenous,
non-Afro-descendent women (4.6)
4
Afro-descendent women (3.9)
3
Indigenous men (2.9)
2
Indigenous women (1.9)
1
0
0 to 3 years
4 to 7 years
8 years and over
Years of education
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted in the respective countries.
a Indigenous population and other population: Brazil, Chile, Ecuador, Mexico, Panama, Paraguay, Peru, Plurinational State of Bolivia and Uruguay. Afro-descendent
population: Brazil, Ecuador, Peru, Plurinational State of Bolivia and Uruguay.
(b) Population without own individual income
Summary
The indicator for people without income of their own can be used as a proxy for lack of economic autonomy
and, together with lack of social protection, as a measure of vulnerability or lack of protection against risks, since
people in this position are more exposed to economic shocks. In Latin America, women are significantly more likely
to lack income of their own, most particularly those in the poorest quintiles. Between 1997 and 2013, the proportion
of women without their own income in the poorest quintiles dropped considerably: 24.6 percentage points in the
first quintile and 20.2 percentage points in the second quintile (see figure III.10). This was due mainly to increased
participation by women in the labour market, and to the fact that they are usually the receipients of cash transfers
designed to combat poverty (ECLAC, 2015a).
35
Economic Commission for Latin America and the Caribbean (ECLAC)
Figure III.10
Latin America (17 countries): population without own individual income,
by income quintile and sex, national totals, 1997-2013 a
(Percentages of the population aged 15 and over) b
80
70.3
70
59.3
60
50
48.9
41.0
39.1
40
15.8
30.8
18.1
11.3
Male
Total
Quintile V
Quintile IV
Quintile III
Quintile II
Quintile I
5.3
Total
14.7
13.8
10.5 11.2 7.6 9.3
Quintile V
Quintile I
0
Quintile II
10
24.7
Quintile IV
24.6
19.2
20
33.6
31.8
29.9
Quintile III
30
49.2
45.7
Female
1997
2005
2010
2013
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted in the respective countries.
a Weighted averages.
bPeople aged 15 and over who are neither in receipt of individual monetary incomes nor studying (depending on their activity status) relative to the whole nonstudying population aged 15 and over. Individuals’ income is obtained by adding up the following sources: wages, salaries and self-employed workers’ labour market
earnings; pensions and allowances; transfers between households and from abroad; social benefits paid by the government; fixed-term investments and property
income; and other income.
(c) Vulnerability among working people
Between 1990 and 2013, indigence, poverty and vulnerability fell among working people aged 15 and over in the
region. Nonetheless, a large proportion of workers remain in these situations (some 39% in 2013), showing that there is
still a major deficit of decent work (see figure III.11). Analysing poverty among workers in the region by sex around 2013
reveals that working men are more likely on average to be poor (19.8%) and indigent (6.5%) than working women (of
whom 17.0% are poor and 5.4% indigent). This shows how important it is for women to be brought into paid work and
for the income gap between men and women to be reduced as means of cutting poverty (ECLAC, 2014a and 2014b).
Figure III.11
Latin America (18 countries): distribution of employed people aged 15 and over
by vulnerability to income poverty, national totals, 1990-2013 a
(Percentages)
100
90
80
38.7
43.4
70
50.1
55.0
61.0
60
50
16.9
17.5
40
30
26.0
20
10
0
24.3
17.8
20.8
17.5
19.1
18.4
14.8
11.3
8.3
1990
2002
2007
2010
16.3
16.7
6.0
2013
Indigent or highly vulnerable to indigence (up to 0.6 poverty lines)
Poor or highly vulnerable to poverty (0.6 to 1.2 poverty lines)
Vulnerable to poverty (1.2 to 1.8 poverty lines)
Not vulnerable (over 1.8 poverty lines)
Summary
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted in the respective countries.
a Weighted averages.
36
In summary, economic tailwinds of the past decade and the set of public policies adopted (such as higher minimum
wages, formalization and extension of social protection coverage, and the strengthening of collective bargaining
and social dialogue arrangements) brought about some improvements in job quality and a moderate reduction in
employment in low-productivity jobs (ECLAC, 2015a). However, large divides remain in the labour market, and the
Social Panorama of Latin America • 2015
proportion living in conditions of indigence, poverty and vulnerability is still high among the population in general
and among working people. The current economic situation has increased the uncertainty about future trends in
Latin American labour markets. Section III.B examines some of the government programmes that might contribute
to increased labour and productive inclusion for the poorest and most vulnerable.
B. The urgent need to coordinate labour and productive
inclusion programmes
The employment dimension has taken on growing importance in the region’s social policies (ECLAC/ILO, 2014a), and
many of the countries have adopted public policies to protect employment and promote decent work, for example
through increases in the minimum wage and a variety of measures to promote formalization and strengthen labour
market institutions. Many of the countries now share a concern to combine cash transfers aimed at securing a given
standard of living with conditionalities designed to enhance human capabilities, involving policies and programmes
to improve beneficiaries’ labour inclusion conditions and current and future earning capacity (ECLAC, 2015a). Labour
inclusion programmes act both on the supply of labour (by means of remedial education and occupational training)
and on demand (by encouraging self-employment and microentrepreneurship and directly or indirectly creating jobs),
and also encompass employment and job placement services.
In the framework of the new 2030 Agenda for Sustainable Development, these policies and programmes
relate to target 8.3 (“promote development-oriented policies that support productive activities, decent job creation,
entrepreneurship, creativity and innovation, and encourage formalization and growth of micro-, small and mediumsized enterprises including through access to financial services”) of Sustainable Development Goal 8 (“Promote
sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”).
According to information from the ECLAC Non-contributory social protection programmes in Latin America
and the Caribbean database, at least 58 public labour and productive inclusion programmes are currently under
way in 21 countries of the region.23 Operated mainly by labour ministries, but in some cases by social development
ministries, or intersectorally (in coordination with national training institutes or services, for example) (ECLAC/ILO,
2013), these policies and programmes are mainly intended to provide men and women of working age living in
poverty or economic and social vulnerability with access to mechanisms that enable them to enter and remain in
the labour market through measures leading to better working conditions and higher earnings.
The various programmes can be classified into two major categories: support for the labour supply, and support
for labour demand (OAS/ECLAC/ILO, 2011). For the former (improving the labour supply), there are programmes that
support technical and vocational training and remedial primary and secondary education. Programmes to expand
the demand for labour, meanwhile, comprise the following actions: (i) support for independent working involving
microcredit, self-employment and enterprise components, (ii) direct job creation and (iii) indirect job creation. Job
placement services can help match supply to demand (see diagram III.1). All these actions should help people to
enter the formal labour market and access social protection.
Diagram III.1
Types of labour and productive inclusion programmes
Labour and productive inclusion
Support for suply
Technical and
vocational
training
Remedial
education
Support for demand
Career
placement
services
Support for
independent
work
Direct job
creation
Indirect job
creation
23
The Non-contributory social protection programmes in Latin America and the Caribbean database (http://dds.cepal.org/bpsnc/
index-en.php), set up in fulfilment of a mandate handed down to ECLAC at the Regional Conference on Social Development in Latin
America and the Caribbean in 2015, provides information on social programmes in the region aimed at people living in indigence,
poverty or vulnerability. Since the database is still under construction, there may be programmes that have not yet been included.
Summary
Source:Economic Commission for Latin America and the Caribbean (ECLAC)/International Labour Organization (ILO), “Conditional transfer programmes and the
labour market”, The Employment Situation in Latin America and the Caribbean, No. 10, Santiago, May 2014.
37
Economic Commission for Latin America and the Caribbean (ECLAC)
1. Support for the labour supply
Actions to boost the supply of labour from the indigent, poor or vulnerable working-age population are twofold:
(a) technical and vocational training (the aim being to improve labour inclusion and stability and raise earnings by
increasing people’s knowledge and capabilities), and (b) remedial education and measures to stop students dropping
out of school. Some programmes combine the two and also seek to connect people with skills to the labour market
by placing them in jobs or promoting enterprise. The National Programme for Access to Technical Education and
Employment (Pronatec) of Brazil is the region’s largest technical and vocational training programme. Some 8.1 million
people enrolled in it between 2011 and 2014, with Afro-descendants (53%), women (60%) and young people (64%)
being particularly well represented (ECLAC, 2015a; Montagner and Muller, 2015).
Technical and vocational training programmes are targeted at three different groups. In the first place, they aim
to improve the knowledge and skills of people in work so that they can perform their jobs more productively. They
may also be aimed at the unemployed with a view to helping them return to their previous occupations or find a job
in some other activity. The last group of beneficiaries are people seeking to participate in the labour market for the
first time (Weller, 2009).
Technical and vocational training is the most common sphere of action for labour and productive inclusion
policies in the region, with this component being found in 36 of 58 programmes analysed (62.1%). About half these
programmes are aimed at people aged between 18 and 35. Sometimes preference is given to particular categories,
such as female household heads with children. Training courses (which may be run by public or private institutions,
depending on the programme) last anything from 40 to 360 hours. Courses may consist of traditional training
(development and acquisition of knowledge and technical skills to perform a specific occupation) or competency-based
training (development of capabilities that can be applied to different circumstances and adapted to change, such as
communication or teamwork) (OAS/ECLAC/ILO, 2011). There are also specific programmes for urban and rural areas
and others that take innovative approaches to participation and gender mainstreaming.
A number of options are made available to supplement training courses. First, there are actions to support
microentrepreneurship (in 12 countries) or the preparation of business plans or employment projects (3 countries).
Second, courses in 11 countries are associated with work experience (internships) in firms that play a mentoring
role under the supervision and responsibility of the executing agencies implementing the programmes. Although the
firms are not required to pay their interns or employ them when the internship is over, a job offer for those who have
performed well is a desirable and common outcome. Programmes in six countries facilitate access to community
infrastructure jobs. In some cases, trainees also receive cash transfers to encourage attendance (nine countries),
subsidies to cover food and transport (four countries), accident insurance coverage (three countries) and health care
(two countries). Lastly, several countries provide access to caregiving services for the children of course participants.
On the basis that completing secondary school is a minimum requirement for securing good employment,
13 programmes currently operating in the region offer specific grants to prevent children from dropping out of
secondary education and to provide remedial education for young people and adults who have already left the
education system. In Latin America, most people living in indigence, poverty and vulnerability have few years of
education: from 0 to 5 (32.7%) or from 6 to 9 (36.0%). Just 7.1% of indigent, poor or vulnerable people have 13 years
of education or more. Undereducation is slightly more prevalent among men than women, and much more common
in rural than in urban areas.
Measures to prevent young people from dropping out of school involve financial incentives as a mechanism
for dealing with this problem, in the form of cash transfers conditional on school attendance and attainment, grants
or transport subsidies. Remedial education components, meanwhile, are aimed at young people or adults with
incomplete formal education or none. They chiefly cover primary and secondary education, but some of them also
extend to the tertiary level. Certain programmes likewise offer literacy training for people aged over 15 and, like
training programmes, incorporate childcare services.
Summary
2. Support for labour demand
38
The instruments designed to activate demand for labour are programmes supporting self-employment, which are
among the most common in this area (24 of 58 programmes), and direct and indirect job creation (8 and 9 of
58 programmes, respectively).
Social Panorama of Latin America • 2015
Actions in support of self-employment are intended to promote opportunities for own-account work and
microentrepreneurship, with the provision of seed capital or microcredits to increase people’s assets (OAS/ECLAC/
ILO, 2011). They also often include programmes to train people in saving and finance matters, microentrepreneurship
and financial planning (ECLAC/ILO, 2014a). Some provide technical assistance and help beneficiaries connect to
production or marketing networks.
Financial support and microcredit programmes seek to facilitate access to monetary resources so that people who
belong to vulnerable groups and have limited access to credit services and other financial instruments can start up
new enterprises or improve their small businesses, and thus generate earnings. In some programmes, participants must
complete a certain number of hours of training and have a functioning microenterprise or a business idea in order
to gain access to financing. The aim of training is for beneficiaries to improve their administration and management
and financial skills, and to learn to trade and market their products. It also tends to include oversight by mentors who
provide advice on the preparation of business plans, tax requirements and money-raising. Financial support usually
consists of a set sum of money, but sometimes covers the full amount applied for on the basis of a business plan.
Support in kind, such as seeds, livestock or tools for agricultural activities, may also be provided.
A number of self-employment support programmes are targeted at young people and seek to help them develop
production activities and generate employment for themselves by means of education for entrepreneurship, access
to financial markets on special terms and mentoring (ranging from identification of the business type, development
of the idea and administrative and technical requirements right up to consolidation of the business). About a fifth of
such programmes target female entrepreneurship and provide childcare services. Some promote partnerships and
cooperative working. Ten of the programmes analysed promote enterprise in rural areas (where wage-paying work
is scarcer), the aim being not only the generation of independent income but also production for self-consumption
and improved food security.
Lastly, so that microentrepreneurs do not end up working informally, some programmes encourage formalization
by providing access to simplified taxation regimes that not only help self-employed workers to formalize their business,
but also provide access to the contributory component of social protection, enabling them to enjoy the same social
security benefits as wage workers, mainly as regards health care and retirement pensions. The channels for this are
the flat tax (monotributo) in the Argentina Trabaja plan, the Programme to Strengthen Enterprise in Uruguay and the
Brazilian microcredit programme Crescer, associated with the Brazil without Extreme Poverty plan, which provides
guidance in legalizing businesses and accessing the benefits to which individual microentrepreneurs are entitled.
Direct job creation consists in expanding the demand for labour through public plans providing temporary
employment, usually in unskilled service occupations and on public works and local and community infrastructure
projects. The beneficiaries, unemployed people belonging to socioeconomically vulnerable households, carry out
temporary jobs of public value for a set period of time and receive a cash transfer. These actions have often been
implemented to cope with situations of economic crisis. In recent years, given the regional context of economic growth
and falling unemployment, they have not been a central instrument in labour and productive inclusion policies for
poor or vulnerable people, but this could change given the current context of low growth.
Indirect job creation is realized through public subsidies granted, usually for a set time, to private companies
for hiring young people or adults who live in poverty or belong to groups considered vulnerable. These subsidies
operate as a hiring incentive, since they reduce labour costs by covering part of the worker’s wage, social security
contributions or tax liabilities (ECLAC/ILO, 2014a).
Job placement services match labour supply to demand, facilitating contact between workers and employers in the
light of the occupational profiles the former possess and the latter require. These services, which are included in 17 of
58 programmes, provide participants in labour and productive inclusion programmes with information on vacancies
in private firms and public bodies and give them priority access to job offers from municipal employment agencies
or departments. Some carry out promotional activities such as fairs or information workshops, or create or enhance
databases to provide job-seekers with guidance and information. The mentoring associated with job placement services
is also crucial, and more and more guidance and support services are being included when individual employment
strategies and plans are drawn up (ECLAC/ILO, 2014a). In addition, several of the programmes analysed combine
job placement services with technical and vocational training courses.
Summary
3. Job placement services
39
Economic Commission for Latin America and the Caribbean (ECLAC)
4. Some outcomes of labour and productive inclusion programmes
The growth in labour and productive inclusion programmes in the last few years has led to evaluations of the benefits
obtained by participants (Bucheli, 2005), but the body of information available is still not large enough. Ideally,
programmes should prepare high-quality information and allow public access to their databases (ECLAC/ILO, 2013).
Furthermore, there remains the challenge of analysing not just individual plans, but labour and productive inclusion
policy generally.
According to Filgueira and Rossel (2015), there are few evaluations available in the region showing occupational
training programmes to have conclusive effects. Where empirical evidence is available, large variations are found
depending on the characteristics of the training, the institution implementing it, the geographical area where it is
carried out and the characteristics of beneficiaries. Schemes involving internships in firms are found to improve training
outcomes (ECLAC/ILO, 2013). According to the studies available, training programmes for adults and young people
have had a positive impact on employability in Brazil, Colombia, Mexico and Peru (Attanasio, Kugler and Meghir,
2009; DNP, 2008; Petterini, 2010; Montagner and Muller, 2015; Van Gameren, 2010; CONEVAL, 2010; Burga, 2003).
A number of difficulties have been found to beset strategies supporting self-employment for working-age people
living in conditions of poverty or vulnerability, particularly when it comes to sustainable income generation. The
analyses available indicate that programmes to foment microentrepreneurship give better results when users are
motivated and relatively well-educated (Farné, 2009). In addition, although encouraging own-account employment
may be seen as a way of bringing the poorest into the world of production, many of the businesses established in
this way do not prosper but end up foundering soon after being created (Weller, 2009), which calls into question the
effectiveness of these programmes.
There are likewise few impact evaluations of direct and indirect job creation programmes in the region. Evaluations
of emergency programmes creating jobs on infrastructure projects in Colombia (DNP, 2007) and Peru (Chacaltana,
2003; IDB, 2012) have found that they are good at targeting poor and vulnerable populations and have positive
short-term effects on participants’ incomes. Once the projects are built, however, most participants go back to informal
wage work and own-account activities, and no systematic differences can be identified between participants and
non-participants as regards income, the likelihood of finding work or the perception of a better standard of living. As
regards indirect job creation, evidence from Chile (Centro de Microdatos, 2011) shows that youth hiring subsidies
have helped to reactivate employment in vulnerable sectors, especially in periods of economic recession. However,
if the programme design does not explicitly encourage the hiring of less employable workers, the risk is that the main
benefits will go to firms in the form of lower labour costs (DIPRES, 2009).
Lastly, despite some modernization of public-sector job placement services (Filgueira and Rossel, 2015),
assessment results indicate that these services have performed poorly in the region when it comes to meeting their
goal of placing workers in high-quality jobs. There is thus a need to develop more thorough knowledge of the staffing
requirements of the private sector where jobs are created and to better match the jobs on offer with users’ profiles
and employment histories. Furthermore, a large proportion of hirings still take place informally (through personal
contacts and recommendations), which undermines the efficiency of job placement services and further widens
labour market divides (ECLAC, 2012b).
C. Final considerations: the challenges of including the poor
and vulnerable in the labour market
Summary
People living in indigence, poverty or vulnerability face numerous barriers in their efforts to find sustainable, highquality jobs. The difficulties involved in accessing decent work are strongly marked by the determinants of gender,
race and ethnicity, with people at certain stages of the life cycle (the young especially), persons with disabilities and
rural-dwellers also being particularly affected. To foment decent work, then, public labour and productive inclusion
policies and programmes need to take account of the heterogeneity of their intended participants’ profiles and the
areas where they live, educational deficiencies and problems in matching labour supply and demand, with weak
ties to job-creating sectors being a particular concern.
40
Social Panorama of Latin America • 2015
The success of these policies and programmes depends, first, on the quality of economic growth and the nature
of the production structure and, second, on how well they are coordinated with other social and economic policy
programmes and instruments, something that requires an eminently intersectoral effort. The coordination and integration
of policies and programmes to promote decent work entails, among other measures, implementing macroeconomic,
productive and sectoral policies favourable to the creation of high-quality jobs, promoting employment formalization
and the regularization of the informal economy, fostering women’s economic autonomy, broadening opportunities
for young people to build decent work trajectories and developing policies and regulations to reconcile work and
family life, pursuing policies to raise minimum wages, implementing or strengthening measures to protect employment
(such as unemployment insurance), preventing and eradicating child labour and forced labour, combating all forms of
discrimination in employment, guaranteeing union and collective bargaining rights, and instituting and strengthening
forums and processes of social dialogue (ECLAC, 2015a, p. 125). This, then, is one of the greatest challenges for social
inclusion in the region: coordinating and harmonizing economic policy, production and employment policies, and
social policy.
The effect of labour and productive inclusion policies and programmes will be limited if economies do not generate
adequate opportunities for decent work. In particular, it is vital for programme beneficiaries to be able to operate in
the formal market, receive wages higher than the minimum or find jobs with access to social protection. The issue
of incentives for working informally is particularly acute when it comes to initiatives to support self-employment,
whence the importance of supplementing support for own-account working with programmes to simplify tax and
administrative formalities as a way of encouraging formalization.
Lastly, a key factor in success is proper consideration of the gender dimension (Abramo, 2005). Although gender
divides in the labour market have narrowed, they remain wide, in contrast to women’s achievements in the education
sphere. Initiatives pursuing gender equality in the division of unpaid labour in households need to be taken further,
as these asymmetries act as an obstacle to women’s participation in the labour force, leave them more exposed to
risks and erode their potential for economic autonomy. Likewise, more needs to be done to foment participation
in deliberative spaces, such as forums for collective bargaining, labour unions, employers’ confederations and
civil society organizations, so that rights are better recognized and guaranteed. Among the policies that should be
strengthened are the provision of care services for dependents, measures to prevent early parenthood (guaranteeing
access to public services for adolescents and young people of both sexes), programmes to train and employ women
from disadvantaged socioeconomic backgrounds and policies to reduce occupational segregation and income divides
(ECLAC, 2014a). Special attention should be paid to indigenous and Afro-descendent women, who face manifold
discrimination on the basis of gender, ethnicity and race.
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Santiago, Economic Commission for Latin America and the Caribbean (ECLAC).
Burga, C. (2003), “Re-evaluando PROJoven: Propensity Score Matching y una evaluación Paramétrica” [online]
http://cies.org.pe/sites/default/files/investigaciones/propensity-score-matching-re-evaluando-projoven.pdf.
Cecchini, S., C. Robles and L.H. Vargas (2012), “The Expansion of Cash Transfers in Chile and its Challenges:
Ethical Family Income”, Policy Research Brief, No. 26, August [online] http://www.ipc-undp.org/pub/esp/
IPCPolicyResearchBrief26.pdf.
41
Economic Commission for Latin America and the Caribbean (ECLAC)
Summary
Centro de Microdatos (2011), “Evaluación de impacto del Programa de Subsidio al Empleo Joven”, Department
of Economics, University of Chile, Santiago, December [online] http://www.dipres.gob.cl/594/articles-88069_
doc_1pdf.pdf.
Chacaltana, J. (2003), Impacto del Programa A Trabajar Urbano: ganancias de ingreso y utilidad de las obras.
Informe final, Lima, Consortium for Economic and Social Research/Centro de Estudios para el Desarrollo y la
Participación (CEDEP).
CONEVAL (National Council for the Evaluation of Social Development Policy of Mexico) (2010), Informe de la
evaluación específica de desempeño 2009-2010, Programa de Apoyo al Empleo (PAE), Mexico City, Coordinación
General del Servicio Nacional de Empleo.
DIPRES (Budget Office of Chile) (2009), “Evaluación de impacto. Programa bonificación a la contratación de la
mano de obra”, Santiago.
DNP (National Planning Department of Colombia) (2008), Evaluación de Políticas Públicas: Subprograma Jóvenes en
Acción: consultoría para la evaluación de impacto del subprograma Jóvenes en Acción, Bogota, DNP-Sinergia.
(2007), Evaluación de políticas públicas: Programa Empleo en Acción. Impactos del programa sobre sus beneficiarios
y familias, Bogota, DNP-Sinergia.
ECLAC (Economic Commission for Latin America and the Caribbean) (2015a), Inclusive Social Development: The
next generation of policies for overcoming poverty and reducing inequality in Latin America and the Caribbean
(LC.L/4056(CDS.1/3)), Santiago.
(2015b), Peliminary Overview of the Economies of Latin America and the Caribbean, 2015 (LC/G.2655-P), Santiago.
(2014a), Compacts for Equality: Towards a sustainable future (LC/G.2586(SES.35/3)), Santiago.
(2014b), Social Panorama of Latin America, 2014 (LC/G.2635-P), Santiago.
(2012a), Structural Change for Equality: An integrated approach to development (LC/G.2524(SES.34/3)), Santiago.
(2012b), Eslabones de la desigualdad: heterogeneidad estructural, empleo y protección social (LC/G.2539-P),
Santiago [online] http://www.cepal.org/es/publicaciones/27973-eslabones-de-la-desigualdad-heterogeneidadestructural-empleo-y-proteccion.
(2010a), Time for Equality: Closing gaps, opening trails (LC/G.2432(SES.33/3)), Santiago.
(2010b), Social Panorama of Latin America, 2009 (LC/G.2423-P), Santiago.
ECLAC/ILO (Economic Commission for Latin America and the Caribbean/International Labour Organization) (2014a),
“Conditional transfer programmes and the labour market”, The Employment Situation in Latin America and
the Caribbean, No. 10, Santiago, May.
(2014b), “Employment formalization and labour income distribution”, The Employment Situation in Latin America
and the Caribbean, No. 11, Santiago, October.
(2013), “Challenges and innovations in labour training”, The Employment Situation in Latin America and
the Caribbean, No. 9, Santiago, October.
ECLAC/OIJ/IMJUVE (Economic Commission for Latin America and the Caribbean/Ibero-American Youth Organization/
Mexican Youth Institute) (2014), Invertir para transformar. La juventud como protagonista del desarrollo,
Madrid, September.
FAO/ECLAC/ILO (Food and Agriculture Organization of the United Nations/Economic Commission for Latin America
and the Caribbean/International Labour Organization) (2012), Políticas de mercado de trabajo y pobreza rural
en América Latina, vols. I and II.
Farné, S. (2009), “Políticas para la inserción laboral de mujeres y jóvenes en Colombia”, Project Documents, No. 251
(LC/W.251), Santiago, Economic Commission for Latin America and the Caribbean (ECLAC).
Filgueira, F. and C. Rossel (2015), “Working and reproductive years”, Towards Universal Social Protection: Latin
American pathways and policy tools, S. Cecchini and others (eds.), ECLAC Books, No. 136 (LC/G.2644-P), Santiago,
Economic Commission for Latin America and the Caribbean (ECLAC).
IDB (Inter-American Development Bank) (2012), “Evaluación de impacto del Programa Construyendo Perú”, Lima,
MACROCONSULT S.A.
ILO (International Labour Organization) (2013), Decent Work and Youth: Latin America, Lima, Regional Office for
Latin America and the Caribbean.
(2010), Global Wage Report 2010/2011, Geneva.
(2007), 2007 Labour Overview: Latin America and the Caribbean, Lima, Regional Office for Latin America and
the Caribbean.
42
Social Panorama of Latin America • 2015
Summary
Martínez, C. and others (2013), “Micro-entrepreneurship training and asset transfers: short term impacts on the
poor”, Documentos de Trabajo, No. 380, Santiago, Faculty of Economy and Business, University of Chile
[online] http://www.povertyactionlab.org/publication/micro-entrepreneurship-training-and-asset-transfersshort-term-impacts-poor.
Maurizio, R. (2014), “El impacto distributivo del salario mínimo en la Argentina, el Brasil, Chile y el Uruguay”, Políticas
Sociales series, No. 194 (LC/L.3825), Santiago, Economic Commission for Latin America and the Caribbean (ECLAC).
Montagner, P. and L. Muller (coords) (2015), “Inclusão Produtiva Urbana: O Que Fez o Pronatec/Bolsa Formação
entre 2011- 2014”, Cadernos de Estudos - Desenvolvimento Social e Debate, No. 24, Brasilia, Ministry of Social
Development and Hunger Alleviation.
OAS/ECLAC/ILO (Organization of American States/Economic Commission for Latin America and the Caribbean/
International Labour Organization) (2011), “Protección social y generación de empleo: análisis de experiencias
derivadas de programas de transferencias con corresponsabilidad”, Project Documents (LC/W.398), Santiago,
Economic Commission for Latin America and the Caribbean (ECLAC).
Petterini F.C. (2010), “Uma avaliação de impacto e retorno econômico do plano setorial de qualificação (PlanSeq)”
[online] http://www.ipece.ce.gov.br/economia-do-ceara-em-debate/vii-encontro/artigos/UMA_AVALIACAO_DE_
IMPACTO_E_RETORNO_ECONOMICO_DO_PLANO_SETORIAL_DE_QUALIFICACAO_PLANSEQ.pdf.
Trivelli, C. and J. Clausen (2015), “De buenas políticas sociales a políticas articuladas para superar la pobreza: ¿qué
necesitamos para iniciar este tránsito?”, Documento de Trabajo, No. 209, Lima, Instituto de Estudios Peruanos
(IEP) [online] http://www.iep.org.pe/biblioteca_virtual.html.
Van Gameren, E. (2010), Evaluación de impacto del Programa de Apoyo al Empleo, Mexico City, Centro de Estudios
Económicos, Colegio de México.
Weller, J. (2009), “El fomento de la inserción laboral de grupos vulnerables. Consideraciones a partir de cinco estudios
de caso nacionales”, Project Documents (LC/W.306), Santiago, Economic Commission for Latin America and
the Caribbean (ECLAC) [online] http://www.cepal.org/es/publicaciones/3738-el-fomento-de-la-insercion-laboralde-grupos-vulnerables-consideraciones-partir.
(2007), “Youth employment: characteristics, tensions and challenges”, CEPAL Review, No. 92 (LC/G.2339-P),
Santiago, Economic Commission for Latin America and the Caribbean (ECLAC).
43
Chapter IV
Institutionality and social development:
overview and challenges
The strides recently taken by Latin America and the Caribbean in the social sphere have been accompanied by new
institutional challenges, with moves to create or strengthen government agencies reflecting the greater priority of
social policies on the public agenda. However, some persistent challenges still need to be addressed.
This chapter examines the existing institutional framework of social development policies in the region, based on
the analysis of government agencies whose core mandate is the design and implementation of social development,
inclusion and poverty eradication strategies.
To that end, it proposes different analytical dimensions through which to advance the study of social institutionality:
the legal and regulatory framework, organizational characteristics and modes of coordination, technical and operational
tools linked to policy implementation and, lastly, the characteristics and magnitude of the resources allocated to
social development policies (ECLAC, 2015). In particular, this analysis focuses on institutional elements related to
non-contributory social protection and care policies, and discusses institutional challenges such as guaranteeing the
exercise of universal social rights, solving the problems and needs of different population segments, and fulfilling the
commitments made by the countries in these areas.
A. Overview of the institutional framework of social development
policies in Latin America and the Caribbean
The Latin American and Caribbean region has made considerable progress in institutionalizing social development
policies at the national and regional levels, raising prospects for improvement in the quality, effectiveness, transparency
and sustainability of policies in this area. This institutional progress is reflected in the place occupied by social
development on the public policy agenda of the region’s countries, in the international commitments that they have
assumed, and in the existence of different forums for regional and subregional discussion and cooperation in the
social area.
In several regional integration and discussion forums, Latin American and Caribbean countries have established
commitments and frameworks for cooperation, based on a multidimensional concept of social development and a
rights-based approach, with a view to eradicating poverty and reducing inequalities. Cooperation between countries
has been reaffirmed as an important tool to help strengthen the policies, institutions and processes that promote social
inclusion. These themes converge with the general orientation of the 2030 Agenda for Sustainable Development,
thus facilitating the coordination of follow-up to the Agenda at the regional level. That the agendas of certain forums
prioritize specific subject areas further adds to their diversity.24
While the countries each have their own institutional path and models, all have a ministry, secretariat or other
coordination body responsible for social development. These entities are chiefly concerned with coordinating or
implementing anti-poverty programmes and policies, but have progressively acquired new functions and responsibilities.
This process has coincided with the growth of the rights-based approach in public policy, which testifies to a
political will to build comprehensive social protection systems that tend towards universal coverage. National and
Notable topics addressed by regional and subregional institutions include: productive inclusion (in the case of the Latin American
Integration Association (ALADI) and the Union of South American Nations (UNASUR)); the facilitation of fair trade in support of
social inclusion (ALADI); the provision of education and health services and food security (in the case of the Community of Latin
American and Caribbean States (CELAC), the Central American Integration System (SICA) and the Andean Community); social
participation, the promotion of employment and decent work and universal access to social security (UNASUR); and preventing
the social impacts of climate change and natural disasters, guaranteeing social investment, and addressing territorial asymmetries
(Andean Community).
Summary
24
45
Economic Commission for Latin America and the Caribbean (ECLAC)
international standards grounded in this rights-based approach have become more widespread, including those that
underpin poverty reduction policies. They generally aim to boost organization and management capacities, improve
accountability and encourage coordination between organizations, different levels of government and civil society
in order to maximize the impact of policies. At the same time, the resource base has grown and new techniques of
internal management, coordination and evaluation have been adopted.
1. The legal and regulatory dimension
International commitments, together with the specific laws and regulations that exist in each country, form the legal
basis on which public policies are founded. The higher the authority invested in a government function, and the
greater the legal specificity accorded to a given population segment in the implementation of these policies, then
the more robust the institutional framework will be.
Regarding the different functions that make up the social sphere, it has been observed that over half of Latin
American and Caribbean countries mention the right to health and education in their constitutions and have specific
legislation in these policy areas. Twelve constitutions explicitly refer to labour protection and the right to social security,
while 15 make provision for the right to housing; however, while 21 countries have specific national legislation on
labour protection and the right to social security, only 14 have legislated on the right to housing (see figure IV.1).
Figure IV.1
Latin America and the Caribbean (33 countries): explicit mention of rights
in constitutional or specific legislation, by sectoral issue
and population segment, September 2015
(Number of countries)
Sectoral issues
Social development
Labour protection
and social security
Education
Health
Population segments
Housing
Women
Children and adolescents
Young people
Older adults
Persons
with disabilities
0
5
Specific legislation
10
15
20
25
Constitutional provision
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information from the countries.
A notable case of a population segment with constitutionally enshrined rights is that of persons with disabilities,
as mentioned in the national constitutions of 11 countries. Other important groups include older persons (9 countries)
and children and adolescents (6 countries). The segments mentioned least frequently in constitutions as enjoying
specific rights are women (5 countries) and young people (5 countries), while racism is defined as a crime in just
1 country.25 Fourteen countries have specific legislative frameworks on the rights of children and adolescents, and
10 countries have such frameworks on the rights of women.
The concept of social development is not mentioned in any of the constitutions of the 33 Latin American and
Caribbean countries studied, and only 9 countries have enacted specific legislation in this area. Nevertheless, several
Latin American constitutions contain references to social, political, cultural and economic rights.
Summary
25
46
These figures refer to constitutional texts that explicitly mention the rights associated with each population segment or social issue.
For example, with the exception of Chile and Costa Rica, all the constitutions studied made some mention of persons with disabilities,
usually in relation to non-discrimination at work or disability pensions, but just 11 established or explicitly mentioned the rights and
the protection enjoyed by this group.
Social Panorama of Latin America • 2015
2. Organizational characteristics and modes of coordination
Crucial factors in improving the social institutionality of a given country are the kind of authority responsible for
policies, and the horizontal and vertical linkages between the public- and private-sector actors that participate in
their implementation.
Twenty of the region’s countries have set up a ministerial-level social development entity or, in the absence of
a specialized ministry, an equivalent authority that reports directly to the Office of the President, the Office of the
Vice-President or another sectoral ministry with a mandate for promoting social development. These government
mechanisms, most of which have emerged since the 1990s, are recent by comparison with other social ministries
(see figure IV.2).26
Figure IV.2
Latin America and the Caribbean (20 countries): year of creation
of social development ministries, 1985-2015 a
2015
2010
2005
2000
1995
Ministry
Uruguay
Venezuela
(Bol. Rep. of)
Peru
Dominican Rep.
Paraguay
Mexico
Panama
Jamaica
Honduras
Guatemala
Ecuador
El Salvador
Costa Rica
Chile
Colombia
Brazil
Belize
Barbados
Argentina
1985
Bolivia
(Plur. State of)
1990
Other entity
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information from the countries.
a Countries with no information available for the year of creation of their social development ministry are not included in the figure (Antigua and Barbuda, Bahamas,
Dominica, Haiti and Trinidad and Tobago).
While many of these entities were created as a response to economic and social emergencies, they have gradually
established themselves as permanent structures and have expanded their formal mandate and programme coverage
from combating extreme poverty to a wider goal of social inclusion, in some cases undertaking the explicit mission
of ensuring minimum universal levels of social well-being.
The main types of coordination mechanism and social authority in the region are described below.27 These
entities are generally empowered to coordinate the various institutions devoted to social development and, in the
case of social cabinets, sometimes have a mandate encompassing all social areas. In practice, they wield greater
influence over social development and anti-poverty policies than over the whole spectrum of sectoral social policies.
•
•
•
•
Specialized technical body appointed by the Office of the President or Vice-President and operating at the
central level, whose authority usually derives from an executive decree.
A family member of the executive (traditionally the figure of the First Lady, who is assigned the role of
coordinating social assistance programmes).
National planning agencies (whose position and functions potentially allow them to coordinate intersectoral
relations, but which tend to lack the required level of technical specialization).
Ministry (or secretariat) of social development or inclusion, with responsibility for coordinating with other
social ministries.
26
Summary
All countries have longstanding institutional precedents in the principal social sectors, especially health, education, labour and benefits.
The emphasis of figure IV.2 is on current ministerial-level social institutions and the recent emergence of social development ministries.
27 The descriptions provided are not mutually exclusive, nor do they necessarily occur in pure form. For example, in a given country an
entity might be attached to the Office of the President or to a ministry of social development endowed with coordination functions,
and may also coexist with a social cabinet.
47
Economic Commission for Latin America and the Caribbean (ECLAC)
•
•
Ministry for coordination (an institution appointed to coordinate and mediate between all relevant entities in
the social area, whether operating at the central or other levels of government).28
Intersectoral collegial entities (such as social cabinets or economic and social councils, usually formed of
ministers with social portfolios and the management authorities of specialized services, and chaired by the
Office of the President, the Office of the Vice-President or the ministry appointed as coordinator, with a
technical secretariat that is either collegial or based in the planning area).
Collegial entities are present in at least 22 of the region’s countries. Rather than a single model or alternative, they
perform a complementary role regarding authority over social policy, which is shared between different government
entities. For the most part, they take the form of councils or cabinets and are chaired by the President or Vice-President;
the ministry of social development (or equivalent) was found to exercise coordination functions in just six countries.
This reflects the existence of a possible disjuncture between the actual and the formal authority wielded by the
ministries responsible for coordinating social development policies (see table IV.1).
Table IV.1
Latin America and the Caribbean (22 countries): type of authority that coordinates
the social cabinet or intersectoral collegial entity in the social area, 2015
Country
Antigua and Barbuda
Office of the President
or Vice President or
authority appointed
by the executive
Ministry of social
development
or inclusion
Spouse or family
member of the
executive
Ministry with another
social portfolio
X
Argentina
X
Belize
X
Bolivia (Plurinational State of)
X
Brazil
X
Chile
X
Colombia
X
Costa Rica
X
Dominican Republic
X
Ecuador
X
El Salvador a
Guatemala
X
X
Haiti b
Honduras
Ministry for
coordination of
social affairs
X
X
Mexico
X
Nicaragua c
X
Panama
X
Paraguay
X
Peru
X
Trinidad and Tobago
X
Uruguay
X
Venezuela (Bolivarian Republic of)
X
Total
12
6
2
1
1
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information from the countries.
a In El Salvador, the authority appointed by the Office of the President to coordinate the Social Management and Inclusion Cabinet is the Ministry of Health.
b In Haiti, the National Commission for the Fight against Hunger and Malnutrition was coordinated by the First Lady between 2012 and 2014 (see the decree published
in the official journal of Haiti of 12 January 2012 [online] http://www.abagrangou.ht/medias/COLFAM_Moniteur_24%20janvier%202012.pdf).
c In Nicaragua, the executive appoints the person in charge of coordinating the intersectoral entity (the Council of Communication and Citizenship).
Summary
28
48
A noteworthy example is Ecuador, which adopted this type of entity throughout its governance structure in 2008.
Social Panorama of Latin America • 2015
In recent years, collegial entities have also been established to address specific issues (such as poverty, social
protection, undernutrition, food and nutrition security, care and anti-discrimination), as well as the needs of different
population segments. They may be cross-cutting (as with national mechanisms for the advancement of women and
entities that promote racial equality and the rights of persons with disabilities) or focused on promoting the rights
and well-being of population segments at specific stages of life, such as children, young people and older persons.
These issue-specific authorities pursue a range of different mandates and missions, but their trademark function
is that of mainstreaming and coordinating the actions of central government, while singling out particular needs
and shortcomings to guarantee the rights and access to services of certain population segments, and ensuring that
priority attention is given to these segments or to particular social problems. In a context of multiple government
actors, the fulfilment of these mandates is critical for effective intersectoral coordination, which is achieved through
a wide variety of models and alternatives (intersectoral commissions, ministries, vice-ministries and institutes,
among others).
3. The technical and operational dimension
Another fundamental element of social policy institutionality refers to the development of management tools to
enhance the production and distribution of social goods and services. In this sense, the social investment funds
that emerged in the 1990s and conditional cash transfer programmes implemented this century have brought about
significant progress, as reflected in the expansion of programme regulations and participant selection and registration
systems, and in the introduction of protocols for the design and ex ante evaluation, monitoring and measurement
of programme impacts. Moreover, social oversight and beneficiary participation mechanisms have gradually been
established at different stages of policy formulation and operation.
These advances certainly bode well for the effectiveness, efficiency, transparency and sustainability of social
systems. Yet considerable challenges remain, such as evaluation at the overall policy level (rather than only at the
programme level), the accumulation of knowledge and technical capacity among managers, and the development
of more comprehensive and more transparent accountability mechanisms involving various stakeholders.
4. The fiscal dimension
The proportion of public resources allocated to each function of government provides a basic indicator of the political
and economic priority accorded to the social area in each country. The volatility caused by changes in the economic
cycle illustrates just how important the context is for these budget allocations. The growth in these resources as a
proportion of GDP, and the relative stability of resources earmarked for social policies, are critical for the sustainability
of such policies and for strengthening their underlying institutional framework.
As discussed in chapter II, the resources allocated to social expenditure in the region have seen sustained
growth since the 1990s, both in GDP terms and in dollars per capita. This trend testifies to the gradual fiscal
institutionalization of social policy, particularly in relation to social protection and combating poverty and its
determinants. Notwithstanding some variation in the growth rate of spending on social policies, it has remained
in positive territory and was a cornerstone of the response to the international financial crisis of the late 2000s.
However, Latin American and Caribbean countries are highly heterogeneous in this regard, as well as in terms of
service coverage in different policy spheres. In general, countries with the greatest needs have the poorest service
coverage and the fewest resources per capita, and assign a lower fiscal priority to social policies. This shows the
extent of the gap that exists between the countries of the region, and of the long road still to be travelled in the
institutionalization of social policies (see figure IV.2).
Summary
Achieving institutional stability for social development policies and ensuring their sustainability requires an
effort to develop fiscal covenants that guarantee stable and permanent resources to address social policy challenges,
especially the social protection of poor and indigent populations, underpinned by countercyclical financing instruments
to overcome crises or low-growth periods. As part of this, possible courses of action include alternatives for fiscal
rules with a social policy bias, and efforts to link social policy to “green fiscal reform” initiatives (see chapter II).
49
Economic Commission for Latin America and the Caribbean (ECLAC)
Table IV.2
Latin America (19 countries): social spending in three groups of countries
with different social promotion and protection outcomes
(simple averages for each group), around 2010-2014
(Dollars and percentages of GDP)
Indicator
Public per capita social spending
(constant dollars at 2010 prices)
Public per capita spending on social security
and assistance
(constant dollars at 2010 prices)
Public social spending
(percentage of GDP)
Public spending on social security
and assistance
(percentage of GDP)
Public spending on education
(percentage of GDP)
Public spending on health
(percentage of GDP)
Public spending on housing and other areas
(percentage of GDP)
Group I
Group II
Argentina, Brazil, Chile, Costa Rica,
Cuba, Panama, Uruguay
Colombia, Mexico, Venezuela
(Bolivarian Republic of)
Group III
Bolivia (Plurinational State of),
Dominican Republic, Ecuador,
El Salvador, Guatemala, Honduras,
Nicaragua, Paraguay, Peru
366
2 110
1 166
888
456
111
20.3
14.0
11.0
7.9
5.6
3.1
5.6
4.1
4.4
5.0
2.9
2.6
1.7
1.3
1.0
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information from the countries.
B. Coordination challenges: social development, non-contributory
social protection, and policies for particular
population segments
The challenge of coordinating mandates, policies and programmes is also evident in the complex and varied
relationships that social development ministries maintain with each other and with government agencies devoted
to specific population segments, as well as in their role in the management of conditional transfer programmes,
non-contributory social pensions and integrated care policies.
Significant organizational hurdles must be overcome in order to meet the needs and guarantee the rights of specific
population groups. Ministerial entities responsible for social development and poverty reduction presently coexist
with a growing number of agencies devoted to the well-being and rights of population segments such as children
and adolescents, older persons, persons with disabilities, indigenous peoples, Afro-descendent populations, and
others. These agencies are often mandated to meet the needs of the groups in question: of 24 countries in the region
with available information, it was found that in seven cases the ministry of social development had a subordinate
entity responsible for older persons, while six countries had youth institutes and five had institutions for children and
adolescents. In each instance, the ability to attend to the needs of the respective population segment hinges on the
entity’s coordination capacities and resources, so that inadequate leadership or insufficient resources pose the risk
that activities will have a limited impact, or that the necessary coordination with other social policy sectors will fail
to materialize.
Another challenge is presented by the growing trend for the establishment of intersectoral commissions specializing
in specific population groups, ordinarily coordinated by the Office of the President or Vice-President.29 The chief
difficulty resides in ensuring that these intersectoral authorities have the leadership and the capacity required to
coordinate their component ministries and agencies and to act in harmony with the entities or ministries devoted to
social development and poverty reduction.
Summary
29
50
For example, national children’s councils, which involve various ministries and other entities, are responsible for the well-being and
rights of children and adolescents in 12 of the 23 countries with available information.
Social Panorama of Latin America • 2015
The institutional affiliations of conditional transfer programmes and social pensions add a further significant
challenge. As noted earlier, conditional cash transfer programmes have had a major impact on social development
policies; however, even when these programmes form a core element of non-contributory social protection, not all of
them fall under the aegis of social development ministries, a reality that further underscores the need for coordination.
Out of the 21 countries that implement at least one national conditional transfer programme, only 10 programmes
are attached to the ministry of social development or an equivalent entity. In six countries, the conditional transfer
programme is run by the Office of the President, while in five countries it falls under another ministerial portfolio.
Meanwhile, national non-contributory pension programmes come under the remit of the social development or
equivalent ministry in 8 of the total of 19 countries where they are provided, while in 2 countries they are managed
by the Office of the President, and in 9 countries, by another ministry. Other entities that are commonly attributed
powers in this area include ministries of labour and finance and central pension authorities. Since the primary mandate
of social development ministries is usually confined to poverty reduction and various social protection and inclusion
initiatives, there is a clear need for coordination to ensure that the system is fully comprehensive.
The development of conditional transfer programmes and other non-contributory social protection instruments
has spurred significant advances in the area of organization and management, since their design, targeting and goals
inspired the creation of new management tools and led to new experiences of intersectoral work. Moreover, the need
to provide these programmes with legitimate underpinnings prompted several attempts at institutionalization, such as
the General Law on Social Development of Mexico (2004), which created an institutional framework for federal social
programmes and established the National Council of Evaluation of Social Development Policy (CONEVAL) as the
autonomous technical body responsible for measuring poverty and evaluating programmes. Another example is the
Law on Development and Social Protection of El Salvador (2014), which serves as the foundation for an institutional
framework encompassing all social programmes introduced since the 2009 crisis, in addition to creating the Universal
Social Protection System (SPSU). In 2004, the Law on Family Allowances of Uruguay extended cash transfers to the
most vulnerable households in the framework of the country’s Equity Plan, which stabilized the emergency social
measures adopted after the economic crisis of 2002. Important progress was also made in developing single registers
of social protection programme participants, such as those maintained by Brazil and Paraguay, which were set up
as part of the implementation and expansion of the main social protection programmes in those countries. These
tools helped to develop social information systems and have become key instruments in the planning and redesign
of various programmes.
In short, while social development ministries are taking on a more prominent role and have received formal
mandates in the area of non-contributory social protection, the management of the main and most extensive
programmes does not always fall under their control. The arrangements governing these programmes depend largely
on the model of social authority adopted by the country in question, the role assigned to social development ministries,
and the existence and institutional affiliation of pension systems providing non-contributory benefits. All of the above
highlights the need to improve coherence and coordination between different models of authority, mandates and
existing ministerial and programme structures, as well as between these models and the multiple stakeholders in
social protection systems, which are more complex today than in the past. This does not mean that social development
ministries should always be responsible for the management of these programmes and pensions, but that appropriate
inter-institutional coordination mechanisms should be in place where this is not the case, in order to make policies
and programmes as comprehensive as possible.
C. Institutionality of care policies in Latin America
Summary
The discussion on the social organization of care and the role of public policies in this area has gained traction
on the public agenda thanks to the impetus of the women’s movement and feminist economics. Care is a shared
responsibility of families, the community, the market and the State; however, it has emerged that the burden of care
work falls mostly on families, and especially on women, with social policies providing only scant and fragmented
responses. Consequently, the recognition that care work ultimately creates and exacerbates gender inequalities has
led to the creation of an incipient institutional framework for policies in this area. Despite the importance of integrated
care policies, their visibility on the regional public agenda and their status as a fundamental component of social
51
Economic Commission for Latin America and the Caribbean (ECLAC)
protection are recent developments. This is a reflection of the tensions and challenges inherent to an institutionality
that is still under construction and which has required inter-institutional coordination and the mainstreaming of a
gender perspective from the moment of its genesis.
Care policies are intersectoral and multidimensional by nature, since they respond to the diverse needs of
caregivers and those in need of care, whether in the case of comprehensive early childhood development, older
persons and persons with disabilities requiring assistance to preserve their autonomy, or other groups. This broad range
of needs requires different public institutions to be involved in policy implementation, as well as a comprehensive,
coordinated and solid institutional framework.
In response to this challenge, the notion of “integrated care policies” is beginning to take root in the region. This
refers to a set of intersectoral public and private actions, integrated into the social protection system of the country
and delivered in a coordinated way to provide direct care to people and to support households in caring for family
members (Salvador, 2011).
The development of a regulatory framework for care policies in the region has coincided with the emergence of
international human rights instruments that enshrine the right to social protection and recognize the value of paid and
unpaid care work, as well as those which aim to better the situation of groups requiring care at different stages of life.
These instruments include the Social Protection Floors Recommendation, 2012 (No. 202) of the International Labour
Organization (ILO), the Inter-American Convention on Protecting the Human Rights of Older Persons, adopted by
the General Assembly of the Organization of American States (OAS) in June 2015, the last five consensuses to have
emerged from the Regional Conference on Women in Latin America and the Caribbean,30 and the Framework Law on
the Economy of Care, adopted in October 2013 at the twenty-ninth General Assembly of the Latin American Parliament.
All Latin American countries have laws that mention child care services and the situation of caregivers, especially
those on maternity (and to a lesser extent, paternity) protection and paid domestic work. The international framework
established by ILO includes the Maternity Protection Convention (Revised), 1952 (No. 103), the Maternity Protection
Convention, 2000 (No. 183), the Workers with Family Responsibilities Convention, 1981 (No. 156), and the Domestic
Workers Convention, 2011 (No. 189). Moreover, in 15 Latin American countries, legislation provides for access to
early childhood development centres, as the main benefit associated with childcare, and regulates the operation of
these centres.31
It is less common to find care matters mentioned in national constitutions. Not all legislations provide comprehensive
guarantees of care for citizens at different stages of their lives, for specific groups such as people who are dependent
owing to advanced age, disability or illness, or for those who devote themselves to unpaid care work.
The only comprehensive care legislation in the region (i.e. an approach encompassing all affected groups and
their benefits) is Law No. 19353 of Uruguay, which in 2015 created the Integrated National Care System and provides
for coordinated benefits and regulatory mechanisms linked to the care of dependent persons (children up to the
age of 12, non-autonomous persons with disabilities and adults over 65 in need of care) and caregivers (House of
Representatives of Uruguay, 2015). In the sphere of childcare, Law No. 9220 of Costa Rica was a pioneering piece
of legislation that created the National Childcare and Child Development Network (Legislative Assembly of Costa
Rica, 2014).
The programmes and policies that form part of the public response on care and its organization include policies
on time, services and resources for the giving and receiving of care in the following areas: (i) maternity, paternity
and parental leave and leave to care for family members suffering from occasional or chronic illness; (ii) public
care services, both inside and outside the home, for those in need of them, and services aimed at caregivers, such
as training programmes and respite and psychological support services; (iii) transfers linked to caregiving, both to
offset the expenses incurred by households in hiring care services and to recognize the unpaid care work carried out
by household members, typically women; and (iv) regulatory and oversight mechanisms for the implementation of
30
Summary
The Lima Consensus (2000); the Mexico City Consensus (2004); the Quito Consensus (2007); the Brasilia Consensus (2010) and the
Santo Domingo Consensus (2013). See [online] http://www.cepal.org/cgi-bin/getprod.asp?xml=/mujer/noticias/paginas/8/28478/P28478.
xml&xsl=/mujer/tpl/p18f-st.xsl&base=/tpl/e-mail.xsl#.VMo5SNKG-b1.
31 Legislation to promote, guarantee or regulate the existence of early childhood care services, either as a comprehensive benefit or
specifically for the children of working parents, was identified in Argentina, Brazil, Chile, Costa Rica, Cuba, the Dominican Republic,
Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay and the Plurinational State of Bolivia.
52
Social Panorama of Latin America • 2015
policies and programmes. In the framework of integrated care policies, the objective is to link up and dovetail these
components to offer comprehensive responses that guarantee the well-being and social protection of those in need
of care and those who provide it (Rico and Robles, 2015).
The regional context shows evidence of a lack of integrated policies in this sphere: apart from the Integrated
National Care System of Uruguay, initiatives to coordinate services for caregivers and beneficiaries are not yet in
evidence (see table IV.3).
Table IV.3
Latin America (13 countries): care policies, around 2015
Integrated care system
Country
Uruguay
Argentina
Chile
Costa Rica
Colombia
Cuba
Dominican Republic
Ecuador
El Salvador
Mexico
Nicaragua
Paraguay
Brazil
Costa Rica
Cuba
Policy
Integrated National Care System
Early childhood
Draft bill for a federal policy on early childhood care
Chile Crece Contigo comprehensive early childhood social
protection system
National Childcare and Child Development Network
De cero a siempre early childhood care programme
Círculos Infantiles daycare policy
Quisqueya Empieza Contigo National Plan for Early
Childhood Comprehensive Care and Protection
National Intersectoral Strategy for Early Childhood
National Policy on Early Childhood Education and Comprehensive Care
National Programme of Integrated Child Care and Development
Service Provision 2014-2018
Amor para los más chiquitos y chiquitas National Policy
for Early Childhood
National Plan for Comprehensive Early Childhood
Development 2011-2020
Older persons
National Policy for Older Adults
Progressive Care Network for the Comprehensive Care of Older Persons
Comprehensive Care Programme for Older Persons
Coordinating entity
National Care Secretariat (Ministry of Social Development)
To be determined
Ministry of Social Development
Joint Institute for Social Aid
Intersectoral Commission for Comprehensive Early Childhood Care
(Office of the President)
Ministry of Education
Directorate-General for Special Programmes (Office of the President)
Ministry for the Coordination of Social Development
Ministry of Education
National Council of Integrated Child Care and Development Service
Provision (Secretariat of the Interior)
Office of the President
National Commission on Early Childhood (Office of the President)
Ministry of Social Development and Hunger Alleviation a
National Council for Older Persons (Office of the President)
National Directorate for Care for Older Adults and Social Welfare
(Ministry of Public Health)
Source: M. N. Rico and C. Robles, “Los cuidados como pilar de la protección social: desafíos para su institucionalización”, Project Documents, Santiago, Economic
Commission for Latin America and the Caribbean (ECLAC), 2015, forthcoming.
a Law No. 8842 of 1994 establishes that the general coordination of this policy shall be a competence of the ministerial body responsible for social assistance
and promotion.
A look at the range of specific care programmes offered by countries reveals that benefits are provided in a
variety of sectors and dimensions, as well as to different population segments. All Latin American countries have
some type of policy in relation to care, particularly as regards the time component, including provisions for maternity
leave, childcare services, and day services or long-stay facilities for older persons. However, public care services
provided to dependent older persons within the home, which could prevent their premature institutionalization, as
well as care services for dependent persons with disabilities, are less widespread. This is also the case with the cash
transfers in recognition of care work or to cover the cost of hiring care services (Rico and Robles, 2015). This situation
demonstrates the still-limited capacity of the region’s care policies to provide a comprehensive response to the risks
associated with care needs, and to prevent these risks from heightening vulnerability.
From an organizational perspective, most care policies and programmes are coordinated and implemented
by entities specifically devoted to target populations or caregivers —commissions or institutes for childhood, older
adults or persons with disabilities, or machineries for the advancement of women—32 which mostly operate in the
framework of the social institutionality of the country in question, under the aegis either of the ministry of social
development, should one exist, or the Office of the President. In other cases, policies are implemented by education
or health ministries.
For further information on machineries for the advancement of women in Latin America and the Caribbean, see Gender Equality
Observatory for Latin America and the Caribbean [online] http://www.cepal.org/oig/.
Summary
32
53
Economic Commission for Latin America and the Caribbean (ECLAC)
However, these entities are myriad and there is little coordination between them, while the involvement of
machineries for the advancement of women has been uneven, despite the cross-cutting approach to the problem
established in current gender equality plans.
There are instances for dialogue and coordination in the set-up of comprehensive care policies. Thus, through
the engagement of intersectoral and inter-institutional spaces, it is possible to forge cross-cutting agreements on
the orientation of these policies and to foster social and fiscal covenants for their implementation, with sustainable
institutional arrangements. These spaces may also help improve the embryonic management instruments for the
implementation of these policies, for example through operational plans designed in accordance with the principle
of social participation.
In short, much progress has been made in terms of reflection and internal discussion on care policies in Latin
American countries, although a large deficit persists in terms of structuring these policies around an integrated
vision combining and coordinating benefits for the various population groups that require or provide care in the
framework of social protection systems. This challenge offers a window of opportunity for rethinking public policy
and its architecture, as well as the linkages, competences and the allocation of resources between institutions, so
as to eliminate overlapping functions, rivalries and segmented approaches and adopt a flexible and coordinated
institutional format that contributes to the goal of equality and treats care as a public good. This requires that care
policies be afforded a new institutional framework in which they are coordinated by a designated social authority,
explicit synergies are established with other components of the social protection system, and an important role is
assigned to machineries for the advancement of women.
D. Concluding remarks
In summary, this chapter notes that while the road ahead is a long one, the countries of the region have taken great
strides in terms of their social institutionality, which augurs well for substantive improvements in quality, effectiveness,
efficiency, transparency and sustainability. There is no single desirable model for achieving these goals; rather the
focus should be on addressing some outstanding challenges, notably:
•
•
•
•
•
Consolidate a legal and regulatory basis that gives sustainability to social policy as a State policy and facilitates
progress towards structural long-term goals, irrespective of changes in government administration.
Build capacity for the coordination of anti-poverty policies with social protection policies as a whole, with
other areas of social policy (education, health and housing) and with the spheres of economics, infrastructure
and productive development. This priority stems from the multidimensional nature of poverty, inequality and
social development, the thematic specialization of each sector, and the need to care for population segments
with particular features, such as their stage of life, sex, race, ethnicity or disability.
Enhance coordination and cooperation capacity between local, regional and central government, particularly
in poorer areas where governments are particularly weak, and create entities for the participation of relevant
populations, their organizations, and private sector stakeholders. The heterogeneity of subnational governments’
technical capacities and their physical, financial and human resources represents a further challenge, since
they tend to be weaker in areas that are more remote from the central government and which have higher
poverty levels.
Increase public administration capacity in the social area through procedures ranging from the drafting of
plans to the evaluation of their outcomes, and ensure the timely availability of reliable information to guide
decision-making with a view to maximizing impacts and efficiency.
Allocate sufficient resources to meet the needs of a good-quality social policy, transforming the notion of
current expenditure into that of social investment and improving accounting and reporting in relation to its
funding and implementation.
Summary
Lastly, frameworks for consensus-building and broad social and political compacts should be promoted with a
view to accomplishing higher goals such as those set forth in the 2030 Agenda for Sustainable Development (ECLAC,
2014). Such accords are essential to underpin the institutionalization of new social protection policies and give them
legitimacy over time. In addition to social and political consensus, progress is needed towards a fiscal covenant that
ensures stable, sufficient resources with which to achieve the goals of eradicating poverty, guaranteeing rights, and
substantially reducing social inequality in Latin America and the Caribbean.
54
Social Panorama of Latin America • 2015
Bibliography
Summary
ECLAC (Economic Commission for Latin America and the Caribbean) (2015), Inclusive social development: the
next generation of policies for overcoming poverty and reducing inequality in Latin America and the Caribbean
(LC.L/4056(CDS.1/3), Santiago.
(2014), Compacts for Equality: Towards a sustainable future (LC/G.2586(SES.35/3)), Santiago, April.
House of Representatives of Uruguay (2015), “Ley Nº 19.353, por la cual se crea el Sistema Nacional Integrado de
Cuidados”, Montevideo.
Legislative Assembly of Costa Rica (2014), “Crea la Red Nacional de Cuido y Desarrollo Infantil, Ley No. 9220”,
San José.
Rico, M. N. and C. Robles (2015), “Los cuidados como pilar de la protección social: desafíos para su institucionalización”,
Project Documents, Santiago, Economic Commission for Latin America and the Caribbean (ECLAC), forthcoming.
Salvador, S. (2011), “Hacia un sistema nacional de cuidados en el Uruguay”, El desafío de un sistema nacional de
cuidados para el Uruguay, M.N. Rico, Seminarios y Conferencias series, No. 66 (LC/L.3359), Santiago, Economic
Commission for Latin America and the Caribbean (ECLAC).
55
Chapter V
The impact of demographic trends
Introduction
This chapter analyses the major demographic transformation under way in the countries of Latin America and the
Caribbean since the late 1960s, with an emphasis on the changes in the population’s age structure and their implications
for key social sectors. Particular attention is devoted to illustrating the persistently high levels of demographic inequality
between countries and between different territories and population groups within countries. It examines the outlook
for the convergent demographic trends towards low fertility and high life expectancy, highlighting the medium- and
long-term opportunities and challenges associated with such population dynamics for economies, societies and
public policies in the process of moving towards sustainable development and equality.
A. Fewer children, greater longevity and more mobility
1. A rapid but uneven decline in fertility
The speed, intensity and impact of the decline in fertility have made it perhaps the most significant demographic
process to have taken place in Latin America and the Caribbean since the late 1960s, giving it a leading role in the
transformation of the region’s population in the second half of the twentieth century (ECLAC, 2008). The change has
been drastic: in just four and a half decades average fertility levels in the region went from being very high in the global
context (a total fertility rate of 5.56 children per woman in 1965-1970) to being significantly lower (2.14 children
per woman in 2010-2015) and holding just above the replacement level.33 Not only has this decline been rapid and
sharp, it has also spread quickly to most countries, demonstrating the broad adoption of a real change in reproductive
behaviour by the region’s population.
Despite being widespread, the pace of decline in fertility in the region has varied between countries and
subregions: it was much faster in the Caribbean and more moderate in Central and South America. Nevertheless, as
a result, fertility rates have fallen below replacement level in nearly half of the region’s countries: 14 out of a total
of 31. Yet there remain significant differences between them: Cuba currently has the region’s lowest fertility rate,
at 1.63 children per woman, while Guatemala has the highest, at 3.3 children per woman. The magnitude of this
difference can be better appreciated by considering that Guatemala’s fertility rate today is the same as Cuba’s was
around 1975, suggesting a 40-year gap between the two countries with respect to the decline in fertility and, therefore,
the process of demographic transition.
Reproductive inequalities between countries tend to be self-perpetuating because fertility levels continue to be
closely related to poverty rates, such that the poorest countries —those with fewer resources on average and greater
hurdles to overcoming poverty— are those with higher reproduction rates. In other words, it is precisely the countries
with the highest reproduction rates that are least prepared to tackle the challenges that these rates bring.
Similarly, within countries, relatively high fertility rates persist in certain population groups, such as indigenous
peoples, persons from lower socioeconomic strata, those with lower educational levels and adolescents.34 High levels
33
Summary
Replacement level is a total fertility rate of 2.1 children per woman. Strictly speaking, replacement level is reached when the net
reproduction rate is equal to 1, that is, when each woman in the population is projected to bear a daughter, thus ensuring the reproduction
of her generation. The net reproduction rate is equal to the number of daughters that would be born to a woman if she experienced
the fertility and mortality risks of today throughout her life.
34 In the case of indigenous adolescents, early maternity is associated with traditional cultural practices that encourage the formation
of unions and reproduction at a young age. This does not mean that such practices are beneficial for the individuals involved or
should be given precedence over individual rights; in fact, in case of conflict between these practices and individual rights, the
latter should prevail.
57
Economic Commission for Latin America and the Caribbean (ECLAC)
of fertility, especially unintended fertility, reflect the constraints that women and couples from these groups face in
accessing information and sexual and reproductive health services, highlighting not only the work that remains to
be done in relation to the Sustainable Development Goals,35 but also with regard to the protection of sexual and
reproductive rights.
With 66.5 live births per 1,000 adolescents in 2010-2015, the region has the second highest adolescent fertility
rate in the world, after Africa. Fertility in this age bracket has declined by much less than total fertility in the three
subregions, despite their socioeconomic differences. The level of adolescent fertility is higher than might be expected
in view of the total fertility rates and other social indicators, such as education levels, degrees of urbanization, life
expectancy and income levels. The greatest inequality is seen in relation to reproductive initiation and it is therefore
the focus of policies on population matters and poverty reduction. According to the data shown in figure V.1, social
inequality among adolescent mothers might even have increased in the 2000s in most countries of the region
(Rodríguez, 2014).
Figure V.1
Latin America (7 countries): ratio between the lowest and highest
socioeconomic quintiles with respect to the percentage
of women aged 19 to 20 years who are mothers,
by area of residence and census year
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
2000 2010
Brazil
2000 2011
Costa Rica
2000 2010
Mexico
2000 2010
Panama
Urban
2002
2010
Dominican
Rep.
1996
2011
Uruguay
2001
2011
Venezuela
(Bol. Rep. of)
Rural
Source:J. Rodríguez, “La reproducción en la adolescencia y sus desigualdades en América Latina. Introducción al análisis demográfico, con énfasis en el uso
de microdatos censales de la ronda de 2010”, Project Documents (LC/W.605), Santiago, Economic Commission for Latin America and the Caribbean
(ECLAC), 2014.
2. A rapid but uneven rise in life expectancy
Life expectancy in the region increased steadily over the last century and continues to rise today, owing primarily to
the decline in infant and child mortality. From an average of about 59 years in the period 1965-1970, life expectancy
rose to almost 75 years in 2010-2015. The population has gained 16 years of life on average in the last 45 years,
which is a gain of almost two years in each five-year period. However, that regional life expectancy average is equal
to the average for developed countries some 25 years ago.
Although life expectancy rose in all the countries, major differences remain between the more and less developed
countries within the subregions —Central America (8 years), the Caribbean (10 years) and South America (15 years)—
revealing substantial differences in health conditions. Chile and Haiti have the highest and lowest life expectancies
in the region, at 81 and 62 years, respectively. If life expectancy in Haiti were to continue increasing by two years
every five-year period, it would still take Haiti 48 years to close the gap with the current life expectancy in Chile.
Summary
35
58
Targets 3.7 and 5.6 of the Sustainable Development Goals and paragraph 26 of the 2030 Agenda for Sustainable Development refer
to ensuring universal access to sexual and reproductive health-care services and to reproductive rights (United Nations, 2015a).
Social Panorama of Latin America • 2015
Despite the overall drop in infant and child mortality across the region in recent decades, national averages
often mask significant disparities between population groups within countries and reflect persistent social and
economic inequalities.
It is clear, for example, from the findings of the censuses of the 2010 round and the most recent surveys that child
mortality rates remain consistently higher in the indigenous population than in the non-indigenous population, with
the exception of Costa Rica. The highest rates are recorded in Panama, Guatemala and, notably, the Plurinational
State of Bolivia, where 77 indigenous children in every 1,000 die before their fifth birthday, by contrast with 38 per
1,000 among non-indigenous children (see figure V.2). With the exception of Brazil, ethnic inequalities are always
sharper in rural areas. Moreover, national averages for indigenous populations can obscure major disparities based
on territorial context and indigenous group (ECLAC, 2014).
Figure V.2
Latin America (9 countries): child mortality by ethnic status,
around 2000 and 2010
(Per 1,000 live births)
100
90
80
70
60
50
40
30
20
10
0
2000
2011
Costa Rica
2000
2010
Mexico
2000
2010
Brazil
2001
2011
Venezuela
(Bol. Rep. of)
Indigenous
2001
2010
Ecuador
2000
2010
Panama
2000
2012
Guatemala a
2002 2008 2003 2008
Peru a
Bolivia
(Plur. State of)a
Non-indigenous
Source: Economic Commission for Latin America and the Caribbean (ECLAC), Guaranteeing indigenous people’s rights in Latin America. Progress in the past decade
and remaining challenges. Summary (LC/L.3893/Rev.1), Santiago, 2014.
a Figures from demographic and health surveys (DHS).
3. One tenth of the native-born population of some countries lives abroad
Large volumes of the region’s population have migrated in the recent past. Before the 1990s, the primary emigration
flows were from the Caribbean, Mexico and Central America to the United States. Thereafter, emigration rose sharply
and Spain became a major destination country, followed by other developed countries, such as the countries of
Western and Eastern Europe, Canada, Japan and Australia.
The financial crisis that hit developed countries from late 2007 led to a decline in the number of Latin American
migrants to these destinations. Recently, there has even been a growing tendency towards return migration, particularly
among Mexicans living in the United States, which has resulted in a negative net balance of migration to the United
States (Pew Hispanic Center, 2015). A proportion of migratory flows shifted to other destinations within the region,
which cushioned the effect of the crisis on migration.
The number of Latin Americans living in the United States, Europe and countries within the region other than
their country of birth remains very large, as illustrated by comparing the proportion of emigrants to resident nationals
in any given country. In many countries that proportion is very high: nearly 50% in Guyana and between 20% and
30% in Jamaica, Trinidad and Tobago and El Salvador (see figure V.3).
Summary
The migration of such large volumes of the population has a significant demographic impact: it changes
population size in origin and destination countries and, given its selectivity, it affects the gender and age structure,
generally reducing the economically active population and the duration of the demographic dividend in countries
59
Economic Commission for Latin America and the Caribbean (ECLAC)
of origin. It also has economic and social effects on labour supply, demand for goods and services, poverty levels,
education levels and the social and cultural environment in countries of origin and destination. The economic
effects include the contribution of migrant remittances to communities of origin, the role of migrants and returnees
in bringing in business skills and technologies and the contribution of immigrants to the social and economic
reproduction of host countries.
Figure V.3
Latin America and the Caribbean: emigrants
as a proportion of the total population
(Percentages)
60
50
40
30
20
Brazil
Bahamas
Suriname
Belize
Argentina
Venezuela
(Bol. Rep. of)
Costa Rica
South America
Peru
Chile
Panama
Barbados
Guatemala
Latin America
and the Caribbean
Colombia
Uruguay
Bolivia
(Plur. State of)
Ecuador
Haiti
Honduras
Mexico
Nicaragua
Dominican Rep.
Cuba
Paraguay
Saint Lucia
Guyana
0
Jamaica
Trinidad
and Tobago
El Salvador
10
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from Latin American and Caribbean Demographic Centre
(CELADE)-Population Division of ECLAC, Investigation of International Migration in Latin America (IMILA) project, and United Nations Population Division.
B. Slower growth and ageing populations
The sharp decline in fertility has reduced rates of population growth across the region. However, the region’s
population will continue to grow well into the present century, peaking at 793 million in 2061 (United Nations,
2015b). Population growth rates continue to vary significantly owing to the different stages that countries have reached
in the demographic transition. By subregion, the lowest rate of growth is currently seen in the Caribbean, whose
population is expected to reach a peak of 48 million in 2047. Central America’s population is the fastest-growing
and will continue expanding until it reaches 235 million in 2069. At the country level, the rates range from less
than 0.5% in the countries furthest on in the demographic transition, such as Barbados, to almost 3% in those that
are in the earlier stages, such as Guatemala.
The decline in population growth in the region’s countries has gone hand in hand with major changes in their
age structure in the past five decades. This is illustrated by analysing the evolution of the population in four main
age groups: 0-19 years (children and adolescents), 20-39 years (young adults), 40-59 years (adults) and persons
aged 60 years and over (older persons).
Historically, the predominant population group in the region has been children and adolescents aged 0-19 years.
However, the year 2023 is projected to mark the end of the youthful society in the region, when the group
aged 20-39 years will represent the largest proportion of the population. In 2045, the population aged 40-59 is
expected to exceed those aged 20-39, giving rise to a more mature society. Seven years later, in 2052, the population
aged 60 and over will become the predominant group, ushering in the era of the ageing society (see figure V.4).
Summary
All the countries in the region will go through these four stages, but at different times. For example, Cuba is
expected to reach the last stage of the transition in 2027, while Guatemala is projected to reach that stage 37 years
later, in 2064.
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Social Panorama of Latin America • 2015
Figure V.4
Latin America: population by age group, 1985-2060
(Millions of persons)
250
200
150
100
50
0
1980
1990
0-19 years
2000
2010
2020
20-39 years
2030
40-59 years
2040
2050
2060
60 years and over
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of United Nations, “World Population Prospects: The 2015 Revision, Key
Findings and Advance Tables”, Working Paper, No. 241 (ESA/P/WP.241), New York, Population Division, 2015 [online] http://esa.un.org/unpd/wpp/.
C. Opportunities and challenges associated with changes
to the age structure
Throughout the various stages of the life cycle, people establish different relationships with crucial aspects of the
economy and society, by taking on different roles in reproduction, production and consumption. Hence the age structure
of the population and the changes to it are closely aligned with the processes of economic and social development.
The demographic dividend is a period of particularly favourable demographic conditions, when the working-age
population is growing faster than the total population, leading to a potential increase in labour income relative to
consumption. This freeing of resources through the demographic transformation serves as a proxy for the economic
value of the demographic dividend in a given country. As the population enters the stage of rapid ageing, the
working-age population begins to grow more slowly than the total population, leading to a demographic disadvantage
(demographic tax), which could cause a drop in economic well-being if it is not offset by increased productivity.
One way of quantifying the impact of the changing age structure on economic growth is by the variation in
the economic support ratio (that is, the ratio of effective producers to consumers, which is calculated on the basis
of age patterns of production and consumption.36 Figure V.5 presents an economic assessment of the demographic
dividend and the demographic tax (annual percentage variation in the support ratio due to age structure changes) in
the periods 2000-2015 and 2015-2030.
The size of the demographic dividend’s economic contribution is represented in the figure by the length of the
positive bars and can be interpreted as the resources saved per person, the tax cuts that could be granted or the
increase in investment that could be made given the freeing of resources by the demographic shift. The length of the
negative bars indicates the magnitude of the demographic tax.
The first thing to note is that the size of the demographic dividend diminishes between the two periods in all countries,
as they progress through the demographic transition and approach the ageing stage. However, a number of countries
are reaping and will continue to reap economic gains because of the demographic dividend in the period 2015-2030.
In 2000-2015, several countries, including Belize, Grenada, Honduras and Nicaragua, made annual resource
savings equivalent to 1% or more per person. In the period 2015-2030, the demographic dividend for eight countries
is expected to stand at between 0.5% and 0.8% per year. At the other extreme are countries whose demographic
For more details on this methodology, see United Nations (2013).
Summary
36
61
Economic Commission for Latin America and the Caribbean (ECLAC)
window has already closed and which are therefore entering an unfavourable demographic phase involving a
demographic tax. This is the case, for example, in Barbados and Cuba, which will have to invest more than 0.5% per
year in additional resources over the next 15 years to offset the adverse demographic conditions.
Figure V.5
Latin America and the Caribbean: economic impact of age structure changes, expressed
as the estimated annual variation in the support ratio, 2000-2015 and 2015-2030
(Percentages)
1.5
1.0
0.5
0
-0.5
2000-2015
Cuba
Bahamas
Barbados
Chile
Antigua and Barbuda
Trinidad and Tobago
Panama
Costa Rica
Brazil
Suriname
Uruguay
Saint Vincent and
the Grenadines
Colombia
Saint Lucia
Peru
Venezuela
(Bol. Rep. of)
Argentina
Guyana
Ecuador
Jamaica
Mexico
Dominican Rep.
Paraguay
Bolivia
(Plur. State. of)
Grenada
Nicaragua
El Salvador
Haiti
Belize
Honduras
Guatemala
-1.0
2015-2030
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of United Nations, “World Population Prospects: The 2015 Revision, Key
Findings and Advance Tables”, Working Paper, No. 241 (ESA/P/WP.241), New York, Population Division, 2015 [online] http://esa.un.org/unpd/wpp/.
Changes in the population’s age structure have different implications for the demands, opportunities and challenges
in key social sectors such as education, health and pensions.37
The education sector could benefit from the transformation of the age structure in all countries of the region,
but whether or not it will depends on political decisions regarding the use of the freed resources. In most countries,
this dividend will continue to play out over the next 15 years, although to a lesser extent than in the last 15 years.
Between 2000 and 2015, more than half the countries had annual savings of 2% or more per user in the education
sector. Between 2015 and 2030, only five countries will have savings of this magnitude, but more than half will
maintain annual savings of 1.5% or more (see figure V.6).
Figure V.6
Latin America and the Caribbean: economic impact of age structure changes
on the education sector, expressed as the estimated annual variation
in the sector’s support ratio, 2000-2015 and 2015-2030
(Percentages)
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
2000-2015
Barbados
Bahamas
Trinidad and Tobago
Cuba
Uruguay
Argentina
Suriname
Antigua and Barbuda
Panama
Grenada
Venezuela
(Bol. Rep. of)
Chile
Peru
Ecuador
Dominican Rep.
Costa Rica
Saint Vincent and
the Grenadines
Jamaica
Guyana
Bolivia
(Plur. State of)
Saint Lucia
Colombia
Paraguay
Brazil
Mexico
Haiti
Guatemala
Belize
Nicaragua
Honduras
El Salvador
0
2015-2030
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of United Nations, “World Population Prospects: The 2015 Revision, Key
Findings and Advance Tables”, Working Paper, No. 241 (ESA/P/WP.241), New York, Population Division, 2015 [online] http://esa.un.org/unpd/wpp/.
Summary
37
62
The method of calculating the overall economic benefit of the demographic dividend can also be applied at sectoral level. To this end,
the support ratio of each sector is calculated on the basis of the age patterns of production and consumption for each one (ECLAC, 2008).
Social Panorama of Latin America • 2015
As the population ages, older persons will account for a larger share of the demand for health services, with a
corresponding shift in their care needs towards diseases that are more complex and expensive to treat. As a result,
health systems in the region will be under great pressure to expand and adapt.
In fact, as shown in Figure V.7, the demographic advantages that countries of the region had in the health sector
have either run their course or are nearing their end. In 2000-2015, the economic impact of demographic change
on the health sector was favourable in almost all countries, with the exception of Barbados and Cuba, which had
already completed that stage of the transition. In more than two thirds of the countries, this favourable situation will
come to an end between 2015 and 2030. Nevertheless, it is a heterogeneous process and in 10 countries the health
sector will continue to reap the benefits of the favourable demographic situation throughout that period.
Figure V.7
Latin America and the Caribbean: economic impact of age structure changes on the health sector,
expressed as the estimated annual variation in the sector’s support ratio, 2000-2015 and 2015-2030
(Percentages)
2.0
1.5
1.0
0.5
0
-0.5
-1.0
2000-2015
Cuba
Barbados
Chile
Bahamas
Trinidad and Tobago
Antigua and Barbuda
Brazil
Costa Rica
Panama
Saint Vincent and
the Grenadines
Colombia
Guyana
Saint Lucia
Uruguay
Venezuela
(Bol. Rep. of)
Jamaica
Latin America and
the Caribbean
Suriname
Peru
Ecuador
Mexico
Argentina
Grenada
Dominican Rep.
Nicaragua
El Salvador
Haiti
Belize
Bolivia
(Plur. State of)
Paraguay
Honduras
Guatemala
-1.5
2015-2030
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of United Nations, “World Population Prospects: The 2015 Revision, Key
Findings and Advance Tables”, Working Paper, No. 241 (ESA/P/WP.241), New York, Population Division, 2015 [online] http://esa.un.org/unpd/wpp/; and National
Transfers Accounts project.
As for pensions, the ageing population is driving up the support ratio in the sector in all countries of the region
(see figure V.8). In the period 2000-2015, the only countries to see a positive demographic impact on pensions were
Grenada, Belize and Haiti. In the period 2015-2030, all will have to assume additional charges or taxes to maintain
current benefits, varying from 0.5% per year in Guatemala to 2.5% in Cuba.
Figure V.8
Latin America and the Caribbean: economic impact of age structure changes on the pensions sector,
expressed as the estimated annual variation in the sector’s support ratio, 2000-2015 and 2015-2030
(Percentages)
1.5
1.0
0.5
0
-0.5
-1.0
-1.5
-2.0
2000-2015
Bahamas
Antigua and
Barbuda
Cuba
Colombia
Barbados
Costa Rica
Saint Vincent and
the Grenadines
Brazil
Chile
Guyana
Panama
Nicaragua
Venezuela
(Bol. Rep. of)
Mexico
Trinidad and Tobago
Suriname
Saint Lucia
Peru
Ecuador
Jamaica
Dominican. Rep.
Belize
Grenada
Honduras
El Salvador
Haiti
Paraguay
Uruguay
Bolivia
(Plur. State of)
Argentina
-3.0
Guatemala
-2.5
2015-2030
Summary
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of United Nations, “World Population Prospects: The 2015 Revision, Key
Findings and Advance Tables”, Working Paper, No. 241 (ESA/P/WP.241), New York, Population Division, 2015 [online] http://esa.un.org/unpd/wpp/; and National
Transfers Accounts project.
63
Economic Commission for Latin America and the Caribbean (ECLAC)
D. Medium- and long-term policy implications
Rapid demographic change in Latin America and the Caribbean raises both opportunities and challenges for advancing
the achievement of the Sustainable Development Goals and equality. The impact of these opportunities and challenges
varies depending on the stage countries have reached in the demographic transition.
A large number of countries in the region began the demographic transition later and, therefore, the biggest
changes in the age structure, especially the growth in the proportion of the working-age population, started more
recently and are still under way. These countries still have a good portion of the demographic window before them
and could make use of other countries’ knowledge and experience in their public policies, especially in the education,
health, pensions and employment sectors, in order to make their opportunities a reality.
Another set of countries, which are further along in the demographic transition, are already undergoing a rapid
population ageing and face mounting demands to ensure sustainable financing for pension systems, to adapt their
health systems to an increasingly onerous epidemiological profile, characterized by the persistence of communicable
diseases and a greater burden of non-communicable diseases, and to create and fund appropriate care systems,
among many other measures to adapt institutions, policies and public infrastructure to guarantee the right of older
persons to an active and healthy old age.
Responding to the effects of demographic change involves a wide range of policies, which include those
aimed at broadening opportunities in relation to the education and employment of young persons, social security,
pensions and health, as well as creating a public care system and adapting fiscal policies to achieve balanced
intergenerational transfers (World Bank, 2015). These policies call for a comprehensive and long-term approach
that takes demographic trends into account, incorporates a life-cycle, gender and rights perspective, and gives due
consideration to interculturalism and intergenerational processes in line with national contexts.
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