In 2010 the Economic Commission for Latin America and the Caribbean (ECLAC) set out the essence of its proposed development agenda for Latin America and the Caribbean in Time for equality: closing gaps, opening trails, the position document submitted to the Commission’s thirty-third session. That document served as a basis for proposing an integrated vision of development in keeping with the times, drawing on historical lessons learned and entailing far-reaching changes. This vision is taking root in the region, and it has laid the groundwork for further discussion of policy content and proposals within ECLAC itself.
For Social Panorama of Latin America, the main challenge is to foster a more in-depth examination of social gaps and the mechanisms that reproduce or decrease them. The previous edition of Social Panorama homed in on inequality gaps and their intergenerational reproduction and paid particular attention to the formative years of individuals, their transition to adult life and the role of social expenditure and transfers in meeting the needs of new generations during their early years. It showed how the life cycle path is determined by differences in skill development and how inequality and poverty become entrenched as people move from one stage of life to the next.The 2011 edition of Social Panorama of Latin America takes a more in-depth look at the chain that produces and reproduces social gaps; it addresses other spheres as well. It focuses on how structural heterogeneity (productivity gaps in the national economies), labour segmentation and gaps in social protection are linked along the chain.
Demographic factors such as fertility differentiated by education and income level are discussed, as are more specific patterns of risk and exclusion like those impacting young people in the Caribbean. These gaps make for an ambivalent scenario in the region, combining structural tendencies that reinforce them with recent, favourable developments that open new possibilities for advancing towards less unequal societies with broader access to well-being. Poverty and inequality are decreasing in the region; the main reasons are, first, rising labour income and, second, increasing public transfers to the most vulnerable sectors. But the productive gaps are still rigid, and there is still little mobility for specific groups in low-productivity sectors (especially women in lower-income socioeconomic groups) whose income has not increased.
Fertility is declining substantially and can mean greater possibilities for well-being among families with fewer dependents.However, the fertility calendar is still stratified according to socioeconomic and education levels, with a higher adolescent motherhood rate among less-educated women. It is plain to see that social expenditure is increasing, as is the response (in terms of social spending and protection) to mitigate the impacts of the 2008-2009 crisis on the most vulnerable sectors. But the social protection systems are far from inclusive, and there are gaps in them that reproduce vulnerability and stratified access to social security.
Chapter I discusses recent trends in poverty and income distribution in Latin America. It includes a subchapter on how the world of work is perceived by the actors in it. In keeping with the overall recent trend, poverty and indigence declined in the region in 2010 as economic growth resumed. Both indicators are at their lowest level in the past 20 years. While the main reason for the decrease in poverty is the increase in mean household income, the decline in inequality was also a significant factor.The poverty rate for the region in 2010 was 31.4%, including 12.3% living in extreme poverty or indigence. In absolute terms, these figures translate into 177 million poor people, of whom 70 million(at least in part) in the poverty indicators.
Indeed, the poverty rate fell by 1.6 percentage points and the indigence rate by 0.8 percentage points compared with 2009. Forecast GDP growth and inflation expectations for each country point to a slight drop in the poverty rate in 2011. But the indigence rate could increase as higher food prices would cancel out the expected rise in household income.Positive changes towards lower income concentration have been seen in recent years, thanks above all to better distribution of labour income and the redistributive role of the State via cash transfers. While the decrease in inequality has been only slight, it does set a favourable scenario —especially given the prolonged absence of broad distributive improvements. There are still issues regarding the way the labour market and labour institutions operate in Latin America.
Perception surveys show that these dysfunctions generate feelings of uncertainty and unease among the employed population. These feelings are more prevalent among those who have precarious jobs or less human capital, those in a less favourable socioeconomic position and those who live in countries with larger productivity gaps. These groups are more likely to fear job loss or perceive a lack of job opportunities, a failure to enforce labour laws or a lack of social security guarantees. Workeremployer dialogue is hindered by low unionization rates (especially among less- skilled workers) and mistrust of labour unions (more so among business executives and managers).
Chapter II discusses the rapid decline in fertility in Latin America over the past five decades, as well as the factors contributing to this. It is still invariably the case that the lower a woman’s education level, the higher her fertility. While fertility has declined recently for all education levels, in many countries the rate of decline has varied from group to group and is, as a rule, slower for less-educated women. The result is that relative differences are deepening. Adolescent fertility has fallen at a much more moderate pace than total fertility. In many of the countries of the region it even rose during the 1990s while the total fertility rate declined significantly.The inequality in fertility between groups with different education levels is usually particularly marked in the case of adolescent mothers. Evidence of the declining percentage of planned births among adolescent mothers is encouraging, and it is a powerful argument in favour of redoubling public sexual and reproductive health policies and programmes targeting this group.The governments of the region are facing two main challenges concerning fertility.
On the one hand is the need to step up efforts to meet target 5.B of the Millennium Development Goals, to achieve, by 2015, universal access to reproductive health, thus narrowing the substantial gaps in fertility that remain among social groups —especially adolescent fertility. On the other hand are the challenges posed by declining fertility, which call for re-thinking policies and institutions to deal with inexorable changes in the family, social and economic structure of the countries.
Chapter III shows how structural heterogeneity (caused by productivity gaps), stratification of the decline in fertility and gender inequality operate as true factories of inequality in the labour markets of Latin America.
The high structural heterogeneity that marks the region’s productive structures results in striking disparities between the contribution that each productive sector makes to GDP and employment. There is still a close linkage between structural heterogeneity and income inequality as a rigid pattern that is stable over time. While employment in low-productivity sectors has fallen over the past two decades, the distance between it and employment in medium- and high-productivity sectors has grown. The stratified incorporation of Latin American women into the labour market means that, instead of narrowing, the gap between higher- and lower-income women has grown slightly over the past two decades. Greater childcare pressure and the glaring lack of protection in this sphere for the most vulnerable sectors reflect a rigid circuit of inequality. The care burden is also a factor in the relative increase of the female unemployment rate compared with the rate for men. The youth unemployment rate is still far higher than the adult unemployment rate, and the distance between the lower and higher quintiles has not changed significantly over the past 20 years.
Against this backdrop of multiple labour market inequalities, robust State intervention is called for in the productive sphere, in labour regulations and institutions, in labour market policies and in the redistribution of childcare.
Chapter IV deals with gaps and challenges in the social protection systems of the countries of Latin America. Limited social security registration coverage and its linkage to formal employment means that larger households, those headed by women, and rural households have less access to contributory protection. And social security coverage shortfalls are reproduced in old age. Retirement and pension coverage is still quite limited, leaving women and the lower-income population more unprotected.
The non-contributory pillar of social protection covers approximately 12% of households and equates to 0.25% of GDP. But these transfers do seem to target the risks of the population and make a big difference for the poorest households, thus confirming that their distribution is highly progressive. A combined assessment of the contributory and non-contributory pillars in Latin American households shows that a large part of the population is excluded from the classic model of protection through employment and is also not being reached by public welfare transfers. While this group does include a proportion of persons from higher-income households, just under half of the group is in the poorest 40% of the population. Latin America’s weak social protection systems are facing tremendous redistributive challenges, with limited fiscal capacity and relatively rigid —if any— architectures of well-being. Any systemic approach should also draw on the contributory pillar and on more or less targeted policies to interconnect rights and progress towards truly universal —and solidarity-based— protection systems.
Chapter V takes up the recent dynamics of social expenditure, its response to the crisis and the outlook for broadening retirement and pension coverage in the countries of the region over the medium and long term.
For the region as a whole, public expenditure (especially social expenditure) has burgeoned over the past two decades. The largest increase has been in social security and welfare (an increase equal to 3% of GDP), followed by education. But among the countries where per capita social expenditure is less than US$ 1000, the main item of expense is education. It is only in the relatively more developed countries that social security and welfare account for more. The countries reacted to the global financial crisis by temporarily expanding public expenditure instead of shrinking it as in the past.
But the expansion did not always have a social focus, although the social repercussions were considerable in that they helped prevent increases in unemployment and social vulnerability. The need to develop rights-based social protection systems that are, as such, built on contributory and non-contributory funding mechanisms and on solidarity-based pillars for resource distribution clearly calls for “re-reforming” many of the social security systems for the medium haul (and especially for the long haul), both structurally and on the parametric level, and to build up social security registration in increasingly formalized labour markets. Otherwise, the long-term effect will be to make it ever more difficult to fund universal social protection in ageing societies with a proportionally smaller labour force.
Chapter VI addresses, for the first time in Social Panorama, an urgent social issue in the countries of the Caribbean: the status of youth in this subregion in terms of socio-demographic dynamics, risks, skill development and the dynamics of social exclusion and inclusion. In the Caribbean, as in Latin America, these are times of major challenges in the sphere of youth inclusion. New education and employment measures are needed in order to improve and balance education achievements with smooth passage to employment, reducing gaps in educational attainment among young people and employment gaps between young people and adults. The demographic transition holds opportunities for young people, but it must be harnessed in the short term so as to expand capacities and productivity and make this generation less vulnerable. Young people move from place to place more easily than children and older people do, especially in the Caribbean. This can be a source of both opportunities and risks.
Young people in the Caribbean are very much exposed to exogenous risks, especially accidents and aggression. And exposure to sexually transmitted diseases, especially HIV/AIDS, is a warning sign that needs to be forcefully addressed. Public and policy awareness has grown over the past few decades; government institutions charged with developing youth plans and programmes have been created. Strides need to be made on comprehensive approaches that can go beyond sector-based rationales, taking into account the very nature of the “young actor” and encompassing risks, capacities, opportunities and modalities of involvement.
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