Achieving Effective Social Protection for All in Latin America and the Caribbean: From Right to Reality

The study focuses on three fundamental questions: how to protect the most vulnerable without promoting informality and dampening incentives to work and save; how to ensure that scarce public resources are used for subsidies that are transparent, fair, and effective and not for badly targeted and regressive benefits for formal sector workers; and how to reinforce human capital development so that more workers can insure themselves through savings or risk-pooling arrangements, reducing vulnerability and the need for subsidies. Rooted in the complex realities of the region, it recognizes that starting points, constraints, and social choices will vary. It invites policy makers to step up to the challenge of building an integrated social protection system that treats the population equitably, provides an inclusive safety net for all, promotes efficiency in service provision, and strengthens incentives to build more flexible human capital, to work, and to save.---Augusto de la Torre Chief Economist, Latin America and the Caribbean Region, The World Bank

Welcome realism and breadth, emphasizing that poverty relief, insurance, and consumption smoothing all matter; that the system must be effective in terms of the level and coverage of benefits; and that close attention needs to be paid to the incentive effects of benefits and the way they are financed.---Nicholas Barr Professor of Public Economics, London School of Economics and Political Science

An innovative conceptual framework that links social protection coverage and performance with the role of subsidies and redistributive arrangements and emphasizes their interactions with the labor market. It highlights the adverse effects of badly designed, implicit transfers and subsidies on evasion, informal work, job-search efforts, and early retirement. As an alternative, the report suggests linking contributions to benefits and moving toward an integrated system of explicit subsidies, allocated based on means (not where individuals happen to work) and financed out of general revenues (not payroll taxes). It also highlights the potential gains from better coordinating social insurance, social assistance, and labor market programs. A must-read for social protection policy makers and practitioners, in the Latin America and the Caribbean region and beyond.---Robert Holzmann Research Director, Labor Mobility Program, Marseille Center for Mediterranean Integration and former Director, Social Protection, The World Bank