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Social protection is now perceived as a handicap to the competitiveness of European economies: it is said that it leads to an increase in labor costs, that it gives rise to relocations to countries where social protection systems do not exist, that it slows growth, and that it contributes to widening public deficits. Should we then abandon our social protection mechanisms in order to remain competitive? Rather than encouraging social dumping and competition between workers at the cost of their living conditions, should globalization not promote higher social standards? And, on the contrary, what if the solution was to extend social protection mechanisms to the rest of the world?
Latin America includes 9 of the 15 most unequal countries in the world. At the same time, it is the most dynamic region for social innovation. After having introduced contributory social welfare systems very early on, covering up to 70% of the population, Latin America privatized these social insurance systems, which were greatly reduced as a result of liberal policies in the 1980s and 1990s. Faced with endemic poverty and growing inequalities, governments have had to innovate: the mechanisms that have been developed are now attracting a great deal of interest around the world and are being copied on other continents. However, the large-scale social movements, led by the middle classes, that have shaken Brazil in recent months demanded more opportunities for progress and greater social cohesion. To meet these demands, governments need to address major challenges: reduce inequalities in social protection systems, secure long-term financing to ensure that these systems are sustainable…
Why does Latin America need to address the challenges of social cohesion? What are the issues? Does France have a role to play in supporting social protection system reforms in Latin America?
Agence Française de Développement
5 rue Roland Barthes
Conference coordinated by Claire Hédon, journaliste at RFI.
The debate was coordinated by Claire Hédon, journalist at RFI. The speakers were Martin Hirsch CEO of the Paris Hospitals Authority, Assistance Publique des Hôpitaux de Paris, Valérie Schmitt, Director of the Social Policy, Governance and Standards Branch in the Social Protection Department of the International Labour Office, Jean-Marc Gravellini, Executive Director for Operations, Agence Française de Développement, Julie Baron, health and social protection project manager, Agence Française de Développement.
According to ILO, in Latin America, 18 % of the population does not have access to essential healthcare services, 95 % of the unemployed do not benefit from any coverage, and 44 % of the elderly population has no income security. As has been shown by the recent social movements, communities, whose standard of living is improving, are aware of and are claiming their rights to an inclusive and universal social protection system. Does France have a role to play in influencing these situations ?
Why promote universal access to social protection ?
The rights to health, social security and to an adequate level of income are set out in the Universal Declaration of Human Rights and are upheld by France at international level, in particular via Recommendation N° 202 on Social Protection Floors adopted by the 185 Member States of the International Labour Office in June 2012. Contrary to the notion that predominated for decades, there has recently been a paradigm shift, with a new consensus on the fact that “the construction of a social protection system supports development and growth and consolidates them” (Martin Hirsch) and makes it possible to fight against inequalities. It is not only a way out of poverty, but also ensures that people do not fall back into it (Valérie Schmitt). It fosters stability by defusing social inequalities, thus avoiding the resulting conflicts.
From an economic perspective, it is in the interest of Northern countries to promote it throughout the world : social protection is an engine for growth as it develops and protects human capital. “In addition to issues related to economic diplomacy, we need to build a social diplomacy, which would involve raising the level of systems by promoting the convergence of standards” (Julie Baron), in order to achieve a fairer and more inclusive globalization. Achieving universal access to social protection in the world indeed “promotes more equitable international competition, in particular by remedying the impacts of social dumping” (Jean-Marc Gravellini).
Universal social protection in Latin America : reforms required
Social protection systems do currently exist in Latin America, but they have a particularly high level of inequalities and the systems in place are highly fragmented (in the form of programs), whereas a systemic vision would be required, which is the only way to fulfill the functions of a social protection system. The middle classes, which are “considerable but fragile” (Jean-Marc Gravellini), are subjected to threshold effects : they have access to neither targeted programs for the very poor, nor to the over-restrictive mutual benefit systems. The targeted redistribution models have proved their worth in Latin America, but they are reaching their limits and more systematic structures are required to fulfill all the missions of social protection.
The issues of intergenerational redistribution and retirement pensions, in particular, are not yet a concern in Latin America, whereas the aging of populations is inevitable : it is necessary to establish protection for these populations. “If no transfer mechanism is planned for the older generations, the gains that have been achieved in terms of poverty reduction in recent years thanks to growth may be reversed” (Martin Hirsch).
The recent demonstrations in Latin America, in Brazil and Chile for example, demonstrate the increasing demand from populations – and particularly from the middle classes – for inclusive and universal social protection systems as a right. This puts pressure on the political authorities.
Can the French model be exported as it is ?
“Our model, even if it is denounced in France today, because it is in deficit, because it has its limits, especially inspires and interests our partners in Latin America” (Jean-Marc Gravellini). For example, the Colombian authorities have clearly expressed their desire to be in contact with France over health insurance issues, since the social protection system in France is internationally recognized and the principles of solidarity and universality on which it was based were those that the Colombian Government wished to reaffirm via its reform (Julie Baron).
Consequently, France places its action, and that of its operators such as AFD or the Public Interest Group for International Health and Social Protection (GIP SPSI), in a support and advisory role in response to requests from countries. For example, AFD is supporting and contributing to financing (in the form of budget support to the Colombian State) the reform for the establishment of universal social protection in Colombia. The GIP SPSI supports ILO projects in Southern countries by making French experts available, for example, for the design of a long-term care insurance system for dependent elderly persons in Thailand (Valérie Schmitt).
It is effectively through an approach based on sharing and not on importing models that these countries call on France to support and inspire the creation of their social models. Indeed, it is not a question of exporting a model with its defects and its specific characteristics, but of learning lessons from it and adapting it. Furthermore, “all these countries are capable of leapfrogging a number of stages that Western countries went through over a century ago”, in particular thanks to new technologies (Martin Hirsch).
Promote exchanges in order to develop social protection models
This exchange does not only benefit Latin American countries. For example, certain emerging countries establish innovative payment systems that could inspire France. “In countries that have a social protection system which is much more recent than the one in France, we can see there are always elements that France can use, and aspects that call into question our system, which is certainly mature, but costly” (Martin Hirsch).