Latin American workers are not covered by contributory social security system, says ILO

More than half of Latin American workers are not covered by a contributory social security system covering them against risks related to illness, unemployment and old age.

More than half of Latin American workers are not covered by a contributory social security system covering them against risks related to illness, unemployment and old age, a new ILO report says. The report calls for decisive action to close existing and future gaps in social security coverage.

The ILO's thematic Panorama Laboral: Presente y Futuro de la protección social en América Latina y el Caribe (Labour Outlook: Present and future of social protection in Latin America and the Caribbean) shows that existing systems in the region are at a crossroads, marked by the need to increase the number of people covered, the level of benefits and the ability to guarantee the sustainability of those systems.

"We are talking about some 145 million workers who do not contribute in a region with an aging population, which could impact their future and that of their families," said ILO Regional Director for Latin America and the Caribbean José Manuel Salazar-Xirinachs, who presented the report in Mexico City. "In recent years, there has been undeniable progress, but there are still large gaps in coverage that must be urgently addressed."

The ILO analysis covers a range of benefits, from pensions for older people to unemployment insurance, health coverage or cash transfers that guarantee income for families with children, including both contributory and non-contributory coverage.

According to the report, coverage of contributory pension systems based on employment records increased from 36.6 to 44.6 percent between 2005 and 2015. While this can be seen as a positive development, the figure also reveals that 55 percent of the working population has never made contributions. The report also reveals huge differences in contributory coverage by sector and region. Coverage mainly benefits public (reaching 80 percent) and private employees (62.5 percent), whereas only 15 percent of the self-employed and 26.6 percent of domestic workers are covered.

Coverage is also markedly higher in the Southern Cone region (including Brazil), where it reaches 58.6 percent, compared to the Andean countries where it reaches 31.4 percent or Central America and Mexico where it reaches 31.2 percent.

In only six of the 16 countries included in the sample, more than 50 percent of the employed are covered by a contributory social protection system. Salazar stressed that "social protection is a fundamental component of economic and social development, which is key to the fight against poverty and inequality."

To address uncertainties generated by the future of work, he called for urgent measures "to reduce the deficiencies in the region". "The data remind us that we live in a region with a high level of informality, which has a direct impact on participation in traditional social protection systems because most of these workers do not make contributions. Almost half of those employed in Latin America and the Caribbean are in the informal economy," Salazar added.

The report states that women's contributory coverage has improved more than men's during 2005-2015. At the regional level, the rate for women reached 45.3 percent, while it was only 44.2 percent for men. The report also emphasizes that "as a region with exacerbated inequality, Latin America transfers the significant inequalities in its labor markets to social security". It concludes by proposing ten points to guide discussion and action by governments and social actors related to reforms of social protection systems in the region.