Income Security in Brazilian Social Policy

1. Income Security in Brazilian Social Policy Maria Paula Gomes dos Santos Institute of Applied Economic Research - IPEA Brasil Johannesburg, October, 2010.

2. Outline • The Brazilian Income Security System • Brief History • New Constitutional Rights from 1988 • Income Security System Profile • Income Security Matrix • Conclusions

3. Brazil's Income Security System • Social Insurance (old age, survivors, sickness, maternity, accidents, reclusion). • Formal employees: private sector & public sector; • Contributory, PAYG, solidaristic; • Unemployment Insurance (private sector employees; contributory) • Old Age and Disability Grant (non contributory); • Bolsa Familia (non contributory)

4. Brief history • The system evolved from previous pension system`s (20`s and 30`s) • Has been broadened after 1988 democratic Constitution • Social Security was recognized as a right of citizens to be protected by the state; • Creation of new non contributory benefits: • 90`s – Old Age And Diasability Grant • 2000`s – conditioned cash transfers • 2003 – Bolsa Familia

5. New Constitutional Rights (1988) • Old Age and Disability Grant; • Rural workers in domestic production – • Same rights as employed urban workers regarding Social Insurance (government subsidies). • Social Insurance minimum benefit and OA&D grant = 1 minimum benefit (gov. subsidies)

6. Coverage profile Social Insurance (if contrib.) Unemployment insurance (if contrib.) Bolsa Familia Poor ACTIVE WORKERS Social Insurance (if contrib.) Unemployment insurance (if contrib.) Non poor Social Insurance (if contrib.) Old Age& Disab. Grant Poor UNACTIVE WORKERS Non poor Social Insurance (if contrib.)

7. Strengths of the system profile • Alleviates poverty (OA&D grant; Bolsa Familia) • Prevents poverty for regular employed workers in case of unemployment, sickness, accidents, maternity and reclusion; • Poverty reduction: • 2003 = 22,9% of pop; 2009 = 10% of pop. • Inequality reduction: • Gini Index: 2001 = 0,594; 2009 = 0,539 (tot reduction: 9%) • Protects elders effectively • No. of poor elders (pop. age 65 or up) • 1981 = 18,4% • 2009= 1,4%

8. Weaknesses of the system • 33% of active population excluded from Unemployment Insurance and Social Insurance, specially against risks like sickness, accidents, maternity (informal urban workers); • Poverty among children is still high: 20,3% of children age 0 to 17.

9. Conclusions • Brazil has a system of income security, composed by different cash benefits, contributory and non-contributory) to face different vulnerabilities; • This diversity of benefits works both on poverty alleviation and coverage of social risks; • Most benefits value are equal to 1 minimum age; • The system as a whole is effective to reduce poverty and inequalities.