Social Protection in Chile: Reforms to Improve Equity

Résumé

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At the beginning of the 1980s, Chile pioneered the implementation in Latin America of structural reforms that fully or partially privatized pensions, health-care and social assistance systems. Implemented without prior social dialogue, these reforms - which subsequently influenced similar reforms in other countries of the region and elsewhere - led to reduced social solidarity and equity and intensified poverty and inequality. Over the past 18 years, however, democratic governments have corrected many design faults in the original reforms. The author examines the progress achieved and areas of persistent social inequality in terms of coverage, gender balance and funding, and identifies future challenges.

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Social Protection in Chile: Reforms to Improve Equity

In 1990, when democracy was re-established in Chile, the country had the best economic performance and the freest market economy in the region. However, a very high social cost had been paid during 17 years of military rule and, with their civil and political rights curtailed, workers and lower-income groups experienced worse poverty and greater inequality. The positive economic performance and fiscal stability, together with legal and political restrictions imposed on the return to democracy, led the "Concertation" (an alliance of the two leading political parties) to retain the previous pension model while making adjustments aimed at relieving poverty and improving social services - though not substantially reducing inequality (Mesa-Lago, 2000 and 2004).

Poverty1 rose from 17 to 57 per cent between 1970 and 1976, then fell to 48 per cent in 1980 and to 39 per cent in 1990 (though this was still twice as high as prior to the military coup). Under democratic rule, the poverty rate fell further, reaching 13.7 per cent by 2006, which was lower than in 1970 and the lowest rate in the region. As to inequality, though the Gini coefficient2 figures are not reliable before 1973, estimates for subsequent years under the military regime suggest a marked increase - to 0.554 in 1990 and still at 0.549 in 2006, similar to the figures for seven much less developed countries in the region (ECLAC, 1997-2007a).3 The Human Development Index (estimated by the UNDP) ranks all the countries in the world, according greater weight to two social indicators (education and health) than to one economic indicator (GDP per capita). Chile was ranked fourth in the region in 1992, but by 2002-05 it had risen to second rank (40th world ranking), notably through increases in the economic indicator, but also through improvements in the social indicators (UNDP, 1993-2007/08).

The Chilean model's viability was high, but to maintain it and increase it, there needed to be greater equity and solidarity and less inequality, through reforms in health care, pensions and social assistance.

The large-scale Latinobarómetro survey of 2003 included two questions on respondents' perceptions of solidarity towards their co-nationals, and the replies showed that Chileans rated highest on feelings of solidarity (77 per cent, against a regional average of 54 per cent), but second lowest on readiness to sacrifice personal interests for the good of the country (only 1 per cent, against a regional average of 61 per cent). The countries displaying the greatest solidarity were those with vigorous social policy institutions and anti-poverty programmes (ECLAC, 2007b).

This article examines the social inequalities that existed in Chile, and the improvements achieved under a democratic regime through social dialogue and reforms in the health-care, pension and social-assistance systems. As Chile pioneered structural reforms in these areas from the early 1980s, it is important for other countries in Latin America, as well as other developing countr...

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