65+ finding it hard to earn says ILO
SOCIAL PROTECTION COVERAGE FOR PERSONS 65 AND OLDER has worsened leaving some 35 percent of people in the age group in Latin America and the Caribbean without pension or means of earning, weakening their already extremely fragile economic condition under a three-year assault from the deadly COVID-19 global pandemic.
“The proportion of older people without labour income or pension increased from 31.9 per cent in 2019 to 34.6 per cent in 2020 and 34.5 per cent in 2021. This coverage gap is the highest in the entire series available since 2012,” according to a new technical note published by the International Labour Organisation (ILO) Regional Office for Latin America and the Caribbean.
According to the ILO technical document, at the regional level, 46.8 per cent of residents over 65 receive a pension only; 5.1 per cent receive a labour income and a pension, while 13.6 per cent report receiving only a labour income.
“The pandemic made visible the importance of social protection systems, understood as the set of policies and programmes that guarantee comprehensive coverage against different social risks throughout the life cycle,” the ILO study says.
It says, “social protection is essential to promote social inclusion and cohesion and reduce poverty and social disparities, especially in the context of a crisis that hit the most vulnerable sectors hardest.”
The ILO study, ‘Overview of Social Protection in Latin America and the Caribbean’, analyses social security trends in the region, in particular pension systems and the economic security of older people. These were put to the test during the social and economic crisis triggered by the pandemic which killed more than 6 million persons worldwide.
“Given the lack of resources, such as savings or other private sources, and the decrease in the ability to generate labour income at advanced ages, it can lead to poverty in old age,” the study adds.
It notes the performance of, and challenges for, social protection systems are related to a “triad of objectives,” viz., coverage, adequacy and sustainability. Coverage refers to the proportion of the population who have effective access to system benefits; adequacy denotes the amount of monetary or in-kind benefits, while sustainability relates to the relative capacity of an economy to meet the present and future costs of a social protection system.
The ILO document points out that while contributory pension systems ensure continuity of income, benefit levels depend on factors such as age, contribution years or pension savings, and these are often related to having formal sector working careers.
Coverage of contributory pensions fell 0.4 percentage points between 2019 and 2021, from 47.4 per cent to 47.0 per cent of the employed workforce. The slide in 2020 represent a seven-year setback, and, despite some subsequent economic recovery, the levels of 2021 are similar to those of 2018. The 19 non-contributory pension programmes in the region can close economic security gaps in old age by creating a guaranteed level of social protection, ILO advises.
Its analysis found since the outbreak of the COVID-19 pandemic, it has become more difficult to achieve coverage, sufficiency and financial sustainability in pension systems, because of greater uncertainty about economic growth; reduced fiscal space; and increased inflation and interest rates.
These, the ILO notes exist side-by-side with longer-term, structural factors playing a greater role, including high levels of informality (which puts pressure on pension system), disruption in work and production organisation, ageing populations, rising dependency ratios, and increasing numbers of natural disasters.
It highlights 10 challenges facing social protection systems for the elderly in Latin America and the Caribbean:
- Recovering economic growth
- Increasing formal employment
- Increasing and consolidating fiscal space
- Consolidating contributory regimes to ensure sufficient, sustainable benefits
- Strengthening non-contributory schemes financed by general tax revenue
- Establishing adequate mechanisms for updating benefits to reflect national inflation levels
- Incorporating financing mechanisms to address issues faced by semi-contributory pension systems
- Achieving universal pension coverage through a mix of contributory, semi-contributory and non-contributory systems, taking into account gender gaps and income levels, so strengthening the governance and coordination of the overall system
- Ensuring health protection for the elderly population, regardless of income
- Clarifying the possible consequences and institutional requirements needed to manage policy transitions
