Social (in)security at the beginning of the XXI Century: The Argentine elderly and a decade of increasing exclusion

Carlos O. Grushka, Argentine

The social security (SS) system in Argentina had a very early development within the region and in 1994, after multiple partial changes, a structural reform introduced a mixed system, with the option to assign contributions to a new capitalization regime. However, one decade later, the elderly population showed the greatest levels of exclusion never seen since the original expansion. Although the measurement of poverty among the elderly has serious limitations, the elderly are less poor than the rest of the population in Argentina and in most of Latin America. SS benefits (contributory or not) play a very important role in reducing poverty. The topic of social security coverage (SSC) requires an in-depth conceptual discussion as well as significant efforts to measure it and to analyze its determinants. The level of SSC in Argentina is relatively high in the Latin American context, but the trend during the last decade is particularly worrying and the performance in terms of GDP and SS expenditure is somewhat frustrating.Taking advantage of a recently available data source, a survey on strategies for the elderly run by the World Bank (ETEEP, 2003), we characterize those excluded from SSC and identify the determinants of SSC, estimating their individual and aggregate contributions. SSC show significant differentials by age, sex, region, schooling, marital status and household size. We also examine other variables from the individuals working history: the number of years with SS contributions, the size of the firm and the sector of activity.The econometric analysis mostly confirmed previous expectations, although it is the first time that many of the effects could be estimated for Argentina. Besides, we provide some clues in terms of understanding the reasons behind the lack of SSC. Those excluded from SSC showed slightly less years of work, less ownership of their houses, less access to sewerage, and less long-term investments, although significant fewer years of contributions to SS. Thus, the lack of SSC can be mainly attributed to difficulties in contributing to the pension system when working, and problems in design of the non-contributory system rather than a choice of alternative strategies for securing wellbeing in old age. The challenge ahead is to find a way to expand social security coverage taking into account the fiscal limitations and the social needs as well.
Date: 30 May - Time: 8:30 to 10:00 - Room: 243
Theme: 3.A. Actuarial problems related to the retirement of the baby-boom