This publication was created by the CIAS University Institute in partnership with Fundar
Over the last decade, the Argentinian state has failed to reduce poverty rates. This performance contrasts with the situation in the rest of Latin America, where nearly every country has managed to lower poverty in a sustained fashion. The difficulties Argentina is experiencing in combating poverty are not caused by insufficient public spending: its investment in social protection is the second-highest in the region.
Given this situation, in which high levels of social spending co-exist with high poverty levels, we believe that the standard approach to this issue needs to be modified: rather than looking at the scale of social spending in relation to the country’s budget or GDP, the analysis needs to focus on the breakdown of this investment and how it has evolved. Based on this premise, this study analyzes these two aspects of social spending between 2002 and 2020, which allows us to identify the strengths and weaknesses of Argentina’s social safety net and suggest changes that might improve the fairness and effectiveness of public policies in the fight against poverty.
The paper examines how the different components of social spending to address poverty evolved between 2002 and 2020, with a focus on which aspects changed and which remained the same from one government to the next. It also provides a detailed analysis of the main programs implemented in different areas of social spending: family allowances, noncontributory pensions, cooperative plans, food policies, and subsidies to preserve or promote formal employment. It also contains a comparative analysis of Argentina’s performance in comparison with other countries in the region as regards social indicators and investment in social security. Finally, it puts forward a series of contributions to a potential reform of social programs targeting poverty to achieve a fairer, more effective distribution of social spending.
We identified three main findings in the evolution of public investment to reduce poverty. First, the investment in noncontributory pensions is greater than all other social spending put together. This implies that spending on poor older adults far outstrips spending on poor children: in 2019, for every peso the state spent on family allowances for poor children, it spent five pesos on pensions for poor older adults. Second, programs for informal worker cooperatives have become a core component of social policy since 2016. The number of cooperative members has increased from 253,939 in 2015 to 1,223,537 in September 2021. Finally, as part of its programs to provide direct, urgent social aid, the state is investing more and more in policies targeting the social economy and less and less in policies that seek to achieve formal employment for the most vulnerable sectors. In fact, in 2019, for every peso invested in subsidies to preserve or promote formal employment, 11 pesos were allocated to cooperative programs within the social economy.
The final section of the study contains a series of suggestions for reforming the social protection system to make it fairer and more efficient. Specifically, we put forward three main ideas: 1) segmenting the noncontributory family allowance system to better address the different problems associated with poverty and extreme poverty; 2) implementing a youth employment program that creates incentives for young people from informal households to enter the formal labor market; and 3) creating a plan to better integration cooperatives with the formal economy.
