Universal Basic Income and our social security

According to the ILO, since February last year, countries have implemented more than 1600 social programs to protect their population from the recession that we are experiencing due to COVID-19. In some cases (the US and the UK, for example) these programs have largely relied on direct transfers to people. In others, such as those in Continental Europe, they have relied largely on the states assuming part of the wages so that companies do not lay off their workers. Certainly most of this effort has taken place in rich countries, which by January are estimated to have invested 13% of their GDP in social support programs, but also countries like Brazil -which has turned to more than 40% of its adult population checks of $ 110 per month – they have executed large and very comprehensive programs.

This change in social security occurs in developed countries in which sectors of their population have suffered in recent decades income losses due to technological change and to a lesser extent due to the expansion of international trade, and in which the gig economy generates temporary or self-employed labor relations. Due to these circumstances and due to the effects of these changes in the social security systems, the massive transfers of resources caused by the pandemic have given new impetus to the idea of ​​a Universal Basic Income (a monthly transfer not conditional on all persons of legal age). to work) with respect to which many investigations have dispelled the concern that they may induce reluctance to work in a part of the population.

The stumbling block for Universal Basic Income continues to be the generation of the necessary resources to finance it as a permanent, and not occasional, activity in the face of a crisis such as COVID-19.

In the United States, an immense stimulus program of President Biden of $ 1.9 trillion (millions of millions) was approved, bringing the total approved between last year and this to almost $ 3 trillion, that is, 13% of GDP before the pandemic. This program includes a guaranteed income for families with children, which is $ 300 per month for each child and which covers 93% of families. It is estimated that this program will lift half of the children in that condition out of poverty, and that it will be given indiscriminately to all families with children who have incomes of no more than $ 150,000 per year.

Between us, those experiences of others and ours with the Proteger Bonus should reinforce the study of the changes that we must carry out in the face of the large size of informal employment and the financing problems of our social security (welfare and health) and of our programs to face poverty.

Due to continued growth, informal employment went from being 40.2% of the labor force in the III Quarter of 2010 (first data of the ECE series of the INEC) to representing 47.1% in the I Quarter of 2020. Then It decreased because informal employment was the most affected by the current crisis, but it is already growing again.

On the other hand, the continued aging of our population once again puts the financing of the IVM regime of the CCSS and the health services in trouble with an increase in the demand for their benefits, and a decrease in the percentage of the contributing mass.

The programs to support poor families, as well as the IVM regime and the health services of the CCSS are fundamentally financed by charges on wages. This closely relates the financial difficulties of these benefits with labor informality, since this burden on payroll makes it difficult to formalize enterprises and aggravates informality.

That is why it seems that in the medium term we should make another transformation of our social security. Establish a universal equal insurance for all people who reach retirement age and that will replace the non-contributory regime and the lower levels of IVM pension and any other pension regime to which the state contributes. This section of pensions, as well as the FODESAF that feeds the anti-poverty programs, must be paid with general taxes (VAT, income, real estate, coal) that would be offset by a decrease in the tax on payroll since the amount The initial pension would not be paid by IVM and that the 10% salary tax that today feeds FODESAF would be eliminated. This pension would meet the needs of everyone, insured or not to IVM, and therefore would cover the informal sector.

The next layer of the pension would be made up of the IVM scheme with a lower contribution than the current one, and then by the ROP and voluntary insurance.

This is one of the most urgent reforms of our institutional framework demanded both by social justice (not leaving informal employees in distress) and by economic efficiency (formalizing companies and allowing their efficient operation in the financial and goods markets).

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