Book review of Carmelo Mesa-Lago, World Crisis Effects on Social Security in Latin America and the Caribbean: Lessons and Policies. Institute for the Study of the Americas, 2010. $28.95, paperback

Rys, Vladimir

English

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The Journal of Sociology & Social Welfare Volume 38 Issue 3 September Article 18 2011 Review of World Crisis Effects on Social Security in Latin America and the Caribbean: Lessons and Policies. Carmelo Mesa-Lago. Reviewed by Vladimir Rys. Vladimir Rys University of Geneva Follow this and additional works at: https://scholarworks.wmich.edu/jssw  Part of the Social Work Commons Recommended Citation Rys, Vladimir (2011) "Review of World Crisis Effects on Social Security in Latin America and the Caribbean: Lessons and Policies. Carmelo Mesa-Lago. Reviewed by Vladimir Rys.," The Journal of Sociology & Social Welfare: Vol. 38 : Iss. 3 , Article 18. Available at: https://scholarworks.wmich.edu/jssw/vol38/iss3/18 This Book Review is brought to you for free and open access by the Social Work at ScholarWorks at WMU. For more information, please contact maira.bundza@wmich.edu. Journal of Sociology & Social Welfareare not the most valuable aspect of this very valuable book.Aside from how much it shows us about the way Haitiworks, what Democratic Insecurities most accurately dem-onstrates is how we work in Haiti, with our outsider role as"mobile sovereigns," James' stinging appellation for variouskinds of tiny foreign dictators working on the ground, espe-cially field anthropologists, like James herself. Her observa-tions are not only from the field but are also based on solid,painstaking research in the literature of Haitian development,ethnography, and anthropology. The book's detailed indexitself is a work of some importance.Democratic Insecurities has one other central virtue: it isunflinchingly self-aware. James is no cowboy anthropologistblithely critiquing the methods of other cowboy anthropolo-gists. "A crucial dilemma emerged during the course of thiswork," James writes in her introduction. "How do individualand institutional humanitarian actors grapple successfullywith conditions of ongoing insecurity without resorting to thevery predatory practices that create such conditions?" Howdo we correct the system without becoming part of it, becom-ing tainted by it? After long experience in Haiti, one comesup with a sad and disconcerting answer to this question: Nomatter how much we grapple with this, we don't grapplewith it successfully. No one can remain utterly uncorrupted bythe predatory political situation. In fact, as James shows us,in places like Haiti, we the outsiders are helping to brew andladle out portions of the very corruption we seek to remedy. Itis to James' great credit that she illustrates this in detail fromwithin the humanitarian edifice.Amy Wilentz, author of The Rainy Season: Haiti since Duvalierand other works on HaitiCarmelo Mesa-Lago, World Crisis Effects on Social Security inLatin America and the Caribbean: Lessons and Policies. Institutefor the Study of the Americas, 2010. $28.95, paperback.This book has been written by a leading social securityexpert and social policy analyst of Latin America. DistinguishedService Professor Emeritus of Economics and Latin AmericanStudies at the University of Pittsburgh, Carmelo Mesa-Lago194has been a visiting professor, researcher or lecturer in 39countries. In recent years he played an eminent role in the ac-tivities of the International Labor Office and was Chairman ofthe ISSA task force on the extension of social security. His studyevaluates the effects of the global financial and economic crisison social security, analysing on a comparative basis the situa-tion in the field of pensions, health care and social assistance in25 Latin American and Caribbean countries.This text is no doubt one of the earliest reactions of theexpert academic world to the financial and economic crises ofrecent years. This in itself constitutes a disadvantage, because,as the author indicates, the book was completed at the endof October 2009, and hence the data analyzed concern essen-tially the first onslaught of the crisis. However, the author hasturned this situation to his advantage by passing the availableinformation through the grid of his regular analytical frame-work for the evaluation of social security schemes. In order tounderstand how Latin America's social security systems areaffected by the global crisis, he invites the reader to examine inturn the impact of previous crises: the strengths and weakness-es of social security prior to the current crisis and the actualand potential effects of the crisis on social security. Within eachof these chapters, as well as in the conclusions, the situationis examined from the point of view of coverage, sufficiencyand quality of benefits, equal treatment and social solidarity,gender equality, efficiency, administrative costs and financialsustainability. On the basis of his conclusions, Meso-Lago thenformulates recommendations as to appropriate policies to copewith the negative effects of the crisis.The wealth of data supporting this analysis permits thereader to draw his or her own conclusions in addition to thoseformulated by the author. Mesa-Lago points out that while thecauses of the previous recessions and of the current economiccrisis are substantially different, their repercussions on socialsecurity have been similar. The sectors most affected werepension coverage of the population and public access to healthcare. Both have declined or stagnated in most countries, es-pecially in those with less developed social security systems.He notes, however, that Latin America and the Caribbeanwere better prepared than before to confront the present crisisbecause they could count on greater fiscal discipline, lowerBook Reviews 195Joumal of Sociology & Social Welfarepublic external debt, and higher international reserves alongwith current account surpluses. The region's main problemshave been generated by shocks resulting from its greater open-ness to the rest of the world plagued with a series of economicdysfunctions.In dealing with potential effects of the crisis on social secu-rity in more detail, the author points to a number of problemswhich are common to all parts the world. Thus with regard tocoverage, we note the presence of increasing unemployment,increase in the volume of informal employment or employer'sevasion of payment of contributions. With regard to pensions,the crisis is likely to reduce the benefit levels of those retir-ing in capitalization systems because of the fall in the value ofcertain financial instruments and their capital returns. Wherethe insured is obliged to take an annuity, it will be lower dueto the decrease in the value of the accumulated amount in theindividual account. From the point of view of pension ad-ministration, the crisis could cause a reduction in the numberof private pension administrators through bankruptcies andmergers, resulting in less competition, increasing concentra-tion and a rise in commissions and premiums.The pension system model will play a key role in the impactof the crisis on financial sustainability. Pure individual capital-ization schemes are likely to be more affected in the short runbecause their beneficiaries are exposed to the financial risk ofvolatile stock markets that influences both the accumulatedvalue in the individual account and the pension amount, par-ticularly for those close to retirement. Nevertheless, solidar-ity mechanisms, such as the minimum universal pension inseveral countries and the state solidarity contribution in Chile,should mitigate such adverse outcomes.The actual impact of the crisis has differed significantlybetween countries. Social security expenditure has declinedas a percentage of GDP in 15 countries and stagnated in nine,while the real value of pensions has fallen drastically. As couldbe expected, social security deficits have increased, or sur-plusses shrunk, in 17 countries, the worst affected being thosewith the oldest pension schemes and a higher proportion ofaging population. Pension coverage has decreased in 11 LatinAmerican countries, stagnated in two and increased in four.Among the non-Latin Caribbean countries, it has increased in196Barbados and Jamaica and stagnated in the Bahamas. Theseresults indicate that a number of other factors unrelated to thecrisis may substantially modify the final outcome.The policy recommendations for coping with the conse-quences of the crisis for social security (health care, pensionsand social assistance) are based on successful policies appliedduring previous economic declines and on the critical exami-nation of the present situation. Some recommended measurescome from international and regional organizations. Theyare modulated following Mesa-Lago's taxonomy developedin earlier work, which recognizes three groups of countriesaccording to the level of development of their social protec-tion systems. In Group 1 we find nearly universal health careand pension coverage, social assistance pensions, the lowestlabor informality and poverty incidence and relatively abun-dant resources. In view of that, policy emphasis is placed onmaintaining contributory coverage and expanding protectionfor the elderly through social assistance pensions, as well asincreasing access of the poor and low income population topublic health care services. On the other hand, Group 3 coun-tries have the lowest pension and health care protection, thehighest labor informality and poverty incidence, no social as-sistance pensions and fewer resources. Consequently, social in-surance systems have a much smaller role to play in attenuat-ing crisis outcomes than in Group 1; policies are hence focusedon social assistance programmes targeted at the newly poorand the most vulnerable portions of the population. Countriesin Group 2 demand a combination of both types of measures.This volume constitutes an interesting attempt at present-ing policy recommendations based on a careful and systematicanalysis of facts pertaining to different aspects of social secu-rity schemes perceived within their total societal environment.The chief message the reader is likely to note is Mesa-Lago'scriticism of policies implemented in the region in previousdecades, promoting deregulation and severe cutbacks in therole of the State, while increasing the role of the market andof the private sector. In his view, the State has a crucial roleto play, both in dealing with the consequences of the presentcrisis and in reinforcing the stabilizing role of social security.Vladimir Rys, Social Security Study CentreUniversity of GenevaBook Reviews 197

Review of \u3cem\u3eWorld Crisis Effects on Social Security in Latin America and the Caribbean: Lessons and Policies.\u3c/em\u3e Carmelo Mesa-Lago. Reviewed by Vladimir Rys.

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Review of \u3cem\u3eWorld Crisis Effects on Social Security in Latin America and the Caribbean: Lessons and Policies.\u3c/em\u3e Carmelo Mesa-Lago. Reviewed by Vladimir Rys.

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