Using Income Transfers to Improve the Lives of Families with Children and the Unemployed in Argentina

Challenge

Despite the nation’s recovery from the 2001–2002 economic crisis, developing a strong and inclusive safety net in Argentina continued to be critical. Poverty remained at around 20 percent and was significantly higher in the poorer regions of the country. Although income inequality has experienced a sustained decline since 2003, it was still higher than in the early 1990s, with a Gini coefficient of 0.48–0.50 in 2008. In addition, although unemployment declined from the peak of 20 percent in 2002 to below 10 percent in 2008, it was expected to rise in 2009 due to the global economic slowdown. The government of Argentina therefore decided to prioritize strengthening the country’s social protection policies and expanding its social program coverage.

Approach

The World Bank’s Basic Protection Project supported the natural development of Argentina’s social protection system. The operation facilitated the transition from the emergency workfare programs set in place in the aftermath of the 2001–2002 crisis, while at the same time it strengthened the Employment Benefit and Training Program (Seguro de Capacitación y Empleo, SEC) and the Family Allowance (FA) Program, both of which were at the core of the government’s social protection strategy. The Basic Protection Project identified substantial opportunities for operational improvements in the two government programs. By clearly separating project disbursement mechanisms relating to selected program improvements from project technical assistance activities, the Basic Protection Project design successfully combined its roles into a single operation, effectively ensuring financial support for and visibility of technical assistance activities without slowing down disbursements for program improvements. In addition, the Bank team foresaw possible expansion of the two government programs to reach beneficiaries not eligible at the time the project was under preparation; the project development objectives and overall implementation mechanisms were therefor conceived to accommodate expansion during implementation.

Results

The operation successfully met its development objective. The following pivotal outcomes can be highlighted:

• The SCE expanded from 78,500 beneficiaries in 2008 to 106,462 in December 2015.  This increase represents only a fraction of the original and revised targets, however, because benefits from other programs, such as the Universal Child Allowance (Asignación Universal por Hijo, AUH), were available to program participants.
• The number of participants exiting the SCE program into formal employment almost doubled during the operation’s lifetime, from 8,400 in 2008 to 15,208 in 2015, exceeding the original and the revised Additional Financing targets.
• The number of services (education, training, and skills development as well as labor intermediation) provided under the SCE program expanded significantly during the operation’s lifetime, from 39,300 services provided in 2008 to 107,000 in 2015.
• The proportion of participants involved in training, education, or employment-support activities increased from 23.5 percent in 2008 to 38 percent in 2015. The actual increase surpassed the anticipated increase.
• The number of operational municipal employment offices (EOs) providing SCE services more than doubled during the operation’s lifetime, with 227 new offices added. The actual increase in the number of participating EOs surpassed the anticipated increase.
• The direct payment system of the contributory Family Allowance Program was fully implemented, enhancing its transparency.
• The Additional Financing loan provided support to implement the newly established AUH program. The effectiveness of the Family Allowance coverage improved, through the AUH in particular, adding over 2 million children and youth ages 18 years or younger.

Bank Group Contribution

The Bank, through the International Bank for Reconstruction and Development, financed a total of US$ 930 million: US$ 450 million under the original loan and US$ 480 million under an Additional Financing loan, representing 15 percent of the country’s total expenditure on social programs of US$ 6,254.4 million.

Partners

Project activities were coordinated with different governmental agencies at the federal level. These agencies supported project implementation and helped achieve the project development objectives. The main governmental agencies contributing to the project were the municipal employment offices, which provided SEC beneficiaries with training and employment services.

Moving Forward

The programs supported under this operation and the additional financing — SCE, FA, and AUH — are clearly sustainable. The operation was fully implemented within the government of Argentina’s public-sector structure utilizing the existing organizational and management structures of the Ministry of Employment and Social Security, responsible for managing and implementing the SCE program, and the Social Security Agency, which is responsible for managing and implementing the FA and the AUH programs. Furthermore, these programs have ample political support (including from the new administration), and they are funded through the federal budget.

Beneficiaries

Mariela lives in the province of Santiago del Estero, in one of the most deprived areas in Argentina. “The one who works informally is my husband — he works in construction. I do not work, I take care of the children and my home. . . . The allowance is helpful. It’s some little extra money to add to the salary and make ends meet” (Family Household).