Rafael Rofman

From reform to crisis: Argentina's pension system

Argentina underwent economic and social collapse in December 2001. The crisis brought the worst socioeconomic indicators in its history, and the pensions system was not immune from this disaster, which was unparalleled in any middle-income developing country. In 1994 the pensions system was restructured, and was regarded as a viable model for other reforms elsewhere. This article discusses in general terms the features of the current pensions scheme, the structural problems that were not resolved in the reform of 1994, the relation between that reform and the governments financial crisis, and the impact of the economic collapse on the pensions system. Finally, it discusses some aspects of the challenges faced in building a system that is both financially viable and has the potential to close the major gaps in coverage affecting both the working population and the aged.

Providing social security in a context of change: Experience and challenges in Latin America

Over the past two decades Latin America has experienced major demographic, economic and social changes. The trend towards accelerated ageing of the population in most countries, together with the financial restrictions faced by social protection systems, has brought sweeping changes in pension programmes. The new demographic and labour context presents challenges for these new programmes which, unless they make the necessary adaptations, will definitely be unable to attain their stated objective of providing universal coverage and eliminating poverty in old age. This article offers a general discussion of the processes that the region is undergoing, as well as the limitations and challenges imposed by existing welfare systems. Finally, it examines the options available to retain the objective of universal coverage and thus ensure the economic needs of the elderly population.

Demographic Change in Uruguay

Uruguay’s population is slowly aging, driven by the demographic transition that started early in the 20th century. While this reflects significant improvements in mortality and fertility trends, it also creates important challenges for the fiscal sustainability of some social policies and for sustaining medium- and long-term economic growth. Uruguay is going through the “demographic dividend” stage of this process as the proportion of the population ages 15–65 peaks. This temporary situation creates the possibility of increasing the endowment of capital and the labor force and sparking sustained economic growth. For this to happen, institutional, financial, and fiscal conditions are needed that promote larger savings and investment. Demographic Change in Uruguay: Economic Opportunities and Challenges studies the opportunities and challenges that the demographic transition poses for Uruguay’s economy. Once the demographic dividend has passed, population aging will have a significant impact on fiscal accounts, especially in social protection expenditures. This is a serious policy challenge, demanding reforms to adapt the institutions and systems to a new demographic context. The main challenge in the next few decades will be to maintain economic growth on a solid path as the working-age population declines. This will require that labor force participation rates increase, particularly among women and older people, but will also require that those in the labor market increase their productivity. This will be achieved only through sustained growth of the capital per worker ratio and the incorporation of innovations and technological developments that facilitate increased production of goods and services for the entire population.