Centre for Finance and Development
30 October 2019

Santiago Levy on social security in Latin America: “A Ford at the price of a Rolls Royce”

Social security in Latin America: “A Ford at the price of a Rolls Royce”

Ahead of the 2019 WIDER Annual Lecture, speaker Santiago Levy gave an interview to Andres Allemand, from the Tribune de Genève newspaper.

Asked about the current crises in Latin America, Santiago Levy points out that “every crisis is different” and each calls for a different solution. However, he points out a common problem of Latin American states: “In general, the welfare state in Latin America is truncated. It was born twisted and could never be fixed since.” Pointing to the existence of separate welfare systems for the formal and the informal sector, he states that in the former, workers get “a Ford at the price of a Rolls-Royce”, while informal workers are getting “a small Seat for free”. In view of this unsatisfying situation, Levy proposes a system where “everyone can buy a Rolls-Royce at the price of a Rolls-Royce”: universal social protection. Such a system, which would not only cover health care, but also unemployment and retirement benefits, would not only be beneficial for the population. Levy also points out that Scandinavia demonstrates how the resulting stability ultimately favors the economy. Asked about the high costs of such a system, Levy points out that it would not be impossible to finance such a system in Mexico or Chile, but that the first step to take for Latin American countries would be to become aware of the problem.

Santiago Levy, this year’s speaker of the WIDER Annual Lecture, is an economist, former Deputy Finance Minister and General Director of the Mexican Social Security Institute, and main architect of Progresa/Oportunidades — Mexico's incentive-based health, nutrition and education program for the poor. He has formerly served as Vice President for Sectors and Knowledge at the Inter-American Development Bank (IDB).

You can find the entire interview in today’s edition of Tribune de Genève as well as online. The citations in the above news item have been translated from the French original by Pascal Blickle, from the Graduate Institute's Centre for Finance and Development.