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ARGENTINA: Child Benefits Expanded to Unemployed and Informal Workers

Marcela Valente

BUENOS AIRES, Nov 5 2009 (IPS) - A new monthly family allowance of nearly 50 dollars per child that will be paid out as of December to parents who are unemployed or work in the informal economy in Argentina was heralded by experts as an extraordinary step forward in terms of social policy.

“There are a large number of families who needed a complementary income, and now they will receive it,” economist Rubén Lo Vuolo, a researcher at the Interdisciplinary Centre for the Study of Public Policy (CIEPP) and a member of the Basic Income Earth Network (BIEN), told IPS.

“This marks a watershed in social policy in Argentina,” said the expert, who had been calling for the creation of a universal child benefit scheme, because the current system only covers the children of formal sector workers.

In Lo Vuolo’s view, the new government strategy is “original,” and the “generosity” of the amount makes this country a leader in South America in initiatives that recognise the right to an income for vulnerable groups, like poor children and the elderly.

Since 2007, neighbouring Uruguay also has a similar family allowance scheme for children under 18, which provides comparable payments.

Economist Claudio Lozano, a lawmaker with the centre-left opposition group Proyecto Sur, told IPS that the expanded child benefit “is very important” because it “broadens coverage to youngsters excluded from the system.”

Although formal sector workers in this South American country already receive monthly payments per child up to the age of 18, informal sector workers and the unemployed do not.

A measure of this kind was demanded by nearly the entire political spectrum, the Catholic Church, and the Central de Trabajadores Argentinos (CTA), one of the country’s two central trade unions.

The government of Cristina Fernández, of the centre-left wing of the Justicialista (Peronist) Party, created the “Universal Family Allowance per Child for Social Protection” of 180 pesos (48 dollars) a month as a social safety net for hundreds of thousands of children and adolescents who are marginalised by the social system.

The benefit is higher than what the Brazilian government provides low-income families through the Bolsa Familia programme, which pays poor families with children an average of around 35 dollars a month, conditional on school attendance and regular medical check-ups.

Like the Brazilian programme, Argentina’s expanded family allowance is targeted, rather than universal.

It covers the children – up to the age of 18 – of unemployed parents and informal sector workers, rural workers and domestics with incomes below the minimum monthly wage, equivalent to 390 dollars. It also covers disabled dependents of any age. Families will receive payments for up to a maximum of five children.

Families currently receiving smaller subsidies under other social assistance plans, such as the one that pays unemployed heads of households 150 pesos (40 dollars) a month, will instead be covered by the new family allowance system to go into effect on Dec. 1.

According to official statistics – which the government has been accused of manipulating since 2007 – unemployment stands at 8.8 percent in Argentina, while over 40 percent of those who work do so in the informal economy, without being registered in the social security system.

The measure could benefit 5.4 million children, which is close to the number of poor children in Argentina. According to the CTA, 47 percent of children under 18 – a total of 6.3 million youngsters – in this country of 40 million are poor.

The government decree that created the new family allowance scheme states that despite the economic growth, rise in employment and drop in poverty seen in the last few years, there are still excluded segments of society in need of attention. It also stresses that “the most diverse political and social sectors” were demanding a measure that would address the needs of “the most vulnerable.”

However, observers argue that the measure should have been passed by Congress, rather than created by means of a government decree. Even those who backed the idea of a direct cash transfer programme wanted to debate the different alternatives in Congress and pass a new law, rather than see a programme created by decree, which could easily be repealed or modified.

“Much progress had been made towards a consensus on the need to expand the family allowance, and it should have been done through a law,” said Lozano. “This way, an opportunity to implement a new right to a basic income for all children, without depending on the will of any specific government, was lost.”

He said that in order to make the right truly universal, the current family allowance law, under which the government pays a per child benefit to formal sector workers with incomes under 4,800 pesos (1,260 dollars) a month, should have been overturned.

Critics also say the income tax exemption benefiting parents with incomes higher than that ceiling should have been eliminated, because it represents a state subsidy to the children of the best-paid workers.

They maintain that the best solution would have been to create a unified scheme granting a basic income to all children, instead of different systems depending on the parents’ employment situation.

Another problem, they say, is that if a parent’s employment situation changes – for example, an informal sector worker’s income climbs above 390 dollars a month, or the parent becomes self-employed – the youngster would lose the monthly child benefit.

In addition, they criticise the programme’s source of financing, which will come from the National Social Security Administration (ANSES).

ANSES officials say earnings generated by the social security funds will be used to finance the new family allowance programme, which will cost around 2.6 billion dollars a year.

But critics say that if the social security funds generate returns, they should be used to increase pensions, extend them to those who do not draw a pension, or pay off unpaid pensions whose beneficiaries won court cases but have not yet received what they are owed.

The CTA, to which Lozano belongs, argued that the new child benefits should be financed through reforms of a tax system that is considered regressive because it does not have a capital gains tax on stocks, bank deposits, or real estate transactions.

The sources who spoke to IPS also question the effectiveness of the conditions set for receiving the cash transfer. Lo Vuolo called it a “repressive mechanism” because it threatens to take the benefit away from children who drop out of school or don’t get their vaccinations. “That’s not fair, because if it happens, it wouldn’t be the child’s fault,” he said.

Lozano said that although it’s not a bad thing to monitor school attendance and vaccination, the state must also assume shared responsibility for compliance, and should also keep track of the children of formal sector workers, who receive child benefits without conditions.