The Center for Analysis and Dissemination of the Paraguayan Economy (Cadep) held the panel “Public Welfare Policies in Paraguay” on Thursday as part of the congress “35 years of democracy: Economy, Society and State in Paraguay.” The event was opened by Fernando Masi.
In her presentation “Contributory Social Security in Paraguay: A Political Economy Perspective,” economist Verónica Serafini pointed out two structural problems of the system: the economic model and the institutional design. According to her, Paraguay imported a scheme inspired by European welfare states of the industrial era but applied it to an economy based on agro-exports, with low formal job creation, high rurality, and no gender perspective.
“Half of women are left out because they are not in the labor market and unpaid women's work in social reproduction is not recognized,” Serafini said. She added that a large part of women who work do so precariously, as do many men. As a result, only 25% of the population contributes to the Social Security Institute (IPS) and only 15% of people over 65 receive a pension.
Another point highlighted was the concentration of benefits in the two highest income quintiles. For self-employed or informal workers, contributions become unfeasible, potentially reaching 25% of the minimum wage without an employer counterpart. Serafini noted that in other countries there are mechanisms such as the monotax or state subsidies to facilitate inclusion.
The economist questioned the origin of the institutional and economic design. She argued that the strong concern for macroeconomic stability contrasts with the scant attention to family stability and reducing uncertainty over the life course. “Without income stability and access to services, one cannot speak of well-being,” she said.
Serafini concluded that any transformation of social security must address population aging, which will occur in Paraguay in half the time it took in Europe, in a context of shared financing and fiscal sustainability. Currently, the contributory system faces sustainability problems due to low revenue, while the universal food pension is also limited, covering about 25% of the minimum wage.