The Universal Child Allowance perpetuates poverty - IDESA

Informe Nº: 07/08/2013

The Universal Child Allowance perpetuates poverty

One of the most widely accepted policies in Argentina is the Universal Child Allowance. Government authorities claim it to be a major achievement and the opposition has no criticism, except some formalities like it was not approved by law but by an inferior norm, as a decree. Both parts overlook that, because of its rudimentary design, it is probably a social scheme that promotes the intergenerational reproduction of poverty rather than a sustained process of social progress. Other countries’ experiences and the finding obtained locally suggest that there are elements of the design and the management of the program that should be improved.

The Universal Child Allowance is one of the few cases of public policy in Argentina which has a high level of consensus. The proof is that most of the opposition does not question its design or management. At most, they raise questions about formalities, such as, for example, that it was not sanctioned by an Act of the Congress but by a decree (an inferior norm). It seems to be a policy with a strong positive impact and that it merits little room for improvement.

The program consists of an allowance given to inactive mothers, or mothers working in the informal sector or as domestic service employees with lower pay than the minimum wage. 80% of the allowance is paid on a monthly basis and the remaining 20% ​​is subject to controls to check if the mother meets health and school attendance of the children. The amount is $ 460 per child, up to five children. This means that families can receive up to $ 2,300 per month.

A complex but determining issue in the success of public policies is unraveling the incentives that these benefits generate in the beneficiaries’ propensity to work. In this sense, INDEC official information for the 4th quarter of 2012 allows to see that:

– Women who are employed in the informal sector are paid an average of $ 2,073 monthly while working a mean of 32 hours per week

–  Women in domestic service earn a salary of $ 1,220 per month working an average of 29 hours per week.

– That is, for women with low qualification level and several children, the state subsidy is equivalent to the payment obtained in the labor market.

This official data shows the severity of the labor problems faced by neglected segments of women in society. Given the precarious employment opportunities faced by women with low-levels of qualification, the state of inactivity, –i.e. not entering the labor market for paid employment–, is a potential alternative. With the current design of the Universal Child Allowance, not only the incentives for female labor inactivity are not reversed, but they are increased. It should be alerted that, when facing labor inactivity, the subsidy dependence tends to perpetuate and close the doors to progress and the opportunity to get out of poverty by means of work and effort.

The risks of altering the motherhood planning should also be considered. Using INDEC data it can be estimated that among women under 25 who have children, the proportion who do not study, work, or is not serching for job is 57%. This proportion among those without children is just 17%. Mothers who neither study nor work not only condition the present but the future of their children. It is known that the lower the education level of mothers, the more modest the school performance of children is.

Argentina has not innovated with the Universal Child Allowance. Several Latin American countries, such as Mexico, El Salvador, Honduras, Nicaragua, Costa Rica, Panama, Colombia, Ecuador, Peru, Chile, Uruguay and Brazil have implemented similar interventions before Argentina (technically called conditional transfer programs). Therefore, the rusticity of the design in the Argentine case is quite striking. The approaches taken by Chile, Uruguay, Brazil, for example, are more sophisticated and aim to prevent that the subsidy multiplies in proportion to the number of children and are supplemented with family planning activities, childcare, school support and/or labor training.

The broad consensus that Universal Child Allowance possesses should be exploited to carry out a critical evaluation in order to improve its design and management. Only in this manner the Universal Child Allowance can be converted into an effective tool for social progress. In other words, to allow poor people to migrate from “perpetual assistentialism” in favor of a modern instrument that promotes the possibility to escape the trap of poverty. 


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