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LATIN AMERICA: Movement for Basic Income for All

Marcela Valente*

BUENOS AIRES, Mar 18 2009 (IPS) - The global financial crisis could present an opportunity to move towards the creation of a universal basic income for all citizens, say advocates of the system in Latin America.

The universal basic income is an unconditional cash payment to all individuals, paid by the government, sufficient to meet basic needs.

Critics of the basic income say it could discourage people from entering the labour market. They also argue that it would be unfair to provide it to the wealthy, and advocate instead conditional social security programmes that target the most vulnerable groups.

Conditional cash transfers are currently made available in most Latin American countries to beneficiaries deemed eligible under different criteria: to unemployed heads of households, families living below the poverty line, or low-income students.

The beneficiaries of these different programmes may be required to do community work, prove school attendance and compliance with medical check-up and vaccination schedules by the family’s children, or demonstrate that they have no other source of income.

And in some cases, social welfare programmes admit a limited number of people, and eligible candidates may be excluded.

The global crisis is “without a doubt a chance to make progress towards the creation of a universal basic income,” Brazilian Senator Eduardo Suplicy, the sponsor of a pioneering law on the question in the region, told IPS.

The bill was passed by the Brazilian Congress in 2003 and signed into law by the leftwing government of Luiz Inácio “Lula” da Silva the following year.

But the Lula administration decided to put the law into effect “in stages, starting out by reaching the most needy,” through the Bolsa Familia or Family Stipend programme, which provides between 8.50 and 76 dollars a month to 11 million poor families.

For now, the cash transfer is not universal, and is conditional on school attendance and vaccination for children.

“It is a necessary transition,” Suplicy acknowledged. “But I am fighting for an unconditional basic income, because it is better and is a more efficient way to ensure human freedom and dignity,” he added.

A new law sponsored by the senator, which has already made it through the Senate, would reserve part of the royalties from oil and other state revenues from private concessions for the creation of a Citizenship Fund that would serve as the foundation for a universal basic income.

Suplicy mentioned an advocacy group in the United States that sent an open letter to President Barack Obama, urging him to consider the question of a basic income to ensure that no citizen would fall below the poverty level.

In its open letter, dated Mar. 1, the U.S. Basic Income Guarantee Network (USBIG) told the president: “We urge you to consider establishing a basic income for all Americans as the most effective way to stop the contraction of the economy and begin a new era of economic prosperity for all.”

The U.S. state of Alaska was a pioneer. Since 1976, it has paid an equal dividend from its oil revenues to all citizens living there for at least a year, from the Alaska Permanent Fund.

Ruben Lo Vuolo, an economist who is calling for the creation of a universal basic income in Argentina, told IPS that experiences like Alaska’s “take on a higher public profile at times of crisis.” But he said that in order to make progress towards that goal, what is needed is “a political decision.”

“Crises can be the best time for discussing social policies that have an impact on the poor, but they can also lead to spending cuts,” said Lo Vuolo, a researcher at the Interdisciplinary Centre for Public Policy Studies (CIEPP) in Buenos Aires and a member, along with Suplicy and other personalities, of the Basic Income Earth Network (BIEN).

A good time to discuss the question will be at the next BIEN conference, to be held in the southern Brazilian city of Sao Paulo in mid-2010. “That will be shortly before the presidential elections, and this will be a hot issue,” said Lo Vuolo.

What exists today in Latin America are conditional income transfer programmes that target the poorest families, like Brazil’s Family Stipend, Argentina’s Heads of Households Plan, or Mexico’s Progresa, said Lo Vuolo.

There are also initiatives at a local level. In addition to the national Progresa plan, all residents of the Mexican capital over the age of 70 receive a universal pension from the city government, regardless of income level.

And the government of Santo Antonio do Pinhal, a town of 7,000 people located 170 km from Sao Paulo, is about to launch a Basic Citizen Income, which will provide between 12 and 21 dollars a month to every local resident – an amount that, in the case of a family of three or more, will be larger than the Family Stipend.

Advocates say that with reforms of the tax system or more efficient use of state funds, a universal basic income could be guaranteed, while avoiding the possible pitfalls of clientelism or patronage.

But unlike Suplicy, Lo Vuolo does not believe that conditional cash transfer programmes can serve as a transition to a universal basic income.

“There is a big difference between the bureaucracy of a plan based on the granting of benefits and a plan based on guaranteeing a right,” he said. “We’re talking about the need to generate a new technology and culture.”

Multilateral lending institutions, which help finance various social plans in the region, are more inclined to support conditional programmes in developing countries, said Suplicy and Lo Vuolo.

But the UBI initiative also runs up against resistance from social policy experts with ties to trade unions.

Trade unions “reject income that is not based on labour,” said Lo Vuolo. “They see the idea as clashing with the right to employment, but many workers in our countries are active in the informal sector of the economy and receive no benefits.”

In Argentina, around 45 percent of the economically active population work in the informal sector and have no social security coverage or health insurance. Nor do they receive the family allowances that the government pays families for each child, as they are not registered in the system.

Sel Consultores, a consultancy in Argentina, estimates that the state transfers five billion dollars a year to formal sector workers, in the form of family allowances, tax deductions for dependent children, and subsidies for children in poor households.

But 98 percent of these funds go towards workers with formal jobs, instead of to those who most desperately need them: the poorest households, where half of the country’s minors live because of the higher birth rate among lower-income sectors, said the report.

Unemployed female heads of households receive the Families Plan stipend of 150 pesos a month – around 40 dollars – plus 10 dollars per child.

By contrast, a formal sector worker earning the equivalent of 657 dollars a month receives 36 dollars a month per minor child.

Sel Consultores states that, if the total government benefits were divided by the number of children and granted without conditions, the poorest would receive more and the middle-class would receive less.

The Labour Ministry’s under-secretary of social security policies, Emilia Roca, told IPS that the idea of a universal basic income could sound “very attractive.”

“It is hard to be against it,” she said. But, she warned, the state “could lose arguments to require that employers register their workers.”

Roca also said that in Latin America, there are “serious budgetary problems” and “macroeconomic limitations” that stand in the way of ensuring a permanent income for everyone.

She said she was in favour of conditional transfers and family allowances for registered workers for each minor child.

With respect to the children of informal sector workers or people who are under-employed, she said “the solution has to come from the labour market, through higher wages and a reduction in the proportion of informal employment.”

“We should move towards a society where income derives from decent work in which employees enjoy protections and benefits,” said Roca.

On the other side of the debate, Lo Vuolo disagreed that the concept of a universal basic income clashed with the right to work, and argued that it is a human right that should be granted to everyone, independently of their socioeconomic status.

“It’s like universal suffrage: in order for it to be a right, there can be no exceptions,” he said.

*With additional reporting by Mario Osava in Brazil.

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