Brazil Extends Bolsa Familia During the Economic Crisis

www.ilo.org

March 20, 2009

Brazil

When the first signs of financial trouble emerged in the industrialized world, predictions were that the “decoupling effect” would insulate the developing world from the crisis. Today, the economic crisis is clearly global and no country is immune. In Brazil, one key measure has been extending a successful cash-transfer programme – Bolsa Familia – to a larger number of poor families. Bolsa Familia was discussed at recent a special session of the ILO Governing Body.

Bolsa Familia is not just another cash transfer programme. With over 11 million families as beneficiaries, it is the largest in the world and has been emulated across Latin America and even in the US.

Launched in 2003, it provides an invaluable safety net for a quarter of Brazil’s population, providing basic social protection income support at a cost equivalent to 0.4 percent of the country’s GDP.

The Brazilian government –like other Latin American countries suffering from the global economic slowdown – has now decided to include an additional 1.3 million families in the programme.

“One very positive aspect of Bolsa Familia – and other cash transfer programmes as well – is that while rescuing millions of people from extreme poverty it also turns them into consumers and helps stimulate local and regional economies”, said the Brazilian Minister of Social Development and Fight Against Hunger, Patrus Ananias, during his presentation of the programme at the ILO.

The idea is simple but makes good economic sense. Since low income families have high propensity to consume, the programme boosts demand for food and basic consumer goods that are mostly produced at the local and regional levels.

Bolsa Familia is perhaps the most visible of Brazil’s cash transfer programmes, but it is not the only or first one. During the 1990’s, the Brazilian reform strategies centred on strengthening the public pay-as-you-go system and extending social security coverage.

This has led to a reduction of 0.7 points per year from 2001 to 2007 in Brazil’s Gini Coefficient, which measures inequality of income distribution. In countries like Sweden, the Netherlands, Canada and France, sustained decreases over large periods of time in the Gini Coefficient have been associated with the development of strong welfare states.
 
“The Bolsa Familia programme covers an ethical and moral demand to protect human rights. The construction of a fairer society should certainly incorporate programmes such as this one as part of the development strategy”, said Mr Arnaldo de Souza Benedetti, representative of the Worker’s group in the Governing Body session and a member of the General Workers’ Union of Brazil (UGT).

“Practically all countries that have succeeded in eradicating extreme poverty have applied some sort of cash transfer policy. Even in high-income countries, there are parts of the population that cannot guarantee their own subsistence through work. Addressing this reality through cash-transfer programmes is taking a decisive step towards the construction of fairer societies”, said the Employer’s representative, Mr. Dagoberto Lima Godoy, Senior Adviser of CNI (the National Confederation of Industry of Brazil). He also pointed out some aspects in which Bolsa Familia should be improved.

Unlike social programmes which provide universal assistance to the poor, Bolsa Familia has some conditionalities. It provides income support to families subject to their fulfilling of certain human development requirements, for example school attendance, vaccinations, nutritional monitoring and prenatal and post natal tests.

The rationale for designing the programme in this way is that poor families can become trapped into poverty over several generations if they are not able to access resources such as education, health, financial capital and networks.

“Poor children are likely to become poor adults unless steps are taken to improve their skills, avoid child labour and enable them to overcome the social and economic barriers faced by their parents. The Brazilian experience is an encouragement for all of us who work for the extension of social security to all. It is a good example of how to implement a massive and rapid social inclusion process at a relatively low cost. This evidence is consistent with several studies conducted by the ILO which show that developing countries can afford to build a comprehensive, even if basic, social protection package”, said Assane Diop, Executive Director for Social Protection at the ILO.

“Given its employment and social protection approach, the Brazilian experience in cash transfer programmes can be seen as a strong reflection of a national Decent Work Agenda”, he added.

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