Jens Holst

Paraguay, one of the least developed countries in Latin America with almost 50 % of rural population, stands out as a country with high poverty, in large part due to a lack of growth. One and a half decades after the end of the Strössner dictatorship, political institutions are still weak and the implementation of democratic and participative social structures is lacking. The access to social protection is limited to a minority of the better off and mostly concentrated in urban areas. Recent estimations showed that only one of every eight Paraguayans is contributing to any kind of pension fund, and just 20 % of the population have a health insurance. Thus social exclusion in a generally poor and lately recessive socio-economic surrounding is a major problem and the main challenge for any Government that assumes the difficult task to consolidate the economic growth as well as the social protection of the citizens.

The actual pension system does not only fail in coverage due to the difficult inclusion of the wide informal sector. General regulation and equality of rights are also lacking, transparency is low, as effectiveness and efficiency are. The actual regime produces palpable limitations of work force mobility and has a devastating impact on public household wages. On the other hand, public spending in health is very low, even compared to other countries in the region, whilst private out-of-pocket-spending is affecting severely household income of the poor. The segregation of both the health insurance and the health care provision sector reduces the effectiveness of the overall system performance. On the other hand, the overwhelming problems are leading to the out-brake of a series of alternative health care financing mechanisms on a regional, local, cooperative or enterprise level. Especially the growing cooperative movement in Paraguay offers a wide range of health care financing approaches based on risk sharing, mutual aid and solidarity.

There is broad consensus that social protection interventions should be reinforced and implemented. This paper suggests investigating some outstanding experiences of European social protection schemes such as universality, solidarity, subsidiarity, participation and the im-plementation of a public-private mix. The historical evolution of social protection in Europe shows some comparable starting points and offers a wide range of successful practices to be translated into today's situation in developing countries. It is more, these general assets seem applicable as orientation points and guidelines for the forthcoming reform process. They facilitate the definition of goals, describe elementary conditions on the political as well as on the societal level and allow for general recommendations how to face reform processes to achieve success as well as sustainability. This paper concludes with a series of concrete ref-erences concerning the introduction and performance of the social protection reform, the po-litical viability and the major challenges in different phases of the process.

Here you can download he extensive Spanish report La protección social en Paraguay. Condiciones, problemas, desafíos y perspectivas de los sistemas de previsión.