Economic Reforms, Social Policy, and the Family Economy in Chile

By Montecinos, Veronica | Review of Social Economy, Summer 1997 | Go to article overview

Economic Reforms, Social Policy, and the Family Economy in Chile


Montecinos, Veronica, Review of Social Economy


INTRODUCTION

Chile has experienced sweeping political and policy transformations in the second half of this century. After a long tradition of expansion in the coverage of social services, in the early 1970s, a military regime introduced market reforms that led to a marked deterioration in income distribution (See Tables 1 and 2). Authorities promoted the withdrawal of state social protection, except for the poorest income groups. In the 1990s, the return to democracy changed the direction of social policies without altering the priorities in economic policy. This article analyzes how major changes in development strategies and welfare policies impact the well-being of women and children.

[TABULAR DATA FOR TABLE 1 OMITTED]

TABLE 2: Percentage Distribution of Household Consumption

Income Quintile             1969         1978         1988

Lowest 20%                   7.7          5.2          4.4
20%                         11.7          9.3          8.2
20%                         15.6         13.6         12.7
20%                         20.6         21.0         20.1
Highest 20%                 44.5         51.0         54.6

Source: Arenas de Mesa et al., in progress.

EVOLUTION AND CHARACTERISTICS OF THE CHILEAN WELFARE SYSTEM

Chile established a system of social protection - modeled on the Bismarckian experiment - in the mid-1920s. Social insurance covered mostly urban wage earners and the dependent families of insured workers.(1) Although the Chilean social security system evolved into one of the most complex - and costly - in Latin America, important forms of gender and class inequality persisted. Social programs were shaped by a rigid legalistic tradition and patriarchal institutions. Those who were less capable of political mobilization remained unprotected, despite attempts to increase efficiency, universalize benefits, and reduce costs (Mesa-Lago 1978, 1985; Borzutzky 1982).

WELFARE POLICIES FOR WOMEN AND FAMILIES BEFORE MARKET REFORMS

Despite the achievement of almost universal coverage in health care and primary education, the needs of those who were at the margins of what the laws assumed to be the typical forms of salaried work and family arrangements were systematically neglected. Many women and children were entitled to few or no social security benefits because they were employed in segregated segments of the labor market or were not legally tied to an insured worker (Arenas de Mesa and Montecinos 1995).

Women employed in the formal sector of the economy received social security benefits above the national average and benefited from policies designed to favor working women.(2) In Chile, the labor force participation rate is lower for women with lower incomes and educational levels. Several studies have documented the limitations faced by poor women when they want or need to combine domestic and paid labor. By contrast, middle- and upper-class women have had a much easier access to paid employment, due to more permissive cultural norms, higher levels of education and the widespread availability of domestic service.(3)

NEOLIBERAL ECONOMIC REFORMS AND THE WELFARE OF WOMEN AND CHILDREN

The military regime altered the principles of the social protection system and redefined the country's development strategy.(4) During this period (1973-1990), social spending was reduced as part of a package of drastic neoliberal economic reforms and massive institutional changes.(5) When the debt crisis of the early 1980s erupted, the short-lived boom of the late 1970s, financed with foreign credits, turned into a major recession (Meller 1990). Unemployment affected a third of the labor force in the early 1980s, and by the end of the decade, poverty reached about half of the families (See Table 1).

Despite the regressive distributional consequences of economic restructuring and recession, the state adopted a minimalist approach in the provision of social services, which was aimed at mitigating extreme poverty. …

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