Alexandre Guye-Bergeret

Examination paper – 8,623: Gesellschaft/Society:

Inequality
The Welfare State in Latin America
Extending the Typology Theory to the Region and Examining the Role of the Welfare State in
Providing Social Protection in Colombia
Abstract: This paper aims to extend Esping-Andersen's typology of welfare states to include Latin America, with a specific focus
on the Colombian regime. While Esping-Andersen's typology provided a comparative view of welfare states based on social
expenditures, it had limitations in capturing the diversity of welfare regimes. The paper explores the development of the welfare
state in Latin America, identifies three regime types in the region, and examines the case of Colombia. It discusses the challenges
and solutions for improving social protection in Colombia, including the role of non-state actors and the need for tailored policies
to address structural poverty and inequality.

1 Introduction

According to Esping-Andersen's (1990) definition, the welfare state encompasses the state's
responsibility to ensure a basic level of welfare for its citizens. The concept of the welfare
regime refers to the interplay between the state, the market, and the family in generating well-
being. In his seminal paper, Esping-Andersen presents a comparative analysis of welfare states
across countries, challenging the previous approach that solely focused on social expenditure
levels as an indicator of the state's commitment to welfare. This approach was deemed
misleading due to variations in the populations targeted by expenditures and differences in
purchasing power between countries.

The re-conceptualization of the welfare state is also of central importance in Esping-Andersen's

(1990) work. He introduces the notion of "de-commodification" as a service provided as a
matter of right, enabling individuals to sustain their livelihoods without relying solely on market
forces. However, the realization of de-commodification is subject to debate within the
development of welfare states, as workers often remain dependent on the market, making it
challenging to mobilize for solidaristic action. Nonetheless, de-commodification empowers
workers and reduces the absolute authority of employers.

Esping-Andersen's analysis identifies three distinct types of welfare regimes:

• Liberal regime: This type is characterized by means-tested assistance, modest universal

transfers, or limited social insurance plans. It primarily benefits low-income individuals,
the working class, and those dependent on state support. Examples of countries with
liberal welfare regimes include the United States, Canada, and Australia.
• Conservative/corporatist regime: In this regime, there is an emphasis on preserving
status differentials and attaching rights to social class and status. The redistributive
impact is generally minimal, as the regime upholds existing status differences. France,

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 Austria, Germany, and Italy are examples of countries with conservative/corporatist
welfare regimes.
• Social democratic regime: This regime is based on the principles of universalism and
the de-commodification of social rights, extending them to the new middle class. Social
democratic welfare regimes strive to promote the highest standards of equality.
Scandinavian countries exemplify this type of regime, although they are not entirely
devoid of crucial liberal elements.

2 The Welfare State in Latin America

2.1 Development

Esping-Andersen's research and typology have significantly contributed to the comparative

analysis of different welfare state types, moving away from a sole reliance on expenditure levels
as the criterion. However, these typologies have certain limitations. Arts and Gelissen (2010)
offer a critical evaluation of the typology, particularly highlighting its lack of exhaustiveness
and exclusivity, as well as its reductionist nature. They argue that there are more than three
regime types and that hybrid forms also exist. The typology's Western-centric approach fails to
adequately account for contrasting regions such as Asia, Latin America, Eastern Europe, and
Mediterranean countries that do not neatly fit into the identified categories. This paper aims to
extend Esping-Andersen's typology to include Latin America, with a specific focus on the
Colombian regime.

In the Latin American region, social insurance programs have evolved throughout the twentieth
century, primarily in countries characterized by a corporatist-statist welfare regime. However,
these programs predominantly benefited unionized urban formal workers and the military,
contributing to the exacerbation of inequalities and the gap between the economic and political
elites and the rest of the population, who were largely dependent on informal and rural labor
(Cruz-Martínez, 2019). The Latin American regimes during the industrialization era (1940s-
1970s) can be compared to the corporatist regime in Europe, as they were primarily linked to
social class and status in the labor market, with a significant role played by the family (Solano,
2019).

In a subsequent phase, inclusionary policies were introduced to extend social protection

mechanisms to encompass a broader population. However, the level of social expenditures and
coverage of welfare programs in the twenty-first century remains limited. The Economic
Commission for Latin America and the Caribbean argues that only 28.6% of households are
included in both social and labor protection systems (Cruz-Martínez, 2019). Social protection

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systems in Latin America suffer from fragmentation and inequity, and the commodification and
privatization of health and pension systems, driven by profit motives, have further exacerbated
inequality and undermined social welfare (Sojo, 2017).

2.2 Typology of Latin American Welfare Regimes

Esping-Andersen (1990) proposes three approaches for assessing whether and when a state can
be considered a welfare state:

• Historical transformation of state activities: This approach examines the extent to which
the state devotes its daily routine to servicing the welfare needs of households, with far-
reaching consequences.
• Distinction between residual and institutional welfare states: Residual welfare states
assume responsibility only when the family or market fails, limiting commitments to
marginal and deserving social groups, while institutional welfare states extend coverage
to the entire population. This approach focuses on the content of welfare states beyond
mere expenditure levels.
• Select criteria for judging welfare state types: This approach involves measuring actual
welfare states against a model and scoring various programs.

Building upon Esping-Andersen's theory, Solano (2019) develops a typology of welfare states
specific to Latin America and provides comparative studies among countries in the region. The
exclusion of other welfare trajectories, such as Mediterranean regimes in Europe or those in
other parts of the world, allows for the development of new typologies that consider the linkages
between the market, the state, the family, and other contextual factors (Barba, 2007). Solano
(2019) identifies three regime types: universalist, dual, and exclusionary.

The universalist and dual regimes in Latin America share similarities with conservative regimes
in Europe but differ in terms of the lack of a consistent democratic component, the presence of
stratification, the connection to organized social interests, formal employment as the main
pillar, and the importance of family support (Solano, 2019). The dualist regimes in Latin
America also exhibit a marked colonial legacy and a significant portion of society lacking social
security coverage. The third regime type, the exclusionary regime, is characterized by weak and
regressive state participation, often influenced by a colonial legacy, high levels of informality,
and heavy reliance on family support as the primary welfare provider.

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The table below allows to understand better the characteristics of each regime types.

Typology developed by Carlos Barba Solano (2019)

Welfare Countries included Historical contexts Comparative characteristics
regime types
Universalist Argentina, Chile, Quick Social states that promoted an
(or Costa Rica and industrialization expansion and universalizing of social
“conservative- Uruguay Significant rights, linked to formal employment
informal”) development of the Social policy favored middle income
formal labor market groups (industrial workers, public
and of worker employees and members of the middle
organizations class)
Relative ethnic and Greater institutional development in
cultural homogeneity social services: universal education and
health systems
Social security systems segmented by
social status and according to gender
Relatively high rates of formal
employment and social expenditure
Relatively high social security coverage
and amplification of social citizenship
High education coverage
Relatively low levels of inequality and
poverty
Family dependency in the area of care
provision
Dual Brazil, Mexico Quick Like the universalist regimes, they
(or “informal– industrialization concentrated on formal sectors in urban
familialist) Greater labor areas
informality Rural workers and informal urban
High ethnic and laborers along with indigenous peoples
cultural heterogeneity and the descendants of Africans were left
and significant on the margins of the main welfare
inequalities inherited institutions
from the colonial Their social security systems less
period developed and/or started later
Intermediate figures for inequality,
poverty, employment, social expenditure,
coverage of social security and education
and health
Strong family dependency in the
provision of care
Exclusionary Central American Weak Very limited social insurance schemes,
nations (without industrialization Great regressive and exclusionary (benefiting
Costa Rica and informality of labor only small oligarchies)
Panama) and markets Indigenous Social protection rests on family and
Andean countries: population are the community networks (not only in the area
Ecuador, Peru, majority or very of care)
Bolivia and numerous Socio-
Paraguay cultural exclusion
Table 1: Welfare State Typology in Latin America. Source: Solano, C. B. (2019). Welfare regimes in Latin
America: Thirty years of social reforms and conflicting paradigms. In Welfare and Social Protection in
Contemporary Latin America. https://doi.org/10.4324/9780429471087-2. p. 37-38

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3 The case of Colombia

It is noteworthy that Colombia, along with Venezuela, is not included in the classification of
welfare regimes. Both countries can be seen as hybrids between dual and exclusionary regimes.
Several reasons account for the development of social protection in Colombia, which will be
discussed below. The Latin American region has made attempts to transition towards more
liberal welfare models, particularly evident in pension reforms. However, countries with less
severe economic conditions, such as Colombia, approached liberal reforms cautiously and
preserved a central role for the public pillar in pension privatization.

3.1 Permissive fiscal conditions and welfare expansion

One significant factor that enabled the expansion of social-insurance systems in Colombia
during the 1990s was the permissive fiscal conditions resulting from conservative policies
pursued by elitist liberal and conservative governments in the 1970s. This conservative fiscal
approach allowed for resilience to shocks that affected the Latin American region (Stallings,
1990). Consequently, subsequent administrations were able to expand the coverage of the
previously limited social-insurance system (Haggard & Kaufman, 2008).

The political incentives to address social issues in Colombia arose from guerrilla violence and
drug trafficking, which imposed limits on the state's legitimate intervention (Haggard &
Kaufman, 2008). However, the emergence of popular and left-oriented groups, previously
marginalized, provided a new platform for advocating the state's commitment to providing
social protection, particularly in areas such as universal health coverage and education. As a
result, social expenditures increased significantly during the 1990s, accompanied by pension
and healthcare reforms.

3.2 Pension and healthcare reforms

In the 1990s, the Colombian government placed high priority on partial pension privatization,
which was coupled with a popular healthcare initiative. This reform encompassed a
combination of liberalizing and expansionist components, including decentralization, an
expanded role for private insurers, and the introduction of performance-based budgeting for
hospitals. Notably, the reform led to a substantial expansion of healthcare coverage, particularly
for low-income families, which increased from 20% in 1993 to 57% by 1997 (Haggard &
Kaufman, 2008).

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 3.3 Decentralization of education

In contrast, the education reform in Colombia was less successful than the healthcare reform.
The education reform aimed to transfer funding and responsibility to provincial and municipal
governments to improve efficiency but faced strong opposition from the Ministry of Education
and the highly centralized teachers' union (Haggard & Kaufman, 2008).

In summary, social policy reforms in Colombia included moderate pension reforms, a mixed
system with limited private sector participation; extensive healthcare reforms, involving
significant responsibilities transferred to departments and municipalities, increased
involvement of private providers, and expanded coverage through subsidized insurance
packages; and limited education reforms, characterized by a decentralization of responsibility
that yielded poor results (Haggard & Kaufman, 2008).

3.4 Fiscal constraints

Fiscal constraints play a crucial role in maintaining existing social commitments and expanding
social insurance in Colombia. While the evaluation of a welfare state often focuses on
expenditures, the expansion of fiscal revenues is equally important for sustaining a higher level
of social commitment. Research has shown that governments relying less on taxes, such as
those benefiting from income generated by natural resources from state-owned companies, tend
to be less responsive to their civil responsibilities and more prone to corruption compared to
states reliant on taxation (Smith, 2007). This complexity further explains the presence of
corruption at the state level in Colombia, particularly given the significant revenue generated
by the state-owned Colombian Petroleum Enterprise (Ecopetrol).

3.5 Stratification System for Social Justice

In an attempt to promote social justice, Colombia introduced a stratification system as an

additional measure. This system serves as a socioeconomic classification tool utilized by the
government to assess the economic status of households and establish pricing structures for
certain public services (Holland, 2018). It is essential to view social policy not only as a means
of redistribution but also as a solution to genuine market failures and a provision of public
goods (Barr, 2001). Examples of such positive externalities for society can be found in public
health and education sectors.

Under the Colombian stratification system, households are categorized into one of six
socioeconomic strata, ranging from 1 (representing the lowest income) to 6 (representing the

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highest income). This classification takes into account various factors, including the residence’s
location, neighbourhood characteristics, and the socioeconomic profile of its residents.

The stratification system offers benefits such as subsidized rates for public services like water,
electricity, and gas. Lower-income households in the lower strata pay reduced rates, while
higher-income households in the higher strata pay higher rates. The primary objective of this
system is to promote social equity and enhance the affordability of basic services for those with
lower incomes (Holland, 2018). However, it is important to note that the stratification system
is currently limited to public service rates. Expanding its scope could potentially lead to greater
social justice between strata, but it may also introduce additional challenges that are already
present. In practice, the system perpetuates socioeconomic inequality by reinforcing disparities
among different strata and by segregating individuals from the same socioeconomic level,
thereby creating socio-economic divisions.

3.6 Central Role of non-state actors

Another significant aspect in the Colombian context is the role played by non-state actors in
contributing to welfare. While the state remains the primary provider of comprehensive welfare
services, non state actors, including families, community-based organizations, religious
institutions, and NGOs, also play a crucial role in contributing to welfare in Colombia. These
non-state actors complement and supplement the efforts of the state by providing additional
support and services to individuals and communities. Families, as the primary units of social
organization, provide financial assistance, emotional support, and caregiving, particularly for
vulnerable members such as children, the elderly, and individuals with disabilities(Ríos Prieto,
2015). They play a fundamental role in ensuring the well-being and social integration of
individuals within Colombian society.

Community-based organizations, religious institutions, and NGOs in Colombia are also vital
contributors to welfare. These organizations offer various social services, including education,
healthcare, vocational training, and community development programs (Ríos Prieto, 2015).
They address specific social needs and often collaborate with the state to fill gaps in service
provision. In comparison to European welfare systems, the church and other religious groups
hold particular importance in Colombia.

While the state remains the primary actor in providing comprehensive welfare services, the
contributions of non-state actors, such as families, community organizations, and philanthropic
institutions, are indispensable for filling gaps, addressing specific needs, and fostering social
cohesion within Colombia's welfare system.

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 3.7 Hybrid regime type

Regarding the typology of Latin American welfare regimes and considering what has been
discussed above, Colombia (and Venezuela) were initially included in the dual typology, but
were later excluded due to their failure to achieve industrial development equivalent to
countries like Brazil or Mexico (Solano, 2019). This explains the classification as hybrids
between dual and exclusionary regimes.

3.8 Solutions

Moving forward, addressing the challenges and limitations identified in the Colombian welfare
system requires the creation of social welfare policies tailored to local settings to combat
structural poverty and reduce inequality. Special attention should be given to rural poor
populations and informal workers, who often face significant barriers to accessing social
protection. Moreover, enhancing elements of upward mobility within social promotion is
crucial in combating persistent poverty (Ríos Prieto, 2015).

The reliance on non-state actors, while valuable, should not be a substitute for an effective and
trustworthy state. Efforts should be made to strengthen the state's capacity to reduce
inequalities, enhance transparency, and combat corruption. Additionally, tackling the high level
of commodification within Colombian society is essential in achieving greater social justice.

In conclusion, Colombia's welfare system exhibits a mixture of characteristics from both dual
and exclusionary regimes. The country has implemented moderate pension and extensive
healthcare reforms, while education reforms have been more limited in their success. Fiscal
constraints and the role of non-state actors further shape the Colombian welfare landscape. A
stratification system has been introduced to address socioeconomic disparities, but it also
perpetuates socioeconomic inequality and segregation. By recognizing the importance of both
state and non-state actors, addressing specific challenges, and promoting social justice,
Colombia can work towards building a more inclusive and effective welfare system.

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Aids
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