Covid-19 is forcing a reconsideration of social welfare everywhere but especially in Latin America, the world’s most unequal continent. In a region where more than half of all workers are in the informal economy, some countries are perforce wondering if they can implement a basic income scheme, whereby citizens receive direct payments from the state. Such schemes are most often discussed in advanced economies. But other nations in the emerging world may find useful lessons from the Latin American experience — as they have in the recent past from Brazil’s famous bolsa familia scheme.
Brazil is not new to the idea of a basic income scheme. In 2004, it passed ground-breaking legislation that was never put into effect as the political focus went to enlarging other social programmes. The emergency of the coronavirus crisis has changed the dynamic.
It has exposed the size of Latin America’s vulnerable population, some 300m people. It has also shown up the inability of existing social programmes to help the poor. Chile is now considering a temporary basic income scheme; Brazil and Ecuador have already done so on an emergency basis. Bolivia has run such a scheme for the elderly since 1997. The main question is: can the region afford it? Fiscal accounts are under pressure and exports have collapsed. The answer is to limit eligibility.