Social Protection and Human Capital Development

Development challenge 

The region grapples with challenges in developing its human capital, facing gaps in access to social services, such as education and health and quality jobs. These disparities exist across income levels, region, gender and diverse groups. 

Problem explanation: 

Despite progress in poverty alleviation, 29% of Latin America and the Caribbean’s population – equivalent to 183 million people – live in precarious conditions, without sufficient income to meet their basic needs. Challenges stemming from lack of access to essential conditions begin at an early age and persist throughout the life cycle. 

The absence of essential services and education opportunities hinders human-capital development, perpetuating intergenerational cycles of poverty and affecting productivity, thus impeding sustainable economic and social growth. A child born in the region reaches only 60% of their productive potential if access to quality health and education services is absent. 

These constraints on productive potential are compounded in a challenging labor market, where 55% of workers operate in the informal sector. This results in low wages and further exacerbates poverty and inequality. In a region where 70% of people rely exclusively on work to support their families, this situation represents a significant barrier to economic well-being.  

Data illustrating the problem:  

• One in five children aged three to four years old experiences developmental delays, jeopardizing their maximum potential. Remarkably, by age five, children from lower-income families exhibit cumulative delays of 1.5 years in language development compared to those from the highest quintiles. 
• Four out of five children under the age of 10 cannot read or write. The percentage has increased between 2019 and 2021, and in regions such as northeastern Brazil, the gap between the wealthiest 25% and the poorest 25% can reach up to 40 points. Digital disparities further limit learning and development. 
• Lack of human capital contributes to low labor productivity, resulting in high levels of poverty. Over the last 30 years, the region has experienced an annual growth of 1% in labor productivity, compared to 1.4% in the OECD region and over 4% in Asia. This underscores the importance of policies aimed at developing skills and enhancing productivity. 
• Seventy percent of deaths in Latin America and the Caribbean are attributed to chronic diseases, and 40% are premature and preventable. The region faces lags in the coverage and quality of health services, with around 70% of preventable deaths imputable to the quality of medical care and 30% to lack of access. 

Solutions:  

• We support adaptive, efficient and equitable systems for social protection and human capital. These systems enable citizens to realize their potential and cope with crises related to climate change, food insecurity, population aging and the transition to a green economy. 
• We endorse income assistance to poor households through conditional cash transfers, access to education, training and quality jobs with social security. Additionally, we aim to develop comprehensive and multi-sectoral solutions that facilitate human-capital accumulation and prepare society to withstand crises and shocks. 

Description of main solutions:  

1.     Expanding cash transfers, prioritizing the most vulnerable populations living in extreme poverty, and strengthening conditionalities to enhance the accumulation of human capital.  

• We support clients with two essential innovations: 

         a.     Efficient and flexible cash-transfer programs to alleviate structural poverty and provide protection against shocks, employing innovative targeting approaches.  

         b.     Cash-transfer programs designed to incentivize human-capital accumulation by promoting increased consumption of nutritious foods, health visits, access to prenatal care, school attendance and child development, while ensuring quality and response to shocks. 

2.     Building adaptive social-protection systems capable of identifying vulnerable populations and rapidly responding to new shocks, such as extreme-weather events, to ensure the continuity of care services that promote human-capital development. 

3.     Improving the quality and efficiency of spending to expand the coverage of health services, child development, education and skills training, integrating good practices in infrastructure construction, management tools and human-capital strengthening. This includes proper use of technology to reach more people and inclusion that considers population diversity and migration flows. Services requiring expansion include: 

         a.     Programs inside and outside the classroom aimed at accelerating learning, particularly in basic skills, implementing trajectory-     protection systems through early detection of at-risk students, combined with interventions such as school feeding programs and   scholarships. 

         b.     Equipping the region's human capital with productive skills that align with the needs of productive sectors, fostering formal employment, and ensuring high coverage of social-security protection and pension schemes in the region. 

Examples of projects and initiatives with impact:  

• In Honduras, we financed a cash-transfer program to increase household income and access to basic education, health and nutrition services. Directly benefiting 50,000 households in extreme poverty, the program will also involve approximately 165,000 children in nutrition and child-development programs, aimed at promoting human capital. 
• In El Salvador, we bolstered the resilience of households affected by adverse events, including those induced by climate change, by establishing an integrated shock-responsive social-protection system. The system includes temporary cash transfers to mitigate impacts and accelerate the recovery of households affected by shocks, while also seeking to improve child development. 
• In Uruguay, we are supporting human-capital development by building childcare centers for children under the age of three and implementing instruments to enhance quality. 

• In Panama, we are supporting the National Registry of Beneficiaries and its expansion to a Universal Social Registry that can identify populations living in poverty, extreme poverty and vulnerability. Exchange platforms for administrative information will enable automatic updating and user-information consultation, along with predictive tools to classify household risk to shocks. The objective is to establish a more agile and flexible social-protection system. In addition, the entire management cycle of cash-transfer programs will be automated. 

   

We promote programs inside and outside the classroom to assist countries in accelerating students' learning. 

• Through the Aprendamos Todos a Leer (ATAL) program, developed by the IDB and partners in Colombia (initially, the Luker Foundation, and later, the Carvajal Foundation), we have supported Colombia in boosting basic learning and skills development. According to impact evaluations, after five years of this intervention, students improved their reading skills by up to 30%. The program has scaled up to other countries, such as Panama and Brazil, benefiting 1.2 million children and teachers to date. 
• Remote tutoring to accelerate basic learning in a cost-effective manner. Students who received eight tutorials in fundamental mathematics learned 30% faster. In addition, benefits were observed in socio-emotional skills. We have conducted six pilots in Mexico, Argentina, Guatemala and El Salvador. Another six are underway in the Dominican Republic, Colombia, Ecuador, Peru, Paraguay and Brazil. 
• We have partnered with the World Bank to support digital transformation in Latin America and the Caribbean, aiming to accelerate learning and school connectivity. We seek to elevate digital standards, reduce costs and establish shared parameters to estimate gaps in public digital infrastructure. We are developing public goods for digital transformation, including a map of schools’ connectivity and a platform for enhancing skills in digital teaching. Over 50,000 educational centers and 500,000 teachers are expected to benefit from the development of digital competencies. 

We foster development of human capital through skills-training initiatives for employment: 

• In alignment with the demands of the productive sectors and employers, we offer training in new food technologies and technological innovation in the agricultural sector of Argentina. Over 12,500 students from secondary technical schools are engaged in these training programs, which incorporate virtual components, mentoring and simulator-based learning. 
• In Jamaica, we have trained over 4,000 young people to meet the demands of the global services sector, leading to a 168% increase in employment within the sector. 
• In Mexico, we are promoting formal employment with a universal social-security initiative, focused on incentives for employers of low-income workers. This program aims to benefit over 70 million active workers by allowing them to finance their retirement with an individual account. It seeks to decrease the poverty rate among individuals over 64 in Mexico from 42% to 35%, increase the number of older adults receiving a non-contributory pension from 4.5 million to 5.3 million people, and raise the value of the non-contributory pensions above the poverty line. In addition, it aims to increase women’s total pensions by 7%.