3. Extending Coverage In five of the nine systems(Peru, El Salvador, Mexico, Colombia, and the Dominican Republic—and also in Bolivia), the EAP contributory coverage ranges between 21% to 38%, less than the 50% recommended by the ILO; also, these countries have the largest informal sector, but successful practices have been identified to expand coverage: a) Setting gradually the mandatory legal affiliation, starting with professional self-employed workers hired with a minimum income(as is done in Costa Rica, Uruguay, Chile, Colombia, and in the current bill draft in Peru), then other unionized self-employed workers, such as taxi drivers, etc., would follow; b) The legal obligation, by itself, would not necessarily extend coverage, hence the recommendation would be to equalize the percentage paid by the self-employed workers to that of salaried employees and adjust their pensions actuarially, or grant a state subsidy or a solidarity contribution as a matching incentive upon registration and payment of contribution to low-income self-employed workers(as done in Costa Rica, Bolivia, and Peru—recently), which would imply less costs than granting these workers a non-contributory pension at the end of their working life; another alternative would be to award them benefits granted to salaried workers(Chile); c) In the Dominican Republic, the contributory-subsidized program that was designed by the structural reform in order to incorporate self-employed workers must be implemented; d) Domestic-service employees have mandatory coverage in most countries but it is not implemented; to achieve this, their working conditions have to be regulated, their unionization and collective bargaining promoted, a minimum tax base established, and a home inspection developed and sanctions on tax-evaders imposed, especially to employers(Uruguay and Costa Rica); e) Likewise, salaried agricultural workers(especially in large plantations) or cooperative members must have mandatory affiliation(Uruguay and Costa Rica); f) It is advisable to combine pension coverage with health coverage as the latter is usually more important for these groups than the former; 210
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Evaluation of four decades of pension privatization in Latin America, 1980-2000 : promises and reality
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