Income Protection Through Direct Employment Programmes: Recent Concepts and Examples from Latin America

The risk of unemployment in Latin America is high. Unemployment insurance exists only in a few countries; coverage is small, and virtually non‐existent in the informal economy. For this reason social protection policies for unemployed workers, defined in the broad sense, have addressed and strengthened the role of direct employment programmes and assistance through cash subsidies. This article describes the main features (financing and administration) of direct employment programmes in the region and their objectives, and evaluates their functioning in terms of targets and coverage, costs and impact. Available studies show that the net direct impact of such programmes on unemployment rates and on beneficiaries' incomes is in most cases relatively low. Nevertheless, in some cases they have helped to lower levels of unemployment and poverty, and have indirect positive effects that are more difficult to measure, such as incentives to economic recovery resulting from the chain effect on consumption of beneficiaries buying goods. For this reason direct employment programmes remain a fully valid mechanism, especially in social emergencies.