Unsafe Unemployment in South America

Abstract

The article explores the challenges of social protection policies in South America by analyzing the Chilean and Brazilian models of unemployment insurance policies. The old challenges of social protection in a dualistic market add up to new challenges resulting from changes in the labor market and the impact of the crisis caused by the COVID-19 pandemic. The text is based on a literature research on unemployment insurance and on statistical data. The conclusions point to the insufficiency of the individual accounts model in substitution to the model currently adopted in Brazil to guarantee the income of the worker while they are seeking for a job and the smoothing  the drop of the aggregate demand in the economic crises. The suggestion is that Latin American countries adopt the unemployment insurance policy and, where it exists, that the coverage and duration of the benefit be extended. In addition,  another type of unemployment insurance should be created to complement the current one but as a defined benefit and unrelated to the dismissal from a formal job. That will support both informal and formal workers in line with the unemployment assistance existing in several countries.