Emerging social security systems in Chile, Namibia, and South Africa : a quest for comparative critical benchmarks for Lesotho

• Date: 01 January 2016
• Author: K.E. Mosito
• Published date: 01 January 2016
• DOI: 10.10520/EJC196793
• Pages: 1-45

EMER GING SOCIAL SECURITY SYSTEMS IN CHILE,

NAMIBIA, AND SOUTH AFRICA: A QUEST FOR

COMPARATIVE CRITICAL BENC HMAR KS FOR LESOTHO

Mosito, K.E.*

Abstract

The Kingdom of Lesotho has for some time now, been

desperate for establishing a comprehensive national social

security scheme for its pe ople. The government’s

commissioned studies and reports hitherto obtained, do not

seem to be geared tow ards a model informed by the

experiences of other nations operating different social security

and social protection models. This article is part of the various

efforts by the writer aimed at filling that lacuna by exploring

critical benchmarks for Lesotho from various jurisdictional

dimens ions.

1.0 Introduction

In order to establish a viable consolidated national social security

scheme for Lesotho, it is worthwhile to undertake some critical

benchmarks for such a scheme. The objective of this article is to

comparatively examine the Chilean, Namibian and South African

social security systems with a view to determining critical

benchmarks for Lesotho. This will be undertaken in three main

ways. Firstly, the Chilean, Namibian and South African social

security models will be explored. Secondly, some critical

benchmarks for Lesotho will be undertaken. Lastly, the article will

highlight some salient points resulting from the discussions in the

article.

2 LLJ Vol. 24 NO. 1

2.0 THE CHILEAN SOCIAL SECURITY MODEL

2.1 Background

Chile is a relatively affluent middle-income developing, South

American country.1 Its socio-economic performance is ahead of that

of Lesotho, Namibia and South Africa.2 It is however, the first

country in the world to privatise its social security system. It is

therefore advisable to see how it went about this, and what lessons

can be learned by Lesotho from Chile’s experi ence.

2.2 Constitutional overview

Chile is, like Lesotho, a constitutional state. The Constitution of

Chile provides for a fundamental right to social security.3 This

Constitution obligates the state to establish compulsory social

security schemes.4 It also vests the supervision of the adequate

exercise of the right to social security in the state.5 It prohibits the

loss of social security rights as a penalty. 6 It also provides for a

* Dip(Law); BA(law); LL.B( NUL); LL.M(Edin); PhD(UCT), Associate

Professor of Law; Dean of the Faculty of Law(NUL) and President of the

Court of Appeal of Lesotho.

1 Chile ranked No. 38 on the UNDP Human Development Index.,2006.

According to the said index, the country’s life expectancy at birth (years)

(HDI), 2004 was 78.1. Its adult literacy rate (% ages 15 and older) (HDI),

2004 is 95.7 at birth (years) (HDI), 2004. Its combined gross enrolment ratio

for primary, secondary and tertiary schools (%), 2004 was 81.Its GDP per

capita (PPP US$) (HDI), 2004 was 10,874. Its life expectancy index was

0.89.The Education index placed the country at 0.91. The country’s GDP

per capita (PPP US$) rank minus HDI rank was 18.

2 Ibid. Namibia’s and South Africa’s socio-economic factors are bri efly

summarised in the relevant sections dealing with those respective

countries for ease of reference.

3 See 19(18) of the Constitution of Chile 1980 (as amended).

4 See 19(18) of the Constitution of Chile 1980 (as amended).

5 Article 18 of the C onstitution of Chile 1980.

6 Article 19(h), of the Constitution of Chile.

3

fundamental right to education.7 There is also a fundamental right

to protection of health.8 The state is obliged to protect the free and

egalitarian access to actions for the promotion, protection and

recovery of the health and rehabilitation of the individual.9

2.3 The develo pment of Chile’s social security System

Chile’s original social security system was designed in the 1920s as

a collective capitalisation fund.10 Chile was the first country in Latin

America to establish a national social insurance fund in 1924. The

system was fractionalised into a large number of separate pay-as-

you-go defined benefit (PAYG-DB) plans for different

occupations.11 Each plan had its own rules.12 Later on, the system

became insolvent due to mismanagement.13 The rati o of

contributors to beneficiaries dropped significantly later on.14 In 1980

the country introduced a new system characterised by a funded

feature with privately managed individual accounts, supplemented

7 See Article 19 (10) of the Chilean Constitution.

8 Section 19(9) of the Constitution of Chile.

9 Article 9 of the Constitution of Chile.

10 Edwards, S. and Edwards, A. C. 2002 “Social Security Privatization

Reform and Labour Markets: The Case of Chile” University of California,

Los Angeles, and National Bureau of Economic Research, at p.467.

11 Kritzer, Barbara E. 2000. “Social Security Privatization in Latin

America.” Social Security Bulletin 63 (2): 17-37. See, Williamson, John B.

and Gilberto Hochman. 1995. “Innovative Old-Age Security Models for

Developing Nations: Chile and Brazil.” Journal of Aging Studies 9: 245-262.

12 Myers, Robert J. 1992. “Chile’s Social Security Reform, After Ten Years.”

Benefits Quarterly 8 (Third Quarter): 41-55.

13 Kritzer, Barbara E. 2000. “Social Security Privatization in Latin

America.” Social Security Bulletin 63 (2 ): 17-37. See, Williamson, John B. and

Gilberto Hochman. 1995. “Innovative Old-Age Security Models for

Developing Nations: Chile and Brazil.” Journal of Aging Studies 9: 245-262.

14 Williamson, John B. and Fred C. Pampel. 1998. “Does the Privatization of

Social Security Make Sense for Developing Nations?” Inter national Social

Security Review 51 (4/98): 3-31.