Situation and Priorities

Social protection situation

Paraguay's social protection system is fragmented with low coverage. Non-contributory programmes such as Tekoporá and Tenonderá offer support to vulnerable families with children and youth, while the Pension Alimentaria serves as a basic pension for the elderly in extreme poverty. Coverage remains limited, and benefits do not necessarily lift beneficiaries out of poverty. Contributory social security covers dependent workers in the formal economy, but many schemes face financial sustainability and equity challenges. Paraguay also lacks an unemployment insurance scheme.

Although access to healthcare is free and guaranteed through public institutions since 2007, households that contribute to the social security system generally use services provided by social security agencies or those in the private sector, financed through private insurance schemes. The low formalization of the labour market, with formalization at 62 per cent of non-agricultural work, limits individual and household’s access to social security.

COVID-19 and other crises

Paraguay responded quickly and efficiently to the pandemic with social protection measures including new cash transfer programmes for workers in the informal economy (Pytyvõ), extension of coverage and benefit levels (Tekoporã and Pension Alimentaria). Though they proved effective in containing the socioeconomic impact of the Covid-19 pandemic, the measures subsided as the crisis receded.

COVID-19 highlighted the need for a statutory unemployment insurance (UI) system, with the ILO providing extensive support in the design of a project for a contributory UI scheme.

Paraguay is also exposed to climate risks: droughts, floods, wildfires, and extreme heat limit households’ capacity to generate income (especially in the rural sector) and threaten livelihoods tied to two industries critical to Paraguay’s economic structure—cattle and soybean.

Government and social partner priorities

The government has continued to enhance the coverage of the non-contributory old-age scheme, reaching 55.4 per cent of the population aged 65 or above in 2023 (an increase of 40 percentage points from 2010).

The government and social partners have prioritised actions to promote the transition from the informal to the formal economy, updating the Formalization Strategy in consultation with the social partners to cover the 2025-2028 period. The government has also begun implementing its policy to ensure that 20 per cent of all public procurement is taken by micro, small and medium enterprises and is seeking ways to support youth’s transition to formal employment, thus ensuring an early access to contributory social security schemes.

The sustainability of the contributory social security schemes is another priority, and the government has recently adopted changes in the calculation of old-age pension benefits to promote the financial sustainability of the main pension fund.

However, contributory pensions still face financial sustainability and equity challenges. The government and social partners have committed to advancing the debate in line with the recently ratified Convention on Social Security (Minimum Standards), 1952 (No. 102).

ILO Projects and Programmes

• Fortalecimiento Actuarial IPS Paraguay - Fase II
  01.06.2023 - 30.06.2025 USD 43,680

Results

The ILO has been a close partner of the Ministry of Labour since its creation in 2014, assisting with capacity-building activities related to the implementation of social protection programmes according to international norms, statistical collection and analysis, and expanding effective access and coverage.

• A través de la Ley no. 7.235 aprobada el 13 de diciembre del 2023, Paraguay ha creado una nueva institución pública, la Superintendencia de Jubilaciones y Pensiones, encargada de velar por el cumplimiento de las obligaciones de las distintas cajas prove...
  2023 PRY131
• El gobierno de Paraguay ha mejorado su capacidad para diseñar y gestionar programas de protección social con atención a la gestión de las finanzas públicas. Más de 140 funcionarios públicos, 21 hombres y 121 mujeres, de más de 30 agencias públicas cuent...
  2022 PRY131
• El Decreto presidencial No. 4775 de enero de 2021, declara al Sistema de Protección Social Vamos! como prioridad nacional, abriendo el camino para la consolidación y mejor articulación de los distintos instrumentos de protección social en el país
  2021 PRY131

Funding gaps / Support the ILO

US$ 200,000

Implement an unemployment insurance scheme

Impact: 600,000 workers in the formal economy

US$ 100,000

Strengthen and mainstream social dialogue instruments through capacity building & participation of workers' & employers' organizations

Impact: 1,600,000 workers

US$ 400,000

Assist the social security agency in reforming is pension fund, improving its health insurance and the management of the affiliation, collection and control systems to ensure its long-term sustainability

Impact: 600,000 workers in the formal economy

US$ 100,000

Develop the emergency social protection schemes to support regions afflicted by slow and fast onset disasters (e.g. droughts, floods, forest fires)

Impact: 1,000,000 workers in the informal economy

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