Honduras
This section provides background information about social protection in Honduras summarising the findings of the project as regards:
It also outlines the general findings of the project regarding the employment scenario and the characteristics of the current major employment-related policy initiatives in the country.
Social Protection in Honduras
Around two-thirds of the Honduran population live in poverty, and this persistently high level of deprivation, combined with rapid population growth, presents a substantial challenge for social protection policies and calls for increased public social investment and coordinated poverty reduction efforts.
In 2010, the Honduran public investment in social security, social assistance and health amounted to around 10% of the country's GDP, equivalent to 31 billion lempiras. Of this overall social protection budget, health care and social security consumed 88% and social assistance 7.8%. The different types of social protection spending and their budget allocations are listed in the table below.
Honduran social protection is not, as of yet, guided by a coherent National Social Protection Policy. Nevertheless, a consultation process has been organised to bring about a National Social Protection Policy (Política Nacional de Protección Social). The tentative discussions have identified poverty and vulnerability reduction, human capital creation and support to high-risk groups such as street children and the disabled as some of the primary objectives of social protection. In addition, there are parallel processes to reform more specific areas of social protection, such as pensions.
Estimated Honduran public social protection budget by category, 2011
Source: Perdomo, R. 2011, Informe para discusión: Protección social - Honduras
Social security |
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In the first decades of the 20th century, social forces in Honduras embarked on a quest for social security. In 1959, the first Law on Social Security was introduced, reflecting a Bismarckian approach to social security - providing protection to salaried workers, financed by workers’ and employers’ contributions.
The Honduran Social Security Institute (Instituto Hondureño de Seguridad Social, IHSS) was established in1959 to cover all formal sector workers. It continues to be the largest social security provider. Five other sizeable occupational social security schemes were created in the following decades to provide contributory pensions and other benefits for specific groups of employees, such as teachers, the military, employees of the National University and public sector workers. IHSS is the only instance that also provides health care services in addition to benefits in old-age, maternity and other contingencies.
While considerable development has taken place since these early years of social security, it is acknowledged that the modern-day Honduran social security system faces notable challenges, among them a low coverage, an institutional fragmentation and an uncertain financial sustainability. Also, the levels of benefits vary greatly, with many cases where the value, for instance, of an old-age pension not reaching a level sufficient to guarantee the satisfaction of basic needs.
Interestingly, these challenges are rooted in the realities of the Honduran labour market. For example, the high level of informality and unemployment inhibit the expansion of coverage, and unstable work relationships do not allow workers to realise contributions in an uninterrupted manner.
For these and other reasons, social security is currently guaranteed to only around 20% of the population, or 45% of salaried workers. In other words, 763 000 workers out of an economically active population of 3.3 million contribute to and receive social security benefits.
In 2010, IHSS had the highest coverage of all the social security schemes of approximately 600 000 workers and close to 900 000 of their family members. IHSS is of crucial importance in extending social security coverage, as the other institutes cover only workers in specific professions with a limited number of workers. IHSS coverage has traditionally concentrated in cities, but there have been efforts to expand it, e.g. to the older children of workers and outside the major urban areas.
The government has announced plans to extend social security coverage to 90% of salaried and 50% of non-salaried workers and to work towards the ratification of ILO Convention No. 102 concerning the minimum standards of social security. In addition, the Secretariat of Labour and Social Security has addressed the challenges of expanding coverage and improving the level of benefits in its plans. The need for efforts to improve the coordination and coherence of the system is also being addressed.
Social Assistance |
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The traditions of Honduran social assistance are long. In the aftermath of the 1980s debt crisis and the structural adjustment programmes of the 1990s, social safety net schemes were employed to alleviate the poverty that resulted from the combination of economic stagnation and reduced public social spending. The most notable of these programmes are the PRAF transfers, established already in the beginning of the 1990s. Another scheme worth noting is the Bono 10 000 conditional cash transfer for poor families that was introduced in 2010.
Social assistance has traditionally been envisioned mainly as a tool for addressing the needs of specific vulnerable groups, such as street children or disabled persons. Its use as a strategic tool for more generalised poverty reduction in the framework of a social protection system has not yet been successfully explored, as the persistently high poverty rate suggests.
The different Honduran social assistance schemes reach a large share of those in poverty. The most ample coverage is achieved by the PRAF in-kind and cash transfers with 12 sub-schemes directed at different vulnerable groups. PRAF covers almost 700 000 beneficiaries. While only recently introduced, Bono 10 000 already covers 160 000 people. There are plans to extend the programme so as to reach 600 000 beneficiaries by 2012. Interestingly, Bono 10 000 provides an exceptionally high benefit level, drawing from the previous lessons of the PRAF schemes, which were found to have a subdued impact on poverty levels partly because of the limited value of the transfers. Bono 10 000 beneficiary families may receive up to 10 000 lempiras (approximately 530 dollars) a year if children aged 6 to 18 attend school regularly and small children and pregnant or lactating mothers in the household attend health check-ups.
Public expenditure on social assistance programmes in Honduras, 2010
Source: Perdomo, R. 2011, Informe para discusión: Protección social - Honduras
* 284.7 million lempiras were transferred from PRAF to Bono 10 000. Therefore, PRAF net transfers amounted to 351 million lempiras in 2010.
** Calculating the number of beneficiaries is complex. If a household member receives a benefit, all household members are considered beneficiaries of the scheme.
Health |
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Article 149 of the Honduran Constitution designates the Secretariat of Health (Secretaría de Salud) as the authority that coordinates the health sector based on the first-ever long-term National Health Plan 2021 (Plan Nacional de Salud 2021), published in 2005. The plan aims to tackle the challenges faced in the health sector by increasing health coverage and reducing the share of out-of-pocket spending, among other things.
Total Honduran health spending reached 7.1% of GDP, or 20.8 million lempiras, in 2010, with no substantial upward trend in recent years. It has been estimated that the government currently covers 70% and private spending comprised 30% of total expenditure on health.
Around 57-60% of Hondurans are covered by public health care, 11-13.7% by IHSS, and approximately 13% have the financial means to access private health services. The remaining 16.8-13.4% who are not covered by health services belong to the poorest segments of society and are usually residents of the most remote areas outside the reach of health services. A source of concern is that children and youth aged 5-14 represent the group with the most difficulties in accessing care. Only 23% of the people in this age group enjoy access to health services.
Share of population with access to health care in Honduras, 1990-2005
Source: Secretariat of Health: "Boletines de atención ambulatoria".
* 2006-2008 average, source: AT2/Departamento de Estadística/SS, "Boletín ambulatorio No. 20".
The proportion of people that are access to get health care has increased especially in the 2000s, particularly due to the presence of externally funded and NGO-led health projects and the improvement of roads that allow access to health centres.
Employment in Honduras |
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Honduras has experienced moderate GDP growth during the past decade, with the communication, transport and financial service sectors as the engines of growth. The bulk of the GDP continues to derive from manufacturing and financial services. Reliance on family remittances from abroad is evident, as these amount to 20% of GDP.
Basic economic indicators of Honduras, 2001-2010
Note: The first three indicators are annual variations presented in percentages.
Source: The first three indicators are from: ECLAC, 2010: "Estudio económico de América Latina y el Caribe";
Income per capita obtained from the Central Bank of Honduras: www.bch.hn/pib_base2000.php
Note: The first three indicators are annual variations presented in percentages.
Source: The first three indicators are drawn from: Estudio económico de América Latina y el Caribe 2010, ECLAC: Santiago. The 2010 figures are ECLAC's preliminary estimates, based on: Balance preliminario de las economías de América Latina, ECLAC: Santiago. Income per capita obtained from the Central Bank of Honduras, http://www.bch.hn/pib_base2000.php.
Even though the national unemployment rate is currently situated at a moderate 6%, employed salaried workers earn, on average, low incomes. Many receive the minimum wage, or less. Until 2009, the growth rate of the minimum wage was inferior to the rate of inflation, eroding low-income workers’ buying power. In 2009, the minimum wage was substantially increased by a governmental decree. Despite this raise, most workers continue to fall into the category of the working poor. Poverty is particularly widespread among those working in agriculture or as own-account and contributing family workers. Roughly 36% of workers earn low salaries (less than 2/3 of the median salary), and this rate rose in the 1990s and 2000s.
Poverty, lack of social protection and informal employment are closely linked phenomena in the Honduran case. Most Hondurans, 58% of those not working in the farming and livestock sector, hold informal jobs. Their social security or labour rights are not safeguarded.
Poverty incidence in different sectors and occupational categories in Honduras (%), 2007
Source: INE: Encuesta permanente de hogares de propósitos múltiples, 2002-2007.
Note: the primary sector includes agriculture, forestry, fishing and mining, the secondary sector manufacturing,electricity, construction. Trade (commerce) includes also transport.
These labour market challenges have been tackled through several policies, plans and programmes, while there exists no general national employment policy as of yet. The Plan of the Government envisions action to promote employment and create the National Employment Service (Servicio Nacional de Empleo). The specific needs of youth between the ages 14 and 30 are addressed in the Youth Employment Plan (Plan de Empleo Juvenil 2011-2013). In addition, the National Plan for the Promotion of Investment (Plan Nacional de Promoción de Inversiones) was recently introduced to boost investment and the economy.
The country's labour market institutions are in need of strengthening, as for instance the disobedience of the minimum wage legislation demonstrates. This institutional weakness has severe consequences for employability and equity. In addition, the employment programmes currently implemented lack resources and are not connected with a wider macroeconomic framework, which limits their impact.
This section is based on the findings of the following employment and social protection studies produced in the project (only available in Spanish; documentos en español):
- Klein, E. 2011, Consideraciones para definir una política de empleo para disminuir la pobreza
- Perdomo, R. 2011, Informe para discusión: Protección social - Honduras
These and other studies and documents produced in the project may be accessed here.
Further information on social protection in Honduras: ILO GESS platform: Honduras country profile
Workshops organised in Honduras in the framework of the EU/ILO project: