• Opinion
  • July 12, 2019
  • 12 minutes
  • 0

Chile’s innovation lab is giving the middle class a makeover

Opinion: Chile's squeezed middle class gets a helping hand

This opinion article was written by Roman Yosif, Executive Director, Laboratorio de Gobierno, Chile. For more like this, see our government innovation newsfeed. 

A recent OECD report called Under Pressure: The Squeezed Middle Classprovides an in-depth focus on the current situation of the middle class as an economic social group in OECD countries. 

It underlines the feeling many have of being left behind in different aspects of life, such as labour, consumption, wealth, and debt. 

Indeed, this same diagnosis was reached by the current President of Chile, Sebastián Piñera, which led him to consider the Chilean middle class as one of the key points of his government program. 

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That is why, at the beginning of 2018, the Ministry of Social Development and Family put together a special team who were tasked with creating a social security system that focuses on mitigating adverse consequences of shocks, and ensuring people recover quickly from economic hardship causes by these shocks.

By creating new instruments and further developing existing ones, the middle class will be protected from risk factors such as getting ill or losing the job, which generates greater insecurities. 

As the task was great, this team decided to seek out the help of Laboratorio de Gobierno, the public innovation agency which depends from Ministry of the Presidency, in the conviction that a new way of working was necessary to achieve a good result that would improve people’s lives. 

The cost of bureaucracy

While the government program already outlined which adverse personal shocks should be included in the social security system, we still had to understand, from the users point of view, the problems they face. So we started putting ourselves in the shoes of those who had to face severe health problems, including elderly people who can’t care for themselves, people who have difficulty finding a job, people who are unable to pay for their children’s higher education and victims of violent crimes. 

It was also an opportunity for Laboratorio de Gobierno to try out our new work model: a flexible and agile consulting service that facilitates the co-creation of concrete solutions to problems of high citizen impact.

After concluding two investigations into citizen needs and behaviour while facing a personal shock, such as losing a job or having to pay for an unexpected hospital bill, we concluded that, across the board, people had the following issues: 

  • Information about benefits is unclear and not standardised:

Citizens do not have clear or standardised information about existing services and benefits when they make key decisions, such as the activation of the catastrophic health insurance, which directly affects their level of final indebtedness while facing a health problem.

  • Disjointed management between government silos:

Citizens must carry out excessive procedures and procedures because there isn’t an integrated management system that connects different departments, which steals the citizen’s time and risks worsening their financial situation

  • Supports and services are not adequate or do not exist:

Users require support and additional services to cope with adverse events, which currently do not suit their needs or do not exist.

Safety nets and safety ropes

Clase Media Protegida (Protected Middle Class) is a social “safety rope”, that gets activated when people have a specific problem, in the same way an insurance would work, protecting citizens from sudden shocks.

In that sense we are aiming to change the traditional paradigm in social security, which is focused more on risk than income levels, and to coordinate a set of benefits and insurances. Some of these benefits already exist and others that are yet to be created, but with these families will be equipped to face the life challenges that can damage their wellbeing, slow their progress and produce great fears in the population.

This proposes an evolution of what is usually called safety netsthat are — in the words of the World Bank — typically concerned with a worsening in poverty or, so to say, a guarantee against a fall past an absolute level, while safety ropes mitigates risk through social insurance or social protection. 

As the system is focused on the risk of seeing families well-being threatened, it allows public institutions to allocate the resources according to the level of risk, and not of the income of the families. That makes it a more inclusive guarantee against a very steep drop in living standards. 

The adverse personal shocks currently contemplated are:

  • High cost health events
  • Being unemployed 
  • Difficulty paying for higher education
  • Access to housing solutions
  • Elderly people with dependence
  • Victim of a violent crime.

A modern system 

As the Government has made it a priority to modernise our system of social protection — expanding  to a different segment of the population and improving the response opportunity — the system works on three different levels: 

New benefits and services: The first level has to do with the creation of new benefits to protect middle-class families against their main fears. Some of them include new laws that, for example, will put a limit on the possible max expenditure that anyone will have to pay while facing a severe health problem. Another project is aimed at creating an additional public health insurance that will expand existing coverage. 

Network management: Second, the new system improves the quality of service, simplifying access to these benefits through the creation of the first citizen platform of the Chilean State with interoperability between different institutions. This aims to improve the difficulties and slowness of the bureaucracy in order to achieve a quality experience for users.

Improving information and user guidance: Finally, the new system seeks to inform and guide citizens in a clear and timely manner about the benefits that already exist. To that end, we co-create files with users, which explains existing benefits and coverage in a simple way. We also create a face-to-face service channel for those users who do not yet have access to digital services. 

Currently the platform offers eight different services to citizens, and also gives access to files in clear language which guides them to more than 80 benefits from the national government.

Within the first week of launch, the platform received more than 200.000 unique users, and 42% accessed the site using their digital identity, giving them personalised information about available benefits.  

This entire system was developed in just nine months of work, which incorporated field research, prototyping, testing and upskilling of public servants, thanks to the agile working model of Laboratorio de Gobierno. 

Expanding coverage

More than just a partnership between the Ministry of Social Development and Family’s partnership Laboratorio de Gobierno, this project was a collaboration between 16 public institutions, who provided the existing services and benefits associated with the adverse contingencies . 

Also, we involved more than 500 people in multiple co-creation activities from 23 public institutions and 32 civil society organisations. These actors were the key to discover real problems that the middle class had to face regarding the adverse contingencies and to test early stage prototypes that influenced the design of the platform, the downloadable material in citizen’s language and the protocol of public attention for the face-to face channel. 

The next steps are to continue expanding the coverage through the passing of regulations that will: 

  • Reform the pension bill for improving pensions for the middle class and add insurances for people that can’t take care of themselves. 
  • Increase free technical education up to the 70% for the most vulnerable families. 
  • Reform the health system in a comprehensive manner; strengthening the public health insurance and adding more transparency and a solidarity pillar to the private health system.
  • Guarantee that all dependent private sector workers who pay for social security and who have children younger than two years of age can access a nursery for their children.

Multiplying innovations

Finally, the Protected Middle Class system, is a great example on how to design and implement a large-scale public sector innovation, changing the understanding of how the state relates to people.

In that sense, the Protected Middle Class initiative has been an inspiring transformation experience, so that the departments that have taken part in the process now feel the need to reorient their value propositions thinking about their users. Some of them have already started down that path. 

At the the same time, it has raised the bar of modernisation in the state in at least two ways: on one hand, it’s put a new standard of integration of processes and services between public institutions, and on the other hand, it’s made authorities and teams see the need to upskill public servants in new methods and approaches to multiply innovations in the public sector.

I would not be surprised if the result and the process of the Protected Middle Class initiative accelerate the evolution of the models of citizen attention in Chile. — Roman Yosif

(photo credit: Unsplash)


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