The Case for Universal Social Protection
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Bibliographic details
- Authors: ISABEL ORTIZ
- Published: December 1, 2018
Overview
- Universal social protection systems, including floors, shape countries, enhance human capital and productivity, reduce poverty and inequality, and build social peace.
- Social protection includes cash and in-kind benefits for children, mothers, families; support for those sick and without jobs; and pensions for older and disabled persons.
- The United Nations Sustainable Development Goals (2015) commit countries to implementing nationally appropriate social protection systems for all (universal), including floors, reaffirming the ILO’s 2012 Social Protection Floors Recommendation.
Key definitions and policy instruments
- Universal Social Protection: policy objective anchored in Article 22 of the Universal Declaration of Human Rights, ILO standards, and Sustainable Development Goal 1.3.
- Social protection floor: nationally defined set of basic social security guarantees ensuring at minimum universal access to essential health care and basic income security for children, mothers with newborns, the poor, the jobless, the sick, disabled, and elderly via contributory social insurance and tax-financed social assistance.
- Guaranteed minimum income: means-tested social assistance, not universal, generally implemented during austerity or fiscal consolidation.
- Universal basic income: unconditional cash transfer to all residents; proposals vary widely in benefit levels, financing, and services, yielding mixed social impacts.
- Global Partnership: USP2030 launched in 2016 led by the World Bank Group and the ILO to showcase countries that achieved universal social protection coverage.
Coverage, gaps, and financing
- Only 45 percent of the global population is effectively covered by at least one social protection benefit.
- The remaining 55 percent—4 billion people—are left unprotected.
- Coverage gaps are associated with significant underinvestment, particularly in Africa, Asia, and the Arab states.
- In many countries benefits are low, keeping people vulnerable; however, many middle-income countries are advancing fast and some countries have achieved universal or near-universal coverage.
Substantive benefits and development impacts
Well-designed social protection systems with adequate benefits:
- Contribute to inclusive growth:
- Increase productivity and employability by enhancing human capital.
- Boost domestic consumption and demand.
- Facilitate structural transformation of the economy.
- Promote human development:
- Cash transfers facilitate access to nutrition, education, and healthcare.
- Encourage higher school enrollment rates.
- Bring about a decline in child labor.
- Protect people against losses due to shocks such as economic downturns or natural disasters.
- Build political stability and social peace, reducing social tensions and violent conflict.
Risks from short-term fiscal reforms and privatization
- Since 2010, a number of countries have undertaken fiscal consolidation or austerity policies that have cut social protection spending and undermined long-term development.
- High-income countries have reduced a range of social protection benefits; combined with labor reforms that weakened wages and collective bargaining, these measures contributed to a declining labor share and increased poverty.
- Fiscal consolidation in developing economies often leads to cuts or caps to the wage bill and reforms that prioritize targeting the poor over broad coverage, penalizing the "missing middle."
- Recent calls to cut employers’ social insurance contributions or introduce very low ceilings for insurable earnings risk destroying social security systems by constraining resources and making them unsustainable.
- Relying on individual savings has not delivered meaningful protection for the majority:
- Pension privatizations implemented in about 30 countries underperformed: coverage stagnated, benefits decreased, gender inequalities compounded, administration costs were very high; systemic risks were transferred to individuals and fiscal positions worsened due to high transition costs.
- Many countries that embarked on pension privatization are now reversing these reforms.
- Private saving schemes should be a voluntary option but not replace mandatory public social insurance.
The future of social protection and policy directions
- Universal social protection is at the forefront of the development agenda.
- Over 100 developing economies are building social protection systems and fast-tracking expansion of benefits to new population groups.
- Expansion is normally achieved by extending social insurance to the informal sector, supported by social assistance.
- Systems must adapt to demographic changes, the evolving world of work, migration, and fragile contexts:
- Public pension systems are making minor parametric adjustments to balance equity and financial sustainability while ensuring income security for older persons.
- Countries are experimenting with innovations to extend coverage to the informal economy and facilitate transition to the formal economy—for example, several Latin American countries have extended coverage to tens of thousands of enterprises and self-employed people via a subsidy combined with a simplified tax and social security contribution mechanism called monotax.
- Policy priorities highlighted:
- Strengthen public social insurance and social assistance rather than erode them through fiscal consolidation or privatization.
- Avoid cuts to employers’ social insurance contributions and very low ceilings for insurable earnings.
- Design reforms with attention to social impacts, supporting the middle classes as well as the poorest.
- Use private saving schemes as voluntary complements, not replacements, to mandatory public social insurance.
- Leverage support from ILO and development partners to help countries achieve universal social protection.
Source: The Case for Universal Social Protection — ISABEL ORTIZ, F&D Magazine, December 2018.
Content in this bundle
- موجبات الحماية الاجتماعية المعممة
- The Case for Universal Social Protection – IMF Finance & Development Magazine | December 2018
- Доводы в пользу всеобщей социальной защиты – журнал МВФ «Финансы и развитие» | Декабрь 2018