Social Protection: An Indispensable Tool for a New Social Contract

Transcription

1 Social Protection: An Indispensable Tool for a New Social Contract Rethinking Social Protection in the Arab Region Amman, May 2014 Isabel Ortiz Director Social Protection Department International Labour Organization

2 Distribution of World Income: Development for Whom? Global Income Distribution by Countries, (or latest available) in PPP constant 2005 international dollars Q5 Q4 Q Q Q Source: Ortiz and Cummins Global Inequality. UNICEF

3 Distribution of Income in the Arab Region Countries where data is available, latest year Source: Ortiz and Cummins Global Inequality. UNICEF

4 Historical Perspective: Income Inequality Increasing Year Gini Source: Milanovic (2009) World Bank

5 Trends in Inequality in the Arab Region Gini Indices and Changes years 1990, 2000 and 2008 (or latest available) Source: Ortiz and Cummins Global Inequality. UNICEF

6 Inequality Slows Down Economic Growth Per Capita Growth and Change in Income Inequality in 94 Developing Countries, (or latest available) Source: Ortiz and Cummins Global Inequality. UNICEF

7 Inequality Generates Violence and Crime Source: Ortiz and Cummins (UNICEF 2011)

8 Inequality Generates Political Instability Source: Ortiz and Cummins (UNICEF 2011), based on Solt (2009) and Kaufmann et al. (2009) Note: -2.5 is high political instability and politically-motivated violence/terrorism; 2.5 is the absence of

9 The Case for Social Protection Social Justice it is a Human Right Article 22 of the Universal Declaration of Human Rights It contributes to growth: Inequality is economically inefficient / dysfunctional Consumption concentrated in top income deciles in all countries 2013: Depressed world markets, low demand and low growth. Questioning export-led model, need for domestic markets as a development strategy. Raising the incomes of the poor increases domestic consumption And enhances human capital and productive employment It builds political stability Poverty and gross inequities tend to generate intense social tensions and violent conflict Social benefits ensure the political/electoral support of citizens

10 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan Social Protection Also Needed Because of High Food Prices Local Food Price Index (UNICEF, 55 countries) Global Food Price Index (FAO, March 2013) Source: Ortiz and Cummins A Recovery for All. UNICEF

11 Social Protection Important Because Not Everybody can Work A Long Jobs Crisis Employment to Population Ratios Source: Ortiz and Cummins A Recovery for All. UNICEF.

12 Declining Demand for Young Labour Youth Employment to Population Ratios Source: Ortiz and Cummins A Recovery for All. UNICEF.

13 Further, Countries Contracting Public Expenditures Number of Countries Contracting Public Expenditures as a % GDP, Source: ILO World Social Protection Report based on IMF s World Economic Outlook (October 2013)

14 : A fifth of countries excessive contraction (expenditures below pre-crisis levels) Changes in Total Government Spending as a %GDP, avg. over avg.

15 Main Adjustment Measures by Region, Developing Region / Aggregates (number of countries) Limiting subsidies Wage bill cuts/caps Increasing consumption taxes Pension reform Rationalizing targeting safety nets Health reform Source: ILO World Social Protection Report based on 314 IMF country reports Labor Reform East Asia and the Pacific Eastern Europe and Central Asia Latin America and Caribbean Middle East and North Africa South Asia Sub-Saharan Africa Developing countries High-income countries All countries

16 Development Impacts 122 countries contracting public expenditures in 2014 (106 developing) Eliminating subsidies (food and fuel) in 100 countries, despite record-high food prices in many regions Wage bill cuts or caps in 98 countries, reducing the salaries of public-sector workers who provide essential services to the population. VAT increases on basic goods and services that are consumed by the poor and which may further contract economic activity in 94 countries Rationalizing and targeting safety nets are under consideration in 80 countries, at a time when governments should be looking to scale up benefits though social protection floors Reforming pension and health care systems in 86 and 37 countries Labor flexibilization reforms in 30 countries, eroding workers rights Source: ILO World Social Protection Report based on 314 IMF country reports

17 A New Deal, or a New Social Contract, is Feasible Current situation presents an opportunity to rethink socioeconomic policies for all persons 1929 financial crash led to a New Deal that radically altered the development model of the day: Stimulated economic growth and employment Regulated the financial sector Expanded social security A comparable policy push is needed today Policy shift started in a few Asian and Latin American countries, concerned on low growth and demand for their exports, they are building internal markets (bold expansion social protection, minimum wage policies, social services, etc)

18 Intead of Adjustment, Investing in People Investment in social protection Sustainable development based on inclusive economic growth Healthier and better educated population Human Rights Social justice Domestic consumption + demand Higher productivity 18

19 Social Protection Contributes Effectively to Development Goals Proven results: Reduced poverty, better nutrition, improved household income stability (MDG 1, 4, 6) Improved preventive health care (MDG 4 and 5) Higher immunization rates (MDG 4) Higher school enrollment rates reduced school drop-out (MDG 2,3) Decline in child labour among children in rural areas (MDG 2, 8) See: Social Protection: Accelerating the MDGs with Equity

20 . Household Minimum Income Support Social Pensions Child and family benefits Cash-for-Work Health Protection Chile, China, Cyprus, Mozambique, Rwanda, Zambia Argentina, Bolivia, Bangladesh, Brazil, Botswana, Cabo Verde, Chile, Costa Rica, India, Lesotho, Mauritius, Moldova, Namibia, Nepal, Peru, Samoa, South Africa, Tajikistan, Thailand, Uruguay, Vietnam Argentina, Bangladesh, Bolivia, Brazil, China, Colombia, Costa Rica, Ecuador, Ghana, Honduras, Indonesia, Jamaica, Kenya, Malawi, Mexico, Mongolia, Mozambique, Nepal, Nicaragua, Philippines, South Africa, Senegal, Tanzania, Uruguay How older poor spend pension cash transfer Argentina, Burkina Faso, Cambodia, Colombia, Cameroon, Egypt, Ethiopia, Ghana, Guinea, Honduras, India, Kenya, Madagascar, Malawi, Mali, Nepal, Niger, Panama, Rwanda, South Africa, South Korea, Tanzania, Uganda, Vietnam, Yemen, Zambia, Zimbabwe China, Lao PDR, Ghana, Rwanda, Tanzania, Thailand

21 Social Protection Floors Recommendation 202 approved by world countries June 2012: The Recommendation Concerning National Floors of Social Protection adopted at the 101st session of the ILC in Geneva, by governments, unions and employers. July 2012: Rio+20 The future we want UNGA A/RES/66/288 Para 156. We stress the need to provide social protection to all members of society, fostering growth, resilience, social justice and cohesion, including those who are employed in the informal economy. We strongly encourage providing social protection floors for all citizens June 2011: Endorsed by G20 Leaders at Cannes Summit

22 Basic Pillars of Recommendation 202 Social Protection Floors Higher levels of protection NATIONAL SOCIAL SECURITY SYSTEM ESSENTIAL HEALTH CARE Including MATERNITY care NATIONAL SOCIAL PROTECTION FLOOR: nationally defined basic social security guarantees basic income security for CHILDREN AND FAMILIES basic income security for WOMEN AND MEN IN WORKING AGE unable to earn sufficient income OLD AGE PENSIONS

23 A Change in Paradigm: The Social Protection Floor Aims To Provide Universal Minimal Guarantees

24 Child and Family Benefits

25 Social protection for the lifecycle: Working age Unemployment benefits Employment injury benefits Disability benefits Maternity protection

26 Old Age Pensions Source: ILO, World Social Protection Report

27 Shifting policy paradigm: The role of social protection in a development context Washington consensus Grow first, distribute later (if at all) Consolidate public budgets Cuts in public services Short-term, minimal social safety nets to cushion the consequences of adjustment policies Pro-poor growth Focus on social protection targeted on the poor and vulnerable Risk management approach Support for (conditional) cash transfers, health and education Inclusive growth and development Social protection indispensable for social and economic development Social contract = for all (not just the poor) Universal and progressive approach

28 14. How to Build Social Protection Floors? Formulating and implementing national social security strategies When formulating and implementing social security extension strategies, Members should (para. 14 of Recommendation 202): SPF Guarantees Existing Gaps Reccomend ations (a) set objectives reflecting national priorities; (b) identify gaps in protection; HEALTH CHILDREN ELDERLY WORKING AGE (c) determine appropriate social protection schemes, whether contributory or non-contributory, or both, as well as the time frame and sequencing for the progressive achievement of the objectives (d) Cost selected schemes (e) Discuss financial and human resources with Ministry of Finance (f) raise awareness about their social protection floors and their extension strategies, and consult options through social dialogue. 28

29 Estimated cost for package of basic transfers old-age and disability pensions, child benefits, unemployment support Source: ILO 2008, Geneva

30 Fiscal Space for Social Protection Floors Exists Even in the Poorest Countries There is national capacity to fund social protection floors in virtually all countries. There are many options, supported by UN and IFIs policy statements: Re-allocating public expenditures Increasing tax revenues Increasing contributions Fighting illicit financial flows Lobbying for increased aid and transfers Tapping into fiscal and foreign exchange reserves Restructuring debt Adopting a more accommodative macroeconomic framework (e.g. tolerance to some inflation, fiscal deficit)

31 Thank you Contact: Isabel Ortiz, Director Social Protection Department, International Labour Organization. Visit: