Visions of welfare social protection floors in the

Visions of welfare: social protection floors in the context of the great ambivalence Michael Cichon, President, International Council of Social Welfare Helsinki, November 2013 1

Structure • One: The Global Social Challenge • Two: The case for welfare for all • Three: How should social protection be organised to foster social and economic development • Four: The great ambivalence: sources of hope and the reality of austerity • Five: Conclusions: Remaining issues and opportunities

One. The Global Social Challenge 3

The global social challenge: reducing insecurity, i. e. reducing poverty and the fear of want Exclusion from formal employment Inequality of what? Poverty 20% of the Global pop. Insecurity 80 % of the global pop.

Employment exclusion…and insecurity Source: ILO Bureau of Statistics database Employment in the informal economy as a percentage of total employment (including agriculture), various years 5

go l C Ang a m am o er la oo b n A C ng m am o l C ero a f am o er n b Bh oo ut n f Ba Bh an ng ut m la an de b s B Ba h h m u n Ba gla tan ng de f la sh d Al esh f ba b Al nia ba m Al nia D ba b en n m ia D ar f en k Au ma m st rk r b C alia an m Au ada st m r C alia an b D ad en a m b Au ar st k f r C alia an f ad a f An Inequality: life expectancy at birth, 2011 , source WHO 90 80 70 60 50 40 30 20 10 0 6

Inequality: Income shares held by the lowest and highest 10% of population 60 50 40 30 highest 10% Lowest 10% Factor 20 10 a Af ric a So ut h m bi le C ol o hi C la An go S U a hi n C K U st ra lia Au er o on a am an ad k C m ar en Fi nl a nd D C Af gh a ni st an 0 7

Poverty : Poverty headcount, 2010 -2011, Source : World Bank 80 70 60 50 40 under 1. 25 under 2. 0 30 20 10 0 East Asia and Pacific Europe and Central Asia Latin America Middle East and Caribbean North Africa South Asia Sub Saharan Africa 8

The global social challenge • $2 buy • Bangladesh: 2 Dozen Eggs • Kenya: 16 Cups of Milk • Philippines : 1 3/5 of a Big Mac • USA: 2/3 of a Starbucks Tall Latte • Uganda: 1/23 of a Bicycle • Bangladesh: 2/3 of a Sari • Ghana: 3 Pairs Rubber Sandals • USA: 1/75 of the Average Daily Cost of Nursing Home Care • India : 1/3 of a Regular Price Evening Movie Ticket

Insecurity …. the state of global social security looks like this. . 80 % of the world population do not have access to comprehensive coverage The global Social security gap 50% of children are living in poverty, many lack access to health and education 30% of the population do not have access to essential health care 60% of the elderly do not receive a pension 10

Two. The case for welfare for all 11

… it works • Social security reduces poverty by up to 50% in almost all OECD countries • Social security reduces income inequality by about 50% in many European countries • Social security is a universally accepted as human right (article 22, Universal declaration) • Hence social security transfers are a pivotal tool to combat poverty and social exclusion and yet social security is underutilised in national antipoverty and development strategies 12

Gini before and after taxes and transfers, OECD late 2000 s, without Ireland Luxembourg 13

Impact of Taxes and Transfers in selected OECD countries (end 2000 s): Two ways to achieve more income equality (OECD data) 0, 6 0, 5 0, 4 0, 3 Gini before taxes and transfers Gini after taxes and transfers 0, 2 0, 1 K U S U g ria st Au em Lu x or w bo ur ay en N ed Sw re a Ko pa n 0 Ja l

The social rationale …It works Poverty rates before and after transfers (without old age and survivors pensions) in the European Union, 2008 l

…and there fiscal space almost at all levels of GDP per capita despite the equality-efficiency trade-off myth… Total public expenditure and social expenditure at different levels of GDP per capita, Sources: IMF, 2009 (various years); UNDATA database latest available year 16

Children| Coverage by CCTs as a percentage of (1) households and (2) total population D D Percentage of families covered q From 5% in Chile or Expenditure as a and Panama (6. 4% percentage of GDP 8. 1% of total q population From 0. 13% of GDP in Chile or Peru respectively, to to q 51% Just over 1 % of GDP q of households in Ecuador and 64% of the population in Ecuador

. . . and even in developing country contexts it works- The Vietnam experiment : Assessing poverty potential impacts in Vietnam (poverty gap in % of GDP) 12 000 Total poverty gap as a percentage of GDP 10 000 0, 80 0, 70 Working age 0, 60 Elderly 8 000 0, 50 6 000 0, 40 0, 30 4 000 0, 20 2 000 0, 10 0, 00 Total poverty gap Total poverty gap BEFORE benefit post universal post means-tested post 100 days post Elderly and post ALL three pension children employment means tested benefits guaranteed and benefits disability benefit Total poverty gap as a percentage of GDP Total poverty gap BEFORE and POST benefits (Millions VND) Total poverty gap (Millions VND) and composition

Hence social protecion is a set of policy tools …that addresses all four dimensions of our social problem • Poverty • Inequality • Insecurity • . . . and the fourth (employment exclusion) at least indirectly. .

Three. And hence. . . how should we organise social protecion ? 21

ILO’s two-dimensional strategy for the extension of social security: Building comprehensive social security systems high Vertical dimension: progressively ensuring higher levels of security, guided by Convention No. 102 an d the principles of R. 202 advanced standards extension strategy level of protection Voluntary insurance under government regulation Social security benefits of guaranteed levels floor level Social Protection Floor: Access to essential health care and basic income security for all low individual/household income high Outcomes can be Social Protection Floor guaranteed through Recommendation, different means – is 2012 adopted there at ILC no one-size-fits-all Horizontal dimension: seeking protection against poverty first, guided by Recommendation No. 202 22

. . . R. 202 and its principles that address inequality, poverty and seek to dynamically increase security without jeopardising access to employment Overall and primary responsibility of the State Universal coverage Rights • Universality of protection, based on solidarity • Social inclusion including persons in the informal economy • Adequacy and predictability of benefits • Non-discrimination, gender equality and responsiveness to special needs • Entitlements to benefits prescibed by national law • Efficiency and accessibility of complaint and appeal procedures • Respect for the rights and dignity of people covered • Respect for collective bargaining and freedom of association Implementation • Progessive realization, including by setting targets and timeframes • Coherence with social, economic and employment policies • Regular monitoring of implementation and periodic evaluation • Tripartite participation and consultation with representatives of persons concerned Financing and delivery • Consideration of diversity of methods and approaches • Solidarity in financing and optimal balance of interests • Transparent, accountable and sound financial management and administration • Financial, fiscal and economic sustainability with regard to social justice and equity • High-quality public services that enhance delivery of social security systems • Coherence across institutions responsible for the delivery of social protection 23

A key point: the term guarantees encompasses transfers in cash and in kind. . . Para 4 of the recommendation states: Housing security The guarantees should ensure at a minimum that, over the life cycle, all in need have access to essential health care and to basic income security which together secure effective access to goods and services national definition of minimum levels defined as necessary at the national level. Other ess. services Water and sanit. Health security education Food security

Four. The great ambivalence… 25

The historical patterns of transition of ideas from theory to policy and the great post GFC ambivalence

Economic development strategies: A tale of two paradigms 27

…the global community seems to approach a great consensus ILO’s new strategy. . . and R. 202 WFP new SP strategy UNICEF’s new SP strategy The new Social Protection consensus World Bank SP and Labour Strategy EC Communic ation and Council decision 28

The „fragile consensus“ : Social Protection is social and economic necessity…. • Social protection is a social, economic and societal necessity. • Only people that are well nourished, well educated and as healthy as possible, and have been brought up in socially secure families will in the long run be productive contributors to national and the global economies and constructive, participating and responsible members of societies who can forcefully make their voices heard. • Social Protection and notably a floor of social protection is thus a prerequisite investment in the development process and in people. 29

…just by the way: The IMF and the great consensus - and the great ambivalence • IMF’s Berg, Ostry, and Zettelmeyer, 2011; and Berg and Ostry, 2011)(IMF Research Department) , : we discovered that when growth is looked at over the long term, the trade-off between efficiency and equality may not exist. … • IMF policy paper (Francesca Bastagli, David Coady, and Sanjeev Gupta: 2012 (Fiscal Affairs Department)), “Although some inequality is deemed necessary to provide incentives for investment and economic growth (Barro, 2000; Forbes, 2000), there is also evidence that high inequality may retard growth, especially if it reflects credit market imperfections or political corruption or if it causes political instability”. . • However, country recommendations in Article IV surveillance reports only rarely follow the new flexibility. . . 30

A first result and a big opportunity: The SPIACB – an effort to institutionalise the great consensus • The establishment of the Social Protection Inter-agency Board for Co-ordination (SPIAC-B) at request of the G 20 Development Working Group chaired by ILO and World Bank • The Social Protection Inter-Agency Cooperation Board is a light, l interagency coordination mechanism - composed of representatives of international organizations and bilateral institutions • to enhance global coordination and advocacy on social protection • and to coordinate international cooperation in country demand-driven actions. • What it actually does remains to be seen …. 31

. . and at the same time we face the age of austerity 32

. . and a biased nature of fiscal consolidation. . . 33

Five. Issues and opportunities? 34

Issues that remain … • Indifference will continue. . and continue to kill. . . • There will always be competition between SP and other potential uses of public money… • . . . the perceived trade-off between employment and protecion. . . will remain a common threat to social expenditure • There will always be powerful hidden agendas of people who favour trickle down economics … • Fiscal problems will always be solved on the back of those with least voice. . . • . . . the myth that societies have to serve economies has to be reversed. . . (Merkel : what we need is a market oriented democracy. . . ) 35

. . Possible social protection strategies for a global coalition of Trade Unions and Civil Society for social protection in the post 2015 debate and beyond … – Use the global consensus on the SPF recommendation as a stratgic basis to ensure that Social Protection Floors to play an umbrella role for all social protection targets in the post 2015 development agenda , – Demand a UN convention on SPFs – Support the demand of a Global Fund for Social Protection that the UN rapporteurs for the Right to Food and Human Rights have jointly issued , – Support the International Financial Transaction Tax as a source of funds for investments in social protection 36