Social Protection - Key Issues and Global Trends Meeting Social Insurance Fund of the Russian Federation Geneva, 28 September 2015 Isabel Ortiz Director Social Protection Department International Labour Organization

A Story of More than 100 Years: Building Social Security Systems

June 2012: Recommendation 202 Concerning National Floors of Social Protection was adopted at the 101st session of the International Labour Conference, in Geneva, providing states with guidelines on the implementation national social protection floors  June 2012: G20 Leaders commit to establishing nationally- defined social protection floors  April 2009: A UN crisis response initiative… …March 2014: One-UN Social Protection Floors Country Teams ILO Social Protection Strategy Endorsed by All World Countries, by the G20 and the UN

Universal Social Protection Coverage Achieved by Mix Contributory and Non-Contributory Schemes

Children Working age Old age Child benefit Support for those without jobs Old Age Pension Disability benefit Maternity Work injury Poor relief safety net Access to health services Recommendation 202 – Universal Social Protection NOT safety nets targeted to the poor

Why? Middle Classes are Low Income in Most Countries Global Income Distribution by Countries, (or latest available) in PPP constant 2005 international dollars Source: Ortiz and Cummins Global Inequality. UNICEF

Shifting policy paradigm Washington consensus Grow first, distribute later (if at all) Deregulation, privatization Cuts in public services/ budgets Privatization of pensions Minimal social safety nets to cushion the consequences of adjustment policies Pro-poor growth Growth first, but with some attention to the poor Focus on social protection targeted to the poor Support for (conditional) cash transfers, health and education Labor reforms Still jobless growth Inclusive growth and development Social protection systems indispensable for growth and development Social contract = for all (not just the poor, also middle classes that are low income in developing countries) Renationalization of pensions Universal and progressive approach Employment- generating investment/ industrial policies

Why Not To Focus Only On Productive Employment? The prevalence of employment issues and a productivist agenda must be tempered with demographic data 52% of the world population is NOT in working age or not able to work Children % world population Older persons % Disabled 10 % Total 52.5 % world population As much as 70% if we add those not employed aged and may be in need of support So it is not only about jobs, but ultimately it is about the social contract, how societies organize support to all citizens

World Social Protection Report The report provides a state of the art on social protection: organization of social security systems, coverage, benefits, expenditures, in 192 countries – most comprehensive source of social protection statistics Following a life-cycle approach, presents social protection for children, for women and men of working age, and for older persons It finds that only 27% of the world population has adequate access – more investments are needed Analyses trends and recent policies, e.g. negative impacts of fiscal consolidation and adjustment measures; and Calls for the expansion of social protection in pursuit of crisis recovery, inclusive development and social justice.

Policy Trends: From Fiscal Consolidation and Adjustment to the Expansion of Social Protection

. How older poor spend pension cash transfer  Child and family benefitsArgentina, China, Mongolia, Mozambique, Nepal, Niger, Senegal, South Africa Cash transfers with human development focus Argentina, Bangladesh, Brazil, Colombia, Ecuador, Ghana, Honduras, Indonesia, Jamaica, Kenya, Malawi, Mexico, Mongolia, Nicaragua, Philippines, Tanzania Household minimum support income Chile, China, Ghana, Mozambique, Rwanda, Uganda, Zambia Public employment programmesArgentina, Benin, Cameroon, Ethiopia, Ghana, India, Indonesia, Malawi, Niger, Rwanda, South Africa, Tanzania Maternity protectionArgentina, Bangladesh, Bolivia, Ghana, India, Indonesia, Jordan, South Africa Social pensionsArgentina, Bangladesh, Bolivia, Botswana, Brazil, Cabo Verde, Chile, China, Costa Rica, India, Kyrgyzstan, Lesotho, Mauritius, Moldova, Namibia, Nepal, Panama, Peru, Samoa, Sierra Leone, South Africa, Tajikistan, Tanzania, Thailand, Vietnam Health coverage expandedArgentina, Brazil, Burundi, Cambodia, Chile, China, Colombia, Ghana, Lao PDR, Indonesia, Mexico, Morocco, Thailand, Rwanda Unemployment protectionJordan, Saudi Arabia, South Africa, Thailand, Vietnam Divergent Trends: Expansion of Social Protection in Middle and Low Income Countries

Social Protection: Demonstrated Results Strong Human Development Impacts Reduces poverty and inequality, hunger and malnutrition In children it has demonstrated results on better education and health outcomes Increases productivity of workers Supports populations that are not able to work, such as persons with disabilities, the unemployed, older persons Universal social protection contributes to growth: Inequality is economically inefficient /dysfunctional Consumption concentrated in top income quintile in all countries Recession and low growth: Depressed world markets, low demand. Questioning export-led model, domestic markets as a development strategy. Universal social protection increases consumption And enhances human capital and productive employment It builds political stability Poverty and gross inequities generate intense tension and conflict Social benefits ensure the political/electoral support of citizens

Crisis Phase I ( ) – Fiscal Stimulus Plans $2.4 trillion fiscal stimulus plans in 50 countries Social Protection in Fiscal Stimulus Plans Source: Ortiz and Cummins, A Recovery for All, UNICEF, 2012

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

: A fifth of countries excessive contraction (expenditures below pre-crisis levels) Changes in Total Government Spending as a %GDP, avg. over avg. Source: ILO World Social Protection Report based on IMF’s World Economic Outlook (October 2013)

Prioritizing Finance over Socio-economic Recovery Source: ILO, World Social Protection Report

Adjustment Measures in 174 Countries, Source: ILO World Social Protection Report based on 314 IMF Country Reports

Fiscal Consolidation/Adjustment: Negative Social Impacts 122 countries contracting public expenditures in 2014 (82 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, including health. 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 narrow-targeting welfare (“safety nets”) 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 Source: ILO World Social Protection Report – based on 314 IMF country reports

100 Countries Reducing Universal Food and Fuel Subsidies sometimes targeted safety nets to the poor as compensation -- insufficient, punishing “middle classes” Fuel Subsidies in %GDP selected countries, 2012 or latest - Higher food and transport costs: Less household income - Higher energy costs – Negative impact on economic activity, employment, domestic demand

Poverty increasing, affecting 123 million or 24% Europe’s population Source: ILO World Social Protection Report

Finan- cial crisis Fiscal stimulus plans Bailouts of the financial sector Downward adjustments in social benefits Fiscal deficit Debt Less public revenue Decline in economic activity Decline in health status Lower productivity Downward adjustments in pensions Downward adjustments in health Increases in taxes, VAT Lower consumption Lower wages Higher unemployment Decline in disposable incomes Lower public investments

Intead of Adjustment, Investing in People

Is Universal Social Protection Affordable in Developing Countries? Source: ILO 2014, Geneva Cost of universal pension coverage, national poverty line, %GDP

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 (eg subsidies) Increasing tax revenues Expanding collection of social security 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) Source: Ortiz, Cummins, Karunanethy 2015: “Fiscal Space for Social Protection: Options to Expand Social Investments in 187 Countries” ILO.Fiscal Space for Social Protection: Options to Expand Social Investments in 187 Countries

Fiscal Space Strategies for Social Protection: Country Examples Source: Ortiz, Cummins, Karunanethy 2015: “Fiscal Space for Social Protection: Options to Expand Social Investments in 187 Countries” ILO.Fiscal Space for Social Protection: Options to Expand Social Investments in 187 Countries

How to Build Social Protection Floors? 3 Steps Assessment Based National Dialogue National social protection strategy: Vision & Priorities Assessment matrix with recommendations: 1. Schemes 2. Operations  Design & reforms of Social Prot Schemes Costing, fiscal space, impact  Policy design, institutional, actuarial and legal studies Scenarios 1, 2, 3 … Tripartite/national endorsement National law adopted and enacted Improvement of operations Analysis of operations leading to recommendations (adminsitrative governance, financial governance) Scenarios 1, 2, 3 … Tripartite/national endorsement Roll out of the recommendations; amendment of the law Tripartite/national endorsement  18 months 24 months 36 months

How to Build Social Protection Floors? Formulating national social security strategies 28 (a) Start national dialogue: what objectives reflect national priorities? (b) identify gaps in social protection; (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, identify potential fiscal space (e) Discuss financial and human resources with Ministry of Finance (f) Agree national strategy through social dialogue 14. When formulating and implementing social security extension strategies, Members should (para. 14 of Recommendation 202):

Post-2015 Development Agenda: Social Protection in the Sustainable Development Goals (SDGs) Goal 1: End Poverty in all its forms everywhere Target Implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable Goal 5. Achieve gender equality and empower all women and girls Target Recognize and value unpaid care and domestic work through the provision of public services, infrastructure and social protection policies and the promotion of shared responsibility within the household and the family as nationally appropriate. Goal 10. Reduce inequality within and among countries Target Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality

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