EXECUTIVE COURSE Social Security Department Education, Training and Capacity Building ILO DWT for East and South-East Asia and the Pacific

report VI International Labour Conference 100 th Session, June 2011 social security for social justice and a fair globalization recurrent discussion on social protection (social security) under the ILO declaration on social justice for a fair globalization, 2011

1. The right and need for social security 2. Social security: state and challenges 3. Policy responses 4. Social security: issues for the future 5. Future policy orientation for the Organization 6. Guidance for further ILO work on social security 7. Key conclusions OUTLINE 3

4 THE RIGHT AND NEED FOR SOCIAL SECURITY Principal objectives of social security Ensuring (1) absence of discrimination and (2) fiscal affordability, efficiency and sustainability Reducing income insecurity and poverty Improving access to health services for all people Reducing inequality and inequity Providing adequate benefits as a legal entitlement Decent work and living conditions

5 THE RIGHT AND NEED FOR SOCIAL SECURITY The right for social security Social security as a HUMAN RIGHT Universal Declaration of Human rights (Art. 22 and 25) International Covenant on Economic, Social and Cultural Rights (Art. 9) Economic, social and cultural rights indispensable for dignity and free development of personality

6 THE RIGHT AND NEED FOR SOCIAL SECURITY 1944 Declaration of Philadelphia Decent Work Agenda 89 th Session of the International Labour Conference Global Campaign on Social Security and Coverage for All Declaration on Justice for a Fair Globalization Global Jobs Pact The right for social security Reiterate ILO’s mandate to the extension of social security Adjusting to social changes, extending social security, improving governance and linking to employment policies Provide basic income and medical care to all needed Joint efforts to develop and enhance measures of social protection Social security as an automatic economic and social stabilizer Social Protection Floor Initiative

7 THE RIGHT AND NEED FOR SOCIAL SECURITY The need for social security Economic Social Natural Systemic GLOBAL RISKS Financial Product Labour Social security

8 SOCIAL SECURITY: STATE AND CHALLENGES COVERAGE The majority of the world population still lacks access to social security coverage Employment-related social insurance remains the main pillar of social security systems, and large groups of the population are not covered at all, or only partly so In many countries, coverage is limited to a few branches, and only a minority of the population has access – both legally and in practice – to existing schemes In many middle- and low-income countries, alternative social security arrangements, such as non-contributory schemes, are not sufficiently developed to provide at least a basic level of social security coverage to those outside a formal employment relationship

9 SOCIAL SECURITY: STATE AND CHALLENGES ADEQUACY Social adequacy Economic adequacy Work in synergy with employment instruments and fiscal and other economic policies, and do not result in unwanted economic consequences Help to achieve expected social policy outcomes Relationship between benefit levels and taxes and/or contributions paid during a working life is considered to be “fair” ILO Convention No. 102 sets minimum adequacy standards for social security benefits in each of the branches: A minimum level of benefits to be paid in the event of occurrence of one of the contingencies; and The conditions for, and periods of, entitlement to the prescribed benefits

10 SOCIAL SECURITY: STATE AND CHALLENGES FINANCING Discussion in low- and middle-income countries increasingly concerns how to increase levels of social expenditure and how to find the fiscal space required In general, higher-income countries spend a greater proportion of GDP on social security than do low-income countries GDP expenditure on health care and non-health social security income transfers – Low income countries 4 % – Middle-income countries 7-10 % – High-income countries 20 %. The main choice is how far these programs should be organized as contributory social insurance and how far as non-contributory programs accessible to all residents or all residents in a specified category.

11 POLICY RESPONSES E xtension of coverage G overnance and delivery A dequacy of benefits E xpenditure and financing

12 POLICY RESPONSES Essential for a minimum standard of living Ensures future well-being and productivity Essential for a minimum standard of living Ensures future well-being and productivity People can be driven even further into poverty because of necessary expenditure on health care in the absence of adequate social health protection Access to health services

13 POLICY RESPONSES Guaranteeing income security in old age, disability and survivorship Provide income protection for individuals and households Only a minority of older men and women enjoy income security in old age Limited earnings capacity as a result of severe disability constitutes a major poverty risk In most countries women are less represented in the formal economy, and are therefore less likely to be covered by social insurance pensions as compared to men Only a minority of older men and women enjoy income security in old age Limited earnings capacity as a result of severe disability constitutes a major poverty risk In most countries women are less represented in the formal economy, and are therefore less likely to be covered by social insurance pensions as compared to men

14 POLICY RESPONSES Income security for the unemployed Unemployment benefit schemes provide income support to maintain a certain standard of living, usually over a limited period, to those who face temporary unemployment Countries with unemployment protection and similar schemes, ideally combined with active labor market policies, have been able to react to the crisis quicker and in a more effective way than countries without such automatic stabilizers

15 POLICY RESPONSES Income security in the event of employment injury In the majority of countries, employment injury was the first contingency covered by social security; these schemes are often closely linked to occupational safety and health regulations Coverage in the event of employment injury contributes significantly towards protecting people from financial risks resulting from employment injury and occupational diseases, and towards restoring their productivity quickly through access to medical care

16 Maternity protection Maternity benefits include access to health services for pregnant and childbearing mothers, and their children, and cash benefits during maternity leave They also include a broader set of protective measures, such as employment protection and non- discrimination, as well as provisions for breast-feeding mothers Maternity benefits include access to health services for pregnant and childbearing mothers, and their children, and cash benefits during maternity leave They also include a broader set of protective measures, such as employment protection and non- discrimination, as well as provisions for breast-feeding mothers These provisions usually apply only to women employed in the formal economy and thus in many low- and middle-income countries only this minority enjoy benefits from maternity protection schemes POLICY RESPONSES

17 SOCIAL SECURITY: ISSUES FOR THE FUTURE National policies on social security have to address a number of issues Clear policy objectives in coherence with employment and other social policies Affordability and sustainability Design, governance and management

18 SOCIAL SECURITY: ISSUES FOR THE FUTURE  Interplay of social insurance schemes, universal benefit schemes, and social assistance schemes as well as private benefit systems;  The ILO should promote equal opportunities and equal treatment in social protection and employment;  Benefit design matters: wrong macroeconomic incentives can jeopardize the macroeconomic effects of investing in social security;  The formalization of employment should ensure social security coverage to workers in small and micro-enterprises, and to the self-employed;  Countries investing in extending – at least – basic social protection, unlock the full productive potential of their workforce. Ensuring social and economic policy coherence

19  The affordability and sustainability of social protection systems have become major concerns for countries at all stages of economic development;  The challenge to maintain and extend fiscal space and to determine optimal overall expenditure levels persists as economies develop and have to find the best balance between social expenditure and competing areas of public spending;  Political and social will defines to a large extent the fiscal space available to finance social security, and not other programs.  Four broad categories of fiscal instruments may be distinguished: (1) official development assistance (ODA); (2) deficit financing; (3) reprioritization and efficiency of expenditures; and (4) domestic revenue mobilization. SOCIAL SECURITY: ISSUES FOR THE FUTURE Establishing and ensuring the affordability and financial sustainability

20  Social security systems are effective and efficient when they reach their policy objectives at appropriate cost and without unwanted side effects;  Benefit design: A controversial aspect of targeting is its possible exclusion effect; targeting increases exclusion by setting conditions (regarding income or wealth) which are difficult to assess; by generating direct and indirect costs for potential beneficiaries; and by being too demanding on local institutions;  Good management and governance are able to offset certain negative effects of poor system design.  The process of implementation, management and administration, governance and monitoring has to meet requirements of transparency, predictability and accountability, and be participative through effective, inclusive and representative social dialogue and social partnership in management and governance. SOCIAL SECURITY: ISSUES FOR THE FUTURE Designing, governing and managing effective and efficient social security systems

21 FUTURE POLICY ORIENTATION FOR THE ORGANIZATION Mandatory social insurance: social security benefits of guaranteed levels for contributors Individual/household income Level of protection THE FLOOR: Four essential guarantees 2.Income security: children 3.Assistance: unemployed & poor Voluntary insurance 4.Income security: elderly & disabled 1. Access to essential health care for all HORIZONTAL DIMENSION: Promotion of a set of basic social security guarantees within the framework of a wider social protection floor Closing coverage gaps is of highest priority VERTICAL DIMENSION: Progressively ensuring higher levels of protection guided by C.102 and higher- level standards. Social security systems cannot stop at the ground floor of protection. Strategic approach (1): Create or extend coverage of national social security systems

22 FUTURE POLICY ORIENTATION FOR THE ORGANIZATION Strategic approach (2): Maintain long-term sustainability  Ensure coherence with national social and economic development policies and other objectives of the Decent Work Agenda;  Ensure social adequacy;  Ensure financial, economic and fiscal sustainability;  Ensure good governance.

23 GUIDANCE FOR FURTHER ILO WORK ON SOCIAL SECURITY The Office should therefore direct its activities towards Supporting national policy development by:  developing a new generic guiding mechanism for the extension of population coverage to all (the horizontal dimension)  developing a new strategy to ensure the adequacy of benefits and the effectiveness of the role of social security as social and economic stabilizers through the use of existing ILO standards; Supporting improvement in the governance of social security by:  ensuring sustainability through sound economic, financial, actuarial and fiscal advisory services; and  generating and disseminating knowledge and capacity building, including strengthening the social partners’ capacity to be active in the governance of social security systems.

24 ILO’s means of action GUIDANCE FOR FURTHER ILO WORK ON SOCIAL SECURITY CAPACITY BUILDING Generation and dissemination of KNOWLEDGE POLICY DEVELOPMENT at the international level TECHNICAL ADVISORY services ILO K PD TACB

25 KEY CONCLUSIONS FIRST CONCLUSION SECOND CONCLUSION Women and men, as well as children, have a right to social security The right to social security – if it is to be consistent, play effectively its productivity-enhancing role and act as a social and economic stabilizer in an uncertain world – has to be built into national laws, governance and institutional structures, as well as effective international mechanisms.

26 SECOND CONCLUSION THIRD CONCLUSION FIRST CONCLUSION The key challenges for national social security schemes identified earlier – coverage, economic and social adequacy and financing – are all critically influenced by governance and well-informed social dialogue. KEY CONCLUSIONS

27 THIRD CONCLUSION FOURTH CONCLUSION FIRST CONCLUSION The extension of social security will remain one of the major challenges for balanced economic growth and social cohesion during the coming decade. SECOND CONCLUSION KEY CONCLUSIONS

28 FIFTH CONCLUSION FOURTH CONCLUSION FIRST CONCLUSION Given the glaring need for social security and its enormous potential to help close the poverty gap, increase equality, foster economic performance and the adaptation process on the labour market, and complement other social policies – perhaps its most optimistic conclusion is that something can be done nearly everywhere. SECOND CONCLUSION THIRD CONCLUSION Once objectives are clearly, realistically and pragmatically established, institutions and fiscal space can be created through investment in good governance. KEY CONCLUSIONS

29 FIFTH CONCLUSION FIRST CONCLUSION It is widely understood that without a social protection floor, no society can exploit its full productive potential and hence achieve desired levels of welfare for all its members. SECOND CONCLUSION THIRD CONCLUSION KEY CONCLUSIONS FOURTH CONCLUSION