Coping with economic & social ‘Crisis’ Social Security: Key Issues for Trade Unions

Social protection for all – is the goal and part of Decent Work agenda Global economic crisis shows the urgency of basic social security for all - & is therefore one of the important elements of GJP Effective social protection would have minimized ‘impact of economic crisis’ and assisted in improving effectiveness of stimulus/recovery packages)

For TUs, social security is not just about pensions, etc but it is a vision of a society, an essential element of human rights & social justice, and a means for human & economic development and social stability. Current global economic crisis is both an opportunity & a threat to building of effective social protection schemes So, what are the key challenges facing Asian countries & trade unions in regard to social protection needs?

Life expectancy & population aged 60+ increasing COUNTRY TOTAL POPULATION LIFE EXPECTANCY AT THE AGE % TOTAL POPULATION AGED 60+ Medium Variant POPULATION AGED 60 + (millions) Medium Variant MenWomen2050 WORLD N.A China India Indonesia Korea Malaysia Philippines Singapore Sri Lanka Thailand Vietnam Source: UN Populations Projections (2008) – quoted by Mukul G Asher, National University of Singapore

Major Challenge Given the low incomes & vast informal economy, providing employment to growing population, health care and old age income support are major challenges before Asian Countries Asia will grow old before it becomes rich enough to provide decent social security to all.

Social Security: General Scenario   Multiple schemes for pensions & health care being implemented by different depts, no coordination - administrative costs high.   Inadequate coverage & inadequate funding   Annual spending on health care & social protection very low - not enough to provide quality care or decent benefits

Contribution Rates for SS Programs in selected Asian countries 2008 (%) A-P spends about 5.3% of GDP on public health and social security –lower than other regions

Social Security: key Challenges   Social Security as a human right? Or is it individual responsibility? PayGo Systems v/s individually funded systems: demographic risk v/s financial risk - Role of State? the State as the ultimate financial guarantor (of benefits).   The Financing Challenge… Tax v/s Contributions?   Coverage, Adequacy & Quality of benefits & services – especially for low income workers   Investment policies & performance – for protection of funds assets and to finance future benefits – role of state   Governance & management – operational performance, transparency, communications with stake holders – tripartite management?

Tyranny of small numbers :   Meaning - even a small change in variables such as life expectancy, permitted age at which full pension can be withdrawn, real rate of return, administrative costs and other taxes in both the accumulation and payout phases, could have a disproportionate impact on the financial viability of the SS schemes and on the extent to which objectives are realized.   Social security reform requires also concomitant reforms in other areas such as labor markets, fiscal management, and capital and financial markets. 9

Social Security: key Challenges   Education Challenge: Needed at all levels, Low Awareness/ Understanding of rights, entitlements, social insurance, etc, especially among the excluded groups – need to develop a broad education efforts customised to the various contexts and target groups – funding? Who will fund this?   The partnership Challenge: Role of Government v/s Public & Private Insurance Companies for providing social protection (pensions, health care, etc) – operate in competitive environment, profit motive, no experience of working with poor, low income groups, no experience of tripartite regulation

THE ADMIN CHALLENGE   EXTEND THE COVERAGE OF EXISTING FORMAL SYSTEMS? BETTER BE PREPARED FOR A VERY BIG LEAP (MILLIONS OF PEOPLE TO BE ADDED)…   ESTABLISH BRAND NEW SOCIAL SECURITY SYSTEMS? HOW LONG WILL IT TAKE TO GET THERE?…   TRIPARTITE BOARDS? SEE THE WELFARE FUNDS EXPERIENCE (INDIA AND NEPAL)…   A SEPARATE ENTITY TO RUN EACH NEW EXTENDED SCHEME? THIS WILL COME AT A HIGH COST…   RELY ON INSURANCE COMPANIES? WHAT ABOUT THE PROFIT SEEKING APPROACH?...   PARTNER WITH COMMUNITY-BASED ORGANIZATIONS? SHARING THE SAME SOCIAL GOALS?...

THE EQUITY CHALLENGE: NEED TO SHARE THE BURDEN… FORMAL ECONOMY WORKERS INFORMAL ECONOMY WORKERS Large contribution resources: Contributions from W, E & G Large contribution resources: Contributions from W, E & G Administrative costs borne by Govt – full allocation of resources to benefits paymentsbenefits higher Administrative costs borne by Govt – full allocation of resources to benefits payments – benefits higher Limited contribution resources: Workers left alone to pay for their social protection Administrative Costs borne by the Schemes – reduction of resources allocated to benefits payments – benefits lower

Social Security System: Issues   Is social security system a ‘cost’ to economy or an ‘investment’?   Social security entitlement: mainly ‘employee’ based   What kind of system should be there? - National? Company based?, - Public? Private? - Insurance based? Tax based?   Addressing exclusion & discrimination & improving coverage (women, casual workers, informal workers)   Collecting contributions & delivering benefits – how?   Maintaining purchasing power of pensions or living standards of pensioners?   Data: No reliable data for quality research, and for price discovery of retirement products

  Role and Capacities of workers representatives?   Should pension systems & its reforms be decided on the basis of - - technical necessities alone? OR - should the choice be made on the basis of political choices – reflecting what workers /society wants than what only the rich/those in power want?   Ex: Sustainability debate about the future of public pension programs - if tax increases are required by current arrangements, then they are considered unsustainable – WHY?

What Else? Participants views? Union vision for universal social security in the 21st century?

key conventions on social security/protection Conventions   C Social Security (Minimum Standards) Convention, 1952   C Employment Injury Benefits Convention, 1964   C Invalidity, Old-Age & Survivors’ Benefits Convention, 1967   C Medical Care and Sickness Benefits Convention, 1969   C Employment Promotion and Protection against Unemployment Convention, 1988   C Maternity Protection Convention, 2000   C Equality of Treatment (Social Security) Convention, 1962   C Maintenance of Social Security Rights Convention, 1982 Major Recommendations   R 67 - Income Security Recommeendation, 1944 (No. 67)   R 69 - Medical Care Recommendation, 1944 (No. 69) Which of the conventions has your countries ratified?

C Social Security (Minimum Standards) Convention, ) Establishes the aims that must be met instead of describing the techniques that are to be applied 2) C 102 provides for 9 contingencies 3) Flexibilities provided – States ratifying C102 can chose any 3 contingencies (incl. one long-term or unemployment benefit) to provide for & progress as its capacities increase 4) Workers participation in the management of social security Health care/insurance Health care/insurance Sickness Sickness Old age Old age Invalidity Invalidity Unemployment Unemployment Employment injury Employment injury Maternity Maternity Family responsibilities Family responsibilities Death/survivors Death/survivors

Govts & Employers Arguments against C 102   Covers very few people & that too only in organized formal sector – needs of women and workers in informal economy not reflected.   Benefits level too high for tax financed universal schemes – not easy for developing countries to provide   Needs of workers in developing countries excluded (such as water, santitation,needs of children, minimum nutrition & role of public distribution, etc) & therefore need for new standard that can provide social protection floor for all. But is this true?   C.102 can be used as an instrument for the provision of a social floor if countries are guided in choosing all the different elements that would constitute such a social floor from among the 9 benefits that C102 provides for.

ILC 2001: THE NEED TO COMPLEMENT THE EXISTING MECHANISMS THE CONSTITUENTS IDENTIFIED 4 STRATEGIC WAYS THAT COULD CONTRIBUTE TO THE EXTENSION OF SOCIAL SECURITY TO ALL…   EXTENSION OF SOCIAL INSURANCE (CONTRIBUTORY SYSTEMS)   PROMOTION OR DEVELOPMENT OF SOCIAL ASSISTANCE PROGRAMS (TAX-FINANCED)   INTRODUCTION OF UNIVERSAL BENEFITS SYSTEMS (TAX- FINANCED)   ENCOURAGEMENT OF MICRO-INSURANCE SCHEMES (community based)

SOCIAL SECURITY EXTENSION: THE MECHANISMS UNIVERSAL BENEFITS SOCIAL ASSISTANCE SOCIAL INSURANCE MICRO- INSURANCE TAX CONTRIBUTIONS WORKER + EMPLOYER + GOVERNMENT (?) MEMBER ALONE?

Campaign for extension of coverage – the year 2009 vision Basic coverage for all, universal but not necessarily uniform coverage (accepting pluralism) Responsibility of the state but delivery can be shared with private sector & communities where feasible Rights based – “Everyone has the right to social security” (Article 22 of the Universal Declaration of Human Rights) Social outcomes in terms of adequate benefit levels have to be reached, independent of the organization. ILO conventions are important as global safeguards and benefit benchmarks.

Basic social package – Social Security Floor A new instrument in the making – proposal: 1) 1) Universal basic essential health care for all - through a public health service funded by taxes, social and private insurance and micro-insurance systems 2) 2) Basic child benefits – aimed to facilitate access to basic social services - nutrition, education, housing 3) 3) Income support – access to basic means tested/self targeting social assistance for the poor and the unemployed in active age groups 4) 4) Income security – for people in old age, invalidity and survivors through basic pensions

The campaign strategy: the social security development staircase Voluntary participation Contributory social security Semi-contributory social security Family benefits Unemployment insurance & minimum revenue Social pensions, old age and special needs Access to health care and essential services SP Floor (non contributory)