Labour Markets: Security and Social Protection in the Informal Sector Complementary Comments by Johannes Jütting Development Centre, OECD, Paris ABCDE conference, Amsterdam, May 23, 2005

Outline Relevance of the topic Additional perspective: health security 3) Conclusions and outlook

1) Relevance of the topic Increasing Interest OECD-DAC countries: POVNET’s work on pro-poor growth World Bank: Social risk management approach ILO: Global Campaign on Social Security and Coverage for All New Insights Risk and vulnerability as impediments to pro-poor growth Emerging knowledge on pro’s and con’s of various social protection instruments Evidence on determinants of participation in different social protection schemes

2) Additional perspective: health security Health risks the most important risk for the poor in developing countries Community financing schemes reaching out to the informal sector and rural areas: From micro-finance to micro-insurance Positive impact for members reported: financial protection, access to health care Similar participation patterns and problems of exclusion

Weak /Reduction in labour supply Costs of Illness Direct Costs Indirect Costs Financial Costs Time Costs Sale of Livestock Sale of Asset Weak /Reduction in labour supply - Reduced productive capacities - Reduced credit worthiness Less chance to hire out or hire in labour Low level of Productivity / income Source:Asfaw 2003 5

3) Conclusions and outlook Emerging consensus on: Crucial role of social protection in the informal sector for pro-poor growth/achieving the MDG’s Labour and employment creation a core element Limits of public provided social protection “Optimal” public social protection policies, differ According to the specific context (between countries and regions) According to the type of risk covered According to strength and weaknesses of non-state provided social protection

3) Conclusions and outlook Conceptual framework needed Impact of policies/instruments on labour market outcomes and social protection Costs and benefits of different social protection instruments Interaction effects, e.g. crowding out of private arrangements through public policies Political economy considerations Who will implement reforms? What are the determinants for success? Social dialogue and ownership