Social Protection in the context of a Recovery with a Human Face Isabel Ortiz Associate Director Policy and Practice UNICEF Social Protection Floor Initiative Workshop Hong Kong, 10 June 2010

Social Protection and Crisis 1929 crisis led to the New Deal : International call for social protection Social protection is necessary to protect populations from economic shocks Social protection counter-cyclical – Increasing incomes through employment and transfers – Raising domestic demand/expanding internal markets Social protection a component of fiscal stimulus plans BUT 2010 Post crisis fiscal consolidation/adjustment: – Need to keep the momentum on expanding social protection – Need a recovery with a human face

Fiscal Stimulus Plans Q Q3 2009, %GDP  Governments embark on fiscal stimulus plans from 2008 onwards  As an average, 25% of stimulus plans spent on protection (UNDP, 2009)  Mostly in high and middle income economies – but slow progress in LICs  Positive development, social protection expanded during crisis

Social Protection in Fiscal Stimulus Plans Source: UNICEF, based on Zhang, Thelen & Rao, 2010

The Social Protection Floor Initiative: A UN System Emergency Response to the Crisis In April 2009, the UN Chief Executives Board (CEB) has agreed on nine joint initiatives to confront the crisis, accelerate recovery and pave the way for a fairer and more sustainable globalization: 1.Additional financing for the most vulnerable 2.Food Security 3.Trade 4.A Green Economy Initiative 5.A Global Jobs Pact 6.A Social Protection Floor 7.Humanitarian, Security and Social Stability 8.Technology and Innovation 9.Monitoring and Analysis

World Bank – Social Protection  Large increase, mostly lending to middle income countries  Mostly safety nets (less employment, food security)

UNICEF work in Social Protection: 124 programs in 76 countries

2010: IMF, G-20 IMF discourse up to February 2010: – fiscal stimulus plans – easing macroeconomic policies – counter-cyclical interventions – measures to ensure social safeguards, including protection of “priority social expending” February 2010: 2 New IMF Board Strategies: – “Exiting from Crisis Intervention Policies” – “Strategies for Fiscal Consolidation in the Post-Crisis World” June G-20 Meeting: Call for fiscal consolidation and adjustment

: Governments Contracting Public Expenditures

Main Issues to Watch Out Contraction of social expenditures Contraction of social protection: – Targeting (reducing coverage) – Rationalizing/reducing benefits – Pension reform Cutting subsidies Wage bill in social sectors While social protection expanded during the crisis - now contraction as a result of post crisis fiscal consolidation/adjustment? A recovery with a human face

Selected Issues in MICs and Lics (March ) Limit subsidiesWage bill caps/cutsRationalize and further target Pension and/or health reform Barbados Belarus Bolivia Burkina Faso Cambodia Cote d’Ivoire El Salvador India Indonesia Iran Iraq Jordan Kiribati Libya Malaysia Maldives Mexico Mongolia Morocco Nigeria Pakistan Panama Republic of Congo Sri Lanka Sudan Syria Timor-Leste Togo Tunisia Algeria Barbados Belarus Belize Bhutan Burundi Cambodia Comoros Cote d’Ivoire DR Congo Georgia Ghana Grenada Iraq Jordan Kiribati Latvia Libya Lithuania Maldives Mali Marshall Islands Mauritius Morocco Paraguay Philippines South Africa Sri Lanka St Kitts & Nevis Syria Tonga Vanuatu Zambia Zimbabwe Armenia Cambodia Georgia Grenada India Indonesia Libya Maldives Mauritius Mongolia Poland Slovenia Syria Timor-Leste Togo Ukraine Belize Cote d’Ivoire Russian Federation St Vincent & Grenadines

Fiscal Space: Illustrated Adjustment Paths

Fiscal stimuli have expanded safety nets, mostly in MICs, however this should lead to longer-term SP systems Slow progress in LICs, too many pilots Risk that the necessary expansion of SP may be undermined in the context of post-crisis fiscal adjustment Need to work with governments to identify fiscal space, there are alternatives to suggested fiscal austerity SP not included in MDGs – September 2010 World Summit Need to Keep Momentum on Social Protection

SP systems, starting by a social protection floor, are necessary to: – cushion populations from future shocks – reduction of poverty and inequalities – contributions to economic growth and human development – fulfilling rights and supporting political stability Key Policy Issues:  Expanding social protection coverage  Benefits: Universal or Targeted? Attention to “targeting” and reducing benefits under adjustment  Unconditional or conditional transfers?  Affordability, working with governments to expand fiscal space and a recovery with a human face Need to Keep Momentum on Social Protection II

Proven results:  Reduced poverty, better nutrition, improved household income stability (MDG 1, 4, 6)  Improved preventive health care (MDG 4 and 5)  Higher immunization rates (MDG 4)  Higher school enrollment rates reduced school drop-out (MDG 2,3)  Decline in child labour among children in rural areas (MDG 2, 8) September 2010: World Summit Social Protection Contributes Effectively to MDGs

Thank you