A Social Protection Floor: Bridging the Gap to Poverty Eradication Isabel Ortiz Associate Director UNICEF Civil Society Forum UN Commission for Social Development New York, 31 January 2012

Distribution of World Income: Development for Whom? Global Income Distribution by Countries, (or latest available) in PPP constant 2005 international dollars Source: Ortiz and Cummins (2011) UNICEF

Global Income Distribution and Children/Youth in 2007 in PPP constant 2005 international dollars Source: Ortiz and Cummins (UNICEF 2011)

Namibia: Reduction of Under-5 Child Mortality Rate U5MR = 72 U5MR = 42

Improving Nutrition in India... but poor c i India: Child Stunting U5 Proportion of children 0 – 59 months old who are stunted, by household income quintile in India Source: National Family Health Survey, 1992–1993, 1998–1999 and 2005–2006.

Historical Perspective: Income Inequality Increasing Source: Milanovic (2009) World Bank Business as usual not an option Need to bring redistribution to the development agenda Need for equitable, sustainable, employment generating national development strategies… … and a social protection floor for all

A basic set of universal social protection transfers and services for: Older persons Children Persons with disabilities Unemployed... All countries have some form of social security but few provide a basic social floor for all See: Lead UN agencies: ILO and WHO Participating UN-system agencies - FAO, OHCHR, UN Regional Commissions, UNAIDS, UNDP, UNDESA, UNESCO, UNFPA, UNICEF, UNHABITAT, UNHCR, UNODC, UNRWA, WFP. Participating Civil Society: Helpage, ICSW… Social Protection Floor

The case for Social Protection: Social Justice Argument – It is a Human Right Articles 22 and 25 of the Universal Declaration of Human Rights “Everyone, as a member of society, has the right to social security” Article 26 of the Convention Rights of the Child “States Parties shall recognize for every child the right to benefit from social security, including social insurance, and shall take the necessary measures to achieve the full realization of rights in accordance with their national law”. But 80% of the global population remains without access

OPORTUNIDADES (Mexico) 10% reduction in poverty headcount ratio, poverty gap by 30% South African social transfers reduced poverty gap by 48% The case for Social Protection: SP Reduces Poverty FAST

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) See: UNICEF 2010: Social Protection: Accelerating the MDGs with Equity The case for Social Protection: SP Contributes Effectively to MDGs

The case for Social Protection: SP Contributes to Economic Growth  Inequality is economically inefficient / dysfunctional  Consumption concentrated in top income deciles in all countries  2010: Depressed world markets, lack of demand, excess capacity  Questioning export-led model, surplus cannot be absorbed by world markets. Need for domestic markets as a development strategy.  Social protection as a development policy:  Raising the incomes of the poor increases domestic consumption and, in turn, encourages growth by expanding domestic markets  Enhance human capital and productive employment - a better educated, healthy and well nourished workforce.

Per Capita Growth and Change in Income Inequality in 94 Developing Countries, (or latest available) Source: Ortiz and Cummins (2011) UNICEF Inequality Slows Down Economic Growth

 Social protection can be effective to prevent conflict and create politically stable societies  Poverty and gross inequities tend to generate intense social tensions and violent conflict  Social benefits ensure the political/electoral support of citizens The case for Social Protection: SP Contributes to Political Stability

Income Inequality and Political Stability in 141 Countries, 2008 Source: Ortiz and Cummins (2011) UNICEF Inequality Generates Political Instability

How older poor spend pension cash transfer  Key Issues: Expanding Social Protection Coverage Happening! Examples: TYPE OF TRANSFERSCOUNTRIES Unconditional Household Income SupportChile, China, Mozambique, Rwanda, Zambia Social PensionsArgentina, Bolivia, Bangladesh, Brazil, Bostwana, Chile, Costa Rica, India, Lesotho, Mauritius, Moldova, Namibia, Nepal, Samoa, South Africa, Tajikistan, Uruguay, Vietnam Child/Family BenefitsMozambique, South Africa, Mongolia, Senegal Conditional Cash for WorkArgentina, Ethiopía, India, South Korea, Malawi, Rwanda, South Africa Cash for Human Development Argentina, Bangladesh, Brazil, Colombia, Ecuador, Honduras, Indonesia, Jamaica, Kenya, México, Mongolia, Nicaragua, Phillipines, Tanzania

UNICEF supporting 88 countries

Importance of Investing in Children NOW Children 30% world population; 2011: 7 billion child born Early years critical for physical and cognitive growth – irreversible impacts Malnutrition and missed schooling have long-term costs: negative impact adult productivity and adult earnings.

Key issues: Affordability Estimated cost of basic transfers: old-age and disability pensions, child benefits, unemployment support Source: ILO 2008, Geneva

Main options: Re-allocating public expenditures Increasing tax revenues Lobbying for increased aid and transfers Fighting illicit financial flows Tapping into fiscal and foreign exchange reserves Borrowing and restructuring existing debt Adopting a more accommodative macroeconomic framework (eg tolerance to some inflation, fiscal deficit) See Ortiz, Chai and Cummins 2011: Identifying Fiscal Space: Options for Children and Poor Households in 184 countries, UNICEF FISCAL SPACE FOR SOCIAL PROTECTION EXISTS EVEN IN THE POOREST COUNTRIES

Key Issues: 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 Phase I of the Crisis: Social protection counter-cyclical – Social protection expansion, a component of fiscal stimulus plans (25% average) BUT Phase II onward fiscal consolidation/ adjustment: – Need to keep the momentum on expanding social protection – Need a recovery for all

Phase I of Crisis ( ) - Social Protection in Fiscal Stimulus Plans 2009

Phase II Governments Contracting Public Expenditures Source: Ortiz. Chai and Cummins (UNICEF 2011) based on IMF 2011 Projected Change in Government Spending, avg. over avg as % GDP

Adjustment Measures and their Potential Risk to the Poor Contraction of public expenditures Wage bill – Including salaries of teachers, health and social workers Eliminating subsidies (eg food, fuel) Social protection: – Targeting (reducing coverage) – Rationalizing/reducing benefits While social protection expanded during the crisis - now contraction A social protection floor needed to achieve the MDGs and as a mechanism for future crisis.

Selected Issues in MICs and LICs ( ) Source: Ortiz. Chai and Cummins (UNICEF 2011)

There are alternatives to adjustment Need for a national dialogue to debate alternative policy options for a Recovery for All See: UNICEF 2010: A Recovery for All: A Call for Collaborative Action html

It Can Be Done: Remember that Not Long Ago There were children working in England’s mines and factories… …Spanish low class emigrants were going to Latin America in search of employment… … poverty was widespread in the US or South Korea… …and in South Africa’s apartheid

IT CAN BE DONE A SOCIAL PROTECTION FLOOR IS FEASIBLE ERADICATING POVERTY IS OUR GENERATIONAL DUTY