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

2. 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)

3. Impact of ‘Crisis’ on Social Security   SS revenues & reserves fell - due to fall in contributions & investment incomes, decline in govt subsidies & through rising non-compliance   Public social security funds lost over $ 225 bn in 2008 - for some funds, the loss represents as much as 5 five years of investment income   Loss in private pension assets in 2008: $ 5.4 trillion (as per OECD estimate) This loss occurred at a time when social security expenditures were rising due to increased demand for benefits for unemployment, housing & social assistance.

4. basic social protection floor essential Recognizing the role of social protection in preventing increased poverty & helping to stabilize the economy, GJP requests countries to build “adequate social protection for all, drawing on a basic social protection floor, including:  Universal access to essential health services  Income/subsistence security for all children (child benefits)  Income support combined with employment guarantees through public works programmes for the working poor  Income security thru tax-financed basic pensions for older people, persons with disabilities & those without main breadwinner in a family.

5. 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.

6. Demographic Indicators of selected Asian Countries COUNTRY TOTAL POPULATION LIFE EXPECTANCY AT THE AGE 60 2000-2005 % TOTAL POPULATION AGED 60+ Medium Variant POPULATION AGED 60 + (millions) Medium Variant 20072050MenWomen2050 WORLD6671.29191.3N.A. 21.82005.7 China1328.61408.8182131.1437.9 India1103.41592.7171921.0329.6 Indonesia231.6296.9171924.873.6 Korea48.242.3192442.217.8 Malaysia26.639.6182022.28.8 Philippines87.9140.5171918.225.5 Singapore4.45.0172139.82.0 Sri Lanka19.718.7171929.05.4 Thailand63.967.4172229.820.1 Vietnam87.4120.0192126.131.3 Source: UN Populations Projections (2008) – quoted by Mukul G Asher, National University of Singapore

7. Major Challenge   Life expectancy and populations are increasing, as is the population aged 60+   Given the low incomes and vast informal economy, providing employment to growing population, health care and old age income support are major challenges before Asian Countries   Even a small increase in life expectancy or permitted age at which full pension can be withdrawn causes major consequences for viability of social security system   Asia will grow old before it becomes rich enough to provide decent social security to all.

8. Country Oldage, disability Maternity – cash benefits Maternity- cash Benefits + care Work Injury Unemploy ment Family Allowances ChinaXabXaa IndonesiaXabXXa KoreaXabXaa MalaysiaXXXXaa PhilippinesXXXXaa SingaporeXabX-X Sri LankaXXXXXX ThailandXXXXaa a- Information not available; b-medical benefits only; X- program available Existing SS programmes in Selected Asian countries 8

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

10. Contribution Rates for SS Programs in selected Asian countries 2008 (%)

11. Key Messages   Social security programs exhibit 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 also requires concomitant reforms in other areas such as labor markets, fiscal management, and capital and financial markets. 11

12. Ex: JAMSOSTEK   Low contributions & even lower benefits – total provident fund contributions 5.7% of salary of a worker (3.7% by employer, 2% by worker)   Contributions not credited to individual accounts, go to general account which no particular individual can claim. This is a weakness which needs to be addressed   Very little coverage of workers in informal sector – workers reluctant to contribute when both incomes & benefits perceived are low & uncertain,   Mechanism for collection of contributions & delivery of benefits weak   Other problems – participants views

13.   Reforms in Pension systems are needed BUT often become controversial   Governments concern: - Expected rise in the number of pensioners (as proportion of workforce) - Viability of Pension scheme – can the scheme pay tomorrow what it promises the workers today?   Employers concern: Costs   Workers concern: contributions & future adequacy of pension benefits, coverage, delivery & certainty of benefits (especially for those working in informal economy)

14. What changes are being introduced?   Reduce publicly funded part of pension benefits & encourage private contributory schemes   Shift to defined contribution (from defined benefits) system   Privatization - shift away from national system to private schemes - private management of pension funds   Increase in retirement age   lengthening the period over which wages & salaries are averaged for purposes of calculating benefits

15. Defined Benefits v/s Defined Contribution Schemes   Defined benefits (DB) pension schemes are financed on a ‘pay as you go’ basis while Defined contribution (DC) pension schemes are pre-funded by participant & benefits depend on what she/he contributes   Shift toward DC schemes - to avoid fiscal burden on the governments in view of aging populations, increasing life expectancies & number of pensioners estimated in future as also rising health care costs & falling investment returns   Under DC scheme people are expected to retire later and contribute for longer period. This policy also expects people to save for their retirement and expected to bring in also self employed.

16.   Shift towards DC schemes also accompanied by privatization which is expected to raise the rate of return on investments of pension funds.   But what has happened since this shift? - reduced income security in old age - future benefits became unpredictable - high admn costs of privately managed pension schemes - coverage reduced (woman, poor, part time & other workers in precarious employment - private pension funds have not benefited national economy (neither increased national savings nor developed capital markets - WB).

17. Assumptions behind Pension Schemes   Existence of employer-employee relationship, Wage earner/Employee status of workers   Worker earns a certain level of income throughout their entire career (unemployment periods not taken into account in the design of the schemes)   For full pension benefit: contribution of 33 – 40 years, depending on the country’s retirement age before being eligible for full retirement pension. But what is the reality of job market in recent years?

18. Changing labour market   Flexible labour markets – most workers will not have many years of contribution & hence will not get full pension benefits.   Changing nature of employment: contractual - where the employment is offered not as appointment but as assignment (as in a client-supplier relationship) – denial of employer-employee relationship & hence no employer contributions to social security.   Informal economy: Most social security programmes not designed to take account of employment relationships in informal economy where employer- workers relationship is often disguised & where it exists, it is temporary

19. Social Security & Gender   Reforms in pension schemes affect all workers but women more adversely affected due to the nature of their participation in labour market & employment opportunities. – lower paid jobs, part time employment, interrupted & shorter employment record, undeclared forms of work  lesser contributions & therefore lower pension benefits  Under ‘defined contributions’ system, increase in retirement age can mean – women either – get lower pensions or work longer years, even then may not get equal pensions

20. Social Security: key Challenges   Social Security as a human right? Or is it individual responsibility? PayGo Systems v/s individually funded systems: demographic risk versus financial risk - Role of State? the State as the ultimate financial guarantor (of benefits).   Coverage – how to extend SS to all?   The Financing Challenge… Tax v/s Contributions?   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 and management – operational performance, transparency, communications with stake holders – tripartite management?   Role and Capacities of workers representatives?

21. 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?   Public V/s Private – what role? 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

22. THE ADMN 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?...

23. 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

24. 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?   Who should pay?   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

25.   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?

26. ADVOCACY CAPACITY BUILDING KNOWLEDGE DEVELOPMENT NEED TO INCREASE THE ACTIVE SUPPORT OF POLICY MAKERS UNDER THE NATIONAL SOLIDARITY PRINCIPLE NEED TO ENHANCE THE TECHNICAL CAPACITIES OF THE VARIOUS ACTORS INVOLVED IN THE MANAGEMENT OF SOCIAL PROTECTION SCHEMES NEED TO DEVELOP STRONGER EVIDENCE ON SOCIAL PROTECTION BEST PRACTICES AT THE GRASSROOTS LEVEL… « THERE IS NO ADVOCACY WITHOUT EVIDENCE » FROM KNOWLEDGE DEVELOPMENT TO ADVOCACY… « THERE IS NO ADVOCACY WITHOUT EVIDENCE » FROM KNOWLEDGE DEVELOPMENT TO ADVOCACY…

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

28. key conventions on social security/protection Conventions   C 102 - Social Security (Minimum Standards) Convention, 1952   C 121 - Employment Injury Benefits Convention, 1964   C 128 - Invalidity, Old-Age & Survivors’ Benefits Convention, 1967   C 130 - Medical Care and Sickness Benefits Convention, 1969   C 168 - Employment Promotion and Protection against Unemployment Convention, 1988   C 183 - Maternity Protection Convention, 2000   C 118 - Equality of Treatment (Social Security) Convention, 1962   C 157 - 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?

29. C 102 - Social Security (Minimum Standards) Convention, 1952 1) 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

30. 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.

31. 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)

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

33. Campaign for extension of coverage – the year 2009 vision 1. 1. Basic coverage for all, universal but not necessarily uniform coverage (accepting pluralism) 2. 2. Responsibility of the state but delivery can be shared with private sector & communities where feasible 3. 3. Rights based – “Everyone has the right to social security” (Article 22 of the Universal Declaration of Human Rights) 4. 4. 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.

34. 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

35. 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)