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					Issues in social protection

               Jayati Ghosh

         ERF-UNICEF Workshop on
Social and Economic Policies on Child Rights
                with Equity
    Bangkok, Thailand, 16-20 July 2012
    Bachelet Report on Social Protection Floor
• Social protection floor for a fair and inclusive globalization”
  Report of Advisory Group chaired by Michelle Bachelet for
  ILO and WHO
• Underlying principle: Decent employment and better
  conditions of life should not be seen only as potential
  positive by-products of income growth, or even as ends in
  themselves, but as a means to sustainable growth
• Integral part of broader economic strategy.
• Role of social protection measures in
   – cushioning the impact of the crisis among vulnerable
     populations;
   – serving as a macroeconomic stabilizer fuelling demand; and
   – enabling people to better overcome poverty and social
     exclusion in both developing and developed countries.
   What exactly is the social protection floor?
• Integrated set of social policies designed to guarantee
  income security and access to essential social services
  for all, paying particular attention to vulnerable groups
  and protecting and empowering people across the life
  cycle.
• It includes guarantees of:
   – basic income security, in the form of various social
     transfers (in cash or in kind), such as pensions for the
     elderly and persons with disabilities, child benefits, income
     support benefits and/or employment guarantees and
     services for the unemployed and working poor;
   – universal access to essential affordable social services in
     the areas of health, water and sanitation, education, food
     security, housing, and others defined according to national
     priorities.
Integrated social policies to protect and
  empower people across the life cycle
Different from “social safety net” approach
• Those measures were temporary, fragmented and
  targeted to the “poor”.
• Shift to rights-based approach to social protection,
  with guaranteed basic social rights as a precondition
  for citizenship.
• Universalise access to benefits in health, pensions,
  unemployment, child care and primary education.
• This contributes to reducing poverty, containing
  inequality, sustaining equitable economic growth and
  encouraging greater empowerment and autonomy for
  women.
• Strong gender issues at many levels.
Emergence of a virtuous circle
                                       Evolution of health coverage in some countries

                                       100

                                        90
Percentage of the population covered




                                        80
                                                    Austria, France,
                                        70             Germany


                                        60

                                        50

                                        40

                                        30                              Spain, Greece
                                                                          Portugal
                                        20                                                                                                                                       Rwanda,
                                                                                                                                     South Korea         China,
                                        10                                                                                           Thailand          Vietnam

                                         0
                                             1920


                                                       1929


                                                                 1937


                                                                         1945


                                                                                    1953


                                                                                           1959


                                                                                                      1964


                                                                                                             1969


                                                                                                                       1974


                                                                                                                              1979


                                                                                                                                       1984


                                                                                                                                                1989


                                                                                                                                                        1994


                                                                                                                                                                  1999


                                                                                                                                                                         2004


                                                                                                                                                                                 2009
                                                       Austria             France                 Germany           Greece           Portugal          Spain             China


                                                       Korea               Thailand               Vietnam           Rwanda
 Can governments in poor countries afford this?
• Many poor countries able to provide at least some
  benefits at relatively low levels of GDP – between 1-2
  per cent of GDP.
• Amount spent negligible compared to the tax revenues
  typically foregone by not effectively collecting revenue
  from the wealthy and by not tackling inefficiencies in
  many expenditure programmes.
• In the short run social protection programmes
  generate positive multiplier effects that increase
  output and employment and can create automatic
  stabiliser effects during crises.
• In the long run they pay for themselves, by enhancing
  the productiveness of the labour force, the resilience
  of society and the stability of the polity.
                   Estimated costs of basic social protection package
                                                                                            (% of GDP in 2010)

                   6.0%




                   5.0%




                   4.0%
in pecent of GDP




                   3.0%




                   2.0%




                   1.0%




                   0.0%
                                                                                    Kenya
                           Burkina Faso




                                                                                                                          Bangladesh
                                          Cameroon




                                                                      Guinea




                                                                                                                                       India




                                                                                                                                                             Pakistan
                                                         Ethiopia




                                                                                                                                               Nepal
                                                                                                  Senegal




                                                                                                                                                                        Viet Nam
                                                                                                            United Rep.
                                                                                                             Tanzania




                     Old-age pensions                Child benefits            Health care          Social assistance/employment scheme                Administrative costs
Annual expenditure estimates for child benefits and
  social pensions in some West African countries
       Financing social protection
• Donor-based systems are not sustainable in the medium
  or long term, and can create temporary islands of
  internationally financed social welfare, with problematic
  effects.
• Pilots that are entirely donor-driven need to bear this in
  mind – it is essential to get governments on board
  through advocacy and pressures generated by social and
  public mobilisation.
• Public finance (including taxation policies and benefits
  from natural resources etc.) are critical.
• Re-orienting public expenditure can also be important.
• Questions of intra-generational and inter-generational
  equity have to be addressed.
                Fiscal space strategies matrix, by country

                                                                                                      South
                                                 Bolivia Botswana Brazil Costa Rica Lesotho Namibia          Thailand
                                                                                                      Africa
Mineral-based taxation or similar single taxes
                                                   X       X        X
for specific purposes (earmarked taxation)
Increasing general taxation                                         X                 X                         X
Social contributions                                                X        X        X       X        X        X
Budget surpluses                                           X        X                         X
Budget redefinition. Reduction of non-priority
                                                                             X        X                X        X
spending or decline of military expenditures
Debt and debt service reduction                    X       X        X        X        X                X        X
Official Development Assistance                                                               X
State assets sales                                 X
Efficiency channel                                                  X
Constitutional channel                                              X        X                         X        X
     The need for universal provision
• Issue of appropriate criteria for establishing beneficiaries (e.g.
  “poor” and other means-testing).
• Dynamic changes in the reality versus fixed norms for
  beneficiaries.
• Problems with targeting: Type 1 (unfair exclusion) and Type 2
  (unjustified inclusion) errors.
• Errors higher in hierarchical and discriminatory contexts.
• High administrative costs of targeting compared to
  transparency of universalism (e.g. all children, all old people,
  etc.).
• Economies of scale in universal programmes.
• Harmonisation of different social, labour market and
  economic programmes.
• Political voice to ensure provision and quality.
       What if you have to target?
• Choosing simplest and most transparent criteria; avoiding
  many (or even several) criteria.
• Reducing role of layers of bureaucracy and elites in choice of
  beneficiaries and criteria for proof
• Making scheme as universal as possible – so sometimes
  geographical criteria may be better.
• Self-selection can operate in design of scheme.
• Specific constraints of desired beneficiaries have to be taken
  into account.
• Transparency, constant monitoring and open grievance
  redressal mechanisms are important.
• Technological advances can be used (IT etc), but these are not
  “solutions” to what is essentially a problem of socio-economic
  and power relations.
 Cash transfers – “Just give money to the poor!”
• Latest mantra for poverty alleviation in the international
  development community – but these are NOT a silver bullet
  for poverty reduction.
• Actually an old idea – Kautilya in 5th century BC; zakat in
  Middle Ages, etc.
• Must be in addition to, NOT a substitute for, public
  provision. So increased social spending is essential apart from
  cash transfers.
• Cash versus direct provision of goods and services: the debate
  (e.g. food in India).
• Employment programmes are not cash transfers – they are
  schemes that gives wages in return for work. Underlying
  employment and livelihood strategy of government remains
  very important.
                 Conditionalities
• Less is more!
• Avoid complicated conditions that require more
  administration and more constraints on beneficiaries.
• Improving quantity and quality of public services is
  essential if attendance is mandatory.
• Gender issues in many conditionalities (especially
  reinforcing traditional gender roles and exploiting unpaid
  women’s labour time).
• Sensitivity to vulnerabilities of target groups is required.
• The need to preserve or generate dignity of beneficiaries
  is essential in the entire process, especially when delivery
  is in the hands of other agents.
                      Micro-credit
• Previous “silver bullet” – now much more skepticism.
• Dual credit structures created – institutional finance for the
  rich (and companies) and microcredit for the poor (and
  women).
• Private microfinance for profit is beset with problems.
• Seen as way of getting out of problem of lack of collateral, but
  other means exist.
• Women’s empowerment is sometimes a positive by-product,
  but other social-economic divisions can get accentuated.
• Important to focus on financial inclusion in institutional credit
  – through subsidies for particular loans and directed credit.

				
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