How can we invest more and better in universal social protection?

Promoting national and global solidarity through the application of international social security standards

Mira Bierbaum and Valérie Schmitt

The COVID-19 pandemic has highlighted stark and persistent gaps in social protection coverage. Today, still 51.3 per cent of the world's population, as many as 4.1 billion people, are left completely unprotected when faced with events that threaten their incomes, jobs, or health; meaning that they have to fend for themselves instead of standing in for each other; and, as witnessed during the pandemic, sometimes even having to choose between protecting their income or their health and the health of others.

These substantial protection gaps are linked to significant underinvestment in social protection. Estimates of the International Labour Organization (ILO) suggest that low-income countries alone would need to invest an additional US$77.9 billion per year to guarantee at least a basic level of social security for children, persons of working age and older persons, as well as access to essential health care: a social protection floor.

Countries therefore need to invest more in social protection. Various options exist to mobilize domestic resources, even in low-income countries. These range from broadening the tax base, tackling tax evasion and building fair and progressive tax systems, duly collecting social security contributions and tackling the non-payment or the avoidance of social security contributions, over the reprioritization or reallocation of public expenditure, the management and negotiation of debt (also in light of the fact that many countries have increased domestic and foreign debt during the COVID-19 crisis), to eliminating corruption and illicit financial flows.

Nonetheless, we also need to be realistic. For low-income countries, the above-mentioned annual financing gap is equivalent to 15.9 per cent of their Gross Domestic Product. Research by Marcus Manuel, Senior Research Associate at ODI, highlights the limits of domestic resource mobilization in low-income countries in the short- to medium-term. Other countries may face increased resource needs due to crisis, natural disasters or climate change. In these cases, international financial resources, in combination with technical assistance, could temporarily complement and support domestic resource mobilization for social protection.

A real-life example for such a trajectory is Kenya, where the Government has progressively reduced its reliance on resources from external partners to finance social protection (see Figure 1). This has been the result of strong political will as well as building public support through a universal approach, ensuring that the benefits of social protection are tangible for wide parts of the population, as pointed out by Richard Rori (Social Protection Policy and Research Analyst, National Social Security Fund, Kenya).

In September 2021, the call for greater global solidarity to achieve universal social protection was prominently made by the United Nations Secretary-General in his report Our Common Agenda, as well as his policy brief on Investing in Jobs and Social Protection for Poverty Eradication and a Sustainable Recovery. Global solidarity could take multiple forms, such as channeling Special Drawing Rights (SDRs) towards social protection; meeting previously made and still woefully unmet commitments in terms of Official Development Assistance (ODA) and increasing the share of ODA directed towards social protection; and expanding “breathing room” for vulnerable countries to invest in their social and economic development, for instance by expanding debt relief programmes and eliminating systemic inequalities in the international debt architecture.

Figure 1. Share of external and domestic financing for non-contributory social protection schemes, Kenya, 2007–2018

Source: Authors’ illustration based on Kenya Social Protection Review Report (2017, Annex 2).

Furthermore, the COVID-19 crisis has also shown once more the importance of combining financial and technical support, the latter geared towards building sustainable social protection systems. The German Development Cooperation, for instance, mobilized additional EUR500 million to respond to urgent needs. Channelling these funds was obviously much easier in contexts where they had previously supported the establishment of systems, such as in Cambodia, as explained by Kathrin Oellers (Head of Division Population Policy and Social Protection, German Federal Ministry for Economic Cooperation and Development).

Hence, investing more is necessary, but not sufficient; countries also need to invest better in universal social protection. What do we mean by that? Even though achieving universal social protection is one of the shared ambitions of the 2030 Agenda for Sustainable Development, progress has been hampered by a disconnect between social protection policy priorities, aiming to respond to people’s needs and leave no one behind, and insufficient financial backing, or even counterproductive fiscal policies—previous crisis have shown the deep social scarring that austerity leaves, hurting the most vulnerable in society.

Divergences at the national level are mirrored by the sometimes incoherent or even conflicting advice of different international organizations, development partners and international financial institutions, both regarding adequate levels of public investment in social protection per se and regarding policy choices.

What is required then is more coherence and coordination, backed by strong political will, to better align social policy and financing priorities. This idea is at the core of the Global Accelerator on Jobs and Social Protection for a Just Transition, launched by the United Nations Secretary-General in September 2021. The Accelerator aims to increase both the level and coordination of the multilateral system’s efforts to support countries in creating decent jobs and extending universal social protection through the commitment to a common roadmap.

How to define such a common approach? In fact, to some extent it already exists. In 2012, representatives from governments, employers’ and workers’ organizations from all 187 Member States of ILO met to deliberate a set of principles, a common denominator, that provides guidance on the design, financing and governance of universal social protection systems. These 19 guiding principles are part of the Social Protection Floors Recommendation, 2012 (No. 202) and have been reaffirmed at the 109th Session of the International Labour Conference in 2021. They are also promoted and applied as part of the ILO’s Flagship Programme on Building Social Protection Floors for All that supports 50 countries in progressively achieving universal social protection.

These 19 principles can be understood as the backbone of national social protection systems. As in a honeycomb structure, there is no hierarchy (see Figure 2): The principles need to be implemented in a holistic manner as failure to observe one of them could compromise the solidity of the complete architecture. Together, these principles can guide countries as well as other actors that support them technical and financially in building nationally owned social protection systems that protect the whole population and leave no one behind, are financially sustainable and socially just, and rely on sound management and good governance.

Figure 2. Guiding principles of the Social Protection Floors Recommendation, 2012 (No. 202) (paragraph 3)

Source: Social Protection Floors Recommendation, 2012 (No. 202), paragraph 3.

Put differently, the 19 principles can be presented in seven groups (with the colours of the circle corresponding to the respective principles shown in Figure 2). Investing better in universal social protection requires:

  • acknowledging the primary responsibility of the State;
  • achieving a national consensus based on effective tripartite social dialogue;
  • ensuring that no one is left behind to realize the right to social security;
  • making progressive and sustainable investments;
  • ensuring social solidarity, including solidarity in financing;
  • exploring diverse approaches and mechanisms; and
  • ensuring good governance and creating synergies.

Finding a common approach to increase levels of investment and coordination is more needed than ever to to support a human-centred recovery from the current crisis that is inclusive, sustainable and resilient. It is also an essential element to facilitate the structural transformation of economies and societies, including developments in the world of work and a just transition.

 

[1]       This blog post is based on our two recent ILO working papers on investing more and better in universal social protection as well as a roundtable discussion during the launch of these papers.