Baseline

  • The COVID-19 pandemic has acted as a stress test for social protection systems worldwide, exposing often dramatic gaps in their coverage, comprehensiveness and adequacy and thereby jeopardizing the health, incomes and jobs of billions of people.

  • These protection gaps, which predated the crisis and were further exacerbated by it, are associated with insufficient public investment in social protection and insufficient state capacity to quickly expand its provision. Prior to the COVID-19 crisis, countries spent on average 18.8 per cent of their GDP on social protection (including health) with staggering variations across regions and income groups.

  • Already taking into account the impact of COVID-19, the ILO estimates that low-income and middle-income countries would need to invest an additional US$1.2 trillion – equivalent to 3.8 per cent of their GDP – to close the annual financing gap in 2020. Low-income countries represent US$77.9 billion of this total financing gap, equivalent to 15.9 per cent of their GDP.

Approach and Technical Support

During its 109th session in 2021, the International Labour Conference concluded that the ILO should provide technical support and assist Member States’ efforts to close financing gaps for social protection through domestic resources and development cooperation. The Flagship Programme supports countries to invest more in social protection, notably through domestic resources mobilization, as well as to invest better in social protection, applying the international social security standards, in particular Recommendation No. 202 and Convention No. 102. Activities on financing social protection within the Flagship Programme are centred on the following strategic approaches:

Enhancing domestic resource mobilization

Options to increase fiscal space for social protection exist even in low-income countries, including, inter alia, through increased taxation, a larger social security contribution base, and a more accommodating macroeconomic framework.

Broadening the tax and contributory base by extending social protection to informal economy workers.

Achieved by expanding coverage with different approaches, including by adapting the way contributions are determined, simplifying the payment of contributions, or subsidizing contributions for workers with limited contributory capacities.

Improving synergies between social protection and public finance management(PFM)
  • Achieved in particular by increasing compliance and good governance of social protection systems and the government budget
  • Social pressure to increase the transparency and accountability of social protection institutions improves provision, trust, and thus compliance
Facilitating the engagement of ILO constituents with ministries of finance and international financial institutions

Engaging in order to increase investments in social protection and enhance policy coherence through the evidence-based assessment of national social protection priorities and the formulation of options for sustainable financing

Mobilizing international financing

This, in combination with technical assistance, helps countries with limited domestic fiscal capacities or that face exceptional circumstances due to shocks, to support the development of sustainable and rights-based social protection systems.

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    ILO Experts

    Céline Peyron Bista

    Helmut Schwarzer

    financing
    • financing
    • Financing social protection

    19.08.2022