Pre-course - Module D
DIFFERENT WAYS TO FINANCE SOCIAL PROTECTION AND TO CREATE FISCAL SPACE
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Key questions
- Social protection: a cost or an investment?
- Is social protection affordable?
- How to increase fiscal space?
Objectives
The objective of this module is to increase employers’ knowledge on the concepts of affordability and fiscal space, as well as on the impact of expanding or implementing new social protection provisions on government budget. It also aims to provide ideas on various measures to increase fiscal space through budget reallocations, tax reforms, structural reforms, and/or other means.
Take away message
- Whereas the concept of affordability relates to the capacity of a country as a whole to finance additional social protection benefits, that of fiscal space indicates whether a government can afford financing these benefits from its own budget.
- Adding new social protection benefits will inevitably result in deteriorating the fiscal balance. Thus, ways to reduce the deficit need to be devised by increasing a government’s resources or cutting “unnecessary” expenditures and reallocating the available resources to social protection.
- In any case, governments need to understand that social protection should not be considered as a cost, but rather as an investment that generates positive spillovers in the economy.
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Financing Social Protection in Low and Middle-Income Countries (PPT presentation)
Additional readings:
Barrientos, A., (2007), Financing Social Protection, BWPI Working Paper 5, Brooks World Poverty Institute, Manchester.
Bastagli, F. (2015), Bringing taxation into social protection analysis and planning, ODI Working paper 421, Overseas Development Institute, London.
Duran-Valverde, F. and J.F. Pacheco (2012), Fiscal space and the extension of social protection: Lessons learnt from developing countries, ESS Working paper no. 33, International Labour Office, Geneva.
Harris, E. (2013), Financing social protection floors: Considerations of fiscal space, International Social Security Review, 66, pp. 111-143.
Ortiz, I., Cummins, M. and K. Karunanethy (2015), Fiscal Space for Social Protection. Options to Expand Social Investments in 187 Countries, ESS Working Paper no. 48, International Labour Office, Geneva.
Whole list of resources: click here