FAQ's - Social Protecton Floor Cost Calculator
1. What is the Social Protection Floor?
The Social Protection Floor (SPF) is a global social policy approach promoting integrated strategies for ensuring access to essential social services and income security for all. A SPF is the first level of a comprehensive national social protection system, guaranteeing:
- Universal access to essential services (such as health, education, housing, water and sanitation, and other services, as nationally defined);
- Social transfers in cash or in kind, to guarantee income security, food security, and adequate nutrition.
Read more on the SPF initiative and the ILO Social Protection Floors Recommendation, 2012 (No. 202).
2. What is the SPF Cost Calculator?
It is an interactive Excel spread sheet that allows policy makers to estimate the costs of implementing different social protection options given certain preferences, budgetary and financing constraints.
The SPF Cost Calculator helps support policy decisions regarding selection, modification and investment in social protection programmes by providing reasonable estimates of programme costs.
The set of interventions the tool can provide cost estimates for are: old-age pensions, child benefits, disability benefits, orphans benefits, maternity benefits and public work programmes.
3. What does the SPF Cost Calculator do?
The tool helps to give an initial ‘basic assessment’ of the potential costs of different sets of social protection benefit options under different economic scenarios. The SPF Cost Calculator is also useful as it requires relatively limited technical background and is therefore accessible to a wide range of practitioners and policy makers.
Users should keep in mind that calculation results are estimates (not exact predictions) and that they are based on the tool’s built-in assumptions – expressed as weights and relationships between variables that are not specific to national circumstances.
4. How does the SPF Cost Calculator work?
The SPF Cost Calculator uses a set of country-specific data collated on different aspect of the countries represented in tool. These data are inputted and used to make the predictions and cost calculation.
These data inputted include: demographic data, economic data, labour market data and benefit parameters. It is worth noting that, estimates calculated are only as useful as the data that are entered in the tool. As such, better prediction can be made if reliable data are available.
Users of the tool will not be required to make inputs of the basic data such as the demographic, economic data, etc. necessary for the costing; they are only required to make changes to the benefit level and the target population as deemed necessary. Although these data are already specified, the users have discretion to make changes as required.
5. What are the limitations of the SPF Cost Calculator?
The SPF Costing Tool does not provide cost estimates for non-cash social protection benefits. It is specifically adapted to estimating the cost of cash transfers.
The tool also operates on the basic assumption that all funding for the social protection programmes implemented will be public. As a result, the projected cost figures are calculated as a percentage of GDP, government revenue, and government spending – proportions that are not as useful when extra-budgetary financing of all or some social protection programmes is a possibility.
The SPF Costing Tool can help cost programmes that ensure a minimum level of income security, food security and adequate nutrition. On the other hand, it cannot provide cost estimates for programmes, such as health insurance or home-based care, that aim to increase access to essential services more directly.
6. What does Poverty Line mean, and how does it affect benefit calculation?
The poverty line or poverty threshold is the minimum level of income deemed adequate in a particular country. This minimum threshold is periodically updated to reflect the changes in the cost of living of that particular country.
As of October 2015, the global poverty line is set at 1.90 US Dollars using 2011 prices. This new global poverty line uses updated price data to create a more accurate picture of the costs of basic food, clothing, and shelter needs around the world.
The SPF Cost Calculator uses a percentage of this set poverty line as a basis for calculating the appropriated benefit amount for the programs, and hence the cost of giving this amount as benefit.
7. What does US Dollars Purchasing Power Parity (PPP) mean?
This refers to the Purchasing Power Parity (PPP) expressed in terms of US Dollars. It is an economic technique used to determine the relative value of different currencies.
The US Dollars PPP gives an estimation of the exchange rate between two countries in order to be at par with the purchasing power of both countries. In other words, the PPP between two countries is the rate at which the currency of one country needs to be converted into that of a second country to ensure that a given amount of the first country's currency will purchase the same volume of goods and services in the second country as it does in the first.
It should be noted that PPP rates are not the same as US Dollars.