Building economic recovery, inclusive development and social justice 2014/15
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1 Building economic recovery, inclusive development and social justice 204/5
2 World Social Protection Report 204/5 Building economic recovery, inclusive development and social justice
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4 World Social Protection Report 204/5 Building economic recovery, inclusive development and social justice INTERNATIONAL LABOUR OFFICE GENEVA
5 Copyright International Labour Organization 204 First published 204 Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to ILO Publications (Rights and Permissions), International Labour Office, CH-2 Geneva 22, Switzerland, or by pubdroit@ilo.org. The International Labour Office welcomes such applications. Libraries, institutions and other users registered with reproduction rights organizations may make copies in accordance with the licences issued to them for this purpose. Visit to find the reproduction rights organization in your country. World Social Protection Report 204/5: Building economic recovery, inclusive development and social justice International Labour Office Geneva: ILO, 204 ISBN (print) ISBN (web pdf) ISBN (e-pub) ISBN (Kindle) International Labour Office social security / scope of coverage / gaps in coverage / social security policy / ageing population / pension scheme / health insurance / role of ILO / developed countries / developing countries ILO Cataloguing in Publication Data The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers. The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors, and publication does not constitute an endorsement by the International Labour Office of the opinions expressed in them. Reference to names of firms and commercial products and processes does not imply their endorsement by the International Labour Office, and any failure to mention a particular firm, commercial product or process is not a sign of disapproval. ILO publications and electronic products can be obtained through major booksellers or ILO local offices in many countries, or direct from ILO Publications, International Labour Office, CH-2 Geneva 22, Switzerland. Catalogues or lists of new publications are available free of charge from the above address, or by pubvente@ilo.org Visit our web site: This publication was produced by the Document and Publications Production, Printing and Distribution Branch (PRODOC) of the ILO. Graphic and typographic design, manuscript preparation, copy editing, layout and composition, proofreading, printing, electronic publishing and distribution. PRODOC endeavours to use paper sourced from forests managed in an environmentally sustainable and socially responsible manner. Code: PAP-WEI-STA
6 Preface Since its creation in 99, the ILO has been supporting countries to develop and implement social security systems for all. There has been tremendous progress since then. At the outset, some 40 countries were starting to build such schemes; today, all countries in the world have a social security system. What is more, social protection coverage and benefits continue to expand, as reflected in the groundbreaking ILO Recommendation concerning National Floors of Social Protection (No. 202), adopted in 202. The Recommendation bears witness to the joint commitment of governments, employers and workers to building nationally defined social protection floors which guarantee at least a basic level of social security to all, encompassing access to health care and income security throughout people s lives and ensuring their dignity and rights. While social protection floors are essential, the Recommendation does not stop there: it also sets out detailed guidance on building comprehensive social protection systems. Two years after the adoption of the Recommendation, this World Social Protection Report offers a comprehensive body of evidence both on the impressive progress made over the last few years and on the remaining gaps that need to be filled. Based on a lifecycle approach, the report provides an overview of the current organization of social protection systems, coverage, benefits and expenditures. With its global scope and valuable statistical annexes, it is an essential reference for anyone interested in social protection. In recent years, the ILO has provided technical assistance on social protection to no fewer than 6 countries. And we are proud to continue our support all over the world, as more and more evidence shows that social protection systems play a key role in the functioning of modern societies and are an essential ingredient of integrated strategies for economic and social development. Furthermore, experience since 200 shows that countries with adequate social protection systems were able to respond more quickly and effectively to the global crisis. Yet some 7 per cent of the world s population continues to live without adequate social protection coverage. In other words, for the large majority of people the fundamental human right to social security is only partially realized or not at all. In 204, it is clear that the global community needs to make greater efforts in realizing this right. With this in view, it is opportune to recall the many countries that v
7 vi historically have built sound economies at the same time as decent societies with social protection. Still grappling with the economic repercussions of the global financial crisis, the world is faced with a deep social crisis which is also a crisis of social justice. Fiscal consolidation and adjustment measures threaten household living standards in a significant number of countries. Despite progress made in reducing levels of extreme poverty in some parts of the world, high levels of poverty and vulnerability persist; what is more, poverty is actually increasing in many high-income countries. In addition, high and still rising levels of inequality in both advanced and developing economies are widely acknowledged as cause for great concern. Social protection measures are essential elements of a policy response that can address those challenges. They not only support the realization of the universal human right to social security, but are both a social and an economic necessity. Well-designed social protection systems support incomes and domestic consumption, build human capital and increase productivity. The bold efforts in extending social protection in many developing countries, from Brazil to China, from Ecuador to Mozambique, have underlined its key role in reducing poverty and vulnerability, redressing inequality and boosting inclusive growth. This is an issue that the international community should embrace as a priority in the post-205 development agenda. Social protection can ensure that all people have the security of knowing that if they lose their job or fall ill, and also when they grow old, they will not face the risk of poverty and insecurity. Our modern society can afford to provide universal social protection everywhere. I hope that this report will be a useful tool for practitioners, and provide the basis for better informed policy-making. Geneva, une 204 Guy Ryder Director-General International Labour Office
8 Acknowledgements This report was drafted by a team supervised by the Director of the ILO Social Protection Department, Isabel Ortiz, consisting of Krzysztof Hagemejer, formerly Chief of the Social Policy, Governance and Standards Branch; Anne Drouin, Chief of the Public Finance, Actuarial and Statistics Services Branch; Florence Bonnet, Social Security Statistics Coordinator; Christina Behrendt, Senior Social Protection Policy Specialist; Emmanuelle St-Pierre Guilbault, Legal Specialist; Xenia Scheil-Adlung, Coordinator Social Health Protection; and ohn Woodall, formerly Coordinator Pension Policy. vii Substantial inputs to the report were received from Matthew Cummins, Social and Economic Policy Specialist at the United Nations Children s Fund (UNICEF), and several colleagues in the ILO Social Protection Department, including Fabio Durán Valverde, Senior Specialist Social Security; Aidi Hu, Coordinator Country Operations, Asia; Cristina Lloret, unior Social Security Actuary; Helmut Schwarzer, Senior Social Security Specialist for the Americas and the Caribbean; Maya Stern-Plaza, unior Legal Officer; Victoire Umuhire, unior Legal Officer; Veronika Wodsak, Technical Officer Social Security; Hiroshi Yamabana, Social Security Actuary; and Katharina Diekmann, Zita Herman, Vinu Parakkal Menon and Nicholas Teasdale-Boivin. The report benefited from comments from colleagues in other ILO technical departments and field offices, including Manuela Tomei, Director of the Conditions of Work and Equality Department; Michelle Leighton, Chief of the Labour Migration Branch; Philippe Marcadent, Chief of the Inclusive Labour Markets, Labour Relations and Working Conditions Branch; Shauna Olney, Chief of the Gender, Equality and Diversity Branch; Alice Ouedraogo, Chief of the HIV/AIDS and the World of Work Branch; Laura Addati, Maternity Protection and Work Family Specialist; anine Berg, Senior Development Economist; Fabio Bertranou, Senior Labour Market and Social Protection Specialist, ILO Buenos Aires; Theopiste Butare, Senior Social Security Technical Specialist, ILO Yaoundé; Pablo Casalí, Senior Social Security Specialist, ILO Lima; Luis Casanova, National Officer, ILO Buenos Aires; Raphael Crowe, Senior Gender Specialist; Adrienne Cruz, Senior Gender Specialist; Loveleen De, Social Security Consultant, ILO Bangkok; uan De Laiglesia, Economist and Labour
9 World Social Protection Report 204/5 Market Specialist; Maria Gallotti, Specialist in Migration Policies; Youcef Ghellab, Head Social Dialogue and Tripartism Unit; Frank Hoffer, Senior Research Officer, ILO Bureau for Workers Activities; Lee-Nah Hsu, Technical Specialist on HIV/ AIDS; Kroum Markov, Legal Specialist; Barbara Murray, Senior Disability Specialist; Susan Maybud, Senior Gender Specialist; Seil Oh, Social Security Officer, ILO Bangkok; Céline Peyron Bista, Chief Technical Adviser, ILO Bangkok; Markus Ruck, Senior Social Security Specialist, ILO New Delhi; Catherine Saget, Senior Economist; Francis Sanzouango, Employer Relations Specialist, Bureau for Employers Activities; Sinta Satriana, Social Security Consultant, ILO Bangkok; Valérie Schmitt, Senior Social Security Specialist, ILO Bangkok; Stefan Trömel, Senior Disability Specialist; Catherine Vaillancourt-Laflamme, Chief Technical Adviser, ILO Manila. Comments and guidance from the ILO s Deputy Director-General for Policy, Sandra Polaski, are especially appreciated. viii The ILO is also grateful for the helpful comments received from other United Nations organizations, including from Diana Barrowclough, Senior Economic Affairs Officer at the United Nations Conference on Trade and Development (UNCTAD); Michael Clark, Special Adviser on International Governance at the Food and Agriculture Organization (FAO); Sarah Cook, Director of the United Nations Research Institute for Social Development (UNRISD); Christian Courtis, Human Rights Officer at the Office of the UN High Commissioner for Human Rights (OHCHR); Frédéric Dévé, Governance Adviser, FAO; David Evans, Director of the Department of Health Systems Financing, World Health Organization (WHO); Lynn Gentile, Human Rights Officer, OHCHR; Catalina Gomez, Social Protection Consultant, UNICEF; Katja Hujo, Research Coordinator, UNRISD; Alex Izurieta, Senior Economic Affairs Officer, UNCTAD; Gabriele Köhler, formerly South Asia Regional Adviser on Social Policy, UNICEF; Hans-Horst Konkolewsky, Secretary-General, International Social Security Association; oseph Kutzin, Coordinator, Health Financing Policy, WHO; Daniel Lopez Acuña, Adviser to the Director General, WHO; Sheila Murthi, Social Protection Consultant, UNICEF; Krista Orama, Focal Point for the Rights of Persons with Disabilities, OHCHR; Shahra Razavi, Chief Research and Data Section, UNWOMEN; Stefania Tripodi, Human Rights Officer, OHCHR; enn Yablonski, Social Protection Specialist, UNICEF; Ilcheong Yi, Research Coordinator, UNRISD; Michael Cichon, former Director of the ILO Social Security Department and now President of the International Council on Social Welfare; and for the comments of three anonymous peer reviewers. Thanks are also due to those who facilitated the editing, production, publication and dissemination of this report in their different roles, including Charlotte Beauchamp, Raphaël Crettaz, Laetitia Dard, Chris Edgar, osé Antonio Garcia, Victoria Giroud- Castiella, ean-luc Martinage, Michel Masurel, Martin Murphy, Marcia Poole, Karuna Pal, Ksenija Radojevic Bovet, Damien Riunaud, Dalibor Rodinis, Hans von Rohland, Gillian Somerscales and Hans Christian Weidmann.
10 Contents Preface Acknowledgements v vii ix List of figures List of tables List of boxes List of abbreviations xiii xvii xvii xix Executive summary xxi. Introduction A right unfulfilled Building social protection systems: A historical overview, Fiscal consolidation: Setbacks The way forward: Building national social protection floors and social security systems Objective and structure of the report Building the knowledge base on social protection statistics Social protection for children and families The role of social protection in ensuring children s well-being Expenditure on social protection for children and families Extent of legal coverage: Child and family benefit programmes anchored in national legislation Closing coverage gaps and strengthening income security for children and families How fiscal consolidation and adjustment measures threaten income security for children and families
11 World Social Protection Report 204/5 x. Social protection for women and men of working age Introduction: The quest for income security Unemployment protection Protecting incomes, cushioning demand shocks and facilitating structural change in the economy Types of unemployment protection schemes Legal coverage for unemployment benefits Effective coverage by unemployment benefits Unemployment protection for young people Expanding unemployment protection in emerging economies Unemployment benefits as a key element of crisis response and fiscal consolidation measures Renewed emphasis on (re-)integrating unemployed workers into the labour market Challenges Employment injury protection Protecting workers affected by employment injury Types of employment injury protection schemes Extent of legal coverage Extent of effective coverage Adequacy of benefits to cover workers needs Recent developments Challenges Disability benefits Protecting and enabling persons with disabilities Types of disability benefit schemes Effective coverage for disability benefits Recent developments and challenges Maternity protection Maternity protection: Ensuring income security, maternal health care and women s rights at work Types of maternity protection schemes Extent of legal coverage Extent of effective coverage Adequacy of maternity benefits in ensuring income security during maternity leave Access to maternal health care Recent developments Social protection for older women and men: Pensions and other non-health benefits The crucial role of pensions in ensuring income security and well-being of older persons Types of pension schemes Extent of legal coverage Extent of effective coverage Income security in old age: A right still unfulfilled for many Changes in pension coverage across the world: Progress and regression Persistent inequalities in access to income security in old age The adequacy of pensions to provide genuine income security to older persons
12 Contents 4.5. Guaranteeing income replacement Preventing erosion of the value of pensions over time: Ensuring regular adjustments Reforming and re-reforming pension systems Ensuring income security for older persons: The continuing challenge Towards universal coverage in health The crucial role of universal health coverage for individuals and the economy The foundation of universal coverage in health in international labour standards Coverage deficits, especially in low-income countries Affordability and risk of impoverishment Protection from income loss: The benefits of paid sick leave Financing mechanisms for universal coverage in health Levels of public and private health expenditure The global shortage of health workers Inadequate levels of pay for health workers Fiscal consolidation measures: Drivers of economic recovery or part of the problem? Addressing the challenges: Achieving sustainable progress in access to health care xi 6. Expanding social protection: Key to crisis recovery, inclusive development and social justice Grappling with recession and slow growth: Social protection and the global crisis Social protection in the first phase of the global crisis: Expansion and fiscal stimulus (200 09) Social protection in the second phase of the global crisis: Fiscal consolidation (200 and after) Divergent trends across countries High-income countries: Fiscal consolidation and its effects Overview: Prioritizing financial sector recovery over social protection First phase of the crisis: Scaling up social protection to sustain households disposable income and domestic demand (200 09) Second phase of the global crisis: Fiscal consolidation, 200 onwards Adequate transfers, taxes and social dialogue: Key elements of a socially responsive recovery Middle-income countries: Inclusive growth through social protection Significant extension of social protection coverage Towards more inclusive growth Low-income countries: Beyond safety nets, towards social protection floor guarantees Against the odds: Extending social protection coverage in low-income countries Expanding social protection using proceeds from fiscal consolidation and adjustment measures Beyond safety nets: Towards national social protection floors
13 World Social Protection Report 204/5 6.5 Fiscal space for social protection floors Option : Reallocating current public expenditures Option 2: Increasing tax revenues Option : Extending social security contributions Option 4: Borrowing or restructuring existing debt Option 5: Curtailing illicit financial flows Option 6: Drawing on increased aid and transfers Option 7: Using fiscal and central bank foreign exchange reserves Option : Adopting a more accommodating macroeconomic framework Why social protection floors are key to recovery and must be part of the post-205 development agenda Social protection floors reduce poverty and inequalities Social protection floors promote decent employment and inclusive growth Leaving no one behind: Social protection floors to change people s lives by xii ANNEXES Annex I. Glossary Annex II. Measuring social security coverage Annex III. Minimum requirements in ILO social security standards: Overview tables Annex IV. Statistical tables Unemployment (tables B., B.4) Maternity (table B.5) Old age (tables B.6, B.7, B., B.9) Health-specific indicators (tables B.0, B.) Social protection expenditure (tables B.2, B.) Bibliography
14 Contents List of figures. Towards comprehensive social security systems: Number of areas covered in social protection programmes anchored in national legislation, Development of social protection programmes anchored in national legislation by area (branch), pre-900 to post Expenditure on child benefits by region, and proportion of children aged 0 4 in total population, 200/ Public social protection expenditure on child and family benefits (excluding health), 200/ Overview of child and family cash benefit programmes anchored in national legislation, by type of scheme and groups covered, 202/ Child/family allowances: Distribution of programmes anchored in legislation, by type of programme, Child/family allowances: Existence of programme anchored in legislation and main group(s) covered, by region, Child/family allowances: Main sources of financing, Level of expenditure and proportion of population reached by non-contributory conditional cash transfer programmes in selected Latin American countries, latest available year xiii. Non-health public social protection expenditure for people of working age, and share of people of working age (5 64) in the total population, 200/ Non-health public social protection expenditure for people of working age, by national income, 200/ Overview of unemployment protection schemes anchored in national legislation, by type of scheme and benefit, 202/ Distribution of unemployment protection schemes worldwide by type of scheme, 202/ Distribution of unemployment protection schemes worldwide by extent of legal coverage of the labour force, latest available year Unemployment protection schemes: Extent of legal coverage, regional estimates, latest available year Effective coverage of unemployment benefits: Unemployed who actually receive cash benefits, regional estimates, 2007, 2009 and 202/ Effective coverage of unemployment benefits: Unemployed who actually receive cash benefits, latest available year Effective coverage of unemployment benefits: Unemployed who actually receive cash benefits, latest available year Proportion of unemployed receiving unemployment benefits and relative poverty rates for the unemployed, selected European countries, Unemployed receiving unemployment cash benefits, all ages and youth, 202/ Employment injury protection: Distribution by type of programme, 202/ Employment injury protection: Regional estimates of legal coverage (total and women), latest available year
15 World Social Protection Report 204/5 xiv.4 Employment injury protection: Legal and effective coverage, latest available year Employment injury protection: Replacement rates for permanent disability 5.6 Employment injury protection: Replacement rates for temporary disability 5.7 Overview of cash disability benefit programmes anchored in national legislation, by type of programme and benefit, 202/ Income support for persons with disabilities: Existence and type of programmes, 202/ Europe: Persons with disabilities in working age and recipients of disability benefits, Europe: Rates of poverty risk among those of working age (6 64) by disability status, Maternity cash benefit schemes anchored in national legislation: Types of schemes, Legal (mandatory) coverage for maternity cash benefits: Women in employment protected by law for loss of income during maternity Effective coverage for maternity cash benefits: Women in employment contributing to maternity cash benefits schemes or otherwise entitled to such benefits Duration of paid maternity leave in national legislation, Level of maternity cash benefits as a proportion of previous earnings, Antenatal care coverage by region, latest available year Antenatal care coverage by social health protection coverage, latest available year Inequities in access to maternal health services by wealth quintile and national income level, latest available year Maternal mortality ratio (per 00,000 live births) and live births attended by skilled health personnel, according to national income level, Sources of income of people aged 65 and over, OECD countries Correlation between greater public pension provision and lower poverty levels, OECD countries Overview of old-age pension schemes anchored in national legislation, by type of scheme, 202/ Non-health public social protection expenditure on pensions and other benefits for older persons, and share of older population (65 and above) in total population, 200/ Non-health public social protection expenditure on pensions and other benefits for older persons, 200/ Long-term care expenditure as a proportion of GDP, 200 and projections for Old-age pensions: Extent of legal coverage, by region, latest available year 2 4. Effective pension coverage ratios, by region, latest available year Old-age pension beneficiaries as a proportion of the population above statutory pensionable age, latest available year
16 List of figures 4.0 Old-age pension beneficiaries as a proportion of the population above statutory pensionable age, 2000 and Comparison of the proportion of older persons receiving a pension, 2000 and Proportions of women and men in employment contributing to a pension scheme, by area of residence Proportions of women and men above statutory pensionable age receiving an old-age (or survivors ) pension, by area of residence Pensioners declining relative standard of living as a result of price indexation or no indexation Average replacement rates at retirement in public pension schemes in 200 and projected for 2060, selected European countries Minimum replacement rates necessary to guarantee pension income above the poverty threshold Health coverage by region: Proportion of population affiliated to national health services, or social, private or micro-insurance schemes, latest available year Global health coverage: Proportion of population affiliated to national health services, social, private or micro-insurance schemes, latest available year Legal health coverage and poverty, latest available year The global deficit in effective access to health services, 20/2, by level of country income Legal health coverage and out-of-pocket payments in selected African countries, Schematic overview of health-care financing mechanisms currently in use Coverage mechanisms used by countries with legal health coverage rates of 0 per cent of the population or over, 204 or latest available year Sources of health-care financing, by region, Share of OOP expenditure in total health expenditure, by proportion of the population living on less than US$2 a day PPP, Number of health workers required to close global and regional gaps in universal health coverage, ILO estimate, ly change in health workers remuneration as proportion of total health expenditure and GDP, by national income level, xv 6. Social protection in stimulus packages, Number of countries contracting public expenditures (year on year), 200 6, relative to GDP and in real terms Excessive fiscal contraction: Projected decline in total government expenditure relative to GDP, and in real government expenditure (20 5 average over average) Public social protection expenditure as a percentage of GDP, real GDP and real social protection expenditure Trends in government and public social protection expenditure per capita, and
17 World Social Protection Report 204/5 xvi 6.6 Expansion of social protection in middle- and low-income countries: Selected examples of new and expanded programmes, Support for the financial sector, fiscal stimulus packages and public debt increases, selected HICs, Increase in the proportion of the population at risk of poverty in European countries between 200 and Distribution of expenditure-based versus revenue-based fiscal consolidation plans in 0 OECD countries, The social and economic risks of fiscal consolidation Trends in real public social protection expenditure, GDP, consumption and unemployment, /: United States, apan, France and Germany Contributions of various components to the growth of nominal gross disposable income of households, European Area 7 countries, Annual changes in disposable income, , by income component, selected OECD countries Reduction in gross theoretical replacement rates of statutory pensions for average wage workers retiring at age 65 after 40 years of contributions, Real public social protection expenditure, unemployment and real GDP: Recent developments in the four EU countries under economic adjustment programmes, 200 : Ireland, Greece, Portugal and Cyprus Poverty rates in OECD countries before and after taxes and social protection transfers, latest available year (around 200) Increase in public social protection expenditure, selected middle-income countries, 2000 to latest year Increase in public social protection expenditure, selected low-income countries, 2000 to latest year Total government spending in selected countries, Illicit financial flows (IFF) versus official development assistance (ODA), Public social protection expenditure (percentage of GDP) and proportion of the population in poverty Public social protection expenditure (percentage of GDP) and income equality (Gini coefficient), latest available year Schematic representation of some of the positive impacts of the extension of social protection on inclusive growth (short term) Schematic representation of some of the positive impacts of the extension of social protection on inclusive growth (longer term)
18 List of tables List of tables 4. Indexation methods Global variations in sickness and sick leave benefits Key aspects of performance associated with various health coverage and financing mechanisms Numbers of medical personnel per 0,000 people, selected countries, latest available year Announced fiscal consolidation policies and associated fiscal savings, selected countries, Announced cuts in public wages, selected European countries, Average annual increase in OOP, selected countries, Key aspects of social protection floor policies aiming at achieving universal coverage in health, based on Recommendation No Main adjustment measures by region, Selected fiscal consolidation measures recently adopted or under discussion in high-income countries Selected recent examples of the extension of social protection in middle-income countries Selected recent examples of the extension of social protection in low-income countries Fiscal space strategies: Country examples xvii List of boxes. The ILO s normative framework for the extension of social security International standards for child and family benefits Child-sensitive social protection Social security systems and the prevention of child labour The universal child allowance in Argentina The Child Support Grant in South Africa Providing benefits for orphans and vulnerable children: The Livelihood Empowerment Against Poverty (LEAP) programme in Ghana The effects of fiscal consolidation and adjustment measures on child and family benefits International standards on unemployment protection Public employment programmes and their contribution to social protection 9. India s Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) Keeping people in employment through part-time unemployment benefits: The example of Germany From expansion to fiscal consolidation: The examples of Slovenia and Spain 42.6 Measures facilitating return to work for parents with young children International standards relevant for employment injury protection The Rana Plaza disaster and its implications for social security in cases of employment injury
19 World Social Protection Report 204/5.9 Disability benefits for income protection: Relevant international standards 54.0 Income security for persons with disabilities: Illustrations from Europe.. 5. Recent developments: Country examples How social protection can help persons with disabilities gain access to employment International standards relevant to maternity protection Maternity protection: Collectively financed schemes vs employer s liability provisions Maternity cash benefits: Some examples of recent expansion of coverage Measures to facilitate parents return to work Recent contraction measures xviii 4. International standards on old-age pensions The crisis of the care economy: Risks associated with inattention to long-term care needs in times of fiscal consolidation Extension of social protection of older persons in China Trends in replacement rates and adequacy of pension payments Re-reforms and un-privatizations of pension systems in Latin America and Central and Eastern Europe Approaching universal coverage in health: Anchored in ILO Conventions and Recommendations and further international standards From fiscal stimulus to fiscal consolidation Implications for social protection Using sovereign pension reserve funds to fund bailouts Iceland: A socially responsive recovery from the crisis The role of social protection in the Brazilian model of domestic demand-led growth Strengthening domestic demand-led growth in China through increased wages and an expansion of social protection benefits Mozambique: Using a fuel subsidy to extend social protection Financing social protection from subsidy removal Taxing mineral and natural resource extraction to generate fiscal space for social protection Ecuador: Using resources freed up by debt restructuring for social protection
20 List of abbreviations AAAQ ADB CCT CIS CRPD DfID ECLAC EU EU-SILC FAO GDP HIC availability, accessibility, acceptability and quality (criteria) Asian Development Bank conditional cash transfer Commonwealth of Independent States UN Convention on the Rights of Persons with Disabilities Department for International Development (United Kingdom) United Nations Economic Commission for Latin America and the Caribbean European Union European Union Statistics on Income and Living Conditions Food and Agriculture Organization of the United Nations gross domestic product high-income country ICESCR International Covenant on Economic, Social and Cultural Rights, 966 IFF illicit financial flows IILS International Institute for Labour Studies ILO International Labour Office/Organization IMF International Monetary Fund ISSA International Social Security Association LEAP Livelihood Empowerment Against Poverty programme (Ghana) MDG Millennium Development Goal MGNREGS Mahatma Gandhi National Rural Employment Guarantee Scheme (India) NDC notional defined contribution NGO non-governmental organization NHIS National Health Insurance Scheme (Ghana) OECD Organisation for Economic Co-operation and Development OHCHR Office of the United Nations High Commissioner for Human Rights xix
21 World Social Protection Report 204/5 OOP out-of-pocket payments PAYG pay-as-you-go PEP public employment programme PPP purchasing power parity SSA Social Security Administration of the United States SWF sovereign wealth fund UDHR Universal Declaration of Human Rights, 94 UN United Nations UNCTAD United Nations Conference on Trade and Development UNDP United Nations Development Programme UNESCO United Nations Educational, Scientific and Cultural Organization UNICEF United Nations Children s Fund UNRISD United Nations Research Institute for Social Development VAT value added tax WHO World Health Organization xx
22 Executive summary Social protection policies play a critical role in realizing the human right to social security for all, reducing poverty and inequality, and supporting inclusive growth by boosting human capital and productivity, supporting domestic demand and facilitating structural transformation of national economies. This ILO flagship report: (i) provides a global overview of the organization of social protection systems, their coverage and benefits, as well as public expenditures on social security; (ii) following a life-cycle approach, presents social protection for children, for women and men of working age, and for older persons; (iii) analyses trends and recent policies, e.g. negative impacts of fiscal consolidation and adjustment measures; and (iv) calls for the expansion of social protection in pursuit of crisis recovery, inclusive development and social justice. While the need for social protection is widely recognized, the fundamental human right to social security remains unfulfilled for the large majority of the world s population. Only 27 per cent of the global population enjoy access to comprehensive social security systems, whereas 7 per cent are covered partially or not at all. The lack of access to social protection constitutes a major obstacle to economic and social development. Inadequate or absent social protection coverage is associated with high and persistent levels of poverty and economic insecurity, growing levels of inequality, insufficient investments in human capital and human capabilities, and weak aggregate demand in a time of recession and slow growth. The strong positive impacts of social protection have brought social protection to the forefront of the development agenda. Social protection is a key element of national strategies to promote human development, political stability and inclusive growth. The ILO Social Protection Floors Recommendation, 202 (No. 202), reflects a consensus on the extension of social security reached among governments and employers and workers organizations from 5 countries at all levels of development. Further, the roll-out of social protection floors is endorsed by the G20 and the United Nations. However, while there has been a global trend towards the extension of social protection, particularly in middle-income countries, the effectiveness of social security systems in a number of countries is at risk as a result of fiscal consolidation and adjustment measures. These trends are presented in the different chapters of the report, following a life-cycle approach. Social protection for children and families: A right unfulfilled Social protection policies are an essential element of realizing children s rights, ensuring their well-being, breaking the vicious cycle of poverty and vulnerability, and helping all children realize their full potential. Despite a large expansion of schemes, existing social protection policies do not sufficiently address the income security needs of children and families, particularly in low- and middle-income countries with large child populations. About,000 children die every day, mainly from preventable causes: many of these deaths could be averted through adequate social protection. xxi
23 World Social Protection Report 204/5 xxii Social protection also has a key role in preventing child labour by reducing economic vulnerability of families, enabling children to go to school and protecting them from exploitation. More efforts are needed to step up measures to ensure income security for children and families. Many children do not receive the essential cash transfers that could make a real difference, in terms of nutrition, health, education and care services, to their chances of realizing their full potential. Specific child and family benefit programmes rooted in legislation exist in 0 countries, yet often cover only small groups of the population. In 75 countries, no such programmes are available at all. On average, governments allocate 0.4 per cent of GDP to child and family benefits, ranging from 2.2 per cent in Western Europe to 0.2 per cent in Africa, and in Asia and the Pacific. Underinvestment in children jeopardizes their rights and their future, as well as the economic and social development prospects of the countries in which they live. Fiscal consolidation and adjustment measures in higher-income economies threaten progress on income security for children and their families. Child poverty increased in 9 of the 2 countries of the European Union between 2007 and 202. Social protection in working age: The quest for income security Social protection plays a key role for women and men of working age by stabilizing their incomes in the event of unemployment, employment injury, disability, sickness and maternity, and by ensuring that they have at least a basic level of income security. While the labour market serves as the primary source of income security during working life, social protection plays a major role in smoothing incomes and aggregate demand, thereby facilitating structural change within economies. Worldwide, 2. per cent of GDP is allocated to social protection expenditure for women and men in ensuring income security during working age; regionally, levels vary widely, ranging from 0.5 per cent in Africa to 5.9 per cent in Western Europe. Unemployment protection Where they exist, unemployment benefit schemes play a key role in providing income security to workers and their families in the event of temporary unemployment, contributing thereby to preventing poverty; supporting structural change in the economy; providing safeguards against informalization; and, in the event of a crisis, stabilizing aggregate demand, helping the economy to recover more quickly. However, only 2 per cent of the labour force worldwide is potentially eligible for benefits (contributory or non-contributory) under existing legislation should they become unemployed. Within this overall figure, regional differences are considerable: 0 per cent of the labour force is so covered in Europe, per cent in Latin America, 2 per cent in the Middle East, 7 per cent in the Asia and Pacific region, and per cent in Africa. Only 2 per cent of unemployed workers worldwide actually receive unemployment benefits, and again regional differences are large, with effective coverage ranging from 64 per cent of unemployed workers in Western Europe to just over 7 per cent in the Asia and Pacific region, 5 per cent in Latin America and the Caribbean, and less than per cent in the Middle East and Africa. A number of emerging economies have introduced unemployment benefit schemes, such as Bahrain or Viet Nam, as a means to ensure income security for unemployed workers and facilitate their search for jobs matching their skills in the formal economy. India s employment guarantee scheme (Mahatma Gandhi National Employment Guarantee Scheme) also provides a form of unemployment protection by guaranteeing 00 days of public employment to poor rural households. Employment injury protection In 20, shaken by the Rana Plaza tragedy in Bangladesh, the world became aware that social protection in case of employment injury is essential to protect workers and their families from the financial consequences of accidents at work and to facilitate their rehabilitation. At present, however, only.9 per cent of the global labour force is covered by law for employment injury through mandatory social insurance. Even if voluntary social insurance coverage and employer liability provisions are included, only 9.4 per cent of the labour force is covered by law. In practice, actual access to employment injury protection is even lower, largely owing to incomplete enforcement of the legislation in many countries. The low coverage of employment injury compensation in many low- and middle-income countries points to an urgent need to enhance working conditions in respect of occupational safety and health, as well as improving employment injury coverage for all workers, including
World Social Protection Report 2014/15
UNDER EMBARGO until June 3 at 00:01 GMT World Social Protection Report 2014/15 Executive summary Social protection policies play a critical role in realizing the human right to social security for all,
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