Social security for all: Investing in people

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Social security for allInvesting in people

• Presentation at UN DESA Forum Productive
  Employment and Decent Work
• Michael Cichon
• Social Security Department
• New York, 8 May 2006

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Structure of presentation

• Point One Social security Definition,
  objective and problematique
• Point Two Social securitys main challenges
• Point Three The rationale for social security in
  development
• Point Four Changing the development paradigm
• Point Five By way of conclusion
  Accepting global responsibility for social
  security for all

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Point One Definition

• Definition social protection/social security
• formal or informal income transfers in cash or
  in kind that ascertain access
• - to health and social services and
• - income security to cope with certain life
  risks that
• could lead to a loss of income
  (i.e. social assistance, pensions, short-term
  cash benefits in case of sickness, maternity,
  unemployment, employment injury)

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Point One Objective

• Objective of social security systems
  alleviate/or better abolish poverty and reduce
  social insecurity
• The Decent Work connection Social
  protection/social security is one of basic
  pillars of decent work without social security
  neither work nor life in the formal and informal
  economy can be decent

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Point One Problematique

• Social security reduces poverty by at least 50
  in almost all OECD countries
• Social security reduces income inequality by
  about 50 in many European countries
• Social security universally accepted as human
  right (article 22, Universal Declaration)
• And yet 80 of people live in social insecurity,
  20 in abject poverty
• And yet Social security is underutilized in
  national anti-poverty and development strategies

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Point One present coverage
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Point Two Challenge One The non-
affordability arguments Work and life cannot be
made decent through social security, because

• Loss in potential GDP due to equity efficiency
  trade-off
• Social expenditure too expensive for developing
  countries
• Ageing poses an unsolvable problem
• Unmanageable expenditure explosions
• - Competitive forces in globalization will
  limit fiscal space

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The equity-efficiency trade-off Empirical
evidence in OECD
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Assessing potential impact and costs of cash
transfers in Senegal and Tanzania Poverty
rates before and after cash transfers
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Assessing potential impact and costs of cash
transfers in Senegal and Tanzania Cost of
benefit package as percentage of GDP
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Affordability study, base scenario2005-2035
projected benefit expenditure on old-age
/disability pension and child benefit ( of
GDP)But, in principle, both would be fiscally
affordable now and in the future
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Preliminary results for Tanzania Expenditure
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Preliminary results for Tanzania Financing
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Ageing A catastrophe?
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Ageing A catastrophe? Global dependency
rates
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Non-manageable expenditure? Projected expenditure
in the EU
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Challenge Two Globalization, race to the
bottom and the new uncertainty

• There is evidence for a reduction of expenditure
  and benefit levels
• BUT There is no universal objective reason to
  assume that the fiscal space has to collapse
  completely However, a challenge remains

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Race to the bottom The expected pension
replacement rates
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No fiscal space?
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No policy and fiscal space?
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Point Three The rationale for social security in
development

• (1) Extensive welfare states and productive
  economies co-exist The trade-off between
  equity and efficiency is wrong
• (2) Some level of social security is affordable
  at any level of economic development
• (3) Social security reduces poverty and
  inequality, facilitates LM adjustments,
  redistributes the proceeds of growth
• ? Social security is thus an investment in
  people, states and the global community

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Point Four Changing the development paradigm
towards progressive universalism
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• Let us start with
• Basic health care for all
• Child benefits conditioned on schooling
• Self targeting social assistance
• Universal benefits in old age, disability and
  loss of breadwinner
• facilitated through international action
  guidelines which could look as follows

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Point Five Accepting global responsibility for
social security for all Three complementary
ways

• Creating international standards to defend a
  global social floor
• Accepting global responsibility for the fiscal
  space for social transfers (PRSP, debt relief,
  ODA etc.)
• Supporting national administrations in improved
  resource allocation and mobilization mechanisms