The ILO Global Campaign to extend Social Security to all

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Universal social security benefitsagainst
poverty and social exclusion

• Michael Cichon
• Social Security Department
• International Labour Office, Geneva
• Lisbon, 2 October 2006

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• The world does not lack the resources to
  eradicate poverty, it lacks the right
  priorities.
• Juan Somavia, Director General of the ILO

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Structure of presentation

• Point one The Problematique
• Point Two Debunking the theoretical
  non-affordability myth of social security
• Point Three Debunking the practical
  non-affordability myth - or Can low income
  countries affoard basic social transfers ?
• Point four Conclusions - Changing the social
  security development paradigm

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Point One Problematique

• 80 of people live in social insecurity, 20 in
  abject poverty
• 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)
• Hence social security transfers are a pivotal
  tool to combat poverty and social exclusion and
  yet social security is underutilised in national
  anti-poverty and development strategies

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Point Two Debunking the theorectical
non-affordability myth

• The  conventional old  argument is There is
  loss in potential GDP due to equity efficiency
  trade-off
• Conclusion That trade off is a myth
   Countries can grow with equity  (Hilary Benn)

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Empirical evidence? OECD
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Point three Debunking the practical
non-affordabilty myth Can low income countries
afford basic social security?

• Two ILO costing studies and one distribution
  study on basic social protection package in
  low-income countries
• Costing min. benefit packages in seven countries
  in Africa (Pal et al. 2005)
• Costing min.benefit packages in five countries in
  Asia (Mizunoya et al. 2006)
• Assessing the poverty in effects two low income
  African countries (Gassmannn and Behrendt, 2006)

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Benefit assumptions for calculations

• Basic old age and invalidity pensions
• Senegal/Tanzania Benefit of 70 of food poverty
  line
• 12 countries Benefit of 0.5 PPP per day
• Child benefits
• Senegal/Tanzania Benefit of 35 of food poverty
  line half a pension), paid to all children in
  school age (7-14) and orphans also below 7
• Benefit of 0.25 PPP per day (half of pension),
  paid to all children up to the age of 14
• Essential health care
  Annual per capita costs
  based on the Commission on Macroeconomics and
  Health estimates of US 34 by 2007 and US 38 by
  2015
• Administration cost
• 15 of benefit expenditure for universal
  cash benefits

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Cost of universal basic old age and disability
pension
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Cost of universal child benefit for children aged
0-14
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Cost of essential health care based on CMH
estimates
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Cost of basic social protection package
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Share of total costs covered by domestic
financing (assumed government contribution 20 of
govt. expenditure)
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Financing alternatives here Cameroon
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Estimated effect of cash transfers on reduction
of poverty (headcount)
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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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Estimated effect of a basic benefit package on
poverty headcount Tanzania
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Other relevant experience

• A GTZ-sponsored targeted cash transfer pilot in
  Zambia has shown that a scaled up social
  assistance to a national level is estimated to
  cost 0.5 of GDP.
• Universal pension schemes in Botswana, Brazil,
  Lesotho, Mauritius, Namibia, Nepal, and South
  Africa, cost between 0.2 and 2 of GDP
• The old age grant in South Africa improved the
  well-being of older persons but also of other
  household members, namely children living in the
  household
• The Mexican conditional cash transfer programme
  Progresa has shown positive effects on childrens
  nutritional and health status and vaccinations
  and school enrolment.

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Other relevant research effect of universal
pensions on old age poverty (ECLAC)
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Point Four Changing the social security
development policy

• Social security is thus an investment in people
  and states through
• reduction of poverty and hence social exclusion
• fostering productive economies through decent
  working and living conditions (if set-up right)
• fostering nation building
• Contributing to a socially beneficial
  globalisation

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The developmental policy paradigm of the Global
campaignTowards progressive universalism

•  Universal but progressive could mean
• Building progressively higher levels of
  protection
• Based on a basic layer of protection consisting
  of
• Basic health care for all within a pluralistic
  system
• Child benefits to foster school attendance
• Pro-active (self targeting) social assistance
• universal benefits in old age, disabilty and loss
  of breadwinner

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Point Four Conclusions

• Coordinated forward looking national social
  protection policy strategies should sequence
  implementation of various social programmes
• Capacity should be built in coordinating
  government agencies, line ministries and then at
  the local level in the areas like
• Social protection development, analysis and
  design
• Administration of social protection programmes
• THE TIME TO ACT IS NOW