Transcript Key Challenges in extending social security

Coping with economic & social ‘Crisis’
Social Security: Key Issues
for Trade Unions
Social protection for all – is the goal and part of
Decent Work agenda
Global economic crisis shows the urgency of
basic social security for all - & is therefore one of
the important elements of GJP
Effective social protection would have minimized
‘impact of economic crisis’ and assisted in
improving effectiveness of stimulus/recovery
packages)
For TUs, social security is not just about pensions, etc but
it is a vision of a society, an essential element of human
rights & social justice, and a means for human &
economic development and social stability.
Current global economic crisis is both an opportunity & a
threat to building of effective social protection schemes
So, what are the key challenges facing Asian countries &
trade unions in regard to social protection needs?
Life expectancy & population aged 60+ increasing
COUNTRY
TOTAL
POPULATION
LIFE
EXPECTANCY AT
THE AGE 60
2000-2005
% TOTAL
POPULATION
AGED 60+
Medium
Variant
POPULATION
AGED 60 +
(millions)
Medium
Variant
2007
2050
Men
Women
2050
2050
WORLD
6671.2
9191.3
N.A.
N.A.
21.8
2005.7
China
1328.6
1408.8
18
21
31.1
437.9
India
1103.4
1592.7
17
19
21.0
329.6
Indonesia
231.6
296.9
17
19
24.8
73.6
Korea
48.2
42.3
19
24
42.2
17.8
Malaysia
26.6
39.6
18
20
22.2
8.8
Philippines
87.9
140.5
17
19
18.2
25.5
Singapore
4.4
5.0
17
21
39.8
2.0
Sri Lanka
19.7
18.7
17
19
29.0
5.4
Thailand
63.9
67.4
17
22
29.8
20.1
Vietnam
87.4
120.0
19
21
26.1
31.3
Source: UN Populations Projections (2008) – quoted by Mukul G Asher, National University of Singapore
Major Challenge
Given the low incomes & vast informal economy,
providing employment to growing population,
health care and old age income support are
major challenges before Asian Countries
Asia will grow old before it becomes rich
enough to provide decent social security to all.
Social Security: General Scenario

Multiple schemes for pensions & health care being
implemented by different depts, no coordination administrative costs high.

Inadequate coverage & inadequate funding

Annual spending on health care & social protection
very low - not enough to provide quality care or
decent benefits
Contribution Rates for SS Programs in
selected Asian countries 2008 (%)
45.00
40.0
40.00
36.1
34.5
35.00
30.00
29.0
25.5
25.3
18.0
20.00
14.5
15.00
13.1
13.8
11.0
13.8
16.1
12.9
8.5
20.0
10.00
5.00
25.0
22.4
25.00
12.4
11.5
10.2
8.3
5.2
7.0
7.6
4.6
5.0
9.5
5.0
4.5
9.0
7.0
2.0
Insured Person
Employer
a
In
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La
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Ja
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M n
al
ay
sia
Vi
et
So nam
ut
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Ko
Ph rea
ili
pp
in
es
Th
ai
la
nd
Si
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ap
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e
In
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0.00
Total
A-P spends about 5.3% of GDP on public health and social
security –lower than other regions
Social Security: key Challenges

Social Security as a human right? Or is it individual responsibility?
PayGo Systems v/s individually funded systems: demographic risk v/s
financial risk - Role of State? the State as the ultimate financial
guarantor (of benefits).

The Financing Challenge… Tax v/s Contributions?

Coverage, Adequacy & Quality of benefits & services – especially for low
income workers

Investment policies & performance – for protection of funds assets and
to finance future benefits – role of state

Governance & management – operational performance, transparency,
communications with stake holders – tripartite management?
Tyranny of small numbers:

Meaning - even a small change in variables such as life
expectancy, permitted age at which full pension can be
withdrawn, real rate of return, administrative costs and
other taxes in both the accumulation and payout phases,
could have a disproportionate impact on the financial
viability of the SS schemes and on the extent to which
objectives are realized.

Social security reform requires also concomitant reforms in
other areas such as labor markets, fiscal management, and
capital and financial markets.
9
Social Security: key Challenges

Education Challenge: Needed at all levels, Low Awareness/
Understanding of rights, entitlements, social insurance, etc,
especially among the excluded groups – need to develop a
broad education efforts customised to the various contexts
and target groups – funding? Who will fund this?

The partnership Challenge: Role of Government v/s Public
& Private Insurance Companies for providing social
protection (pensions, health care, etc) – operate in
competitive environment, profit motive, no experience of
working with poor, low income groups, no experience of
tripartite regulation
THE ADMIN CHALLENGE

EXTEND THE COVERAGE OF EXISTING FORMAL SYSTEMS?


ESTABLISH BRAND NEW SOCIAL SECURITY SYSTEMS?


THIS WILL COME AT A HIGH COST…
RELY ON INSURANCE COMPANIES?


SEE THE WELFARE FUNDS EXPERIENCE (INDIA AND NEPAL)…
A SEPARATE ENTITY TO RUN EACH NEW EXTENDED SCHEME?


HOW LONG WILL IT TAKE TO GET THERE?…
TRIPARTITE BOARDS?


BETTER BE PREPARED FOR A VERY BIG LEAP (MILLIONS OF PEOPLE TO
BE ADDED)…
WHAT ABOUT THE PROFIT SEEKING APPROACH?...
PARTNER WITH COMMUNITY-BASED ORGANIZATIONS?

SHARING THE SAME SOCIAL GOALS?...
THE EQUITY CHALLENGE: NEED TO SHARE
THE BURDEN…
FORMAL ECONOMY WORKERS
• Large contribution resources:
Contributions from W, E & G
• Administrative costs borne by
Govt – full allocation of resources
to benefits payments – benefits
higher
INFORMAL ECONOMY WORKERS
• Limited contribution resources:
Workers left alone to pay for their
social protection
• Administrative Costs borne by
the Schemes – reduction of
resources allocated to benefits
payments – benefits lower
Social Security System: Issues

Is social security system a ‘cost’ to economy or an ‘investment’?

Social security entitlement: mainly ‘employee’ based

What kind of system should be there?
- National? Company based?, - Public? Private?
- Insurance based? Tax based?

Addressing exclusion & discrimination & improving coverage
(women, casual workers, informal workers)

Collecting contributions & delivering benefits – how?

Maintaining purchasing power of pensions or living standards of
pensioners?

Data: No reliable data for quality research, and for price discovery
of retirement products

Role and Capacities of workers representatives?

Should pension systems & its reforms be decided on the
basis of - technical necessities alone? OR
- should the choice be made on the basis of political
choices – reflecting what workers /society wants
than what only the rich/those in power want?

Ex: Sustainability debate about the future of public
pension programs - if tax increases are required by
current arrangements, then they are considered
unsustainable – WHY?
What Else? Participants views?
Union vision for universal social security
in the 21st century?
key conventions on social
security/protection
Conventions








C 102 - Social Security (Minimum Standards) Convention, 1952
C 121 - Employment Injury Benefits Convention, 1964
C 128 - Invalidity, Old-Age & Survivors’ Benefits Convention, 1967
C 130 - Medical Care and Sickness Benefits Convention, 1969
C 168 - Employment Promotion and Protection against
Unemployment Convention, 1988
C 183 - Maternity Protection Convention, 2000
C 118 - Equality of Treatment (Social Security) Convention, 1962
C 157 - Maintenance of Social Security Rights Convention, 1982
Major Recommendations


R 67 - Income Security Recommeendation, 1944 (No. 67)
R 69 - Medical Care Recommendation, 1944 (No. 69)
Which of the conventions has your countries ratified?
C 102 - Social Security (Minimum
Standards) Convention, 1952
1) Establishes the aims that must be met instead of
describing the techniques that are to be applied
2) C 102 provides for 9 contingencies
• Health care/insurance
• Employment injury
• Sickness
• Old age
• Invalidity
• Unemployment
• Maternity
• Family responsibilities
• Death/survivors
3) Flexibilities provided – States ratifying C102 can chose
any 3 contingencies (incl. one long-term or unemployment
benefit) to provide for & progress as its capacities increase
4) Workers participation in the management of social security
Govts & Employers Arguments against C 102

Covers very few people & that too only in organized formal
sector – needs of women and workers in informal economy
not reflected.
 Benefits level too high for tax financed universal schemes –
not easy for developing countries to provide
 Needs of workers in developing countries excluded (such
as water, santitation,needs of children, minimum nutrition &
role of public distribution, etc)
& therefore need for new standard that can provide social
protection floor for all. But is this true?
------------------------------------------------------------------------- C.102 can be used as an instrument for the provision of a
social floor if countries are guided in choosing all the
different elements that would constitute such a social floor
from among the 9 benefits that C102 provides for.
ILC 2001: THE NEED TO COMPLEMENT
THE EXISTING MECHANISMS
THE CONSTITUENTS IDENTIFIED 4 STRATEGIC WAYS THAT
COULD CONTRIBUTE TO THE EXTENSION OF SOCIAL SECURITY
TO ALL…

EXTENSION OF SOCIAL INSURANCE (CONTRIBUTORY SYSTEMS)

PROMOTION OR DEVELOPMENT OF SOCIAL ASSISTANCE
PROGRAMS (TAX-FINANCED)

INTRODUCTION OF UNIVERSAL BENEFITS SYSTEMS (TAXFINANCED)

ENCOURAGEMENT OF MICRO-INSURANCE SCHEMES
(community based)
SOCIAL SECURITY EXTENSION:
THE MECHANISMS
UNIVERSAL
BENEFITS
TAX
SOCIAL
ASSISTANCE
TAX
SOCIAL
INSURANCE
MICROINSURANCE
CONTRIBUTIONS CONTRIBUTIONS
WORKER
+
EMPLOYER
+
GOVERNMENT (?)
MEMBER
ALONE?
Campaign for extension of coverage
– the year 2009 vision
1.
2.
3.
4.
Basic coverage for all, universal but not necessarily
uniform coverage (accepting pluralism)
Responsibility of the state but delivery can be shared
with private sector & communities where feasible
Rights based – “Everyone has the right to social
security” (Article 22 of the Universal Declaration of
Human Rights)
Social outcomes in terms of adequate benefit levels
have to be reached, independent of the organization.
ILO conventions are important as global safeguards and
benefit benchmarks.
Basic social package – Social Security Floor
A new instrument in the making – proposal:
1)
Universal basic essential health care for all - through
a public health service funded by taxes, social and
private insurance and micro-insurance systems
2)
Basic child benefits – aimed to facilitate access to basic
social services - nutrition, education, housing
3)
Income support – access to basic means tested/self
targeting social assistance for the poor and the
unemployed in active age groups
4)
Income security – for people in old age, invalidity and
survivors through basic pensions
The campaign strategy:
the social security development staircase
Voluntary participation
Contributory social security
Semi-contributory social security
Family benefits
SP Floor
(non contributory)
Unemployment
insurance & minimum
revenue
Social pensions, old
age and special needs
Access to health care and essential services