Transcript Outline of envisaged TC activities in the field of social

Extending social protection to all
Charles Crevier
International Training Centre of the ILO
Turin, 26 June 2012
Extending social protection to all
● Objective of the presentation:
(a)Why do we need social protection?
• Human, social and economic necessities
(b)Where do we stand?
• State of social security coverage
(c) What do we do?
• Different ways of extending social security
(d)How much does it cost?
• Fiscal space analysis
(e)What does it do?
• Fiscal space analysis
(f) How to do it?
• Sharing innovative experiences
Why do we need social protection?
Consumption smoothing over the lifetime
Y
Ymin
Yt
age
Why do we need social protection?
Consumption smoothing over the lifetime
Y
Ymin
Yt
age
The basic problem of social protection
Why do we need social protection?
Extending social protection to all
● Social security is a human right
(a) Article 22 of the Universal Declaration of Human Rights states: “Everyone, as a
member of society, has the right to social security”
(b) Article 25: Everyone has the right to a standard of living adequate for health and
well being for himself and of his family
● Social security is a social necessity
(a) Economic growth does not automatically reduce poverty
(b) Social security transfers are a powerful tool to reduce poverty and inequality reduce
poverty by at least 50% in almost all OECD countries,
(c) All socially and economically stable societies have extensive social security systems
● Social security is an economic necessity
(a) Access to social health protection and education improves productivity levels an has
a positive impact on growth
(b) The famous trade-off between efficiency and equity is a myth. Cash transfers in
developing countries have multiplier effects on local markets
(c) Social security benefits are widely recognised as social and economic stabilisers in
times of crises
Why do we need social protection?
ILO Global campaign on Social Protection
“Social protection has proven to be a powerful anti-crisis
measure. It protects and empowers people, and contributes to
boosting economic demand and accelerating recovery. It is also
a foundation for sustainable and inclusive economic growth,”
ILO Director-General Juan Somavia
Why do we need social protection?
The global state of social security coverage
and recent policy initiatives
80 % of the
world
population do
not have access
to
comprehensive
coverage
Social
security
coverage
gap
50% of children
are living in
poverty, many
lack access to
health and
education
National social security strategies,
based on social dialogue
30% of the
population do
not have
access to
essential
health care
60% of the
elderly do not
receive a
pension
Strengthening social
health protection
Social pension programmes
Child and family benefits
6
Where do we stand?
Social security coverage: Statutory and
effective coverage
7
Where do we stand?
Pension coverage: Effective coverage
8
Where do we stand?
Pension coverage: Effective coverage
Old-age pensioners (at all ages) as a
proportion of the elderly population (%)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
Bangladesh, 18%
China, 35%
India, 23%
Indonesia, 22%
Korea, 33%
Malaysia, 37%
Nepal, 67%
Pakistan, 26%
Philippines, 17%
Viet Nam, 33%
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What do we do?
Extending social security to all the options
●
Option 1: Extending classical social insurance
(a)
(b)
(c)
No cross-subsidization of non-covered part of the population;
Primarily designed for the formal sector and hence will not easily reach more
than a portion of the total population, but
Recently showed some potential to extend health coverage to the informal
sector through premium subsidization (e.g. Ghana)
What do we do?
Extending social security to all the options
●
Option 2: Introducing community based
social/mutual insurance schemes
(a)
(b)
(c)
(d)
(e)
Springing up in Africa and Asia, covering 40 million people now
–
Offers some possibility to increase resource base largely for health care
Offers a chance to empower demand side
Some possibility to tax the informal sector = is a step forward to
formalisation, but
Is no stand-alone solution: requires financial links to national or
international sponsor agencies
What do we do?
Extending social security to all the options
●
Option 3: Extending tax financed schemes (conditional,
unconditional, means-tested, universal often called
social transfers)
(a)
(b)
(c)
(d)
Can reach out to entire population subgroups (presently worldwide at least 150200 million people covered)
Requires some basic logistical capacity
Some level of social security can be afforded by all
Probably the biggest potential
How much does it cost?
Costs for basic universal old age and
disability pensions
Note: It was assumed that the simulated universal old-age and disability pension would be set at 30 per cent of GDP per capita, with a maximum of
one US dollar (PPP) per day (increased in line with inflation) and would be paid to all men and women aged 65 and older; and to persons with
serious disabilities in working age (the eligibility ratio was assumed to be 1 per cent of the working-age population, which reflects a financially
13
conservative estimate of the rate of disability).
How much does it cost?
Vietnam: Analysis of cost to close
the SPF Gap
3.0
3. Working age
income security
(scenario 1 - high
cost )
0.7
0.7
0.6
0.6
0.82
0.80
0.79
0.77
2017
2018
2019
2020
0.79
0.8
0.85
2016
0.82
0.81
0.89
0.91
0.7
0.88
2015
2014
2013
0.56
0.5
0.37
0.0
2012
0.5
2011 0.170.2 0.35
0.6
1.0
0.6
0.71
1.5
0.92
0.93
2.0
1.00
1.02
2.5
2010
Total child benefit cost as percentage of GDP
Total additional costs to fill the gaps toward the SPF components
as a percentage of GDP
2.b Child benefit
(scenario 2bTargeted for ALL
poor children cash
and kind )
1b. Old age
universal pension
(65+)
Source: Compatibility analysis of the national Social Protection Strategy and the UN Social Protection Floor Initiative: Costing and financial projections to implement social protection
policies 2011-2020 (Draft), ILO, Geneva.
How much does it cost?
Vietnam: Analysis of cost to close
the SPF Gap
The impact of filling the SPF gap on the General Government deficit
as a percentage of GDP
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
As a percentage of GDP
0,0
-1,0
-2,0
-0,2
-3,3
0,0
-1,2
-2,5
-3,0 -3,0 -3,0 -3,0 -3,0 -3,0
-3,9 -3,8 -3,6 -3,3
-3,0
-4,0
-5,0
-6,4
-9,0
-0,9 -0,8 -0,8 -0,8 -0,8 -0,8
-0,6 -0,9
-0,4
-0,2
-0,7 -0,6 -0,6
-0,2
-0,4 -0,5 -0,6 -0,6 -0,7 -0,8 -0,7
-0,7 -0,9
-0,9 -0,8 -0,8 -0,8
-1,0 -1,0 -0,9
-6,0
-7,0
-8,0
-9,0
-10,0
3. Working age income security
2.b Child benefit (targeted for ALL poor children | cash and kind )
1b. Old age universal pension (65+)
General government fiscal balance (IMF) - STATUS QUO
Source: Compatibility analysis of the national Social Protection Strategy and the UN Social Protection Floor Initiative: Costing and financial projections to implement social protection
policies 2011-2020 (Draft), ILO, Geneva.
What does it do?
Vietnam: Assessing potential poverty
impacts (poverty gap in % of GDP)
Working age
12,000,000,000
0.80
Elderly
0.70
Children 11-15
10,000,000,000
Children 6-10
0.60
Children <5
8,000,000,000
Total poverty gap as a percentage of GDP
0.50
0.40
6,000,000,000
0.30
4,000,000,000
0.20
2,000,000,000
0.10
0.00
Initial situation |
Poverty rate
BEFORE benefit
ELD2 | Poverty post CHILD 1 | Poverty
CHILD2 | Poverty
WA1 | Poverty post
Poverty post ALL
universal pension to post means-tested post means-tested
100 days
three benefits (ALL
all (Same as scenario children (all children children (limited to 2
employment
Elderly ELD2 + ALL
1 + 50 % poverty line
in poor HH)
per poor HH)
guaranteed and children per poor HH
for contributory
disability benefit
CHILD1 + WA)
scheme pensionners)
Poverty post ALL
three benefits (ALL
Elderly poverty line
ELD2 + limited to 2
children per poor HH
CHILD2 + WA)
Source: Compatibility analysis of the national Social Protection Strategy and the UN Social Protection Floor Initiative: Costing and financial projections to implement social protection
policies 2011-2020 (Draft), ILO, Geneva.
Total poverty gap as a percentage of GDP
Total poverty gap BEFORE and POST benefits (Millions VND)
Total poverty gap (Millions VND) and composition
What does it do?
Extending social protection to all
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How to do it?
Sharing innovative experiences
1.
Extension of the Universal Family Allowance: The Universal Child Allowance – Argentina
2.
The Dignity Pension (Renta Dignidad): A Universal Old-age Pension Scheme – Bolivia
3.
Broadening Social Protection and Integrating Social Policies – Brazil
4.
The Rural Social Insurance Programme – Brazil
5.
Building a Social Protection Floor – Burkina Faso
6.
The National Social Protection Strategy for the Poor and Vulnerable: Process of Development –
Cambodia
7.
The Red Protege, the Social Protection System, 2006-2010 – Chile
8.
Developing a Basic Rural Medical Security System – China
9.
The Subsidized Health-care Scheme in the Social Protection System – Colombia
10.
Towards a Universal Pension Protection Scheme – Ecuador
11.
Rashtriya Swasthya Bima Yojana – India
12.
The Mahatma Gandhi National Rural Employment Guarantee Act – India
13.
A Social Protection Floor – Mexico
14.
Setting Up a Social Protection Floor – Mozambique
15.
Social Protection: An Ongoing Process – Rwanda
16.
Child Support Grants – South Africa
17.
The Universal Coverage Scheme – Thailand
18.
The 500 Baht Universal Pension Scheme – Thailand
Main reference documents:
Extending social protection to all
World Social
Security Report
2010-2011
Extending social
security to all:
Sharing Innovative
Experiences
A guide through
challenges and options
2011
2011
End of the presentation
Thank you