Transcript Townsend - Global Action on Aging

UN International Forum on the Eradication of
Poverty
Poverty, Social Security and Human Rights:
Lessons from OECD Experience
Peter Townsend
London School of Economics
Population Living Below $1.08 per day and $1.50 per day at
1993 PPP in 2001
Regions
World
Bank($1.08)
IPC
($1.50)
Percentage of poor
World
Bank
($1.08)
IPC
($1.50)
Number of poor
(millions)
14.9
28.5
271
520
3.5
8.6
16
41
Latin Americ`a and Caribbean
10.0
15.7
52
82
Middle East and North Africa
2.4
9.0
7
27
South Asia
31.9
56.6
439
779
Sub-Saharan Africa
46.4
61.8
312
417
Total
21.3
36.1
1,098
1,865
East Asia
Eastern Europe and Central
Asia
Source: Kakwani and Son, 2006, Table 2. They reproduced World Bank estimates based on $1.08 per
person per day, and then calculated estimates if the poverty line had been $1.50 per person per day,
ie the median of the poverty lines of 19 low-income countries in Africa and Asia in the 1990s.
Table 2 Percentage of population no longer in poverty – post-social
compared with pre-social transfers, by country and welfare regime (1999)
Welfare regime/ country
Percent of population
no longer in poverty
Percent of population in
poverty after transfers
Mean percent in
poverty (regime)
Social Democratic/ Nordic
Denmark
30.3
10.8
11.4
Sweden
35,5
10.2
Finland
33.1
13.3
Netherlands
31.2
11.4
Austria
35.6
14.2
Germany
29.6
11.8
France
32.8
15.9
Belgium
32.0
13.9
31.8
13.3
25.0
18.7
Ireland
23.4
17.9
Italy
27.5
18.5
Spain
28.9
17.3
Greece
25.5
21.9
Portugal
25.9
20.6
EE12
28.6
16.5
EE15
29.8
15.5
Corporatist
Luxembourg
Liberal/ residual
South European
UK
13.8
18.3
19.6
Lessons of Substantial Commitment to Social
Security on the Part of All OECD Countries
• 1. In the last half century all OECD countries, of every welfare
regime complexion, have doubled, or more than doubled, their
annual expenditure on social security.
• 2. This has applied particularly to universal and group benefit
schemes, and not so much to safety net or social assistance
schemes.
• 3. High social security spending countries have not, by and
large, experienced lower than average economic growth. On
the contrary, indicators of high economic and social
performance are found to correspond (See, for example, Goodin,
Heady, Muffels and Dirvan, 1999, who find that The Netherlands outstripped
Germany, and both countries outstripped the US).
• 4. The most innovative and effective OECD schemes
historically have simultaneously involved benefits as well as
contributory obligations for the participants.
Table 3a Total Public Social Expenditure, and Total Public
Social Security Expenditure (included), as %GDP
[countries ranked highest-lowest for 2001]
Country
Total public social
expenditure
as % GDP (2001)
Total public social security
expenditure as %GDP (2001)
Sweden
29.8
14.4
Denmark
29.2
15.2
France
28.5
17.9
Germany
27.4
15.6
Switzerland
26.4
18.2
Austria
26.0
18.9
Finland
24.8
15.4
Belgium
24.7
16.2
Italy
24.4
17.1
Greece
24.3
16.5
Norway
23.9
11.6
Poland
23.0
17.9
Table 3b continued
Country
Total public social expenditure
as % GDP (2001)
Total public social security
expenditure as %GDP (2001)
UK
21.8
14.2
Netherlands
21.4
13.3
Portugal
21.1
13.2
Luxembourg
20.8
14.5
Czech Republic
20.1
12.4
Hungary
20.1
13.0
Iceland
19.8
8.4
Spain
19.6
12.8
New Zealand
18.5
11.6
Australia
18.0
9.9
Slovak Republic
17.9
11.9
Canada
17.8
8.0
Japan
16.9
9.1
USA
14.7
7.9
Ireland
13.8
7.5
Turkey
13.2
..
Korea
6.1
2.3
Mexico
5.1
1.3
Table 3c Trends in Total Public Social Expenditure, and Total Public
Social Security Expenditure (included), as %GDP
Country
Total public social security expenditure (ie cash
benefits) as %GDP (new OECD series)
2001
2002
2003
2004
2005
Sweden
17.2
17.3
18.1
17.8
17.4
Denmark
16.3
16.4
17.0
16.8
16.2
France
17.1
17.3
17.5
17.6
17.9
Germany
18.6
19.5
19.8
19.4
19.2
Switzerland
11.0
11.4
12.1
..
..
Austria
18.6
19.0
19.2
18.8
18.6
Finland
15.9
16.3
16.7
16.8
16.4
Belgium
15.4
15.8
16.1
16.0
16.0
Italy
16.2
16.5
16.8
16.9
17.1
Greece
16.9
16.9
17.6
17.1
16.7
Norway
13.7
14.8
15.6
14.8
..
Poland
17.4
17.6
17.5
16.8
..
Table 3d Trends in Total Public Social Expenditure, and Total Public
Social Security Expenditure (included), as %GDP
2001
2002
2003
2004
2005
Lower spenders
UK
13.7
13.2
13.3
13.3
13.4
Netherlands
11.1
11.2
11.5
11.5
11.1
Portugal
12.0
12.6
13.8
14.1
14.9
Luxembourg
13.9
14.6
15.0
15.0
14.7
Czech Republic
12.7
12.5
12.3
11.9
..
Hungary
12.8
13.5
14.0
14.1
14.8
Iceland
7.0
8.0
9.4
8.9
9.1
Spain
11.7
11.8
11.7
11.7
11.6
New Zealand
10.9
10.5
..
..
..
Australia
8.5
8.2
8.6
8.4
..
Slovak Republic
12.0
11.8
10.9
10.4
..
Canada
10.8
10.7
10.5
10.2
..
Japan
10.5
11.1
11.2
11.3
..
USA
11.4
12.0
12.1
12.0
12.0
Ireland
8.3
8.7
9.0
9.0
..
Turkey
..
..
..
..
..
Korea
2.0
1.9
2.3
2.5
..
Mexico
1.8
1.6
..
..
..
Table 4 Total public social security expenditure as % GDP in selected
high-, middling- and low-spending countries
Countries
Total
High-spending
France
17.9
Germany
15.6
UK
14.2
Middling
Australia
9.9
Japan
9.1
Chile
8.2
United States
7.9
Low
Ghana
2.1
China
1.5
India
1.5
Indonesia
1.1
Mexico
1.1
Kenya
0.3
Zambia
0.3
Source: For low-spending countries – data adapted from ILO (2001), Social Security: A New Consensus,
Geneva, ILO, Statistical Annex. The data for the low-income countries apply to 1996 (1995-China) and
exclude health care (then counted in “social security expenditure”).
In January 1954 President Eisenhower strongly praised the social
insurance system in the US developed from needs “arising from the
complexities of our modern society…. The system is not intended as a
substitute for private savings, pension plans, and insurance
protection. It is, rather, intended as the foundation upon which these
other forms of protection can be soundly built. Thus, the individual’s
own work, his planning and his thrift will bring him a higher standard
of living upon his retirement, or his family a higher standard of living in
the event of his death, than would otherwise be the case. Hence the
system both encourages thrift and self-reliance, and helps to prevent
destitution in our national life.”
Quoted by Christgau V. “Old Age and Survivors Insurance after 20 Years,” in Haber W. and
Cohen W.J., eds., (1960), Social Security: Programmes, Problems and Policies, Illinois, Irwin,
p. 168.
The Chairman of the first Advisory Council on
Social Security in the late 1930s explained that
the US system of political economy had to “shift,
so far as the worker was concerned, to a system
of benefits payable as a matter of right”
(J.Douglas Brown, Haber W. and Cohen W.J., eds., (1960), Social Security:
Programmes, Problems and Policies, Illinois, Irwin, 4).
Trends in the Funding of Social
Security (1980-1996)
Funding of
social security
1980 (EU 12) % 1990 (EU 12)%
1996 (EU 15) %
All
contributions
67.4
65.6
62.9
(employers)
(45.4)
(41.8)
(39.2)
(employees
etc)
(22.0)
(23.8)
(23.7)
General taxes
27.9
27.8
31.9
Other receipts
4.7
6.5
5.2
Total
100
100
100
Source: Ministry of Social Affairs and Health, 1999, p. 213; and Eurostat, 1999
Two broad sets of recommendations
1)Turning research into action. First, to identify more exactly the
social insurance and group tax-financed schemes in the OECD
countries that have worked best in relation to their economic and
social development. This will show how key principles and
mechanisms might be applied by stages to the emerging institutions
of developing countries. Second, if a scheme for tax contributions
from the industrialised countries and/or corporations can also be
worked out and agreed, poverty will be reduced much more quickly.
Third, the developing countries can, at the same time, review how
their own schemes for social protection can be most quickly extended
and linked with the best models of OECD system development.
2) Universal coverage. To extend agreements by governments to give
greatest weight to “universal” contributory social insurance and taxfinanced group benefits in constructing social security systems to
defeat poverty. Contribution-based social insurance depends on
revenue willingly provided from wages by employers and employees
to earn entitlement to individual and family benefits in adversity,
including unemployment, sickness, disability, bereavement and
retirement benefits. Tax-financed group schemes will be crucial for
some groups unable to work, such as children, the severely disabled
and the advanced elderly. Trans National Companies should play their
part on behalf of sub-contracted labour in countries with which they
trade. Similarly, Governments trading extensively with low-income
countries must accept greater responsibility for the establishment and
growth of social security in those countries.