Friday, 15 February 2013

Towards Systems of Social Protection

by Gabriele Koehler
Most countries of the world, South and North, feature formal sector social insurance schemes which are contributory and cover government employees, workers in large domestic or international enterprises, or members of the military (see International Social Security Association database). But, in low-income countries, such schemes de facto cover only a minute fraction of the population. The majority of the world’s population lack any institutionalised social security - although they face enormous economic and social insecurities, income and asset poverty, and systematic social exclusion.

Over the past decade, however, social assistance programmes addressing hunger, acute poverty and various vulnerabilities have been introduced on an unprecedented scale in many regions of the world. They come in the form of monthly cash transfers, food subsidies, school meals or education stipends, social pensions, or public employment schemes. According to the “Barrientos database”, roughly 50 countries today provide some form of non-contributory social assistance (Barrientos et al 2010). But still, only roughly 10% of the world population is covered by such non-contributory schemes.

These assistance schemes are often fragmented. Recently, countries which have been proactively introducing these programmes are therefore beginning to look into consolidating them into a more coherent system of social protection.

Indeed, an international consensus concerning social protection appears to be emerging favouring a unified system of universal coverage, to be achieved progressively as resources permit, to address income and child poverty, vulnerability and social exclusion, or health shocks (Michelle Bachelet 2011)
In several countries, social protection systems are conceptualised around the notion of a social protection floor, with guaranteed income for the very young, the retired, the unemployed and at least rudimentary health insurance. In some countries, social protection efforts are being linked to tax reform, as a means to address the ever growing income inequalities.

The efforts at system building go in the direction of creating legally binding entitlements and benefits based on a notion of social solidarity. Many discussions now position social protection as a right, with the government as duty bearer. Other principals include transparency and accountability, and financial, fiscal and economic sustainability. Monitoring and periodic evaluations and complaint and appeal mechanisms are to be built into the system. There is also a general agreement that social protection needs to be in coherence with other social and economic policies, such as high-quality public service delivery in education, health and utilities, and active labour market and decent work and employment policies.

But beyond the consensus on principles, building a “system” is not straightforward. There are numerous challenges (see CSP Newsletter 23,Talking point on systems of social protection). In terms of strategy, a system can be built “top-down”, by fostering processes of formalising the economy, so that all citizens move from the informal to the formal economy and become eligible for social insurance. However, this is difficult, since many economies are becoming more casualised, in North and South, rather than more formalised. The alternative route would be “bottom-up”, by universalising social assistance to cover all citizens – or even all residents - of a country, and funding this from universal, and progressive, taxation.

At the managerial level, countries need to determine roles and responsibilities of respective governmental ministries and departments that often each administer separate social assistance schemes, and create an overarching coordinating body at cabinet level or higher. In terms of financing, a systemic approach requires governments to undertake actuarial calculations of population trends and the evolution of beneficiary entitlements over time, as well make binding decisions to create and sustain fiscal space, so as to reliably fund social protection over the long term. At the administrative level, systems need to unify eligibility criteria and have transparent records of recipients and accounts of claims and receipts. Some countries have for example begun creating citizens registries, or offering “single window” access to social assistance, or are introducing bank transfer modalities.

Probably the most difficult challenge in system building is political: to build coalitions or a social compact between tax-paying middle and high income groups and the working poor and those in complete poverty who are outside the formal economy and lack voice and political influence.

At this juncture, the policy moment for system building has come. At the Centre for Social Protection at the IDS, we are looking for experiences from low-income countries of creating a unified social protection system. Policy makers, policy analysts, researchers and activists working on systems of social assistance or social security or social protection are invited to share their insights.