The Social Protection Floor Initiative

A decision of the UN System Chief Executives Board (CEB)

in response to the global financial and economic crisis

Isabel Ortiz, Gaspar Fajth and Jennifer Yablonski, UNICEFSocial Development Advisors Network meeting

New York, 8 January 2010

Session Objectives

I. Rationale

II. What is the Social Protection Floor Initiative?

III. Feasibility

IV. Potential Impacts

V. Next steps - Discussion

I. Rationale: social and economic necessity Social Justice Arguments

Unacceptable levels of poverty and inequality Half of the world lives below the $2-a-day poverty line The poorest 50% of the world’s adult population

receives 1% of global wealth (UN WIDER, 2006)

Social protection is a human right: Article 22 of the Universal Declaration of Human

Rights states: “Everyone, as a member of society, has the right to social security”

=> But 80% of global population remains without access Article 25 including the right to health and well being

including food , clothing, housing and medical care and necessary social services …special care and assistance in case of motherhood and childhood…

Article 26 - universal right to education

But Also Strong Economic Arguments

Raising productivity

Inequality is economically inefficient / dysfunctional World problem of overproduction and global excess capacity

in the context of weak effective demand Consumption concentrated in top income deciles Raising the incomes of the poor increases domestic demand

and, in turn, encourages growth by expanding domestic markets

A Social Protection Floor can be an effective instrument to: Boost economic growth by raising domestic

demand / internal markets Enhance human capital and productive employment

- a better educated, healthy and well nourished workforce.

… and Political Arguments

A Global Social Floor can be effective to prevent conflict and create politically stable societies

Poverty and gross inequities tend to generate intense social tensions and violent conflict

Other crisis: riots, violent xenophobia The huge disparities in income inequality

encourage uncontrolled migration

Fiscal Stimulus Plans Q4 2008-Q4 2009, %GDP

As an average, 25% of stimulus plans spent on social support (UNDP, 2009)

Mostly in high and middle income economies - what happens with lower income countries?

1929 Crisis led to the New Deal

• Bank reforms • Social Security Act (1935)• Universal old-age pensions

• Unemployment insurance• Social assistance for poor families

• Employment programs (public works), collective bargaining, minimum wages• Farm/rural programs 2009-10: The Crisis as an Opportunity:

Scaling up Social Protection Social protection counter-cyclical

Increasing incomes Raising domestic demand/expanding internal markets Social Protection reduces poverty FASTER => MDGs

II. A UN System Emergency response to the crisis: The Social Protection Floor (SPF) Initiative

l On April 2009, the UN Chief Executives Board (CEB) has agreed on nine joint initiatives to confront the crisis, accelerate recovery and pave the way for a fairer and more sustainable globalization:1. Additional financing for the most vulnerable

2. Food Security 3. Trade 4. A Green Economy Initiative 5. A Global Jobs Pact 6. A Social Protection Floor7. Humanitarian, Security and Social Stability 8. Technology and Innovation 9. Monitoring and Analysis

II. What is the SPF initiative?.. As agreed in the concept note and the CEB issues paper

Promotes a holistic and coherent vision of national social protection systems as a key component of national development strategies and seeks to Support countries in identifying and closing crucial protection gaps through coherent and efficient measures that maximize the effects of scarce resources on the reduction of poverty and insecurity, through Concerted actions of UN agencies, national governments and, stakeholders as well donor agencies in order to Alleviate the negative social impact of the crisis and increase the resilience of societies against the impact of future crises through the implementation of automatic social and economic stabilisers.

II. What is the SPF initiative?

The SPF Initiative aims at joint action to promote access to essential services and social transfers for the poor and vulnerable. It includes:

1. A basic set of essential social transfers, in cash and in kind, to provide a minimum income and livelihood security for poor and vulnerable populations and to facilitate access to essential services, such as health care2. Geographical and financial access to essential services, such as health, water and sanitation, education, and other social services

II. What is the SPF initiative? …a unique matrix of supply and demand

Health services Water and sanitationHousing

Education Food Other social services as defined by national priorities (including life and asset saving information…

Children

People in active age groups with insufficient income from work

Older persons and people with disabilities (e.g.pensions)

Means to ensure availability of:

Rights and transfers to guarantee access for:

II. SPF initiative: Who participates?

The Initiative will be owned by national stakeholders, including governments (ministries of labour, health, finance, agriculture …), social partners and national NGOs, etc. with support of …

UN agencies such as ILO, WHO, FAO, IMF, OHCHR, UN Regional Commissions, UNAIDS, UNDP, UNDESA, UNESCO, UNFPA, UNICEF, UNHABITAT, UNHCR, UNODC, UNRWA, WFP, WMO, other international organizations such as World Bank and Regional Development Banks, and bilateral donors, and

International NGOs

III. SPF Initiative Feasibility: AffordabilityA Simulation exercise by ILO - Assumptions:

Basic old age and invalidity pensions: – 30% of per capita GDP capped at US$ 1 PPP per day

Child benefits: – 15% of per capita GDP capped at US$ 0.50 PPP, for a max. of

two children in age bracket 0-14 Essential health care:

– based on a health system staffing ratio of 300 medical professionals per 100,000 population, overhead 67% of staff cost …

Basic social assistance for the unemployed: – 100 day guaranteed employment paid at 30% of per capita daily GDP to 10% of the population

Administration cost: 15% of cash benefit expenditure

III. SPF Initiative Feasibility: Affordability

Cost of Old-Age Universal Pensions ($1 day) in 100 countries

Source: UN DESA, 2007: World Economic and Social Survey 2007, United Nations

III. SPF Initiative Feasibility: Fiscal Space was growing

Sub-Saharan African countries increased on average domestic revenue from 15% to 19% of GDP between 1997 and 2006…and after Monterrey domestic resources increased (source OECD and ECA)…

Counter-cyclical spending needed to provide social support and ensure a recovery with a human face

Projected Deterioration in Fiscal Balance, 2007-09

Source: Prospects for the Global Economy database (June 2009), World Bank.

III. SPF Initiative Feasibility: Cash Transfers Schemes in Developing Countries - Covering 200 Million People

TYPE OF TRANSFERS

COUNTRIES

Unconditional

Household Income Support

Chile, China, Mozambique, Rwanda, Zambia

Social Pensions Argentina, Bolivia, Bangladesh, Brazil, Bostwana, Chile, Costa Rica, India, Lesotho, Mauritius, Moldova, Namibia, Nepal, Samoa, South Africa, Tajikistan, Uruguay, Vietnam

Child/Family Benefits Mozambique, South Africa, Mongolia, Senegal

Conditional

Cash for Work Argentina, Ethiopía, India, South Korea, Malawi, Rwanda, South Africa

Cash for Human Development

Argentina, Bangladesh, Brazil, Colombia, Ecuador, Honduras, Indonesia, Jamaica, Kenya, México, Mongolia, Nicaragua, Phillipines, Tanzania

III. SPF Initiative Feasibility: Preliminary results of ILO Meta Study on transfers in Developing Countries

Number of countries in study: 28 - 8 in Africa, 9 in Asia, 11 in Latin America

Number of studies: 80 studies during 1999 and 2008

Number of programmes: 63 Estimated number of total beneficiaries

(primary and secondary , at the end of 2008): between 150 and 200 million people

Expenditure starts at less than 0.5% of GDP…

III. SPF-I Feasibility: Emerging comprehensive SPF

Uruguay (El plan de Equidad) Chile (La red de proteccion social) Brazil China

IV. SPF-I: Potential Impacts

A basic package of modest pensions and child benefits can reduce the poverty head count by 40 per cent in poor developing countries at a cost of 3-4 per cent of GDP.

In Latin America the cost of a modest package of conditional child cash transfers, universal pensions and basic health care can be kept under 5% of GDP; the poverty headcount effects can reach a reduction of more than 50%

South Africa Social Transfers Effective South Africa Social Transfers Effective to Reduce Poverty and Destitution – Cost to Reduce Poverty and Destitution – Cost 3% GDP3% GDP

Source: Sampson, M. 2006, EFPRI South Africa

=> Social Transfers can make the difference between achieving MDG1 of halving poverty by 2015 or not

IV. SPF initiative: Simulated Impacts of basic package of pensions & child benefits - Results of ILO Meta study

Criteria Number of studies that found Effect positive

Effect small/neut.

Effectnegative

Poverty/Vulnerability PovertyInequality

465

91

--

Health/nutrition 25 1 -

EducationEnrolmentQuality

309

-5

--

Labour Market Participation 9 5 3

Child labour 12 3 -

Prod. Investments/act’s 40 5 -

Social Status/bonds 23 1 2

Gender 13 4 -

IV. Child-sensitive social protection impacts on achieving other MDGs also..

Health

Water and sanitation Education

Social welfar

e

Nutrition

Child protectio

n

Social Policy

Social Protection

Source: UNICEF

IV. Potential impacts on achieving other MDGs also..

For example:

• Increases in use of preventative health measures, e.g. routine child check-ups, pre-post natal care – Mexico, Peru, Honduras, Nicaragua, Columbia• In review of 10 conditional and unconditional transfer programmes, 7 out of 10 programmes show positive impacts on stunting• In families receiving South African pension, children have 5cm greater growth on average

(Yablonski & O’Donnell 2009)

IV. Potential impacts on achieving other MDGs also.. including protection during crisis

Food security in Mchinji, Malawi – projected food stores (Miller et al. 2008)

V. Next Steps - Implementation of the SPF Initiative

No best solutions or ‘one-size-fits-all’ formulas

Each country has different social needs, development objectives and fiscal capacity to achieve them, and will choose a different set of policies

We can learn from countries of the South who have already successfully taken measures to introduce elements of national social protection floors

V. Next Steps

National level: setting up of national SPF task forces composed by representatives of governments, social partners and other stakeholders, and supported by UN SPF country teams, supported - if requested - by the UN country reps:

to raise awareness ; to prepare diagnostics and assessments; to propose a country specific approach to the social floor; to identify alternatives and make concrete proposals and to monitor

and evaluate the results

Integration into national, regional and global planning process is fundamental, SPF country activities will not build parallel structures. It should seek policy coherence with United Nations Development Assistance Framework (UNDAF), Poverty Reduction Strategy Paper (PRSP), and the WB Rapid Social Policy Response.

To Conclude

The time to make a difference is now…

If the crisis can leave behind a broad-based consensus that people in the global economy and the global society have a right to a basic level of social protection and that this is feasible, the crisis has not been wasted.

Urgent need for a recovery with a human face

Discussion

Does the SPF provide a new and useful framework for an integrated approach to realising social and economic rights?

What opportunities do you see for concretely moving the initiative forward?

Thank you