Download Point one

Universal social security
benefits
against poverty and social
exclusion
International
Labour
Office
Michael Cichon
Social Security Department
International Labour Office, Geneva
Lisbon, 2 October 2006
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International
Labour
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“The world does not lack the
resources
to
eradicate
poverty, it lacks the right
priorities.”
Juan Somavia, Director General of the ILO
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International
Labour
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Structure of presentation
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Point one: The Problematique
Point Two: Debunking the theoretical nonaffordability myth of social security
Point Three: Debunking the practical nonaffordability myth - or : Can low income
countries affoard basic social transfers ?
Point four: Conclusions - Changing the
social security development paradigm
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International
Labour
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Point One: Problematique
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80% of people live in social insecurity, 20% in abject
poverty
Social security reduces poverty by at least 50% in
almost all OECD countries
Social security reduces income inequality by about
50% in many European countries
Social security universally accepted as human right
(article 22, Universal declaration)
Hence social security transfers are a pivotal tool to
combat poverty and social exclusion and yet social
security is underutilised in national anti-poverty and
development strategies
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Point Two: Debunking the
theorectical non-affordability
myth
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International
Labour
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The « conventional old » argument is :
There is loss in potential GDP due to
equity efficiency trade-off
Conclusion: That trade – off is a myth:
« Countries can grow with equity » (Hilary
Benn)
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Empirical evidence? OECD
The ILO Global Campaign to extend social security to all
Correlations between per hour productivity and
social expenditure per capita
in OECD countries in 2001
International
Labour
Office
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Productivity
(per hour worked)
Can
50 low-income countries
40
afford
social security?
30
DfID-GTZ-ILO
Research Seminar
20
“Challenging the Development Paradigm:
Rethinking
the Role of Social Security in State Building”
10
4-5 September 2006, Geneva
0
2000 and4000
8000
10000
Krzysztof0Hagemejer
Christina6000
Behrendt
Social Security
y = 0.0043x
+ 8.7845Department,
Total public social expenditure
2
International
Geneva
R = 0.7812 Labour Office,per
capita in PPP
12000
Source: OECD
Point three: Debunking the practical
non-affordabilty myth: Can low
income countries afford basic social
security?

International
Labour
Office
Two ILO costing studies and one
distribution study on basic social protection
package in low-income countries
–
–
–
Costing min. benefit packages in seven countries
in Africa (Pal et al. 2005)
Costing min.benefit packages in five countries in
Asia (Mizunoya et al. 2006)
Assessing the poverty in effects two low income
African countries (Gassmannn and Behrendt,
2006)
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Benefit assumptions for calculations
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Basic old age and invalidity pensions:
–
–
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Senegal/Tanzania: Benefit of 70% of food poverty line
12 countries: Benefit of $0.5 PPP per day
Child benefits:
–
–
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Labour
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Senegal/Tanzania: Benefit of 35% of food poverty line half a pension),
paid to all children in school age (7-14) and orphans also below 7
Benefit of $0.25 PPP per day (half of pension), paid to all children up
to the age of 14
Essential health care:
Annual per capita costs based on the Commission on
Macroeconomics and Health estimates of US$ 34 by 2007 and
US$ 38 by 2015
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Administration cost:
15% of benefit expenditure for universal cash benefits
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Cost of universal basic old age and
disability pension
International
Labour
Office
1.2%
0.8%
2010
0.6%
2020
2030
0.4%
Asia
Tanzania
Senegal
Kenya
Guinea
Ethiopia
Cameroon
Burkina Faso
Viet Nam
Pakistan
Nepal
0.0%
India
0.2%
Bangladesh
Percent of GDP
1.0%
Africa
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Cost of universal child benefit for
children aged 0-14
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Labour
Office
7.0%
5.0%
4.0%
2010
3.0%
2020
2030
2.0%
Asia
Tanzania
Senegal
Kenya
Guinea
Ethiopia
Cameroon
Burkina Faso
Viet Nam
Pakistan
Nepal
0.0%
India
1.0%
Bangladesh
Percent of GDP
6.0%
Africa
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Cost of essential health care based
on CMH estimates
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Labour
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35.0%
25.0%
20.0%
2010
15.0%
2020
2030
10.0%
Asia
Tanzania
Senegal
Kenya
Guinea
Ethiopia
Cameroon
Burkina Faso
Viet Nam
Pakistan
Nepal
0.0%
India
5.0%
Bangladesh
Percent of GDP
30.0%
Africa
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Cost of basic social protection
package
International
Labour
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45.0%
40.0%
30.0%
25.0%
2010
20.0%
2020
15.0%
2030
10.0%
Asia
Tanzania
Senegal
Kenya
Guinea
Ethiopia
Cameroon
Burkina Faso
Viet Nam
Pakistan
Nepal
0.0%
India
5.0%
Bangladesh
Percent of GDP
35.0%
Africa
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100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
2010
2020
Asia
Tanzania
Senegal
Kenya
Guinea
Ethiopia
Cameroon
Burkina Faso
Viet Nam
Pakistan
Nepal
India
2030
Bangladesh
Percent of total cost
Share of total costs covered by
domestic financing (assumed
government contribution 20% of
govt. expenditure)
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Labour
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Africa
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Financing alternatives: here Cameroon
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Labour
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6
4
Total cost
govt.con
2
Hccon
Deficit
0
Cameroon
2010
-2
-4
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Estimated effect of cash transfers on
reduction of poverty (headcount)
International
Labour
Office
Poverty rate (percent of the population)
25
20
Universal old age and disability
pension
15
Universal child benefit for school-age
children (7-14)
10
Simulated remaining poverty rate
5
0
Senegal
Tanzania
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Assessing potential impact and costs of cash transfers in
Senegal and Tanzania:
International
Labour
Office
Cost of benefit package as percentage of GDP
child benefit
pension
5%
4%
3%
2%
1%
0%
Senegal
Tanz ania
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Estimated effect of a basic benefit
package on poverty headcount :
Tanzania
International
Labour
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Simulated reduction of poverty rates in Tanzania
45
40.8
40
5.0
Poverty rate (head count)
35
8.8
30
25
22.2
20
5.1
15
7.9
27.0
10
5
9.2
0
Food poverty line
Remaining poverty
Basic needs poverty line
Old age and disability pension and benefit for children and orphans
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Access to health care
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Other relevant experience
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A GTZ-sponsored targeted cash transfer pilot in Zambia has
shown that a scaled up social assistance to a national level is
estimated to cost 0.5% of GDP.
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Universal pension schemes in Botswana, Brazil, Lesotho,
Mauritius, Namibia, Nepal, and South Africa, cost between
0.2 and 2% of GDP
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The old age grant in South Africa improved the well-being of
older persons but also of other household members, namely
children living in the household
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The Mexican conditional cash transfer programme Progresa
has shown positive effects on children’s nutritional and health
status and vaccinations and school enrolment.
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Other relevant research: effect of
universal pensions on old age
poverty (ECLAC)
International
Labour
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Effect and cost of universal pensions (ECLAC2006)
40
35
30
25
20
15
10
5
0
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Latina
America
and
Caribbean
Uruguay
Mexico
Chile
Brazil
Argentina
Poverty before
Poverty rate after
Cost in % of GDP
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Point Four:
Changing the social security
development policy
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Social security is thus an investment in
people and states through
–
–
–
–
reduction of poverty and hence social exclusion
fostering productive economies through decent
working and living conditions (if set-up right…)
fostering nation building
Contributing to a socially beneficial globalisation
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The developmental policy paradigm
of the Global campaign:Towards
progressive universalism
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International
Labour
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Universal but progressive could mean:
–
–
Building progressively higher levels of protection
Based on a basic layer of protection consisting of
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Basic health care for all within a pluralistic system
Child benefits to foster school attendance
Pro-active (self targeting) social assistance
universal benefits in old age, disabilty and loss of
breadwinner
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Point Four: Conclusions
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Coordinated forward looking national social
protection policy strategies should sequence
implementation of various social programmes
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Capacity should be built in coordinating government
agencies, line ministries and then at the local level in
the areas like:
–
–
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International
Labour
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Social protection development, analysis and design
Administration of social protection programmes
THE TIME TO ACT IS NOW
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