focus on developing countries · a more ambitious social cohesion agenda. 2. the process of rapid...

Global Social Policy Forum,

Helsinki, 4-5 November 2013

Perspectives on Social Policy: Focus on Developing

Countries

1

Alexandre Kolev

Head, Social Cohesion Unit

OECD Development Centre

About the OECD Development Centre…

To help policy makers in OECD and non-OECD member countries identify effective policy solutions for growth, poverty alleviation and the reduction of inequality, relevant to the diverse contexts of its member countries by:

Producing multidisciplinary analysis on key development issues

Providing an informal platform for policy dialogue and mutual learning between OECD and non-OECD countries

11/8/2013 2

Austria Israel

Portugal

Belgium Italy

Slovakia

Chile Korea

Spain

Czech republic Luxembourg

Sweden

Finland Mexico

Switzerland

France Netherlands Turkey

Germany Norway United Kingdom

Iceland Poland European Commission

Ireland

OECD members: 24 countries + EU

Non-OECD members: 18 countries

The Centre’s Membership

Argentina Mauritius

Brazil Morocco

Colombia Panama

Costa Rica Peru

Cape Verde Romania

Dominican Republic

Senegal

Egypt South Africa

India Thailand

Indonesia Vietnam

• In OECD countries

• OECD databases (social expenditures, social benefit

recipients, pension, income support, family policies,

income distribution, employment, health)

• Pension Review, Social and Labour Market Review

• In developing countries

• Social Cohesion and Policy Review

• Social Institutions and Gender Index (SIGI) country

studies

OECD work related to social policy

•Social Cohesion Policy Reviews: the pilot of the project will be carried out in Viet Nam. Other countries, such as India and Peru, have expressed their interest; •Gender: preparation of the SIGI 2014 and implementation of the SIGI at the country level (India, Kenya, South Africa, Uganda…); •Migration: 3-year project on the “Interrelations between public policies, migration and development” (10 country studies); •Skills: design and implementation of the “National Skills Strategies” in several non-member OECD countries; •Well-being: How’s life? index in developing countries.

Perspectives on Social Policy - Main messages

1. As economic uncertainty deepens, now is the time for developing countries to channel their recent prosperity into a more ambitious social cohesion agenda.

2. The process of rapid growth in many developing countries presents both a chance and risks for social cohesion.

3. Inclusive social policy is key for social cohesion.

1 Shifting Wealth: an unprecedented opportunity?

2 Challenges for social cohesion in fast growing countries

3 What policies for social cohesion?

4 Looking forward

Outline

The four-speed world in the 1990s

Source: OECD Development Centre, Perspectives on Global Development 2010 - Shifting

Wealth

The four-speed world in the 2000s

Source: OECD Development Centre, Perspectives on Global Development 2010 - Shifting

Wealth

Shifting Wealth:

New resources for development

Greater fiscal space in the 2000s vis-à-vis the 1990s

Fiscal revenue to GDP ratio (%)

Source: Authors’ calculations based on World Bank (2011).

Resources for development in Africa

0

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800

1200

1600

2000

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USD

Tax revenue per capita

ODA per capita

Source: OECD/AfDB/UNECA (2010), African Economic Outlook




4 Looking Forward

Outline

Economic growth, but not for everyone

12

MENA Southeast Asia Sub-Saharan Africa Latin America

Changes in welfare distribution across regions

(Gini index of income distribution)

Note: An asterisk (*) indicates that the Gini index has been measured from income data. If not specified,

Gini index is calculated from consumption data.

Source: OECD calculation based on PovcalNet.

Fast growth, rising inequalities

Absolute vs. relative poverty in China and Brazil, 1981-2007

Source: OECD (2012) Perspectives on Global Development : Social cohesion in a shifting

world.

Distance matters as countries grow

Note: latest year available in the 2000s

Source: Garroway and de Laiglesia (forthcoming) based on PovcalNet.

Incidence of absolute vs. relative poverty (percentage of the population)

MENA Southeast Asia Latin America Sub-Saharan Africa

From Branko Milanovic

USA

India

Brazil

China

Russia

1

10

2

0

30

4

0

50

6

0

70

8

0

90

1

00

p

erc

en

tile

of w

orl

d in

co

me

dis

trib

utio

n

1 20 40 60 80 100 country percentile

Different countries and income classes

in global income distribution in 2008

Real income growth at various percentiles of global

income distribution, 1988-2008 (2005 PPPs)

0

10

20

30

40

50

60

70

80

0 10 20 30 40 50 60 70 80 90 100

x

Percentile of income distribution

X“US lower middle

class”

X “China’s middle class”

Branko Milanovic

$PPP

2

$PPP4 $PPP11

$PPP

110

From Branko Milanovic

The “missing middle” in social protection coverage

Share of the working population by income quintile and labour status in Brazil (2006)

Source: da Costa et al. (2011).




4 Looking forward

Outline

What policies for social cohesion?

• Policies can make a difference

• Key areas: Fiscal, employment, social and educational policies

• A social cohesion agenda is a more ambitious social agenda:

Poverty reduction + increased attention to vulnerable middle class +

inclusive policies.

• Exploiting linkages between different policies is crucial : policy

coherence and co-ordination.

Policies can make a difference for inequality

Source: ILO 2011.

The impact of taxes and transfers on income inequality, regional averages (ca.

2000s)

Social policy across the distribution in Brazil

Growth incidence curve (2001-06) Real minimum wage (in end 1994 R$)

Source: PGD 2012 Source: IBGE and Central Bank of Brazil

0

50

100

150

200

01

-Dec

-94

01

-Ju

n-9

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-Dec

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0

2

4

6

8

10

12

0 20 40 60 80 100

Growth rate by income percentile Growth rate in mean

Labour and social cohesion:

Increase in labour disputes in China

Source: Cai and Wang (2011)

0

200

400

600

800

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Nu

mb

er

of

Lab

or

Dis

pu

te C

ase

s (t

ho

usa

nd

)

Labour markets:

Reforming labour institutions (China)

Responses: increase in minimum wages…

…and wider use of collective bargaining

Source: Authors’ calculations based on Du and Pan (2009) and

CASS. Source: Cai and Wang (2011).

0

10

20

30

40

50

60

70

80

90

100

0

100

200

300

400

500

600

700

800

900

1 000

1998 1999 2000 2001 2002 2009

Number of collective contracts (left axis)

Number of employees covered (right axis)

Thousand Million

0

50

100

150

200

250

300

19

99

20

00

20

01

20

02

20

03

20

04

20

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20

06

20

07

20

08

20

09

20

10

Average minimum wage in Chinese cities (1999 = 100)

Source: Hertz et al. (2007), “Intergenerational Economic Mobility around the World”, The B.E. Journal of Economic

Analysis & Policy, Vol.7, No. 2, pp.1-45.

The role of social policy through a social mobility lens

Correlation between parental and child education

OECD

countries

non-OECD

economies




4 Looking forward

Outline

Summary and Looking Forward

Shifting wealth: Opportunities and risks

• Social cohesion as a means and an end

• More resources and unprecedented possibilities

• New opportunities not equally shared

• Rising middle classes in developing countries also at risks

Looking forward

• Remaining questions: evolution of worldwide economic environment, sustainability and social cohesion, global governance.

• How to integrate inclusive social policy a part of national development strategies?

Thank you for your attention!

focus on developing countries · a more ambitious social cohesion agenda. 2. the process of rapid...

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