Social Protection: Costing & Financing SP targetsSPIAC-BNew York, 3 February 2015

Anne Drouin, Social Protection Department International Labour Organization

2 fundamental questions:What matters when assessing the cost of SP Targets and monitoring their progress?

1)Towards Universal Coverage – No one is left outWhat are the needs for SP ?

Is everyone covered in case of loss of income and insufficient means?

Does everyone have access to health care ?

2)Towards Adequate Social protection – Is SP sufficient to meet people’s needs ?

Taking into account need to scale up resources to pay for benefits of all kinds and to invest into developing the national and local SP delivery system - Progressive or Immediate realization? 2

Building Social Security Systemsfor a Century

Developing Countries Increasing Social Protection

Selected Countries, 2011

Increase in public social protection expenditure ratios (%GDP), selected middle-income countries, 2000-latest year

Source: ILO World Social Protection Report 2014-15

.

How older poor spend pension cash

transfer

Child and family benefits Argentina, China, Mongolia, Mozambique, Nepal, Niger, Senegal, South Africa

Cash transfers with human development focus

Argentina, Bangladesh, Brazil, Colombia, Ecuador, Ghana, Honduras, Indonesia, Jamaica, Kenya, Malawi, Mexico, Mongolia, Nicaragua, Philippines, Tanzania

Household minimum support income

Chile, China, Ghana, Mozambique, Rwanda, Uganda, Zambia

Public employment programmes

Argentina, Benin, Cameroon, Ethiopia, Ghana, India, Indonesia, Malawi, Niger, Rwanda, South Africa, Tanzania

Maternity protection Argentina, Bangladesh, Bolivia, Ghana, India, Indonesia, Jordan, South Africa

Social pensions Argentina, Bangladesh, Bolivia, Botswana, Brazil, Cabo Verde, Chile, China, Costa Rica, India, Kyrgyzstan, Lesotho, Mauritius, Moldova, Namibia, Nepal, Panama, Peru, Samoa, Sierra Leone, South Africa, Tajikistan, Tanzania, Thailand, Vietnam

Health coverage expanded Argentina, Brazil, Burundi, Cambodia, Chile, China, Colombia, Ghana, Lao PDR, Indonesia, Mexico, Morocco, Thailand, Rwanda

Unemployment protection Jordan, Saudi Arabia, South Africa, Thailand, Vietnam

Expansion of Cash Transfers in Middle and Low Income Countries

Universal Social Protection: Mixed approachesCombining Non-contributory SP Floors and

Contributory Systems

F How to better engage with other government ministries beyond Ministry of Labour?

100 Countries Reducing Universal Food and Fuel Subsidiessometimes targeted safety nets to the poor as compensation

-- insufficient, punishing “middle classes” Fuel Subsidies in %GDP selected countries, 2012 or latest

- Higher food and transport costs: Less household income- Higher energy costs – Negative impact on economic activity, employment, domestic demand

Social protection is an investment in people

Source: ILO, World Social Protection Report 2014-15

Is Universal Social Protection Affordable in Developing Countries?

Source: ILO 2014, Geneva

Cost of universal pension coverage65+, National poverty line (% of GDP)

FINANCING SOCIAL PROTECTIONFiscal policy space options exist even in the poorest countries

1) Increasing social insurance coverage for self-financed contributory benefits for those who can afford their social protection

2) Re-allocating public expenditures (eg subsidies) 3) Better taxation systems increasing central tax revenues 4) Increased aid and central budget transfers to support national

priorities for sustainable state capacities … especially in fragile states requiring kicking off SP institutions

5) Fighting illicit financial flows6) Tapping into fiscal and foreign exchange reserves7) Debt restructuring to allow investment into SP bringing back

economic and fiscal returns 8) Adopting a more accommodative macroeconomic framework

Fiscal Space Strategies for Social Protection: Country Examples

Source: ILO, World Social Protection Report 2014-15

ILO Social Protection Floor Cost Calculator

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Welcome to the Social Protection Floor Cost Calculator!

Selection of countries

Selection of SPF Income Security & In-kind Benefits

o Children

o Youth Unemployed - PWP’s

o Women & Maternity

o HIV/AIDS victims

o Disabled persons

o Elderly

Coverage Definition Universal Targeted

Benefit Adequacy Definition National Poverty Line Other ref.

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Old Age Children Disabled Pregnant Orphans0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

SPF Benefits for Bangladesh (% of GDP)

Maternity

ILO Social Protection Floor Cost CalculatorAn example

Thank you