International Labour Office How to finance, deliver and govern social security for all … Tripartite Meeting of Experts on Strategies for the Extension of Social Security Coverage Geneva, 2-4 September 2009 Michael Cichon Social Security Department International Labour Office The ILO Campaign on Social Security and Coverage for All 1
Structure of the presentation International Labour Office � One: Social security is an economic necessity � Two: Social security is fiscally affordable � Two: Social security is fiscally affordable � Three: Financing strategies � Four: Delivery and governance issues The ILO Campaign on Social Security and Coverage for All 2
One: … in addition to a social necessity International social security is an economic necessity … Labour Office Economies cannot develop and grow without a productive � workforce. In order to unlock a country ’ s full growth potential one has to fight social exclusion, ignorance, unemployability … through social transfers Access to social health protection and education improves Access to social health protection and education improves � � productivity levels and has a positive impact on growth (we have ample research evidence … ) The famous trade-off between productivity and equity is a � myth … Investments on social security and economic development � coincided in OECD countries Cash transfers in developing countries have multiplier effects � on local markets (stimulate local production inter alia of food) Stabilise domestic demand in times of crises � The ILO Campaign on Social Security and Coverage for All 3
Two: … a basic social protection package is International Labour affordable: Total cost of all basic benefit Office package components 6.0% 5.0% 4.0% i n p e c e n t 3.0% 2.0% 1.0% B u r k i n a F a s o U n i t e d R e p . B a n g l a d e s h e r o o n e n e g a l P a k i s t a n V i e t N a m E t h i o p i a G u i n e a T a n z a n i a K e n y a N e p a l 0.0% I n d i a C a m S O ld - ag e p e ns io ns C h ild b en efits H ea lth care So ci al a ssi st an ce/ em p lo ym en t sch em e A dm i ni st rative co sts The ILO Campaign on Social Security and Coverage for All 4
Point Three: Financing strategies: Lack International Labour of fiscal space? The good news – part I Office 60 France of GDP | Total government Belarus Slovenia Hungary Belgium Ukraine 50 Seychelles Italy Croat ia Portugal Greece Germany Czech Republic Republic of Moldova United Kingdom Poland Bulgaria Mongolia f GDP Slovakia 40 Morocco Spain Latvia Public SP & Health expenditure in percentage of Bolivia Bolivia expenditure in percentage of Public SP & Health Japan South Africa Ethiopia Est onia expenditure in New Zealand Romania Uruguay percentage of GDP Tunisia Viet N am Azerbaijan France 30 Russian Federation Argentina Germany Kuwait Bahrain Public government Belgium Albania Mauritius Italy Costa Rica Ukraine expenditure in Greece Portugal percentage of GDP Burundi Georgia Trinidad and Tobago United Kingdom Panama Croat ia Spain Korea, Republic of El Salvador Hungary Uruguay 20 Poland China Indonesia Thailand Chile Israel Linear (Public SP & Japan Belarus Nepal Malta Health expenditure in Dominica Czech Republic Bulgaria Slovakia India percentage of GDP) Singapore New Zealand Republic of Moldova Latvia Russian Federation Mongolia Panama C hile Linear (Public Estonia 10 Argentina Bolivia government United Arab Emirates South Africa Georgia expenditure in Kazakhstan Korea, Republic of Mexico Kuwait percentage of GDP) U ganda India C hina Burundi Bahrain Thailand Viet N am Bhutan 0 Ethiopia 0 5000 10000 15000 20000 25000 30000 35000 GDP per capita PPP The ILO Campaign on Social Security and Coverage for All 5
Three: Good news part II: Growing fiscal International Labour space Office � 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) … (source OECD and ECA) … 5 0 4 0 3 0 be fore 2002 2 0 es tim a ted 2008 differe nce 1 0 0 a e R d a r r a d n l a c a d a e n i n i i a i n -1 0 r n c g r ; r a a g h o e f a e e s e i A l h C g V a N z g i B n z G n n i g h a e N e o a a t S w p u C d T a S o a C S M The ILO Campaign on Social Security and Coverage for All 6
Three: Financing strategies International Labour Office Domestic resource mobilisation � � Increase the efficiency of tax collection � Reduce waste � Broaden tax base � Reduce tax evasion and avoidance � Reduce tax evasion and avoidance � Introduce self-financing insurance systems (largely health care) � Increase overall tax rates International resources (transitional financing) � � Modified social security oriented budget support? � Project financing to build national delivery capacity � International financing of health care goods and services The ILO Campaign on Social Security and Coverage for All 7
Four: Delivery issues International Labour Office � There are very few countries where essential public services cannot be delivered (see universal pensions in Namibia, Nepal and universal HC in Thailand) but � it may need investments in logistical infrastructure � Investment increased efficiency of public services � Efficient use of private sector delivery systems (e.g. � Efficient use of private sector delivery systems (e.g. pensions in Namibia) � Innovative use of modern technology (cell phones … ) � Pragmatic delivery decisions are needed with respect to � Universal vs targeted options � Conditional vs unconditional transfers The ILO Campaign on Social Security and Coverage for All 8
Four: Governance issues International Labour Office International: International instruments are useful in � making national policy cases … National: Social dialogue processes are needed to � obtain national consensus on � Benefit priorities and sequencing Benefit priorities and sequencing � Benefit design (conditions, benefit levels) National: Stakeholder participation necessary to � monitor/supervise the effectiveness and efficiency of benefit delivery The ILO Campaign on Social Security and Coverage for All 9
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