International Labour Office Is a social security floor affordable? Krzysztof Hagemejer, Karuna Pal, Christina Behrendt, Florian Krzysztof Hagemejer, Karuna Pal, Christina Behrendt, Florian Léger, Florence Bonnet, Suguru Misonoya, Veronika Wodsak, Griet Léger, Florence Bonnet, Suguru Misonoya, Veronika Wodsak, Griet Cattaert, Michael Cichon Cattaert, Michael Cichon Social Security Department Social Security Department Geneva, 15 May 2008 Geneva, 15 May 2008 The ILO Global Campaign to extend Social Security to all 1
International Structure of the presentation Labour Office � Point One: Social security is a Human Right � Point Two: Social security is a social necessity � Point Three: Social security is an � Point Three: Social security is an economic necessity � Point Four: Basic social security for all is fiscally affordable � Point Five: A new policy paradigm � Point Six: What next? The ILO Global Campaign to extend Social Security to all 2
Point One: Social security is a human right… International Labour Office � Article 22 of the Universal Declaration of Human Rights states: “ Everyone, as a member of society, has the right to social security ” � Even after almost 60 years that still remains a dream for 80 per cent of the global population. � The ILO’s Declaration of Philadelphia charged the ILO with “…. the extension of social security measures to provide a basic income to all in need of such protection and comprehensive medical care ”. In 2003 the ILO launched a campaign to extend social security to all. � The ILO now proposes a set of social rights as a social security floor. This is now the core message of the campaign. The ILO Global Campaign to extend Social Security to all 3
International Point Two: Social security is a social necessity Labour Office � 80% of people live in social insecurity, 20% in abject poverty, more than 5 million children die every year under age 5 due to lack of access to health care and lack of income security to health care and lack of income security � Social security transfers reduce poverty by at least 50% in almost all OECD countries � Social security transfers reduce income inequality by about 50% in many European countries The ILO Global Campaign to extend Social Security to all 4
Point Three: …social security is an International Labour economic necessity… Office � In order to convince governments and societies to spend on social protection, have to show that countries can grow with have to show that countries can grow with equity. � It can be shown that those countries that have been the most successful in achieving long-term sustainable growth and poverty reduction have all put in place extensive systems of social security at an early stage. The ILO Global Campaign to extend Social Security to all 5
Point Three: …social security is an economic International Labour necessity… 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… It is social transfers that most directly and most effectively reach out to the excluded and the poor and those – who have to adapt to economic change and thus maintain their – productivity … Access to social health protection improves productivity levels � Social transfers cushion the effects of economic downturns on � domestic demand Cash transfers in developing countries have multiplier effects on � local markets, transfers in kind my have negative effects on prices, no known effect on LF participation The ILO Global Campaign to extend Social Security to all 6
Point Four: Basic social security for all is International Labour affordable Office � Our actuaries have shown time and again that we need less than 2 per cent of Global GDP to provide a basic set of social protection benefits to all people that have to protection benefits to all people that have to live on less than one dollar a day. � Evidence emerges that a minimum package of social security benefits is affordable in even the poorest countries as recent work by the ILO on the cost of a minimum package of social security benefits in sub- Saharan Africa, Asia and Latin America has shown. The ILO Global Campaign to extend Social Security to all 7
International Labour A simulation exercise: Benefit Office assumptions for affordability calculations for developing countries Basic old age and invalidity pensions: 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 barcket 0-14 – Essential health care: � based on an 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 by 30 of per capita daily GDP to 10% of the – population Administration cost: � 15% of cash benefit expenditure The ILO Global Campaign to extend Social Security to all 8
International Labour A simulation exercise: Office Demographic, economic, fiscal assumptions Demography: UN population projections Demography: UN population projections � � Economy: � real GDP growth is assumed as working age population growth plus 1 percentage point, in Ethiopia, Tanzania � and Viet Nam it is assumed as working age population growth plus 2 percentage points while for India it is assumed as working age population growth plus 3 percentage points; Fiscal: � projected levels of total government expenditure increase by 50 per cent of their current level by the year 2034, with a maximum of 30 per cent of GDP; government revenue (excluding grants) is assumed to reach the projected expenditure level by 2014 in order � to reach a balanced budget; The ILO Global Campaign to extend Social Security to all 9
Point Four:… a basic social protection International Labour package is affordable: cost of universal Office pension 2.5% of GDP 2.0% 2010 2010 in per cent of 1.5% 1.5% 2020 1.0% 2030 0.5% 0.0% a a a n o a l l m n a h a a i i e n i a s o y s p g d p a t a o n a e o n n e e s N i F r e z d I i i u e n N k h n K a t a G e a m t e a E l n g S P i T V a i n k C . a r p u B e B R d e t i n U The ILO Global Campaign to extend Social Security to all 10
Point Four:… a basic social protection International Labour package is affordable: cost of basic child Office benefit 4.5% 4.0% of GDP 3.5% 3.0% 3.0% 2010 2010 in per cent of 2.5% 2020 2.0% 1.5% 2030 1.0% 0.5% 0.0% n a o a l h a n a l m a a i a o s i e n i a s g p y d p a o t e a n e a o n n s e N r d F i z i I i e u e n N k h n a K e t a m G a t a l e E S g n P i a T V n i C k a . r p u B e B R d e t i n U The ILO Global Campaign to extend Social Security to all 11
Point Four:… a basic social protection International Labour package is affordable: cost of essential Office health care 6.0% of GDP 5.0% 4.0% 4.0% in per cent of 2010 3.0% 2020 2.0% 2030 1.0% 0.0% a o n a a m l h a l n a a i a s o i e n s a p y i g p a d a o n a t e o n e e N n s F r i z d i u e n I N i e h n k K a t G a e e m t a a l E n S g P i T V a i n k C . a r p u B e B R d e t i n U The ILO Global Campaign to extend Social Security to all 12
Point Four:… a basic social protection International Labour package is affordable: cost of employment Office guarantee scheme 1.0% 0.9% 0.8% of GDP 0.7% 0.6% 0.6% in per cent of 0.5% 2010 0.4% 2020 0.3% 2030 0.2% 0.1% 0.0% United Rep. Tanzania Ethiopia Cameroon Senegal Bangladesh India Pakis tan Burkina Faso Guinea Nepal Viet Nam Kenya The ILO Global Campaign to extend Social Security to all 13
Point Four:… a basic social protection International Labour package is affordable: cost of all basic benefit Office package components 12.0% 10.0% f GDP 8.0% in per cent of G 6.0% 2010 2020 4.0% 2030 2.0% 0.0% a a o n l a n h m a a a i l i a o n i s p s a e g d y a o p a a e t o n n n e s N e r z F i d e i I i h e n u n N k K a m e t a t G a a l e E S g n a T P i V i n k C . a p r u B e B R d e t i n U The ILO Global Campaign to extend Social Security to all 14
Point Four:… a basic social protection International Labour package is affordable: share of total cost that Office can be covered by domestic resources 100.0% on basic 90.0% 80.0% 70.0% 70.0% per cent of total expenditure on 2010 2010 60.0% 50.0% social protection 2020 40.0% 30.0% 2030 20.0% 10.0% 0.0% a a m o n l h a l n a a a i i a o s i s e y n a p g d a p o a n n a e t o e n e s N F r i d i e z u I N i e h n k K n a t a m G e t a e a l E n S g i a P T V i n k C a . r p u B e B R d e t i n U The ILO Global Campaign to extend Social Security to all 15
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