Social Protection Poli licy Responses in in the Future of Work in in Africa Zainab Usman, PhD (World Bank) Presentation at the “Transforming economies – for better jobs” UNU-WIDER Development Conference in partnership with UNESCAP 11-13 September 2019 Bangkok, Thailand
Outline 1. Introduction: Questions, Methods & Findings 2. What is Social Protection? 3. Systemic Risks and Fiscals Constraints Limit Social Protection Coverage in SSA 4. Social Protection Policies in the Changing World of Work in Africa 5. Conclusions
1. Introduction
Questions & Methods Questions: Methods: • Review and synthesis of academic and 1. In the changing world of work, what are the risks to labor markets and policy literature policy constraints that SSA • Analysis of revenue, expenditure and economies face? tax data 2. What social protection policies • Select examples of innovations in should African governments social protection policies consider in preparing for the future of work, and how can they be financed?
Summary of Findings Social Protection & Labor Systems in a Changing World of Work Should Manage Risks to African Labor Markets Strengthen traditional social Turn risks into opportunities protection and labor to provide innovative SPL programs for the poor & solutions vulnerable Optimize potential and existing resources to address fiscal & policy constraints
2. What is Social Protection?
What is Social Protection? “Social Protection and Labor (SPL) systems, policies, and instruments help individuals manage risk and volatility and protect them from poverty and destitution through instruments by improving equity, resilience and opportunity” Source: World Bank. (2012). Resilience, Equity, and Opportunity : the World Bank's Social Protection and Labor Strategy 2012-2022. Washington D.C.: World Bank.
Rethinking Social Protection and Labor Systems Expand social protection coverage in the changing world of work Most of SSA population is not covered by any Social Protection and through the guiding principle of “progressive universalism”, while Labor program giving priority to the poorest people” 1,2% 100,0% 3,3% 9,4% 13,7% 13,3% 14,6% 90,0% 15,5% 27,1% 1,4% 3,9% 19,8% 80,0% 16,0% 70,0% 21,2% 60,0% 42,4% 30,6% 30,4% 61,2% 50,0% 19,1% 40,0% 80,0% 30,0% 20,0% 40,2% 39,9% 39,2% 32,5% 24,0% 10,0% 0,0% Europe & Latin America & East Asia & Middle East & South Asia Sub-Saharan Central Asia Caribbean Pacific (EAP) North Africa (SAR) Africa (SSA) (ECA) (LAC) (MENA) No transfer Only social assistance programs Source: World Bank. (2019). World Development Report 2019 : The Changing Nature of Work. Washington Only social insurance programs More than one SPL benefit D.C.: World Bank Source: World Bank Atlas of Social Protection (ASPIRE) database
Rethinking Social Protection and Labor Systems in Africa In the Changing Nature of Work: ✓ Social protection policies will need to effectively manage a large compendium of risks in Africa’s labor markets. ✓ Given the low baseline of social protection coverage in most SSA countries, there are fiscal implications to expanding coverage. ✓ Given the low-income level of most SSA countries, it will be important to balance competing policy priorities such as education and health, infrastructure and security, and optimize public investments.
3. Systemic Risks and Fiscal Constraints Limit Social Protection Coverage in SSA
Global Trends Pose Systemic Risks to Africa’s Labor Markets (i). Digital technologies are disrupting labor markets Socio-behavioral skills are becoming more important to recruiters Automation and globalization affect industrial employment Source: World Bank. (2019). World Development Report 2019 : The Changing Nature of Work. Washington D.C.: World Bank
Global Trends Pose Systemic Risks to Africa’s Labor Markets (ii). Greater economic integration (i.e.AfCFTA) will create New Economic Opportunities and Result in Adjustment Costs Africa has one of the lowest levels of intra-regional trade, Adjustment Paths Following Trade Liberalization as a percentage of total exports, 2017 Source: Francois, J., Jansen, M., & Peters, R. (2011). Trade Adjustment Costs and Assistance: the Labour Market Dynamics. In M. Jansen, Trade and Employment: from Myths to Facts (pp. 213-252). Geneva: ILO-EU.
Global Trends Pose Systemic Risks to Africa’s Labor Markets (iii). Climate and conflict drivers create shocks that disrupt labor markets Conflict Events Worldwide, by Type of Conflict and African countries are highly vulnerable to climate shocks Region, 1989 – 2016 Source : IMF. (October 2018). Regional Economic Outlook Sub-Saharan Africa: Capital Flows and the Future of Source: United Nations; World Bank. (2018). Pathways for Peace : Work. Washington D.C.: International Monetary Fund Inclusive Approaches to Preventing Violent Conflict. Washington D.C.: World Bank
Global Trends Pose Systemic Risks to Africa’s Labor Markets (iv). SSA’s demographic transition is characterized by a youth bulge, urbanization and migration flows Africa is projected to experience rapid population growth over the SSA is urbanizing at lower per capita GDP than other regions next decades Global Population Projection to 2050 (billions) Income Per Capita at 40% Urbanization (Constant 2005 US$) 3 000 000 000 $4 000 $3 617 2 500 000 000 $3 500 $3 000 2 000 000 000 $2 500 1 500 000 000 $1 860 $1 806 $2 000 $1 500 1 000 000 000 $1 018 $1 000 500 000 000 $500 $- - LAC (1950) MENA (1968) EAP (1994) SSA (2013) 2001 2011 2021 2031 2041 SSA MENA EAP ECA SAR LAC N.America EU Source: Hommann, K., & Lall, S. (2019). Which Way to Liveable and Productive Cities? A Road Map for Sub- Source : Calculations from World Bank’s World Development Indicators Saharan Africa. Washington D.C.: World Bank.
Fiscal Constraints Limit Social Protection Coverage in Africa (i). Insufficient resources are devoted to social protection in SSA due to low- levels of social spending, donor dependence, misallocation, and inefficiencies SPL expenditures are heavily concentrated in pensions Regional Median Annual Social Safety Net Spending per Capita (US$ PPP) $300 $253 $253 $250 Cote d'Ivoire $200 $158 Cameroon $150 $139 $93 $100 $80 $69 $66 Tanzania $43 $50 $40 $29 $29 $16 $15 $- 0 % 20 % 40 % 60 % 80 % 100 % ECA LAC MENA EAP SAR SSA World Social Assistance Pensions Median SSN spending (total) per capita Employment/Labor Market General Subsidies Median SSN spending (without health fee waivers) per capita Source: Authors’ calculations from World Bank public expenditure reviews
Fiscal Constraints Limit Social Protection Coverage in Africa (ii). SSA countries have limited social protection coverage and spend less per capita in part due to low levels of domestic revenue mobilization (DRM). Performance of Different Tax Types (Africa) 6 4 2 0 1990 1995 2000 2005 2010 2015 Year PIT CIT Property Tax VAT Excises Trade Taxes Other Taxes Source: Authors’ calculations from World Bank, IMF and UNU -WIDER databases
Fiscal Constraints Limit Social Protection Coverage in Africa (iii). Due to competing policy priorities, SPL expenditures in Africa are lower than other public investments Share of T otal Goverment Expenditure (%) Cote d'Ivoire 6,3 18,6 4,9 5,1 27,7 30,3 7,0 Cameroon 6,6 15,5 3,0 6,5 36,3 27,3 4,9 Tanzania 12,0 17,3 9,5 5,8 8,0 24,7 22,6 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0 100,0 Social Protection Education Health Military Capital Expenditure Employee Compensation Others Source: Authors’ calculations from World Bank public expenditure reviews
4. Social Protection Policies in the Changing World of Work in Africa Mitigate Risks, Leverage Opportunities and Optimize Existing and Potential Resources
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