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Poverty & Inequality

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Is a ‘Global Social Floor’ the Right Path for Ending Poverty?
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An internationally coordinated effort to secure universal social protection may not address the structural factors which make people vulnerable to poverty, but it could represent a major step forward in the fight against needless suffering and deprivation, argues Adam Parsons.


31st March 2011 - Published by Share The World's Resources

Of the many proposals that have been pushed up the policy agenda in response to the global financial crisis, the ‘global social floor' is one that few concerned citizens or journalists may have heard of. Yet the concept of a social protection floor, also called a social minimum, has recently received widespread backing within the United Nations and could represent - if given sufficient support by governments - a coordinated global response for ending extreme poverty and inequality across the world. For some analysts, however, the concept does not go far enough in reforming the current economic model and may signify another wrong turn for international development.

The idea itself is not new: to deliver social protection in all countries through basic old age and disability pensions, child benefits, employment programs, and provision of social services. These protections have long been enshrined in several international legal documents, including Articles 22 and 25 of the Universal Declaration of Human Rights. But more than 60 years since these rights were set down on paper, still the majority of people lack a comprehensive set of social protection guarantees - as much as 75-80 percent of the global population, or about four out of every five people.[1] During the present economic and financial crisis, even the existing provision of social services and social protection programmes is being threatened in many countries, with severe implications for the developing world.

There has clearly never been such an urgent need for coordinated international efforts to secure a basic level of social protection for all people, many of whom are struggling just to survive in the poorest countries. This is the objective of the UN Social Protection Floor Initiative (SPF-I), which was adopted in April 2009 by the United Nations System Chief Executives Board (CEB) as one of its nine key priorities to cope with the global economic crisis.[2] As the CEB report on the financial crisis and its impact stated, "it is more necessary than ever to ensure access to basic social services in the areas of food, education, health, water and sanitation, housing and minimum welfare for the most needy."[3] The Social Protection Floor Initiative, led by the International Labour Organisation (ILO) and the World Health Organisation (WHO) within the United Nations, sets out two broad elements to achieve this goal:

a) A basic set of essential social rights and transfers, in cash and in kind, to provide a minimum income and livelihood security for all and to facilitate effective demand for and access to essential goods and services.

b) The supply of an essential level of goods and social services such as health, water and sanitation, education, food, housing, life and asset-saving information that are accessible for all.[4]

In a large volume of literature on the global social floor published by the ILO and other UN agencies over a number of years, a comprehensive case has been developed for the expansion of social security systems worldwide. These include a variety of economic, political, moral and social justice arguments. For example, the ILO cites strong evidence that social protection contributes to economic growth by raising labour productivity and enhancing social stability.[5] In an economic downturn, the ILO states that social security and guaranteed access to services not only prevents people from falling further into poverty, but also limits the contraction of aggregate demand and thereby curtails the potential depth of the recession.[6] Political arguments for a global social floor also include the prevention of conflict, the reduction of social tensions and other crises such as riots and violent xenophobia, and the prevention of uncontrolled migration.[7]

The inequality of social protection

Most of all, the moral arguments in favour of universal social protection make a direct appeal to common reason. For example, it requires only the repetition of well-known statistics on poverty and inequality to demonstrate the failure of governments to secure basic human rights for all people (such as that half of the world still lives below the $2-a-day poverty line, or that 925 million people are currently estimated to be suffering from hunger). The sheer inequality in social provision between countries is also made plain in The World Social Security Report 2010/11, the first in a series of reports by the ILO on social security coverage in different parts of the world. The world as a whole spends 17 percent of GDP on social protection, but that is 19 percent in the developed world and only around 4 percent in developing countries.[8] The report also notes that nearly one-third of the world's population has no access to any health facilities or services at all, even though a larger percentage of people have access to healthcare than to various cash benefits.[9]

As pointed out by Isabel Ortiz, a UN policy advisor and key advocate of the global social floor, the financial crisis in the 1930s gave the political will to expand social assistance to all people in the industrialised countries, and the same opportunity exists today in the developing world.[10] Otherwise it is the poor in developing countries who are again being made to endure the worst consequences of a crisis that they played no part in creating. This could spell another ‘lost decade of development' as happened during the 1980s if governments in these countries continue to reduce public expenditures through such measures as public-sector wage cuts or caps, the withdrawal of food subsidies, and the targeting of already meagre social-protection systems.[11]

On the questions of cost and funding, actuaries at the ILO have demonstrated that less than 2 percent of global GDP is required to provide a basic set of social protection benefits to all people that have to live on less than $1-a-day. Even in the poorest countries of sub-Saharan Africa, Asia and Latin America, evidence suggests that a minimum package of social security benefits is affordable.[12] Michael Cichon, Director of the Social Security Department in the ILO, states that investing in a basic set of social security benefits most likely will cost nothing in the longer term, as modest schemes should pay for themselves by the productivity increases that they can trigger.[13] "The key is the political will," said Cichon at a recent news conference in New York as the UN Commission for Social Development met to discuss social protection. "There's no God-given economic law that says you shouldn't spend more than X on your transfers and on preventing people from falling into deep poverty."[14]

Beyond poverty alleviation

Despite the noble aims of the various UN agencies in advocating a global social floor, not all policy analysts are convinced that the initiative is the right direction for social development in low-income countries. Bob Deacon, Professor of International Social Policy at the University of Sheffield, has questioned whether the new initiative goes far enough in breaking away from what he calls the "global politics of poverty alleviation". This is the dominant discourse in international development of the past 30 years that focused on a targeted approach to poverty alleviation, rather than a universal approach to social policy based on building and strengthening the welfare state. As Deacon explains, it is common knowledge that the state-led development strategies in Africa, Latin America and South Asia were largely destroyed during the structural adjustment period of the 1980s and 1990s. An alliance between the World Bank and development NGOs was instrumental in constructing a "social safety net future" for many developing countries that challenged the logic of universal social security-based welfare states as established in Western European countries.

In turn, writes Deacon, this gave rise to the OECD-DAC poverty targets focussed upon the poorest of the poor, which in turn gave rise to the Millennium Development Goals of merely halving the incidence of extreme poverty and hunger by 2015 - themselves a retreat from the comprehensive goals of The World Summit for Social Development in Copenhagen, 1995. Deacon argues that the global social floor or minimum social protection packages, while being more progressive than the residual approach to poverty reduction as promoted by the International Monetary Fund, are still essentially "packages for the poor" that do not address what's really needed, namely a "major social and political-institutional change involving a shift in power relations and a significant increase in redistribution from rich to poor."[15]

The economist Jayati Ghosh has also raised concerns with cash transfer schemes as a preferred strategy for poverty reduction, which represents a key pillar of the social protection floor initiative. Within the scope of its mandate, the ILO is in charge of promoting the social transfer component of the social floor and promotes conditional or unconditional cash transfer schemes in developing countries as "the most promising innovations that can help to cover the global coverage gap".[16] Although such programmes of non-contributory, direct payments of money to eligible poor people have received considerable attention for their success in reducing income inequality in such countries as Brazil, Mexico and South Africa,[17] Ghosh writes that the current tendency is to see this as a further excuse for the reduction of publicly provided services. In India, for example, the UPA government intends to bring in cash transfers to replace public distribution of various essential items, including food. While acknowledging that redistribution is a major and even critical element of any fiscal system of taxation and public expenditure, Ghosh argues that cash transfers cannot and should not replace the public provision of essential goods and services, but rather supplement them. Similar to Deacon, Ghosh concludes that there is no more just alternative to the universal provision of essential goods and services, which would ultimately "ensure better access and create public pressure for greater accountability in public delivery".[18]

The ILO does address these concerns and defends state-organised welfare systems based on the principles of solidarity and progressive universalism, stating that a global social floor is only a first step along the way of building higher levels of social security. Based on that floor, the ILO argues that more comprehensive social protection mechanisms should be sought as economies develop and as the fiscal space for redistributive policies widens. The most fundamental task, it states, is to develop comprehensive social security systems in those low-income countries where only rudimentary systems exist so far, beginning with the provision of basic income security and affordable access to essential healthcare. Alongside this urgent need, the ILO also stresses the importance of providing support to existing social security systems in developed as well as developing nations.[19]

The campaign for a social protection floor therefore goes to the heart of the current debate on austerity measures in higher- and middle-income countries, as well as the ideological battle of several decades surrounding the talk of over-burdened welfare states and the inefficient public sector. Already, the economic crisis has helped the international community to reach a wide consensus on the necessity of social security for the poor and marginalised in low-income countries. The concept of a social floor may not provide a complete solution to social justice goals or address the structural factors which make people vulnerable to poverty, but it could represent a major step forward in the fight against needless suffering and deprivation - one that deserves far greater attention from civil society and the mainstream media.

References:

[1] International Labour Office, World Social Security Report 2010/11: Providing coverage in times of crisis and beyond, Geneva, 2010.

[2] Juan Somavia, The global financial crisis and its impact on the work of the UN system, UN System Chief Executives Board for Coordination (CEB), April 2009, pp. 19-20.

[3] Ibid, p. 20.

[4] WHO and ILO, Social Protection Floor Initiative (brochure), Geneva, November 2010.

[5] Global Extension of Social Security, The UN Social Protection Floor (SPF) Initiative, webpage accessed March 2011 <www.ilo.org>

[6] Ibid.

[7] See Isabel Ortiz, ‘A Global New Deal for People in a Global Crisis: Social Protection for All', UN Department of Economic and Social Affairs, Presentation at the United Nations Commission for Social Development New York, 6 February 2009.

[8] World Social Security Report 2010/11, op cit, p. 3.

[9] Ibid, pp 1-2.

[10] Isabel Ortiz, Fiscal Stimulus Plans: The Need For A Global New Deal, UNDESA, March 2009.

[11] Isabel Ortiz, A Recovery for All, Project Syndicate, September 2009.

[12] ILO, ‘Can low-income countries afford basic social security?', Social Security Policy Briefings, Paper 3. International Labour Office, Geneva, 2008.

[13] Michael Cichon, ‘Building the case for a Global Social Floor', Social Security Department, International Labour Office, New York, 7 February 2008 (Powerpoint)

[14] UN News Centre, ‘UN pushes for social schemes to protect poor at mere fraction of national wealth', 14 February 2011.

[15] Bob Deacon, ‘Shifting the Global Social Policy Discourse: The impact of the global economic crisis on ideas about social protection, social development policy and global social governance', Presented at the United Nations Research Institute for Social Development (UNRISD) conference on the "Social and Political Dimensions of the Global Crisis: Implications for Developing Countries", Geneva, 12 - 13 November 2009.

[16] World Social Security Report 2010/11, op cit, p. 2.

[17] Such tax-financed social assistance schemes include the Bolsa Família scheme in Brazil, the Oportunidades schemes in Mexico, the social grant system of South Africa, or universal basic pension schemes in countries such as Namibia and Nepal. See the World Social Security Report 2010/11, op cit; also UN Non-Governmental Liaison Service, Decent Work and Fair Globalization: A Guide to Policy Dialogue, New York and Geneva 2010, p 15.

[18] Jayati Ghosh, The siren song of cash transfers, The Hindu, 2nd March 2011.

[19] World Social Security Report 2010/11, op cit, p. 121-122.


Adam Parsons is the editor at Share The World's Resources. He can be contacted at adam(at)stwr.org.

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