Social Protection Floor

28 October Print

Cutting social protection programmes as part of fiscal austerity measures could weaken recovery from the global economic crisis, as they were integral to stabilizing labour markets, maintaining human rights and stimulating aggregate demand, Michelle Bachelet, Chairperson of the Social Protection Floor Advisory Group and Executive Director of UN Women said today at a Headquarters press briefing.


Those findings were contained in a report entitled “Social Protection Floor for a Fair and Inclusive Globalization”, which was officially presented to United Nations Secretary-General Ban Ki-moon by the Advisory Group, which was convened by the International Labour Organization (ILO), in collaboration with the World Health Organization (WHO).  That report, Ms. Bachelet said, estimated that 5.1 billion people — 75 per cent of the global population — lacked adequate social security protection and some 1.4 billion people lived on less than $1.25 a day, statistics that revealed the social liabilities that threatened political stability and economic prosperity.


The Protection Floor approach protected rights and favoured economic growth, she said.  The basis for it was clear:  everyone should have access to basic health, education, housing, water and sanitation.  No one should live below a certain income level.  Access to income guarantees should be provided in the form of social transfers, such as child benefits and/or employment guarantees.  The Protection Floor had the potential to reconfigure people’s lives, helping them escape chronic and extreme poverty, or preventing their initial fall into it.


Acknowledging the perception of the Protection Floor as a temporary safety net, she said:  “It is not.”  Its purpose was to empower people by helping them overcome barriers to participating in economic life.  “Social protection is an investment, not a cost,” she insisted.  From the fiscal point of view, social protection spending positively impacted aggregate demand.  It was a flexible, gradual approach that could be tailored to countries’ financial constraints.  It enhanced stimulated economic risk-taking, which in turn, led to increased productivity, particularly for women.


Joining Ms. Bachelet at the briefing, Juan Somavía, Director-General, ILO, said the Advisory Group had been convened in 2010 by the ILO and WHO, as co-leaders of the Chief Executives Board for the Social Protection Floor Initiative.  “It’s a very practical indication that, if you put yourself to it, you can make things happen,” he said.


Answering journalists’ questions, first on how developing countries could finance social protection programmes, Ms. Bachelet said those countries would likely need international financial contributions.  Other countries could reallocate resources.  Still others could proceed gradually, starting with pensions, child support or health programmes.  Studies by the ILO, WHO and the International Monetary Fund (IMF) had calculated the costs of including various initiatives.


The report estimated that the annual cost of pensions, for example, was between 0.5 per cent and 1.5 per cent of gross domestic product (GDP), depending on the country.  More generally, the Protection Floor was estimated to cost 2 per cent to 4 per cent of GDP.  Countries must analyse their financing sources.  Bangladesh and China, for example, had created fiscal space to better serve their poor populations.


As to whether better social protections could have averted the “Arab Spring” uprisings, Ms. Bachelet said that ensuring people’s rights was essential for reducing social and political instability.  “If you ensure people’s rights you will have a more peaceful and stable country,” she said.  The Arab Spring was about more than social justice; it was about political and social rights, and producing more jobs, especially for youth.


To a query on if the Advisory Group had discussed a place for the private market, Ms. Bachelet said discussions had centred on the crisis and managing deficit cuts.  The report found that social protections were not only socially efficient but economically efficient.  Some people had argued it was impossible to have a macroeconomic balance without better income distribution.


Asked for advice to Gulf Cooperation Council (GCC) countries that were wealthy but dependent on a foreign workforce, Ms. Bachelet said social protection was needed for everyone and workers were an important area of focus.  UN Women had worked on that very issue with the ILO, because many workers were domestic workers, who had approved of the Domestic Workers Convention.


Adding to that point, Mr. Somavía said the resources issue must be seen from the point of view of least developed, middle-income, developed and commodity-rich countries — all of which were in a different situation.  Every country needed social protection to have a stable society.  How far along that path a country travelled was an internal matter.


Asked how to “sell ethics” to European Governments that were imposing austerity measures, which in turn, were causing social protests in Greece, England, France and other countries, Ms. Bachelet responded that the Advisory Group was making a strong economic and political case for the Protection Floor.  It had been working with the IMF, the World Bank and Group of 20 (G-20) countries.  Ministries of Labour had made recommendations to the G-20.  “We have had a lot of support,” she said.  It would be important to see what happened at the next G-20 meeting.


Adding to that, Mr. Somavía pondered why it was the developed world — and not the emerging world — that was in social crisis.  One reason was that most emerging countries had focused on saving jobs and creating social protections.  “This is what the experience shows.”  Austerity measures were at the centre of the debate today.  Questions hinged on whether to organize a response to the crisis that gave confidence to the market or the people.  Was the G-20 in a position to connect with people?  That was a question it would need to answer to stem global discontent.


As to whether the Governments imposing austerity measures had been open to the Advisory Group’s arguments, Mr. Somavía said the debate was ongoing.  When, how and at what moment political systems would react, “we will have to see”.  The systems in many countries did not appear up to the task.  The crisis was being seen as a way to win the next election.


Ms. Bachelet added that ideas had been well received at the ministerial level.  The Secretary-General would attend the next G-20 meeting, offering a chance to argue for what must be done.



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