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Social policy response to financial crisis
             in small states




                         Naren Prasad
        ...
Social Policy
• Social policy “is state intervention that
  directly affects social welfare, social
  institutions and soc...
A UN Report of 1957

• Social policy should not be treated “as a
  housemaid whose function is to tidy up human
  sufferin...
Recovering from the crisis:
         A Global Jobs Pact
•   Accelerating employment creation, jobs
    recovery & sustaini...
GJP: Generating growth
• Stimulus packages
  • Boosting demand
  • Wage maintenance
• Supporting enterprises
• Green inves...
GJP: Protecting employment
  • Employment-oriented stimuli
     • Public works & job guarantees, training & skills develop...
Mauritius: Saving jobs
– Riding our the global crisis: saving bobs-
  protecting people-preparing fro recovery
– Stimulus ...
Mauritius: GDP growth



+6.0

+5.0

+4.0

+3.0
                                        GDP
+2.0                          ...
GJP: Guaranteeing social
                protection/security
• Introducing cash transfer schemes for the poor
• Guaranteei...
Why social security?
• Social security
  – Human rights (article 22 of UDHR)
        – “Everyone.. has the right to social...
Guaranteeing social protection

Type of social protection       Social protection instrument    Role in Crisis


Protectiv...
Social security: Current status
• 20% of population covered by social
  security globally
• Developed countries
  – Genero...
Old age social security
•   Pensions have a strong redistributive effect, and in reducing
    poverty
     – But in develo...
Pension coverage
    100

    90
    80
    70
    60
%




    50
    40
    30
    20
    10
     0
                    ...
Pension in small states
         12



                                                       MUS          SYC

          ...
% GDP
                  0                              10               20                    30              40


       ...
Revenue, expenses % social security in small states
    50
    4030
   % GDP
20  10
    0



             BRB




        ...
Developing/small countries social security

• Social security (& labour standards)
  – Too expensive - unaffordable
  – Fi...
Social security: Its possible…
– Suppose a country provides…
   • Universal pension
      – 30 % GDP per capita to all 65+...
Basic social security (% GDP)

         6

         5
                                               Its possible for smal...
GJP: Recovering with
employer-employee dialogue
• To reduce social tensions
• To inspire confidence in the results
  achie...
What social policy works
• Evidence shows…
  – Minimum old age pensions and cash transfers to
    families seem to have th...
G-20 stimulus packages, 2008-2010
         %GDP (PPP-weighted)
Shaping a fair and
        sustainable globalization
• Using the decent work agenda to create a
  sustainable future
     ...
Conclusion
• Social policy & economic policy goes hand in hand
• Universal provision of social security
   – This is perha...
Conclusion
– State-led provision of social services
   • Education, health,
   • Strong political leadership and will to i...
History….some reflections
• Preamble 1919
  – Whereas universal and lasting peace can be
    established only if it is bas...
Philadelphia 1944

• labour is not a commodity
• poverty anywhere constitutes a danger to prosperity
  everywhere
• it is ...
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Transcript of "Social Policy Responses"

  1. 1. Social policy response to financial crisis in small states Naren Prasad International Institute for Labour Studies, ILO London 7 July 2009 Commonwealth Meeting: Sustainable development in small states in a turbulent
  2. 2. Social Policy • Social policy “is state intervention that directly affects social welfare, social institutions and social relations. It involves overarching concerns with redistribution, production, reproduction and protection and works in tandem with economic policy in pursuit of national social and economic goals” » UNRISD. 2006. Transformative social policy: lessons from UNRISD Research, (p. 1) • 16 lessons!
  3. 3. A UN Report of 1957 • Social policy should not be treated “as a housemaid whose function is to tidy up human suffering and insecurity left in the wake of economic development”. • Social objectives should be built in on an equal footing with economic objectives into comprehensive social and economic planning” • Report on a Co-ordinated Policy regarding Family Levels of Living, United Nations, 1957, Sales no. 57.IV.7 (p. 18). ).
  4. 4. Recovering from the crisis: A Global Jobs Pact • Accelerating employment creation, jobs recovery & sustaining enterprises • Building social protection systems & protecting people • Strengthening respect for international labour standards • Social dialogue: Bargaining collectively, identifying priorities, stimulating action …the way forward: Shaping a fair and sustainable globalization
  5. 5. GJP: Generating growth • Stimulus packages • Boosting demand • Wage maintenance • Supporting enterprises • Green investments • Effective & efficient regulation to promote employment generation
  6. 6. GJP: Protecting employment • Employment-oriented stimuli • Public works & job guarantees, training & skills development, and employment services • Supporting enterprises to retain workforce • Supporting job creation in enterprises, especially smaller businesses • Protecting labour standards & strengthening labour inspection • freedom of association, the right to organize & collective bargaining • prevention of forced labour, child labour & discrimination at work … aiming for full and productive employment
  7. 7. Mauritius: Saving jobs – Riding our the global crisis: saving bobs- protecting people-preparing fro recovery – Stimulus package • saving jobs – 2,700 jobs saved through the Mechanism for Transitional Support, by helping enterprises that are at the breakdown point, 3000 indirectly • Public infrastructure • Manufacturing Adjustment and SME Development Fund (500 million rup, 0.2% of GDP) • Save jobs 4 billion rup (1.7% GDP) – 14.7 billion to stimulate economy (6.1% GDP) – 27.4 bn rup for infrastructure & transportation development (12% of GDP) » 126.3 bn rup over 10 yrs PPP
  8. 8. Mauritius: GDP growth +6.0 +5.0 +4.0 +3.0 GDP +2.0 textile tourism +1.0 +0.0 2006 2007 2008 2009 -1.0 -2.0
  9. 9. GJP: Guaranteeing social protection/security • Introducing cash transfer schemes for the poor • Guaranteeing basic social protection for all • access to health care • income security for the elderly & persons with disabilities • child benefits • income security combined with public employment guarantee schemes • Extending the duration & coverage of unemployment benefits • Protecting temporary & non-regular workers • Avoiding deflationary wage spirals
  10. 10. Why social security? • Social security – Human rights (article 22 of UDHR) – “Everyone.. has the right to social security.. through national effort and international co-operation …”. – plays a crucial role in protecting people from risks such as income loss, sickness or old age – Old age, work injury, sickness & maternity, unemployment benefit, family assistance, other cash transfers – it can boost demand, create consumer confidence and create employment in crisis times
  11. 11. Guaranteeing social protection Type of social protection Social protection instrument Role in Crisis Protective Social transfers Immediate protection and relief (social assistance) Disability benefits from poverty and Pension schemes deprivation Social services Preventive Social transfers Prevents damage to coping (insurance) Social insurance strategies Livelihood diversification Saving clubs Promotive Social transfers Promotes resilience through (Economic opportunities) Access to credit livelihood diversification School feeding and improves security Public works program Transformative Promotion of minority rights Transforms social relations to (addressing underlying social Anti-discrimination campaigns reduce exclusion vulnerabilities Social funds
  12. 12. Social security: Current status • 20% of population covered by social security globally • Developed countries – Generous welfare system • Social democratic: Nordics • Conservative: Europeans • Liberal: Anglo-saxons • Developing countries • Underdeveloped, informal employment
  13. 13. Old age social security • Pensions have a strong redistributive effect, and in reducing poverty – But in developing countries, pensions only to formal sector Distribution of public social spending by quintlies (average for 9 Latin American countries) 70 60 50 Education 40 Health % 30 Social Security 20 10 0 I II III IV V
  14. 14. Pension coverage 100 90 80 70 60 % 50 40 30 20 10 0 Bolivia Indonesia Thailand OECD (30) Sri Lanka Argentina Japan Pakistan Australia India Philippines Canada Mexico France Vietnam Germany Korea China Italy Brazil US UK – In Asia only 20% of the population have access to health care, Chile 30% of the elderly receive pensions, 20% of those unemployed receive some kind of unemployment benefit such as training, public works (UNESCAP 2009). – Latin America, less than 30% of the labour force are covered by any pension (Rofman & Lucchetti 2006).
  15. 15. Pension in small states 12 MUS SYC WSM CYP MLT 10 BLZ Pensio n index BHS BRB TT O 8 KNA LCA VCT DMA GRD GUY JAM 6 PNG FJI 4 SLBVUT KIR 0 5 10 15 Social welfare spen ding (% GD P)
  16. 16. % GDP 0 10 20 30 40 19. 9678 20.3219 . 831954 Africa 4.3324 Revenue 2.46081 21. 5771 21. 6607 Expenses 3. 85301 4. 97327 3.55251 Latin America 17.9332 18.5321 Social security 1.09747 Asia 5. 45578 3.55732 32. 8386 Education 33.2248 12. 4736 5.5799 6. 37722 High income Health Current levels of revenue & spending
  17. 17. Revenue, expenses % social security in small states 50 4030 % GDP 20 10 0 BRB CY P DV MUS JA M CPV KNA MLT PNG FJI TO SYC M T revenue expenses social security
  18. 18. Developing/small countries social security • Social security (& labour standards) – Too expensive - unaffordable – First we need development • Universal pension – Mauritius (1958), Namibia (1990), Samoa (1990), Bolivia (1996), Botswana (1996) and the City of Mexico (2001) • Near-universal pension – South Africa, Argentina, Brazil, Chile, Cost Rica and Uruguay
  19. 19. Social security: Its possible… – Suppose a country provides… • Universal pension – 30 % GDP per capita to all 65+ • Basic health – 300 medical staff to 10,000 people • Child benefit – 15% GDP per capita to all children 0-14 • Social assistance/employment scheme – 30% of GDP per capita to the poor, – 10% of working age population for 100 days per year – What will it cost…..?
  20. 20. Basic social security (% GDP) 6 5 Its possible for small states 4 3 % 2 1 0 dia l ea a l pia on ia pa am sh n ga so ny ta an in In ro Ne de Fa ne h io etn Ke kis Gu nz me la Se Et Pa ina Vi Ta ng Ca rk Ba Bu pension health child assistance
  21. 21. GJP: Recovering with employer-employee dialogue • To reduce social tensions • To inspire confidence in the results achieved • To promote decent work solutions
  22. 22. What social policy works • Evidence shows… – Minimum old age pensions and cash transfers to families seem to have the biggest poverty impact with the lowest transactions costs – Employment intensive schemes • Public infrastructure renewable energy sources, waste management, low cost housing, sanitation, etc • Micro, small and medium-sized enterprise support • Skills development • Youth employment schemes • Improved public employment services
  23. 23. G-20 stimulus packages, 2008-2010 %GDP (PPP-weighted)
  24. 24. Shaping a fair and sustainable globalization • Using the decent work agenda to create a sustainable future • Social protection, job creation, social dialogue, standards • Investing in a green recovery • Ensuring developing countries have the fiscal space to stimulate their economies • Reforming the financial sector • to serve the real economy, promote sustainable enterprises & decent work, and protect people’s savings and pensions
  25. 25. Conclusion • Social policy & economic policy goes hand in hand • Universal provision of social security – This is perhaps the only message you should take home and influence your policy makers…. • Tends to be universal policies • Multiple roles of social policy – nation building, promoting development – Production, protection, reproduction, distribution • Democratic and good governance – No 1:1 relation, but democracy provides space for social articulation of interests • Governments associated with social justice
  26. 26. Conclusion – State-led provision of social services • Education, health, • Strong political leadership and will to improve welfare of citizens – State capacity & infrastructure to deliver – State as organizer, provider, ability to regulate & stimulate non-state actors – Countries with high growth tend to have better social policies
  27. 27. History….some reflections • Preamble 1919 – Whereas universal and lasting peace can be established only if it is based upon social justice; – … provision for old age and injury
  28. 28. Philadelphia 1944 • labour is not a commodity • poverty anywhere constitutes a danger to prosperity everywhere • it is a responsibility of the ILO to examine and consider all international economic and financial policies • policies in regard to wages and earnings, calculated to ensure a just share of the fruits of progress to all, and in need of such protection; • the extension of social security measures to provide a basic income to all in need of such protection and comprehensive medical care
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