Source: South-North Development Monitor SUNS #9413 Tuesday 7 September 2021.

Currently, only 46.9 per cent of the global population are effectively covered by at least one social protection benefit, while the remaining 53.1 per cent, or as many as 4.1 billion people globally, are left wholly unprotected, the International Labour Organization (ILO) has said.

In its World Social Protection Report 2020-2022 (pdf version), the ILO said that countries spend on average 12.9 per cent of their gross domestic product (GDP) on social protection (excluding health).

However, it said high-income countries spend on average 16.4 per cent, or twice as much as upper-middle-income countries (which spend 8 per cent), six times as much as lower-middle-income countries (2.5 per cent), and 15 times as much as low-income countries (1.1 per cent).

This financing gap for building social protection floors has widened by approximately 30 per cent since the onset of the COVID-19 crisis, owing to the increased need for healthcare services, income security measures, and reductions in GDP caused by the crisis, said the ILO.

The ILO said to guarantee at least a basic level of social security through a nationally defined social protection floor, lower-middle-income countries would need to invest an additional US$362.9 billion and upper-middle- income countries a further US$750.8 billion per year, equivalent to 5.1 and 3.1 per cent of GDP respectively for the two groups.

Low-income countries would need to invest an additional US$77.9 billion, equivalent to 15.9 per cent of their GDP.

The COVID-19 crisis has resulted in an unprecedented yet uneven global social protection response, said the ILO.

According to the ILO, higher-income countries were better placed to mobilize their existing systems or introduce new emergency measures to contain the impact of the crisis on health, jobs and incomes.

“Mounting a response was more challenging in lower-income contexts, which were woefully ill prepared and had less room for policy manoeuver, especially in macroeconomic policy,” it said.

At a virtual media briefing last week, Mr Guy Ryder, the Director-General of the ILO, said that since the last ILO report on social protection was published in 2017, “the world, of course, has been struck by a crisis unlike anything we’ve ever previously lived through.”

Part of that impact is that COVID-19 has devastated the world of work. Not only has it brought new and profound challenges, is has also exposed and crystallized the existing challenges such as those of inequality and poverty, he added.

“Most of the countries in the world continue to feel the full weight of the pandemic’s impact and there is massive uncertainty about the future direction of the recovery process,” said Mr Ryder.

“But what I think is extremely clear is that this crisis has revealed the absolutely crucial role that social protection has played in national responses around the world,” he added.

For millions of people, social protection has ensured access to health care, to safeguarded jobs and incomes and it has stabilized businesses and economies.

And without the massive and rapid expansion of social protection during the COVID-19 crisis, its impact would certainly have been very much worse than it actually has been, said Mr Ryder.

Social protection at a crossroads

The ILO said social protection is at a critical crossroads. Around the world, the COVID-19 pandemic has exposed the vulnerability of those who are not adequately protected from its socio-economic consequences.

“This crisis has underscored the vital role of social protection as a front-line policy response,” said the ILO, adding that crucially, it has made the case for universal social protection irrefutable.

The ILO said while the unprecedented initial response to COVID-19 provided a massive impetus for universal social protection, in many countries this response has been neither sustained nor sufficient.

Short-term measures, lasting only a few months, have come to an end, and benefit levels have often been too low to ensure an adequate standard of living.

“These measures have thus provided only limited underpinning for a full recovery, leaving many people highly vulnerable,” it added.

“Now is the time to take decisive action to shape the future of social protection. It remains to be seen whether the lessons learned from this crisis and previous ones will provide the necessary jolt for universal social protection to be realized.”

To achieve this would require gaps in coverage, comprehensiveness and adequacy to be closed, and national social protection systems to be reinforced, not least with solid social protection floors that guarantee at least a basic level of social security to everyone throughout their lives, the ILO underlined.

According to the report, unless emergency measures are systematically transformed into elements of rights-based social protection systems, large numbers of people will be unceremoniously consigned to circumstances no better than, and in many cases worse than, those in which they found themselves before COVID-19: left to fend for themselves with insufficient protection or even none at all.

State of Social Protection coverage

According to the ILO report, many countries have made significant progress in the extension of social protection coverage, reinforced their social protection systems and established effective social protection floors.

Some have achieved universal or near-universal coverage in different branches of social protection through a combination of non-contributory and contributory schemes and programmes.

Nevertheless, the human right to social security is still not a reality for a majority of the world’s population, said the ILO.

It noted that only 46.9 per cent of the global population are effectively covered by at least one social protection benefit (excluding healthcare and sickness benefits), while the remaining 53.1 per cent – as many as 4.1 billion people – are left unprotected.

The ILO said while 77.5 per cent of people above retirement age receive a pension, thanks to the expansion of both non-contributory and contributory pensions, other branches of provision still lag behind.

It said only 26.4 per cent of children globally receive social protection benefits. Despite the positive developmental impacts of supporting childbearing women, only 44.9 per cent of women with newborns worldwide receive a cash maternity benefit.

A mere 18.6 per cent of unemployed people receive unemployment cash benefits in the event of job loss, largely owing to the absence of unemployment protection schemes.

Meanwhile, the share of people with severe disabilities worldwide who receive a disability benefit remains low at 33.5 per cent.

Moreover, said the ILO, social assistance cash benefits are limited and cover only 28.9 per cent of vulnerable persons, comprising children, people of working age and older persons not otherwise protected by contributory schemes.

It said that in Africa, despite significant progress in extending social protection coverage, only 17.4 per cent of the population are effectively covered by at least one social protection cash benefit, with significant variation across countries.

Owing to greater efforts to extend old-age protection, 27.1 per cent of Africa’s older population now receive a pension, and some countries, such as Botswana, Cabo Verde, Lesotho, Mauritius and Namibia, have reached, or approached, universal pension coverage.

“However, significant coverage gaps remain across the region with respect to children, mothers with newborns, unemployed workers, persons with disabilities and vulnerable population groups,” said the ILO report.

In the Americas, 64.3 per cent of the population are effectively covered by at least one social protection cash benefit, largely as a result of major efforts to extend social protection systems over recent decades.

Just over half of children, pregnant women and mothers of newborns are covered by social protection cash benefits, but only 16.4 per cent of unemployed people receive unemployment benefits. While almost 90 per cent of older people enjoy pension coverage, benefit levels are often low.

The ILO said some countries have successfully achieved universal legal coverage and high effective coverage of children (Argentina, Brazil, Chile), mothers with newborns (Canada, Uruguay), people with disabilities (Brazil, Chile, United States, Uruguay) and older people (Argentina, Bolivia, Canada, Trinidad and Tobago, United States).

In the Arab States, just 40 per cent of the population are effectively covered by at least one social protection cash benefit.

Significant coverage gaps remain across the region for older people, children, people with disabilities, women with newborns and unemployed workers.

This is the result of segmented and exclusionary social insurance schemes on the one hand, and under-investment in non-contributory social protection, which remains fragmented and narrowly targeted, on the other, said the ILO.

In Asia and the Pacific, only 44.1 per cent of the population are effectively covered by at least one social protection cash benefit, although significant progress has been made in strengthening social protection systems and building social protection floors.

Moreover, the regional aggregate hides important disparities both across and within countries, said the report.

Older people enjoy the highest coverage rate in the region, at 73.5 per cent, while pregnant women and mothers are covered to a lower extent at 45.9 per cent.

Even larger coverage gaps remain in the areas of child and family benefits, unemployment protection and disability benefits.

However, the ILO report noted that some countries have achieved universal or near-universal coverage of children (Australia, Mongolia), others have extended maternity protection coverage (Bangladesh, India, Mongolia), and still others have introduced and expanded non-contributory and contributory pension schemes to achieve universal coverage for older people (China, Japan, Mongolia, New Zealand, Thailand, Timor-Leste).

In Europe and Central Asia, where social protection systems are relatively comprehensive and mature, 83.9 per cent of the population have access to at least one cash social protection benefit.

According to the ILO report, regional estimates suggest that coverage is 82.3 per cent for child and family benefits, 83.6 per cent for maternity cash benefits, 86.0 per cent for disability benefits and almost 97 per cent for old-age pensions, with several countries reaching universal coverage.

However, further progress needs to be made in the extension of unemployment coverage, as well as the adequacy of pensions and other social protection benefits, in the light of demographic changes, macroeconomic pressures and the socio-economic fallout from COVID-19, said the ILO.

Despite significant progress in the development of national social protection floors, vulnerable population groups face greater challenges than other sections of the population in accessing social protection, it added.

Globally, only 28.9 per cent of people considered vulnerable – all children, along with people of working age and older people not covered by social insurance – receive social assistance.

While in Europe and Central Asia, almost two thirds of vulnerable people receive non-contributory benefits (64.4 per cent), this is the case for only 36.7 per cent in the Americas, 32.2 per cent in the Arab States, 25.3 per cent in Asia and the Pacific, and 9.3 per cent in Africa.

Many countries face significant challenges in closing coverage gaps and achieving universal social protection, said the ILO.

In this context, the ILO identified three major challenges: extending coverage to workers who are still uncovered, including those in the informal and rural economies; ensuring social protection coverage for migrant workers and the forcibly displaced; and closing gender gaps.

It noted that only a minority of the working-age population enjoys comprehensive social protection coverage.

According to ILO estimates, just 30.6 per cent of the working-age population are legally covered by comprehensive social security systems that include the full range of benefits, from child and family benefits to old-age pensions, with women’s coverage lagging behind men’s by a very wide margin of 8 percentage points.

“This implies that the large majority of the working-age population – 69.4 per cent, or 4 billion people – are not protected at all, or only partially protected,” said the ILO.

The ILO report also pointed out that prior to COVID-19, countries spent on average 12.9 per cent of their GDP on social protection (excluding health), with staggering variations across regions and income groups.

Significantly, high-income countries spend on average 16.4 per cent, or twice as much as upper-middle-income countries (which spend 8 per cent), six times as much as lower-middle-income countries (2.5 per cent), and 15 times as much as low-income countries (1.1 per cent).

Pronounced differences are also evident between regions, with proportions of GDP ranging from 17.4 per cent in Europe and Central Asia and 16.6 per cent in the Americas to 7.5 per cent in Asia and the Pacific, 4.6 per cent in the Arab States and 3.8 per cent in Africa.

Factoring in the impact of COVID-19, low-income countries would need to invest an additional US$77.9 billion or 15.9 per cent of their GDP to close the annual financing gap, said the ILO.

Lower-middle-income countries would need to invest an additional US$362.9 billion and upper-middle-income countries an extra US$750.8 billion, equivalent to 5.1 and 3.1 per cent of GDP respectively.

Regionally, the relative financing gap is particularly high in Central and Western Asia, Northern Africa and sub- Saharan Africa (9.3, 8.3 and 8.2 per cent of GDP respectively).

“Clearly, then, current levels of expenditure on social protection are insufficient to close persistent coverage gaps, despite large – yet unequal – resource mobilization during COVID-19,” the ILO emphasized.

Social Protection during COVID-19 crisis

The ILO report said the pandemic has exposed pronounced gaps in social protection coverage, comprehensiveness and adequacy across all countries.

“These have left a number of population groups, including women, children and workers in different forms of employment and in the informal economy, very vulnerable,” it added.

Before the crisis, half of the global population did not have access to health services, and about 40 per cent were not affiliated to a national social health insurance system or national health service.

Many people have had to make significant out-of-pocket payments to get the treatment they need, it said.

More than any recent economic crisis, the COVID-19 pandemic has reinforced the need for comprehensive social protection systems, the ILO emphasized.

In 2020, virtually all countries and territories took action – in total, just over 1,600 social protection measures were announced.

The ILO said as of March 2021, more than 196 countries had introduced domestic fiscal measures with a total value of approximately US$17.1 trillion (not limited to social protection).

Global fiscal stimuli, however, have been strongly concentrated in high-income countries, said the ILO, adding that in lower-income countries, domestic efforts have been backed by pledges from International Financial Institutions (IFIs) and development cooperation agencies, amounting to US$1.3 trillion as of 1 February 2021.

“The crisis has poignantly shown the inherent vulnerability of all, thereby making the case for universal social protection more strongly than ever,” said the ILO.

While the crisis disproportionately affected certain groups, it illustrated that without comprehensive and adequate social protection, anyone can “fall” into poverty and insecurity, it added.

The crisis exposed the shortcomings of limited coverage and low benefit levels, with narrow targeting, problematic proxy means tests and behavioural conditions, especially in contexts where large parts of the population are vulnerable and administrative capacity is constrained, to an even greater degree than in non-crisis times, it said.

Consequently, the ILO said, many eligibility requirements were relaxed during the crisis to ensure high take-up and to protect people’s health.

COVID-19 made it impossible for policymakers to ignore the “missing middle” and unpaid carers, it added.

For instance, countries where large parts of the population, including workers in the informal economy and unpaid carers, were covered either inadequately or not at all had to adopt ad hoc measures; this often entailed a fair degree of improvisation, with hit-and-miss results.

Furthermore, many of these emergency benefits were limited in terms of adequacy and paid for only a short period, soon leaving people vulnerable and unprotected once more.

In some countries, social protection has been insensitive to the needs of women, children, indigenous people and people with disabilities, said the ILO.

According to the UN Development Programme and UN Women, the global jobs and social protection response to the crisis has been largely gender-blind: of 1,340 social protection measures they identified, only 23 per cent can be considered gender-sensitive (half aimed at strengthening women’s economic security and half at supporting unpaid care work).

Moreover, said the ILO, about one third of all high-income countries did not implement any policies specifically aimed at supporting children through the crisis period, and only 2 per cent of the fiscal response across all high- income countries was earmarked for child-specific social protection policies.

In contrast, around 90 per cent of the fiscal response was allocated to or through businesses (in such forms as loans and grants, or wage subsidies), tending to benefit families with a strong labour market attachment.

The ILO pointed out that while modest progress was made before COVID-19 to the point where, in 2017, 17.5 per cent of children – one in six, or 356 million – were living in extreme poverty (down from an estimated 19.5 per cent in 2013), the pandemic has dealt a profound blow to child well-being.

On the basis of national poverty lines, it is estimated that the pandemic has increased the number of children living in income-poor households by more than 142 million, bringing the total to almost 725 million, it said.

The vast majority of children still have no effective social protection coverage, it added.

Effective coverage figures for SDG indicator 1.3.1 show that only 26.4 per cent of children globally receive social protection benefits, with significant regional disparities: while 82.3 per cent of children in Europe and Central Asia and 57.4 per cent in the Americas receive benefits, this is the case for only 18 per cent of children in Asia and the Pacific, 15.4 per cent in the Arab States and 12.6 per cent in Africa.

The ILO said that making progress in a high-road scenario means making continued investment in social protection to ensure a human-centred response to this ongoing crisis and to an eventual recovery.

The ILO suggested that beyond crisis mitigation, a high-road approach will involve a longer-term commitment to progressively strengthening social protection systems, including floors, as reflected in the ILO Social Protection Floors Recommendation No. 202 and the vision set out in the 2019 ILO Centenary Declaration for the Future of Work.

“Such policies are essential to accelerate progress towards achieving the SDGs,” said the ILO.

If there is a silver lining to this pandemic, it is the potent reminder it has provided of the critical importance of social protection and the need to follow a high-road strategy, said the ILO.

It is evident that countries can pursue a high-road strategy in different ways – there is no “one pre-eminent high road”.

The ILO said to make progress along a high road requires several policy actions to be taken and several critical challenges to be tackled.

These include:

* ensuring universal protection for all people in case of need;

* overcoming serious structural challenges that pre-dated COVID-19, but were accentuated by it, and ensuring that the state effectively fulfils its role by enshrining social protection in law and being answerable to rights-holders;

* ensuring that social, economic and employment policies cohere;

* leveraging the comparative advantages of universal social protection – rights fulfilment, inclusivity, ease of take- up, non-stigmatizing shock responsiveness – across both contributory and non-contributory provision;

* closing the social protection financing gaps in sustainable and equitable ways by considering a diversity of mechanisms based on national and international solidarity as a matter of priority – both during this crisis and beyond it;

* making full use of social dialogue and social participation; and

* further enhancing coordination between United Nations agencies, development partners and IFIs on the design and financing of social protection.

Given the immense social and economic collateral damage wrought by the pandemic, now is the time for being bold and taking the high road to realize universal social protection and shape a more socially just future, the ILO report concluded.

By Kanaga Raja.

Source: South-North Development Monitor SUNS #9413 Tuesday 7 September 2021.