Social Security for Social Justice and a Fair Globalization

Recurrent Item Report on Social Security, 2011

Opening statement Helen Kelly

Dear Chair,

Good morning to everybody. Mr. Chairman, congratulation on your election. Let me say on behalf of the workers’ group that we really appreciate your willingness to take on this challenging task on such short notice. We are convinced your stewardship will help us get a good outcome. Congratulations as well to my employer colleague Mr. Barde with whom l am also looking forward to working with. The discussions in the ILO during the last years including the tripartite meeting on social security where Mr Barde already led the employers’ group show that this is an area where we have great potential for consensus and a strong tripartite political message.

Social protection is at the heart of the ILOs mission. It is indispensable for both Decent Work and Social Justice. The aspiration of universal social protection is enshrined in the 1919 in the Preamble of the Constitution. At this 100th International Labour Conference we have a unique historic opportunity and, may I say, an obligation to ensure that we make decisive progress. We ought to set the course that at the 100 anniversary of the ILO in 2019 the aspiration of the founding fathers and mothers of this organization will finally be a reality for all.

The ILO is today leading the global debate on the need and feasibility of a social protection floor. At the same time it is also present on the ground to help to design sound and sustainable social security systems. This combination of global vision and the involvement in practical solutions makes the ILO a powerful advocate for sustainable and inclusive social protection. Translating ambitious visions into universal international labour standards and helping to ratify and implement them through technical assistance and policy advice is the trinity of action that the Social Justice Declaration calls for.

The office report for this discussion captures well the fundamental importance of a rights based approach to social security and development. It replaces the concept of the “deserving poor”, where those in need have thankfully to rely on private charity or ad hoc state emergency funds, with a concept of human dignity and predictability. It takes a rights based approach which we support. A rights based approach puts the extension of social security to provide a basic income to all in need “as the highest priority. Citizens including the poor can trust their governments that tax levels, revenue collection and resource allocation will ensure the availability of the resources required to protect people against poverty and the risks of “unemployment, sickness, widowhood, old age and other events that threaten livelihoods in a rights approach the availability of resources does not define the needs, but the needs define the resources requirements.

The Social Justice Declaration emphasizes that Decent Work requires an integrated approach of the four strategic objectives. The report before us shows the interrelationship between social protection, employment, workers rights and social dialogue. The Social Justice Declaration as well as the Global Jobs Pact also underlines the need for overall monetary, fiscal and economic policies to provide a macroeconomic framework that gives highest priority to full employment and Decent Work. The crisis has reminded us of the crucial role social security played in protecting people, reducing downward pressure on working conditions and stabilizing aggregate demand.

Seeing social security as an integrated part of a wider policy agenda is a central idea of the Social Justice Declaration. The two social security reports for this conference, the Report for this Committee and the General Survey on Social Security for the Application Committee do complement each other well in this respect. The General survey gives a comprehensive overview about the application of central social security instruments; it underlines the relevance of key existing social security standards as well as the need for new initiatives and in particular concerning the social protection floor.

The recent ratification of Convention 102 by Bulgaria, Brazil, Romania and Uruguay as well as the fact that more than 15 countries are considering ratification of C.102 show that the minimum social security convention is valued and applied by member states as the fundamental basis for social security systems. As the report for our committee points out “It is the only international Convention that defines the nine branches of social security, sets minimum standards for each of these branches and lays down principles for the sustainability and good governance of those schemes” Over the years Convention No. 102 has had, and continues to have, substantial influence on the development of social security in the various regions of the world reinforcing the value of the standard setting tools of the ILO

As workers and I am sure this is shared by governments and employers, we feel strongly that it is the perfect time to make decisive progress towards the extension of social security coverage. As I will discuss later in more detail, the idea of a social protection floor in particular, is a “hot” topic in many of the major international institutions and our work is being observed here in the next two weeks and will reinforce the leading role of the ILO

On Social Security there are bad news and good news stories.

The bad news, highlighted in a number of the reports available for this conference, is that far too many people are deprived of this basic human right. Hunger and malnutrition are still the biggest killer on this planet. Millions of children and mothers die because of lack of basic natal care and maternity protection, out of pocket health payments or lack of unemployment benefits throws many workers and their families into desperate poverty.

The good news is that we have seen some impressive progress in a number of countries during the last years to close the coverage gap. Innovative new social security schemes are pioneered by countries in Asia, Africa and Latin America. These programmes that respond to their needs and challenges and that are progressively reaching many million of people. There are many inspiring innovations like Bolsa Familia in Brazil, the National rural employment guarantee Act in India, the universal health care programme in Thailand, the Dignity pension in Bolivia, the Child Support Grant in South Africa, Rural Medical Support systems in China, the Universal Child Allowance in Argentina or the Opportunities initiative in Mexico and many more. This multitude of initiatives is for us the strongest evidence that the time for a global commitment to a basic social floor has come. If so many countries pursue country specific but similar programmes to address the lack of social security coverage, we see already a growing global consensus emerging. The extension of social security is clearly not wishful thinking, it is happening. The world has made considerable progress, but there are still huge gaps. This morning many of our workers colleagues mentioned in particular the huge challenges in a number of African countries where the majority of people is lacking any protection.

The world is much richer today than it was 90 years ago. Lack of resources is no longer a credible excuse to deny anybody basic social protection and essential health services. In our view the key message of the report is: Social protection is a human right, it is indispensable for development, social justice and growth with equity and it is affordable: in short it can and must be done.

The report is a rich source of information and will certainly help to guide our work. It provides a very good and comprehensive overview about the global state of social security. It informs about the deficits, but more importantly it also shows the progress and provides ideas and suggestions on how to close the social protection gap and what the contribution of the ILO could be. Let me congratulate Mr. Diop, Mr. Cichon and their team for this excellent report and also for the work they have done in promoting the extension of social security since we discussed this the last time at an ILC in 2001 and where we unanimously agreed that the ILO and by this I don not mean only the office but all of us need to continue and upscale our campaigns to improve and extend social security coverage to all those in need of such protection

The idea of a social security stair case captures well the idea that we simultaneously need to work on both the horizontal and vertical extension of social security. A social protection floor for all is urgently needed, but it needs to be understood and designed as a stepping stone towards a fully fledged and comprehensive social security system and be consistent with the other ILO instruments and in particular build a base for countries to move on to ratification of C102.

Social security is more than protecting people from starvation; it is a powerful instrument to build inclusive societies where people collectively protect themselves against major risks in life.

The vertical extension of social security is as important as a social floor if we want to build open, sustainable and inclusive societies. Social security is key for growing with equity. It is indispensable for income security as well as mobility and flexibility in a modern society. It is at all levels of development a powerful instrument for reducing inequality and only a fully fledged social security can play its role as shock absorber and automatic stabilizer during an economic downturn.

This is why it is disappointing to observe that while the recognition for a universal social protection floor is growing, at the same time some countries are cutting back on acquired social security rights and are dismantling welfare regimes that have been build over decades. While societies continue to grow richer, we are paradoxically told that we can no longer afford what was possible for previous generations. Let us be clear here, what we are facing is not so much an affordability problem but one of distribution. If wealth is no longer shared in society but monopolized at the top, something is fundamentally wrong with the overall development model.

On the issue of aging and demographic change and its implications on social security. I want to stress two important issues. First it is great that we all live longer. Some funding problems should not lead us to regret one of the great successes of the 20th century. People on average do live longer and more healthy lives. However it is also one of the great scandals of our time that the poor on average die so much earlier than the rich. And this is the case in nearly all societies.

The report shows that demographic change is manageable High labour market participation rates, continued productivity growth, age adequate workplace environment, and promotions of life-long learning are central in meeting this challenge. The office report rightly also stresses the need for effective and efficient social security systems. We fully agree with policies to design and administer social security systems as efficient as possible. Workers don’t want their money wasted neither in inefficient bureaucracies nor in stock market lotteries. But efficiency arguments should not be used as a pretext to dismantle acquired rights or undermine adequacy and equivalents in social security systems. Neither should extension be funded through reduction of existing benefits.

The social floor is a powerful idea and an urgent necessity and we fully support this initiative, but it is a minimum and should in no way be interpreted as a maximum. As Article 19 of the ILO constitution clearly states new rights and recommendation shall never undercut existing standards.

“ In no case shall the adoption of any Convention or Recommendation by the Conference, or the ratification of any Convention by any Member, be deemed to affect any law, award, custom or agreement which ensures more favourable conditions to the workers concerned than those provided for in the Convention or Recommendation.”

Social protection is a Human right and as such ought to be a priority for governments and the international community. What is more, research, including that of the ILO, demonstrates that the trade off that is often assumed between economic growth and basic social protection does not exist. Indeed it is rather the other way round. Social protection helps to generate growth. But even if this weren’t the case, it would be totally unethical to exclude the poor from essential health services for the sake of faster economic growth. And where a country has not the resources to provide this human right to its people because it is too poor, the international community has the moral obligation to help. In a global open economy, solidarity cannot stop at national borders. If the world wants to achieve the MDG rapid expansion of social protection to all in need is an indispensable part of the answer.

The role of social security goes far beyond income security. The report discusses in detail the role of social security systems in economic development, in facilitating productive employment and structural change as well as stabilizing demand and maintaining social peace during crises. It is also one of the most powerful tool s to reduce inequality. We also strongly support the idea that social security should be combined with active labour market policies, training and qualifications in order to help people to stay in the labour force. I don’t need to repeat the arguments presented in the report. They are sound and we largely agree with the analysis provided.

No transfer system can replace the need for full and decent employment. No social security system can compensate for poverty wages. Without a living minimum wage a social floor might run a risk that in stead of subsidizing the poor it might be subsidizing employers. That is why we see social security of an integrated part of a wider policy package of monetary, fiscal, economic and employment policies as outlines in the Global Jobs Pact. We strongly support the idea that social security should help the transition from informal to formal employment. However, it seems to us that there is probably more thinking and research needed on how best to do this in practice. The report is honest about the challenge and addressing this issue should in our view be one of the priorities of the research work of the office. There are however some useful experiences that have made progress on this and we hope some of the Governments will share good examples during this discussion. Certainly having a small and perhaps even shrinking formal sector to fund social protection for all is not a sustainable option.

Let me flag two other important issues. One is gender equality. If social security benefits were purely dependent on individual income, they will reproduce in the benefit system the gender inequality that we find in the labour market. It must be the objective of policy makers to overcome all kinds of discrimination in the labour market including gender inequality. However as long as this is not fully accomplished, we think redistribution within the social security system is necessary to compensate as much as possible against this discrimination. A social protection floor will provide basic benefits to everybody and will benefit many women as they are disproportionally working in the informal economy where many currently don’t have any social protection. Extending health coverage to dependent family members is an essential protection for women as their labour market participation rate is still comparatively low in many countries. Also survivor benefits are essentials as long as incomes within a household are as unequal as they are today. Furthermore, collective responsibility for maternity protection and full recognition of care work are essential to avoid the perpetuation of structural disadvantages into social security provisions. The report shows in point 60 the positive impact social services can have on employment in general and in particular help women to enter the labour market and to provide also more formal sector jobs to address the growing needs of health and care provisions.

The other issue is the concept of a democratic and inclusive society. The message of the ILO Constitution is today as valid as in 1919: Universal and lasting peace can be established only if it is based upon social justice. Market forces left to themselves create levels of inequality and poverty that are not sustainable and may result in disintegration of societies. From Cairo to Madrid, from Athens to Bahrain, from Wisconsin to London people are protesting. They are protesting against inequality and against policies that make them pay for the financial crisis, Social protection in this situation is part of the solution, not part of the problem. As already identified in the Global Jobs pact they are essential automatic stabilizers and can help to avoid a downward spiral in working conditions.

Workers have had little choice but to share the burden of this crisis. But if the crisis caused by uncontrolled and irresponsible financial markets is now used to dismantle welfare states and public services, social peace is at risk. If we fail to provide fair solutions and people continue losing jobs, homes and pensions, while the financial sector is in full swing again, sooner or later we will see a populist reaction which might be neither rational nor reasonable nor democratic.

Let me now turn to a point where we feel that the report could have been stronger. The report shows that fiscal and political space to strengthen social security provisions exists in many countries. It also underlines the potential of ILO standards to create and maintain that space. C. 102 ensures fundamental principles like adequacy, solidarity, equivalence, guaranteed replacement rates, shared contributions from workers and employers, and participation of them in the governance of social security systems.

The report does not fully capture the role of employers, trade unions and let me add civil society at-large in maintaining and protecting this space. At the end of the day, policies do matter and without strong public support and social movements it is virtually impossible to build the political alliances for comprehensive social protection.

In many instances social security benefits have first been pioneered through collective bargaining and trade union struggles and trade union services are essential for high quality social protection. Collective bargaining and social dialogue are key in improving the policy making process and bringing the deep knowledge of the world of work to the policy process. It also helps to mobilize more resources and higher commitment for social security. The ILO is the place to recognize, support and promote this role: Social progress is most likely when people have a say and an active role in the development of their societies.

Often workers organizations are driving forces to strengthen social protections. Historically employers have often been more hesitant, seeing cost and problems than rather the opportunities Of social security. Albert Thoma(s) the first Director General of the ILO compared the ILO once to an automobile with governments at the wheel, workers being the accelerator and employers the brake. This division of labour is fine with us as long as there is broad consensus about direction and speed of the overall process. And the brake is used to ensure a safe journey and not a stand still.

Let me finish with a few remarks where we think our common journey should take us during the next two weeks and what we hope to achieve. At the hundredth ILC, we want to be ambitious. We want this conference to send a strong message to the world and to give a strong mandate or directive to the office that horizontal and vertical extension of social protection must be a priority of our work. We want to see tangible results that make a difference to the life of people.

We hope that we can all agree on the importance of a social floor and on the need to adopt an ILO Recommendation in 2012 to provide guidance to member states on a social floor. Such guidance should in our view identify the benefits, spell out the fundamental principles of adequate, prudent, accountable, efficient and democratically governed social security systems. It should also provide guidance how to move from a social floor towards a more comprehensive social security as outlined in C. 102. The recommendation should provide suggestions on how to speed up the extension process and how to assess progress an national and international level. It should recognize the creativity and diversity of innovations currently being developed in many countries.

Many other international organizations are discussing the idea of a Social Protection Floor. They are watching this tripartite organization closely for support and guidance. We have the advantages of being tripartite, having social protection at the core of our agenda, having standards on the matter, having technical capacity to support the development of social protection systems and being closely tied into the world of work. The leadership of this organization in this area is vitally important and a test of our relevancy.

In addition in this discussion we would like to see a work plan on key social security activities for the next decade. This should include:

• Strengthening the ILO as a center of excellence concerning knowledge, statistics and policies on social protection.
• A strong campaign to achieve a substantial number of additional ratification of C. 102 and the higher social security conventions.
• A good practice guide on design , administration ,sustainability, financial prudence and equity of social security systems,
• Efforts to achieve gender-neutral language in social security standards or better in all ILO standards,
• A major programme to strengthen the capacity of workers and employers organization to fully engage in the promotion and oversight of social security systems
• Substantial research and policy debate of the role and potential of social security to facilitate the transitions from informal to formal employment
• Policy guidance and if necessary an ILO standard to ensure full social security coverage for all workers in a-typical or precarious employment.

I will not go into detail on all these issues as I am sure we will come back to this in our deliberation during the next days. But we thought it would be helpful for our discussion to provide the committee with some broad ideas that we think could become the result of our joint deliberations

Chair I apologize for taking such a long time and I thank the delegates for their interest and patience in listening to us. I promise during the next days we will try to make good on any time lost by sticking to the workers role and accelerating the process as much as possible.