More than 70 per cent of the world population lacks proper social protection

A new ILO report on the latest trends in social security: Most people do not have adequate social protection to have a major impact on reducing poverty and improving the standard of living.

News | 03 June 2014
GENEVA/ADDIS ABABA (ILO News) – More than 70 per cent of the world population is not adequately covered by a social protection package to guarantee a major impact on poverty reduction, particularly in Africa, says a new report by the International Labour Organization (ILO).

According to the “World Social Protection Report 2014/15: Building economic recovery, inclusive development and social justice,” only 27 per cent of the global population enjoys access to comprehensive social security.

Global campaigns for the promotion of social security have shown that Africa is the continent where the coverage of social security is at its lowest. There is a clear deficit between social security needs and the capacity to meet those needs. In sub-Saharan Africa, coverage by statutory social security schemes is very limited and largely confined to workers in the formal economy and their families. In North Africa, coverage tends to be substantially higher, although levels of exclusion are still very high.

“The global community agreed in 1948 that social security and health care for children, working age people who face unemployment or injury and older persons are a universal human right,” said ILO Deputy Director-General Sandra Polaski. “And yet in 2014 the promise of universal social protection remains unfilled for the large majority of the world’s population.”

Social protection is a key policy tool to reduce poverty and inequality while stimulating inclusive growth by boosting the health and capacity of vulnerable segments of society, increasing their productivity, supporting domestic demand and facilitating the structural transformation of national economies.

According to the Yaoundé Tripartite Declaration on the implementation of the Social Protection Floor, it is estimated that in sub-Saharan Africa only about 10 per cent of the economically active population is covered by statutory social security schemes, most of these being old-age pension schemes, while in some cases also providing access to health-care.

“The case for social protection is even more compelling in these times of economic uncertainty, low growth and increased inequality. It is also an issue that the international community should embrace prominently in the post-2015 development agenda,” added Polaski.

Multifaceted challenges in social security

Although there is a great need for social security in Africa, factors such as limited formal economy employment, high rates of inflation and the impact of HIV/AIDS, make meeting this need, even partially, particularly difficult. Low productivity limits the necessary fiscal space, and weak governance mechanisms pose serious challenges to efficient delivery and administration. At the same time, governance and administrative problems in some existing social security schemes undermine trust and public support for social security. The coverage of targeted populations tends to be narrow, leaving the most vulnerable, in particular those in rural areas, without any form of social protection. There is therefore a very limited capacity to provide adequate social protection. High levels of unemployment and underemployment, as well as the inadequacy of current labour and social protection standards, hamper the delivery of social protection in many countries.

However, “contrary to public perception, fiscal consolidation measures are not limited to Europe,” said Isabel Ortiz, Director of the ILO Social Protection Department. “In fact, as many as 122 governments are contracting public expenditures in 2014, of which 82 are developing countries.”

“These measures include reforms to the pension, health and welfare systems that often involve reductions in coverage or funding of these systems, the elimination of subsidies and cuts or caps to the number of health and social workers or to their wages. In effect, the cost of fiscal consolidation and adjustment is passed on to populations at a time of low employment and when support is most needed,” she added.

The latest trends show that many middle-income countries are expanding their social protection systems, supporting household incomes and thereby boosting demand-led growth and inclusive development. Some lower-income countries, for example Mozambique, have also extended social protection, yet often through temporary safety nets with very low benefit levels. Many of these countries are now undertaking efforts to build social protection floors as part of more comprehensive social protection systems.

National experience from Botswana, Namibia and South Africa, as well as ILO research, has demonstrated that it would in principle be possible and affordable to provide all of the poor in Africa with a minimum package of social benefits and services including access to basic health care, basic income transfers in case of need, and basic education.

More investment needed

The report shows that at the global level, governments allocate only 0.4 per cent of GDP to child and family benefits, with expenditures ranging from 2.2 per cent in Western Europe to 0.2 per cent in Africa and in Asia/Pacific. These investments should be scaled up, considering that about 18,000 children die every day and that many of these deaths could be averted through adequate social protection.

Expenditures for social protection for people during working age (for example, in the event of unemployment, maternity, disability or work injury) vary widely across regions, ranging from 0.5 per cent in Africa to 5.9 per cent in Western Europe. Worldwide, only 12 per cent of unemployed workers receive unemployment benefits, ranging from 64 per cent in Western Europe to less than 3 per cent in the Middle East and in Africa.

The report also shows that 39 per cent of the world population lacks any affiliation to a health system or scheme. The number reaches more than 90 per cent in low-income countries. The ILO estimates that there is a global shortfall of 10.3 million health workers required to ensure quality health services for all in need. Despite these challenges, some countries - including Thailand and South Africa- have achieved universal health coverage in just a few years, showing that it can be done.

The ILO is assisting all African countries adopt coherent national social security strategies, including for the introduction or extension of a basic social security package that includes essential health care, child support for school age children and a minimum pension.