Major programme 110. Social Security

Summary of 1998-99 proposals and comparison with previous biennium (including funds from other sources)

110.1. The provision of an appropriate level of social protection is a fundamental human right recognized in the Declaration of Philadelphia, in several international labour standards and by recent constitutional developments in certain member States. Not only do efficient and effective social protection programmes alleviate individual hardship arising from sickness, old age, unemployment and social exclusion, but they also facilitate the process of social and economic change, moderate the harsher aspects of a market-driven distribution of income, and ensure that the costs and benefits of economic transition and structural change are equitably shared within the community. However, many industrialized countries are now concerned at the cost and relevance of providing social protection, while many developing countries are seeking to expand and broaden their existing systems to achieve more universal coverage and better benefits. To resolve this tension requires basic reflection on the fundamental principles of social security, their appropriateness to countries at different stages of development, transition or reform, and the role of the State and the responsibility of individuals in providing for their own protection. This reflection has to be founded on the principles contained in the relevant international labour standards and take into account the interaction between social security programmes, labour market programmes and economic and demographic constraints.

110.2. The objectives of this major programme are: the extension of social protection programmes to achieve the widest possible coverage, both in terms of contingencies and benefits; the improvement of the governance, management and efficiency of these programmes; and the development of programme designs that achieve these goals with the minimum of disruption to economic performance and individual initiative. The advice and guidance provided to assist constituents in the achievement of these objectives will include technical advisory services, assistance in carrying out actuarial valuations, support for technical cooperation activities, the organization of training activities and workshops, the development of training materials and the collection and dissemination of information. In support of these activities, research and development work will focus on the financing and operation of health-care programmes, especially in developing countries, and the development of a broad-based and flexible ILO approach to the design and implementation of retirement pension schemes. In view of the rapid evolution of analytical techniques in the field of social security, substantial emphasis will be placed on the development of quantitative approaches to the reform of social protection systems and their dissemination to national experts and practitioners. This will involve an updating of the ILO’s actuarial models, the development of social budgeting techniques, the reform of the information services provided and the survey on the cost of social security and an expansion of training programmes.

110.3. The resources for this major programme are increased by some $456,000 in real terms, resulting from an increase of 2/00 General Service work-years and $50,000 in short-term assistance, and an increase in non-staff costs of some $290,000 (missions, printing credits and external collaboration), partially offset by a reduction in RBTC.

110.4. It is expected that some $3.3 million will be available for the major programme’s technical cooperation and assistance activities from outside sources, including UNDP, the European Union, the World Bank and other donors. These activities will be undertaken in cooperation with the multidisciplinary advisory teams. In addition, RBTC resources amounting to $366,500 will be used for: short-term consultancies, particularly in preparation for longer-term technical cooperation activities; short-term training projects covering both the planning and development of social security systems and the development of financial and actuarial skills.

Director-General’s Report on a Social Theme

110.5. As indicated under major programme 60 (Employment and training), the World Employment report will continue to be published every two years. In the intervening years, an ILO report on a social theme to be chosen by the Director-General will be prepared. Each such report will concern a topic in the field of the world of work. The intended readership includes ILO constituents, policy-makers, organizations active in the fields of labour and social development, the mass media and the general public. This report, which should in principle be published in the three official languages of the Organization, may continue to be marketed under the title World Labour Report, although the themes to be addressed will be the subject of more in-depth research than was the case in the past. In the 1998-99 biennium, this report will deal with the topic of social protection, and resources for the preparation of the report are therefore shown under this major programme.

Action programme

An operational framework for pension reform

110.6. A large number of countries are faced with the need to reform their old-age pension systems or, where none exist, to establish new systems. For many countries, this is a field of policy in which understanding of the options is limited, experience in implementing reform is scarce and administrative capacities need to be greatly strengthened. Outside advice and assistance is therefore needed, especially from the ILO, concerning the alternative pensions schemes that could be adopted, their merits and disadvantages, the political and social process of reform, and the adaptability and suitability of the various options to the circumstances and traditions of each country.

110.7. The objective of the action programme is greater awareness of the available options by policy-makers as a basis for the design and implementation of old-age pension systems that are adapted to national conditions and take into account the principles embodied in the relevant international labour standards. Several case studies will be carried out to provide a basis for the development of the operational framework, which will distinguish the ILO approach to pension reform, with its emphasis on social principles, from the advice and analysis provided by other international agencies. The framework will cover issues relating to the design of benefit and contribution schemes, the relative merits of unfunded and funded schemes, the role of the State, strategies for extending the coverage of retirement schemes to make them as nearly universal as possible, and techniques of governance and good management. The framework will be disseminated in a major publication and will form the basis of the ILO’s advice, assistance and technical cooperation activities on pension reform for developing countries.

Planning, development and standards

110.8. The objectives of this subprogramme are the design, implementation and reform of social security policies and systems that embody the principles set out in international labour standards, and the improved governance and management of the corresponding schemes. The assistance provided to constituents in this context covers the whole range of means of action available to the ILO, including the promotion of international labour standards, research, information dissemination, technical cooperation, advisory services and training. In particular, the issues covered by the subprogramme will include the provision of health care in developing countries and an in-depth reflection on the fundamental principles of social security. The strengthening of working relations with other ILO documentation services, particularly through the use of electronic communication facilities, will increase the effectiveness of the subprogramme’s information dissemination activities. Moreover, as a reference tool for those interested in social security, an annotated bibliography of ILO works in the field of social security will be produced.

110.9. The training of managers and personnel, including employers’ and workers’ representatives on the boards of social security funds, is vital to the sound functioning of social security institutions. Although such training is usually reasonably successful in most industrialized countries, it is often insufficiently developed or completely lacking in developing and transition countries, in some newly industrialized countries and in schemes for workers in the informal sector. Support will therefore be provided to evaluate social security, staff training needs, design appropriate training programmes, build up the necessary institutions and develop suitable training materials. In collaboration with the Turin Centre and the International Social Security Association, sets of training materials will be produced and tested to address the most urgent needs of African, Central and Eastern European and some Asian countries. A general review of the social security staff training programmes in which the ILO has been involved in recent years will also be conducted as a basis for the design and development of new programmes in this field.

110.10. The work of the subprogramme will continue to include the technical analysis of reports on the application of ILO instruments dealing with social security, as well as on the European Code of Social Security. The principles contained in these standards will continue to be a key feature of the technical support provided to constituents, especially when major reforms are under consideration, as well as in the assistance provided for the design and implementation of other relevant instruments and agreements at the international, regional and subregional levels. In the context of economic globalization, special emphasis will be placed on issues relating to the social protection of migrant workers. Taking into account the work of the interdepartmental project on migrant workers in the biennium 1994-95, and trends and developments in migratory flows, a report will be prepared on improving the protection of the social security rights of migrant workers and their families, including those residing or working in, or originating from, countries that are not parties to social security agreements guaranteeing such protection.

The development of sustainable health-care delivery systems in developing countries

110.11. Many developing countries do not provide universal access to basic health care. In those that do, the quality of the basic care provided does not often comply with the minimum levels established in international labour standards. Problems related to the delivery and organization of health-care programmes are critical in this respect and include: the reimbursement, regulation and control of health-care providers; the question of cost control for doctors, hospitals and pharmaceuticals; the improvement of access, especially for the poorer categories of the community; and the efficient governance of the system as a whole. With a view to the development of a practical and analytical framework for the establishment or reform of universal health-care systems, research will be carried out on these issues and on alternative systems of financing, including social security contributions, tax-based schemes and local, cooperative or private sector structures, which are more suited to countries with a large informal sector. This work will be supported by the extension of the ILO’s existing actuarial and social expenditure models into the area of health-care financing. The results of this work will be set out in a series of technical papers, which will form the basis for a workshop in each region.

The principles of social security

110.12. In many countries, social security appears to have reached a crossroads. Some question the validity of the concept itself, either directly or through their opposition to its financing mechanisms or the role of the public sector in its operation. Others, although comfortable with the concept and its core assumptions, none the less feel that in-depth reforms are needed. A review will therefore be carried out of the underlying principles of social security systems to determine the extent to which they remain valid and applicable. Case studies will be carried out of social security reforms in a number of countries in which a variety of approaches have been adopted, including systems based on the Beveridge or Bismarckian models, countries in transition, developing and newly industrialized countries, including countries with a high level of informal sector employment.

Financial, actuarial and statistical services

110.13. The successful establishment, operation and reform of social protection systems requires sound financial planning, design and management, based on benefits and financing arrangements that are well adapted to the social, economic and fiscal environment in which the systems operate. The objective of the subprogramme is the development of the capacity of government agencies and autonomous social protection agencies to carry out sound quantitative planning and the improvement of the management and governance of social protection schemes, both in terms of the performance of individual institutions and of their impact on public budgets, the economy and the distribution of income. This objective will be achieved through the transfer of technology and the provision of training and advisory services to constituents relating to actuarial, financial and economic analysis and management, and through the compilation and maintenance of statistical databases to provide constituents with internationally comparable information on income and expenditure patterns, the consequences of social protection on the distribution of income and the performance of social protection schemes. The subprogramme will serve as a focal point for the international exchange of quantitative information and methodologies in the field of social protection and an active presence will be established on international data networks.

The extension and dissemination of quantitative techniques

110.14. The design and operation of financially, economically and fiscally sound social protection systems in a rapidly changing demographic, economic and labour market environment requires increasingly sophisticated quantitative methods for the monitoring and projection of their expenditure and the resources required for their financing. The actuarial models for social security pension schemes developed by the ILO will be complemented by health financing models that can be used on personal computers. A social budget model will also be developed to establish an accounting framework for aggregate national social expenditure and the financial resources of social protection systems, particularly as they relate to public finances in general, the accounts of social security institutions and household incomes. Emphasis will be placed on the dissemination of the technology to member States with the aim of creating a growing network of users who can provide mutual support to each other. Communication with users will be improved through the use of international data networks. Standard courses on actuarial techniques in social protection and social budget techniques will be developed and tested for use by national experts.

International financial and actuarial service

110.15. Regular actuarial reviews of social security systems are a statutory requirement in many countries and ad hoc financial and actuarial studies have to be undertaken when reforms are planned. The Office has traditionally provided actuarial assistance to developing countries with a view to the establishment of the principal tools and techniques of actuarial and social expenditure analysis and the training of local counterparts in their use. It has also developed the capacity to provide comprehensive advice on the overall financing of national social protection systems, including pension, health care, unemployment benefit, social assistance and a variety of other benefit schemes. Under this approach, the actuarial requirements of social protection systems are linked to their overall national fiscal and economic aspects, which means that comprehensive advice can be provided on politically, economically and fiscally sustainable benefit levels, as well as on levels of social expenditure and the distribution of income, benefits and contributions. During the biennium, a cost-effective form of technical cooperation will also be developed that will permit a more rapid response on the Internet to countries requesting technical assistance on financial and actuarial matters.

Statistical inquiry into the cost of social security

110.16. There is a considerable demand by governments, social security agencies, researchers, workers’ organizations and multinational enterprises for reliable information on the cost of social security programmes throughout the world. For many years, the ILO has conducted a statistical survey providing information on the level of the benefits, coverage and contributions of social security schemes in member States, which extends and complements other sources of information. These inquiries have been published in The cost of social security series. However, two major problems have emerged, namely: the difficulty of ensuring reliable inter-country comparisons, especially for countries where coverage is weak and several schemes are in operation; and delays in receiving information from all countries, which have resulted in delays in publication. Several private sector organizations have attempted to fill this gap, making much use of the ILO survey, although their country coverage is partial and their estimates are not always reliable. The current series will therefore be replaced. Publication delays will be avoided and costs reduced by providing continuous access on the Internet, with the publication of hard copy only intermittently. The content of the inquiry will also be changed and descriptive material will be included indicating the comprehensiveness of the statistical series. The data will be treated more fully to make it more comparable and supporting material will be added, such as demographic projections and wage and income levels. Where possible, country data will be placed in the same statistical framework as the actuarial and social expenditure models, so that information and technical advisory services become mutually reinforcing. The full implementation of the new survey will require more than one biennium, with additional series, countries and analysis being added over time.

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