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Income Security Index

Income security is about the level of income (absolute and relative to needs), assurance of receipt, expectation of income adequacy now and improvement or deterioration in the future, both during a person?s working life and in old age or disability retirement. Income security is about actual, perceived and expected income.

An Income security index

A national Job Security Index must be calculated on the basis of more indirect proxy measures than the others, and focuses on access to relatively skilled jobs and measures to combat discrimination in job opportunities.


Input indicators The selected input indicators represent governments' formal commitment to income security.

Thus, a positive value is given if the country has ratified
- ILO Convention No. 102 on Social Security (Minimum Standards),
- ILO Conventions No. 26 and 131 on Minimum Wage Fixing and
- ILO Convention No. 95 on Protection of Wages.

Also included are two dummy variables for:
- the commitment at national level to the income security of the employed, with a positive value for the existence of a minimum wage law
- and a positive value for the existence of laws promoting or legitimizing collective bargaining.
Process indicators The process indicators need to reflect the degree of comprehensiveness of the social protection system. The selected indicators, while not ideal, are:
- the social security expenditure share of GDP and
Two dummies having a positive value:
- for the existence of an unemployment benefits scheme and
- a positive value for the existence of a state pension.
Outcome indicators The outcome indicators are of two types.

The first covers the whole population in each country. They are:
- The national poverty rate, as a measure of the size of the population economically at risk;
- GDP per capita expressed on a purchasing power parity basis and
- the Gini coefficient measuring income distribution to evaluate wealth and its distribution, assuming the lower the level and the more unequal the distribution the more insecure;
- A measure of foreign indebtedness (external debt relative to gross national product) to reflect a country's vulnerability to a sudden loss of whatever level of national income security it has achieved (relevant for the sort of experience Argentineans endured in 2001-02);
- Life expectancy at birth, as a proxy for overall public and individual health status. Several health indicators were reviewed, including the infant mortality rate. While highly correlated with GDP per capita, health indicators vary considerably across developing countries.

The second type refers to the income security of workers and the elderly retired. The corresponding indicators are:
- The wage share in total value-added, representing the extent of a relatively secure form of income earning;
- The old-age income security index generated from the Social security database, reflecting the security of non-work income for mainly retired workers;
- The ratio of average female to male income, as a proxy for wage differentials, gender discrimination and disadvantage of female workers.
Coverage The Income Security Index covers 96 countries.


Only a few non-European countries are Pacesetters and none of them is from Africa, North or South. Countries from this continent, together with most countries from Asia and Eastern Europe, do not provide adequate income security, and are either in the Much-to-be-Done or the Conventional clusters. Latin American countries are mainly Conventionals.

Comparing individual country scores on income security shows that the 14 most secure, the Pacesetters, are western European countries headed by Norway. Next are non-European OECD countries, such as Japan, Canada, Australia and New Zealand, and the more economically advanced eastern European countries, such as the Czech Republic, Slovakia, Latvia and Poland.

Latin American, Caribbean and North African countries constitute the bulk of those providing 'middle range' income security. As Conventionals they have some formal policies and institutions that should promote income security but have economic realities that make the outcomes less than satisfactory.

The least secure countries are concentrated in South and East Asia, including the highly populated countries of China, India, Indonesia and Bangladesh, in Central Asia and the Caucasus, and in sub-Saharan Africa. Mauritius and South Africa are the exceptions, achieving relatively high levels of income security compared to their neighbours.

Additional outputs Factsheets:

Security dimensions
Income Insecurity: Neglected aspects of poverty and inequality
Weak Collective Voice leaves Workers Insecure: New forms of voice still limited
Labour Market Insecurity: Lost in global statistics
Work Insecurity: Work-related ill health
Employment Insecurity: Why neither formal nor informal my be best for workers
Skills Insecurity: Why "human capital" will not do

Regional perspective
Africa: Insecurities compound poverty
South and South-East Asia: Economic security exceedss income share
Eastern Europe and CIS: Unpaid wages, lost benefits and concealed unemployment
Latin America and the Caribbean: Lower and most unstable growth intensify insecurities - Huge majorities favour redistribution and basic security
Economic Insecurities in Rich countries: Western Europe still sets lead, but slipping

Transversal issues
"Targeting" the Poor is Poor Policy: Support for security and equality strong
Women face more Economic Insecurity