Social Protection

Since the ILO was founded in 1919, its primary concern has been to develop international policies and programs to improve working and living conditions worldwide. Within this context, social protection has been a central issue for the Organization. The fact that more than half of the ILO’s International Labor Conventions relate to social protection issues, most notably Convention 102 on minimum standards of Social Security, demonstrates the important role that the Organization has played in the development of social protection.

With more than five billion people lacking adequate social security, a new international labor standard adopted by the International Labor Conference in June 2012 calls for the provision of essential health care and benefits as well as basic income security constituting national social protection floors. Such basic social protection, i.e. essential health care and basic income security throughout the lifecycle reduces poverty, inequality, ill health and the number of premature deaths. The new ILO Recommendation is the first autonomous social security recommendation to be voted on in 68 years. It comes 24 years after the last legal instrument on social protection was discussed by delegates from governments, workers and employers back in 1988. The Recommendation requests countries to implement their Social Protection Floors as early as possible in national development processes.

The Washington Office supports the work of the ILO in promoting social protection by engaging our social partners and multilateral organizations in the discussion and design of social protection systems. In particular, the Washington Office facilitates the dialogue between the ILO’s experts on Social Protection and Social Security with the Washington based International Financial Institutions such as the World Bank and the IMF and think tanks working on the issue.

“Social Protection Floor (SPF) Initiative “

Concept

The social protection floor approach has been co-developed by the ILO and the WHO and involves a group of 17 collaborating agencies, drawing on the recent experiences of extending protection, mostly in developing countries. It was endorsed by the United Nations Chief Executives Board and by the Heads of State and Government in the 2010 Millennium Development Summit as an integrated set of social policies designed to guarantee income security and access to essential social services for all, paying particular attention to vulnerable groups and protecting and empowering people across the life cycle.

It includes guarantees of:

• basic income security, in the form of various social transfers (in cash or in kind), such as pensions for the elderly and persons with disabilities, child benefits, income support benefits and/or employment guarantees and services for the unemployed and working poor;
• universal access to essential affordable social services in the areas of health, water and sanitation, education, food security, housing, and others defined according to national priorities.

The concept is part of a two-dimensional strategy for the extension of social security, comprising a basic set of social guarantees for all (horizontal dimension), and the gradual implementation of higher standards (vertical dimension), in line with the ILO’s Social Security (Minimum Standards) Convention, 1952 (No. 102), and others, as countries develop fiscal and policy space.

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Effectiveness of SPF

The effectiveness of social protection floor-type measures in reducing poverty, containing inequality and sustaining equitable economic growth is already well acknowledged in developed countries. In OECD countries, it is estimated that levels of poverty and inequality are approximately half of those that might be expected in the absence of such social protection provision. That said, this significant poverty reduction in such countries reflects the combination of both social protection floor measures and more comprehensive forms of social security. This signals the need for each country, having put in place measures representing a solid floor, to then take the next step of developing the vertical dimension of social protection.

Recent years have provided potent proof of the value of social protection interventions in a time of crisis. Throughout the economic and financial crisis many floor-type social protection measures acted as effective countercyclical stabilizers. They helped attenuate the adverse impact on labor markets, contributed to maintaining social cohesion and stimulated aggregate demand. The combined effect of this effort ultimately aided and spurred economic recovery in a range of countries. More broadly, the floor’s income-led approach can contribute to combating imbalances in the global economy by inducing reductions in precautionary savings and increases in the purchasing power of emerging consumer classes in developing countries, thereby strengthening the national markets.

Contrary to “received wisdom”, social protection measures at a basic level, of the kind comprising the floor can be kept within a relatively modest percentage of national income, even in severely resource-constrained countries. To what extent resources should be devoted to such measures remains a country-specific choice. In other words, levels of social provision are driven much more by a country’s political and policy environment than its level of economic development. The cost of a well-designed social protection floor is small compared to the tax revenues often forgone by not effectively collecting revenue from the wealthy and by not tackling inefficiencies that exist in many expenditure programs.

Bachelet Report on “Social Protection Floor for a Fair and Inclusive Globalization”

On October 27, 2011 a high-level panel convened jointly by the ILO and the WTO headed by the former President of Chile, Michele Bachelet, delivered a ground-breaking report to UN Secretary-General, Ban Ki-moon, arguing that a social protection floor could boost economic growth and enhance social cohesion. The report shows how social protection can play a pivotal role in relieving people of the fear of poverty and deprivation, delivering on the promises of the Universal Declaration of Human Rights. The extension of social protection, drawing on basic social floors, is a missing piece in a fairer and inclusive globalization.

“Social Protection in ILO Programs”

The concept of social protection encompasses almost all of the ILO’s areas of work and is closely related to the Decent Work agenda. In particular, research and experiences have shown that a social protection floor is extremely beneficial for children: cash transfers lead to increased school attendance and reduce the “time budget” available for child labor. From an intergenerational impact, ensuring investment in the human development of the child reduces intergenerational transfer of poverty and thus the need for child labor in the next generation. Social protection was therefore identified as one of the three areas of public policy to promote effective and sustainable action against child labor, as stipulated in the Global Action Plan Against the Worst Forms of Child Labor. A recently agreed inter agency statement makes the case that in the design of social protection programs it is important to take account of their impact on children. It concludes that while many social protection measures – ranging from pensions to unemployment insurance – already benefit children without explicitly targeting them, even relatively small changes in the way children are considered in the design, implementation and evaluation of social protection programs can make a major difference. Making social protection more focused on children’s welfare has the potential to benefit not only children, but also their families, communities and national development as a whole.

“Social Protection in the US”

The Social Protection system in the US consists of a number of programs, insurance schemes, transfer and income guarantees and more, provided by the federal government, the states and many non-governmental organizations which fall under the umbrella of Social Security. The Social Security Act was created in 1935 as the federal Old-Age, Survivors and Disability Insurance (OASDI) program. Currently, some of the larger programs encompassed in Social Security are:

• Federal Old-Age (Retirement), Survivors, and Disability Insurance
• Unemployment benefits
• Temporary Assistance for Needy Families (TANF)
• Health Insurance for the Aged and Disabled (Medicare)
• Grants to States for Medical Assistance Programs (Medicaid)
• Children’s Health Insurance Program (CHIP)
• Supplemental Security Income (SSI)¹

The US Social Security program is primarily funded through payroll taxes or Federal Insurance Contributions Act tax (FICA). With Social Protection programs in the United States encompassing more than 50% of the national budget in 2010, the US Social Security program represents the largest government social insurance program in the world – 20%.²

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¹http://web.archive.org/web/20061012002738/http://www.access.gpo.gov/uscode/title42/chapter7_.html
²http://www.cbpp.org/cms/index.cfm?fa=view&id=1258