Working together to make poverty history

By Claire Courteille – Mulder, Director of the ILO Country Office for China and Mongolia. Although the world has made significant progress in reducing poverty, it is still with us and its eradication should be the first task of humanity.

Comment | Beijing, China | 17 October 2018
October 17th, the International Day for the eradication of poverty, is a reminder to all of us that according to the latest estimates, there are still over 700 million human beings on this planet living in dire conditions with less than 1.90 US dollar a day. Although the world has made significant progress in reducing poverty, it is still with us and its eradication should be the first task of humanity. The good news is that this is exactly what the Goal No1 of the 2030 Sustainable Development Agenda is all about: it calls upon all nations, regardless of their level of development, to take action to end poverty in all its forms and everywhere. The objective is set, action is now required.

The creation of decent jobs and access to social protection are key tools to win the battle against poverty. Both are at the heart of the International Labour Organisation (ILO)’s mandate. The ILO was founded almost a century ago, in 1919, in the wake of a destructive war, to pursue a vision based on the premise that universal and lasting peace can only be established if it is based on social justice and decent work. On the eve of the ILO 100 year anniversary, it is striking to note how relevant its mandate has remained over time!

Tea farmer in China
As founding member, China was among the first countries to commit to the ILO’s mandate. Looking at the four most recent decades of China’s development, it appears that job creation and access to social protection stood indeed central in the reform and opening-up process, and in both areas, the results have been impressive. An annual double digit economic growth over the period fuelled the creation of millions of jobs and the expansion of social protection. Although this development has brought on many challenges, not least environmental sustainability and fast-growing inequalities, the impact on poverty reduction has been remarkable: according to the World Bank estimates, the absolute poverty ratio (defined at 1.90 USD a day in PPP) decrease from 66.6 % of the population in 1990 to less than 1% in 2015. In total, more than 700 million Chinese people were lifted out of poverty since the beginning of reform and opening-up. In 2017 national statistics estimated that poverty still affects 30 million people in rural areas only. But the government is well on track to achieve its objective of eradicating it by 2020, 10 years ahead of the deadline set by Sustainable Development Agenda. No other country in the world has managed to improve the living conditions of so many over such a relative short period of time.

ILO-China Cooperation on social protection

While many lessons can be learnt from the Chinese experience in poverty reduction, there is one that deserves particular attention: the development of China’s social security system. Forty years ago, social security and welfare benefits were provided by work units, covering only these formally employed in a fragmented way. Today, China has a comprehensive social security system in line with its market-oriented economic reforms covering its 1.3 billion population. The ILO has been supporting and assisting this development since it established an Office in the country in 1985.

Starting early 80’s, China took measures to ensure that its social security system be responsive to the transformation of the economy. In the 90s, five social insurance schemes covering unemployment, pension, medical care, employment injury and maternity for urban employees were established and the minimum living guarantee programme (Dibao), a means-testing social assistance programme to support the poorest urban and rural residents was put in place. During this time, the ILO worked closely with the then Ministry of Labour and Social Security and together they created a national social security school in Beijing to build the capacity of social security officials across the country.

Pensions have been an area of extensive cooperation between the Chinese government and the ILO. In the 90’s when individual accounts were promoted worldwide, China resisted that trend and followed a different model in line with ILO’s recommendations. A collective funding of basic pension benefits was put in place through a pay-as- you-go system with individual accounts topping-up basic benefits for employees. This dual model is still in place today. A decade later, at the request of the Ministry, the ILO provided technical assistance to the design of the actuarial model for pension scheme of urban employees.

Health insurance has been another area of cooperation. In the 90’s, the ILO’s assistance focused on the development of the first medical insurance regulation for urban employees. After 2000, China entered into a new phase of social security development, in which healthcare benefits were made available to rural and non-working urban residents. Universal coverage was achieved within a few years. ILO expertise and standards were referenced in the drafting of the Social Insurance Law of 2010. Today the ILO continues to provide assistance to the Ministry of Human Resources and Social Security on the reform of the health insurance payment system.

China has progressively established a comprehensive social security system with quasi-universal coverage of health insurance and old age benefits in record time. The ILO is pleased to have left a few marks on China’s social security system which reflect some of the key principles of its international Conventions.

Social security is an area in which constant reforms and adjustments are needed. Despite the enormous progress China has achieved, there are still many challenges to be tackled. Among them are the very low rate of effective coverage for rural migrant workers by earnings-related social security schemes and the very modest level of benefits under the pension scheme for rural and non-working urban residents which does not guarantee adequate old-age income security. As the country’s population is getting old before getting affluent, the long-term financial sustainability of pension schemes is another priority issue which will have to be addressed. In the meantime, new challenges are emerging such as closing social security gaps for a growing number of workers in non-standard forms of work, including these generated by electronic platforms and apps.

New areas of cooperation to end poverty

No doubt in the years ahead, the ILO will continue to cooperate with the Chinese government and social partners to ensure that no one is left behind. But there is a new dimension to the ILO- China’s partnership. Sharing Chinese successful experiences and disseminating good practices worldwide can inspire and guide other developing nations on their way toward poverty eradication. South- South cooperation has become an important element of multilateralism in which the ILO’s experience and expertise has proved useful in building bridges between countries. Social protection, skills development, green jobs, youth entrepreneurship, health and safety at work are some of the areas in which the ILO promotes cross-border exchanges and lesson learnt.

But next year will be special. The ILO’s centenary anniversary should be more than a celebration of the past. It is a strategic opportunity to focus on today’s people pressing priorities - the need for jobs, social protection, income security, rights at work – and to forge solutions through dialogue. In today’s world characterized by political uncertainty, growing inequalities, environmental challenges and rapid technological evolution, next year is a unique opportunity to find new and innovative ways to steer toward social justice and a world of work based on human values. To make poverty history!