How a social protection floor can help address Lebanon’s crises

A new policy note by the ILO and UNICEF explores policy options and costs for core life-cycle social grants that will lay the foundations for a new social contract that is both sustainable and people-centred in Lebanon.

Article | 12 May 2021
Lebanon is facing an unprecedented culmination of economic, social and political crises. Macro-economic, fiscal and monetary collapses have led to a rapid slowdown of business, rising inflation, increasing unemployment and underemployment. The economic fallout of the COVID-19 pandemic and damage from the Beirut explosion have only exacerbated pre-existing labour market and social challenges. The ongoing deferral of urgent reforms has further intensified poverty and soaring inequalities. This brings to the fore the longstanding need for investment in an inclusive, lifecycle-based social protection system.

Lebanon’s national system for the provision of public goods, services, and social protection is weak. The highly fragmented and unequal institutional framework for delivery of key services is rooted in sectarian-based welfarism and hinges on the assistance of international and national non-governmental organisations. In fact, with almost no tax-financed guarantees to provide basic income security for people facing lifecycle contingencies as children, during working age, and in old age, a large number of people in the “missing middle” lack any access to social protection.

For past decades, the primary source of economic protection in Lebanon has been universal price subsidies for key imports such as wheat, fuel, medicines, and a list of basic products – more recently through foreign reserves of the Central Bank of Lebanon. Talks about the partial or total removal of these subsidies have been underway since August 2020. Taking away the only remaining form of state financed social support will lead to significant deterioration of the living standards of the poor and middle class, unless comprehensive, adequate and permanent social protection guarantees are put in place. An approach that only temporarily protects households - or only targets the poor - will not be sustainable if it does not address the structural weaknesses of the social protection system. In this context, the announced expansion of the National Poverty Targeting Program is an important development in the current crisis context, but cannot replace a rights-based social protection system that provides income security to everyone when they experience lifecycle contingencies.


The present calls for reforming subsidies should go hand in hand with the foundation of a new social contract that is both sustainable and people-centred. 
 
In turn, the present calls for reforming subsidies should go hand in hand with the foundation of a new social contract that is both sustainable and people-centred. Immediate compensation measures should be accompanied by plans for long-term development of a multi-tiered social protection system, and should set the foundation for a permanent social protection floor for Lebanon. Comprehensive and inclusive income transfer programmes – based on broad coverage — are the most efficient and effective means of reaching the affected population, compensating for the negative effects of subsidy lifting while also promoting inclusion and reducing inequalities.

Jointly produced by ILO and UNICEF, this paper makes the case for the establishment of social grants to provide adequate income protection to everyone experiencing a lifecycle contingency — mainly, a tax-financed child grant, a disability allowance and a social pension — as the foundation for a multi-tiered and rights-based national social protection system. Based on data from the latest Labour Force and Household Living Conditions Survey, the paper presents an assessment of coverage and cost of core lifecycle benefits adjusting eligibility criteria and benefit levels to balance the long-term objectives of achieving universal coverage against current available resources.


Reallocating around one quarter to one third of resources currently allocated to prices subsidies towards social protection would be sufficient to set solid foundations for the social protection floor Lebanon desperately needs.
 
Lebanon invests in tax-funded social assistance significantly less than other countries in the region, and other countries at similar levels of development around the world. Reallocating around one quarter to one third of resources currently allocated to prices subsidies towards social protection would be sufficient to set solid foundations for the social protection floor Lebanon desperately needs.

The country – its people and the Government – is at a critical juncture in which key decisions around the (re)construction of core institutions will determine the success or failure of the country’s immediate recovery plans and long-term trajectory. This crossroad stipulate an urgent shift from the existing fragmented and residual social protection approach to a comprehensive one, centered on the core notions of citizenship and rights. A relatively simple system, consisting of three core lifecycle transfers — inclusive child benefits, disability allowances and old-age pensions — would go a long way towards addressing a wide range of vulnerabilities. Not only will this provide immediate relief, it is the only condition to fuel a faster recovery and lay the foundation for a stronger and more inclusive economy and society.