G20 Education and Employment Ministers’ Meeting

We need more and better social protection

Director-General of the International Labour Organization, Guy Ryder, calls for social protection policies to be reinvigorated, as a key element of the future of work. He was speaking at the G20 Labour and Employment Ministers’ Meeting in Argentina.

Statement | 07 September 2018
Thank you, Minister Triaca, for the opportunity to share some ILO perspectives on how social protection can be strengthened in light of the future challenges we have been discussing.

Let me start by contrasting two of the most prominent views in the current debate. One view holds that social protection systems will simply not be able to effectively cover workers in new forms of employment, or will become financially unsustainable and therefore increasingly weak. In contrast, others suggest that particularly technology-induced gains in productivity will enable a universal basic income that is sufficiently generous to allow all people effectively to work at their leisure.

We don’t need to subscribe to either of these views. But we don’t need less social protection in the future, but more and better social protection. We need to reinvigorate social protection policies to fully play their role as a means to achieve equity and social justice and as a key element of the future of work that we want.

Let me chart out some thoughts on how the G20 can strengthen the ability of social protection systems to respond to three specific challenges.

The first concerns social protection coverage and adequacy gaps. According to the ILO’s World Social Protection Report, only 29% of the global population are covered by comprehensive social protection systems and 55% are not covered by any social protection benefit at all. In many cases, even if people receive some benefits, these are not adequate to meet their needs. And so the challenge is to ensure that all workers, regardless of the form of employment, benefit from adequate levels of protection.

This includes – and I was struck by the presentations made earlier today by Germany and the Netherlands - social protection for workers in the digital economy. We can do this, both to ensure that digital platforms respect their obligations to protect workers and to allow fair competition with other economic actors.

We also need to guarantee at least a basic level of social security for all – a social protection floor as called for in ILO Recommendation 202 - that provides a basis of a comprehensive and inclusive social protection system.

The second challenge concerns the role of social protection systems in facilitating labour mobility. The portability of benefits and entitlements across different jobs, different types of employment, as well as periods out of employment were highlighted in last year’s G20 Ministerial Declaration as an effective means of smoothing life and work transitions. Ensuring that entitlements are portable and transferable requires better coordination and less fragmentation. Prioritizing collectively-financed mechanisms like social insurance over forms of protection linked to a specific employer, such as severance pay or employer-provided health insurance, also helps to support labour mobility and to improve the protection of workers.

Ensuring the effective portability of social security rights and benefits for international migrants seems to us to be crucial. G20 Governments could certainly increase and strengthen the already significant number of bilateral and multilateral social security arrangements that are already in place.

And the third challenge concerns sustainability. An overly generous social protection system may not be financially sustainable, but a system that does not deliver adequate benefits will not be economically, socially or politically sustainable. And the fact is that in many countries, fiscal consolidation has caused social protection to contract beyond the limits of adequacy. Policy choices need to take into account current and future impacts on inclusive growth and social justice, poverty and inequality.

In most countries, a mix of contributions and taxes ensures a sustainable and equitable financing base for social protection. We see no reason to believe that existing mechanisms cannot be adapted to changing circumstances.

Fully individualized mechanisms, such as private insurance, tend unduly to shift risk to individual workers, whereas publicly-mandated solutions are based on the principles of risk-sharing and collective financing. Every contributory form of social protection, including private arrangements, requires a regular and adequate income stream. Weakening existing systems, including through an erosion of employer contributions, would be likely to reduce the potential for risk sharing and redistribution – and that potentially exacerbates inequality including, particularly, gender inequality.

And a strong role for tax financing is necessary to complement contributions. That may require additional efforts to broaden the tax base and ensure a level playing field. Tapping into technological dividends could provide additional revenue and share productivity gains more widely; yet, there are significant implementation challenges in a globalized economy with significant tax competition. In this respect, we welcome, Ministers, the attention paid to these policy coherence issues by the Framework Working Group this year.

In conclusion, Chair, we appreciate Argentina putting such important issues before us these days. These seem to us to touch upon the basic fabric of our economies and societies, and the challenges we face in constructing the future of work we want.

I look forward to your views.