Facilitating transition between social assistance and social insurance

Ensuring bridges between different social protection programmes and financing mechanisms - including smooth transition paths (forward and backward) between social assistance and social insurance schemes - has increasingly become an important issue in many developing countries. This has the potential to create better impetus for accessing formal employment, expand social protection coverage, stabilize income, reduce vulnerabilities, and, in doing so, to ensure both the right to decent work for those in working age and to social protection for all.

The very notion of ‘graduation’ from social assistance is a contested one as it often suggests the idea of ‘graduation’ from social protection altogether and neglects that there can—and should—be transitions from one form social protection to another (or a combination of forms). Social protection is a human right of all, and hence it is not expected that individuals will “graduate” from social protection but rather transition across different components of a holistic social protection system.

For this, it is important to ensure coherence across social assistance and social insurance programmes. This will avoid, for example, situations where eligibility criteria and exit rules of social assistance programmes create disincentives to a smooth transition of informal and self-employed workers into the formal economy—especially for working-age members of low-income households. It will also prevent scenarios where social insurance administrative procedures, benefit suitability and contribution levels or schedules hinder registration and retention of workers in the contributory system.

Against this background, this report aims to provide a review of international experiences on ensuring better transitions between social assistance and employment-related social insurance. The report proposes a conceptual framework and policy recommendations based on a review of international experiences in ensuring better transition between tax-financed social assistance and employment-related social insurance.

It identifies four critical factors:

• Social assistance design features (push factor): play a key role in incentivizing beneficiaries to search for work;
• Social insurance design features (pull factor): can be adapted to make schemes more inclusive and attractive for workers currently excluded;
• Labour market support measures (push factor): providing support for human capital development or labour activation,
• Financial incentives for joining social insurance (pull factor): encourage workers and businesses to join social insurance schemes.