A Social Protection Floor: Bridging the Gap to Poverty

Eradication

Isabel OrtizAssociate Director UNICEF

Civil Society Forum UN Commission for Social Development

New York, 31 January 2012

Distribution of World Income:

Development for Whom?Global Income Distribution by Countries, 1990-2007 (or latest available) in PPP constant 2005 international dollars

Source: Ortiz and Cummins (2011) UNICEF

Global Income Distribution and Children/Youth in 2007in PPP constant 2005 international dollars

Source: Ortiz and Cummins (UNICEF 2011)

Namibia: Reduction of Under-5 Child Mortality Rate

U5MR = 72U5MR = 42

Improving Nutrition in India ... but poor ciIndia: Child Stunting U5

Proportion of children 0 – 59 months old who are stunted, by household income quintile in India

Source: National Family Health Survey, 1992–1993, 1998–1999 and 2005–2006.

Historical Perspective: Income Inequality Increasing

Source: Milanovic (2009) World Bank

• Business as usual not an option

• Need to bring redistribution to the development agenda

• Need for equitable, sustainable, employment generating national development strategies…

• … and a social protection floor for all

A basic set of universal social protection transfers and services for:

• Older persons• Children• Persons with disabilities• Unemployed• ... All countries have some form of social security but fewprovide a basic social floor for all See: www.socialsecurityextension.org

Lead UN agencies: ILO and WHOParticipating UN-system agencies - FAO, OHCHR, UN Regional Commissions, UNAIDS, UNDP, UNDESA, UNESCO, UNFPA, UNICEF, UNHABITAT, UNHCR, UNODC, UNRWA, WFP.Participating Civil Society: Helpage, ICSW…

Social Protection Floor

The case for Social Protection: Social Justice Argument – It is a Human Right

• Articles 22 and 25 of the Universal Declaration of Human Rights “Everyone, as a member of society, has the right to social security”

• Article 26 of the Convention Rights of the Child “States Parties shall recognize for every child the right to benefit from social security, including social insurance, and shall take the necessary measures to achieve the full realization of rights in accordance with their national law”.

• But 80% of the global population remains without access

• OPORTUNIDADES (Mexico) 10% reduction in poverty headcount ratio, poverty gap by 30%

• South African social transfers reduced poverty gap by 48%

The case for Social Protection: SP Reduces Poverty FAST

Proven results:

Reduced poverty, better nutrition, improved household income stability (MDG 1, 4, 6)

Improved preventive health care (MDG 4 and 5)

Higher immunization rates (MDG 4)

Higher school enrollment rates reduced school drop-out (MDG 2,3)

Decline in child labour among children in rural areas (MDG 2, 8)

See: UNICEF 2010: Social Protection: Accelerating the MDGs with Equity http://www.unicef.org/socialpolicy/index_55915.html

The case for Social Protection: SP Contributes Effectively to MDGs

The case for Social Protection: SP Contributes to Economic Growth

Inequality is economically inefficient / dysfunctional Consumption concentrated in top income deciles in all countries 2010: Depressed world markets, lack of demand, excess

capacity Questioning export-led model, surplus cannot be absorbed by

world markets. Need for domestic markets as a development strategy.

Social protection as a development policy: Raising the incomes of the poor increases domestic

consumption and, in turn, encourages growth by expanding domestic markets

Enhance human capital and productive employment - a better educated, healthy and well nourished workforce.

Per Capita Growth and Change in Income Inequality in 94 Developing Countries, 1990-2008 (or latest available)

Source: Ortiz and Cummins (2011) UNICEF

Inequality Slows Down Economic Growth

Social protection can be effective to prevent conflict and create politically stable societies

Poverty and gross inequities tend to generate intense social tensions and violent conflict

Social benefits ensure the political/electoral support of citizens

The case for Social Protection: SP Contributes to Political Stability

Income Inequality and Political Stability in 141 Countries, 2008

Source: Ortiz and Cummins (2011) UNICEF

Inequality Generates Political Instability

How older poor spend pension cash

transfer

Key Issues: Expanding Social Protection Coverage Happening! Examples:

TYPE OF TRANSFERS COUNTRIES

Unconditional

Household Income Support

Chile, China, Mozambique, Rwanda, Zambia

Social Pensions Argentina, Bolivia, Bangladesh, Brazil, Bostwana, Chile, Costa Rica, India, Lesotho, Mauritius, Moldova, Namibia, Nepal, Samoa, South Africa, Tajikistan, Uruguay, Vietnam

Child/Family Benefits Mozambique, South Africa, Mongolia, Senegal

Conditional

Cash for Work Argentina, Ethiopía, India, South Korea, Malawi, Rwanda, South Africa

Cash for Human Development

Argentina, Bangladesh, Brazil, Colombia, Ecuador, Honduras, Indonesia, Jamaica, Kenya, México, Mongolia, Nicaragua, Phillipines, Tanzania

UNICEF supporting 88 countries

Importance of Investing in Children NOW• Children 30% world population; 2011: 7 billion child

born • Early years critical for physical and cognitive growth –

irreversible impacts• Malnutrition and

missed schooling have long-term costs: negative impact adult productivity and adult earnings.

Key issues: AffordabilityEstimated cost of basic transfers: old-age and disability

pensions, child benefits, unemployment support

Source: ILO 2008, Geneva

Main options:

•Re-allocating public expenditures•Increasing tax revenues•Lobbying for increased aid and transfers•Fighting illicit financial flows•Tapping into fiscal and foreign exchange reserves•Borrowing and restructuring existing debt•Adopting a more accommodative macroeconomic framework (eg tolerance to some inflation, fiscal deficit)See Ortiz, Chai and Cummins 2011: Identifying Fiscal Space: Options for Children and Poor Households in 184 countries , UNICEF

FISCAL SPACE FOR SOCIAL PROTECTION EXISTS EVEN IN THE POOREST COUNTRIES

Key Issues: Social Protection and Crisis• 1929 crisis led to the New Deal • 2008-09: International call for social protection • Social protection is necessary to protect populations from

economic shocks

• Phase I of the Crisis: Social protection counter-cyclical – Social protection expansion, a component of fiscal stimulus

plans (25% average) • BUT Phase II 2010- onward fiscal consolidation/ adjustment:

– Need to keep the momentum on expanding social protection– Need a recovery for all

Phase I of Crisis (2008-09) - Social Protection in Fiscal Stimulus Plans 2009

Phase II 2010 - Governments Contracting Public Expenditures

Source: Ortiz. Chai and Cummins (UNICEF 2011) based on IMF 2011

Projected Change in Government Spending, 2011-12 avg. over 2008-09 avg as % GDP

Adjustment Measures and their Potential Risk

to the Poor • Contraction of public expenditures• Wage bill – Including salaries of teachers, health and social workers• Eliminating subsidies (eg food, fuel)• Social protection:

– Targeting (reducing coverage) – Rationalizing/reducing benefits

• While social protection expanded during the crisis - now contractionA social protection floor needed to achieve the MDGs and as a mechanism for future crisis.

Selected Issues in MICs and LICs (2010-11) Wage Bill Cuts or Caps

Reduce or Eliminate Subsidies

Further Target SafetyNets

Old-Age Pension Reform

Increase Consumption Taxes

Algeria Antigua and Barbuda Belarus Belize Benin Bosnia and Herzegovina Botswana Bulgaria Burkina Faso Burundi Cambodia Chad Chile Costa Rica Côte d'Ivoire Djibouti Fiji Gabon Grenada Guinea-Bis. Haiti Honduras India Jamaica Jordan Kazakhstan Kiribati Lebanon Lithuania

Macedonia Maldives Marshall Islands Micronesia Moldova Montenegro Mozambique Nicaragua Nigeria Palau Romania Samoa Serbia Solomon Is South Africa St. Kitts and Nevis St. Lucia Swaziland Tajikistan Tanzania Timor-Leste Tonga Tunisia Tuvalu Ukraine Vanuatu Yemen

Algeria Angola Belarus Bolivia Burkina Faso Burundi Cameroon Cape Verde Central African Republic Congo, Dem. Rep. of Dominican Republic Egypt El Salvador Fiji Gabon Ghana Grenada Guinea-Bissau Haiti Honduras India Indonesia Iran Iraq Jordan Kiribati Kosovo

Lesotho Liberia Macedonia Malaysia Maldives Mali Mauritius Mexico Mozambique Nepal Nicaragua Nigeria Pakistan Palau Philippines Romania Serbia Sierra Leone St. Kitts and Nevis Sudan Suriname Tanzania Thailand Timor-Leste Togo Tunisia Tuvalu Ukraine Yemen

Algeria Antigua and Barbuda Belarus Bolivia Bosnia and Herzegovina Bulgaria Cambodia Dominica Egypt El Salvador Fiji Grenada India Indonesia Jordan Kazakhstan Lebanon Malaysia Mauritania Mauritius Moldova Mongolia Mozambique Nepal Nicaragua Paraguay Peru Philippines Romania Russia St. Kitts and Nevis Sudan Timor-Leste Tunisia

Albania Antigua and Barbuda Belarus Belize Benin Bosnia and Herzegovina Bulgaria Egypt Guyana Honduras India Jamaica Jordan Lebanon Lithuania Mali Mexico Micronesia Montenegro Nicaragua Romania Russia Serbia St. Kitts and Nevis St. Lucia Tunisia Turkey Ukraine

Antigua and Barbuda Armenia Belize Bhutan Botswana Colombia Costa Rica Djibouti Dominican Republic Egypt Ethiopia Fiji Gambia Ghana Guatemala Guinea-Bissau Guyana India Iran Jamaica Jordan Kenya Kiribati Kyrgyz Republic Liberia Lithuania Malaysia Mali

Mexico Micronesia Moldova Montenegro Nicaragua Pakistan Panama Romania Russia Seychelles Sri Lanka St. Kitts and Nevis St. Lucia Sudan Suriname Swaziland Tanzania Thailand Togo Tunisia Turkey Uruguay Vanuatu Vietnam Yemen

Source: Ortiz. Chai and Cummins (UNICEF 2011)

There are alternatives to adjustmentNeed for a national dialogue to debate

alternative policy options for a Recovery for All

See: UNICEF 2010: A Recovery for All: A Call for Collaborative Action.

http://www.unicef.org/socialpolicy/index_55305.html

It Can Be Done: Remember that Not Long Ago

There were children working in England’s mines and factories…

…Spanish low class emigrants were going to Latin America in search of employment…

… poverty was widespread in the US or South Korea…

…and in South Africa’s apartheid

IT CAN BE DONEA SOCIAL PROTECTION FLOOR IS FEASIBLE

ERADICATING POVERTY IS OUR GENERATIONAL DUTY