The International Labour Organization (ILO) said even the poorest countries can afford to extend social protection to all their citizens. In its recently released World Social Protection Report 2017-19, the ILO said universal coverage in old-age pensions has been achieved by more than 20 countries, including Bolivia, Botswana, Brazil, Cabo Verde, China, Lesotho, Mauritius, Mongolia, Namibia, South Africa, Timor Leste, Trinidad and Tobago and Zanzibar (Tanzania). Countries normally achieve universal coverage by a combination of contributory social insurance and tax-based social assistance or social protection floors.
Finding out just how much social protection floors cost is easy, thanks to the ILO’s new calculator. The ILO Social Protection Floors Calculator makes it possible to estimate the costs of child and orphan allowances, maternity benefits, public works programs for those without jobs, disability and old-age pensions. Results can be found in its companion paper “Universal social protection floors: Costing estimates and affordability in 57 lower income countries ,” just released by ILO.
The cost of universal benefits for 364 million children, 81 million pregnant women, 103 million persons with severe disabilities and 153 million older persons ranges from 0.3 per cent of GDP for Mongolia to 9.8 per cent of GDP for Sierra Leone – with an average cost of 4.2 per cent of GDP in 57 lower income countries. “From a global perspective, these life-changing benefits for 700 million people – nearly 10 per cent of the world’s population – would require only 0.23 per cent of global GDP. That’s just 1.1 per cent of what G20 countries spent to bail out the financial sector in 2009. It is a question of priorities,” said Isabel Ortiz, Director of the ILO’s Social Protection Department.
While some countries have the fiscal space to develop social protection floors, others will have to gradually extend coverage and benefits according to national fiscal capacity, in combination with contributory social insurance schemes. “It is imperative that governments explore all possible financing alternatives to promote national socio-economic development with jobs and social protection,” Ortiz added. There is a wide variety of options to generate resources for social protection, including reallocating public expenditures, increasing tax revenues, expanding social security revenues, lobbying for aid and transfers, eliminating illicit financial flows, and managing debt, among others.
Another ILO-UNICEF and UNWOMEN 2017 publication, “Fiscal space for social protection and the SDGs. Options to expand social investments in 187 countries,” provides guidance on the multiple options that government have to make social protection a reality. For example, Indonesia, Ghana and other developing countries are using fuel subsidies for social protection. Argentina, Brazil, Tunisia and Uruguay, among others, extended contributory social security coverage by formalizing workers in the informal economy. More than 60 countries have successfully renegotiated debts, using savings from debt servicing for social programs. Brazil used a financial transaction tax to expand social protection. Bolivia, Mongolia and Zambia are financing universal old-age pensions, child benefits and other schemes from taxes on mining and gas.
Extending national social protection systems requires national consultations to agree on national priorities, identify programmes to close social protection gaps, set adequate benefits levels, and estimate the potential costs and possible financing sources based on national circumstances. National social dialogue with trade unions, employers, UN and civil society organizations, is often a Joint United Nations response to implement social protection floors . National social dialogue is fundamental to generate political will and to explore all possible fiscal space options in a country, articulating optimal solutions to promote jobs and social protection.