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UNITED NATIONS Department of Economic and Social Affairs Social Policy: Social Policy: The Way Forward Isabel Ortiz Senior Interregional Advisor United.

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Presentation on theme: "UNITED NATIONS Department of Economic and Social Affairs Social Policy: Social Policy: The Way Forward Isabel Ortiz Senior Interregional Advisor United."— Presentation transcript:

1 UNITED NATIONS Department of Economic and Social Affairs Social Policy: Social Policy: The Way Forward Isabel Ortiz Senior Interregional Advisor United Nations DESA ICSW 33 rd Conference 30 June-5 July 2008 Tours France

2 Distribution of World Income Development for whom? Distribution of world GDP, 2000 (by quintiles, richest 20% top, poorest 20% bottom) Source: UNDP Development Report 2005

3 Apartheid at a Global Scale? Source: Sutcliffe, Department of Economic and Social Affairs. WP 2. UNDESA  Half of the world lives below the $2-a-day poverty line  Need to bring redistribu- tion to develop- ment agenda

4 Ratio of the Income of the Richest 20% to the Poorest 20% YearRatio18203: : : : : : :1 Source: UNDP Human Development Reports 1999 and 2005, New York Historical Trend: Inequality Keeps Rising

5 North-South Transfers: Limited Overseas Development Aid Source: OECD [Compare to military expenditures!]

6 THE SOUTH FINANCES THE NORTH! Africa Sub-Saharan * Eastern Asia Western Asia Latin America Transition Economies Memorandum - HIPCs Least Developed Countries Source: Naciones Unidas, Department of Economic and Social Affairs World Economic Situation and Prospects, UN DESA, New York World Economic Situation and Prospects, UN DESA, New York. NET FINANCIAL FLOWS TO/FROM DEVELOPING COUNTRIES, IN BILLION US$.

7 Increasing Global Reserve Accumulation, Little left to governments to spend on social and economic development Tax Justice Network estimates that capital flight = $11 trillion, if taxed would significantly increase fiscal space for social policy

8 1980s-90s “Washington Consensus” Emergent New Paradigm: Emergent New Paradigm:  Growth (“priority”) through deregulation, free markets, supply side economics, minimalist governments, residual social policies.  Growth and equity through active promotion of national development. Winning “policy space”. Social and economic development integrated => actually bringing equity and social issues to all policy domains.  Cuts in public expenditures, avoiding fiscal deficits  Public investment for development; need to expand governments’ “fiscal space”  Privatization of public assets services, minimalist government (state as predatory, crowding out private sector)  Building state capacity to promote development, public investment, technology policy BUSINESS AS USUAL IS NOT AN OPTION: NEED TO BRING SOCIAL CONSIDERATIONS TO ECONOMIC POLICY

9 No Trickle-Down Effect: The Benefits of Economic Growth do NOT Automatically Reach All Source: Woodward and Simms, Department of Economic and Social Affairs. WP 20. United Nations. WP 20. United Nations.

10 Country Fiscal Deficit Targets over 3-year IMF Program Reduction % GDP What this could buy for one year Cameroon -0.7 to Could have doubled health expenditure Ghana -9.7 to – Could have doubled primary healthcare expenditure each year of the 3-year program Rwanda -9.9 to – Could double the health and education budget in each of three program years  Normal inflation target: below 5% per annum  Alternative: Expansive, employment- generating macroeconomic policies, tolerance to limited inflation  Normally deficit reduction a priority  Alternative: Public investment for development; need to expand governments’ fiscal space Examples of Standard Macroeconomic Policies and Alternative Options Source: Oxfam International 2003 and Rick Rowden, Action Aid 2007

11 IMF PapersOutside PapersEstimated Inflation Thresholds Fisher (1993)15%-30 % Bruno and Easterly (1998)40% Burdekin, et al (2000)3% for developing and 8% for rich countries Gylfason and Herbertsson (2001)10%-20% Pollin and Zhu (2005)15%-18% Bruno (1995)20% Barro (1996)Finds that a 10% increase in the annual inflation rate is associated on impact with a decline in GDP’s annual growth rate of only 0.24%. Sarel (1996) 8% Khan and Senhadji (2001) 11%-12% for developing and 1%-3 % for rich countries Ghosh and Phillips (1998) Finds that the inflation-growth relationship is convex, so that the decline in growth associated with an increase of 10-20% inflation is (1998) much larger than that associated with moving from 40% to 50% inflation.

12 1980s-90s “Washington Consensus” New Paradigm/Consensus:  Residual social policies (minimal, targeted to the poor), safety nets  Universal policies (for all). Importance of social policies for development, equity, domestic market, nation building, political stability  Labor flexibility, productivity  Decent work agenda, distribution issues (ie. wage policies); employment a result of adequate macro, economic and social policies  Commercialization of social services  Expansion of coverage of services (health) ensuring retention (education)  Cost recovery mechanisms (fees for services)  Avoidance of user fees, except for upper income groups in tertiary services BUSINESS AS USUAL IS NOT AN OPTION: NEED OF DIFFERENT APPROACHES IN SOCIAL POLICIES Source: United Nations National Development Strategies Policy Notes, 2008

13 1980s-90s “Washington Consensus” New Paradigm/Consensus:  Social Protection: pension reform  Importance of expanding pension coverage (social pensions) and addressing community needs  No interest for culture and values (intangible)  Culture and values important for tackling exclusion and building social cohesion  No attention at sources of conflict (“political”)  Conflict prevention  Selective participatory processes  National coalitions and social pacts/dialogue BUSINESS AS USUAL IS NOT AN OPTION: NEED OF DIFFERENT APPROACHES IN SOCIAL POLICIES (cont) Source: United Nations National Development Strategies Policy Notes, 2008

14 Universal vs. Targeted Social Policies Universal vs. Targeted Social Policies Residual approach 1980s-90s:  Public services only for the poor  Main reforms focused on privatizing/commercializing services for middle and upper classes (health, pensions, education)  In a context of fiscal austerity, cost recovery mechanisms such as fees for services were introduced Problems of targeting:  Expensive, at about 15% total programme costs  Complex to implement – not advised when poor large numbers  It backfired politically, middle classes had to pay for both expensive services and for the poor  Public services became of bad quality (and not accessible when fees)  United Nations agencies defend UNIVERSAL services (= for all, including middle classes, as part of a country’s social contract) combined with targeting to fast-track access of the poor. Targeting is administratively complicated: Undercoverage of the “Success” Stories in the Americas Undercoverage of the “Success” Stories in the Americas -Brazil: Bolsa Escola 73% of poor not reached -Mexico Oportunidades 40% of poor not reached -United States Food Stamps 50% of poor not reached

15 Is Social Policy Affordable in Developing Countries? Is Social Policy Affordable in Developing Countries? Countries at the same level of economic development differ significantly in their social spending Countries at the same level of economic development differ significantly in their social spending The size of social systems depends on political attitudes The size of social systems depends on political attitudes to reduce poverty and construct a society for allto reduce poverty and construct a society for all to expand internal markets and increase productivityto expand internal markets and increase productivity to win electoral supportto win electoral support Affordability is at the core of the social contract between governments and citizens: how much a society is willing to redistribute through taxes and contributions Affordability is at the core of the social contract between governments and citizens: how much a society is willing to redistribute through taxes and contributions Caution re: arguments about unmanageable fiscal crisis Caution re: arguments about unmanageable fiscal crisis A “Universal but progressive” approach to expand benefit coverage A “Universal but progressive” approach to expand benefit coverage

16 How to Bring Equity to the Development Agenda How to Bring Equity to the Development Agenda  1995 Copenhagen World Summit: “A society for all”  2005 NY World Summit – Reaffirmed Global Level  A new financial architecture needed to support social and economic development – More ODA, no South-North flows  Urgent need for global social policies, to counterbalance economic globalization, “A globalization for all”.  Urgent need to address food crisis  A global social floor Regional Level Second best option, a constructive alternative to unequal pattern of globalization Second best option, a constructive alternative to unequal pattern of globalization Regional social policies possible if the flow of resources from South to North stopped Regional social policies possible if the flow of resources from South to North stopped National Level  Policy – See NATIONAL DEVELOPMENT STRATEGIES SOCIAL POLICY  Design and implementation of adequate policies, new paradigm as explained earlier slides  Social Accountability/Monitoring/Social Audits

17 Social Dimension of Globalization Social Dimension of Globalization Advocacy for: A GLOBALIZATION FOR ALL, based on people’s centred development, redressing social assymmetries E.g. more North-South transfers/ODA E.g. more North-South transfers/ODA E.g. global food crisis – it requires a “new deal” to ensure that food to people, not ad hoc emergency response E.g. global food crisis – it requires a “new deal” to ensure that food to people, not ad hoc emergency response A GLOBAL SOCIAL FLOOR is a basic and modest set of social security benefits for all citizens 1.Basic social pensions, tax-financed, universal non- contributory, for older persons and persons with disabilities 2.Child benefits 3.Some modest conditional support for the poor in active age (employment programmes, benefits), and 4.Financing universal access to essential health care A coalition for a world campaign with ILO, UNDESA, Helpage, UNICEF and… ICSW? A coalition for a world campaign with ILO, UNDESA, Helpage, UNICEF and… ICSW?

18 Social Pensions ($1 Day) Cost less than 1% GDP in Most Countries Source: UN DESA, 2007: World Economic and Social Survey 2007, United Nations

19 A Global Social Floor: Costs for basic social protection package as % GDP Old-age/disability pensions ($1 day) + child benefits ($0.5 day) + unemployment support ($1 day/100day/10% pop) + 15% admin costs Source: ILO, Social Security Department, Geneva

20 How to Bring Equity to the Development Agenda How to Bring Equity to the Development Agenda  1995 Copenhagen World Summit: “A society for all”  2005 NY World Summit – Reaffirmed Global Level  A new financial architecture needed to support social and economic development – More ODA, no South-North flows  Urgent need for global social policies, to counterbalance economic globalization, “A globalization for all”  Urgent need to address food crisis  A global social floor Regional Level Second best option, a constructive alternative to unequal pattern of globalization Second best option, a constructive alternative to unequal pattern of globalization Regional social policies possible if the flow of resources from South to North stopped Regional social policies possible if the flow of resources from South to North stopped National Level  Policy – See NATIONAL DEVELOPMENT STRATEGIES SOCIAL POLICY  Design and implementation of adequate policies, new paradigm as explained earlier slides  Social Accountability/Monitoring/Social Audits

21 South-South Cooperation  South-South Bilateral ODA  Limited, estimated at 4.4% of total ODA  Increasing role of China, India, Venezuela Brazil and S Africa  Regional Integration Most elaborate example is the European Union – but regionalism is quickly developing, all countries belong to some regional formation (ALBA, ASEAN, AU, CAN, CARICOM, LAS, MERCOSUR, SAARC, SADC)Most elaborate example is the European Union – but regionalism is quickly developing, all countries belong to some regional formation (ALBA, ASEAN, AU, CAN, CARICOM, LAS, MERCOSUR, SAARC, SADC) Several elements:Several elements: Finance (ensuring regional savings are used for regional development – e.g. Monetary unions such as Chiang Mai initiative, Latin American Fund and Bank of the South/ALBA) Finance (ensuring regional savings are used for regional development – e.g. Monetary unions such as Chiang Mai initiative, Latin American Fund and Bank of the South/ALBA) Intra-regional trade Intra-regional trade Policy coordination for social and economic development Policy coordination for social and economic development Raising living standards and expanding internal markets, etc Raising living standards and expanding internal markets, etc

22 Latin America most developed case of Southern Regional Integration  ALBA, CAN, MERCOSUR, UNASUR  Bank of the South (2007), Bank of ALBA (2008) created to redress social assymmetries

23 Regional Social Policies 1. An alternative to the lack of global policies: Using regional integration to promote endogenous development, economic growth, internal markets and social cohesion 2. Management of cross-border social problems: SARS, Avian Flu, migration 3. Economies of scale/division of labour e.g. education - specialized training/research centers expensive, not all countries can afford to have one 4. International risk pooling Redressing some of the limitations of national policies e.g. agricultural insurance and reinsurance, disaster prevention and management 5. A stronger voice in international and national negotiations Avoiding weak negotiating positions and dispersion by associating Avoiding weak negotiating positions and dispersion by associating 6. An instrument to promote human rights e.g. European Court of Human Rights

24 How to Bring Equity to the Development Agenda How to Bring Equity to the Development Agenda  1995 Copenhagen World Summit: “A society for all”  2005 NY World Summit – Reaffirmed Global Level  A new financial architecture needed to support social and economic development – More ODA, no South-North flows  Urgent need for global social policies, to counterbalance economic globalization, “A globalization for all”  Urgent need to address food crisis  A global social floor Regional Level Second best option, a constructive alternative to unequal pattern of globalization Second best option, a constructive alternative to unequal pattern of globalization Regional social policies possible if the flow of resources from South to North stopped Regional social policies possible if the flow of resources from South to North stopped National Level See UN NATIONAL DEVELOPMENT STRATEGIES SOCIAL POLICY NOTE Design and implementation of adequate policies, new paradigm as explained earlier slides Social Accountability/Monitoring/Social Audits

25 National Social Policies See United Nations National Development Strategies: Social Policy. Areas: Diagnosis of social and economic issues for all social groupsDiagnosis of social and economic issues for all social groups Policy Priorities to build countries that are socially inclusive, employment generating, economically robust and politically stable.Policy Priorities to build countries that are socially inclusive, employment generating, economically robust and politically stable. This includes national policies to implement internationally agreed goals such as Convention on the Rights of Persons with Disabilities, International Action Plan on Ageing, etc This includes national policies to implement internationally agreed goals such as Convention on the Rights of Persons with Disabilities, International Action Plan on Ageing, etc Adequate budgetary allocations, including recurrent expenditures (salaries of staff, supplies)Adequate budgetary allocations, including recurrent expenditures (salaries of staff, supplies) Implementation arrangements – service provision, empowering communities…Implementation arrangements – service provision, empowering communities… Monitoring mechanisms including Social Accountability/Community Monitoring/Social AuditsMonitoring mechanisms including Social Accountability/Community Monitoring/Social Audits

26 It Can Be Done: Remember that Not Long Ago There were children working in England’s mines and factories… …Spanish low class emigrants going to Latin America in search of any job… … poverty was widespread in the US or South Korea… …and in South Africa’s apartheid

27 Thank you United Nations Department for Economic and Social Affairs


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