International Labour Office e 1 1e 1 1 1‹#›‹#› The ILO Global Campaign to extend Social Security to all Universal social security benefits against poverty and social exclusion Michael Cichon Social Security Department International Labour Office, Geneva Lisbon, 2 October 2006

International Labour Office e 2 2e 2 2 2‹#›‹#› The ILO Global Campaign to extend Social Security to all “The world does not lack the resources to eradicate poverty, it lacks the right priorities.” Juan Somavia, Director General of the ILO

International Labour Office e 3 3e 3 3 3‹#›‹#› The ILO Global Campaign to extend Social Security to all Structure of presentation Point one: The Problematique Point Two: Debunking the theoretical non- affordability myth of social security Point Three: Debunking the practical non- affordability myth - or : Can low income countries affoard basic social transfers ? Point four: Conclusions - Changing the social security development paradigm

International Labour Office e 4 4e 4 4 4‹#›‹#› The ILO Global Campaign to extend Social Security to all Point One: Problematique 80% of people live in social insecurity, 20% in abject poverty Social security reduces poverty by at least 50% in almost all OECD countries Social security reduces income inequality by about 50% in many European countries Social security universally accepted as human right (article 22, Universal declaration) Hence social security transfers are a pivotal tool to combat poverty and social exclusion and yet social security is underutilised in national anti-poverty and development strategies

International Labour Office e 5 5e 5 5 5‹#›‹#› The ILO Global Campaign to extend Social Security to all Point Two: Debunking the theorectical non-affordability myth The « conventional old » argument is : There is loss in potential GDP due to equity efficiency trade-off Conclusion: That trade – off is a myth: « Countries can grow with equity » (Hilary Benn)

The ILO Global Campaign to extend social security to all International Labour Office Can low-income countries afford social security? DfID-GTZ-ILO Research Seminar “Challenging the Development Paradigm: Rethinking the Role of Social Security in State Building” 4-5 September 2006, Geneva Krzysztof Hagemejer and Christina Behrendt Social Security Department, International Labour Office, Geneva Empirical evidence? OECD

International Labour Office e 7 7e 7 7 7‹#›‹#› The ILO Global Campaign to extend Social Security to all Point three: Debunking the practical non-affordabilty myth: Can low income countries afford basic social security? Two ILO costing studies and one distribution study on basic social protection package in low-income countries – Costing min. benefit packages in seven countries in Africa (Pal et al. 2005) – Costing min.benefit packages in five countries in Asia (Mizunoya et al. 2006) – Assessing the poverty in effects two low income African countries (Gassmannn and Behrendt, 2006)

International Labour Office e 8 8e 8 8 8‹#›‹#› The ILO Global Campaign to extend Social Security to all Benefit assumptions for calculations Basic old age and invalidity pensions: – Senegal/Tanzania: Benefit of 70% of food poverty line – 12 countries: Benefit of $0.5 PPP per day Child benefits: – Senegal/Tanzania: Benefit of 35% of food poverty line half a pension), paid to all children in school age (7-14) and orphans also below 7 – Benefit of $0.25 PPP per day (half of pension), paid to all children up to the age of 14 Essential health care: Annual per capita costs based on the Commission on Macroeconomics and Health estimates of US$ 34 by 2007 and US$ 38 by 2015 Administration cost: 15% of benefit expenditure for universal cash benefits

International Labour Office e 9 9e 9 9 9‹#›‹#› The ILO Global Campaign to extend Social Security to all Cost of universal basic old age and disability pension

International Labour Office e ‹#›‹#› The ILO Global Campaign to extend Social Security to all Cost of universal child benefit for children aged 0-14

International Labour Office e ‹#›‹#› The ILO Global Campaign to extend Social Security to all Cost of essential health care based on CMH estimates

International Labour Office e ‹#›‹#› The ILO Global Campaign to extend Social Security to all Cost of basic social protection package

International Labour Office e ‹#›‹#› The ILO Global Campaign to extend Social Security to all Share of total costs covered by domestic financing (assumed government contribution 20% of govt. expenditure)

International Labour Office e ‹#›‹#› The ILO Global Campaign to extend Social Security to all Financing alternatives: here Cameroon

International Labour Office e ‹#›‹#› The ILO Global Campaign to extend Social Security to all Estimated effect of cash transfers on reduction of poverty (headcount)

International Labour Office e ‹#›‹#› The ILO Global Campaign to extend Social Security to all Assessing potential impact and costs of cash transfers in Senegal and Tanzania: Cost of benefit package as percentage of GDP

International Labour Office e ‹#›‹#› The ILO Global Campaign to extend Social Security to all Estimated effect of a basic benefit package on poverty headcount : Tanzania

International Labour Office e ‹#›‹#› The ILO Global Campaign to extend Social Security to all Other relevant experience A GTZ-sponsored targeted cash transfer pilot in Zambia has shown that a scaled up social assistance to a national level is estimated to cost 0.5% of GDP. Universal pension schemes in Botswana, Brazil, Lesotho, Mauritius, Namibia, Nepal, and South Africa, cost between 0.2 and 2% of GDP The old age grant in South Africa improved the well-being of older persons but also of other household members, namely children living in the household The Mexican conditional cash transfer programme Progresa has shown positive effects on children’s nutritional and health status and vaccinations and school enrolment.

International Labour Office e ‹#›‹#› The ILO Global Campaign to extend Social Security to all Other relevant research: effect of universal pensions on old age poverty (ECLAC)

International Labour Office e ‹#› The ILO Global Campaign to extend Social Security to all Point Four: Changing the social security development policy Social security is thus an investment in people and states through – reduction of poverty and hence social exclusion – fostering productive economies through decent working and living conditions (if set-up right…) – fostering nation building – Contributing to a socially beneficial globalisation

International Labour Office e ‹#›‹#› The ILO Global Campaign to extend Social Security to all The developmental policy paradigm of the Global campaign:Towards progressive universalism Universal but progressive could mean: – Building progressively higher levels of protection – Based on a basic layer of protection consisting of Basic health care for all within a pluralistic system Child benefits to foster school attendance Pro-active (self targeting) social assistance universal benefits in old age, disabilty and loss of breadwinner

International Labour Office e ‹#›‹#› The ILO Global Campaign to extend Social Security to all Point Four: Conclusions Coordinated forward looking national social protection policy strategies should sequence implementation of various social programmes Capacity should be built in coordinating government agencies, line ministries and then at the local level in the areas like: – Social protection development, analysis and design – Administration of social protection programmes THE TIME TO ACT IS NOW