1. UN Department of Economic and Social Affairs Establishing a Social Floor for the Global Economy Isabel Ortiz Senior Interregional Advisor United Nations DESA UN Commission for Social Development Side Event by ILO-HelpAge-UNDESA New York, 7 February 2008

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

3. Ratio of the Income of the Richest 20% to the Poorest 20% YearRatio18203:1 18707:1 191311:1 196030:1 199161:1 199774:1 2005103:1 Source: UNDP Human Development Reports 1999 and 2005, New York Historical Trend: Inequality Keeps Rising

4. Apartheid at a Global Scale? Need of a Global Social Floor Source: Sutcliffe, 2005. Department of Economic and Social Affairs. WP 2. United Nations WP 2. United Nations

5. A Global Social Floor Defined as a basic and modest set of social security benefits for all citizens Defined as a basic and modest set of social security benefits for all citizens 1.Financing universal access to essential health care 2.Income security for all children through child benefits 3.Some modest conditional support for the poor in active age (employment programmes, benefits), and 4.Income security through basic, tax-financed, universal non-contributory pensions for older persons, persons with disabilities and those who lost the main breadwinner in a family All countries have some form of social security but few provide a basic social floor for all All countries have some form of social security but few provide a basic social floor for all

6. The case for a Global Social Floor: Social Justice Arguments Unacceptable levels of poverty and inequality Unacceptable levels of poverty and inequality Half of the world lives below the $2-a-day poverty lineHalf of the world lives below the $2-a-day poverty line The poorest 50% of the world’s adult population receives 1% of global wealth (UN WIDER, 2006)The poorest 50% of the world’s adult population receives 1% of global wealth (UN WIDER, 2006) Social security is a human right: Social security is a human right: Article 22 of the Universal Declaration of Human Rights states: “Everyone, as a member of society, has the right to social security”Article 22 of the Universal Declaration of Human Rights states: “Everyone, as a member of society, has the right to social security” But 80% of global population remains without accessBut 80% of global population remains without access

7. But Also Strong Economic Arguments  Inequality is economically inefficient / dysfunctional  World problem of overproduction and global excess capacity in the context of weak effective demand  Consumption concentrated in top income deciles  Raising the incomes of the poor increases domestic demand and, in turn, encourages growth by expanding domestic markets  A Global Social Floor can be an effective instrument to: Boost economic growth by raising domestic demand / internal markets Boost economic growth by raising domestic demand / internal markets Enhance human capital and productive employment - a better educated, healthy and well nourished workforce. Enhance human capital and productive employment - a better educated, healthy and well nourished workforce.

8. … and Political Arguments  A Global Social Floor can be effective to prevent conflict and create politically stable societies  Poverty and gross inequities tend to generate intense social tensions and violent conflict  The huge disparities in income inequality encourage uncontrolled migration  At the international level, globalization will find further resistance unless it deals with its social aspects => Need of a global social contract => Need of a global social contract

9. Source: OECD Transfers Reduce Poverty more than 50% in OECD countries

10. South Africa Social Transfers Effective to Reduce Poverty and Destitution – Cost 3% GDP Source: Sampson, M. 2006, EFPRI South Africa => However social transfers are rarely considered in National Development Strategies/Poverty Reduction Strategies in Developing Countries => Social Transfers can make the difference between achieving MDG1 of halving poverty by 2015 or not

11. Redressing Income Assymmetries and Reducing Poverty Requires: National Development Strategies that include 1. Employment-generating macroeconomic and sector policies 2. Adequate labour regulations and standards 3. Social Transfers – A Social Floor 4. Progressive fiscal policies HOUSEHOLD INCOME = Earnings + Rents/Private Transfers + Social Transfers – Taxes

12. A Social Floor is Affordable even in Low Income Countries Affordability in African and Asian countries (old-age /disability pension and child benefit) (% of GDP) Source: ILO, 2007. Social Security Department, Geneva

13. Social Pensions Cost less than 1% GDP in Most Countries Source: UN DESA, 2007: World Economic and Social Survey 2007, United Nations

14. Is there an Old-Age Crisis? Future contingent liabilities not a problem because of changes dependency ratios Source: UN DESA 2007

15. Financing a Global Social Floor  National Sources:  A Social Floor is affordable, estimated at an average 2-4% GDP in developing countries  Several countries have started building a social floor: Namibia, South Africa, Botswana, Mauritius, Bolivia, Brazil, Argentina, Thailand…  Social transfers have to grow with the fiscal space made available by increasing GDP or Aid  Domestic resources exist:  Budget reallocation  Billions lost through tax evasion and inadequate tax systems  Currently South-North flow of funds that needs to be reversed

16. Financing a Global Social Floor International Sources: International Sources:  Strong argument given world inequalities, 70% explained by differences in income between countries  ILO estimates that Global Social Floor would cost between 2%-6% of global GDP  Mechanisms:  Increased Official Development Aid  Multilateral and bilateral ODA to governments  New instruments like SWAps and Budget Support ideal  A Global Welfare Fund? (Milanovic, to citizens)  Global tax justice  Collecting a minimum tax on corporate profits and strengthening tax cooperation  An International Tax Agency?  Voluntary donations: Global Trust (ILO)

17. 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

18. Thank you United Nations Department of Economic and Social Affairs http://www.un.org/esa/ Email: ortizi@un.org