What Kind of International Support for Social Protection Floors?

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Assistance to social protection floors in “normal” times

Funding social protection is a basic obligation of governments everywhere. ILO Recommendation No. 202 calling for social protection floors says that they include “essential” health care and “basic” income security for children, older persons and those in the active population unable to earn “sufficient” income, in each case subject to national definitions. That may be as precise as it is politically possible to be in an internationally negotiated definition of social protection floors.

However, it is doubtful that prospective donors would simply accept national definitions of need. One fear might be that recipient countries would set the target for their minimum need too high so as to take advantage of the donors’ generosity. On the other hand, de Schutter and Sepúlveda also said that the international support to individual LDCs should be phased out over time, including specifying a date when the support would end. That means that whatever the level of social protection provided, there would be a political constituency that would press to continue at least that level of protection once the international support ended. That might be an incentive to set the floor too low.

In the end, the recipient country and its donors would have to agree on the targeted content of the social protection floor. It would also have to be offered to all persons in the country, regardless of gender or ethnic identity or location. Furthermore, the recipient should have to open its accounts on social protection programs to donor scrutiny, as well as its tax revenue and fiscal expenditure accounts, since the international support would only cover what was needed beyond the “maximum available resources” that could be mobilized by the government and that would be made available for social protection. Those accounts should anyway be open to public scrutiny in the receiving country, as transparency is a necessary condition for the government’s accountability, although that is often not the case. In short, international financial assistance specifically to cover a financing gap in the full set of social protection services requires substantial international inspection and inevitably high conditionality.

The proposal is also quite complicated because much of social protection is provided as insurance, paid for by some combination of tax revenue and payments by beneficiaries as insurance premiums and/or as co-pays for the services. It could be that the international support scheme would only apply to the poorest people in the poorest countries, in which case one may assume both the premiums and co-pays would be zero. That would simplify the estimation of the need for international support, but also might excessively limit the number of people covered.

For example, unemployment insurance is one type of social insurance in a social protection floor. The poorest of the poor are more likely than not to be working in the informal or subsistence economy and not be covered by formal unemployment insurance. And yet, unemployment is likely to push many non-poor people into the ranks of the poor. So, should an international subvention be made available to a national unemployment scheme so that a larger percentage of a worker’s wages would be paid during spells of unemployment? Or a scheme that would extend the number of weeks of unemployment that would be covered? Are these decisions that foreign governments or multilateral institutions should make?

In the best of circumstances, the international community would have a tough job deciding how much of which types of social protection services and when and for how long to financially supplement services and in which countries. Similarly, recipient countries would have to decide how much international scrutiny they would wish to invite of their domestic social, tax and overall budgetary expenditure programs in order to qualify for the international support.

That does not mean that campaigns for an internationally supported social protection floor are wrong-headed, only that the transfer of international funds specifically to cover overall gaps in social protection floors is unworkable. Additional technical assistance to help countries design or improve their systems of social protection is fully warranted. And to be sure, there are already a number of funds that address specific pieces of a social protection floor, such as aspects of essential health care, including combating HIV/AIDS, malaria and TB. However, such funds are not the solution. They encourage governments to distort domestic policy priorities in order to capture the money offered for specific services on what are global—but not necessarily each country’s—priorities (see United Nations, World Economic and Social Survey, 2012).

A preferable solution is to assist all aid-receiving countries to qualify for general budget support, convincing donors that it is time to switch more of their assistance to this form of support, and then increasing the funding enough to help countries meet their social protection obligations.