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and Pacific Region 21-22 April 2010, Manila Valerie Schmitt-Diabete International Labour Office
Disclaimer: The views expressed in this paper/presentation are the views of the author and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence of their use. Terminology used may not necessarily be consistent with ADB official terms.
Issues to be discussed
☯ The need, economic crisis and coverage deficit ☯ The UN Social Protection Floor Initiative ☯ Roots and Rational ☯ Social security strategy for extension of coverage ☯ Selected good practice from Asia ☯ Social impacts of social transfer ☯ Affordability
The need, economic crisis and coverage deficit
☯ The need and economic crisis Every human being, whether poor or not poor, needs social protection. The needs are rising in the time of crisis. But the gap, particularly in the developing world, is significant
Old-age pensions: Legal coverage and effective active contributors
(by region, 2008–09, %)
The UN Social Protection Floor Initiative
☯ Nine joint initiatives endorsed by the United Nations System Chief Executives Board for Coordination (CEB) in April 2009 to effectively address the crisis, accelerate recovery and pave the way for a better future:
Additional financing for the most vulnerable Food Security Trade A Green Economy Initiative A Global Jobs Pact A Social Protection Floor Humanitarian, Security and Social Stability Technology and Innovation Monitoring and Analysis
A basic set of essential social rights and transfers, in cash and in kind, to provide a minimum income and livelihood security for poor and vulnerable populations and to facilitate access to essential services, such as health care; Geographical and financial access to essential services, such as water and sanitation, adequate nutrition, health and education, housing, etc.
Roots and Rational
☯ Human need As described before. Human right
The rationale is also rooted in the international legal frameworks. e.g: The Universal Declaration of Human Rights lays down that everyone, as a member of society, has the right to social security, the International Covenant on Economic, Social and Cultural Rights, being a treaty, opens for signature and ratification and thus, a means for enforcing these human rights. The Declaration of Philadelphia of the ILO, adopted in 1944, has also recognized it as a universal right. As an UN agency specifically charged with setting international labour standards, the ILO has over the years adopted a range of instruments, Conventions and Recommendations, which lay down concrete obligations and guidelines for States to implement this right since 1919. Amongst the currently-valid ILO social security instruments, the most prominent is the Social Security (Minimum Standards) Convention, 1952 (No. 102).
In addition to being a basic human right and a social necessity to combat poverty, insecurity and inequality, social security is also proved as an economic necessity to unblock the full economic potential of a country, only people that are healthy, well educated and well nourished can be productive and have capacity to consume.
Social security stragety for extension of coverage
☯ The Social Security Staircase
The minimum set of social security guarantees, defined as a floor in the Social Security Staircase strategy, consists of four essential guarantees:
All residents have access to a nationally defined set of essential health care services; All children have income security, at least at the level of the nationally defined poverty line level, through family/child benefits aimed at facilitating access to nutrition, education and care; All those in active age groups who are unable to earn sufficient income on the labour markets should enjoy a minimum income security through social assistance; All residents in old age and with disabilities have income security at least at the level of the nationally defined poverty line through pensions for old age and disability. Effectively, it constitutes the universal access to essential social transfers of the SPF.
Social security strategy for extension of coverage (continue)
☯ Two-dimensional strategy for the extension of social security coverage The scope for increasing coverage to population groups
This strategy reflects four core principles
Universality. Progressiveness. Pluralism. Outcome focus.
Selected good practice from Asia
Health insurance for the rural population: 54.3% of the population of 1.3 billion still live in the rural areas. A new rural corporative medical care (NRCMC) was launched in 2003 with an aim of covering all by 2010. At the end of 2008, the NRCMC has been operated in all rural counties (2,729) since 2008, covering 830 million people at the end of 2009. Voluntary participation, Government organization with high subsidy. The ratio of contribution by the insured person to Government's is Y10: Y20 in 2003, Y20: Y80 in 2009 and Y30: Y120 in 2010 . Hospital care and treatment of serious diseases are commonly covered, but financing less than 50% of the total health expenditure on average. Health insurance for urban uninsured residents (HIUR): tagetting the urban uninsured residents, mainly consisting of the elderly, children and students, amounting to about 100-200 million. Piloted since 2007 with a view to covering all targeted people by 2010. Voluntary participation but significantly subsidized by the Government. The shares of subsidy as percentage of the total costs are about 36% and 56% for the elderly and children respectively in 2008. The minimum living standard guarantee program: important component of social assistance. Piloted in Shanghai in 1993 and having achieved universal coverage 2007. In 2008, 66 million people, nearly 5% of the national population, received cash benefits. It costs the Government CNY62 billion，about 1.0% of its annual revenue or 0.2% of GDP. Rural old-age pension: Piloted since 2009 with a view to covering all rural population by 2020. Consisting of two pensions: flat-rate universal pension financed by the State and individual account pension mainly financed by the insured persons and local cooperatives if possible.
Selected good practice from Asia (continued)
☯ Universal coverage of health insurance in Thailand
The HI system consist of, since 2002, three schemes, namely Civil Servant Medical Benefit Scheme, Social Security Scheme (SSS) and Universal Coverage Scheme (UC), providing health protection to almost all population. But before the introduction of UC, the coverage gap was as large as 80% of population, most of them work in the informal sector with irregular and low income. Whilst the comprehensive benefit package provided under UC is basically identical to that provided under SSS except for no cash benefit, no co-payment is required from the UC beneficiaries.
Rashtriya Swasthya Bima Yojana (RSBY) HI for the poor in India
RSBY was launched in April 2008 by the Government of India. The objective is to provide protection to people living below poverty line (BPL) from financial liabilities arising out of health shocks that involve hospitalization. Beneficiaries are entitled to hospitalization coverage for most of the diseases that require hospitalization. Pre-existing conditions are covered from day one and there is no age limit. Coverage extends to five members of the family which includes the head of household, spouse and up to three dependents. With regard to financing, it is almost entirely financed out of the Government budget on the basis of Rs 30,000 (U.S.$ 660) per BPL family per year, 75% of which by the Central Government and 25% by State Government. Besides, administrative cost is financed by the State Government, whilst cost of Smart Card by the Central Government (Rs.60 (U.S.$ 1.30) per beneficiary). Beneficiaries only pay Rs. 30 (U.S.$ 0.65) per year as registration fee.
Social impacts of social transfer
☯ Evidence from poor countries
For instance, the combination of a modest cash benefit for children and a modest pension, which could be an “entry level” of SPF for poorer countries, could reduce the poverty head count by about 40% as documented by some studies.
Evidence from rich countries
The experiences of the EU and OECD countries show that the higher social expenditure is, the lower is the poverty rate. Income inequality in the Scandinavian EU countries and the Netherlands (with high social expenditure and Gini coefficients ranging between 0.225 and 0.261) is much lower than in some other countries with lower levels of social expenditure, notably the “Anglo-Saxon” countries of the United Kingdom, Ireland and the United States (where Gini coefficients are well above 0.3). The percentage of children who grow up in poor households is around 3% in the Nordic countries, compared with 16% in Ireland and the United Kingdom and 22% in the United States. The percentage of the elderly living below the poverty line in the Netherlands is 1.6% while in Ireland it is 35.5 %. These countries spend on social transfers: 24% on average in the Scandinavian countries plus the Netherlands, whilst 17% on average in the three Anglo-Saxon countries.
☯ The ILO studies provide a first estimate of the costs of a hypothetical basic social protection package, with four components:
Essential health care based on a health system staffing ratio of 300 medical professionals per 100,000 population, overhead 67% of staff cost; Child benefits equal to 15% of per capita GDP capped at US$ 0.50 PPP, for a maximum of two children in age bracket 0-14; Basic social assistance for the unemployed equal to 100 day guaranteed employment paid at 30% of per capita daily GDP to 10% of the population; Basic old age and invalidity pensions equal to 30% of per capita GDP capped at US$ 1 PPP per day; Administration cost = 15% of cash benefit expenditure.
Costs for components of a basic social protection package as % of GDP for selected countries in Africa and Asia
The studies show that the initial gross annual cost of the overall basic social protection package (excluding access to basic health care that to some extent is financed already) is projected to be in the range of 5% to 10% of GDP in 2010.
☯ Social protection expenditure
Total public social protection expenditure as % of GDP by region
On average, 18.1 % of global GDP is allocated to social security, whilst the share varies across the world, ranging, by region, from 6.4% to nearly 27% of GDP.