Social Protection in the context of a Recovery with a Human Face

Isabel OrtizAssociate Director Policy and Practice UNICEF

Social Protection Floor Initiative WorkshopHong Kong, 10 June 2010

Social Protection and Crisis• 1929 crisis led to the New Deal • 2008-09: International call for social protection • Social protection is necessary to protect populations

from economic shocks

• Social protection counter-cyclical – Increasing incomes through employment and transfers – Raising domestic demand/expanding internal markets

• Social protection a component of fiscal stimulus plans

• BUT 2010 Post crisis fiscal consolidation/adjustment: – Need to keep the momentum on expanding social

protection– Need a recovery with a human face

Fiscal Stimulus Plans Q4 2008-Q3 2009, %GDP

Governments embark on fiscal stimulus plans from 2008 onwards

As an average, 25% of stimulus plans spent on protection (UNDP, 2009)

Mostly in high and middle income economies – but slow progress in LICs

Positive development, social protection expanded during crisis

Social Protection in Fiscal Stimulus Plans

Source: UNICEF, based on Zhang, Thelen & Rao, 2010

The Social Protection Floor Initiative: A UN System Emergency Response to the Crisis

In April 2009, the UN Chief Executives Board (CEB) has agreed on nine joint initiatives to confront the crisis, accelerate recovery and pave the way for a fairer and more sustainable globalization:

1. Additional financing for the most vulnerable 2. Food Security 3. Trade 4. A Green Economy Initiative 5. A Global Jobs Pact 6. A Social Protection Floor7. Humanitarian, Security and Social Stability 8. Technology and Innovation 9. Monitoring and Analysis

World Bank – Social Protection 2006-10

Large increase, mostly lending to middle income countries Mostly safety nets (less employment, food security)

UNICEF work in Social Protection: 124 programs in 76 countries

2010: IMF, G-20 IMF discourse up to February 2010:

– fiscal stimulus plans– easing macroeconomic policies– counter-cyclical interventions– measures to ensure social safeguards, including

protection of “priority social expending” February 2010: 2 New IMF Board Strategies:

– “Exiting from Crisis Intervention Policies” – “Strategies for Fiscal Consolidation in the Post-

Crisis World” June 2010 - G-20 Meeting: Call for fiscal consolidation and adjustment

2010-11: Governments Contracting Public

Expenditures

Main Issues to Watch Out

• Contraction of social expenditures• Contraction of social protection: – Targeting (reducing coverage) – Rationalizing/reducing benefits– Pension reform

• Cutting subsidies• Wage bill in social sectors

• While social protection expanded during the crisis - now contraction as a result of post crisis fiscal consolidation/adjustment?

• A recovery with a human face

Selected Issues in MICs and Lics (March 2009-10) Limit subsidies Wage bill caps/cuts Rationalize and further

target Pension and/or health

reformBarbadosBelarusBoliviaBurkina FasoCambodiaCote d’IvoireEl Salvador India IndonesiaIran Iraq JordanKiribatiLibyaMalaysiaMaldivesMexico MongoliaMoroccoNigeriaPakistanPanamaRepublic of CongoSri LankaSudanSyria Timor-LesteTogoTunisia

AlgeriaBarbadosBelarusBelizeBhutanBurundi CambodiaComorosCote d’IvoireDR Congo Georgia GhanaGrenadaIraqJordanKiribatiLatviaLibyaLithuaniaMaldivesMali Marshall IslandsMauritiusMoroccoParaguayPhilippinesSouth AfricaSri LankaSt Kitts & NevisSyriaTongaVanuatuZambiaZimbabwe

ArmeniaCambodiaGeorgia GrenadaIndia IndonesiaLibyaMaldivesMauritiusMongolia PolandSloveniaSyria Timor-LesteTogoUkraine

BelizeCote d’IvoireRussian FederationSt Vincent & Grenadines

Fiscal Space: Illustrated Adjustment Paths

• Fiscal stimuli have expanded safety nets, mostly in

MICs, however this should lead to longer-term SP

systems

• Slow progress in LICs, too many pilots

• Risk that the necessary expansion of SP may be

undermined in the context of post-crisis fiscal

adjustment

• Need to work with governments to identify fiscal

space, there are alternatives to suggested fiscal

austerity

• SP not included in MDGs – September 2010 World

Summit

Need to Keep Momentum on Social Protection

• SP systems, starting by a social protection floor, are necessary to:

– cushion populations from future shocks

– reduction of poverty and inequalities

– contributions to economic growth and human development

– fulfilling rights and supporting political stability

• Key Policy Issues: Expanding social protection coverage Benefits: Universal or Targeted? Attention to

“targeting” and reducing benefits under adjustment Unconditional or conditional transfers? Affordability, working with governments to expand

fiscal space and a recovery with a human face

Need to Keep Momentum on Social Protection II

Proven results:

Reduced poverty, better nutrition, improved household income stability (MDG 1, 4, 6)

Improved preventive health care (MDG 4 and 5)

Higher immunization rates (MDG 4)

Higher school enrollment rates reduced school drop-out (MDG 2,3)

Decline in child labour among children in rural areas (MDG 2, 8)

September 2010: World Summit Social Protection Contributes Effectively to MDGs

Thank you