ILO Global Flagship Programme on Building Social Protection Floors for All - Global Development Partners’ Meeting

Excellencies, Ladies and Gentlemen,

Fellow panelists

The recent publication of the World Social Protection Report reminded us, again, that despite important progress, the world still has major social protection gaps.

And -- in case we needed a reminder, the impact of COVID-19 has demonstrated what the human cost of these gaps can be.

And also - that one of the most central reasons for social protection not extending to all, is the ongoing and significant funding gap.

The ILO has calculated that to finance the total cost of a set of universal benefits in developing countries for one year, an additional $1.2 trillion US dollar would be needed, equivalent to 3.8 per cent of these countries combined GDP.

Realizing a change of that magnitude will take truly combined efforts.

Everyone needs to do more, and to do better; Countries need to do more to extend and deepen coverage; we, as UN need to do more to support this; and -- I also believe development partners and the private sector need to do more.

Often, the discussion on financing social protection focuses on attempts to move social protection up the list of national priorities for funding.

This is indeed important. We should work toward a higher-level agreement on this, particularly considering the long-term impact of social protection.

However, it is also clearly not enough. It is not enough for the Ministries traditionally involved in social protection to advocate -- amongst many other development needs, for additional public resources.

To that end, I am very happy that we have a representative of a Ministry of Finance from Angola, on our panel today - as they have a central position on these matters.

To make progress, we need a wider consensus on the role of social protection -- not only to protect individuals and families, but also as an enabler for economic growth, and as such -- a fully integrated component of national development strategies, in particular during these challenging times.

But we also need to understand that when the size of the cake – in this case the Government Budget – is small, and where there, -- as mentioned, -- are many important competing priorities, an effort to increase fiscal space for social protection can only succeed if integrated within the broader effort on financing for development. 

And in this, the UN, working as a team, can make a valuable contribution.

The SDGs and ‘Integrated National Financing Frameworks’ can lead to essential opportunities to link discussions across ministerial mandates and sectoral silos.

Here in Lao PDR, the UN Country Team is using this framework to support the Ministry of Planning and Investment and other key partners in developing a financing strategy for the 9th National Socio-Economic Development Plan.

This allows for a holistic and integrated approach to finance progress towards its objectives, engaging all sources of finance including both public and private, domestic and international funding and financing streams, and all relevant stakeholders.

In turn, we believe this will give the Government the best chance of making efficient use of all available resources in pursuit of national development priorities, that leaves no one behind.

Returning to the cake analogy, the challenge in this case is not only “how to increase the slice for social protection”, but also “how to increase the size of the entire cake”. I would propose that doing this will require four important dimensions:

1. Bringing all actors together, both at country level and internationally, recognizing that each actor has an important role to play, and critical contribution to make,
2. Thinking creatively of progressive ways of increasing the domestic tax base, despite the challenges that entails. We know that Cambodia made interesting progress on this, which we will hear more about today,
3. A move toward increasing formalization. Whether we think of contributory or tax-funded social protection, the formalization of economic activity and jobs, is essential to increase the revenue base, and to strengthen the social contract between the state and individuals as a foundation for sustainable social protection. – and we must also be mindful of any possible risk of unintended reverse incentives when introducing for example the employer’s contributions to social protection schemes…
4. and finally, the willingness to question how certain issues are handled and debated, with one pertinent example being the ongoing discussion around debt.

Allow me to elaborate on this last point as this is of particular relevance to Lao PDR. But, when considering the extra spending on stimulus packages by many countries to soften the impact of COVID-19, I can imagine this may become increasingly relevant also to many more countries.

First – let us be clear - that unsustainable debt levels leaves continuous fiscal gaps, and their implications for public policy should be of concern to us all.

However, if we automatically assume that a country with a high debt to GDP ratio needs to put in place austerity measures and reduce already limited spending on social protection, we risk drastically reducing the opportunities for a brighter future for many of the world’s most vulnerable.

Rather, the circumstances call for us to engage in more detailed and nuanced thinking about the purpose of borrowing, and what that implies for debt sustainability.

Spending can be put to either productive or unproductive use. And when it comes to borrowing, what is essential is that resources are put to productive use, that creates demand and future base for revenue -- that can cover the cost of repayments.

And crucially, under the current circumstances, with the aim of rapid COVID recovery and long-term economic sustainability, I am tempted to argue that this combined with progressive taxation and debt cancellation schemes, should include a new consideration of spending on social protection, and pro-poor equality generating primary education and public health.

In the midst of an economic hit on the scale of COVID-19, threatening to wipe out decades of progress and undermine the productive potential of generations, expanding social protection now , also in its broader sense, can yield economic benefits that over time could pay for themselves.

Moreover, much of the money transferred through social protection will be spent in local economies, providing a much-needed boost towards a post-pandemic recovery.

So, I encourage us all to think creatively, about how social protection could be part of the response to the longer-term economic challenges that many countries now face.

And to the relevant actors, I would like to reiterate the recent call of Our Common Agenda by the UN Secretary-General, António Guterres, urging that now is the time to re-embrace global solidarity.

Allow me also to borrow a well quoted expression from the ILO Philadelphia Declaration which stated that “Poverty anywhere is a threat to prosperity everywhere”. This was true in 1944 and, in a world that is increasingly global, is perhaps even more valid today.

I began by emphasizing the gaps in social protection funding. I acknowledge that these gaps can only be sustainably covered by national efforts, and depend, above all, on domestic will.

However, it must also be recognized that this is something that all countries cannot solve immediately, as some countries, even with the best of will, lack the conditions and resources to immediately close these gaps

And so, international solidarity is needed, to support the countries most in need and to assist them in taking gradual steps to close their funding gaps. This will require determination, political courage and creativity. Redistribution is a matter of political choice.

Discussions on the creation of a Global Social Protection Fund are important, but also discussions at country level to find innovative methods, such as national Social Protection Funds, that combine gradual increasing commitments from national governments, private sector and with financial support and technical assistance from development partners could be an important part of a solution.

Last week, as part of the UN initiative ‘Financing for the Development in the Era of COVID-19 and Beyond’, the UN Secretary-General announced the creation of a ‘Global Accelerator’ to help ensure global financing to create 400 million jobs and extend social protection to 4 billion people currently without coverage. This is what we need, bold, and at scale!

To close, let me reiterate from his message the three key calls, for:

• greater policy coherence;
• sound financial architecture through domestic resource mobilization; and
• international solidarity and enhanced multilateral cooperation,

to accelerate social protection extension and job creation.

Thank you for your attention, and I wish you a very productive session.