UN pushes for social schemes to protect poor at mere fraction of national wealth by ILO Social Security Director Michael Cichon 11:42pm 14th Feb, 2011   The United Nations began laying the groundwork today for a global “social protection floor” that would guarantee food security, health services for all and old-age pensions, with a senior official stressing that all that is lacking is the political will for an initiative needing minimum investment.    “Social security is a human right. We’ve forgotten that for a very long time, but roughly only 20 per cent of the global population has actually access to social protection mechanisms that actually provide them with a safety mechanism against food poverty at least,” said UN International Labour Organization (ILO) Social Security Department Director Michael Cichon.    “And what’s a real scandal is you only need 2 per cent of global GDP [gross domestic product] to basically give security systems to all of the world’s poor,” he told a news conference in New York as the UN Commission for Social Development met to discuss social protection.    At a meeting in Oslo last September, ILO Director-General Juan Somavia and International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn agreed to explore the concept of a “social protection floor” for people living in poverty and those in vulnerable situations within the context of a medium to long-term strategy.    “Social transfers are the most powerful tool that a country has to redistribute income and combat poverty,” Mr. Cichon said. “It has a direct impact on poverty, inequality, on social and economic development. In Europe and OECD [Organization for Economic Cooperation and Development] countries, 50 per cent of poverty is reduced by social transfers. And yet 80 per cent of the global population does not access.    “Without investing in basic social protection you can’t grow at all. People that are hungry, people that are unhealthy, kids that haven’t been educated well and haven’t been nourished well will never be able to be productive and will never be able to have productive jobs and well-paid jobs in the formal economy. Without a basic investment in their health, their nutrition, and their well-being you will never be able to unblock economic growth to the extent we could.”    He highlighted social transfers, social security, pensions, basic health care, basic family benefits as tangible elements, noting that in Brazil for example, the Bolsa Familia welfare programme, costing 0.5 per cent of GDP – “which is next to nothing” – reaches out to 25 per cent of the population and makes “an enormous difference” in poverty and inequality reduction.    He described the social protection floor as a set of four entitlements guaranteeing basic income security for children, access to some social assistance for people of working age that prevents them from falling into absolute food poverty, a basic old-age pension for people over a certain age, and essential health services for all.    “This isn’t Utopia,” Mr. Cichon. “We can do this with as little as 3 to 4 per cent in a developing country and it will reduce the poverty head count by about 40 per cent. And if you add basic health service you can add on another 20 per cent. I don’t know of any other policy instrument as powerful as that.    “The key challenge is to effect a fiscal space for it,” he added, noting that the fiscal space in Africa grew by 4 per cent from 2004 to 2007. “There’s no reason why we shouldn’t cream off some of that in the next 10 years from basic transfers.”    Currently the world spends 17 per cent on social protection, but that is 19 per cent in developed world and only 4 to 4.5 per cent in developing countries. “There’s a lot of policy space if there is the political will,” Mr. Cichon stressed.    “The key is the political will. There’s no God-given economic law that says you shouldn’t spend more than X on your transfers and on preventing people from falling into deep poverty. There’s just a political decision to make a process that has to be reorganized.”    In the current global economic crisis developed countries are looking to cut deficits and public expenditure, consolidate budgets and finance fiscal stimulus package by cutting back on social expenditure.    “What it means in the end, and I think we should all understand that, is that the old, the disabled, the sick and the poor are going to pay for the crisis for the next few years,” Mr. Cichon warned. “And it’s a pretty straightforward message and a pretty perturbing message”    Nov 2010    UN study finds most people worldwide have no social security.    Basic social security remains out of reach for most people across the world, especially in poorer countries, despite the crucial role it plays in cushioning people from the consequences of economic crises, according to a United Nations report unveiled today.    The “World Social Security Report 2010-2011: Providing coverage in times of crisis and beyond,” prepared by the UN International Labour Organization (ILO), examines the gaps in access to social security programmes in areas such as health care, pensions, social assistance, and unemployment benefits.    It shows that most of the world’s working age population and their families lack effective access to comprehensive social protection systems.    Worldwide, nearly 40 per cent of the working-age population is legally covered by contributory old-age pension schemes, according to the report.    In North America and Europe, this number is nearly double, while in Africa less than one-third of the working-age population is covered even by legislation. In sub-Saharan Africa, only 5 per cent of the working-age population is effectively covered by contributory programmes, while this share is about 20 per cent in Asia, the Middle East and North Africa.    “The current crisis has highlighted the importance of having a minimum set of social security benefits for all in place,” said Juan Somavia, the ILO Director-General. “This is why we advocate for social security and a global social protection floor. This report shows that building adequate social protection for all, drawing on a basic social protection floor, as called for by the ILO Global Jobs Pact, is now more urgent than ever,” he added.    According to the report, social security plays an important role in times of economic crisis, including the current one, as an “irreplaceable economic, social and political stabilizer” that provides income replacement and helps stabilize aggregate demand, without negatively effecting economic growth.    The study also warns that cutting social security due to fiscal consolidation aimed at coping with increased deficits and public debt “may not only directly affect social security beneficiaries and consequently the standards of living of a large portion of the population, but also, through aggregate demand affects, slow down or significantly delay a full economic recovery.”    Well-designed unemployment schemes, social assistance and public works programmes effectively prevent long-term unemployment and help shorten recovery from economic recession, the report states.    Unemployment insurance schemes were the most common type of social protection measures used to respond to the crisis, it adds, while also noting that only 64 out of 184 countries for which information is available had such unemployment schemes in place when the survey started. 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