Transcript Slide 1
UN DESA Department of Economic and Social Affairs
MOVING THE SOCIAL POLICY
AGENDA FORWARD
Isabel Ortiz
Senior Interregional Advisor
United Nations DESA
UN Commission for Social Development
New York, February 2007
Development for whom?
Inequality has risen in the
last decades:
Within countries
Among countries
Inequality keeps rising
UNUWIDER 2006
The benefits of
globalization, as it is
managed/mismanaged,
go to a few companies
and individuals, in a few
countries.
This is a result of the
choice of economic and
social policies
Business as usual not
an option
Business as Usual not an Option
Standard Policy Advise 1980s-90s:
Caused poverty and increased inequality (adjustment
programs, severe financial crisis)
Interrupted nation-building development processes
Increased political instability and conflict
It constrained growth in developing countries!
Remains part of conventional development thinking
Are attempts to redress it (ie. PRSPs) good enough?
General Issues: targeting and residualism, employment, choice of
social protection instruments, participation, trade, finance…
What happens in non-IDA middle income countries where no
PRS?
Bringing Equity to the Development Agenda
1995 Copenhagen World Summit: “A society for all” – United Nations
DESA mandate to implement it – work on:
Employment and Poverty Reduction
Social groups (persons with disabilities, youth, older persons…)
2005 World Summit: governments’ pledged more ambitious National
Development Strategies, backed by increased international support
2005: UNDESA, UNDP and World Bank reports on Equity
DESA works on governments’ requests – Advisory services on demand
Since 2005, main focus on National Development Strategies
2006: United Nations Policy Notes to guide National Development
Strategies, on critical areas Developed with Nobel Laureate Joseph
Stiglitz, Jomo K. Sundaram and other alternative economists/sector
specialists, with inputs from UN agencies
Bringing Equity to the Development Agenda
1980s-90s Standard Policy Advise:
New Paradigm/Consensus:
Growth (“priority”) through
deregulation, free markets, supply
side economics, minimalist
governments, residual social policies.
Growth and equity through active promotion of
national development. Winning “policy space”.
Social and economic development integrated =>
actually bringing equity and social issues to all
policy domains.
Anti-inflationary measures as core
monetary policy
Employment-generating growth as a priority,
some authors tolerant to limited inflation
Fiscal policies: Minimal direct
taxation
Taxation for development and redistributive
purposes
Financial liberalization, open capital
accounts
Selective capital controls to avoid financial
volatility, making finance work for real economy
growth (regional development banks etc)
Cuts in public expenditures,
avoiding fiscal deficits
Public investment for development; need to
expand governments’ “fiscal space”
Privatization of public assets
services, minimalist government
(state as predatory, crowding out
private sector)
Building state capacity to promote
development, public investment, technology
policy
Free trade
Free trade not priority, growth of domestic
activities prior to (selective) trade liberalization
1980s-90s Standard Policy Advise:
New Paradigm/Consensus:
Residual social policies (minimal,
targeted to the poor), safety nets
Universal policies (for all). Importance of
social policies for development, equity, domestic
market, nation building, political stability
Labor flexibility, productivity
Decent work agenda, distribution issues (ie.
wage policies); employment a result of adequate
macro, economic and social policies
Commercialization of social services
Expansion of coverage of services (health)
ensuring retention (education)
Cost recovery mechanisms (fees for
services)
Avoidance of user fees, except for upper
income groups in tertiary services
Social Protection: pension reform
Importance of expanding pension coverage
(social pensions) and addressing community
needs
No interest for culture and values
(intangible)
Culture and values important for tackling
exclusion and building social cohesion
No attention at sources of conflict
(“political”)
Conflict prevention
Selective participatory processes
National coalitions and social pacts/dialogue
How to prepare an equitable National Development
Strategy
Prerequisites:
National Coalitions: Strategies not technocratic; require
national alliances to be sustainable; social pacts
Integrating economic and social policies
STEPS:
Diagnosis of social and economic issues for all social groups
Policy Priorities to build countries that are socially inclusive,
employment generating, economically robust and politically stable:
Macroeconomic policies
Sector priorities (i.e. energy, water…)
Social policies (i.e. decent work, social protection…)
Budget in a multiannual MTEF
Implementation arrangements
Monitoring mechanisms including
comparable poverty line
indicators for each of the social groups – preferably in the form, of
National Action Plans for youth, elderly, indigenous populations,
disabled, etc (reality check: what happens to people?)
Sector Priorities for Equity and Poverty Reduction I
Area
Typical interventions with
EQUITABLE/PROGRESSIVE
outcomes
Typical interventions with
INEQUITABLE/REGRESSIVE
outcomes
Culture
Multicultural activities, popular events
that foster social cohesion
Subsidies to elitist events/
exclusive art
Education
Universal primary and secondary
education; programmes to ensure
access and retention of students
User fees in primary and
secondary education
Energy and
Mining
Rural electrification; life-line tariffs
(subsidized basic consumption for low
income households)
Large power plants, Untaxed
oil/mineral extraction
Finance
Regional rural banks, microfinance;
managing finance (current accounts,
capital flight…)
Reform/rescue of banking system
(transfers to large banks);
subsidies to large private
enterprises
Health
Universal primary and secondary
health services, nutrition programmes
User fees, commercialization of
health, tertiary highly specialized
clinics (e.g. cardiology centres)
Housing
Subsidized housing finance, upgrading
of substandard housing
Housing finance for upper income
groups
Industry
Supporting competitive, employmentgenerating domestic industries, SMEs
Deregulation
Labour
Active and passive labour programmes
Labour flexibilization
Sector Priorities for Equity and Poverty Reduction II
Area
Typical interventions with
EQUITABLE/PROGRESSIVE
outcomes
Typical interventions with
INEQUITABLE/REGRESSIVE
outcomes
Macroeconomics
Employment-sensitive monetary and
fiscal policies, countercyclical policies,
direct taxation
Cyclical policies, indirect
taxation (VAT)
Public Expenditures
Pro-poor expenditures
Military spending
Rural Development
Secure access to land, water, markets,
livestock, credit for smallholders
Large investments such as
irrigation systems that benefit
landowners
Social Protection
Non-contributory pensions, cash
transfers, social services, etc.; almost all
SP are aimed at redistribution
Private pension systems
Tourism
Small-scale local companies
Poorly taxed luxury hotel chains
Trade
Linking employment-generating local
companies with export markets
Most bilateral free trade
agreements
Transport and
Infrastructure
Rural roads, affordable public transport,
non-motorized transport for households
(bicycles, buffalos, etc)
Some large (and costly)
infrastructure investments
Urban Development
Slum upgrading, accessible universal
design
Large urban infrastructure
projects in wealthy areas
Water
Rural water supply and sanitation
Poorly negotiated privatizations
National Social Policies
Reasons of social policy:
Intrinsic:
Social justice
Instrumental: Governments use it pragmatically to:
Enhance human capital and productive employment
Boost domestic demand
Secure political support of citizens
Prevent conflict, create stable cohesive societies
Social policies- issues:
Universal vs. targeted policies
Importance of speed
How to create employment?
Expanding coverage of social services and protection
Preventing conflict and building social cohesion
Affordability
Cross-border issues: Regional social policies
International aid supporting equity
Universal vs. Targeted Social Policies
Residual approach 1980s-90s:
Public services only for the poor
Main reforms focused on privatizing/commercializing services for
middle and upper classes (health, pensions, education)
In a context of fiscal austerity, cost recovery mechanisms such as
fees for services were introduced
Problems of targeting:
Expensive, at about 15% total programme costs
Complex to implement – not advised when poor large numbers
It backfired politically, middle classes had to pay for both expensive
services and for the poor
Public services became of bad quality (and not accessible when fees)
United Nations agencies defend UNIVERSAL services (= for all, including
middle classes, as part of a country’s social contract) combined with
targeting to fast-track access of the poor.
Targeting is administratively complicated:
Undercoverage of the “Success” Stories in the Americas
-Brazil: Bolsa Escola
73% of poor not reached
-Mexico Oportunidades
40% of poor not reached
-United States Food Stamps
50% of poor not reached
Key Issues: Education and Health Social Services
For social services, it is generally suggested:
On the supply side:
To increase budgetary allocations for social programmes to expand
coverage, aiming at universal provision.
To eliminate barriers to access for poor and excluded groups such as:
Fees for services and hidden fees such as school uniforms,
extracurricular activities, under-the-table payments, etc.
Complicated or restrictive administrative procedures.
Services provided in languages not spoken by the population.
To address the differing needs of women and men
To target inaccessible remote areas.
To include minorities and special population groups, designing targeted
programmes if necessary.
To improve the quality of services from a user-perspective.
On the demand side:
To raise awareness and promote behavioural change.
To support demand for services (e.g. ensuring that people have
knowledge of them, using conditional cash transfers if necessary).
Speed Matters
Most development programs tend to take a long time to show results (ie.
education). When a government intends to develop equitable social policies,
it may want to consider two different sets:
Medium and long-term policies include most important initiatives such as
expanding coverage of education services, health and social security,
improved labour standards, adequate wage and employment policies, etc
Short-term high-impact initiatives: A set of fast high impact initiatives can
assist governments address basic needs among the neediest segments
of the population. These programs may contain components such as:
free school meal programmes
nutrition, vitamin and micronutrient
supplements for mothers and children,
upgrading programmes for
substandard housing (water,
household repairs),
social pensions for the elderly poor
or persons with disabilities.
Examples:
Low cost (Zero Hunger 0.2%GDP,
Fome Zero Brazil (2003)
rural pensions 1% GDP)
Hambre Urgente Argentina (03)
Bolivia Urgente (2006)
Pobreza O Nicaragua (2007)
Key Issues: Employment – Jobless growth, Labour Flexibility
Growth does not necessarily
generate employment => It does
in China, but in most countries
the experience has been
“Jobless Growth”
In most developing countries,
particularly in Africa, the number
of “working poor” has increased;
labour reforms led to increased
informalization of the labour force,
predominantly in Latin America,
Easter Europe and the former
Soviet Union.
In 1965, CEOs were paid 51 times
as much as a minimum wage earner
in the United States; in 2005, this
had risen to about 821 times
Increased precariousness of
work not only had negative impacts
on people selling their labour, it also
reduced national tax bases
and induced migration.
1980s-90s standard policy advise
fostered labour market reforms, as an
investment incentive.
However, labour flexibility not
accompanied by increased employment
The strong welfare states of northern
Europe (Denmark, Netherlands, Norway
and Sweden), with employment rates as
high as the US and the UK, demonstrate
that employment is fully compatible with
“rigid” labour markets, high social
protection and collective bargaining.
Employment is not related to labour
market flexibility, but to economic
policies that are effectively coordinated
with adequate social policies.
Generating DECENT employment must
be first priority of a National
Development Strategy
Key Issues: Employment II
HOW TO CREATE EMPLOYMENT? Employment is a result of:
Promotion of growth through macroeconomic and sector policies
Effects of expansive monetary and fiscal policy on aggregate demand;
debate tight monetary policy does not generate employment.
Adequate exchange rate policy combined with industrial policy stimulates
output growth; gradual and sequential trade opening to support it
Adequate Labour Policies: It is not only about generating employment, many
people work but cannot bring their families out of poverty, adequate salary and
working conditions essential => Decent work agenda.
Main labour policies:
Active labour market programmes
•Direct employment generation (promoting SMEs, cooperatives, wage subsidies,
public works, guaranteed job schemes).
•Labour exchanges or employment services (job brokerage, counselling offices)
•Skills development programmes (training and retraining of labour to enhance
employability and productivity).
•Special programmes for youth and persons with disabilities.
Passive Labour market policies
Unemployment insurance, income support policies.
Labour regulations and standards such as adequate wage policies (minimum salaries,
wage indexation, equal pay for work of equal value), job security provisions
(recruitment/dismissal of employees), working conditions (occupational health and safety
minimum age, maximum working hours and overtime, leave provisions), special protection
for mothers, and antidiscrimination provisions to protect women and minorities.
Social Pacts/Dialogue – Collective Bargaining
Key Issues: Social Protection I
Social protection programmes include:
Social insurance (old-age pensions, disability, etc)
Social assistance (programs for vulnerable groups like streetchildren,
battered women, etc).
Schemes to assist communities and the informal sector include
agricultural insurance, food security programmes, social funds, disaster
prevention and management.
Because of the strong redistributive character of most social protection
policies, they were not favoured by conventional approaches during the
1980s-90s (except pension reform projects). In extreme cases like Bolivia, the
Ministry of Social Security was closed down.
In the 1980s-90s, push for pension reforms, moving away from PAYGO public
systems towards funded systems (privately managed, invested in capital
markets) (next slide)
Given the urgency to eradicate poverty, social protection, in particular social
transfers/pensions, are currently at the forefront of the social development
agenda.
Key Issues: Social Protection II - Pensions
Multi-pillar Pension System
Funded pension systems (private pillars II-III)
- Do not serve the poor or low income groups; pension
coverage did not expand.
- Are expensive (transition costs) – ie. In Brazil, 7.3% GDP, as
compared to 1% of GDP public rural pensions for the poor
- Administrative costs of pension funds are very high, making
PILLAR I
PILLAR II PILLAR III
returns on investments lower.
Redistributive Funded
Funded
- Financial risk left to pensioners; the state has to bail out
PAYGO
Voluntary
companies and provide safety nets in case of crisis.
- By investing savings in capital markets, loss of resources to governments
Social Pensions (public, pillar I):
- Have high impact on poverty reduction (ILO: 35%
to 40% reduction)
- Older people spend their pensions supporting
household, important for food security
- Ideal to expand coverage
- Monetizes rural economies
- Countries like Brazil, Argentina, South Africa,
Namibia, Zambia, have introduced non-contributory
pension schemes as an instrument to fight poverty.
- Increased donor support, relatively easy to
implement through budgetary support
How older poor spend
pension cash
transfer
Preventing Conflict and Building Social Cohesion I
Early Warning: Risk Screening
Indicators:
History of earlier conflicts
High prevalence of poverty
and inequality, elite
capture of benefits
Dependency on a primary
export (ie. natural resources)
Political instability and
non-responsive
governments
Denial of political and
civil rights
Militarization and small
arms proliferation
Ethnic dominance
Conflicts in neighbouring
states
High male youth
unemployment
Culture of violence, mythmaking, public perceptions.
Most national and sector strategies, done by
economists and sector specialists => blind to
conflict matters, designed ignoring sources of
tension as it is perceived as “political” beyond
the development domain. Business as usual no
longer possible.
Early warning: Conflict prevention starts by
detecting its probability.
Tackling potential causes of conflict:
National Development Strategies are the
perfect setting to prioritize interventions to
deal with the internal sources of tension
identified, before conflict takes violent forms,
for instance:
where male youth unemployment a factor =
youth employment programs
where ethnic prejudice and myth-creation a
factor = programs for changing values
where inequality a factor = equitable policies as
described earlier
Building Social Cohesion/ Integration
Values, culture => intangible, not favoured by development aid (preferred
investments, less sensitive).
Changing values, building social trust and cohesion is back in the development
agenda
Essential to fight discrimination (women, ethnic, caste, persons with disabilities…)
Tolerance, respect for diversity, non-violence, solidarity, trust in society,
contribution to the community, are beliefs and behaviours that can be taught.
Tackling Prejudice and Building Social Trust:
1. Understand the existing cultural values.
2. Have clear objectives on the values that need to be altered for social
progress.
3. Gain support from the local structures including religious leaders; a
technique is providing solid scientific evidence of the benefits from other
countries, putting aside emotions and value judgments.
4. Support allies and “drivers of change”; encourage local level groups and
organizations in dialogue.
5. Design adequate programs such as:
Multicultural education
Media programs
Public information campaigns
Investing in popular culture (above all, avoiding myth-making)
Empowering people and supporting associations
Empowerment and Social Mobilization
Organizing excluded groups to fight for their rights: social development
would not have happened in most countries without the fight of unions and
civil rights groups
Empowering people and promoting associations:
Excluded people tend to internalize inferiority and repress their voice,
may lead to violent conflict
When people associate and share their problems, the result is often
increased encouragement, capacity for self-advocacy, ability to
organize, to create positive change for their communities.
Associations help communities to defend their interests, and can be
linked to microfinance, cooperatives and other local development
programmes.
As people's associations sometimes stand up against powerful local
interest groups, need to protect them from extortion and intimidation.
Not only local level: National Economic and Social Councils good
practice to institutionalize participation of representative stakeholders in
a society to:
monitor public policies, assessing social impacts
provide alternative proposals for employment-generating economic growth
and social justice
Empowerment and social mobilization are intrinsically linked to the broader
agenda of good governance.
Are Social Policies Affordable?
Social Ministries suffer from “second class” stigma, need to secure budgetary
allocations
Often expenditures for poverty reduction and social policy are declined (“cannot be
afforded”) because of:
a loss in potential investment/GDP due to a supposed equity/ efficiency tradeoff, and
the assumption that large social needs will create unmanageable fiscal deficits
Counterarguments:
Social development not a cost but an important investment.
Investing in people enhances their productivity and thus growth; raising the
incomes of the poor encourages domestic demand therefore growth.
A significant proportion of national budgets is spent on non-productive
activities, such as the military, or activities with very low returns. => Public
Expenditure Reviews good tools to bring transparency.
Ultimately, affordability depends on a society’s willingness to finance social
policies through taxes and contributions. Affordability is at the core of the
social contract between governments and citizens: how much a society is
willing to redistribute, and how.
Countries at the same level of economic development differ significantly in
their social spending – OECD countries spend between 15-35%GDP on health,
education and social protection alone (compare to 4% in S. Asia)
In developing countries, social policies have to grow with the fiscal space
made available by increasing GDP or aid.
Global and Regional Social Policies
Urgent need for global social policies, to counterbalance economic
globalization => but difficult agreements. Regional social policies are an
easier form of transnational social policy
Examples of regional social policies:
Regional social redistribution mechanisms e.g. to target depressed
areas or to redress inequalities.
Regional regulations e.g. regulation of private social services and
utilities (water, electricity); regional formations are in a stronger
position to negotiate with private providers to ensure access,
affordability and quality standards.
Regional mechanisms that give citizens a voice to challenge rights
abuse: e.g. the EU’s European Court of Justice or the Council of
Europe’s Court of Human Rights
Regional cross-border investments addressing different social policy
common priorities, for instance, the production of cheaper generic
pharmaceuticals at regional level to benefit from economies of scale,
or common programs to avoid cross-border spread of diseases (e.g.
malaria, SARS, avian flu)
Regional technical co-operation in social policy
Financing: Global and regional funds
Examples: - ALBA, the
Latinamerican Bolivarian
Alternative for the Americas 2007
- Southern Africa SADC Regional
Social Policy 2006
International Redistribution and Social Justice
2002 Monterrey; 2005 World Summit: donors recommit
increased aid to support Millennium Development Goals
= > Supporting committed governments with equitable
National Development Strategies with increased aid,
aligned and harmonized, particularly with general budget
support (GBS), moving away from projects.
CRITICAL ISSUES:
It is essential that new instruments of aid like SWAps and GBS be used as
instruments of redistribution and social justice, this is, that they reach
people, and are not utilized to sustain institutions (e.g. a Ministry) or
development processes (e.g. completion of an MTEF), or are simply used
as fast disbursing mechanisms of donors aid.
Some GBS donors like the European Union believe in linking
disbursements to outcomes – this could include attainments in respect of
effective impacts on excluded groups.
Social transfers (e.g. social pensions) become particularly attractive from
the point of view of direct and quick impacts on low-income households;
governments can finance social transfers through both GBS and SWAps.
Civil society activities at the national and local levels must be expanded,
funded through special funds.
Thank you
United Nations Department for Economic
and Social Affairs
http://www.un.org/esa/
Email: [email protected]