Nowadays, Social Protection is one of the top priorities in national and international agendas since many studies have proved that it fosters economic growth while directly reducing poverty by targeting vulnerable people. However, Social Protection has not always been this mainstreamed. Indeed, its evolution and diffusion have been deeply influenced by the dominant economic paradigms that alternated up until now.
In order to understand how the alternation of different economic paradigms in the current and last century has influenced the evolution of Social Protection, it is essential to elaborate a definition of this practice.
Social Protection consists of national and international policies and programs aimed at reducing poverty and vulnerability by promoting efficient labour markets, diminishing people’s exposure to risks and enhancing their capacity to manage economic and social risks such as unemployment, exclusion, disability and old age. Thus, following the definition of United Nations Research Institute For Social Development, Social Protection is aimed at preventing, managing and overcoming situations that affect people’s well being.
In order to chieve these obejectives, Social Protection initiatives encompasses three main types of tools. A first type is represented by labor market interventions, which consist in policies and programs designed to promote employment, protection of workers as well as an efficient functioning of labor markets. A second tool is social insurance, aimed at mitigating risks associated with unemployment, ill health, disability, work-related injury and old age (i.e.: contributory pensions schemes, health or unemployment insurances). The third type of Social Protection instrument is social assistance, that encompasses public actions based on resources transfers to vulnerable individuals or households deemed eligible due to deprivation (i.e.: single parents, homeless, etc). This last can be defined both in terms of low income or other dimensions of poverty such as lack of access to productive means, nutrional status, etc. Therefore, Social protection deals with both the absolute deprivation and vulnerabilities of the poor.
The ILO World Social Protection Report 2014-2015 has highlighted that about 50% of the world population have no access to social protection measure. Most of these people reside in rural areas. Besides, 73% of the world population have no access to adequate social protection.Disaggregating these statistics is useful to uderstand how Social Protection is tighly linked with countries’ economic development levels. Indeed, fewer than 10 % of workers in least-developed countries are covered by social security, and generally, women have less access to social protection than men as they usually work in the informal sector. Finally, in middle-income countries, the coverage ranges from 20 to 60 % whereas in industrial countries, social security levels are close to 100%.
The evolution of Social Protection vis-à-vis the change of economic paradigms in the current and past century
Social Protection is a relatively new phenomenon. Indeed, it developed as a national regulated practice at the end of the XIX century in Europe. During that period, industrialization deeply transformed the social structure of European countries, giving birth to the modern working class. This last was composed by poor workers that usually left the countryside to look for better condition of life and salary in the cities, where the industry was growing fast. In this context, countries such as Germany and Great Britain started to create welfare systems to improve the standards of living of the working classes as well as to tackle transient poverty. The United States followed several years later, during the Great Depression, implementing measures to mitigate the negative effects of the economic breakdown on their population.
Started as social security for the formal sector, Social Protection kept expanding and evolving until the end of XX century. This expansion was supported by the spread of the Keynesian economic paradigm, which rejected the neoliberal idea of self-regulating markets and promoted governemental interventions in countries’ economies. At the same time, the decolonization and the spread of socialist and communist doctrines further fostered the rise of movements for the acknowledgement and guarantee of social and economic rights, which encouraged the diffusion of Social Protection practices. Those movements considered economic and social rights to be among the pillars of dignity and freedom since they ensure that everybody is able to meet its fundamental needs. The emphasis on economic and social rights led to the approval of the ICESCR in 1966, which formalized the status of economic and social rights as human rights. 1966 Convenant was the results of a process started in the 50s, when access to adequate social protection began to be recognized as a basic human right by the UN. Indeed, Article 22 of the Universal Declaration of Human Rights (1948) stated that “Everyone, as a member of society, has the right to social security”. Further, Article 25 added that “(1) Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control. (2) Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection.”
From 1980 to 1990 social security suffered a sudden and rapid involution. The contraction of public expenditure was a consequence of the economic crisis of the ‘80s. However, its decline lasted until the ‘90s due to the spread of the Washington Consensus approach. Springing from the failure of the Keynesian theory, this neoliberal economic paradigm was based on the idea that growth was a priority to be achieved through deregulation (that is abolition of any regulation that impedes market entry or restricts competition), trade liberalization (liberalization of imports, with particular emphasis on elimination of quantitative restrictions), capital market liberalization and privatization of state enterprises. In this context, redistribution and welfare were conceived as deeply dependent from growth. Therefore, countries were suggested to provide minimal social safety nets to mitigate the consequences of adjustment policies and to redirect public spending from subsidies toward provision of pro-growth and pro-poor services such as primary education, primary health care and infrastructure investments. During the ‘90s, a huge number of countries conformed to the Washington Consensus cornerstones, inasmuch as the implementation of the reform packages was often imposed as a condition for receiving loans from the IMF and the World Bank. However, the results of these reforms proved to be ambiguous and were criticized for having triggered the Argentine economic crisis (1999–2002), and exacerbated economic inequalities in Latin America.
Social Protection regained momentum when the limits and weaknesses of the Neoliberal approach led to a new shift in the dominant economic paradigm in the early 2000s. During those years, Washington Consensus institutions began to soften the emphasis on the Neoliberal approach due to political pressures stemming from the ambiguous effects of their economic policies as well as the rapid expansion of globalization. After having been a domestic concern of wealthy nations for a long time, Social Protection suddenly became an international issue. International fora such as the General Assembly began to mainstream Social Protection as a global issue, giving voice to poor countries’ instances and raising the question of how to foster and sustain their internal growth rate. Consequently, together with poverty reduction, sustainable growth and equitable development, Social Protection was reintroduced in the international agendas as a major point of discussion.
The renewed interest of the international community and development agencies towards Social Protection was the result of a global reaction to a number of economic and financial crisis occurred during the ‘90s. These downturns were frequently considered as unexpected results of the process of globalisation, in particular of the growing integration of trade systems and capital markets. If, on the one hand, globalization had proved to be a major channel for increasing opportunities for all (including poor people and countries), on the other hand it had also fostered insecurity on a global scale, increased inequality (both within countries and between countries) and eroded the capacities of states to regulate the relationships between capital and labour, to control conditions of access to internal markets, and to implement adjustment policies to contrast the effects of negative economic cycles.
Thus, the international community started to question the sustanability of globalization and fast economic integration occurred at global level during the previous decade. Even though in prevous years these processes had proved to have great potential for fostering growth and improving human well being, many economists began to highlight that in the long run their effects could have been contradictory. Specifically, they could have threatened economic growth if the inequalities they produced had not been adjusted through Social Protection mechanisms.
In this context, the international community started to support a pro-poor growth approach to economics. The basic idea was that growth remained a priority but it had to be achieved while paying attention to the conditions of life of the poor. This meant developing and strengthening Social Protection practices at national and global level that could directly target the poor (i.e.: cash transfers, efficient health and education systems and labor reforms). To this purpose, in 2000, the UN established 8 Millennium Development Goals (MDGs) to be achieved in the following 15 years. Those goals consisted in eradicating extreme poverty and hunger, achieving universal primary education, promoting gender equality, reducing child mortality, improving maternal health, combating HIV/AIDS, malaria, and other diseases, ensuring environmental sustainability and developing a global partnership for development. Due to their socio-economic nature, it was clear that most of these goals could have been achieved only by strengthening Social Protection systems both at national and international level. Also, this created a renewed consciousness of the role of Social Protection in fostering economic growth and further pushed the international community and its components to focus on the improvement and worldwide diffusion of Social Protection practices.
The financial crisis erupted in 2008 further raised awarness on the need for stronger Social Protection and redistribution system to tackle the negative effects that the economic downturn produced on the most vulnerable sections of the population. Indeed, the negative impact that the Great Recession had on the standard of living at global level pushed the international community to acknowledge that institutional frameworks and incentives strongly influence bottom-line economic performance help the recovery and the achievement of sustainable and broad-based progress in living standards. So far, many studies have confirmed that growth is a necessary but not sufficient condition for the satisfaction of social needs. Indeed, even though strong economic growth is essential to improve standards of living, its capacity of generating broader economic opportunity and outcomes hinges on the presence of efficient Social Protection systems that can provide everybody (above all the poor) with education, heath and redistribution.
Acknowledging the importance of Social Protection as a means to ensure sustainable and equitable growth pushed the international comunity to shift from the pro-poor approach to the inclusive growth and development approach to economics. This last aims at achieving sustainable output growth that involves all economic sectors, creates productive employment opportunities for a great majority of the country’s working age population, eliminates incomes inequalities and reduces poverty. The direct consequence of this shift towards Inclusive growth and development was the spread of the Universal Social Protection approach. This last preaches adequate cash transfers for the ones in need, support for all people in working age in case of maternity, disability, work injury or unemployment and pensions for all older people. This new vision is based on rigorous scientific evidences that wherever efficient, broad-based and affordable Social Protection systems were in place, they have been effective in reducing poverty and inequality as well as promoting economic growth and social development. With regard to the pursuit of these goals, Social Protection has proved to be more effective than policies focusing on Productive Employment. This is due to the fact that 52% of the world population is not in working age or is unable to work (e.g.: children (0-18 years) constitute 34.7% of the world population, older people (65+) are 7.9% and disabled represent 10 %). These data highlight that eradication of poverty is not only about job creation, but ultimately it is about how societies organize support to all citizens. Particularly, it has been proved that Universal Social protection has positive impacts on a number of economic variables. Firstly, it is essential to ensure sustainable growth and equitable development in the long term since it prevents and reduces poverty and promotes social inclusion and dignity of vulnerable populations. Besides, it contributes to economic growth since it raises incomes and increases consumption, savings and investments at household level, as well as improves domestic demand at national and international level. As a consequence, it also increases productivity and employability by enhancing human capital and productive assets. Universal Social Protection is also known to be the main tool to protect vulnerable individuals and families against losses due to shocks (i.e.: pandemics, natural disasters, economic downturns) and to promote human development (i.e.: through cash transfers that facilitate access to nutrition and education). Finally, well-taylored, efficient and universal Social Protection systems ultimately help build political stability and social peace, reducing inequalities, social tensions and violent conflict as well as enhancing social cohesion and participation.
In 2014, Universal Social Protection approach was embedded in the ambitious Post 2015 Development Agenda, which, under the auspices of the United Nations, aims at achieving 17 Sustainable Development Goals (SDGs). In this context, Social protection is considered a development priority since it plays a critical role in furthering key economic outcomes, ensuring inclusion of all groups in development and in combating inequality, vulnerability and poverty. Thus, different from the past, nowadays Social Protection programmes are conceived as major tools to address multiple dimensions of poverty and deprivation (decent work, education, health care, food security, income security). Specifically, Social Protection is currently aimed at tackling persistent poverty, hunger and their structural causes.
Social protection as an international issues
During the last years, the growing recognition that poverty and deprivation cannot be defeated uniquely through economic growth has increased the number and improved the quality of specific interventions, targeting the most vulnerable sectors of the population. These interventions are widely considered essential to face global challenges stemming from unstable socio- economic scenarios inasmuch as the present financial and economic crisis has shown their potential to mitigate the effects of the breakdown. Consequently, social protection has experienced a renaissance in the global development policy discourse. Indeed, the global nature of the challenges affecting the standard of living of the world population has recently fostered cooperation among countries, IOs and UN agencies to improve Social Protection systems at global level.
In ths regard, the UN and ILO started a strong cooperation in 2009, when the United Nations System Chief Executives Board for Coordination (UNCEB) adopted the Social Protection Floor Initiative to contain the negative effects of the economic crisis through Universal Social Protection. Welcomed by the MDGs Summit in 2010, the initiative was further regulated by ILO Recommendation 202 on Social Protection Floors. The document, which received strong global political support when approved in 2012, was aimed at implementing universal social protection through the elaboration of nationally defined social protection floors based on a set of human rights standards.
Social Protection Floors are nationally defined basic social security guarantees which consist in: granting access to essential health care, education and other social services; ensuring basic income security for children with the aim of facilitating access to nutrition, health, education care and any other necessary goods and services; ensuring basic income security for people in active age unable to earn sufficient income, granting basic income security for people in old age. This approach seeks to establish minimum performance standards of national social protection policies to grant that all people have access to a minimum set of goods and services thus creating basic income security for all.
Further, the initiative emphasizes the need for comprehensive, coherent and coordinated social protection programmes and employment policies, aimed at granting services and social transfers across the life cycle while paying attention to the most vulnerable groups including informal sector workers, children, pregnant women, migrants, people affected by HIV/AIDS and populations exposed to adverse external effects like natural hazards or extreme climate.
Currently, the post-2015 development agenda is offering new opportunities for international institutions to join forces and achieve universal social protection. To this purpose, ILO has recently started a strong cooperation with the World Bank Group, endorsing the consensus that has emerged in the early 21st century that social protection is a primary development tool and priority. These two institutions share a common vision of social protection. Indeed, they both consider that universal coverage and access to social protection are crucial elements vis a vis the eradication of poverty and achievement of inclusive and sustainable growth. These two objectives are both the World Bank Group’s twin goals, to be achieved by 2030, and the core of ILO’s mandate, as the the Social Protection Floors Recommendation 202 proves.
Social Protection approach vis a vis the economic crisis
Even though in recent years, Social Protection has emerged as a major tool to reduce poverty worldwide, the financial crisis had a negative impact on it, hindering the implementation and narrowing the application of the universal approach.
During the first phase of the financial crisis, (2008-2009), Social Protection gained momentum as countries started to implement fiscal stimulus plans to mitigate the negative effects of the economic downturn on their populations. It is estimated that in this phase adjustment measures were put in place in 174 countries, with $2.4 trillion fiscal stimulus plans being carried out in 50 countries.
Fiscal Consolidation lasted until 2010 when the secon phase of the crisis began. During the second stage, policy trends shifted from expansion to contraction of public expenditure, producing a decline in the development of Social Protection programmes worldwide. In particular, the majority of contractions happened in developing countries, where Social Protection was needed the most to relief from the crisis effects.
In the last biennium (2013 – 2015) a huge number of countries experienced excessive contraction, with total expenditure in % of GDP reported to be below pre-crisis levels. Recent policy trends aimed at contracting public expenditure deeply affected the implementation of efficient Social Protection systems, thus having negative social impacts worldwide. Particularly, adjustments measures entailed: the elimination of subsidies in 100 countries, despite record-high food prices in many regions; wages cuts in 98 countries, that reduced the salaries of public-sector workers who provided essential services to the population, including health; VAT increases on basic goods and services, mostly consumed by the poor; rationalization of safety nets at a time when governments should be looking to scale up benefits though social protection floors; pension and health care systems reforms in 86 and 37 countries.
Even though it wasn’t possibile to measure to effects that these contractions had in developing countres due to the lack of data, their impact can be assessed looking at what happened in Europe. In the old continent, austerity measures have led to a negative economic cycle, increasing poverty and creating 123 millions new poor (which represent 24% of the European population).
The evolution of Social Protection has been deeply influenced by the shift in the dominant economic paradigms. Also, its waves of diffusion and regression followed the path of economic growth and development. Nowadays, there is a widespread consensus that Social Protection systems are major tools to address multiple dimensions of poverty and deprivation. Indeed, Social Protection is considered to be both a trigger for economic growth and an effective tool to reduce poverty worldwide, its main functions being providing relief from deprivation, averting deprivation, enhancing incomes and capabilities and ensure social equity and inclusion. Thus, Social Protection is regarded as an insurance policy against poverty and a tool for delivering social justice, as well as a means of promoting inclusive development. It is an expression of solidarity and cohesion between the haves and have-nots, between governments and citizens, and even between nations.
Notwithstanding the recent trend of narrowing social protection practices due to the crisis, many studies have highlighted the essential role of welfare in pursuing economic recovery as well as inclusive development and social justice. Thus, there is a strong need for bringing back to life the universal approach, building efficient Social Protection systems that can contrast the negative effects of the current crisis. This will foster recovery and lead to sustainable and inclusive growth in the long term, helping achieve a more equal and poverty-free world.