Call for reactions: Proposal for a Global Fund for Social Protection
Special Rapporteur on extreme poverty and human rights
22 April 2021
47th session of the Human Rights Council
Special Rapporteur on extreme poverty and human rights
22 April 2021
47th session of the Human Rights Council
Issued by Special Procedures
This report, presented to the Human Rights Council in June 2021, recommends the establishment of a global fund for social protection as a means to close the financing gap faced by low-income countries to provide for social protection floors; to protect the resilience of those countries from future shocks; and to support the increased mobilization of domestic resources for social protection. Such a fund is affordable, whether funding comes from official development assistance or from other sources, including unused or new special drawing rights. Moreover, social protection should be seen as an investment with potentially high returns, since it leads to building human capital, has significant multiplier effects in the local economy, and contributes to inclusive growth and to resilience in times of crisis.
A global political commitment to Social Protection Floors
Following the presentation, in October 2011, of the Report of the Social Protection Floor Advisory Group on Social Protection Floor for a Fair and Inclusive Globalization, chaired by Ms. Michelle Bachelet, the International Labour Conference unanimously adopted Recommendation (No. 202) Concerning National Floors of Social Protection, on 14 June 2012. The Social Protection Floors Recommendation defines social protection floors as "nationally defined sets of basic social security guarantees which secure protection aimed at preventing or alleviating poverty, vulnerability and social exclusion." (para. 2) Social protection floors should "ensure at a minimum that, over the life cycle, all in need have access to essential health care and to basic income security which together secure effective access to goods and services defined as necessary at the national level." (para. 4).
The 2030 Sustainable Development Agenda would be significantly furthered by the universal adoption of social protection floors. Indeed, under Goal 1 (eradication of poverty) of the 2015 Sustainable Development Goals, target 1.3 is to "implement social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable." SDG target 3.8 further calls on countries to "achieve universal health coverage, including financial risk protection, access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines and vaccines for all." The role of social protection in Agenda 2030 goes beyond its contribution to ending poverty in all its forms everywhere and universal health coverage. Social protection contributes to all dimensions of development and supports the realization of other SDGs, in particular gender equality (target 5.4), decent work and economic growth (target 8.5), reduced inequalities (target 10.4), as well as peace, justice and strong institutions (target 16.6).
The Covid-19 pandemic has further illustrated the importance of ensuring that social protection floors are established universally, in order to build resilience in the face of shocks. In September 2020, the Special Rapporteur presented a review of the social protection measures adopted in order to cushion the impacts of the crisis. While commending the fact that, since the start of the crisis, over 1,400 social protection measures had been adopted by some 208 countries and territories to support those affected, he noted that these measures were often temporary, left out a number of groups (such as informal workers or migrants), and provided inadequate levels of protection. He, therefore, advocated for strengthening social protection floors from a rights-based perspective, arguing that "building social protection systems on the basis of human rights can significantly contribute to their effectiveness in eradicating poverty and in reducing inequalities, thus making for societies that shall be more resilient in the face of shocks. This means defining social protection neither as an emergency response to a situation of crisis, nor as charity but rather as a set of permanent entitlements prescribed by domestic legislation, defining individuals as rights-holders and public authorities as duty-bearers. It also means guaranteeing individuals' access to independent claims mechanisms if they are denied certain benefits, including as a result of corruption, discrimination, or favoritism based on family affiliations or political loyalty. It means establishing social protection floors that are financed equitably, providing income support at levels sufficient to ensure an adequate standard of living and fulfilling a redistributive function, in line with the pledge made in SDG 10 to reduce inequalities. It means, finally, ensuring adequate participation, by social partners and by people in poverty, in the design, implementation, monitoring and evaluation of social protection schemes, to ensure that such schemes will effectively benefit people in need [...]" (para. 75).
Social protection coverage gaps linked to under-investment in social protection
The Covid-19 crisis exposed the fact that the global political commitment to the establishment of social protection floors has not translated yet into sufficient action to make the right to social security and access to health care a reality for all. Despite progress in extending social protection systems in many countries—including low- and lower-middle-income countries—protection gaps remain at unacceptable levels, leading to unnecessary human suffering and providing the breeding ground for sharpening inequalities and social unrest. 55 per cent of the world's population still has no access to social protection, and more than one third lacks legal healthcare protection; only 29 per cent have access to the full range of safeguards included in the concept of social protection floors.
Recovery will only be sustained, and future crises mitigated, if countries are able to progressively build on or transform the temporary relief measures adopted during the crisis into comprehensive, shock-responsive and universal social protection floors. The Special Rapporteur is convinced that strengthened international solidarity should be put in the service of this objective. While in most countries additional investments in social protection should rely on domestic resource mobilization, if economic and fiscal capacities are insufficient, as in the case of low-income countries, or because of a covariate shock as the Covid-19 crisis, countries may have to receive international support to complement efforts.
The need for global solidarity
The 2011 Report of the Social Protection Floor Advisory Group recommended, inter alia, that "donors provide predictable multi-year financial support for the strengthening of nationally defined and determined social protection floors in low-income countries within their own budgetary frameworks and respecting their ownership." The 2012 Social Protection Floors Recommendation (No. 202) itself notes that, while "national social protection floors should be financed by national resources," "Members whose economic and fiscal capacities are insufficient to implement the guarantees may seek international cooperation and support that complement their own efforts" (para. 12). These recommendations are fully consistent with international human rights law, which recognizes a special responsibility for States to provide international assistance and cooperation in the fulfillment of economic, social, and cultural rights to other States with limited resources. It also supports the 2030 Sustainable Development Agenda: under SDG 17, the global community has committed to supporting developing countries by means of (1) strengthening domestic resource mobilization; (2) official development aid; and (3) additional resource mobilization from multiple sources.
In October 2012, in his former capacity as Special Rapporteur on the right to food, the Special Rapporteur proposed jointly with the then mandate-holder on extreme poverty and human rights, a Global Fund for Social Protection (full proposal here; executive summary here), comprising two branches: a financial facility seeking to close the funding shortfall for establishing social protection floors in least developed countries (LDCs); and, in parallel, a reinsurance branch, helping to underwrite these schemes against the risks of excess demand triggered by major shocks, either by advising LDCs on suitable private reinsurance options, subsidising their premiums, or acting as the reinsurer of last resort. The proposal was referred to by the High-Level Panel of Eminent Persons on the Post-2015 Development Agenda in the Report A New Global Partnership: Eradicate Poverty and Transform Economies through Sustainable Development submitted in May 2013 to the Secretary-General. Other proposals were also put forward in preparation of the Third International Conference on Financing for Development convened in Addis Ababa on 13-16 July 2015, including the proposal to establish a Global Fund for Social Protection Floors made by the Global Coalition for Social Protection Floors. The Addis Ababa Action Agenda, as endorsed by the General Assembly in its resolution 69/313 of 27 July 2015, includes a pledge by the Heads of State and Government and High Representatives to provide "strong international support" for the efforts to establish social protection floors (para. 12).
These proposals have gained visibility in the light of Covid-19 crisis. The 2019 "G7 Social" under the French Presidency adopted an unprecedented Tripartite Declaration stating that social protection is an indispensable instrument to increase resilience to crises, prevent and reduce poverty, vulnerability and social exclusion, while providing income security over the life cycle. On this occasion, the G7 Labour Ministers advocated for adequate and responsive social protection systems worldwide, designed to provide access and support to meet people's urgent needs, including by extending adequate social protection to all regardless of the type of employment and work arrangements, in accordance with nationally defined social protection schemes.
The idea of a Global Fund for Social Protection starts from the finding that social protection floors are affordable, provided low-income countries receive international support in order to complement their own efforts to mobilize domestic resources. In 2019, it was estimated that the financing gap for all 134 developing countries (the difference between what these countries already are investing in social protection and what it would take to guarantee the full range of entitlements associated with social protection floors) represented about 527 billion USD per year, or the equivalent of 1.6% of the GDP of these countries, and that the gap for low-income countries alone was 27 billion USD, equivalent to 5.6 per cent of their GDP. This amount represented less than 18% of the total official development assistance provided in 2019 by OECD countries. The most recent estimates, updated taking into account the Covid-19 pandemic, are that developing countries would need to invest an additional 1.2 trillion USD – equivalent to 3.8% of their gross domestic product (GDP) – to close the financing gap, and that the gap for low-income countries is 78 billion USD, equivalent to 15.9% of their GDP. By way of comparison, the total official development assistance from OECD countries amounted to 152 billion USD in 2019.
The desirability and feasibility of a new international mechanism in support of social protection floors remains debated, however. On 22-23 September 2020, the Special Rapporteur organized jointly with the French government a High-Level Expert Meeting on this topic, which brought together 12 governments, 18 international agencies, social partners, civil society, and academic experts. The questions listed below are informed by the views expressed during that meeting. The Special Rapporteur would be grateful for answers to be provided before 1 December 2020. On the basis of the reactions received, he intends to present the Human Rights Council with a mapping of the positions adopted, and to identify ways forward.
1. Added value of the Global Fund for Social Protection (GFSP)
The GFSP is intended to contribute to four objectives:
(a) Improving the coordination of efforts towards the establishment of social protection floors worldwide, both at multilateral / inter-agency level and at country level;
(b) Capacity-building and improving international cooperation in order to strengthen the ability for LICs to mobilize domestic resources;
(c) Increasing levels of financial support to low-income countries; and
(d) Providing risk insurance for LICs with poorly diversified economies and those that are particularly vulnerable to shocks.
1.1. Taking into account these objectives, what do you see as the added value of the GFSP?
1.2. Do you see one or more of these objectives as a priority?
2. Synergies with existing initiatives
2.1. How to ensure that the initiative for a Global Fund for Social Protection builds on, and ensures appropriate synergies with, existing initiatives in this area, in particular the coordination achieved through SPIAC-B (Social Protection Inter-Agency Cooperation Board), USP2030 (Universal Social Protection 2030 Partnership), and the ILO Flagship Programme on "Building Social Protection for All")?
2.2. How to ensure that the GFSP complements, and does not compete with, other existing multilateral funds, in particular the funds placed under the Multi-Partner Trust Fund Office (MPTF Office)?
3. Strengthening international coordination
3.1. How can objective (b) (capacity-building and improved international cooperation in order to strengthen the ability for LICs to mobilize domestic resources) be most effectively achieved?
3.2. Could the GFSP lead to improved international coordination against tax evasion and tax avoidance, including base erosion and profit shifting by transnational corporations, and, if so, how?
4. Provision of financial support
4.1. How can objective (c) (increased levels of financial support to low-income countries) be most effectively achieved?
4.2. If the GFSP provides financial support for the establishment of social protection floors, should this be in the form of grants or in the form of loans?
4.3. Should financial support be made conditional upon recipient countries increasing their own budgetary efforts towards social protection (e.g. through matching funds)?
4.4. Should other conditions be imposed on recipient countries and, if so, which ones and why?
4.5. How could the imposition of conditions be reconciled with the principle of national ownership?
5. Innovative sources of financing
5.1. Should the GFSP develop into a forum for the discussion of innovative sources of financing, such as a worldwide tax on digital companies (the "GAFAM"), a carbon tax on air or maritime transport, a tax on financial transactions, or other?
6. The informal economy
6.1. Should the GFSP play a role in encouraging the extension of social protection to workers in the informal economy, in line with ILO Recommendation No. 204 on the Transition from the Informal to the Formal Economy (2015), and, if so, how would it do so?
7. Role of the private sector
7.1. Should the private insurance sector play a role in the organisation of the reinsurance branch of the GFSP and, if so, how do you envision such a role?
8.1. What governance structure should the GFSP have?
8.2. What roles do you envision for governments, for international agencies (such as, in particular, the ILO, the World Bank, or the UNDP), or for social partners?
8.3. What lessons can be drawn, in particular, from the Global Fund on AIDS, tuberculosis and malaria?
9. Next steps
9.1. If a mandate were to be given to certain organisations to develop operational proposals for the establishment of the GFSP, what approach would you recommend?
9.2. Should SPIAC-B be tasked with this mandate? Or USP2030? Or should another approach be followed, for instance requesting that the OECD and the ILO develop operational proposals for the GFSP?
The Special Rapporteur greatly appreciates the efforts that go into making such contributions and looks forward to reading the submissions.
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