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UNITED NATIONS Department of Economic and Social Affairs

UNITED NATIONS Department of Economic and Social Affairs. Social Policy: The Way Forward Isabel Ortiz Senior Interregional Advisor United Nations DESA ICSW 33 rd Conference 30 June-5 July 2008 Tours France. Distribution of World Income Development for whom?.

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UNITED NATIONS Department of Economic and Social Affairs

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  1. UNITED NATIONS Department of Economic and Social Affairs Social Policy: The Way Forward Isabel Ortiz Senior Interregional Advisor United Nations DESA ICSW 33rd Conference 30 June-5 July 2008 Tours France

  2. Distribution of World IncomeDevelopment for whom? Distribution of world GDP, 2000 (by quintiles, richest 20% top, poorest 20% bottom) Source: UNDP Development Report 2005

  3. Apartheid at a Global Scale? • Half of the world lives below the $2-a-day poverty line • Need to bring redistribu-tion to develop-ment agenda Source: Sutcliffe, 2005. Department of Economic and Social Affairs. WP 2. UNDESA

  4. Historical Trend: Inequality Keeps Rising Ratio of the Income of the Richest 20% to the Poorest 20% Source: UNDP Human Development Reports 1999 and 2005, New York

  5. North-South Transfers:Limited Overseas Development Aid [Compareto military expenditures!] Source: OECD

  6. NET FINANCIAL FLOWS TO/FROM DEVELOPING COUNTRIES, IN BILLION US$. THE SOUTH FINANCES THE NORTH! Source: Naciones Unidas, Department of Economic and Social Affairs. 2007. World Economic Situation and Prospects, 2007. UN DESA, New York.

  7. Increasing Global Reserve Accumulation, 1998-2007 Little left to governments to spend on social and economic development Tax Justice Network estimates that capital flight = $11 trillion, if taxed would significantly increase fiscal space for social policy

  8. BUSINESS AS USUAL IS NOT AN OPTION: NEED TO BRING SOCIAL CONSIDERATIONS TO ECONOMIC POLICY

  9. No Trickle-Down Effect: The Benefits of Economic Growth do NOT Automatically Reach All Source: Woodward and Simms, 2006. Department of Economic and Social Affairs. WP 20. United Nations.

  10. Examples of Standard Macroeconomic Policies and Alternative Options Source: Oxfam International 2003 and Rick Rowden, Action Aid 2007

  11. IMF Papers Outside Papers Estimated Inflation Thresholds Fisher (1993) 15%-30 % Bruno and Easterly (1998) 40% Burdekin, et al (2000) 3% for developing and 8% for rich countries Gylfason and Herbertsson (2001) 10%-20% Pollin and Zhu (2005) 15%-18% Bruno (1995) 20% Barro (1996) Finds that a 10% increase in the annual inflation rate is associated on impact with a decline in GDP’s annual growth rate of only 0.24%. Sarel (1996) 8% Khan and Senhadji (2001) 11%-12% for developing and 1%-3 % for rich countries Ghosh and Phillips (1998) Finds that the inflation-growth relationship is convex, so that the decline in growth associated with an increase of 10-20% inflation is (1998) much larger than that associated with moving from 40% to 50% inflation.

  12. BUSINESS AS USUAL IS NOT AN OPTION: NEED OF DIFFERENT APPROACHES IN SOCIAL POLICIES Source: United Nations National Development Strategies Policy Notes, 2008

  13. BUSINESS AS USUAL IS NOT AN OPTION: NEED OF DIFFERENT APPROACHES IN SOCIAL POLICIES (cont) Source: United Nations National Development Strategies Policy Notes, 2008

  14. 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

  15. Is Social Policy Affordable in Developing Countries? • Countries at the same level of economic development differ significantly in their social spending • The size of social systems depends on political attitudes • to reduce poverty and construct a society for all • to expand internal markets and increase productivity • to win electoral support • Affordability is at the core of the social contract between governments and citizens: how much a society is willing to redistribute through taxes and contributions • Caution re: arguments about unmanageable fiscal crisis • A “Universal but progressive” approach to expand benefit coverage

  16. How to Bring Equity to the Development Agenda • 1995 Copenhagen World Summit: “A society for all” • 2005 NY World Summit – Reaffirmed

  17. Social Dimension of Globalization Advocacy for: A GLOBALIZATION FOR ALL, based on people’s centred development, redressing social assymmetries • E.g. more North-South transfers/ODA • E.g. global food crisis – it requires a “new deal” to ensure that food to people, not ad hoc emergency response A GLOBAL SOCIAL FLOOR is a basic and modest set of social security benefits for all citizens • Basic social pensions, tax-financed, universal non-contributory, for older persons and persons with disabilities • Child benefits • Some modest conditional support for the poor in active age (employment programmes, benefits), and • Financing universal access to essential health care • A coalition for a world campaign with ILO, UNDESA, Helpage, UNICEF and… ICSW?

  18. Social Pensions ($1 Day) Cost less than 1% GDP in Most Countries Source: UN DESA, 2007: World Economic and Social Survey 2007, United Nations

  19. A Global Social Floor: Costs for basic social protection package as % GDP Old-age/disability pensions ($1 day) + child benefits ($0.5 day) + unemployment support ($1 day/100day/10% pop) + 15% admin costs Source: ILO, 2008. Social Security Department, Geneva

  20. How to Bring Equity to the Development Agenda • 1995 Copenhagen World Summit: “A society for all” • 2005 NY World Summit – Reaffirmed

  21. South-South Cooperation South-South Bilateral ODA Limited, estimated at 4.4% of total ODA Increasing role of China, India, Venezuela Brazil and S Africa Regional Integration Most elaborate example is the European Union – but regionalism is quickly developing, all countries belong to some regional formation (ALBA, ASEAN, AU, CAN, CARICOM, LAS, MERCOSUR, SAARC, SADC) Several elements: Finance (ensuring regional savings are used for regional development – e.g. Monetary unions such as Chiang Mai initiative, Latin American Fund and Bank of the South/ALBA) Intra-regional trade Policy coordination for social and economic development Raising living standards and expanding internal markets, etc

  22. Latin America most developed case of Southern Regional Integration ALBA, CAN, MERCOSUR, UNASUR Bank of the South (2007), Bank of ALBA (2008) created to redress social assymmetries

  23. 1. An alternative to the lack of global policies: Using regional integration to promote endogenous development, economic growth, internal markets and social cohesion • 2. Management of cross-border social problems: SARS, Avian Flu, migration • 3. Economies of scale/division of labour e.g. education - specialized training/research centers expensive, not all countries can afford to have one • 4. International risk pooling • Redressing some of the limitations of national policies e.g. agricultural insurance and reinsurance, disaster prevention and management • 5. A stronger voice in international and national negotiations • Avoiding weak negotiating positions and dispersion by associating • 6.An instrument to promote human rights e.g. European Court of Human Rights Regional Social Policies

  24. How to Bring Equity to the Development Agenda • 1995 Copenhagen World Summit: “A society for all” • 2005 NY World Summit – Reaffirmed

  25. See United Nations National Development Strategies: Social Policy. Areas: • 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. • This includes national policies to implement internationally agreed goals such as Convention on the Rights of Persons with Disabilities, International Action Plan on Ageing, etc • Adequate budgetary allocations, including recurrent expenditures (salaries of staff, supplies) • Implementation arrangements – service provision, empowering communities… • Monitoring mechanisms including Social Accountability/Community Monitoring/Social Audits National Social Policies

  26. It Can Be Done: Remember that Not Long Ago There were children working in England’s mines and factories… …Spanish low class emigrants going to Latin America in search of any job… … poverty was widespread in the US or South Korea… …and in South Africa’s apartheid

  27. Thank you United Nations Department for Economic and Social Affairs http://www.un.org/esa/ Email: ortizi@un.org

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