International Social Security Review

Social security’s vital contribution to inclusive growth and social cohesion

International Social Security Review

Social security’s vital contribution to inclusive growth and social cohesion

In these extraordinary times, the International Social Security Review has released a new special issue that offers a timely opportunity to consider the important relationship linking social security, inclusive growth and social cohesion

In terms of realizing global progress towards the achievement of social and economic development goals, there is a growing acceptance that 2020 will have been a calamitous year.

Globally, the unprecedented effects of the COVID-19 pandemic continue to extend and be felt in ever more aspects of social and economic life. In particular, progress as regards inclusive growth and social cohesion has faltered in many countries.

Nonetheless, it is widely understood that this situation would have been much worse if it were not for the important role played by public policy interventions, and social security systems in particular.

For this reason, the 2020 special issue of the International Social Security Review (ISSR, Vol. 73, No. 3) shines an important light on the mutually reinforcing objectives of social security, inclusive growth and social cohesion.

Inclusive growth and social cohesion

Generally, inclusive growth and social cohesion are commonly seen to be political expedient and necessary objectives for national economies.

Inclusive growth is normally considered to mean the more equitable sharing by society of the benefits of economic development. Social cohesion encompasses many elements in society, but may be portrayed as involving meaningful degrees of trust, inclusive identity, and a willingness to cooperate.

At a political level, they represent part of the “social contract” that binds society together. In global terms, these important objectives are elements of the United Nations Sustainable Development Goals (SDG) 2030 agenda.

Of course, achieving and sustaining progress on the objectives of inclusive growth and social cohesion is no less important to the longer-term social, political and financial sustainability of social security systems.

Social security systems: Economic stabilizers and social buffers

Based on the experience of previous global crises, it was only to be expected that, as part of the policy response to the COVID-19 crisis, we would see governments upscale their use of national social security systems.

Indeed, as the International Social Security Association’s (ISSA) COVID-19 Social Security Responses online monitor comprehensively reports, social security programmes in many countries have been tasked with providing necessary protection to those exposed to the health, social, economic and labour markets risks unleashed by the pandemic. This has been achieved through the adapted delivery of standard programmes as well as the introduction of ad hoc emergency measures.

Overall, social security systems have acted as vital economic stabilizers and social buffers to mitigate the downside risks faced by national economies, labour markets and, in the first instance, vulnerable populations.

The increased demands made of social security systems makes evident the fact that social policy is not a constraint to economic development – sustainable social and economic development go hand in hand.

COVID-19, structural inequalities and comprehensive social security coverage

Despite the increased spending by many social security systems in the recent period, the scale of the COVID-19 crisis has been such that progress as regards the objectives of inclusive growth and social cohesion has stalled. In some national cases, it may even have reversed.

Framed by the broader context of the SDG agenda, the COVID-19 pandemic has also acted to draw attention to persistent structural inequalities in many societies. For the ISSA, such inequalities typically translate into limited access to social security protection. This is most evident, for instance, among self-employed workers, rural workers, digital platform economy workers and, globally the most numerous group without access to adequate coverage, informal economy workers. There is also an important gender dimension to inequalities in social security coverage.

The evidence of recent months has underlined the importance of the role of comprehensive social security coverage to help cushion society against social and economic shocks. Clearly, we have witnessed the unmatched ability of comprehensive social security and universal health and long-term care systems, coordinated with preventive public health strategies and occupational safety and health systems and labour market policies, to mitigate the most severe downside social and economic impacts of crises as well as to support aggregate consumer demand.

As ISSA Secretary General Marcelo Caetano reminds, “Without comprehensive social security, the toolkit to support inclusive growth and social cohesion would be much more limited”.

Here lies the challenge. The lack of comprehensive systems in many countries is seriously hindering the ability of social security administrators to deliver benefits and services to meet the needs of all, and especially the vulnerable in an evolving crisis context. In the absence of comprehensive national programmes, this also limits policy-makers’ options to design and roll out novel emergency responses at the national level, which benefit normally from being piggybacked on tried-and-tested national administrative structures.

A sustainable future for social security

The global economy currently faces the risk of a deep recession. For social security systems, the recent months have seen social security expenditures grow while income from contributions has waned – as levels of unemployment have risen, the hours worked by many workers have reduced and earnings declined. The demand for social expenditure financed from general government revenue has increased.

Notwithstanding the important stabilizing and protective roles of social security systems, it is probable that the financial health and stability of social security systems in many countries will have weakened. Public finances will be similarly negatively affected. As part of policy responses to address the sustainable financing of social security systems, the ensuing period will see a need to increase contributions or reduce benefits, or both. Innovative, alternative forms of financing may need to be considered. It is likely that the longer that the effects of the crisis endure the greater the demand will be for tax financed social expenditures, especially for social assistance benefits. In this regard, and while the risk of the imposition of austerity measures is real, the goals of inclusive growth and social cohesion require that any necessary changes to the tax system be progressive.

The world continues to change and social security systems must adapt. Yet, income security and health challenges facing people across the life course remain. If we were to seek to give meaning to the so-called “new normal”, it is probably that of a sense of greater shared uncertainty – at the social, economic, political and environmental levels. To counter such uncertainty and help rebuild confidence in society, social security systems have an important role to play.

As the content of the ISSR special issue emphasizes, it is vital that national social security systems around the world continue to support the goals of inclusive growth and social cohesion – to help ensure the “social contract”.

Further reading

ISSR. 2020. “Special issue: Social security, inclusive growth and social cohesion” (entire issue), in International Social Security Review, Vol. 73, No. 3.

Contact

For more information about the 2020 ISSR special issue, contact Roddy McKinnon, Editor, International Social Security Review; mckinnon@ilo.org.