Developments and Trends in Social Security Worldwide
Extracts from the keynote address of Hans-Horst Konkolewsky, ISSA Secretary General, at the World Social Security Forum
We have witnessed the most severe episode of global financial and economic crisis since the Great Recession of 1929. This crisis has seriously impacted the global economy, social conditions and consequently also social security schemes.
Increasing levels of unemployment and poverty have led to higher benefit expenditures, with a commensurate loss of contribution revenues and a drawing down of reserve funds. Increased investment in active labour market programmes and other responses, often as part of stimulus programmes, pushed the financial and administrative capacities of social security institutions to their limits.
At the same time, the financial capacity of social security systems and governments to tackle longer-term challenges related to demographic ageing, changing family structures or urbanization in the countries most affected by the crisis has been seriously diminished.
More positively, however, in a number of countries stimulus packages and other political response measures also provided important windows of opportunity to improve and extend social security benefits and services.
In this context, how can social security developments best be summarized?
I believe that in spite of major difficulties and challenges, social security has been strengthened in the recent period and I would like to give you two good reasons to support this statement:
First, the societal and political status of social security has increased significantly.
During the crisis, public social security provision has acted as an unrivalled social buffer and economic stabilizer essential to maintaining economic and social stability.
Regrettably, global levels of unemployment and poverty have grown as a direct consequence of the economic downturn. However, without social security, the negative impact of the turmoil would undoubtedly have been much more serious.
Moreover, an important lesson for policy-makers worldwide is that those countries that had comprehensive social security systems in place also were the ones most able to manage its negative impact. These schemes provided policy-makers with immediate responses to help sustain aggregate demand and to offer adequate protection to those affected.
A second positive observation is that a growing number of national developments and trends are compatible with the objectives of Dynamic Social Security.
Whether prompted by the crisis, or by other socio-economic challenges and initiatives by policy-makers or social security institutions, the analysis of regional and global social security trends during the last triennium show that reforms can be classified into four cross-cutting themes.
(1) The first of these four cross-cutting trends is the effort in all regions to build high-performing and well-governed social security administrations.
Clearly in the current environment, good governance is a vitally important objective for social security organizations wherever they may be located. Delivering what is mandated and ensuring that what is delivered is responsive to the evolving needs of individuals and society is the essence of this concept.
Ensuring high quality services has been at the centre of recent reforms. Service profiles have evolved, and service channels have become more diversified. An empowered and client-oriented workforce lies at the heart of high-performing administrations.
(2) The second of the four cross-cutting trends is to make social security more accessible, an issue of special relevance for the regions of Africa, Asia and the Pacific and the Americas.
As a basic human right, access to social security should be universal. However, the majority of the world’s population remains without access to comprehensive social security coverage.
Positively, a number of countries have succeeded in improving affiliation to social insurance schemes and have thereby demonstrated that rapid extension through improving compliance and enacting innovative measures for specific population groups can be achieved. Importantly, social security institutions were at the forefront of these extension efforts.
A key challenge for extension strategies has been to reach large groups of informal economy workers and their families, with migrant labour presenting special challenges in this regard. Efforts to extend access to coverage in a small number of populous and politically-prominent developing countries point to significant innovations, indicating that conventional perceptions of social protection provision are evolving.
(3) A third cross-cutting trend in recent reforms consists of broad efforts in all regions to realize sustainable social security.
Such efforts have been magnified by the impact of the financial and economic crisis.
The crisis has underlined that financially sustainable social security programmes are better able to adjust to mitigate the social risks presented by an adverse economic environment.
Yet, levels of public debt have grown and the financial health of many social security programmes has weakened.
As a result, the financial capacity to respond to future challenges such as demographic ageing and extension initiatives has been reduced. Not surprisingly, significant acceleration of reforms to guarantee financial sustainability is one of the consequences that can be observed.
Importantly, to reduce cutbacks, in particular in view of the important crisis response role social security has just played, some countries are seeking innovations in financing social security. Recent developments suggest for instance that greater integration of contributory and tax-financed social security programmes may help in guaranteeing the future financial sustainability of social security programmes. Such innovative reforms have often gone beyond the conventional relationship between contributions and benefits.
(4) This brings me to the fourth cross-cutting trend: the strengthening of proactive and preventive social security measures. This trend has been most pronounced in higher-income countries, but the diffusion of such approaches to other regions has undoubtedly accelerated.
Three years ago, I reported on the broadening of the role of social security, which is increasingly not only to protect individuals, but to also mitigate, at the earliest possible stage, the major risk factors that affect them.
It is in this cross-cutting theme where innovation has been most striking.
Proactive and preventive measures have spread across all branches of social security, aiming at risks affecting health, employment status and earnings capacity. Interventions have been applied earlier and risk-assessments of individuals and groups are becoming an important tool for effective targeting.
Positively, these four cross-cutting themes of accessibility, sustainability, proactive and preventive approaches and high-performing and well-governed social security institutions correspond to key elements of the Dynamic Social Security agenda.
However, the sheer complexity of these reforms in times of significant pressure has created tough challenges for social security administrations.
Keynote address: Developments and Trends in Social Security Worldwide