UN DESA Department of Economic and Social Affairs

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UN DESA Department of Economic and Social Affairs

• MOVING THE SOCIAL POLICY
• AGENDA FORWARD
• Isabel Ortiz
• Senior Interregional Advisor
• United Nations DESA
• UN Commission for Social Development
• New York, February 2007

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Development for whom?

• Inequality has risen in the last decades
• Within countries
• Among countries
• Inequality keeps rising
• UNUWIDER 2006
• The benefits of globalization, as it is
  managed/mismanaged, go to a few companies and
  individuals, in a few countries.
• This is a result of the choice of economic and
  social policies
• Business as usual not an option

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Business as Usual not an Option

• Standard Policy Advise 1980s-90s
• Caused poverty and increased inequality
  (adjustment programs, severe financial crisis)
• Interrupted nation-building development processes
  
• Increased political instability and conflict
• It constrained growth in developing countries!
  
• Remains part of conventional development thinking
• Are attempts to redress it (ie. PRSPs) good
  enough?
• General Issues targeting and residualism,
  employment, choice of social protection
  instruments, participation, trade, finance
• What happens in non-IDA middle income countries
  where no PRS?

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Bringing Equity to the Development Agenda

• 1995 Copenhagen World Summit A society for all
  United Nations DESA mandate to implement it
  work on
• Employment and Poverty Reduction
• Social groups (persons with disabilities, youth,
  older persons)
• 2005 World Summit governments pledged more
  ambitious National Development Strategies, backed
  by increased international support
• 2005 UNDESA, UNDP and World Bank reports on
  Equity
• DESA works on governments requests Advisory
  services on demand
• Since 2005, main focus on National
  Development Strategies
• 2006 United Nations Policy Notes to guide
  National Development Strategies, on critical
  areas Developed with Nobel Laureate Joseph
  Stiglitz, Jomo K. Sundaram and other alternative
  economists/sector specialists, with inputs from
  UN agencies

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Bringing Equity to the Development Agenda
1980s-90s Standard Policy Advise New Paradigm/Consensus
Growth (priority) through deregulation, free markets, supply side economics, minimalist governments, residual social policies. Growth and equity through active promotion of national development. Winning policy space. Social and economic development integrated gt actually bringing equity and social issues to all policy domains.
Anti-inflationary measures as core monetary policy Employment-generating growth as a priority, some authors tolerant to limited inflation
Fiscal policies Minimal direct taxation Taxation for development and redistributive purposes
Financial liberalization, open capital accounts Selective capital controls to avoid financial volatility, making finance work for real economy growth (regional development banks etc)
Cuts in public expenditures, avoiding fiscal deficits Public investment for development need to expand governments fiscal space
Privatization of public assets services, minimalist government (state as predatory, crowding out private sector) Building state capacity to promote development, public investment, technology policy
Free trade Free trade not priority, growth of domestic activities prior to (selective) trade liberalization
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1980s-90s Standard Policy Advise New Paradigm/Consensus
Residual social policies (minimal, targeted to the poor), safety nets Universal policies (for all). Importance of social policies for development, equity, domestic market, nation building, political stability
Labor flexibility, productivity Decent work agenda, distribution issues (ie. wage policies) employment a result of adequate macro, economic and social policies
Commercialization of social services Expansion of coverage of services (health) ensuring retention (education)
Cost recovery mechanisms (fees for services) Avoidance of user fees, except for upper income groups in tertiary services
Social Protection pension reform Importance of expanding pension coverage (social pensions) and addressing community needs
No interest for culture and values (intangible) Culture and values important for tackling exclusion and building social cohesion
No attention at sources of conflict (political) Conflict prevention
Selective participatory processes National coalitions and social pacts/dialogue
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How to prepare an equitable National Development
Strategy

• Prerequisites
• National Coalitions Strategies not technocratic
  require national alliances to be sustainable
  social pacts
• Integrating economic and social policies
• STEPS
• 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
• Macroeconomic policies
• Sector priorities (i.e. energy, water)
• Social policies (i.e. decent work, social
  protection)
• Budget in a multiannual MTEF
• Implementation arrangements
• Monitoring mechanisms including
• comparable poverty line
• indicators for each of the social groups
  preferably in the form, of National Action Plans
  for youth, elderly, indigenous populations,
  disabled, etc (reality check what happens to
  people?)

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Sector Priorities for Equity and Poverty
Reduction I
Area Typical interventions with EQUITABLE/PROGRESSIVE outcomes Typical interventions with INEQUITABLE/REGRESSIVE outcomes
Culture Multicultural activities, popular events that foster social cohesion Subsidies to elitist events/ exclusive art
Education Universal primary and secondary education programmes to ensure access and retention of students User fees in primary and secondary education
Energy and Mining Rural electrification life-line tariffs (subsidized basic consumption for low income households) Large power plants, Untaxed oil/mineral extraction
Finance Regional rural banks, microfinance managing finance (current accounts, capital flight) Reform/rescue of banking system (transfers to large banks) subsidies to large private enterprises
Health Universal primary and secondary health services, nutrition programmes User fees, commercialization of health, tertiary highly specialized clinics (e.g. cardiology centres)
Housing Subsidized housing finance, upgrading of substandard housing Housing finance for upper income groups
Industry Supporting competitive, employment-generating domestic industries, SMEs Deregulation
Labour Active and passive labour programmes Labour flexibilization
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Sector Priorities for Equity and Poverty
Reduction II
Area Typical interventions with EQUITABLE/PROGRESSIVE outcomes Typical interventions with INEQUITABLE/REGRESSIVE outcomes
Macroeconomics Employment-sensitive monetary and fiscal policies, countercyclical policies, direct taxation Cyclical policies, indirect taxation (VAT)
Public Expenditures Pro-poor expenditures Military spending
Rural Development Secure access to land, water, markets, livestock, credit for smallholders Large investments such as irrigation systems that benefit landowners
Social Protection Non-contributory pensions, cash transfers, social services, etc. almost all SP are aimed at redistribution Private pension systems
Tourism Small-scale local companies Poorly taxed luxury hotel chains
Trade Linking employment-generating local companies with export markets Most bilateral free trade agreements
Transport and Infrastructure Rural roads, affordable public transport, non-motorized transport for households (bicycles, buffalos, etc) Some large (and costly) infrastructure investments
Urban Development Slum upgrading, accessible universal design Large urban infrastructure projects in wealthy areas
Water Rural water supply and sanitation Poorly negotiated privatizations
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National Social Policies

• Reasons of social policy
• Intrinsic
• Social justice
• Instrumental Governments use it pragmatically
  to
• Enhance human capital and productive employment
• Boost domestic demand
• Secure political support of citizens
• Prevent conflict, create stable cohesive
  societies
• Social policies- issues
• Universal vs. targeted policies
• Importance of speed
• How to create employment?
• Expanding coverage of social services and
  protection
• Preventing conflict and building social cohesion
• Affordability
• Cross-border issues Regional social policies
• International aid supporting equity

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Universal vs. Targeted Social Policies

• Residual approach 1980s-90s
• Public services only for the poor
• Main reforms focused on privatizing/commercializi
  ng 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 countrys 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

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Key Issues Education and Health Social Services

• For social services, it is generally suggested
• On the supply side
• To increase budgetary allocations for social
  programmes to expand coverage, aiming at
  universal provision.
• To eliminate barriers to access for poor and
  excluded groups such as
• Fees for services and hidden fees such as school
  uniforms, extracurricular activities,
  under-the-table payments, etc.
• Complicated or restrictive administrative
  procedures.
• Services provided in languages not spoken by the
  population.
• To address the differing needs of women and men
• To target inaccessible remote areas.
• To include minorities and special population
  groups, designing targeted programmes if
  necessary.
• To improve the quality of services from a
  user-perspective.
• On the demand side
• To raise awareness and promote behavioural
  change.
• To support demand for services (e.g. ensuring
  that people have knowledge of them, using
  conditional cash transfers if necessary).

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Speed Matters

• Most development programs tend to take a long
  time to show results (ie. education). When a
  government intends to develop equitable social
  policies, it may want to consider two different
  sets
• Medium and long-term policies include most
  important initiatives such as expanding coverage
  of education services, health and social
  security, improved labour standards, adequate
  wage and employment policies, etc
• Short-term high-impact initiatives A set of fast
  high impact initiatives can assist governments
  address basic needs among the neediest segments
  of the population. These programs may contain
  components such as
• free school meal programmes
• nutrition, vitamin and micronutrient
• supplements for mothers and children,
• upgrading programmes for
• substandard housing (water,
• household repairs),
• social pensions for the elderly poor
• or persons with disabilities.
• Low cost (Zero Hunger 0.2GDP,
• rural pensions 1 GDP)

Examples Fome Zero Brazil (2003) Hambre Urgente
Argentina (03) Bolivia Urgente (2006) Pobreza O
Nicaragua (2007)
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Key Issues Employment Jobless growth, Labour
Flexibility

• Growth does not necessarily
• generate employment gt It does
• in China, but in most countries
• the experience has been
• Jobless Growth
• In most developing countries,
• particularly in Africa, the number
• of working poor has increased
• labour reforms led to increased
• informalization of the labour force,
• predominantly in Latin America,
• Easter Europe and the former
• Soviet Union.
• In 1965, CEOs were paid 51 times
• as much as a minimum wage earner
• in the United States in 2005, this

• 1980s-90s standard policy advise fostered labour
  market reforms, as an investment incentive.
• However, labour flexibility not accompanied by
  increased employment
• The strong welfare states of northern Europe
  (Denmark, Netherlands, Norway and Sweden), with
  employment rates as high as the US and the UK,
  demonstrate that employment is fully compatible
  with rigid labour markets, high social
  protection and collective bargaining.
• Employment is not related to labour market
  flexibility, but to economic policies that are
  effectively coordinated with adequate social
  policies.
• Generating DECENT employment must be first
  priority of a National Development Strategy

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Key Issues Employment II

• HOW TO CREATE EMPLOYMENT?
  Employment is a result of
• Promotion of growth through macroeconomic and
  sector policies
• Effects of expansive monetary and fiscal policy
  on aggregate demand debate tight monetary policy
  does not generate employment.
• Adequate exchange rate policy combined with
  industrial policy stimulates output growth
  gradual and sequential trade opening to support
  it
• Adequate Labour Policies It is not only about
  generating employment, many people work but
  cannot bring their families out of poverty,
  adequate salary and working conditions essential
  gt Decent work agenda.

• Main labour policies
• Active labour market programmes
• Direct employment generation (promoting SMEs,
  cooperatives, wage subsidies,
• public works, guaranteed job schemes).
• Labour exchanges or employment services (job
  brokerage, counselling offices)
• Skills development programmes (training and
  retraining of labour to enhance
• employability and productivity).
• Special programmes for youth and persons with
  disabilities.
• Passive Labour market policies
• Unemployment insurance, income support policies.
• Labour regulations and standards such as adequate
  wage policies (minimum salaries,
• wage indexation, equal pay for work of equal
  value), job security provisions
• (recruitment/dismissal of employees), working
  conditions (occupational health and safety
• minimum age, maximum working hours and overtime,
  leave provisions), special protection
• for mothers, and antidiscrimination provisions to
  protect women and minorities.
• Social Pacts/Dialogue Collective Bargaining

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Key Issues Social Protection I

• Social protection programmes include
• Social insurance (old-age pensions, disability,
  etc)
• Social assistance (programs for vulnerable groups
  like streetchildren, battered women, etc).
• Schemes to assist communities and the informal
  sector include agricultural insurance, food
  security programmes, social funds, disaster
  prevention and management.
• Because of the strong redistributive character of
  most social protection policies, they were not
  favoured by conventional approaches during the
  1980s-90s (except pension reform projects). In
  extreme cases like Bolivia, the Ministry of
  Social Security was closed down.
• In the 1980s-90s, push for pension reforms,
  moving away from PAYGO public systems towards
  funded systems (privately managed, invested in
  capital markets) (next slide)
• Given the urgency to eradicate poverty, social
  protection, in particular social
  transfers/pensions, are currently at the
  forefront of the social development agenda.

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Key Issues Social Protection II - Pensions
Funded pension systems (private
pillars II-III) - Do not serve the poor or
low income groups pension coverage did not
expand. - Are expensive (transition costs)
ie. In Brazil, 7.3 GDP, as compared to 1 of
GDP public rural pensions for the poor -
Administrative costs of pension funds are very
high, making returns on investments lower.
- Financial risk left to pensioners the
state has to bail out companies and provide
safety nets in case of crisis. - By investing
savings in capital markets, loss of resources to
governments Social Pensions (public, pillar
I) - Have high impact on poverty reduction
(ILO 35 to 40 reduction) - Older people spend
their pensions supporting household, important
for food security - Ideal to expand coverage -
Monetizes rural economies - Countries like
Brazil, Argentina, South Africa, Namibia,
Zambia, have introduced non-contributory pension
schemes as an instrument to fight poverty. -
Increased donor support, relatively easy to
implement through budgetary support
Multi-pillar Pension System
PILLAR I PILLAR II PILLAR
III Redistributive Funded
Funded PAYGO
Voluntary
How older poor spend pension cash
transfer
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Preventing Conflict and Building Social Cohesion
I

• Most national and sector strategies, done by
  economists and sector specialists gt blind to
  conflict matters, designed ignoring sources of
  tension as it is perceived as political beyond
  the development domain. Business as usual no
  longer possible.
• Early warning Conflict prevention starts by
  detecting its probability.
• Tackling potential causes of conflict National
  Development Strategies are the perfect setting to
  prioritize interventions to deal with the
  internal sources of tension identified, before
  conflict takes violent forms, for instance
• where male youth unemployment a factor
  youth employment programs
• where ethnic prejudice and myth-creation a
  factor programs for changing values
• where inequality a factor equitable
  policies as described earlier

• Early Warning Risk Screening
• Indicators
• History of earlier conflicts
• High prevalence of poverty
• and inequality, elite
• capture of benefits
• Dependency on a primary
• export (ie. natural resources)
• Political instability and
• non-responsive
• governments
• Denial of political and
• civil rights
• Militarization and small
• arms proliferation
• Ethnic dominance

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Building Social Cohesion/ Integration

• Values, culture gt intangible, not favoured by
  development aid (preferred investments, less
  sensitive).
• Changing values, building social trust and
  cohesion is back in the development agenda
• Essential to fight discrimination (women,
  ethnic, caste, persons with disabilities)
• Tolerance, respect for diversity, non-violence,
  solidarity, trust in society, contribution to the
  community, are beliefs and behaviours that can be
  taught.
• Tackling Prejudice and Building Social Trust
• 1. Understand the existing cultural values.
• 2. Have clear objectives on the values that need
  to be altered for social progress.
• 3. Gain support from the local structures
  including religious leaders a technique is
  providing solid scientific evidence of the
  benefits from other countries, putting aside
  emotions and value judgments.
• 4. Support allies and drivers of change
  encourage local level groups and organizations in
  dialogue.
• 5. Design adequate programs such as
• Multicultural education
• Media programs
• Public information campaigns
• Investing in popular culture (above all,
  avoiding myth-making)
• Empowering people and supporting
  associations

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Empowerment and Social Mobilization

• Organizing excluded groups to fight for their
  rights social development would not have
  happened in most countries without the fight of
  unions and civil rights groups
• Empowering people and promoting associations
• Excluded people tend to internalize inferiority
  and repress their voice, may lead to violent
  conflict
• When people associate and share their problems,
  the result is often increased encouragement,
  capacity for self-advocacy, ability to organize,
  to create positive change for their communities.
• Associations help communities to defend their
  interests, and can be linked to microfinance,
  cooperatives and other local development
  programmes.
• As people's associations sometimes stand up
  against powerful local interest groups, need to
  protect them from extortion and intimidation.
• Not only local level National Economic and
  Social Councils good practice to institutionalize
  participation of representative stakeholders in a
  society to
• monitor public policies, assessing social impacts
  
• provide alternative proposals for
  employment-generating economic growth and social
  justice
• Empowerment and social mobilization are
  intrinsically linked to the broader agenda of
  good governance.

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Are Social Policies Affordable?

• Social Ministries suffer from second class
  stigma, need to secure budgetary allocations
• Often expenditures for poverty reduction and
  social policy are declined (cannot be afforded)
  because of
• a loss in potential investment/GDP due to a
  supposed equity/ efficiency trade-off, and
• the assumption that large social needs will
  create unmanageable fiscal deficits
• Counterarguments
• Social development not a cost but an important
  investment.
• Investing in people enhances their productivity
  and thus growth raising the incomes of the poor
  encourages domestic demand therefore growth.
• A significant proportion of national budgets is
  spent on non-productive activities, such as the
  military, or activities with very low returns. gt
  Public Expenditure Reviews good tools to bring
  transparency.
• Ultimately, affordability depends on a societys
  willingness to finance social policies through
  taxes and contributions. Affordability is at the
  core of the social contract between governments
  and citizens how much a society is willing to
  redistribute, and how.
• Countries at the same level of economic
  development differ significantly in their social
  spending OECD countries spend between 15-35GDP
  on health, education and social protection alone
  (compare to 4 in S. Asia)
• In developing countries, social policies have to
  grow with the fiscal space made available by
  increasing GDP or aid.

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Global and Regional Social Policies

• Urgent need for global social policies, to
  counterbalance economic globalization gt but
  difficult agreements. Regional social policies
  are an easier form of transnational social policy
  
• Examples of regional social policies
• Regional social redistribution mechanisms e.g. to
  target depressed areas or to redress
  inequalities.
• Regional regulations e.g. regulation of private
  social services and utilities (water,
  electricity) regional formations are in a
  stronger position to negotiate with private
  providers to ensure access, affordability and
  quality standards.
• Regional mechanisms that give citizens a voice to
  challenge rights abuse e.g. the EUs European
  Court of Justice or the Council of Europes Court
  of Human Rights
• Regional cross-border investments addressing
  different social policy common priorities, for
  instance, the production of cheaper generic
  pharmaceuticals at regional level to benefit from
  economies of scale, or common programs to avoid
  cross-border spread of diseases (e.g. malaria,
  SARS, avian flu)
• Regional technical co-operation in social policy
• Financing Global and regional funds

Examples - ALBA, the Latinamerican Bolivarian
Alternative for the Americas 2007 - Southern
Africa SADC Regional Social Policy 2006
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International Redistribution and Social Justice

• 2002 Monterrey 2005 World Summit donors
  recommit increased aid to support Millennium
  Development Goals
• gt Supporting committed governments with
  equitable National Development Strategies with
  increased aid, aligned and harmonized,
  particularly with general budget support (GBS),
  moving away from projects.
• CRITICAL ISSUES
• It is essential that new instruments of aid like
  SWAps and GBS be used as instruments of
  redistribution and social justice, this is, that
  they reach people, and are not utilized to
  sustain institutions (e.g. a Ministry) or
  development processes (e.g. completion of an
  MTEF), or are simply used as fast disbursing
  mechanisms of donors aid.
• Some GBS donors like the European Union believe
  in linking disbursements to outcomes this could
  include attainments in respect of effective
  impacts on excluded groups.
• Social transfers (e.g. social pensions) become
  particularly attractive from the point of view of
  direct and quick impacts on low-income
  households governments can finance social
  transfers through both GBS and SWAps.
• Civil society activities at the national and
  local levels must be expanded, funded through
  special funds.

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Thank you United Nations Department for Economic
and Social Affairs http//www.un.org/esa/ Email
ortizi_at_un.org