From “unaffordability” to rights: Claiming fiscal space for universal social security
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Article summary
Notes from the Civil Society Policy forum on 15 April titled From “unaffordability” to rights: Claiming fiscal space for universal social security. This panel discussed how, for years, universal social security has been portrayed as fiscally unaffordable. However, new research and regional case studies challenge this assumption. This session drew on Matthew Greenslade’s book Beyond the World Bank, and the report Beyond the Unaffordability Myth by Development Pathways and Act Church of Sweden, to reassess the fiscal sustainability of universal programs. The panel also considered evidence from pension reforms in Africa and analysis of development discourse in the Arab region. Together, these perspectives examined how narratives shape fiscal choices and whether “affordability” is ultimately a political question.
Moderator
- Lena Simet, Senior Advisor, Human Rights Watch (HRW)
Panelists
- Jamele Rigolini, Senior Advisor, Social Protection and Jobs, WBG
- Stephen Kidd, CEO, Development Pathways
- Angella Kasule Nabwowe, Executive Director, ISER Uganda
- Diala Ahwach, Programme Coordinator, Arab Reform Initiative (ARI)
- Dhanisha Raj, Social Protection Officer, Development Pathways UK
A recording of this session can be found here.
Jamele: Opening remarks
Stephen: It is possible to put in place universal social security systems, as long as we take a longer term vision. We’re constantly told that building the system we’d like to see is unaffordable, so we did the research to show it’s not. What leads people to think it’s unaffordable is a system of poor relief based on a 19th century model, with a big missing middle by design who are not included despite being on low and insecure incomes. They are generally badly targeted. The problem is that poor relief benefits are never popular with the majority of the population. If we just give to the poorest, we’re missing out on those who pay taxes, and then we undermine the social contract, and people don’t want to pay tax. Even things like proxy means tests, etc., undermine trust.
The plan for introducing universal social protection is to commence one scheme per year, index schemes to inflation so that they retain their purchasing power, assume the rate of economic growth predicted by the IMF in five years time, and account for current expenditures to estimate the financing gap. Gradual expansion requires an additional 0.12 per cent of GDP per year. Nepal is already spending more than the top point, on similar schemes. The highest costs by 2044 would be in Mauritania and Tunisia at 3.4 per cent of GDP. In some low income countries, costs are less than 1.5 per cent of GDP, such as Ethiopia and Liberia.
* Presentation on Development Pathways report on costing universal social protection.*
Looking at the political economy of targeting, versus universal benefits, we’re giving it to everyone, people will be more willing to accept higher tax rates. Universal benefits build trust in the state, a stronger social contract, and higher government revenues. We wrote a paper evidencing this historically.
What if we had started building universal social protection systems 20 years ago? Poorer targeted programmes never expand or grow.
Dhanisha: * Presentation on the financing gap tool.*
Lena: We’re heard in some regions that targeted programmes are being cut, now we are hearing that universal programmes are being cut in several African countries.
Angella: Our vision for Africa is Agenda 26. I come from Uganda. We have a number of reforms we are working on right now, looking at lowering the pension age. We are reviewing our social protection policy. It’s at the very beginning, we have had the pronouncements from cabinet that we can find the resources to lower the age to 65. We are also looking at a pilot for universal social child benefit. We are looking at this as a right. But when we’re seeing the developments in Kenya, we worry. It has had a universal pension for those aged 70 and above. One of the things they’re looking at is reverting it to make it poverty targeted. In the region, we are looking at Kenya as a progressive country, so as East Africa we worry. It brings up the questions Stephen mentioned about the social contract, parties start to lose elections. Our organisation has done some research, we have looked at pension reforms in several African countries, we see how gradually they moved from charity-based schemes to universal schemes. We see that when you come from contexts like ours, most of the guidance from the Bank has been around targeting rather than universal social protection. In Africa, we are also seeing the discussion about defining social protection. If you include livelihood programmes, it becomes problematic – a lot of them are loan schemes, that is not social protection.
In our context, I’m looking at myself as a parent, I see my children having problems in school and wanting a softer life. We see the amount of money we have in these countries, we see how much is collected in taxes and how much is spent on debt, it is very problematic. When we talk about domestic revenue mobilisation, we see tax exemptions being made to people who can afford it. Also looking at the money we lose through illicit financial flows, corruption, in elections, you hear a government operating like that saying they can’t afford it, it is a problem. We are acquiring more debt than what we spend on social protection healthcare etc.
Diala: I urge everyone in the room to advocate for Lebanon, there is no room for reform under occupation and war crimes. We need to decode the policy code of IFIs to understand the political and economic implications of their policies. When we talk about universal social protection, we are not talking about universal basic income. We are confronting this reality in this paper. The paper adopts a discourse analysis process, we analysed IMF regional economic outlook reports for the region, and WBG annual reports. We also conducted interviews with experts.
While language has changed, the underlying policy frameworks have remained the same. We concluded that language is being used as a tool for legitimising fiscal consolidation. While austerity language does not appear, fiscal consolidation appears many times. Austerity is still being pursued, just under different terms. We found that the IMF mainly often denies and deflects blame. There is an inclination to portray themselves as ‘neutral’ actors. We witnessed distinctions in their language, using ‘social safety nets’, but CSOs call them ‘poverty targeting measures’, and often staff refused to refer to them with this language. We have to go the extra mile to show what is poverty targeting. We are confronted by the reality where references to reforms are considered ‘home grown’ or advocated for by countries, yet we don’t really know who advocated for what. This creates an illusion of national ownership whilst masking power dynamics. People must adapt to technical language to prove the validity of their work. Relationships with staff become hierarchical.
The paper found an increasing reference to gender and climate, but the policies do not follow through. Mentions of climate policy are often coupled with private and public finance measures that reproduce austerity. Gender measures focused on labour force participation but did not pay attention to structural inequality or care burdens. Transformation in language does not reflect a shift in the economic framework. Therefore, institutions can appear responsive to public demands, whilst not being so.
Questions and answers
Mary Campbell, Kenya Human Rights Commission: I appreciated all the milestones on universal social protection, but I missed one element where social protection programmes have exacerbated human rights violations, where I have seen in my country. Elderly citizens are targeted when they receive cash transfers. We had failures by the government to send the money every month so sometimes it comes in lump sums. The delayed cash transfers expose citizens to hunger, many people are starving.
Maria, think tank in Mexico: An important issue in achieving universal coverage is financing. In Mexico, the problem we have now is financing. Few contribute, the problem is political. How will the government be incentivised to charge those who are receiving the benefits? There are plenty of incentives for populist policies to offer the coverage without paying.
Institute for Social Accountability in Kenya: A question for the International Financial Institutions: we’ve seen delays but this relates to conditionalities and austerity measures that come with lending. In Kenya, our debt levels, the austerity measures are affecting social protection – how are the IFIs safeguarding social protection? Any time the government needs to cut spending, it goes to social spending.
Hamza, student: Talking about the north star – how accessible is this? Yesterday I was in a meeting where we heard there is a need to build more resilient economies. Given high costs, inequality, how do we wrestle with the budget constraints? Given our current system of global capitalism, is it enabling what we’re doing? Do we need restructuring?
Jamele: I would like to counteract this idea that the narrative has changed but our actions have not. Over twenty years, we have really worked on cash transfers. Our social protection financing has never been as high. I feel a little unjust when we hear that things have not changed. I was an author of the State of Social Protection report, what we say is when resources are limited, we want resources to prioritise the poor. We also say we want social protection expanded to cover the missing middle. We are not exactly against universality, but we have to pay attention to the context. In many countries targeting happens through taxation. Also challenging the view that if you go through universal social protection, there is broader acceptance. I come from Switzerland, where they rejected a universal proposal. I’m not sure it’s a magic trick to really achieve, the discussion is more nuanced.
Stephen and I go back a long time. We can’t just have simulations based on GDP. We also need to have some absolute valuations. It’s a challenging discussion. Where we have immense needs, what do we do? I think a tiny amount to everyone is not necessarily the solution. I’d like to challenge the ‘only 2 or 3 per cent’ of GDP. That is more than entire health and education budgets. That’s why we have ministries of finance.
On the issue of violence in the face of targeted protections, we have discussions with countries on the systems they use so payments aren’t delayed. We’ve made a lot of progress. In Latin America, it’s a fifteen year old dilemma. It’s affecting the incentive of people to contribute. It’s an interesting debate, where do we go now? What’s the solution?
Angella: To Mary, and the other colleague. I don’t want to talk about the criminal charges, but on other issues. We work with Denmark, they have lessons to learn. They had a team visiting Uganda in March, a grandmother who was not a beneficiary, was telling them she doesn’t receive anything but sees others receiving.
Stephen: The narrative from the WBG hasn’t really changed, the Washington Consensus, target the poor, low taxes. The real problem we have…they’re not generating enough revenue from citizens. Much of the poor relief around the world has much lower transfer values, generally universal schemes have much higher transfer values. On the 2-3 per cent of GDP, this is in 20 years time. We need to change the paradigm.
In Kenya, it’s sad the systems are not strong enough to pay the amounts regularly. None of the donors, including the WBG, were interested in building the systems for the universal system. If we’d have got behind that, we’d have regular payments and none of these problems.
