- Sustainable economic growth doesn’t take place without inclusion, studies say
- Universal social protection consists of policies designed to ensure income security for everyone, help the neediest and build resilience to economic shocks
- The link between universal social protection and poverty reduction is clear
- Many experts see it as an investment instead of an expense
Sustainable economic growth does not happen without inclusion, according to a consensus of studies published over the past three decades. Public policies designed to share the wealth are essential for individuals, communities and nations. They make all three more resilient to economic shocks. They help vulnerable households from slipping back into poverty during economic crises.
Universal social protection can mean many things to many people. One largely accepted definition calls it an “integrated set of policies and programmes designed to ensure income security and support to all people across their entire life cycles – paying particular attention to the poor and the vulnerable”. Policies can be expanded horizontally to reach larger numbers of people or vertically to add benefits or boost benefit levels. It is supposed to remain affordable for taxpayers and to adequately focus primarily on people who really need help.
Universal social protection should go down on the investment side of the ledger and not as an expenditure, according to many experts. In addition to providing protection and resilience, it can help break the cycle of poverty from generation to generation. It can be used to move resources from the rich to the poor, but also from the healthy to the sick, urban areas to rural ones, from the childless to people with children, etc.
The link between social protection policies and poverty reduction is clear. The one to reduced inequality is less so. A widely accepted economic theory postulates that, as they grow, countries first show wider income disparities but that the gap closes over time.
However, recent evidence shows disparate results around the globe – including increasing inequality in places where it was expected to shrink. This may be due to new factors such as globalization and digital technology. There is convincing evidence that public policies, notably universal social protection and assistance, can address even this new-found strain of inequality.
Around the turn of this century, Latin America began to make headway in its attack against poverty and inequality. In recent years, inequality seems to be creeping back in some places.
In Bogotá, the capital of Colombia, the phenomenon has been exacerbated by the influx of rural immigrants, many escaping a decades-long guerrilla war in the countryside and, more recently, by Venezuelan refugees. The municipal government has launched a series of programmes that include education, training, psychological treatment and efforts to bring informal workers into the mainstream economy.
Indonesia has pursued social protection policies, including cash transfers and subsidies, that are credited with helping reduce the poverty ratee from 24.2% in 1998 to 9.6% last year. The numbers continue to improve, but progress has become incremental. A few regional pockets of poverty are proving hard to eliminate.
Official development assistance (ODA) will never be sufficient to provide universal social protection. Policy-makers in developing countries must deal with it themselves. Some observers blame their foot-dragging on the lack of political will. Others believe that governments prefer to reward groups with the loudest voices. Still others argue that pervasive informality presents a nearly insurmountable barrier to implementing comprehensive social security programmes, for example