By Ramesh Jaura
BERLIN | NEW YORK | 28 October 2024 (IDN) — As the international community girds up its loins for next year’s Second World Summit for Social Development, the UN has warned that more than 4 billion people worldwide lack any social protection. Only 47 per cent of the global population is estimated to have access to at least one social protection benefit. The cost of achieving nationally appropriate social protection systems in developing countries by 2030 is estimated at $1.4 trillion, or 3.3 per cent on average of their gross domestic product. a new UN report has warned.
Furthermore, only 31 per cent of the working-age population are legally covered by a comprehensive social security system. In high-income countries, on average, 85 per cent of the population is covered by at least one social protection benefit, while in low-income countries, it is only 13 per cent.
The pandemic-era expansion of social protection instruments can provide “the building blocks for social protection floors” in many countries. Experience with these initiatives can help reduce transaction costs and improve efficiency. However, with fiscal space remaining constrained, international support, including for improving domestic resource mobilization would be necessary, asserts the latest World Social Report released on 17 October.
In the aftermath of converging and interdependent crises, however, countries face additional limitations. “Many face shrinking fiscal space and increased debt burdens, constraining their ability to invest in social development. Vulnerable people and societies tend to be the worst affected, especially those in developing countries and countries in special situations: in early 2024, half of the low-income countries were in, or at high risk of, debt distress.”
The UN Report stresses the need for a human-rights–based approach to social protection, prescribed by law, which would guarantee its continuity and predictability at times of crisis, and help reduce the need for ad hocemergency actions. The grounding in law creates entitlements, ensures permanence, and gives rights holders the legal ability to invoke their rights, as in Brazil and South Africa. International efforts can then be devoted to complement national efforts of developing countries, including those in special situations, to provide social protection to their people.
Insurance, too, is an important element of a comprehensive risk management framework, especially through innovative mechanisms, such as parametric insurance, that expand their availability to the poor in developing countries. “Appropriate regulation, supported by more granular and timely data, forward-looking models, and digital technology can help to foster a more inclusive, effective and efficient insurance market.”
In view of recurrent and converging shocks threatening the viability of the basic insurance model, national and international partnerships may be necessary to maintain effective risk pooling, says the Report.
It calls on countries to re-examine the entire range of their policies and programmes, working through alternative scenarios, to ensure they can succeed in accelerating social development in the new crisis context. However, because of multiple and multi-layered crises, countries face additional constrictions.
Many face shrinking fiscal space and increased debt burdens, restricting their ability to invest in social development. Worst affected, especially those in developing countries and countries in special situations: in early 2024, half of the low-income countries were in, or at high risk of, debt distress.
These compound investment shortfalls during crisis periods: over the COVID-19 pandemic, 65 per cent of governments in low- and lower-middle-income countries had to reduce their education budgets.
“Constraints such as those identified above can only be addressed by re-invigorating international cooperation for social development,” declares the UN report. It pleads for collective-action solutions to free up fiscal space in heavily indebted countries, while also providing an effective debt resolution framework for the future.
Additional measures, such as supporting stable growth pathways that are consistent with social development, and facilitating institutional development are also considered necessary in the medium term. “For many countries, particularly those in special situations, official development assistance (ODA) in the form of grants and concessional finance would continue to be essential for advancing social development objectives. Such actions would, in the longer term, also enhance a country’s ability to service its debt.”
Mechanisms that support the resilience of individuals and households and guard against long-term losses must be available to all
The UN Report warns that preparing for the unexpected requires creating robust systems and investments in resilience. Because the existing social protection systems and other risk protection mechanisms in many countries have significant gaps undermining social development during shocks and crises.
“While national-level efforts for achieving social goals remain vital, they are insufficient in the face of multiple crises that can affect households and individuals in different ways,” adds the Report.
If ODA is used, it should be in the form of grants or highly concessional loans, as investments in social protection typically take longer to strengthen a country’s debt-carrying capacity. Support in the form of debt swaps for social development or debt swaps for SDG investment can also help, allowing countries expand their fiscal space by reducing debt payment obligations in return for social spending commitments.
There is a need to strengthen and build the resilience of networks and foster adaptive capacities to navigate the complex, multilayered network of systems through which the impacts of crises on social development are transmitted, particularly in those countries that are disproportionately impacted.
Global cooperation can help develop and maintain effective early warning systems to detect warning signals at the earliest possible point, allowing for prompt interventions to contain initial shocks and minimize contagion. Absent such action, shocks that cascade through the system can inflict profound damage to social development. International cooperation is also needed to avoid possible regulatory arbitrage — for example, in the case of systemically important firms that may be subject to more stringent or less stringent regulation in different jurisdictions.
A successful example of such cooperation is the agreement on reforms of banking regulation and supervision by the Group of Twenty following the 2008 world financial and economic crisis. Multilateral processes and institutions are important protection mechanisms and need to be strengthened further.
International collective action is essential to address the drivers of shocks that spill over national boundaries
Experience with recent crises has underscored the importance of coordinated knowledge-sharing and timely action by the international system to guide effective crisis response during global shocks. For example, as the pandemic unfolded, collaborative platforms and international coalitions facilitated the exchange of knowledge and resources, enabling both a coordinated response that spanned continents and the rapid development of several effective vaccines.
Building on past experiences, a standing capacity to undertake such coordinated action would ensure that no time is lost, as was recently seen with the Global Crisis Response Group. Such action becomes especially important, as shocks originating in one sector could unexpectedly trigger stresses in another, requiring a coordinated response at short notice.
Collective action that addresses the drivers of shocks that spill over, and cross-national boundaries can reduce systemic risk from the outset and prevent or limit future damage, which greatly reduces the impact on social development.
Examples include climate change mitigation, global financial stability, pandemic prevention, preparedness and response, and preventing the spillovers of violent conflict. As each of these is best supplied through different provisioning mechanisms, global coordination and agreements are necessary to elicit the appropriate contributions from countries. Importantly, requiring these collaborative solutions to also advance social development can deliver a double dividend through enabling appropriate national contributions while guiding global coordination. In the absence of such collective action, purely national solutions may not succeed, and could even end up further increasing systemic risks.
The way forward to advancing social development during a period of converging crises
The UN Report finds that next year offers a unique opportunity for updating the global consensus on social development for our times.
“The United Nations system is well placed to take forward the recommendations of this report in partnership with other stakeholders. At the national level, it is a trusted presence on the ground through country teams, with unparalleled convening power.”
The Report argues strongly the need to further strengthen United Nations joint programming for resilience-building across the entire cycle, from risk assessment to planning, implementation and monitoring. “Joint programming is already under way to advance the six key transitions identified as catalytic for accelerating progress towards the SDGs. The United Nations can also support capacity-building, responding to a variety of needs across countries.”
Major conferences and summits through the end of 2025 — the Summit of the Future in September 2024 in New York, the Fourth International Conference on Financing for Development in June–July 2025 in Spain — would precede the Second World Summit for Social Development in November 2025. These would all offer a unique opportunity to converge towards a consensus, through different workstreams, that would update the Copenhagen declaration for our times, says the UN Report. [IDN-InDepthNews]
Source: UNDESA
