News Excerpt:
Universal social protection for low- and middle-income countries would require an additional $1.4 trillion per year, according to a working paper by the International Labour Organization (ILO). Among regions, Africa faces the most substantial challenge in achieving universal coverage for social protection.
Key takeaways from ILO’s Documents
- The ILO document provided estimates of the financing gap to achieve universal social protection, including access to five key social protection guarantees and essential health care.
- For low-income countries, the financing gap is more than half (52.3%) of their annual gross domestic product (GDP), highlighting the significant challenge of financing universal social protection.
- International solidarity is required to bridge this financing gap, especially for low-income countries.
- The majority of the funds needed (60.1%) are for essential health care, while the remaining portion is divided among social protection cash benefits, such as child benefits, old-age pensions, disability benefits, unemployment benefits, and maternity benefits.
- For child benefits, the financing gap was calculated for individuals aged 0 to 14 who do not currently receive any child benefits.
- The financing gap for old-age pensions was calculated by counting the number of people aged 65 and up who do not receive any type of old-age pension.
- The financing gap is measured both in absolute terms and in relative terms (percentage of GDP).
- Furthermore, the financing gap is compared to actual government expenditure as well as social protection expenditure.
- In low- and middle-income countries, the financing gap for universal social protection is 3.3% of GDP per year, with essential health care accounting for 2% and the five key social protection cash benefits accounting for 1.3%.
- Africa faces the most significant challenge in achieving universal social protection coverage, with a financing gap of 17.6% of the region's annual GDP.
- Sudan has the largest financing gap among all low- and middle-income countries due to ongoing conflicts, disease outbreaks, economic and political turmoil, and climate crises.
- To achieve universal coverage, low- and middle-income countries will need to increase government spending by 10.6% of total annual spending, which can be accomplished through domestic resources and better sovereign debt management.
Climate Change and Social Protection Financing:
- The paper emphasizes the importance of universal social protection in dealing with the effects of the climate crisis by reducing vulnerabilities and mitigating climate shocks.
- To mitigate climate change and its unequal impact on populations within countries, progressive taxation, including taxes on those who consume and produce the most carbon dioxide, is urgently needed.
- One way to accomplish this is to eliminate regressive fossil fuel subsidies (explicit fossil fuel subsidies).
- Raise the price of carbon-intensive goods and services through a carbon tax that accounts for the environmental costs of carbon use.
- International climate financing could help strengthen and adapt social protection systems in low- and middle-income countries to mitigate the unequal impact of climate change.
