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ILO basic social protection costing models and policy implications. ODI International Conference on Financing Social Protection in LICs: Finding the Common Ground London, 26-27 May 2011 Christina Behrendt, ILO Social Security Department. - PowerPoint PPT Presentation
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ILO basic social protection costing models and policy implications
ODI International Conference on Financing Social Protection in LICs: Finding the Common GroundLondon, 26-27 May 2011
Christina Behrendt, ILO Social Security Department
How it all began...Results of the first ILO costing model (2005-06)
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Burk
ina
Faso
Cam
eroo
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Ethi
opia
Gui
nea
Keny
a
Sene
gal
Uni
ted
Rep.
Ta
nzan
ia
Bang
lade
sh
Indi
a
Nep
al
Paki
stan
Viet
Nam
Per ce
nt o
f G
DP
Old-age pensions
Child benefits
Health care
Social assistance/ employment scheme
Administrative costs
ILO, 2008: Can Low-income Countries Afford Basic Social Security?, Social Security Policy Briefings 3 (Geneva: ILO), http://www.ilo.org/public/english/protection/secsoc/downloads/policy/policy3e.pdf
Assumptions:Old age pensions: all men and women 65+, 30% of GDP per capita, max US$1 PPP. Child benefits: children 0-14, benefits for max. 2 children per mother, 15% of GDP per capita, max US$0.5 PPP. Health care: cost of 300 medical staff per 100,000 population plus overhead of 67% of wage cost.Social assistance/ employment scheme: 10% of population for 100 days of employment/year, 30% of GDP per capita, max US$1 PPP. Administrative cost (cash benefits): 15% of benefit expenditure.
ILO modelling results and policy context: Some examples
Full references: see last slide.
The emergence and context of ILO basic social protection costing models
Rapid Assessment Protocol
(RAP)
Joint ILO/UNICEF
costing tool
First ILO costing model
(2005)• 7 African and
5 Asian low income countries
• Developed in cooperation with DfID
* SPER = Social Protection Expenditure and Performance Review
GENERIC
COUNTRY-SPECIFIC
Social Protection Floor Quantitative Tools
COSTING TOOL
1. Fixed and pre-defined format
2. Not time demanding
3. Features: pre-defined scenarios, types of benefits; pre-defined poverty impact module
4. No previous knowledge on Excel modelling, demographics, macroeconomics, government finances, benefit design or poverty impact is necessary .
5
RAPID ASSESSMENT PROTOCOL
1. Flexible format2. Time demanding3. The construction of the model
goes hand in hand with a dialogue process involving national authorities and other actors dealing with social protection
4. Previous knowledge on Excel modelling, demographics, macroeconomics, government finances, benefit design or poverty impact is required.
SPF Quantitative Tools:Model uses and trade-offs
More robust results
Quantitative technical background
not absolutely necessary
Quantitative technical background indispensable
Rapid results
Useful for (a) testing different benefit
designs (tailor made) and policy options in national dialogue
process(b) Fiscal space analysis
Early stages, prior to detailed consultations
Early and intermediate stages of the discussion
COSTING TOOL
RAPID ASSESSMENT PROTOCOL
WHO?
WHEN?
Useful for testing standard predefined benefit designs
WHAT FOR?
RESULTS
GGO (BS)GENERALGOVMNT.OPS. BS
EAPECON.ACTIVEPOPULATION
ECOMACRO- ECONOMIC FRAMEWORK
GGO (SQ)GENERALGOVMNT.OPS. SQ
POPPOPULATION BY AGE AND SEX
ARACTIVITY RATES BY AGE AND SEX
READMEINFORMATION INSTRUCTIONS
BEN (n)BENEFIT – MODELING EXERCISE
BEN (...)BENEFIT – MODELING EXERCISE
BEN (2)BENEFIT – MODELING EXERCISE
BEN (1)BENEFIT – MODELING EXERCISE
Rapid Assessment Protocol
Example: Analysis of cost to close the SPF Gap in Viet Nam
8
The impact of filling the SPF gap on the General Government deficit
as a percentage of GDP
-3,3
-0,2
-2,5-1,2
-9,0
-6,4
-3,9 -3,8 -3,6 -3,3 -3,0 -3,0 -3,0 -3,0 -3,0 -3,0
0,0
-0,2 -0,4 -0,6 -0,9 -0,9 -0,8 -0,8 -0,8 -0,8 -0,8
0,0
-0,2 -0,5 -0,6 -0,6 -0,7 -0,8 -0,7 -0,7 -0,6 -0,6
0,0
-0,4-0,7 -0,9 -1,0 -1,0 -0,9 -0,9 -0,8 -0,8 -0,8
-10,0
-9,0
-8,0
-7,0
-6,0
-5,0
-4,0
-3,0
-2,0
-1,0
0,0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020As
a p
erce
ntag
e of
GDP
3. Working age income security2.b Child benefit (targeted for ALL poor children | cash and kind )1b. Old age universal pension (65+)General government fiscal balance (IMF) - STATUS QUO
0.17 0.
37 0.56 0.
92
0.88
0.85
0.82
0.80
0.79
0.77
0.2
0.5
0.6
0.6 0.7
0.8
0.7
0.7
0.6
0.6
0.35
0.71
0.93
1.02 1.
00
0.91
0.89
0.81
0.82
0.79
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Tota
l chi
ld b
enefi
t cos
t as
perc
enta
ge o
f GDP
Total additional costs to fill the gaps toward the SPF components as a percentage of GDP
3. Working age income security (scenario 1 - high cost )
2.b Child benefit (scenario 2b-Targeted for ALL poor children cash and kind )
1b. Old age universal pension (65+)
Source: Compatibility analysis of the national Social Protection Strategy and the UN Social Protection Floor Initiative: Costing and financial projections to implement social protection policies 2011-2020 (Draft), ILO, Geneva.
Example: Assessing potential poverty impacts (poverty gap in % of GDP) in Viet Nam
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
2,000,000,000
4,000,000,000
6,000,000,000
8,000,000,000
10,000,000,000
12,000,000,000
Initial situation | Poverty rate
BEFORE benefit
ELD2 | Poverty post universal pension to
all (Same as scenario 1 + 50 % poverty line
for contributory scheme pensionners)
CHILD 1 | Poverty post means-tested
children (all children in poor HH)
CHILD2 | Poverty post means-tested
children (limited to 2 per poor HH)
WA1 | Poverty post 100 days
employment guaranteed and disability benefit
Poverty post ALL three benefits (ALL Elderly ELD2 + ALL children per poor HH
CHILD1 + WA)
Poverty post ALL three benefits (ALL Elderly poverty line ELD2 + limited to 2
children per poor HH CHILD2 + WA)
To
tal p
ov
ert
y g
ap
as
a p
erc
en
tag
e o
f G
DP
To
tal
po
vert
y g
ap B
EF
OR
E a
nd
PO
ST
ben
efit
s (M
illi
on
s V
ND
)
Total poverty gap (Millions VND) and composition
Working age
Elderly
Children 11-15
Children 6-10
Children <5
Total poverty gap as a percentage of GDP
9 Source: Compatibility analysis of the national Social Protection Strategy and the UN Social Protection Floor Initiative: Costing and financial projections to implement social protection policies 2011-2020 (Draft), ILO, Geneva.
Where do we stand today?
Important features●Nationally dialogue process ensuring national ownership
●Detailed and comprehensive assessment including existing schemes
●Priority-setting and sequencing for gradual implementation
●Strengthening national institutional capacities
●Fiscal space: detailed assessment of status quo and options for extension as necessary
●Collaboration with IMF, UNICEF and other partners
10
Ongoing Social Protection Floor costing assessments and national dialogue processes:●Benin
●El Salvador
●Haiti
●Mozambique
●Nepal
●Togo
●Viet Nam
Moving forward... Some policy implications and challenges
1. Financing of social security, particularly with respect to national Social Protection Floors● Identifying and extending fiscal space within current budgets (collaboration
with IMF)
● Challenge: Identifying possible options for more effective collection of taxes and other sources of revenue
2. Effective policy dialogues at national level● Identification of priority benefits, priority target groups and sequencing
in gradual implementation processes
● Dynamics of national policy dialogues
● Including estimates on direct impact on poverty
3. Strengthening national institutional capacities● Starting from existing institutional frameworks where possible
● Building up sustainable institutional capacities and ensuring their effectiveness
● Importance of monitoring and policy planning
11
Further references
● ILO, 2008: Can low-income countries afford basic social security?, Social Security Policy Briefings 3 (Geneva: ILO), http://www.ilo.org/public/english/protection/ secsoc/downloads/policy/policy3e.pdf
● Pal, K. et al., 2005: Can low income countries afford basic social protection? First results of a modelling exercise, Issues in Social Protection Discussion Paper (Geneva: ILO), http://www.ilo.org/public/english/protection/secsoc/downloads/policy/1023sp1.pdf
● Mizunoya, S. et al., 2006: Can low income countries afford basic social protection? First results of a modelling exercise for five Asian countries, Issues in Social Protection Discussion Paper (Geneva: ILO), http://www3.ilo.org/public/english/protection/secsoc/downloads/1527sp1.pdf
● Gassmann, F. and Behrendt, C., 2006: Cash benefits in low-income countries: Simulating the effects on poverty reduction for Senegal and Tanzania, Issues in Social Protection Discussion Paper (Geneva: ILO), http://www.socialsecurityextension.org/gimi /gess/RessFileDownload.do?ressourceId=6813
● Townsend, P. ed., 2009: Building decent societies: Rethinking the role of social security in state building (London: Palgrave), http://www.palgrave.com/ products/title.aspx?pid=370307n
● ILO, 2010: Extending social security to all. A guide through challenges and options (Geneva: ILO), http://www.socialsecurityextension. org/gimi/gess/RessFileDownload.do?ressourceId=16152
● ILO, 2011: Growth, employment and decent work in least developed countries (Geneva: ILO), http://www.ilo.org/wcmsp5/groups/ public/---ed_emp/---emp_elm/documents/publication/ wcms_153868.pdf
● UNDP; Special Unit for South-South Cooperation, and ILO, 2011: Sharing Innovative Experiences: Successful social protection floor experiences (New York and Geneva: UNDP, Special Unit for South-South Cooperation and ILO), http://www.socialsecurityextension.org/ gimi/gess/RessFileDownload.do?ressourceId=20840
● ILO, 2011: Social security for social justice and a fair globalization (Geneva: ILO), http://www.ilo.org/wcmsp5/groups/public/---ed_norm/---relconf/documents/meetingdocument/ wcms_152819.pdf
More info: [email protected]