Financing the cost of social protection

26 - 27 May 2011
Conference
Description

Social protection has gained prominence in the development discourse in recent years, and has become established as a key dimension of national government and donor policy responses to poverty. Now that the desirability of social protection provision has become widely accepted, it is an appropriate time to reflect on the key question of financing social protection. This question has been somewhat contested in the international discourse, and the debate has been fragmented across different institutions. This conference offered an opportunity to share knowledge, ideas and experiences on financing social protection, and for finding the common ground to inform effective policy, programming and research in the future. 

The conference was particularly timely given the current development of the World Bank’s Social Protection and Labour strategy, and the work of the UNDP for the G20 Development Working Group.

With a focus on Low Income Countries, the conference provided an opportunity to:

  • Share recent research on cost, affordability and financing of SP,
  • Debate alternative perspectives and seek common ground on approaches to assessing cost, affordability and financing options,
  • Explore new financing challenges related to financial crises, food price volatility and shifting donor financing options and preferences,
  • Create a community of practitioners working in this area, and
  • Develop a shared plan of action to address the key challenges identified in this sector.
Conference structure

The conference was divided into three sections:

  • the cost of social protection;
  • the affordability of social protection; and
  • financing social protection;

In each section major issues and current challenges were identified and a series of short presentations were offered by experts working on these specific issues with the objective of i) sharing information on current and recently completed research and ii) stimulating informed discussion. These were followed by a plenary discussion. The key issues explored in each of the three sessions are summarised below.

Section 1: The cost of social protection

The cost of social protection component examined and compared current costing models, with the objectives of i) information and technology sharing, ii) reviewing consistency of cost analysis and iii) exploring the adequacy and compatibility of current approaches. Both macro models and micro-simulation models were discussed. This section explored cost from several perspectives; cost as an advocacy tool, and cost as efficiency measure, in relation to cost benefit analysis and value for money. The session also explored insights from recent research into actual levels of spending on social protection provision.

The starting point for this discussion was the seminal work carried out by the ILO. Other costing models, including those developed by EPRI/ODI, HelpAge and UNICEF were presented.  It was noted that there is a need for greater sharing of modelling initiatives, an improved understanding of the advantages and disadvantages of the various models, and greater coordination to ensure the selection of models on the basis of their appropriateness rather than institutional affiliations.

The challenges relating to the norms and conventions of costing were discussed. In order to promote understanding of the issues relating to cost, the specification of the leading models was briefly discussed, to identify areas of consistency and difference.   Issues relating to the norms governing social protection costing analysis were also interrogated, for example, which interventions are or should be included, what costs should be included, how these should be defined, and how different measures of cost might be relevant in relation to different purposes (% GDP, %GNP, % government expenditure). This session explored ways to improved analytical coherence and consistency within the research community.

Section 2: The affordability of social protection

The affordability of social protection section explored both normative and empirical aspects of ‘affordability’, encompassing issues of social justice, contribution to economic growth, and political economy as well as fiscal constraints.  The issues were explored from multiple perspectives: the efficacy of focusing on affordability, the political nature of affordability and the tendency to link affordability to productivity in the current discourse, and how ‘affordability’ should be assessed, taking into consideration both the direct and indirect development outcomes which may be promoted by social protection provision (health, education, stability etc).

Section 3: Financing social protection

The financing social protection section explored both LIC government approaches to finding fiscal space for provision, and also how different donor funding modalities might play a role in influencing recipient government perspectives on social protection.

The implications of the changing economic environment from both national government and donor perspectives was discussed and the pros and cons of new financing options including TNCs, wealth taxes and mineral dividends considered in this context. The relationship between financing and sustainability was also be explored and the relative importance of national government ownership compared to national financing considered. 

In addition the potential role of new modalities of donor financing, including SWAPs, COD and the proposed Global Social Protection Fund were explored, along with the implications for donor coordination.

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