A New Tool Is Born – The Social Protection Floor Index

Cäcilie Schildberg

Mohamed Attaallah

In 2012, the international community adopted Recommendation 202, concerning national floors of social protection, in the International Labour Conference (ILC) in Geneva. The recommendation calls on the 184 member states to implement nationally defined guarantees of income security from childhood through economically active age to old age, as well as access to essential health care. The need for universal social protection policies was acknowledged and reinforced by heads of states in the Sustainable Development Goals adopted in September 2015 in New York.

But moving governments from easy promises at the global level to real policy action at the national level only happens, in many cases, under pressure. How can implementation of social protection policies be supported?

The Global Coalition for Social Protection Floors, founded in March 2012, played an important role in pushing for a strong recommendation at the ILC in 2012 (Global Coalition, n.d.). The coalition is a network of more than 90 civil society and trade union umbrella organisations committed to supporting social protection floors as key instruments to realise the human right to social security and the advancement of social justice. The Global Coalition represents millions of people organised in or affiliated to the umbrella organisations that are members of the Global Coalition.

Universal social protection floors – a minimum the world is too rich not to have

Frank Hoffer

The problem of capitalism is not its wealth-creating capacity, but its inability to share it. A global economic system that produces incredible wealth, but cannot ensure “zero hunger” on this planet is deeply flawed. Markets lacking the visible helping hand of democratic and accountable governments are producing socially undesirable, and most likely unsustainable, outcomes.

The most successful – and actually the only – way to provide universal minimum social protection in modern societies is the welfare state that guarantees basic rights for those in need, and is financed through compulsory payments (contributions or taxes) by all members of society according to their abilities. Systems might be organised in different ways, but at the end of the day all systems are based on the capacity and willingness of governments to impose on their citizen obligatory solidarity with the poorer members of society.

Working for a Social Protection Floor

Ellen Ehmke

Andreas Bodemer

Worldwide, 75% of the population have no or insufficient access to social security provision. Despite the long record of social security as a human right, which is enshrined in the Universal Declaration of Human Rights (Art. 22, 25) and the International Covenant on Economic Social and Cultural Rights (Art. 9), its implementation has been widely disregarded.

Many pretexts have been given to excuse this severe injustice. Prominently, the competitiveness of a globalised economy has allegedly caused a scarcity of financial resources available for social policies. On the one hand, the assumed negative effects of social security on economic growth have served as reason to cut back globally. On the other hand, during and after the economic crisis of 2009/2010 many observers confirmed the benefits of wide-ranging use of existing social security structures.
 

The dilemma of job creation and decent work

Edward Webster

In August 2010 South African government officials began closing down clothing and textile factories in Newcastle, in the province of KwaZulu–Natal. This came in the face of angry protests from the workers because the owners were paying less than the statutory minimum wage of R324 ($49) a week. The factory owners said they could not pay more and survive in the face of cheap Chinese textile imports.
 

Globally, the clothing and textile industry is to a large extent controlled by an oligopolistic group of large retailers and branded manufacturers, who stipulate their supply specifications in terms of low price, high quality and short lead times. But due to the strengthening of the local currency (the rand) since 2003, the end of the Multifibre Agreement (MFA) in 2004 and relatively high labour costs, South Africa no longer has a comparative advantage in an integrated global economy.[i]

7 Reasons why a Universal Income makes Sense in Middle-Income Countries

Hein Marais

Is job creation really the best way to seek wellbeing for all in countries with chronic, high unemployment? No – especially not in a wealthy middle-income country like South Africa, where very high unemployment combines with high poverty rates. Here are 7 reasons why a universal income grant makes more sense.

 

1. EARNING A DECENT SECURE WAGE IS NOT A PROSPECT FOR MILLIONS OF SOUTH AFRICANS

While the rewards of South Africa’s modest economic growth are cornered in small sections of society, close to half the population lives in poverty, and income inequality is wider than ever before.
 

Job creation improved modestly as economic growth accelerated in the early 2000s. About 3 million ‘employment opportunities’ were created in 2002-08. The semantics are important. Very many of those ‘opportunities’ did not merit being called ‘jobs’. They divided roughly equally between the formal and informal sectors, and occurred mainly via public works programmes, business services, and the wholesale and retail trade sectors. A lot of them were crummy, insecure and poorly paid.

Social forces drive financial insecurity

Seeraj Mohamed

The frequency of financial crises has increased and we are concerned about how soon to expect the next one. The liberalisation of cross border capital flows has increased the possibility not only of contagion from crises elsewhere but that financial profligacy in one country is easily exported to another. Economic policymakers have a duty to protect their country from contagion, global financial volatility and the domestic adoption of profligate financial practices by asserting policy sovereignty. The global trade union movement can play an important role by fighting for policies that limit the power of finance.

Civil society, including trade unions should campaign for economic policies that protect countries from financial crises and contagion. Global trade unions are well placed to co-ordinate these campaigns across countries. Widespread financial liberalisation leads to increased socio-economic insecurity and loss of jobs, factors which weaken the social fabric and create increased hardship for the poor. The rich are able to diversify their investment portfolios and move their wealth abroad if necessary. They can weather the storms of financial instability and crises while the poor are stuck in the eye of the storm.

More pay and more jobs: how Brazil got both

Paulo Eduardo de Andrade Baltar

So far, the 21st century has been good to many Brazilians. Formal employment and the minimum wage have risen, the purchasing power of those earning average pay has recovered, open unemployment has fallen, and undocumented subcontracting has been curbed. Average household incomes have risen and poverty has declined. Positive macroeconomic developments, a range of progressive government policies and improved collective bargaining outcomes have all played a part in this.[1]

Purchasing power regained

Under the two successive presidencies of Luiz Inácio Lula da Silva (“Lula”), income inequality in Brazil has shown just a small decrease, from a Gini index of 0.58 in 2002 to 0.55 in 2008. Much more significant is the marked change in the labour market configuration, which has had a very positive impact on poverty levels. From 61.4 million people in 2003, the number living in poverty dropped to 41.5 million in 2008 (a cut from 34.3% to 21.9% of the total population). Those in absolute poverty fell from 26.1 million in 2003 to 13.9 million in 2008 (from 14.6% to 7.3%).

Beware the Canadian Austerity Model

Andrew Jackson

Paul Martin was Canada's Minister of Finance from 1993 to 2003, then served a short term as Prime Minister. He spoke on Canada’s 1990s debt reduction strategy to a February, 2010 Public Services Summit organized by the Guardian in the UK, and Canadian newspapers report that he is being tapped by the Europeans for advice on fiscal matters.

Martin himself has said that he's been engaged in "informal" discussions with several European ministers and senior officials seeking advice on how to confront that continent's debt crisis. "There's a huge, huge interest," said Hamish McRae, a prominent columnist with the Independent, who recently advised readers that the route out of Europe's debt crisis was by following Canada's example. "Boy oh boy. Canada, along with four or five other countries, is attracting tremendous attention here."1

Riding Your Luck and Adopting the Right Policies: Why the Australian Economy is Rebounding Strongly

Bob Kyloh

The global economic crisis that commenced in 2008 has had devastating effects across rich and poor nations. But the impact on growth, employment and incomes has not been uniform across countries. Economic performance has depended critically on the policy response adopted by governments. Other authors writing for this Column have made a convincing case for an income led growth strategy in response to the recession. At least one country has clearly demonstrated the benefits of this approach.

Australia is often referred to as the “lucky country”. The recent economic performance of this resource rich nation has helped reinforce this notion. Indeed recent economic achievements down-under may be partly due to the good fortune of rebounding commodity prices and expanding Asian markets. But the terms of trade actually moved against Australia in the last eighteen months and net exports detracted significantly from economic growth in 2009. Economic recovery is actually the result of public policies that boosted the disposable incomes of low and middle income families when aggregate demand was plummeting.

Financial Crises, the Informal Economy and Workers Unions

(by Renana Jhabvala)

Workers all over the world have been hit by the financial crisis and the unemployment rates, particularly in developed countries, have risen to high levels. Little is known, however, about the effects on the informal workers in developing countries who have no social security net or unemployment insurance, and no personal savings cushion to tide them over the crisis. Even worse, as the crisis deepened and the world began looking for solutions, these workers’ voices and concerns were not heard, as their ‘unemployment rates’ were rarely measured. Unemployment in the informal economy cannot be measured by “jobs lost”, but rather by income decline, decrease of days of work available and disappearing livelihoods.

Don’t waste the crisis: The case for sustained public investment and wage-led recovery policies

Frank Hoffer

Returning to the pre-crisis world after timely, targeted and temporary government interventions as advocated by the OECD and others is risky and a waste of public funds. Structural changes in income distribution, taxation and capital markets are needed to address the fundamental causes of the crisis and put social justice and decent work at the centre of a crisis response.

Root Causes of the Global Economic Crisis

In recent decades, wages and transfer incomes have not grown in line with productivity in most countries. In fact, institutional and legal capital and labour market changes, combined with aggressive, short-term profit-maximisation strategies enabled the owners of private enterprises and financial capital to appropriate most of society’s productivity gains. Moreover, threats of relocation or disinvestment resulted in labour market deregulation and casualisation of employment. Such global capital mobility led to the rise of tax havens, transfer pricing and tax competition, reducing the ability of governments to tax capital, thus driving down tax rates and regulation levels. Meanwhile, the high profit rate in the financial industry put pressure on the real economy to produce similar results for shareholders. Thus, the profits of the financial bubble economy became the benchmark for the real economy.