Low- and middle-income countries must significantly increase their spending to provide universal social protection with an estimated additional $1.4 trillion needed annually, according to ILO.
The ILO’s working paper, “Financing Gap for Universal Social Protection: Global, Regional and National Estimates and Strategies for Creating Fiscal Space,” says that this increase is essential to ensure that everyone has access to basic social protection.
THE SCALE OF THE FINANCIAL GAP
The financing gap amounts to 3.3% of the combined annual GDP of low- and middle-income countries. However, the situation is even more dire for low-income countries, where the gap represents a staggering 52.3% of their annual GDP. To put it into perspective, these nations would need to mobilize resources equivalent to four times their current annual government expenditure to bridge this gap.
FUNDING STRATEGIES: DOMESTIC AND INTERNATIONAL
To achieve universal coverage, governments in low- and middle-income countries must increase their spending by 10.6% of their annual expenditure. This increase can be achieved through various domestic resources, such as enhanced taxation and social security contributions, and improved sovereign debt management. Effective utilization of these resources is crucial for generating the necessary funds.
THE NEED FOR INTERNATIONAL SOLIDARITY
For low-income countries, the challenge is particularly daunting. The ILO working paper emphasizes that international solidarity is indispensable. Development assistance must be more than tripled and directed exclusively towards social protection to bridge the gap. The international community’s support is essential in helping these countries achieve their social protection goals.
AFRICA: THE GREATEST NEED
Among the regions, Africa faces the most substantial challenge, with a financing gap of 17.6% of the continent’s GDP annually. This significant gap underscores the urgent need for both domestic efforts and international aid to enhance social protection systems.
OTHER REGIONS’ STRUGGLES
Low- and middle-income countries in the Arab States follow with a gap of 11.4%, Latin America and the Caribbean at 2.7%, Asia and the Pacific at 2.0%, and Europe and Central Asia at 1.9%. Each region has unique challenges and requires tailored strategies to address their specific needs.
Reducing Vulnerabilities
Universal social protection is not only a social necessity but also crucial for addressing the climate crisis. The ILO paper argues that such protection helps reduce vulnerabilities and mitigate the impacts of climate shocks. Strengthened social protection systems can make communities more resilient to environmental changes and disasters.
INTEGRATING CLIMATE FINANCING
The document suggests that international climate financing should be leveraged to support and adapt social protection systems in low- and middle-income countries. By integrating these funds, countries can enhance their capacity to respond to climate-related challenges and ensure the well-being of their populations.
INVESTMENT ESTIMATES FOR UNIVERSAL COVERAGE
Based on data from 133 low- and middle-income countries, the working paper provides detailed estimates of the investment required to ensure universal coverage of basic benefits. These benefits include support for all children, mothers of newborns, individuals with severe disabilities, the elderly, the unemployed, and access to essential health care.
The estimated $1.4 trillion additional annual spending is necessary to cover the following:
- Children’s Benefits: Ensuring all children receive adequate social protection.
- Maternal Support: Providing support to mothers of newborns to ensure their health and well-being.
- Disability Benefits: Offering financial assistance to persons with severe disabilities.
- Old Age Pensions: Ensuring the elderly receive pensions to live with dignity.
- Unemployment Benefits: Providing support to the unemployed.
- Universal Health Care: Guaranteeing access to essential health services for all.
A CALL FOR GLOBAL ACTION
Achieving universal social protection in low- and middle-income countries is a monumental task that requires significant financial commitment. While domestic efforts are crucial, international solidarity and increased development assistance are indispensable. The integration of climate financing further underscores the multifaceted benefits of robust social protection systems. By working together, the global community can help bridge the social protection gap, ensuring a safer and more equitable world for all.