Development and Social Sector

Prepared By:
Anup K. Mishra
 Introduction
• Development can be defined as the process of improving the
quality of life for a population, while the social sector refers to
the services that are provided to improve the well-being of
individuals and communities.
• Once the terms have been defined, it is important to discuss
the relationship between development and the social sector.
• Development cannot be achieved without the support of the
social sector, which provides essential services such as
education, healthcare, and social security.
• The social sector also plays a role in promoting social justice
and equality.
• In order to achieve sustainable development, it is important to
ensure that the social sector is adequately funded and
supported.
• This can be done through government investment, private
sector partnerships, and individual philanthropy.
 Concept of Social Security
Promotive and Protective Notions
 Concept
• Social security is a system of social protection
that provides economic assistance to individuals
and families who are unable to support
themselves due to old age, unemployment,
disability, or other circumstances. Social security
programs are typically funded through a
combination of taxes and government
borrowing.
• Social security = a means to promote
employment and increase capability &
employability.
 Idea Behind Social Security
• The concept of social security is based on the
idea that everyone deserves a basic level of
economic security, regardless of their
circumstances.
• Social security programs help to ensure that
everyone has access to essential services like
healthcare and education, and that they are not
at risk of poverty or social exclusion.
 Definitions
According to ILO Fried Lander defines V.V. Giri defines

The result achieved by a Social security is “a Social security as “Social

comprehensive and programme of protection security, as currently
successful and series of provided by the society understood, is one of the
measures for protecting against these contingencies dynamic concepts of the
the public (or a large sector of modern life- sickness, modern age which is
of it) from the economic unemployment, old age, influencing social as well as
distress, that, in the dependency, industrial economic policy. It is the
absence of such measures, accidents and invalidsm security that the state
would be caused by the against which the furnishes against the risks
stoppage of earning in individual cannot be which an individual of small
sickness, unemployment or expected to protect himself means cannot, today,
old age and after death; for and his family by his own stand up to by himself or
making available to that ability or foresight. even on private
same public medical care combination with his fellow
as needed; and for countrymen.
subsidizing families
bringing up young children.
 Social protection
• Social protection describes all public and
private initiatives that provide income or
consumption transfers to the poor, protect
the vulnerable against livelihood risks, and
enhance the social status and rights of the
marginalised; with the overall objective of
reducing the economic and social vulnerability
of poor, vulnerable and marginalised groups.
 Definition by National Commission on Labour
• “Social security envisages that the members of the
community shall be protected by collective action
against social risks causing undue hardship and
privation to individuals whose primary resources can
seldom be adequate to meet them. The concept of
social security is based on ideals of human dignity
and social justice. The under lying idea behind social
security measures is that a citizen who has
contributed or is likely to contribute to his country’s
welfare should be given protection against certain
hazards or as consequence of it”.
 NEED FOR SOCIAL SECURITY
• Modernisation and urbanisation have resulted in radical
socio-economic changes and give rise to new conflicts and
tensions consequent upon the erosion of age old family and
fraternal security.
• The transition from agricultural economy to an industrial
economy brought in special accompanied problems like
industrial accidents in serious dimensions.
• Hence the joint family system, workers mutual aid societies,
private savings etc. are found to be out dated and inadequate
to the tempo of modern life to provide relief in the event of
sickness, oldage, maternity, unemployment, employment
injury etc.
 For Human Development
• Human development insists that everyone
should enjoy minimum level of security.
Workers also want to be free from economic
threats which disrupt in their daily lives.
Hence, there must be a system in which the
state bears the responsibility for providing
and ensuring a basic level of social security
which is an essential ingredient in the
protection, development and full utilisation of
human resources.
 Promotive and Protective Notions
• There are two main types of social security programs:
promotive and protective.
• Promotive programs are designed to prevent people
from falling into poverty or social exclusion. These
programs can include things like education, healthcare,
and job training.
• Protective programs are designed to provide financial
assistance to people who are already in poverty or
social exclusion. These programs can include things like
unemployment benefits, disability benefits, and social
assistance.
• Both promotive and protective notions of social
security are important.
• Promotive notions help to prevent people from
falling into poverty, while protective notions help
to provide a safety net for people who are
already in poverty.
• By combining these two approaches, social
security can help to ensure that everyone has a
basic level of economic security.
 Examples
• Promotive:
– Universal healthcare
– Free or low-cost education
– Job training programs
• Protective:
– Unemployment benefits
– Disability benefits
– Social assistance
• Social security is an important part of a just and equitable
society. By providing economic security to individuals and
families, social security helps to promote social inclusion and
to reduce poverty.
Promotive and Protective Notions
Protection against Unemployment in
ILO Standards
 Protective Notions

Maintaining the
unemployed and their
family in healthy and
reasonable living
conditions

Unemployment Insurance
( UI)

Promoting active labour

market policies for full,
productive and fully
chosen employment
 Particularity of Convention
 looks beyond the internal organization and functioning of the traditional
social security system into the external socio-economic environment where
social security interacts with the labour market, human resources
development and the economy at large;
Contingency covered & Principles
 The ILO’s Perspective
The Provision of Unemployment Benefits on the basis of
– Periodical payments, and
– Social Insurance

is optimal in most cases, for reasons including:

– It is well-suited to ensuring the rights of participants;

– Periodical payments best meet the livelihood needs of individuals and
families (limitations of the severance pay);
– The social insurance mechanism allows for “pooling” of risks and costs
on an equitable basis; and
– Allows for protection of workers even when an employer becomes
insolvent or individual savings mechanisms fail (as in recent economic
crisis).

18
 Limitations of the Social Insurance,
informal economy
• Insurance schemes often fail to work well for workers in the informal
economy :
– even though contributions can be proportional for those with low
incomes,
– it may be difficult to ascribe adequate benefits for those who can only
contribute on an irregular basis.
• It has been suggested that where informality predominates in national
labour markets, unemployment protection should be provided through
individual savings accounts .
• The ILO does not agree with this view, as the evidence to date shows that
Unemployment Savings Accounts generally fall far short of providing
adequate benefits, especially for workers with low earnings.
• A better approach is probably to strengthen social assistance provisions
and develop programs to increase capability & employability of workers.
19
A typology of Passive and Active No
un
ive
rs a
Labour Market Policies l fo
rm
ula
Passive LMP Active LMP !

Provides temporary ‘income Provides active support to unemployed

security’ for the unemployed: workers in making ‘transitions’ to new
 contributory Unemployment employment:
Insurance Benefits • Job search assistance
 Severance/compensation •Training or re-training to increase
payment (under Employers’ employability (apprenticeships).
liability) • Promotion of SME through business
• Employment-related social management training, mentoring, access to
assistance that steps in when the credit access, tax incentives, etc.
unemployed are no longer • Wage subsidies to encourage hiring of
eligible for UI, or for new unemployed or maintaining in employment.
entrants (tax-funded) •Employment guarantee schemes
•Unemployment Saving •Employment through public investments
Accounts
 Emphasis on UI (unemployment Insurance) or EI
ALMP ( Employment Investment)
High

+ Employment
stabilization

Low PLMP
High Low
 Active labour market policies
• All schemes:
- are equipped with employment service centers which offer job counseling and placement services,
- provide VT and skills development grants.
• Integrated ES under the UI/EI fund:
- Japan: Two Services,
- South Korea: Vocational Competency Development & Employment Stabilization,
- Canada: Employment Benefits and Support Measures .
• Support to skills development beyond the UB entitlement limit: Mongolia, France, Japan.
• Work-sharing subsidized by UI/EI Fund: Canada, Denmark, France, Germany.
• Labour mobility assistance (equipment allowance, travel allowance, household allowance and
relocation allowance): Germany.
• Re-employment lump-sum: Japan, South Korea, Viet Nam.
• Employment stabilization (loans to enterprises to maintain wages and employment): Japan, South
Korea.
• Preventive case management prior to lay-off: USA.
 Unemployment situation in 14 countries

* For Canada, Japan, South Korea and USA figures are from 01/2012; for Mongolia, 2009.
Source: Harmonised Unemployment Rates (HURs), OECD - Updated: February 2012 for OECD countries, CIA-the World Fact Book
for other countries.
 Legal vs. Effective Coverage

Legal coverage:
percentage of EAP legally
covered by UI scheme

Effective coverage:
percentage of unemployed
receiving unemployment
benefits

Source: ILO comparative analysis of 14 UI/EI schemes, 2012 (draft report- not for quotation)
Source for data prior to 2010: ILO World Social Security Report 2010/11
 Eligibility criteria and Benefits
Qualifying period Level of benefits Duration of benefits
Argentina 12 months in last 36 months 50% for 1st 4 months, lower afterwards 4 to 12 months (18 for >
60)
Bahrain 12 months or 1st time jobseekers 60% and flat amount for 1st-time jobseekers 6 months
Canada 3 to 4 months 50% 3.5 to 11 months
Chile ISA: 6 or 12 months depending if temporary IUSA & SI: Decreasing monthly rate (50 to 5 months (2 for
or permanent 20%) for permanent workers, SI: 35 to 30% temporary)
SI: 12 months in last 24 months (3 cont.) for temporary workers
China 12 months Flat rate (< mini. wage) 12 to 24 months
Denmark 12 months in last 36 months 90% 24 months
France 4 in last 28 months if younger than 50, or 4 75% at low income, grading down to 57% at 4 to 24 months
in last 36 months if older high income
Germany 12 months in the last 36 months 60% (higher if with children) 6 to 24 months (age)
Japan 6 months in the last 24 months 50 to 80% (digressive with level of past 3 to 11 months (reason)
earnings).
Mongolia 24 months (last 9 continuous) (adjusted to 6 15 to 17% depending on contribution length 18 months (increased to
during 2009) 24 months during 2009)
South Korea 6 months in last 15 months 50% 3 to 8 months
Thailand 6 months in last 18 months 50% (30% for voluntary quitters) 6 months (8 during
2009)
USA 12 months in last 15 months 50% 6 months
Viet Nam 12 months in last 24 months 60% 3 to 12 months
Source: ILO comparative analysis of 14 UI/EI schemes, 2012 (draft report- not for quotation)
 Lessons-learnt from the 14 UI/EI schemes

• It does not exist a “one-fit-all” model.

• Should be included: temporary/seasonal workers, domestic workers,
foreign workers, new entrants (young, women and informal eco.
workers), “forced” part-time employed, home workers, SME, self-
employed.
• Certain flexibility to adjust parameters during crisis
• Denied or reduced benefits for voluntary quitters (insurance)
• Case management services (closer support to unemployed)
 Relevance for the ASEAN
Informal employment increased in South East Asia as a 10.0 Example of Indonesia
9.8
63.5

consequence of laid offs in formal sector 9.5

9.1
63.0

62.5
9.0
8.5 62.0
8.5 8.4
61.5
8.1
8.0
61.0
7.5 60.5

7.0 60.0
2007 2007 2008 2008 2009
Feb Aug Feb Aug Feb

Informal employment, right scale

Unemployment rate, left scale

After the crisis, job creation was mainly in

vulnerable employment

Unemployment
benefits & other
income security
measures facilitate
Uncertainty persists due to recovery
Eurozone debt crisis and low US
recovery….
Prospective Role of Social Security
• Affordability: Given binding budget constraints,
how can low-income countries deliver effective
social protection to their vulnerable citizens at
affordable cost?
• Growth: Can social protection policies contribute
to the Millennium Development Goal of halvin
extreme poverty and hunger, by supporting pro-
poor economic growth?
• Equity: How can existing definitions and
frameworks for social protection be extended to
incorporate the “social” as well as “economic”
aspects of risk and vulnerability?
 Encouraging Answer
• Recent thinking and research is starting to provide some
encouraging answers to these questions, and is
demonstrating their positive interconnections. For instance:
 For Instance
• Many forms of social protection are affordable even in the poorest
countries, especially those that are not based on large or repeated income
transfers to beneficiaries, but instead provide protection to the poor and
vulnerable through, say, legislative change.
• Evidence is accumulating that social protection can contribute, both
directly and indirectly, to economic growth and poverty reduction:
• Directly: redistributive transfers raise the incomes and
smooth the consumption of the poor, which also allows them
to engage in moderate risk-taking, and to protect rather than
erode their asset holdings when confronted by livelihood
shocks;
• Indirectly: several social protection mechanisms contribute to
economic growth through asset creation (e.g. public works
programmes build infrastructure, school feeding schemes
invest in human capital), and income or employment
multipliers.