1. Social policy response to financial crisis
in small states
Naren Prasad
International Institute for Labour Studies, ILO
London 7 July 2009
Commonwealth Meeting: Sustainable development in small states in a turbulent

2. Social Policy
• Social policy “is state intervention that
directly affects social welfare, social
institutions and social relations. It involves
overarching concerns with redistribution,
production, reproduction and
protection and works in tandem with
economic policy in pursuit of national
social and economic goals”
» UNRISD. 2006. Transformative social policy:
lessons from UNRISD Research, (p. 1)
• 16 lessons!

3. A UN Report of 1957
• Social policy should not be treated “as a
housemaid whose function is to tidy up human
suffering and insecurity left in the wake of
economic development”.
• Social objectives should be built in on an equal
footing with economic objectives into
comprehensive social and economic planning”
• Report on a Co-ordinated Policy regarding Family Levels of
Living, United Nations, 1957, Sales no. 57.IV.7 (p. 18). ).

4. Recovering from the crisis:
A Global Jobs Pact
• Accelerating employment creation, jobs
recovery & sustaining enterprises
• Building social protection systems & protecting
people
• Strengthening respect for international labour
standards
• Social dialogue: Bargaining collectively,
identifying priorities, stimulating action
…the way forward:
Shaping a fair and sustainable globalization

5. GJP: Generating growth
• Stimulus packages
• Boosting demand
• Wage maintenance
• Supporting enterprises
• Green investments
• Effective & efficient regulation to
promote employment generation

6. GJP: Protecting employment
• Employment-oriented stimuli
• Public works & job guarantees, training & skills development,
and employment services
• Supporting enterprises to retain workforce
• Supporting job creation in enterprises, especially
smaller businesses
• Protecting labour standards & strengthening labour
inspection
• freedom of association, the right to organize & collective bargaining
• prevention of forced labour, child labour & discrimination at work
… aiming for full and productive employment

7. Mauritius: Saving jobs
– Riding our the global crisis: saving bobs-
protecting people-preparing fro recovery
– Stimulus package
• saving jobs
– 2,700 jobs saved through the Mechanism for Transitional
Support, by helping enterprises that are at the breakdown point,
3000 indirectly
• Public infrastructure
• Manufacturing Adjustment and SME Development Fund (500
million rup, 0.2% of GDP)
• Save jobs 4 billion rup (1.7% GDP)
– 14.7 billion to stimulate economy (6.1% GDP)
– 27.4 bn rup for infrastructure & transportation development
(12% of GDP)
» 126.3 bn rup over 10 yrs PPP

8. Mauritius: GDP growth
+6.0
+5.0
+4.0
+3.0
GDP
+2.0 textile
tourism
+1.0
+0.0
2006 2007 2008 2009
-1.0
-2.0

9. GJP: Guaranteeing social
protection/security
• Introducing cash transfer schemes for the poor
• Guaranteeing basic social protection for all
• access to health care
• income security for the elderly & persons with disabilities
• child benefits
• income security combined with public employment guarantee
schemes
• Extending the duration & coverage of unemployment
benefits
• Protecting temporary & non-regular workers
• Avoiding deflationary wage spirals

10. Why social security?
• Social security
– Human rights (article 22 of UDHR)
– “Everyone.. has the right to social security.. through national
effort and international co-operation …”.
– plays a crucial role in protecting people from risks
such as income loss, sickness or old age
– Old age, work injury, sickness & maternity,
unemployment benefit, family assistance, other cash
transfers
– it can boost demand, create consumer confidence
and create employment in crisis times

11. Guaranteeing social protection
Type of social protection Social protection instrument Role in Crisis
Protective Social transfers Immediate protection and relief
(social assistance) Disability benefits from poverty and
Pension schemes deprivation
Social services
Preventive Social transfers Prevents damage to coping
(insurance) Social insurance strategies
Livelihood diversification
Saving clubs
Promotive Social transfers Promotes resilience through
(Economic opportunities) Access to credit livelihood diversification
School feeding and improves security
Public works program
Transformative Promotion of minority rights Transforms social relations to
(addressing underlying social Anti-discrimination campaigns reduce exclusion
vulnerabilities Social funds

12. Social security: Current status
• 20% of population covered by social
security globally
• Developed countries
– Generous welfare system
• Social democratic: Nordics
• Conservative: Europeans
• Liberal: Anglo-saxons
• Developing countries
• Underdeveloped, informal employment

13. Old age social security
• Pensions have a strong redistributive effect, and in reducing
poverty
– But in developing countries, pensions only to formal sector
Distribution of public social spending by quintlies
(average for 9 Latin American countries)
70
60
50
Education
40
Health
%
30
Social Security
20
10
0
I II III IV V

14. Pension coverage
100
90
80
70
60
%
50
40
30
20
10
0
Bolivia
Indonesia
Thailand
OECD (30)
Sri Lanka
Argentina
Japan
Pakistan
Australia
India
Philippines
Canada
Mexico
France
Vietnam
Germany
Korea
China
Italy
Brazil
US
UK
– In Asia only 20% of the population have access to health care, Chile
30% of the elderly receive pensions, 20% of those unemployed
receive some kind of unemployment benefit such as training,
public works (UNESCAP 2009).
– Latin America, less than 30% of the labour force are covered by
any pension (Rofman & Lucchetti 2006).

15. Pension in small states
12
MUS SYC
WSM
CYP MLT
10
BLZ
Pensio n index
BHS BRB
TT O
8
KNA
LCA VCT DMA
GRD
GUY
JAM
6
PNG
FJI
4
SLBVUT KIR
0 5 10 15
Social welfare spen ding (% GD P)

16. % GDP
0 10 20 30 40
19. 9678
20.3219
. 831954
Africa
4.3324
Revenue
2.46081
21. 5771
21. 6607
Expenses
3. 85301
4. 97327
3.55251
Latin America
17.9332
18.5321
Social security
1.09747
Asia
5. 45578
3.55732
32. 8386
Education
33.2248
12. 4736
5.5799
6. 37722
High income
Health
Current levels of revenue & spending

17. Revenue, expenses % social security in small states
50
4030
% GDP
20 10
0
BRB
CY P
DV
MUS
JA M
CPV
KNA
MLT
PNG
FJI
TO
SYC
M
T
revenue expenses social security

18. Developing/small countries social security
• Social security (& labour standards)
– Too expensive - unaffordable
– First we need development
• Universal pension
– Mauritius (1958), Namibia (1990), Samoa (1990),
Bolivia (1996), Botswana (1996) and the City of
Mexico (2001)
• Near-universal pension
– South Africa, Argentina, Brazil, Chile, Cost Rica and
Uruguay

19. Social security: Its possible…
– Suppose a country provides…
• Universal pension
– 30 % GDP per capita to all 65+
• Basic health
– 300 medical staff to 10,000 people
• Child benefit
– 15% GDP per capita to all children 0-14
• Social assistance/employment scheme
– 30% of GDP per capita to the poor,
– 10% of working age population for 100 days per year
– What will it cost…..?

20. Basic social security (% GDP)
6
5
Its possible for small states
4
3
%
2
1
0
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pension health child assistance

21. GJP: Recovering with
employer-employee dialogue
• To reduce social tensions
• To inspire confidence in the results
achieved
• To promote decent work solutions

22. What social policy works
• Evidence shows…
– Minimum old age pensions and cash transfers to
families seem to have the biggest poverty impact with
the lowest transactions costs
– Employment intensive schemes
• Public infrastructure renewable energy sources, waste
management, low cost housing, sanitation, etc
• Micro, small and medium-sized enterprise support
• Skills development
• Youth employment schemes
• Improved public employment services

23. G-20 stimulus packages, 2008-2010
%GDP (PPP-weighted)

24. Shaping a fair and
sustainable globalization
• Using the decent work agenda to create a
sustainable future
• Social protection, job creation, social dialogue, standards
• Investing in a green recovery
• Ensuring developing countries have the fiscal
space to stimulate their economies
• Reforming the financial sector
• to serve the real economy, promote sustainable
enterprises & decent work, and protect people’s
savings and pensions

25. Conclusion
• Social policy & economic policy goes hand in hand
• Universal provision of social security
– This is perhaps the only message you should take home and
influence your policy makers….
• Tends to be universal policies
• Multiple roles of social policy
– nation building, promoting development
– Production, protection, reproduction, distribution
• Democratic and good governance
– No 1:1 relation, but democracy provides space for social
articulation of interests
• Governments associated with social justice

26. Conclusion
– State-led provision of social services
• Education, health,
• Strong political leadership and will to improve
welfare of citizens
– State capacity & infrastructure to deliver
– State as organizer, provider, ability to regulate & stimulate
non-state actors
– Countries with high growth tend to have better
social policies

27. History….some reflections
• Preamble 1919
– Whereas universal and lasting peace can be
established only if it is based upon social
justice;
– … provision for old age and injury

28. Philadelphia 1944
• labour is not a commodity
• poverty anywhere constitutes a danger to prosperity
everywhere
• it is a responsibility of the ILO to examine and consider
all international economic and financial policies
• policies in regard to wages and earnings, calculated to
ensure a just share of the fruits of progress to all, and in
need of such protection;
• the extension of social security measures to provide a
basic income to all in need of such protection and
comprehensive medical care