Financing Social Protection: A National and International Responsibility

briefingThe Committee on Economic, Social and Cultural  Rights has elaborated the right to social protection’s normative content, as well as the core obligations governments have in respect of social protection. Furthermore, the ICESCR (International Covenant on Economic, Social and Cultural Rights) states that the full realisation of the rights recognised in its Covenant on ESCR should be achieved -inter alia -through international assistance and co-operation. It follows from this that the provision of social security for everyone is also an international responsibility.

National societies and their governments are the first in line to implement and finance social protection, but in particular low-income countries may need the support from the global community to eradicate extreme poverty and establish social protection systems. Against this background, the debate on international financing options should be intensified.

Given that national economies worldwide lose significant financial resources as a result of illicit financial flows, for example through money laundering and tax evasion, the international community should put more effort into controlling tax havens and tax exemption systems designed for international investment. Global cooperation is central to combating international tax avoidance and evasion. The lack of an international agenda in tax matters costs all governments a great amount of resources that could be invested into social protection.

In addition, new and effective taxes will have to be applied to the financial sector, such as taxes on financial transactions and financial activities. These resources could be budgeted for national social protection systems.

At present, there are no effective ways to manage debt rescheduling and debt relief. Debt service competes with development spending even in countries that do not suffer from an acute debt crisis. The possibilities of debt reduction and cancellation have to be explored to end the debt crisis and to allow countries to spend resources for i.e. social protection and poverty eradication.

In particular for low-income countries the financial support of other countries is indispensable, possibly at a progressively decreasing rate. Some countries may also need additional outside financing in times of crisis. This could be in the form of a special financing window within the context of existing global or regional institutions, or through the establishment of a specific fund for the financing of national social protection floors. A fund could provide re-insurance for countries where shock-related risks currently make it difficult for states to stick to their development trajectories.

In this context, any engagement of private institutions, particularly actors of “philanthrocapitalism”, has to be transparent, closely monitored, regulated and controlled by national governments, civil society and the international community.

The financing of social protection should eventually be based on sustainable and sufficient national resources, and a fair international trade and financial system.

Moreover, new approaches have to be elaborated that correspond to the global migration of labour. This development cannot easily be challenged by nationally defined systems, and it needs more intensive international cooperation such as the portability of entitlements for migrants.

Finally, further analysis is needed to ascertain the root causes of the structures and processes that lead to the rapid accumulation of wealth. It is not enough to create redistribution mechanisms, such as through social security, but it is necessary to challenge both the accumulation of wealth and the idea of infinite economic growth. Inequality is a major barrier to sustainable human development, as it has detrimental effects on both individuals and societies, and it makes it difficult to reduce poverty overall.

 Luise Steinwachs, Brot für die Welt, Germany

See the full briefing paper Winning the Fight against Poverty and Inequality

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