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Which are the principles for the governance of a Global Financing Mechanism for Social Protection?

Markus Kaltenborn's picture
Submitted by Markus Kaltenborn
on Fri, 01/04/2022 - 17:17

This blog refers to the study "Governance Principles for a Global Fund for Social Protection", co-authored with Laura Kreft and in collaboration with Friedrich-Ebert-Stiftung, Brot für die Welt and the Global Coalition for Social Protection Floors (GCSPF).

 

In many countries social protection systems – which represent a key instrument in the fight against extreme poverty and social inequality – are severely underfunded. Due to economic difficulties which have been further exacerbated by the COVID pandemic, some low-income countries in particular are not able to provide adequate social protection from their own resources, at least not in the short or medium term. Therefore, for some time now, a proposal has been under discussion that would enable internationally coordinated and effective action to provide support to these countries. A ‘Global Fund for Social Protection’ (or a differently named international financing mechanism that would pursue similar ob­jec­tives) could be established to provide temporary co-financing of social protection floors in countries that lack the financial capacities to guarantee rights-based basic social protection for their populations (De Schutter and Sepúlveda 2012; De Schutter 2021; GCSPF 2020). The Fund could, for example, be built on the Global Partnership for Universal Social Protection (USP2030) and become an integral part of the Global Accelerator for Jobs and Social Protection, recently proposed by the UN Secretary-General (see also Cichon and Lanz 2022).

Of course, if such a new mechanism is set up (whatever it may be named), both the good and bad experiences gained with comparable institutions should be taken into account. This applies in particular to the governance structure, as its design can be a decisive factor for the success of such a new financing approach. Equally important is that some basic principles of international human rights law and development cooperation ‘soft law’ – the principles of the Global Partnership for Effective Development Cooper­ation and the UN Development Cooperation Forum (for details see Kaltenborn and Kreft 2022) – will be observed in the design of the governance structure. These principles are intended primarily to guarantee that the Fund would have sufficient legitimacy. At the same time, they help to ensure its operability and that it will be able to contribute effectively to the establishment of social protection floors in low-income countries. Such a principle-based approach does not specify a concrete and detailed governance model, but it does provide a framework of orientation for the actors involved in setting up the Fund.

 

Ownership

A key principle for effective development partnerships is country ownership. Without a clear commitment to this fundamental requirement of contemporary development cooperation, the governments of potential recipient countries cannot be expected to agree to such a new institution. Even if the Fund can of course only make its funding decisions on the basis of certain eligibility criteria, these criteria must not be formulated in such a way as to deprive the recipient countries of their necessary scope for social policy. It will therefore be important to focus on a few core specifications when defining eligibility requirements and, in addition, to clarify – as also required by the human right to social security and ILO standards (CESCR 2008, paras. 4, 5, 12; ILO Recommendation R202, para. 9) – that all other issues concerning the design of social protection programs in the country remain within the exclusive competence (‘ownership’) of the respective government.

The eligibility criteria could specify that

  • the resources provided by the new financing mechanism must be used exclusively for the purpose of ensuring the financing of ‘social protection floors’, as defined by ILO Recommendation R202;
  • recipient countries should guarantee non-discriminatory access to social protection systems, especially for disadvantaged persons and groups;
  • a national social protection strategy and action plan must be adopted (including an approach to long-term domestic financing);
  • implementation of social protection floors must be regularly monitored and that review mechanisms must also be available for rights holders.

If these conditions are met, a country would in principle be eligible for financial assistance from the Fund. In addition, the Fund – in cooperation with other multilateral or bilateral institutions – could offer advisory services in the field of social protection. However, the implementation of such services should not be made a regular precondition for funding.

 

Inclusion of all stakeholders

Development partnerships often have a two-tier governance structure – a high-level body which is usually responsible for more general, strategic decisions of the organisation (sometimes called ‘assembly’ or ‘conference of the parties’) and a steering board (or committee) where the concrete financing decisions are made. It is fundamental both for the effectiveness of the institution and for its legitimacy that the composition of these bodies complies with the principle of inclusivity. On one hand, it is important that decision-making procedures can be carried out stringently and concluded within a manageable timeframe. If they are burdened with excessive participation requirements, it can happen that the institution loses its ability to react in time and in an appropriate manner to crisis situations that might become urgent. On the other hand, a broad-based approach to participation that takes all relevant stakeholders into account is indispensable for ensuring the necessary political legitimacy for an institution that operates in an area as important to society as social protection. To resolve this tension between effectiveness and legitimacy, in most global partnership groups are formed that represent certain stakeholder constituencies. On the boards not all members of the partnership work together, but only representatives of those stakeholder groups.

This implies for the new financing mechanism that all stakeholders affected by the Fund's financing decisions should be represented on this board. These are the donor and recipient countries, which should have the same voting rights, as well as the ILO and the World Bank (as the co-founding members of USP2030). Private donors should also be represented, provided they can participate in the financing of the Fund in accordance with its statutes. Furthermore, it must be guaranteed that trade unions, employers' associations and informal workers' organisations, as well as members of civil society be represented on the board.

For the design of the decision-making procedures, the requirement of qualified majorities could be included in the statutes, following the example of other international financing mechanisms such as the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM). In principle, it is the GFATM’s aim that board decisions be made by consensus. If such a consensus is not reached in exceptional cases, however, decisions are not taken by simple majority vote. Instead, qualified majorities must be found, which in the end give those stakeholder groups particularly affected by the decisions – the constituencies of the recipient countries and of the donor countries – a veto position. This particular procedural structure also provides other stakeholders with an important role in the decision-making process (for a concrete proposal for the distribution of voting weights see Kaltenborn and Kreft 2022).

 

Mutual Accountability

Another guiding principle of particular importance to the governance structure of a new Global Fund is mutual accountability. To ensure that the requirements of this principle are met, it is necessary for the new international financing mechanism to have transparent procedures. It is also crucial to guarantee that funding decisions can be reviewed by both donor and recipient countries (including those whose applications have not been approved) for compliance with the eligibility criteria. A special committee staffed with independent experts could be set up for this purpose. Also, it should be ensured that the work of the Fund be regularly evaluated and that complaints bodies be set up in the event of misconduct on the part of individual staff members. Civil society actors should also have control mechanisms at their disposal. Primarily, they are supposed to use the review and complaint procedures available at the national level. But it should also be possible to report at least significant deficiencies in the implementation of the support programmes directly to the Fund.

 

Conclusions

The challenge of combating extreme poverty and inequality continues to be of major importance for the global community. In addition to investments in education and job creation, solutions for financing social protection floors should therefore be at the top of the list of priorities of international development cooperation, especially support for those countries that are currently unable to raise sufficient domestic resources for this purpose. In the spirit of the 2030 Agenda for Sustainable Development, these efforts must be organised in a partnership-based framework. Therefore, if a new international financing mechanism is set up to support low-income countries in providing their inhabitants with a minimum level of social protection, it should be designed in such a way that the governments of the countries concerned retain full ownership of their social protection systems and that they (or rather their constituencies) are included in the decision-making processes of this mechanism on equal terms with the donor side; likewise, the relevant civil society actors must be given appropriate opportunities to participate. Moreover, it is also necessary that effective and transparent accountability instruments be implemented. It does not particularly matter whether this funding mechanism is subsequently called a ‘Global Fund for Social Protection’ or something else. But it is important that its governance structure be shaped by these three principles: ownership, inclusiveness, and mutual accountability.

 

References

 

This is the fourth post of the blog series “Global Financing Mechanisms for Social Protection”, which draws from different studies around the proposal for a Global Fund for Social Protection. The blogs look into different subjects, such as: learnings from earlier global fund initiatives, costing for country cases, micro-simulation on expected impacts, financing side proposals, institutional coordination, governance, among others. As of February 2022, the studies are currently being implemented by experts from United Nations University-MERIT, University of Bochum and other independent experts. The blog series is organized by Brot für die Welt and the socialprotection.org team.

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