Sustainable Social Protection Systems: Existing and new challenges

Social protection is key for the productive transformation of the economy, especially the structural shifts to higher productivity activities. It works toward the inclusion of people in vulnerable situations, including women, migrants, people with disabilities, youth, and the elderly. Enhancing labour supply, strengthening and stabilising aggregate demand, and improving the allocation of labour also depend on a strong social protection system. In designing this policies support, countries need to avoid poverty traps and policies that incentivise informality. Lack of registration stands as a barrier to social protection expansion as it narrows the tax base, affects revenues, and reduces fiscal space. Transitioning from informality to the formal economy is one of the most desirable ways to increase the fiscal space and allow further steps towards universal coverage.

This document is intended for members of the IOE members, to summarise the global state of social protection and present the future challenges and opportunities from the standpoint of employers. The first section describes the Social Protection Floors (SPF), which are part of the International Labour Organization’s (ILO) work on the promotion of social protection around the world. This is followed by a description of the state of global social protection benefits and spending, highlighting the impact of Covid-19 and the remaining coverage gaps. Section 3 discusses opportunities and limitations for increasing investment in social protection and emphasises the problem of the informal economy. Section 4 focuses on pensions, which represent a structural challenge to sustainable SPF. Section 5 looks into the new challenges that digitisation and the gig economy present to the current systems and explores the current debates on how to address this issue. Finally, Section 6 reviews innovative experiences around the world that can work as blueprints for other countries.