by Ian Orton | Jun 3, 2013 | Opinion
In 2011, the United Nations (UN), fronted by Michelle Bachelet, head of UN Women, launched the Social Protection Floor [SPF] initiative (1). This initiative aims to support the development of social protection worldwide. Arguably, this development represents an opportunity for more experimentation with basic income and possibly fully-fledged basic income programmes.
National SPFs aim to extend social security vertically (providing more comprehensive services and benefits) and horizontally (extending coverage to a greater number) to cover all groups. In particular, SPFs can assist the extension of coverage to the unprotected, the poor and the most vulnerable, including workers in the informal economy and their families. Countries should define their floors according to national needs and priorities and progressively build their floors in the most advanced yet achievable manner. The UN states that SPFs should comprise at least the following social security guarantees:
- Access to essential health care, including maternity care;
- Basic income security for children;
- Basic income security for persons in active age who are unable to earn sufficient income;
- Basic income security for older persons (1,2).
The UN’s use of ‘basic income security’ should not be understood in the same way as the Basic Income Earth Networks use of “basic Income.” Basic income security literally means a set of minimum income guarantee that could or could not be arranged as an unconditional, universal payment. These guarantees can be fulfilled in different ways through social insurance, social assistance or effective minimum wage or labour market measures.
In spite of a possible divergence with BIEN’s conception of a basic income, it is likely that these policies would represent a significant step toward basic income by legitimising the idea of basic income security as an essential ingredient for human development. Arguably, these would create a social policy culture more conducive or receptive to BIEN-type notions of basic income. In fact, many of the income security programmes championed by the SPF are those often touted by the BIEN community as precursors to fully-fledged basic incomes, such as the Bolsa Familia in Brazil. Clearly, there is some convergence.
In June 2012, this initiative was bolstered further when the International Labour Conference of the International Labour Organization voted on an historic Recommendation for a SPF, which supports the extension of social protection coverage and the progressive building of national social security systems. The adoption of this new international labour standard, the Recommendation concerning national floors of social protection (No. 202) (3), marks a major milestone for social security, as it reaffirms the human right to social security and renews national commitments to extend coverage.
The current momentum gathering behind the SPF and the actual proliferation and strengthening of existing SPFs throughout middle- and low-income countries already provides the basic income with an entry point as well legitimising basic income discourse in general. In fact many social pensions and family benefits (as advanced by the SPF) are essentially a basic income for the elderly and for children. Moreover, they have proven their impressive positive economic and social impacts (4) However, extending a rights-based discourse to basic income (in the BIEN sense of the world) still remains plagued by an array of difficulties where active population (i.e. the working population) groups are concerned. In other words, the SPF has a more ‘workfare’ view of income guarantees for the working poor, and that this group should not get unconditional income guarantees. Rather they should have to participate in some kind of public works’ programme.
Perhaps even more interesting still, is the emergence of a new hot topic within development discourse of the SPF: the idea of a specific ‘global fund’ to finance SPFs globally (5). If new financing sources do become available this may open up new financing sources for basic income-type programmes to be introduced for specific population groups. Thus, all those interested in the basic income would be well advised to keep an eye on the emergence of a global fund.
Naturally, many have well founded reservations about a yet another vertical fund earmarked for a specific use. It may add to an already confounded and highly fragmented international development assistance architecture, and result in top down prescriptions of how countries should develop their SPFs. Nonetheless, in spite of these concerns there is a discernable groundswell of political support for the idea of global fund for SPFs. It is perhaps conceivable that the idea of basic income will find ripe opportunities here. Watch this space.
For more information on this issues see:
1. ILO. 2011. The Bachelet report: Social Protection Floor for a fair globalization, Report of the Advisory Group chaired by Michelle Bachelet Convened by the ILO with the collaboration of the WHO (Geneva).
www.ilo.org/global/publications/ilo-bookstore/order-online/books/WCMS_165750/lang–en/index.htm
2. Ian Orton. 2012. The ILO Recommendation on Social Protection Floors: A milestone in the extension of social security coverage. ISSA, Geneva.
www.issa.int/News-Events/News2/The-ILO-Recommendation-on-Social-Protection-Floors-A-milestone-in-the-extension-of-social-security-coverage
3. ILO. 2012. Social security for all: The ILO Social Protection Floors Recommendation (Briefing note). Geneva, International Labour Office.
www.social-protection.org/gimi/gess/RessFileDownload.do?ressourceId=31089
4. Ian Orton. June 2010. Reasons to be cheerful: How ILO analysis of social transfers worldwide augurs well for a basic income (with some caveats). Submitted for the 13th International Congress of the Basic Income Earth Network, Sao Paulo, Brazil, basic income as an instrument for justice and peace.
www.bien2010brasil.com
5. Magdalena Sepúlveda & Oliver de Schutter, 2012. Underwriting the Poor: A Global Fund for Social Protection. Briefing Note 7. United Nations SpecialRapporteur on the Right to Food.
www.srfood.org/images/stories/pdf/otherdocuments/20121009_gfsp_en.pdf
Disclaimer:
The responsibility for opinions expressed in this article rests solely with the author and dissemination does not constitute an endorsement by the International Labour Organization of the opinions expressed in it.
by Ian Orton | Jun 9, 2011 | News
To support its campaign on the global extension of social security, in 2008 the International Labour Organisation (ILO) undertook a study of 126 research reports on tax-financed social transfer programmes (STs) operating worldwide. 62 programmes from 30 developing countries were analysed. These STs reach between 300 and 350 million beneficiaries – children, working adults, and elderly people – and represent a considerable proportion of the world’s poor. The results are available through the ILO’s online Matrix on the effects of social transfers (2009). 3 STs have emerged as a core component of poverty reduction strategies supported by international organisations such as the World Bank and a number of UN institutions. Thus their impact merits considerable interest.
This article outlines the current knowledge on the effects of STs in a way relevant to those interested in Citizen’s Income (CI). STs are not unlike CIs. They are non-contributory and tax-financed, and a considerable number of STs are unconditional and universal (across certain groups). The ILO study shows positive impacts of STs on a range of areas of human existence. The study therefore enables us to predict the kinds of effects that a CI could deliver in low and middle income countries.
The findings of the ILO matrix on social transfers
The ILO’s matrix was developed to support decision-making within ministries of planning and finance, mainly in developing countries. By ordering the unintended and intended effects of tax-financed STs in developing countries in relation to human development goals and the anti-poverty agenda, the matrix helps to inform national policy makers about the outcomes that could be realistically expected from STs and to guide investment in social security systems. Likewise, all those interested in CI might utilise the findings of the matrix to guide their arguments on the CI proposal.
Results
The table below gives an overview of the impacts of the STs. In the columns, the impact of STs in the specific sub-dimensions are documented. Programmes had a generally positive effect, 4 evidenced by the significantly higher scores in the ‘clear positive effect’ column for all but five of the sub-dimensions. Those sub-dimensions where the overall positive impact cannot be discerned are in grey text.
The conclusion of this article is that a majority of the social transfers studied clearly generate a range of positive effects in terms of enhancing human development, supporting the full utilisation of productive capacity, enhancing and stabilising consumption, and facilitating social cohesion and inclusion.
TABLE: Summary of the ILO matrix: Effect of social transfers
| Impact dimension and sub-dimensions |
Number of programmes |
Total |
| with a clear positive effect |
with a clear negative effect |
with no evidence of effect |
where effect is unclear |
| 1. Enhancing human development |
|
|
|
|
|
Adult preventative health
Child labour
Child preventative health
Drop out rates
Educational attainment
Maternal preventative health
Reduction in the worst forms of child labour
School attendance
School enrolment |
1
6
7
4
9
3
1
12
13 |
–
–
–
–
–
–
–
–
– |
–
2
–
–
–
–
–
–
– |
1
2
–
1
1
–
–
–
– |
2
10
7
5
10
3
1
12
13 |
| 2. Supporting the full utilisation of productive capacity |
|
|
|
|
|
Employability
Employment creation
Reduction of informality
Participation in the labour market
Productive activities |
1
4
–
5
15 |
–
–
1
2
– |
1
1
–
–
– |
2
2
–
2
– |
4
7
1
9
15 |
| 3. Enhancing and stabilising consumption |
|
|
|
|
|
Food expenditure
Income inequality
Income level and stimulation of consumption
Income stability and consumption smoothing
Long-term effects on income and consumption
Nutritional level
Satiation |
4
4
20
5
5
10
3 |
–
–
–
–
–
–
– |
–
2
1
–
1
2
– |
–
–
3
–
–
–
– |
4
6
24
5
6
12
3 |
| 4. Facilitating social cohesion and inclusion |
|
|
|
|
|
Empowerment
Intra-household relations
Social capital and solidarity |
14
4
4 |
–
–
3 |
1
–
– |
2
1
– |
17
5
7 |
This study shows that STs exhibit positive impacts on poverty, health and nutrition, the social status of recipients (notably women), economic activity and entrepreneurial small scale investments (notably in agriculture), and have avoided significant adverse effects on labour market participation of the poor populations which they serve. The studies also show that many families used part of the cash transfer to invest in small-scale agricultural activities, including the purchase of livestock. However, in the areas of adult preventative health, reduction in the worst forms of child labour, employability, reduction of labour market informality, and social capital and solidarity, the effect of STs is less obvious, either because there is no actual effect or because of limited research on the subject.
In light of these results, we can deduce that a CI could deliver similar effects in some instances. Consequently, the results can be used to support some aspects of the CI proposal. However, before the repercussions for a CI are discussed in detail, we need to explore a number of important caveats and knowledge gaps.
Methodological caveats and knowledge gaps
- The programme evaluations covered by this study do not represent an exhaustive list. Rather, the study covers those programmes that were easily accessible online and were Anglophone and to a lesser extent in Portuguese.
- There are problems in finding original sources online. In light of this, the study cannot be considered to be comprehensive, though the studies used are probably representative and give a good overview.
- The findings in the table are the result of a subjective chain of interpretation open to human error.
- The matrix suffers from knowledge gaps. For example, little is known about the effects of STs on non-beneficiaries, and little is known about the macroeconomic impact of STs on economic growth and about how this affects general redistributive mechanisms (formal and informal).
- The evaluations privilege quantitative measures over qualitative ones. This is a concern because the qualitative effects of STs (i.e. social bonds, capabilities, and human empowerment) may have a lot more to say about people’s well-being than quantitative measures.
The analysis presented here can therefore only be considered as indicative of the effects of STs.
To what extent does the ILO study support the Citizen’s Income proposal?
Thus far this article has cautiously suggested that the findings in the ILO matrix study augur well for CI, by indicating that it too can be expected to deliver a number of similarly positive effects. However, the message perhaps ought to be a little more mixed and nuanced, because the table better supports unconditional and universal transfers for children and the elderly (a CI for the young and the old) than for working age adults. A significant number of the STs that focus on active population groups are conditional and targeted (based on behaviour and income/wealth) and therefore one might suppose that their effects will be related to their conditional and targeted mechanisms.
Conclusion 1: Effects of social transfers for children and elderly support the case for a Citizen’s Income:
The findings on the effects of STs on children and pensions suggest that a CI could have similarly positive effects. It is possible to make this conclusion because a significant number of the STs for these two vulnerable groups were unconditional or universal across these groups and are therefore similar to a CI. The social pensions evaluated were not based on previous activity or earnings and are therefore essentially a Citizen’s Pension. Similarly, the South African Child Support Grant, which is unconditional, has encouraged human capital formation of the young and their future earnings (Agüero et al, 2007, p. 19). We could expect a CI to do the same for children. The results of social pensions and a number of other unconditional transfers support the expectation that a CI could generate similarly positive social and micro-economic effects.
Conclusion 2: Effects of social transfers for the active population deliver a mixed message for a Citizen’s Income
Apart from the pilot CI in Namibia, there are no studies on the impact of a CI on active population groups, simply because, with the exception of the Alaskan Permanent Fund, there is no fully-fledged CI that actually covers active population groups. 5 Secondly, the STs analysed in the ILO study differ from a CI because they are conditional. 6 It is therefore difficult to maintain with any certainty that the effect of a CI would be the same as for conditional and targeted STs.
Having said that, the findings of the Namibian pilot scheme do permit us an insight into how the active population group might react. For instance, according to the evaluation of this pilot, productive capacity of the active population group rose and economic activity rose, especially among women. In addition, own account work saw the largest increase, and particularly the tending of vegetable plots and the building of latrines, both of which increased the community’s health. The pilot scheme also seemed to stimulate more micro-economic activity, with new shops opening. These findings are important as they provide evidence that a CI does not act as a disincentive in the labour market (see Basic Income Grant Coalition, 2009; Torry, 2009). This is of great significance, as the argument that a CI would act as a disincentive to productive activity tends to be one of the biggest concerns of policy makers and governments with regard to STs for the active population. Having said this, one must also be cautious about using the Namibian pilot scheme as absolutely conclusive evidence on the potential effect of a CI on the active population because of obvious limitations in terms of replicating an actual fully-fledged society-wide CI.
The key impediment to using the table to support CI revolves around whether it is the conditional nature of many of the STs that is pivotal in producing the positive results they have delivered. Does conditionality make the difference? If conditionality is not the overriding factor, then perhaps we can conclude that the unconditional and universal nature of a CI could deliver results similar to those documented in the ILO matrix. There is not space here to discuss this debate in full, but suffice to say that the precise role played by conditionality in delivering positive outcomes is not clear. As the author of this article and the ILO have argued elsewhere, it is problematic to argue that conditionality is pivotal in producing the outcomes generated by STs (see ILO, 2010a).
A similarly ambivalent conclusion on the role of conditionality is made by Gabel and Kamerman, who state that researchers have not been able to attribute with absolute certainty the causality between effect and the conditional mechanism, because of the difficulty in disentangling the effects of the policy from other elements (e.g., the state of the labour market) (2008, p.18). One suspects that the motivation for conditionality is to satisfy the ‘paternalist twitch’ of governments and policy makers (Standing, 2002: 208) and public thirst for satisfying the social ethic of reciprocity. There is therefore plenty of scope for arguing that a CI could deliver similar outcomes in the absence of conditionalities.
Closing remarks
It is not clear that conditionality is crucial in achieving certain human development goals or for producing the positive effects that have been identified in the ILO matrix, so the study can be used to support a CI, provided caveats and limitations accompany any such argument.
What the findings of the matrix definitely support are those conditional programmes which many see as precursors to a society-wide CI. For example: in Brazil, Senator Eduardo Suplicy, a key proponent of CI, has argued that the Bolsa Familia ST is a first step towards a CI (2006). This is because the behavioural demands synonymous with the receipt of cash from conditional STs are easier to sell to the public and political class than is a CI. The greater political acceptability synonymous with conditional 7 STs could help to cultivate a political and public culture more receptive to STs and, therefore, to a CI at a later stage.
Just as significant as the results of the matrix study are those of the pilot CI in Namibia which has demonstrated positive results similar to those documented in the ILO matrix table across an entire community, including the active population. Particularly significant are the positive effects on labour market participation and productive capacity. The linking of the matrix and the findings of the Namibian case study can bridge the ‘unknown’ empirical dimension in the ILO study; given that hitherto no society-wide CI has really existed. Combining the results of the table and the Namibian case study justifies the expectation that a CI could produce similar effects to STs for the active population.
However, the current preference amongst governments and major international institutions (e.g. the World Bank) seems to be shifting toward conditionality, and this poses some concerns for those proposing universal and unconditional cash transfers. The political prospects of a CI would be better if the trend were against conditionality.
In conclusion: The ILO matrix confirms what many have suspected, that STs have a number of positive micro-economic and social effects. The matrix also offers proponents of CI reasons to feel optimistic that it too could produce similarly positive results.
Disclaimer: The author conducted the original research for this project as a consultant for the International Labour Organization. However, the responsibility for opinions expressed in this paper rests solely with the author and dissemination does not constitute an endorsement by the International Labour Organization of the opinions expressed in it.
Notes
1. This paper was originally submitted at the 13th International Congress of the Basic Income Earth Network in Sao Paulo, Brazil, June 2010. I would like to thank Armando Barrientos, Florence Bonnet, Philippe Marcadent, Nadine Ndeberi and Luis Soares for their assistance, and the ILO’s Social Security Department for financing the original research that features in this paper.
2. The author currently works as the Financial Crisis Monitor for the International Social Security Association.
3. The author of this paper was a member of a team that carried out the research that constituted the content of the ILO matrix. The ILO matrix project was supervised by Philippe Marcadent. The data contained in the matrix is discussed more analytically in the new ILO book: Extending social security for all: a guide through challenges and options (2010a) and in an ILO working paper entitled: Effects of non-contributory social transfers in developing countries: A compendium (2010b).
4. For a more detailed description of the methodology employed to calculate the scoring system that features in the table please see: Orton, I. 2010. Reason to be cheerful: How ILO analysis of social transfers worldwide augurs well for a basic income. www.bien2010brasil.com
5. And this differs from the standard proposed version of a CI in that it is an annual dividend, therefore one wonders how far it can replicate the income smoothing nature of those STs that are paid monthly.
6. A similar discussion for the way many STs are targeted could also be made, but there is not space here.
7. The reason for this acceptability is that conditionality conforms to the social norm of ‘reciprocity’ whereby in social contract type relationship the recipient adjusts his or her behaviour in a way acceptable to the rest of society.
Bibliography
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