Recovery with a Human Face
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Recovery with a Human Face

A discussion on alternatives for a socially-responsive crisis recovery
 

May 05th, 2015

5/5/2015

 
Dear friends,

It is often argued that social protection is not affordable or that government expenditure cuts are inevitable during adjustment periods. But there are alternatives, even in the poorest countries.

Our new working paper  "Fiscal Space for Social Protection: Options to Expand Social Investments in 187 Countries" offers an array of options that can be explored to expand fiscal space and generate resources for social investments. These include: (i) re-allocating public expenditures; (ii) increasing tax revenues; (iii) expanding social security coverage and contributory revenues; (iv) lobbying for aid and transfers; (v) eliminating illicit financial flows; (vi) using fiscal and foreign exchange reserves; (vii) borrowing or restructuring existing debt and; (viii) adopting a more accommodative macroeconomic framework. To serve as a general advocacy resource, Annex 1 provides a summary of the latest fiscal space indicators for 187 countries.

All of the financing options described in this paper are supported by policy statements of the United Nations and international financial institutions. Governments around the world have been applying them for decades, showing a wide variety of revenue choices. As this paper demonstrates, examples abound, did you know that:

·         Costa Rica and Thailand reallocated military expenditures for universal health.

·         Egypt created an Economic Justice Unit in the Ministry of Finance to review expenditure priorities.

·         A large number of countries are increasing taxes for social investments – not only on consumption (generally regressive) but also on income, corporate profit, property, natural resource extraction.

·         Brazil used a financial transaction tax to expand social protection coverage.

·         Bolivia, Mongolia and Zambia are financing universal pensions, child benefits and other schemes from taxes on mining and gas.

·         Argentina, Brazil, Tunisia, Uruguay, and many others expanded social security coverage and contributory revenues.

·         A number of low-income countries are receiving North-South and South-South transfers while other countries are fighting illicit financial flows such by cracking down on tax evasion.

·         Chile, Norway and Venezuela, among others, are using fiscal reserves to support social development.

·         South Africa issued municipal bonds to finance basic services and urban infrastructure.

·         More than 60 countries have successfully re-negotiated debts, and more than 20 defaulted/repudiated debt, such as Ecuador, Iceland and Iraq, using savings from debt servicing for social programs.

·         A significant number of developing countries have used deficit spending and more accommodative macroeconomic frameworks during the global recession to attend to pressing demands at a time of low growth, and to support socio-economic recovery.

Each country is unique, and all options should be carefully examined - including the potential risks and trade-offs associated with each opportunity - and considered in national social dialogue. Given the importance of public investments for human rights and inclusive development, it is imperative that governments explore all possible alternatives to expand fiscal space to promote national socio-economic development with jobs and social protection.                                                                                                                                                                           We hope the paper is useful (donwload:  http://www.social-protection.org/gimi/gess/RessourcePDF.action?ressource.ressourceId=51537 )

Very best,

Isabel Ortiz
Director Social Protection
International Labour Organization (ILO)
4 Route des Morillons
CH-1211 Geneva 22 Switzerland
Tel. +41.22.799.6226; ortizi@ilo.org
Visit www.social-protection.org  


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