Commission for Social Development

2^nd Meeting (PM)

SOCIAL SECURITY REFORM MUST BUILD ON EXISTING SYSTEMS,

COMMISSION ON SOCIAL DEVELOPMENT TOLD

 “Fundamental reform of social security systems is not something that can take place by just wiping out what is in existence”, Vivienne Taylor, Chair of the Committee of Enquiry into a Comprehensive Social Security System and Special Adviser to the Minister for Social Development of South Africa, told the Commission for Social Development this afternoon.

As the Commission continued its panel discussion on “Enhancing Social Protection and Reducing Vulnerability in a Globalizing World”, she said there could be no fundamental change without incremental shifts.  Short- medium- and long-term measures had to be put in place.  The question was one of provision and sustainability.

While people born into extreme poverty may never escape it in their lifetime, long-term policies could begin to address that problem and eventually have an impact.  Effective strategies should result in moving certain social groups out of their deprivation, she said.

Frank Vandenbroucke, Belgium’s Minister for Social Affairs and Pensions, listed four major demographic, economic and social changes that had generated internal pressures in welfare States in the European Union over the past 20 to 25 years.  Those changes would continue to have profound implications for social protection systems. 

He said the first factor was the prospective increase in the rate of growth of elderly people from 2010 onwards.  Second was the changing gender balance and the growing participation of women in the labour force.  Third was persistent high and long-term unemployment, a low participation rate in the work force, especially among women and older workers, and a trend towards earlier retirement.  The final factor was the increasing number of households, the decline in their average size and the growing number of households with no working members.

The causes of exclusion were not advanced age, accidents, illness or even a temporary fluctuation in the business cycle, he said.  The main cause lay in new work requirements that turned productive people into disabled people.  In such cases, the traditional welfare State offered benefits, but no way out.  It provided material comfort, but offered no new opportunities.  In short, more effort was required for traditional social ambitions to coexist with new challenges.

During the question and answer sequence, Dalmer Hoskins, Secretary-General of the International Social Security Association, said the review by the International Labour Organization (ILO) of their Convention 102 on social security standards, was a subject of competing interests and contested terrain.

The ILO however, had a responsibility to review one of its most important core activities.  Convention 102 was written some 50 years ago.  It reflected neither the massive numbers of women who had joined the labour market since then, nor the migrant, casual and contract workers who had also joined that market since then.

Responding to a question on private versus public sector involvement, he said it was not a question of one or the other.  He strongly felt that the future would be a mixture of both systems.  Countries such as Finland and Switzerland, which had successful mixed systems, should be asked how their systems worked so effectively.

The representative the ILO, responding further to the question on the review of Convention 102, said that there was no formal process of revision of that Convention on social security under way.  The Convention was adopted in 1952.  What had begun was a general discussion about goals, limits and alternatives in the field of social protection for employers, workers and government involved with the ILO.

All three players, he continued, should assume their responsibility to review the elements involved in social security protection.  Those elements would be discussed in June 2002 in Geneva.  It was not so much a case of the standards needing to be revised, but more one of the will of the various players in the social security arena to implement those standards and make them a part of their own systems.

Ernesto Murro, Head of the Workers Representation on the Board of the National Social Security Bank of Uruguay, also responded to questions from the floor in his capacity as a panellist.

The Commission will meet again tomorrow at 10 a.m. to continue its consideration of this theme.

Commission Work Programme

The Commission for Social Development (CSD) met this afternoon to continue its panel discussion on “Enhancing social protection and reducing vulnerability in a globalizing world”.  [For background on the Commission and its current session, see Press Release SOC/4556 of 9 February.]

      Panel Discussion

VIVIENNE TAYLOR, Chair of the Committee of Enquiry into a Comprehensive Social Security System and Special Adviser to the Minister for Social Development of South Africa, said one of the issues being grappled with in her country was figuring out how it would move towards a comprehensive system of social security.

She said fundamental reform was not something that could take place by just wiping out what was in existence.  Long-term reform options were critical.  The question was one of the provision and sustainability of options.  One also had to be able to say what a programme would provide, when policy choices were put in front of decision makers.

She said her country had been challenged to ask itself what its international obligations were.  She cited, as an answer, the International Covenants on Human Rights, the International Labour Organization Convention, the Convention on the Elimination of Discrimination against Women and the Convention on the Rights of the Child.  It was also necessary to look at national obligations.  The legislative framework that was in place was critical to the reform process.

She said another key issue was how to ensure that the rights of both citizens and non-citizens were addressed within the social security framework.  What mechanism would be used to ensure that rights were protected?  What legal and institutional frameworks needed to be put in place to ensure the effective delivery of social justice and social security?  How did one integrate –- in terms of administration –- the fragmented systems that were currently in place?

She said provision of social security was not value-free and did reflect a particular ideological stance, in terms of whose needs would be served by the process.  Any reconceptualization of social security must reflect the socio-economic circumstances, and acknowledge the forces and factors within a system.  Gaps had to examined and options devised to address them.  Also, short-,

medium-, and long-term measures had to be put into place.  One could not fundamentally change a system.  Incremental shifts in the current system must be made.

She said black exclusion and black unemployment were all historic facts that had to taken account in any reform of South Africa’s social security system.  Over 40 per cent of the country’s population lived on under $2 per day -- 60 per cent of those people were black.  The HIV/AIDS pandemic also had to be taken into account when policy options were being considered.  Ten per cent of South Africa's population was infected with the virus.

In addition, people born into extreme poverty would never escape it in their life time, she said.  Long term policies, however, would begin to address that problem and eventually have an impact.  Effective strategies should result in moving certain groups away from deprivation.

FRANK VANDENBROUCKE, Minister for Social Affairs and Pensions of Belgium, said that that if welfare States in the developed world were under pressure, the reason was not globalization, but rather internal pressures.  Four major demographic, economic and social changes, across the European Union, over the past 20 to 25 years would continue to have profound implications for social protection systems. 

First was the prospective increase in the rate of growth of the percentage of the population that were elderly from 2010 onwards in all Member States, he said.  The largest expansion would be in the number of people of 75 years and over, who tended to make greater demands on pension systems, health care and social services.  A falling birth rate over many years has also caused a prospective decline in the number of working-age people, potentially undermining capacity to finance the system.

He said the second factor was the changing gender balance and the growing participation of women in the labour force.  Those changes, accompanied by increasing demand for support services -– as well as care for children, people with disabilities, and the elderly infirm –- put gender issues and equality of opportunity for men and women at the forefront of the national and European political agendas.

The third factor, he said, was the persistence of high and long-term unemployment, low participation rate in the work force, especially among women and older workers, and a trend towards earlier retirement.  Finally, the increasing number of households, the decline in their average size, and the growing number of households with no working members, had made it more difficult to provide care and support from within the family.

He noted that an ageing population meant spending more on essentially traditional areas of social security, notably pensions and health insurance.  Also, while feminization of the labour market was in itself a positive development, it pushed a traditional objective further beyond reach.  In addition, the traditional welfare State did not adequately meet the new needs of combining family life, work and training.  And there was a significantly higher risk of social exclusion among those without adequate schooling.

Exclusion was not caused by advanced age, accidents, illness, or even a temporary fluctuation in the business cycle, he said.  The main cause lay in new work requirements that turned productive people into disabled people.  In such cases, the traditional welfare State offered benefits, but no way out.  It provided material comfort, but offered no new opportunities.  In short, more effort was required for traditional social ambitions to coexist with new challenges.

Responses to Questions

DALMER HOSKINS, Secretary-General of the International Social Security Association,  responding to a question raised this morning on the implication of the review by the International Labour Organization (ILO) of their Convention 102 on social security standards, said that subject was one of competing interests and contested terrain.  The question being asked was why would the ILO want to raise a debate about social security standards at a time when there was already so much debate about it. 

The ILO, he continued, had a responsibility to review one of its most important core activities.  Convention 102 was written some 50 years ago.  It reflected neither the massive numbers of women who had joined the labour market since then, nor the migrant, casual and contract workers who had joined the market since then as well.  Of course it was now time to look at that document.  Was there a risk that opening up 102 would result in lower standards?  He hoped not.  He wanted the process to result in modernization.

Responding to another question raised this morning on whether the process to inform the public of their social security rights was a top-down or bottom-up process, he said unfortunately that process was very much the former.  People running social security these days prided themselves on being good managers.  The revolution in technology, however, meant that the public had more information available to it, and was therefore more demanding.  People no longer had to stand in line.  Modernization, nevertheless, could present a new problem –- exclusion.  Some populations would not follow the modernization process, while others would not even have access to it.

Responding to another question raised this morning on private versus public sector involvement, he said it was not a question of one or the other.  He strongly felt that the future would be a mixture of both systems.  Countries such as Finland and Switzerland, which had successful mixed systems, had to be asked how their systems worked so effectively.  There was also a need for the introduction of frameworks that ensured that people who paid money to either public or private sectors got something back.

ERNESTO MURRO, head of the workers’ representation team on the board of the National Social Security Bank of Uruguay, responding to remarks this morning by another panellist, stressed the need to review ILO Convention 102.  Only seven Latin American countries had ratified the Convention and far fewer were actually implementing it -- a serious state of affairs as the commemoration of its fiftieth anniversary approached.

Regarding measures to compensate the most excluded members of the work force, he said that those with the highest incomes and best education had the greatest abilities.  Much less was known about how to reach those in greater need.  While it was true that mistakes had been made in administering public social security systems, critical opinions of private systems should not be confused with the urgent, absolute necessity to implement good measures.

Responding to comments this morning by the representative of Chile, he said he disagreed that the Panel was not well-balanced.  It included the secretary-general of a major social security organization (the International Social Security Association) and two Ministers.  While certain accomplishments had been made by Chile’s social security system, there were problems with administrative costs.  On the other hand, although historical mistakes had been made in public social security systems, there was no need to throw the baby out with the bath water.  Principles established under ILO Convention 102 and international law were worth upholding.

ALEJANDRO BONILLA-GARCIA of the ILO, responding further to the question on the review of Convention 102, said that there was no process of revision of that Convention on social security underway.  The Convention was adopted in

1952.  What had begun was a general discussion about goals, limits and alternatives in the field of social protection for employers, workers and government involved with the ILO.  All three should assume their responsibility to review the elements involved in social security protection.  Those elements would be discussed in June 2002 in Geneva.  It was not so much a case of the standards needing to be revised, but more one of the will of the various players in the social security arena to implement those standards and make them a part of their own systems.

Ms. TAYLOR, Special Adviser to the Minister of Social Development of South Africa, told the representative of Sweden that rather than seeking an expanded budget or outside revenues for financing social protection, her country’s Government sought more efficient and effective uses of resources within the country.

She said States could examine the extent to which budgetary allocations were addressing gender and other issues.  South Africa’s women’s programme tried to mainstream women’s issues and to ensure that women-sensitive and child-sensitive agendas were addressed.  While that remained a vexed question owing to competing claims, it was essential to prioritize the needs of women and children, who were on the receiving end of poverty.

Responding to the representative of India, she said that social protection in South Africa typically included social insurance and social assistance.  Ways were sought to address deprivation and expand responses within a social protection framework.

Regarding non-monetized economies with large informal sectors, she acknowledged the difficulty of designing systems for the informal sector, saying there were no glib answers for societies with unique characteristics and a specific history, culture and experience.  Nevertheless, there must be provisions that people could fall back on. 

She said South Africa was grappling with mass poverty among the majority of its people, who lived in the rural areas.  It was essential to address the

continuing private system/public system dilemma.  While their services might not differ greatly in quality, the pricing of those services, especially in health care, continued to be controversial.  There must be an interface between the two types of systems.

Mr. VANDENBROUKE of Belgium, responding to a question, said he believed the definition of social protection given in Secretary-General’s report was perfect and very wide.

Responding to a question on whether regulation fundamentally contradicted the search for profits, he said he thought that differed from sector to sector.  In healthcare, for example, it was difficult to leave basic insurance to the private sector.  A profit-driven private sector could only be functional in the margins of the healthcare.  That story differed, however, with pensions.  People today were looking for something more than even the decent pensions his public system in Belgium could offer.  One should therefore not be driven by ideology but by economic common sense.  Common sense dictated that the private sector could only marginally manage health insurance.

On globalization, he said it was clear that there were situations where there were disruptive capital flows or domestic problems caused by the rapid opening up of capital markets.  His feeling was that one should not blame the general notion of globalization –- that was much too vague.  The responsibility lay with the lack of international regulation of financial markets and perhaps with the inadequate opening up of markets and a lack of related institutions.  It was necessary to discuss what kind of regulations were needed to reap the benefits of trade and capital mobility.

Mr. MURRO, head of the workers representation on the board of the National Social Security Bank of Uruguay, said that in Latin America and Europe, particular sectors developed particular systems.  In Europe taxation was based on land productivity combined with a contributory input based on the size of the holding and the labour intensity of the operation.

He told the representative of Sweden that some obligatory social security schemes discriminated against women.  Despite the greater life expectancy of women, they often still received a smaller pension when they retired.  That was the hard reality in Uruguay.

It was true that there was a decline in the level of protection of workers, he told the representative of Cuba.  That was a clear trend.  Although the right to social security was tied to contributions, it had become more difficult to become eligible while social security benefits were declining.

Mr. HOSKINS of the International Social Security Organization reiterated that there was an absolute need to monitor and evaluate outcomes.  The importance of that, however, seemed to have been missed by many participants today.  Defined outcomes were necessary if an organization such as his was to sit down with a Ministry of Finance and say “here are the results of our social security projects”.  Outcomes and bench-marks showed how well a job was being done.  Unless they were used “we are vulnerable to cuts in public budgets”, he explained.

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