What are policies to achieve social pension security extension of coverage

Outside the industrialized world, policy-makers have found few remedies for the lack of social protection. This may be because existing social protection policies are inappropriate. It may be because insufficient efforts have been made to implement these policies. Or it may be because the lack of social protection is related to much wider economic, social and political problems.

If policy-makers define the problem too narrowly, their chances of finding feasible solutions may be greatly reduced. It is therefore necessary to give due consideration to the wider context in which public pension security systems have to operate.

           

The first point to consider is the nature of a country’s governance. Among market economies, experience shows that, with few exceptions, there tends to be a correlation between the level of democracy and the adequacy of social protection. For the most vulnerable members of the population to have their needs for health care and basic income security met, it is vital that they should at least be able to make their voices heard. In the long run a democracy which does not ensure adequate social protection is unlikely to survive.

The second issue which must be considered is the macroeconomic situation and the state of the labour market. The scope of social protection is likely to extend naturally (the means by which it may do so are considered below) if and only if the labour market is strong. So long as demand for labour remains weak, few people will obtain decent jobs and most will depend on ill-paid and unprotected work in the informal economy. Conversely, if the demand for labour increases, more workers may look forward to better-paid and generally better-protected employment in the formal economy. However, the informal economy in its many manifestations  is hardly likely to disappear either naturally or quickly, and it is of the greatest importance that governments work towards social protection policies, which must be both innovative and imaginative, that will promote improved conditions for such workers.

A third point is that excessive demands should not be placed on public pension security systems. They are no substitute for adequate macroeconomic, regional education and housing policies and they cannot be expected to achieve a fair distribution of income on their own. Many public pension security systems redistribute from the rich to the poor, but this is not their main objective. The prime objective is to provide security for people when they are sick, disabled, unemployed, retired, etc.

Schemes which represent reasonable value for money for all the insured have the best chance in practice of achieving high compliance rates, that is, of ensuring that legislation providing for wide coverage is actually implemented. Public pension or social security is just part albeit an important part of the broader package of measures necessary to reduce poverty and improve income distribution.

Finally, public confidence in social security systems is crucial if they are to attain and maintain wide coverage. This requires not only efficient administration and high standards of financial probity, but also a strong degree of commitment by the government itself to ensure the long-run health of the system. Where this confidence is lacking, people will always find ways to avoid contributing, even though their need for social protection may be very high.