Social protection - Developing countries should invest US$1.2 trillion to guarantee basic health

A new study by the International Labour Organisation (ILO) has recommended that developing countries invest roughly US$1.2 trillion – on average 3.8 per cent of their gross domestic product (GDP), to guarantee at least basic income security and access to essential health care for all in 2020 alone.

It states that closing the coverage gap in the sector, worsened by COVID-19, will require additional sources of financing.

The study “Financing Gaps in Social Protection: Global Estimate and Strategies for Developing Countries in Light of the COVID-19 Crisis and Beyond”, revealed that since the onset of the COVID-19 pandemic,  the social protection financing gap has increased by approximately 30 per cent.

“This is the result of the increased need for healthcare services and income security for workers who lost their jobs during the lockdown and the reduction of GDP caused by the crisis.

“The situation is, particularly, dire in low-income countries who would need to spend nearly 16 per cent of their GDP to close the gap – around US$80 billion”, it stated.  

Regionally, the relative burden of closing the gap is particularly high in Central and Western Asia, Northern Africa and Sub-Saharan Africa (between 8 per cent and 9 per cent of their GDP).
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Pre COVID

It noted that even before the COVID-19 crisis, the global community was failing to live up to the social protection legal and policy commitments it had made in the wake of the last global catastrophe – the 2008 financial crisis.

Therefore, “Closing the annual financing gap requires international resources based on global solidarity”, the ILO Director of Social Protection Department, Ms Shahrashoub Razavi.  

Currently, only 45 per cent of the global population is effectively covered by at least one social protection benefit. The remaining population – more than 4 billion people – is completely unprotected.

National and international measures to reduce the economic impact of the COVID-19 crisis have provided short-term financing assistance.

Some countries have sought innovative sources to increase the fiscal space for extending social protection, like taxes on the trade of large tech companies, the unitary taxation of multinational companies, taxes on financial transactions or airline tickets.

The study added that with austerity measures already emerging even with the crisis ongoing, these efforts are more pressing than ever.

Ms Razavi emphasised that domestic resources were not nearly enough and so closing the annual financing gap required international resources based on global solidarity.

The ILO states that any mobilisation at the international level should complement national efforts.

COVID-19 Impact report

Meanwhile, the ILO will publish the sixth edition of its report that tracks the impact of the COVID-19 pandemic on workers and businesses worldwide.

The ‘ILO Monitor sixth edition: COVID-19 and the World of Work’ will be published on Wednesday September 23.

The latest Monitor looks at labour income losses and the effectiveness of fiscal stimulus packages introduced to lessen the impact of the pandemic on labour markets. It also includes revised estimates on the extent of disruption to labour markets in 2020, and the implications for policies in the remainder of the year.