Our guest blogger, Michael Cichon, is the former Director of the ILO’s Social Security Department and led the creation of the Social Protection Floor. He is still actively engaged in providing advice on social security globally.
At the beginning of the second decade of the 21st century, we still have more than half the global population in misery, in other words in abject poverty and severe social insecurity. We have known and shown for decades that well run national social protection systems can solve most of the problem. And – on a global scale – they are not even prohibitively expensive. Depending on the poverty line we want to lift all people up to we would need somewhere between 2 and 3 per cent of global GDP to finance basic social protection for all the world’s population living in poverty. That we cannot achieve that level of global solidarity, remains a disgrace. If we don’t start to share seriously and soon, we will have to build fences and walls around our islands of prosperity that are so high, that hundreds of millions of people will die on the less lucky side and we on the lucky side will lose what remains of our humanity.
But how do we start sharing?
One way is to help set up effective social protection systems and co-finance them for as long as necessary in countries that – at the moment – cannot afford to do so on their own. The Global Coalition for Social Protection Floors (GCSPF) estimates that there are presently only about 10-12 LDC countries which would have to spend more than 10 per cent of their GDP to close their Social Protection Floor (SPF) gap and probably could not mobilise the resources to do so on their own anytime soon. If the global community were to help, on a transitional basis, to close the SPF gap in these countries by covering 50 per cent of the costs, the estimated global annual cost would be in the order of US$ 10-15 billion. Supporting only the poorest five countries with 50 per cent of the cost of the floor would amount to roughly US$ 2-3 billion.
But how would we finance these investments in more global social justice?
An old idea resurfaced when the ILO celebrated its 100th anniversary this year by staging a social protection week at the end of last November: The Global Fund for Social Protection. The ILO first explored the idea (then called Global Social Trust) in 2002. A major feasibility study was undertaken, the ILO’s Governing Body authorised the Social Security Department in November 2002 to “establish a Global Social Trust pilot project”, bringing together trade union funding from Luxembourg and the welfare administration of a district in Ghana. The pilot worked, and met with a lot of enthusiasm on both sides of the twinning arrangement. However, the development of a strategy to roll-out the pilot into a major global initiative had to wait until the concept of a Social Protection Floor, a conceptual benchmark for global support on the national level, was developed and established in global and national social protection strategies. That has now been achieved and we can return to the Global Fund as a funding mechanism for global social solidarity.
The idea of a Global Fund was, in 2012, further developed by former UN Special Rapporteurs Olivier de Schutter and Magdalena Sepúlveda. It was supposed to have two branches, a subsidy “facility branch” and a re-insurance branch, and be financed by overseas development assistance (ODA) resources. So far, there are no “political takers” yet in sight to come forward with the necessary funding for the Fund.
So how could the Fund be kick-started?
We could try again to convince governments to set up the fund. It was done before in case of the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM). That fund disburses presently around US$ 4 billion a year. We would need a fund of that size or preferably about double the size. At a time where national egoism, or worse nationalism, and social indifference is on the rise and multilateralism seems to lose ground, the appetite for another big fund is certainly limited.
The money we would need sounds big. But it is not. We would need roughly 1 per cent of the income of the World’s 2,000 billionaires to make up one-third of that amount, and we would need 1 per cent of the income of about 16 million people like us (the relationship is a scandal in itself, how did we let this happen…?) to make up the other two thirds.
Again, that sounds big. But again, it is not. Thirty-five million people in Germany and Britain alone insure voluntarily against the breakdown of their cars by joining an automobile club. Maybe we can find half of that number in the privileged part of the world to fight the break-down of global social justice. Of course, it would be better to finance it from global taxation. A Tobin tax would be the ideal vehicle to fuel the Fund. But, until that happens hell might well have frozen over. James Tobin started to think about the famous tax about 50 years ago and we still don’t have it on a global scale.
Maybe we should simply not wait for the better to beat the good. Maybe we can kick the fund off by crowdfunding, at least among those of us who are sufficiently well-off and who are no longer young and fit enough to take the battle for global income sharing and justice to the streets.
I have a proposal to make. There may be better ones, but this is what comes to mind here.
We could challenge the Jeff Bezoses and Mark Zuckerbergs of this world – and their comrades-in-money – and tell them: If you put down 1 per cent of your income (i.e. 1 per cent of the money, people like us gave to you so generously) for a serious fight against global poverty (for example to start with by co-financing simple and adequate universal pensions that raise the standard of living of entire families in the poorest countries), we will do likewise. We can start small and probably set up an organisation by 2025. The principle is simple: “Gates-for-all by the year 2025”. Why should funding global transfers be a privilege of Bill and Melinda Gates and other rich people? It would be a stop-gap measure until we get a buy-in by major governments and a proper and progressive global taxation system.
Reality shows that such funding – in principle – can be done. At least we have a pilot model. A few dozen UN staff in Geneva created about 40 years ago the 1 per cent for Development Fund, that finances small development projects. The idea was: if governments do not live up to their commitment to spend 1 per cent on ODA, we can! In the 40 years of its existence, the Fund has successfully financed more than 800 small scale development projects. A few years ago Kofi Annan., whose individual initiative started the GFATM, said about the small 1 per cent Fund in Geneva: “The 1% for Development Fund demonstrates that every one of us can contribute to overcoming extreme poverty and supporting the Sustainable Development Goals. By donating 1% of their income and becoming directly involved in the selection of projects, its members have shown that each of us can make a difference.”
What then are we waiting for?
 See Bierbaum, M. et al. 2017. Social Protection Floor Index – Update and Country Studies, FES Berlin
 For more information see: De Schutter, O. & Sepúlveda, M. (2012) Underwriting the Poor: A Global Fund for Social Protection
 See http://www.onepercentfund.net/about/
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PUBLICATION: How to Finance Inclusive Social Protection