Interview: How Can Basic Income and Health Care Prevent the Next Crisis?

“Social protection is not about charity.”

Global Citizen – By Joe McCarthy

Poverty has skyrocketed worldwide because of the economic disruptions caused by the COVID-19 pandemic.

But poverty was pervasive before 2020, when billions of people around the world lacked basic human rights such as access to clean water, sanitation, food, shelter, and education.

In fact, the scale of poverty and its daily deprivations made the pandemic worse. The people most likely to die and suffer severe illness were those without access to steady income, reliable health care, and other social protections. Meanwhile, ongoing vaccine inequity emerged between wealthy nations and poor countries, widening global inequalities.

As countries seek to contain COVID-19, a return to the way things were is not an option, according to Olivier De Schutter, the UN Special Rapporteur on Extreme Poverty and Human Rights. Instead, countries must guarantee basic living conditions.

“We see that when social protection remains weak, the poorest pay the price,” De Schutter said. “Due to the COVID-19 pandemic and economic slowdown, an estimated 115 million additional people may have fallen into extreme poverty in 2020, and 35 million more may follow this year.

“This could have been avoided with strong social protection mechanisms, which shows that if governments maintain low levels of social support, societies are not ready to cushion shocks,” he added. “They actually run into a stone wall.”

De Schutter recently spoke to Global Citizen about the global effort to achieve a “social protection floor,” what people get wrong about welfare, and how eliminating poverty helps all of us.

Global Citizen: What do you mean by a “social protection floor”? What rights would be guaranteed by this floor?

Olivier De Schutter: From cradle to grave, people should be guaranteed access to essential health care and basic income security. This is the basic idea behind social protection floors, a set of basic social security guarantees defined at national level, to make sure that everybody can reach what is considered as necessary in a particular society.  We are talking about health care, child care, education, and basic income security for people who have to stop working due to old age, sickness, maternity, unemployment, or disability.

Why is it important to create this floor and what do we risk by allowing large swaths of the human population to exist outside of these protections?

Everybody in his or her lifetime is going through phases when support is needed. It can be an accident, a pregnancy, a bankruptcy, or simply the need to pay for school fees. Societies also have their ups and downs and go through severe crises such as the current COVID-19 pandemic or the climate crisis. It is therefore a necessity to envision solidarity mechanisms at national and international levels to bumper the vicissitudes of life and to protect social resilience.

This is precisely why all [UN member] states have committed to guarantee income security throughout people’s lives. Yet it is far from a reality. Even before the pandemic, 61% of the global workforce was still made up of informal workers or workers in precarious forms of employment, with little or no access to social protection. Fifty-five percent of the world’s population, 4 billion people, had no social protection whatsoever, and an additional 26% were covered only against certain risks.

We see that social protection remains weak and as a result, the poorest pay the price. Due to the COVID-19 pandemic and economic slowdown, an estimated 115 million additional people may have fallen into extreme poverty in 2020, and 35 million more may follow this year. This could have been avoided with strong social protection mechanisms, which shows that if governments maintain low levels of social support, societies are not ready to cushion shocks. They actually run into a stone wall.

Why has it been so hard to secure funding for social protections in low-income countries? And how can well-funded social protection generate wealth and broader prosperity, leading to a virtuous cycle that creates more tax revenue?

In addition to the lack of sufficient political will, a range of causes explain the lack of progress in the realization of the right to social security in low-income countries. The prevalence of informal work means that only a very small proportion of the workforce is contributing to social schemes.

Moreover, large gaps in population registries also make it challenging for social security and tax administrations to mobilize domestic resources in order to finance and implement social protection programmes.

It is now time for policy-makers to consider social protection as an investment to strengthen society rather than a cost. Social protection allows poor countries to gradually create the conditions for an inclusive type of growth, and thus in turn to better mobilise domestic resources for the financing of social protection. History shows that social protection helps stabilise the economy in times of economic downturn because it raises consumption levels of low-income households. It also has significant multiplier effects: it leads to increased school enrolment and success, improved health, and higher participation to the labour market, thus benefiting local economies at large.

What’s the thinking behind a global social protection fund? And why do wealthier nations need to step up and provide the primary support for this fund?

The Global Fund for Social Protection is a new financial mechanism proposal that would increase international support to low-income countries, thus helping them both to establish and maintain social protection schemes for the benefit of their population.

It is estimated that low-income countries would need 79 billion USD per year, including 41 billion USD for health care in order to fund social protection for their 711 million inhabitants. This is a huge amount for low-income countries, representing 15.9% of their GDP. However, if we take a look at the broad picture, this amount is actually affordable for the international community. This is just half the total level of official development assistance (ODA) provided by OECD countries in 2020.

Once it will be set up, the GFSP will help low-income countries to increase mobilisation of domestic resources and redistribute wealth nationally, gradually making international support redundant. In the longer run, the fund will act as a guarantee so that the countries involved can maintain their social programs in times of shocks.