# EUR-Lex - 52012DC0446 - EN

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# 52012DC0446

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Social Protection in European Union Development Cooperation /* COM/2012/0446 final */**

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COMMUNICATION FROM THE COMMISSION TO
THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL
COMMITTEE AND THE COMMITTEE OF THE REGIONS

Social Protection in European Union
Development Cooperation

1.           Why Is Social Protection
Important?

Persistent poverty and increasing vulnerability

The Agenda for Change[1] sets out EU policy on future
development cooperation. It calls, inter alia, for a more comprehensive
approach to human development, supporting increased access to quality health
and education services and enhanced social protection in support of inclusive
growth characterised by "people's ability to participate in and benefit
from wealth and job creation".

In recent years the world economy has seen impressive growth in some
developing countries, notably in Asia. Five large-population countries have
reached middle income country (MIC) status. Yet two thirds of the world's 1.5
billion poorest people now live in middle-income countries. Furthermore,
globalization has more widely been associated with increased vulnerability,
disruption of traditional solidarity systems and, in some cases, increased
social polarisation. Large numbers of casual,
informal and migrant workers have no access to employment-related social
insurance or any real form of social protection.

While the first Millennium Development Goal
(MDG) target of halving the proportion of people living in extreme poverty is
likely to be attained, many households remain vulnerable, just above the
extreme poverty line.[2]
Where poverty persists, it is increasingly associated with exclusion and
marginalisation as a result of specific factors such as geographical isolation,
disability, gender or ethnicity. In lower income countries (LICs), in
particular, ill health and disease, inadequate nutrition, especially for
children, lack of adequate skills, particularly for young people, scarcity of resources
and repeated exposure to severe livelihood shocks prevent millions of poor
people from participating effectively in the labour market or as entrepreneurs
in order to escape from poverty. The global food, fuel
and financial crises have exacerbated these impacts on the livelihood and employment
quality and security of the poor.

Social protection in support of inclusive development

Social protection can play a key role in reducing poverty and
vulnerability. By increasing equity – e.g. through social transfers and
increased access to basic social services – and providing protection against
risk, social protection can support poverty reduction and inclusive growth, as
well as supporting social cohesion and stability. However, the very different
profiles of developing economies and the high levels of informality in their labour
markets present a very different setting from that in which most of the
existing social protection systems in the developed world were established,
calling for innovative and tailor-made solutions based on country-specific
needs and priorities.

Social protection in future EU development cooperation

The
Council of the European Union, the European Parliament, international
organisations and civil society have called on the Commission to prepare a
proposal on social protection in EU development cooperation.[3] The 2010 European Report on Development calls for social protection
to be made an integral part of EU development policy.[4] In 2011, the Commission
launched a consultation process, which confirmed the relevance and timeliness
of developing a policy framework for future EU support to social protection.

This Communication seeks to explain the role of social protection in
underpinning inclusive and sustainable development and the role of EU
development cooperation in supporting the strengthening of social protection
policies and systems.

2.           What is Social Protection
and what can it do?

Defining Social Protection

The definitions
of social protection used internationally vary widely. Some approaches are
strongly normative, based on the concept of social protection as a right as
stipulated in UN instruments, including International Labour Organisation (ILO)
conventions, while others focus more on the functions of social protection in
poverty reduction and economic growth. Some approaches to social protection
emphasise its functions in helping poor people escape from poverty, while
others emphasise its role in promoting social inclusion, social justice and assuring
income security, quality education and healthcare for all. Social protection
may be broadly defined therefore as policies and actions that:

·
enhance the capacity of all people, but notably
poor and vulnerable groups, to escape from poverty, or avoid falling into
poverty, and better manage risks and shocks

and

·
aim at providing a higher level of social
security through income security and access to essential services (in
particular, health and education) throughout active and inactive periods and
periods of need throughout the life-cycle.

The obligation for governments to provide
social protection coverage stems from the right to social security enshrined in
the 1948 Universal Declaration of Human Rights. Social security standards are
set out by the ILO, in particular in the Social Security (Minimum Standards)
Convention of 1952 (No. 102), which has been fully or partially ratified by
forty-seven, mainly high-income, countries.

How Social Protection supports inclusive
development

Social protection has the potential to promote inclusive
development in a number of ways:

·
Social protection increases access
to public services, improving the health, education and nutrition of working
people and their children, supporting the participation of the poor in the
economy and raising labour productivity.

·
Social protection can provide tools for risk
management for individuals and their assets, enabling them to defend
their long-term income-generating potential as well as make investments.

·
Social protection promotes income
stability and can stimulate demand for local goods and services, not
least by acting as a macroeconomic stabilizer in times of
economic turbulence.

·
Social protection reduces inequality,
which both contributes to inclusive and sustainable growth and can help strengthen
the compact between citizens and the state and promotes social
inclusion, cohesion and greater accountability.

·
Social protection can provide inter-generational
equity by distributing social benefits over the life-cycle from the
currently-productive generation to children, young people and the elderly. This
contributes to security, stability in society and predictability for the individual.

The role of social protection policies and
measures in supporting inclusive growth and poverty reduction at the national
level is reflected in their contribution to the attainment of the MDGs.

Social Protection in support of the MDGs MDG 1: Extreme poverty and hunger              The Child Support Grant in South Africa has contributed to reducing the poverty gap by 47 percent.[5]              MDGs 2 and 3: Better education and gender outcomes               Between 1996 and 2002/3 girls' net primary enrolment in Bangladesh increased from 48% to 86%. Many researchers attribute this in part to the stipend programme for girls' education, which was supported by EU funding.[6]                MDGs 4, 5 and 6: Improved health care and reduced illness      The Oportunidades programme in Mexico combined cash transfers and free health services with improvements in supply of health services, leading to a 17% decline in rural infant mortality in Mexico over a three year period.[7]

3.           Social protection in the
European Union

A common commitment but different
approaches

Social protection lies at the heart of the
European social model. Social protection policy is largely the responsibility
of individual Member States in accordance with the principle of subsidiarity.
However, at the EU level the 'Open Method of Coordination', a voluntary process for political cooperation based on
agreeing common
objectives and common
indicators, has been established. Social
protection systems vary widely across the Union  However, EU Member States are all
in principle committed to providing universal access to social protection against
the major lifecycle risks, in line with the guarantee contained in Article 34
of the Charter of Fundamental Rights of the European Union.

European social protection systems have
provided important buffers against risk and income poverty, as well as limiting
inequality in Europe, but persistent economic difficulties due to the financial
crisis have raised difficult questions about their affordability and
efficiency. In response, the EU is seeking to develop new ways of delivering
high levels of social protection at lower cost, including greater emphasis on activating
young and elderly people. ‘Europe 2020’, the EU’s strategy for smart, sustainable
and inclusive growth, was launched in 2010 with targets for increasing
employment and reducing poverty and social exclusion. These are the subject of
detailed monitoring and analysis through the European Semester, which was
initiated in 2011 in order to enhance coordination of policies for recovery and
growth.

4.           Social protection in
Developing Economies

The economies of developing countries are
often characterised by high levels of informality, a low income tax base, relatively
low budget allocations for social protection and highly segmented social
insurance systems that generally benefit only a small minority in the formal
sector. On average, developing countries spend around a quarter of that spent on
social protection in the advanced economies. Consequently only about 20% of the
world’s working-age population has access to comprehensive social protection.

In MICs, the challenges are to
broaden the coverage and to improve efficiency.

In many middle-income countries, the
elements of a modern social protection system have already been established
with some components of social insurance now in place. However, the coverage –
particularly of contributory schemes - is generally low so that a relatively
small segment of the population benefits, mainly those that work in the formal economy.
In these contexts, the main challenge is to extend coverage, in particular to those
in the informal economy.

MICs also tend to operate a host of
discrete social assistance programmes designed to reach specific groups, such
as the poor, and increase their access to basic services. The effectiveness of
these schemes varies widely, although evidence from both Asia and Latin America
suggests that well-designed programmes can be highly effective in reaching the
poor and other vulnerable groups.

In addition, governments have commonly used
energy subsidies and/or price controls as a means of providing notional income
protection to parts of the population. However, such policies have proven
costly, regressive and inefficient.

In LICs, funding and institutional
capacity are the main constraints

In low-income countries, provision of
social protection is often even more constrained by the relative lack of
resources and, critically, the weakness of public institutions. In a context of
limited industrialisation and large rural populations, most citizens remain
uncovered by organised methods of social protection and are vulnerable to
shocks, although family and other informal networks can provide partial
compensation. Social transfer programmes – whether targeted or untargeted, conditional
or unconditional – remain the dominant form of social protection with donors
often playing an important role in their design and funding. Such programmes are
often fragmented and many have failed to develop into sustainable, government-owned
systems. Consequently, outright exclusion and large inequality in access to
social protection remain major features.

The common challenge: sustainable
financing, extending coverage, building capacity

Despite these limitations, an important
shift in attitudes has been taking place. Where economies have grown, the
demand for social protection from citizens has also increased and governments
are under pressure to respond. Yet the challenge for them is both to design
social protection programmes that have better coverage – and hence address equity
issues - but also to operate them with greater efficiency and in ways that are
fiscally feasible and sustainable. Further, how governments can respond depends
in turn not only on financing – and the ability to raise tax revenues or
mobilise contributions rather than rely on debt or donor finance – but also on
the institutional capacity of a country and the ease with which it can be deployed
for social protection.

A renewed commitment by the
international community

In response to these challenges there has
been a renewed impetus to reinforce the international community's commitment to
promoting social protection. This is reflected in the Social Protection
Floors (SPF) Initiative, developed under ILO leadership, which was strongly
supported at the 2011 International Labour Conference (ILC) and at the 2011 and
2012 G20 Summits. In 2012 G20 leaders also agreed to assist LICs in capacity
building for implementing national SPFs through policy coherence, coordination,
cooperation and knowledge sharing. The 'Recommendation Concerning National
Floors of Social Protection', which provides guidance on the progressive
implementation of social protection floors as a fundamental element of
inclusive national social security systems, was adopted at the 2012 ILC.

While the SPF is a global initiative and is
based on a set of principles, which are expressed as guarantees, it is not a
one-size fits all approach. The design and implementation of SPFs is a matter
for each country in line with national-specific institutional structures,
economic constraints, political dynamics and social aspirations.

Social Protection Floors Social protection floors comprise a basic set of social guarantees for all (horizontal dimension) and the gradual implementation of higher standards (vertical dimension) as an integrated set of social policies designed to guarantee income security and access to essential social services for all, paying particular attention to vulnerable groups and protecting and empowering people across the life cycle.[8] The Social Protection Floors Recommendation adopted at the 2012 ILC states that social protection floors should comprise at least the following basic social security guarantees: (a) access to a nationally defined set of goods and services, constituting essential healthcare, including maternity care, that meets the criteria of availability, accessibility, acceptability and quality; (b) basic income security for children, at least to a nationally defined minimum level, providing access to nutrition, education, care and any other necessary goods and services; (c) basic income security, at least to a nationally defined minimum level, for persons in active age who are unable to earn sufficient income, in particular in cases of sickness, unemployment, maternity and disability; and (d) basic income security, at least to a nationally defined minimum level, for older persons.[9]

5.           The future direction of EU
development cooperation in support of social protection in partner countries.

Equity, social inclusion and social
cohesion

The goal of EU development cooperation in
supporting social protection is to improve equity and efficiency in provision,
while supporting social inclusion and cohesion, as the essential underpinnings
of inclusive, sustainable growth and poverty reduction. These goals spring
naturally from the fundamental values of the European Union.

Placing social protection at the
centre of dialogue on national development strategies

The EU seeks to include social protection
in its policy dialogues with partner countries on their national development
strategies and should further promote and assist the development of
context-specific social protection systems that are efficient, equitable and
sustainable.

Policy dialogues with partner governments should
ensure that social protection systems are underpinned by principles that aim to
achieve equal and universal access to social protection throughout people's
lives, with particular attention to the most vulnerable and disadvantaged
people, such as children and persons with disabilities.

Supporting national policies and programmes

The EU should support the development of nationally-owned
social protection policies and programmes, including social protection
floors, while seeking to promote good practice in
policy formulation and the design and development of social protection systems.
Good practice might typically include moves to rationalise and unify systems to
improve efficiency and develop a better basis for establishing wider and more
effective coverage, including through moving from selective, short-term safety nets to comprehensive systems. Policies
should reflect the specific needs and priorities of individual partner
countries.

Revenue reform for fiscal space

Effective and sustainable social protection
should ultimately be based on internal rather than international wealth redistribution.
The Busan Partnership for Effective Development Cooperation[10] calls for partner governments' own revenues to play a greater role
in financing development needs in order to increase poverty reduction and
progress towards achieving the MDGs, while strengthening sustainability through
reduced dependency on foreign aid. In line with the 2010 Communication on Tax
and Development[11]
and the principles of good governance in the area of taxation, the EU will
support measures to develop effective, efficient, fair and sustainable tax
systems, according to the capacities of individual partner countries, in order
to increase fiscal space to fund social protection. This may include capacity-building
for tax administration and revenue reform to improve the tax base as well as the
replacement of regressive subsidies with more effective social protection
measures.

Capacity-building for strong
institutions

Establishing an appropriate legal and
institutional framework is a key challenge for the provision of effective and
efficient social protection coverage. The EU should continue to support partner
countries through technical cooperation, to set up the strategic, policy, legal
and institutional framework, based on their local analysis and priorities. The
EU should also continue to support institutional capacity-building at all
levels (national, provincial, local; governmental and non-governmental) in
order to develop and strengthen the administrative and implementation
capacities of governments, implementing agencies, social partners and other non
state actors.

Social protection systems may suffer from
high levels of leakage. Consequently, support will also have to address issues
of good governance and public finance management, not least in order to reduce
fraud, malpractice and waste, as well as promoting accountability.

EU added value in technical cooperation

The EU has accumulated a wealth of
experience and approaches in the field of social protection. The differences
between EU Member States in social protection financing, levels of coverage,
administration and delivery systems offer a wide range of experiences and
knowledge which can provide a strong basis for capacity building and policy
advice in support of partner countries. Where relevant, the EU should also facilitate
south-south cooperation, sharing of experiences and research.

The Commission will make greater use of
existing tools, such as TAIEX, and develop new tools to enable rapid
demand-driven deployment of expert practitioners both from Europe and from
relevant third countries within a south-south or triangular cooperation
paradigm.

Support for job creation and
employment

Effective social protection should also
include or be closely associated with measures that enable beneficiaries to
participate in productive economic activity and employment. The essential role
of productive employment and decent work in reducing poverty is clearly set out
in the first MDG, as well as the Commission Staff Working Document on Promoting
Employment through EU Development Cooperation.[12]

The EU should support national governments
to develop employment programmes, job creation schemes, and support for
entrepreneurship. It should also support social dialogue and labour standards
in line with the Decent Work Agenda[13]
and the provision of social protection in the context of highly informal labour
markets, including innovative approaches such as micro-insurance schemes. The
EU should also support national programmes to improve the employment
opportunities of vulnerable and marginalised groups, such as persons with
disabilities.

Bringing
in civil society and the private sector

While governments
have the main responsibility for social protection policy and provision, there
are some situations in which social protection schemes can best be delivered
through public-private partnerships. In supporting the development of social protection
systems the EU should recognise
the important role played by private sector and non-governmental service
providers. The
EU's initiative on Corporate Social Responsibility can support the private
sector in developing countries to implement relevant international guidelines
in order to achieve more inclusive and sustainable growth and further
development.

Civil society and the social partners
should be empowered and encouraged to partner with the state in developing and
implementing social protection systems. Their participation can help promote
efficiency in provision as well as wider consultation and inclusion. They can
play a key role as advocates for social protection as well as empowering
communities and individuals, in particular the disadvantaged and excluded,
through raising awareness and improving information. In some instances, they
can also help in monitoring and evaluating social protection schemes.

Support for Transformative Social
Protection

Transformative approaches extend the
concept of social protection to include 'areas such as equity, empowerment
and economic, social and cultural rights, rather than confining the scope of
social protection to targeted income and consumption transfers'[14]. This aligns
well with the values that underpin the development of social protection within
the EU and EU development cooperation should therefore support such approaches.
There has, however, been little research into their effectiveness and the EU should
therefore consider support for operational research which documents good
practice and generates evidence on the impacts of transformative social
protection in order to build a firm knowledge base for action.

Gender
in Social Protection

'Women and men face
different risks and vulnerabilities, some specific to their gender and others
exacerbated by gender inequalities and discrimination.'[15] To
ensure that men and women benefit equally, social protection systems must
address women's life-cycle risks and the burden of care that they bear, as well
as the impediments to women's access to work. The EU should ensure that
gender-related concerns are addressed in social protection policy and programme
design.

6.           Development Cooperation
Programming and Modalities

All aid modalities are relevant for
development support for social protection, depending on the context and the
objective of the support. In line with the Agenda for Change, social
protection may be selected as one of the sectors for cooperation in individual
country or regional programmes or feature as a dimension in other sector
programmes (e.g. employment, health, education, food security, agriculture and private
sector development, etc). Social protection may also be supported through
thematic programmes, which should complement the geographical programmes.

Sector approaches[16] can be a particularly suitable
modality for supporting social protection, because of their use of partner
country systems and processes and their basis on policy dialogue.

Budget support,[17] accompanied by policy
dialogue, can help incentivise the development of social protection systems
which are fully integrated into national budget and planning processes in a
framework of government accountability to parliament and people.

7.           Differentiated
Development Partnerships

The Agenda for Change proposes a
differentiated EU approach to aid allocation and partnerships. Support for the
development of social protection systems is relevant to both LICs and MICs, but
countries at middle income status will have more fiscal and institutional
capacity than LICs. Some of these countries will have graduated from
large-scale EU development cooperation financing through bilateral geographical
programmes. However, support for the development of social protection systems
in these countries, in particular for technical assistance, exchanges and
collaborative operational research may be delivered through regional and thematic
programmes.

The critical role that social protection
can play in addressing the high levels of poverty and vulnerability that
persist in newly graduated and emerging economies also makes it essential that
social protection remains a key item for the EU’s political and policy dialogue
with those partners.

EU development cooperation can be used to
fund the setting-up and strengthening of social protection systems, including
in situations which call for the development of systems that can be rapidly
scaled up to address recurrent natural disasters. The funding of social
protection benefits or transfers may be justified in fragile states and post-conflict
situations in particular cases where social protection may play a critical role
in helping affected populations to recover assets. However, the EU should work
towards the development of systems based on domestic funding.

8.           Coordinated EU Action

The Agenda for Change calls for
renewed efforts to make EU aid more effective, including through joint
programming and the development of a harmonised results framework.
Consultations with partner countries, EU Member States, international
organisations, social partners, civil society and the wider public have all
supported increased EU coordination for supporting social protection in
development. Coordination should take place at field level in the partner
countries.

The EU has expressed support for the concept
of nationally-defined social protection floors, as adopted by the 100th
session of the ILC in 2011, and contributed to its endorsement by the G20. It
contributed to and supported the adoption of the Social Protection Floors
Recommendation at the 2012 ILC. The concept of SPFs could provide a well
defined basis on which to build coordinated and, where possible, joint EU
support for social protection with partner countries which decide to develop
them.

The EU may also seek to participate in
global initiatives, such as the Social Protection Interagency Board that has
been proposed by the G20 Development Working Group.

9.           Improved Coherence among
EU policies

In a globalised economy, coherence among
policies is essential. The external dimension of EU policies may impact on
social protection in partner countries. The EU should ensure consistency
between policies for supporting social protection in development cooperation
and all other relevant EU policies.

The EU is committed to promoting openness
to trade and integration into world markets as a basis for inclusive and
sustainable economic growth and development.[18]
Greater openness may lead to increased vulnerability for those employed in
sectors that may become uncompetitive, which can be mitigated if an effective
social protection system is in place. The EU is also committed to strengthening
cooperation between Member States to develop a more coherent approach to social
security coordination with third countries[19].

The successful transition from humanitarian
aid to development cooperation will also depend critically on the establishment
of effective social protection systems. Effective integration of development
and humanitarian aid should be promoted in line with the Communication on
‘Linking Relief, Rehabilitation and Development’[20] to ensure that the
international aid system operates consistently, coherently and transparently to
address vulnerabilities. An effective social protection system should
facilitate labour mobility by ensuring portability of social security rights
for migrant workers. Social protection and climate change adaptation measures
should also be closely linked in order to reduce the vulnerability of poor
people to the effects of climate change.

[1]               COM(2011) 637, Council Conclusions 9316/12

[2]               S. Chen and M. Ravallion, The developing world is
poorer than we thought, but no less successful in the fight against poverty,
WB, 2008

[3]               Council Conclusions 11068/07, European Parliament
Resolution 2011/2047.

[4]               2010 European Report on Development, Social Protection
for Inclusive Development, A new perspective in EU cooperation with Africa.

[5]               DFID,
Cash Transfers Evidence Paper, 2011.

[6]               Unicef,
Accelerating the MDGs with Equity, 2010.

[7]               DFID,
Cash Transfers Evidence Paper, 2011.

[8]               ILO, Social protection floor for a fair and
inclusive globalization. Report of the Social Protection Floor Advisory Group,
2011.

[9]               ILO, Article 5 of the Recommendation concerning
National Floors of Social Protection, 2012.

[10]             Fourth High-Level Forum on Aid Effectiveness, Busan,
Korea, November 2011.

[11]             COM(2010) 163, Council Conclusions 10349/10.

[12]             SEC(2007) 495.

[13]             COM (2006) 249, Council Conclusions 11068/07.

[14]             S. Devereux and R. Sabates-Wheeler, Transformative
social protection, IDS, 2004

[15]             Promoting pro-poor growth: social protection, OECD
2009

[16]             A sector approach is a way of engaging in development
cooperation based on the principle of coordinated support for a locally-owned
programme of development, such as a national poverty reduction strategy, or a
sector programme.

[17]             COM(2011) 638 , Council Conclusions 9323/12.

[18]             COM (2012) 22 and Council Conclusions 7412/12.

[19]             COM (2012) 153.

[20]             COM (2001) 153.