At least four billion people around the world are yet to be covered by any form of social security, and therefore vulnerable to economic, social, and environmental shocks. This paper examines the state of social security in the Group of Twenty (G20) economies—home to 63 percent of the global population. It finds gaps in social security financing in these countries: between universal coverage and actual coverage, and between countries of the Global North, and those of the Global South. To bridge these disparities, it is critical to ensure the financial sustainability of social security through alternative mechanisms. India, as current president of the G20, can guide the grouping in creating sustainable financing for social security, utilising lessons it has learnt from its own social protection schemes.

The International Labour Organization (ILO) defines social security broadly as “protection that a society provides to individuals and households to ensure access to health care and to guarantee income security, particularly in cases of old age, unemployment, sickness, invalidity, work injury, maternity or loss of a breadwinner.” The term social security therefore covers a variety of benefits, ranging from insurance and pensions to disability and unemployment benefits. These instruments aim to provide a basic level of income and access to health facilities for all, and to develop safety nets in situations of crisis. In 2016, the World Bank and the International Labour Organization jointly adopted the Universal Social Protection (USP) 2030 Call to Action that commits countries, international partners and institutions to ramp up efforts towards meeting the global commitment on “social protection for all” declared in the Sustainable Development Goals (SDG) 2030 Agenda.

While social protection has historically been identified as a responsibility of the State, countries have made concerted efforts to diversify their systems to accommodate various forms of social security financing. These mechanisms seek to leverage different forms of capital assets—human, physical, social, and natural—that they have at their disposal. The “sustainomics” framework recognises the critical role of social security in the achievement of the sustainable development goals. This meta-framework enables the sustainability aspect of development through a transdisciplinary integrative approach, balancing the economic, societal and environmental aspects of development. Social security features in all the three pillars of sustainomics. While social security accelerates inclusive growth for economic progress, on one hand, it also hinges on the societal tenets of empowerment and peace and strong institutions, thus leading to human capital development. Again, the role of ecosystem services in providing livelihood opportunities to the vulnerable socio-economic classes is undeniably a crucial component of social security; this will be discussed in the latter sections of this paper.

A diverse set of instruments are used to operationalise comprehensive social protection frameworks across the world. These need to be designed in consideration of the needs and vulnerability of various sections of society and in relation to their contextual realities. Economic and social vulnerability can vary across variables such as gender, social groupings, socio-economic status, age, extent of labour force participation, and nature of employment. While assuming different approaches, social protection everywhere aims to primarily advance the first Sustainable Development Goal (SDG) of ‘No Poverty’. Target 1.3 of SDG 1 focuses on the provision of nationally appropriate social protection floors with coverage to all persons. Adequate provision of social security has been shown to contribute significantly to poverty alleviation as well as economic growth, along with advancements of other related SDGs.

At present, however, only 47% of the world’s population is covered by some form of social security programmes. The remaining 53% are left without any safety net in case of crises, whether at an individual, local, or global scale. The pandemic, for instance, was one such crisis that underlined the need for adequate provision of social security. In the aftermath of the pandemic and its economic fallout, significant populations were left without their regular sources of income nor any alternative, and they did not have social protection floors to cushion the shocks.

Across countries, the pandemic has had the worst impacts on those with the lowest income levels, and the least social security. The bottom 40 percent of the global population lost 6.7% of their average incomes, as compared to only 2.8% for the top 40%. This loss in income additionally emphasises the repercussions of such an event for those without adequate social protection. Indeed, the social protection gap between the developing economies and the advanced nations has also expanded because of the pandemic.

This is true for the G20 that brings together some of the largest advanced and emerging economies around the world. While noticeable improvement in social protection coverage was necessary to sustain the demand-supply dynamics of product and factor markets across the G20 economies through the pandemic, this also led to increasing gaps in social security financing. For the emerging G20 economies, pre-existing challenges to universal social protection—namely, economic informality, narrow tax base, illicit financial flows, profit shifting and fiscal space considerations—were exacerbated by the pandemic.

This study, while underscoring the need for adequate provision of social protection, focuses on their effective coverage across the G20 economies. After all, the G20 is home to 63% of the global population, and therefore, can collectively provide universal social protection for the majority. The sections investigate the existing divergences and gaps in social security financing among the advanced and emerging economies of the G20 and suggests approaches to ensure financial sustainability of social protection systems around the world. Through its presidency of the G20 over the next year, India can play a pivotal role in guiding the agenda of the G20 Development Working Group (DWG) around social security issues, especially in the domain of poverty mitigation. Focusing on the priorities of the USP 2030, the G20 can work together to develop innovative models that cater to financial sustainability and progressive universality of social protection frameworks, especially for the emerging, developing and underdeveloped economies of the world.

The paper can be accessed by clicking here

This paper has been authored by Debosmita Sarkar and Soumya Bhowmick.

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