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Lessons of good social policy

Ilcheong YI | 04 March 2013

Well-designed transformative social policy in developing countries is particularly needed since it increases individual and social capability to take advantage of initial conditions for catching-up and is one of the most effective measures to strengthen individual and societal resilience against economic crisis.

Social policy is now widely acknowledged as a central instrument of structural transformation to remove the root causes of poverty and inequality. There are good examples of social policy being effective in reducing inequality and poverty, successfully playing more than a residual role, addressing areas beyond a safety net, and engaging with broad public policy issues of distribution, protection, production and reproduction. Two recent UN global social protection initiatives, the Social Protection Floor and Universal Health Coverage should take account of these lessons about good social policy for reducing inequality and poverty.

Social policy is a central instrument of structural transformation to remove the root causes of poverty and inequality. Various trajectories of successful economic growth and enhancement of living standards pursued since the Second World War – in the Nordic countries, the East Asian NIEs and recent emerging economies – invariably share a strong role of the state in service provision, a substantial level of investment in human capital, even at a low level of economic development, social protection for the weak and vulnerable, a progressive redistribution of wealth or income, and measures to reduce the burden of reproductive care. Social policy in these countries has been an effective tool for transformation because it was able to transcend its residual role and the boundaries of a safety net, and engage with broad public policy issues of distribution, protection, production and reproduction.

Well-designed transformative social policy in developing countries is particularly needed since it increases individual and social capability to take advantage of initial conditions for catching-up and is one of the most effective measures to strengthen individual and societal resilience against economic crisis. Providing basic social services and transfers to compensate for insufficient income generates domestic demand and creates jobs, which can contribute to economic growth and recovery from economic crisis.  Designed to reduce various forms of inequality, it helps empower the weak and vulnerable and strengthen social cohesion, both of which are the basis of equitable, democratic, and sustainable growth.

The most significant reductions in poverty and inequality have occurred in countries with comprehensive social policies that aim at universally accessible, affordable and available social services and transfers, for instance in countries like Sweden, Denmark, Norway and Finland. Social policies in these countries did not stand alone but linked with various complementary institutions and policies, including stable and effective democratic mechanisms for social dialogue, sound and counter-cyclical macro-economic policy, and industrial policies to guard and generate decent jobs through the process of structural transformation. National development strategy in these contexts was composed of social policy and complementary institutions and policies, and was anchored in the values of democracy, solidarity, equality and a universal welfare state. It was not a strategy specifically addressing poverty, but rather development for all, which consequently resulted in the reduction of poverty and inequality. It is worth reminding ourselves that one of the major motives to establish welfare states in Europe was to combat not only poverty but also economic depression.

Two recent UN global social policy initiatives which aim at universal coverage of social protection are laudable and deserve attention: the Global Social Protection Floor and Universal Health Coverage. Several concerns need to be addressed for these initiatives to have a maximum impact on the reduction of poverty and inequality. Firstly, essential, basic and minimum national criteria for a socially acceptable minimum should be defined democratically. One way of setting this socially acceptable minimum can be a “socially perceived necessities” approach. Secondly, the provision of services and transfers should be designed and implemented in a way so as not to undermine the role of the state. Thirdly, there should be a specific measure to include informal workers and others outside the formal expenditure programme in universal coverage of social protection, in particular in the case of a global social protection floor. Fourthly, an enabling structure is required, with complementary institutions and policies. In particular, policies to secure fiscal space and strengthen the recipient’s ownership for development strategy, mobilize resources for productive investment, and empower the vulnerable and marginalized, should be established and strengthened. Finally, the establishment or consolidation of a comprehensive development strategy, in which social policy is integrated with economic policies, should be encouraged and promoted. It is particularly important to revive and renovate the idea of planning for sustainable development in order to meet the new challenges and risks of the 21st century.  

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