Social protection

Labor market interventions, consisting of both active and passive policies, provide protection for the poor who are capable of gaining employment. Passive programs, such as unemployment insurance, income support and changes in labor legislation, alleviate the financial needs of the unemployed but are not designed to improve their employability.[7] On the other hand, active programs focus on directly increasing the access of unemployed workers to the labour market.[8]

Active labour market policies (ALMPs) have two basic objectives: (1) economic, by reducing the risk of unemployment, increasing the ability of the unemployed to find jobs and increasing their earning capacity, productivity and earnings; and (2) social, by improving social inclusion and participation in productive employment. These programs thus aim to increase employment opportunities and address the social problems that often accompany high unemployment.

Active policies are a way of reversing the negative effects of industrial restructuring in transition economies and to help integrate vulnerable people furthest from the labor markets.[9] They are often targeted at the long-term unemployed, workers in poor families, and particular groups with labor market disadvantages.

A European Union-funded research as part of the DRIVERS project revealed a linear relationship between investments in national active labour market policies (specifically those directed towards integrating vulnerable groups into employment) and quality of work. It found that European countries with more active labour market policies seem to have healthier, less stressed workplaces.[10]

Active labor market programs include a wide range of activities to stimulate employment and productivity such as:

• Employment services. These services include counseling, placement assistance, job matching, labor exchanges, and other related services to improve the functioning of the labor market.
• Job Training. This includes training/retraining for the unemployed, workers in mass layoffs and youth to increase the quantity of work supply.
• Direct employment generation The promotion of small and medium enterprises (e.g., public works projects, subsidies) to increase labor demand.[11]

A common issue in implementing successful labor market interventions is how to incorporate the informal economy, which comprises a significant portion of the workforce in developing countries.[12] Informal employment comprises between half and three quarters of non-agricultural employment in the majority of these countries. The proportion of informal employment increases when agriculture is taken into account.[13] Most informal workers are not covered by social security schemes, occupational safety and health measures, working conditions regulations and have limited access to health services and work-related measures of social protection. Labor market interventions work to integrate the different strategies to prevent and compensate occupational and social risks in the informal economy. The strategies that include measures to prevent and mitigate the impact of risks are the most effective.[14]

In general, public expenditure on labor market policy (LMP) interventions falls within three main categories:

• Labor Market Services (1)
• Total LMP Measures (2-7)

training (2), job rotation & job sharing (3), employment incentives (4), supported employment & rehabilitation (5), direct job creation (6), start-up incentives (7),

• Total LMP supports (8-9)

out-of-work income maintenance and support (8), early retirement (9)

Social insurance schemes are contributory programs that protect beneficiaries from catastrophic expenses in exchange for regular payments of premiums. Health costs can be very high, so health insurance schemes are a popular way reducing risk in the event of shock.[12] However, an individual with low income may not be able to afford insurance. Some argue that insurance schemes should be complemented with social assistance. Community-based health insurance allows pooling in settings where institutional capacity is too weak to organize nationwide risk-pooling, especially in low-income countries, making insurance more affordable. In risk-sharing schemes, the insurance premium is unrelated to the likelihood that the beneficiary will fall ill and benefits are provided on the basis of need.[15]

Social assistance schemes comprise programs designed to help the most vulnerable individuals ( i.e., those with no other means of support such as single parent households, victims of natural disasters or civil conflict, handicapped people, or the destitute poor), households and communities to meet a social floor and improve living standards. These programs consist of all forms of public action, government and non-government, that are designed to transfer resources, either cash or in-kind (e.g. food transfers), to eligible vulnerable and deprived persons.[16] Social assistance interventions may include:

• Welfare and social services to highly vulnerable groups such as the physically or mentally disabled, orphans, or substance abusers.
• Cash or in-kind transfers such as food stamps and family allowances. Unconditional cash transfers, for example, appear to be an effective intervention for reducing extreme poverty, while at the same time improving health and education outcomes.[17] [18][19]
• Temporary subsidies such as life-line tariffs, housing subsidies, or support of lower prices of staple food in times of crisis.[20]

There are two main schools of thought concerning scope of social protection. Universalism argues that each person, by merit of simply being a citizen should be entitled to benefits from social protection programs. Such a policy would avoid means-testing and any conditionalities such as work requirements.[4] One of the greatest benefits to this policy perspective is social solidarity, since everyone contributes collaboratively to a system that everyone also benefits from. Social security is one such example. Moreover, economists have argued that universalism is an investment in human capital that aids the development of a nation as a whole.[21] The World Bank's 2019 World Development Report The Changing Nature of Work[22] considers social protection from this perspective, describing existing schemes around the world and presenting simulation data on the potential costs. Opponents would argue that universalism is cost-ineffective and unfairly distorts individual efforts. Such an argument points toward targeting as a better solution.[23] In such a case, the question arises of who should be the target population that receives benefits from social programs.

Net income is the simplest method of determining a needy population. Some states use a Guaranteed Minimum Income system, in which all members of a state receive sufficient income to live on, so long as they meet certain conditions.[24] However, proponents of the capabilities approach argue that income is easier to misrepresent, and moreover, fails to target the root causal factors of poverty.[23] Hence, they recommend targeting a minimum level of basic capabilities that will impact quality of life, such as institutional improvements like health and education. Policy examples might include a social floor.[25]

Social protection is an expensive and difficult endeavor, by any means; the question remains how best to implement programs that effectively aid the people who need it the most. Currently, there are a number of mechanisms that provide social protection in various nations. These policies and instruments vary according to country context. In some nations, governments are strongly involved in the provision of social protection, following a developmentalism model, in which social protection is seen as a tool to promote economic growth. There are also nations which are characterized by dualism, in which there is state-provided protection for those who work in the formal sector, but little to no protection for those who work in the informal sector. Finally, there are nations in which the economy is largely agrarian, and a great majority of the population works in the informal economy. In those countries that have only residual social protection coverage and weak state capacity, social protection is mainly provided by non-governmental means such as kin, NGOs, and individual philanthropic donations.[4]

In South Korea and Taiwan, the government provides extensive support for public programs, following the developmentalism model, in which social protection is seen as a tool to promote economic growth.[28]

In Argentina, Brazil, India, Indonesia and South Africa, there is a dualist structure of protected formal sector workers with social protection similar to that European welfare states and marginalized informal sector workers with basic welfare benefits mostly coming from social assistance.[29][30][31]

In nations such as Tanzania and Ethiopia, governments struggle to provide adequate social protection, and citizens must instead depend on non-state actors and informal provisioning.