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What Governments Can Do to Curb Inequality

July 22, 2021  By  Hans-Paul Bürkner ,  Vincent Chin ,  Leila Hoteit ,  Yasmine Gharaibeh , and  Kedra Newsom Reeves

This article is the second in a series providing insight on why government leaders need to look beyond economic development and prioritize the overall well-being of citizens. The first article explored how countries that focus on overall societal well-being are more resilient , and the third article will cover direct actions that governments must take for the short- and long-term development of countries and their citizens.

There is much concern about rising inequality around the world—and rightly so. However, discussions of inequality often miss a key point: it is an exceptionally complex issue. Inequality comes in different forms, and it is driven by different factors, depending on the country and its historical and current economic context. Frequently, inequality is perpetuated by troubling feedback loops, and it disproportionately impacts marginalized groups.

That complexity is critical to understand if nations are to address their specific inequality challenge. Too often, solutions focus largely on the redistribution of income and wealth. Certainly, redistribution policies—including those that affect tax rates and social safety nets—have a critical role to play. But strategies to combat inequality often underemphasize the need for regeneration: making collective investments in areas such as health care, education, entrepreneurship, and employment that support marginalized groups to fundamentally improve their situation rather than merely survive. A greater effort in regeneration that enables people to have agency to advance their well-being will help drive sustained progress in reducing inequality and, ultimately, could require less redistribution.

Governments that fail to appreciate the complexity driving inequality will struggle to address it, posing real risks.

Governments that fail to appreciate the complexity driving inequality will struggle to address it, posing real risks. Consider the complexities of high income inequality. First, it creates distortions in economic resource allocation, hampering growth. Second, it has a negative impact on citizen well-being. BCG’s Sustainable Economic Development Assessment, a comprehensive diagnostic for tracking the relative well-being of countries around the world, found that countries with high income inequality tend to have a weaker record of converting their nation’s wealth into well-being for their citizens —and that translates into lower levels of happiness. Such dissatisfaction can undermine general support for government, and it has played a role in the rise of populism and even civil unrest and violence in some countries in recent years. The COVID-19 pandemic makes taking effective action on income inequality even more urgent because it threatens to exacerbate inequality: after significant reductions in poverty over the past couple of decades, the pandemic now threatens to push more than 70 million people into extreme poverty, according to World Bank estimates.

• Economic Resilience Is Built on Societal Well-Being
• Sustainable Economic Development Assessment (SEDA)
• Measure Well-Being to Improve It
• Governments Should Think Big, Act Fast, and Start Small to Solve Tough Problems

Of course, it has proved difficult in many countries to make progress on inequality given the lack of agreement among citizens and among policymakers about the right prescriptions and given the complex political dynamics. However, governments should not allow those obstacles, nor the complexity of the challenge in general, to lead to paralysis. Rather, they should look for ways to begin the journey of building more equitable and equal societies by focusing in two areas. First, they should improve access to quality education, health care, and employment. Such actions should include collaborating with the private sector so that governments can move from a focus on creating safety nets that support people to an emphasis on providing trampolines that help them advance. Second, governments should strengthen critical enablers of equity—governance, policies and regulations, tax and social-protection programs, and infrastructure.

Such an approach will help governments create a dynamic economy, one in which people can shape their own future, rather than depend on government support. That will ultimately foster a more equitable distribution of income, access to opportunities, improved social mobility, and greater inclusion and well-being.

Trends in Inequality

There are two broad categories of inequality: inequality of outcomes and inequality of opportunity. Inequality of outcomes includes not only income inequality but also wealth inequality and consumption inequality. Certainly, income is not a proxy for wealth. However, due in part to the limited data on wealth globally, we use income as a primary metric.

Opportunity inequality is reflected in unequal access to opportunities such as health care, education, and employment based on circumstances beyond an individual’s control (including gender, disability, ethnicity, and family background). (See “Assessing Income and Opportunity Inequality.”)

Assessing Income and Opportunity Inequality

A look at the trends in income and opportunity inequality globally and within individual countries shows that although there has been progress in some areas, inequality remains a significant challenge, and one that is likely to become more prominent in the wake of the pandemic.

The Good News. Global income inequality was rising before 1980 and then fell significantly from 1980 through 2013, according to the World Bank’s analysis of the global Gini coefficient. This trend reflects the growth in average incomes in populous developing countries, such as China and India, as well as in developing countries in Africa, Latin America, and the Middle East.

That income growth has also driven declining levels of poverty in many countries. The number of people in extreme poverty, defined by the World Bank as individuals living on $1.90 per day (adjusted for purchasing power parity), has fallen from nearly 1.9 billion in 1990 to about 650 million in 2018. Although extreme poverty is still a major issue in many parts of the world, this is meaningful progress.

Of course, many would argue that an income of $1.90 per day is wholly insufficient and, therefore, the extreme poverty line is set too low. That’s one reason why it is important to also look at broader indicators of poverty to assess this progress. The multidimensional poverty index is a measure of education, health care, and standards of living developed by the United Nations (UN). Since 2000, 65 countries, home to 96% of the population of the 75 countries assessed by the UN, significantly reduced multidimensional poverty, according to a report by the United Nations Development Programme (UNDP) and Oxford Poverty & Human Development Initiative (OPHI). 1 1 The most comprehensive data available for countries from 2000 to 2020 was used. For some countries, that data starts after the year 2000 and ends before the year 2020. Notes: 1 The most comprehensive data available for countries from 2000 to 2020 was used. For some countries, that data starts after the year 2000 and ends before the year 2020. Those gains were powered by improvements such as increased access to primary school, sanitation, electricity, and drinking water. (See “Gains in the War on Poverty.”) Although the UN measure of multidimensional poverty does not include access to the internet, that factor has also been improving globally, and it is clearly becoming a basic human need in most parts of the world.

Gains in the War on Poverty

At the same time, there are signs that opportunity inequality has also improved. Inequality in education and life expectancy based on income has declined globally; access to drinking water, electricity, and basic sanitation services has improved; and access to education has held roughly steady at a high level. (See Exhibit 1.)

The Bad News: If global inequality has been on the decline, the same is not true for inequality within many regions and countries. From 1990 through 2016, income inequality, as measured by the Gini coefficient, increased in countries that account for nearly 70% of the world’s population, according to the UN.

If one looks at another measure of income inequality—the distribution of income across a population—the story is similar. 3 3 Our analysis is based on post-tax income data when it is available. However, for the regional analysis, we used pretax figures because post-tax data was not available. Notes: 3 Our analysis is based on post-tax income data when it is available. However, for the regional analysis, we used pretax figures because post-tax data was not available. The share of total national income for the top 10% of earners grew in most regions from 1980 through 2019, with the maximum share at 56% in the Middle East and the minimum share at 35% in Europe, according to the World Inequality Database. Meanwhile, the share of total national income for those earning the least—the bottom 50% of earners—fell in several regions and remains at or below 20% across the board. (See Exhibit 2.) Furthermore, the share of the top 10% increased significantly in North America as well as in Russia and Ukraine, while the share declined for the bottom 50%. And Africa, Latin America, and the Middle East saw persistent, high income inequality.

Certainly, there is significant variation when one looks at countries individually. Still, even in those that have made great strides in reducing inequality, the issue remains a persistent problem.

For countries and regions with high levels of income inequality, there are significant long-term repercussions, including the erosion of social mobility. In countries with relatively high levels of income inequality, such as Brazil, India, South Africa, and the US, the income of children is more dependent on that of their parents than it is in countries such as Denmark and Finland that have lower income inequality, according to research by the World Economic Forum . This transmission of disadvantage is true not only for income but also for education and occupation: in some countries, children attain little more education than their parents did or end up in occupations similar to those of their parents, according to research by the Organisation for Economic Co-operation Development.

The COVID-19 pandemic is likely to amplify the inequality challenge for a number of reasons:

• First, the pandemic is likely to reverse some of the gains made against poverty in developing countries where vaccines are not being as quickly deployed and the return to normal will take longer.
• Second, lower-income individuals and families tend to have limited access to adequate health care and affordable COVID-19 testing.
• Third, in many places, the shift to virtual learning disadvantaged children from low-income households that have limited access to technology. According to UNICEF, at least one-third of the world’s school children—463 million—were unable to access remote learning when COVID-19 shuttered their schools.
• Fourth, the slowdown of the global economy disproportionately affected low-skilled and low-wage employees. That’s because industries that have large numbers of workers whose average hourly wage is comparatively low and whose average number of hours worked per week is also relatively low—the hospitality and retail industries, for example—have been heavily hit. And the pandemic has expedited the adoption of technology, with companies likely to adopt more automation going forward .
• Fifth, wealthy investors have gained even more ground over the past year and a half relative to people without sizable investment portfolios. That’s because even after factoring in the massive market declines during the first quarter of 2020, the stock market has posted robust gains over that period.

The Complexity of Inequality

Inequality is a complex problem for a couple of reasons. First, it exists in different forms. And some forms, such as income inequality, link to and reinforce many other forms. Second, the magnitude and drivers of inequality differ in each country.

Looking at income and opportunity inequality reveals how different forms of inequality impact and reinforce one another.

Linkages Among Different Forms of Inequality . A close look at income and opportunity inequality reveals how different forms of inequality impact and reinforce one another. For example, income inequality can create unequal educational opportunities for a group—opportunities that are often further limited by gender and race. Without an education, however, job opportunities for members of the group will be limited, diminishing their lifetime income potential and furthering income inequality.

That dynamic is often experienced by disadvantaged groups, including women, people with disabilities, those from certain races and ethnic backgrounds, and young people. Frequently, these groups are systematically excluded from or discriminated against by education systems and labor markets, resulting in higher income inequality and opportunity inequality.

Differences in Magnitude and Drivers. Some countries clearly have a greater inequality challenge than others. Looking specifically at the 17 countries with the largest economies for which recent Gini data is available and the 5 Nordic countries (often lauded for progress on equality), a wide variation in income inequality is evident. (See Exhibit 3.) For example, while the US, Australia, and many countries in Europe are developed nations with similar levels of wealth and natural resources, the US has a much higher level of income inequality. That disparity indicates that government policy plays a major role in determining income inequality levels.

Just as the magnitude of income inequality differs by country, so, too, do the drivers. Drivers can include the degree to which health care and education systems are functional and inclusive; the extent to which certain communities, races, and genders are disadvantaged on the basis of country history; and even the factors that create economic growth. For example, countries whose economies rely heavily on natural resource-based industries tend to have higher levels of inequality than do countries whose economies are based on agriculture or manufacturing. 4 4 “Inequality: Driving Forces and Policy Solutions,” United Nations University, May 2019. Notes: 4 “Inequality: Driving Forces and Policy Solutions,” United Nations University, May 2019. In addition, a key driver of inequality in some African countries is high population growth, a trend that is expected to continue over the next few years. 5 5 “Population–Poverty–Inequality Nexus and Social Protection in Africa,” Social Indicators Research , May 25, 2020. Notes: 5 “Population–Poverty–Inequality Nexus and Social Protection in Africa,” Social Indicators Research , May 25, 2020.

The Complex Dynamics in the US and Europe. The complexities outlined here shape the inequality challenge for each country and region—and, therefore, the required policy response from individual governments. A close look at the dynamics in the US and Europe highlights the differences.

In the US, income inequality has risen more since 1980 than in any other developed country, according to research by UNDP. In 1980, 50% of earners accounted for about 26% of the national income. In 2019, their share was 20%. During this period, the top 10% of earners’ share of income jumped from 29% to 38%, while the middle 40% of earners’ share dropped. Meanwhile, the share of income nearly doubled for the top 1% of earners, from 8% in 1980 to about 15% in 2019.

Racial inequality is a particularly persistent problem. The levels of both income and opportunity inequality—reflected in lower access to quality education, health care, decent jobs, and housing—are higher for Black Americans than they are for other groups. (By a decent job, we mean one that guarantees dignity, equality, a fair income, and safe working conditions.) Black households have the lowest average median income, well below that of white and Asian households, although close to that of Hispanic households, according to the Economic Policy Institute. About 40% of Black American households, compared with 15% of white households, had zero or negative net worth in 2016, according to the Institute for Policy Studies. And data from the US Bureau of Labor Statistics shows that the unemployment rate at the end of 2020 was 4 percentage points higher for Black Americans than it was for white Americans.

The overall inequality picture is quite different in Europe. Income inequality in Europe, while up since 1980, has not increased as dramatically as it has in the US. (See Exhibit 4.) For example, in Europe, the top 10% of earners’ share of national income increased by only 3 percentage points, from roughly 26% to 29%; the top 1% of earners’ share increased by only 2.5 percentage points. The bottom 50% of earners, while losing ground before 1995, have since seen their share of national income rise slightly by nearly 2 percentage points. It is worth noting that this improvement comes even as European countries have witnessed a heavy influx of migrants in the past few years. That trend has likely put pressure on welfare systems in those countries and exacerbated the income gap (as migrants often face initial difficulty finding employment largely due to language barriers and skills gaps).

Certainly, there is significant variation across countries in Europe—most notably, differences between Eastern and Western European nations. (See “A Closer Look at Europe.”) But overall, the US faces a greater inequality challenge owing to several factors:

• Social Spending. Government social spending (including amounts for education, health care, and retirement pensions) is markedly lower in the US than it is in Europe. In several large European countries, such spending as a percentage of GDP ranges from 21% to 31%, compared with 19% in the US.
• Access to Education. Schools in the US are funded by property taxes, which means that schools in affluent neighborhoods with a high tax base typically perform at a higher level than do schools in less wealthy areas. In Europe, schools rely more on central government funds and less on local funds—a policy that helps to keep a more level playing field when it comes to access to education. At the same time, although higher education in Europe is relatively cheap or in many cases free, in the US, high tuition fees shackle many young students with significant debt.
• Access to Health Care . Though the US spends more on health care as a percentage of GDP than do other developed countries, health insurance in the US is costly. And unlike most European countries, the US has no universal health care program.
• Worker Clout. Compared with other advanced economies, the US has lower minimum wages, a reduced role for unions, and higher CEO-to-worker pay ratios. 6 6 Some states have a minimum wage that is higher than the federal level, but many do not. Notes: 6 Some states have a minimum wage that is higher than the federal level, but many do not. Former Treasury Secretary Lawrence H. Summers and Harvard economist Anna Stansbury, among others, argue that the continued growth of large companies creates a monopsony for employees—meaning they have few options in terms of employers and little bargaining power.
• Taxation. The corporate tax rate has declined in both the US and Europe. However, individual taxes in the US—including taxes on income and wealth—have become significantly less progressive, while the decline in progressivity in Europe has been much less pronounced. For example, in the US, taxes as a percentage of pretax income for the 400 highest-earning Americans fell from 70% to 23% from 1950 through 2018, while the tax rate for the bottom 10% of earners increased from 16% to 26% over same time frame. 7 7 According to the Forbes list of the 400 highest-earning Americans; tax rates include those for local, state, and federal taxes. Notes: 7 According to the Forbes list of the 400 highest-earning Americans; tax rates include those for local, state, and federal taxes. , 8 8 Progressive Wealth Taxation, Emmanuel Saez and Gabriel Zucman, Brookings Papers on Economic Activity, BPEA Conference Drafts, September 5–6, 2019. Notes: 8 Progressive Wealth Taxation, Emmanuel Saez and Gabriel Zucman, Brookings Papers on Economic Activity, BPEA Conference Drafts, September 5–6, 2019. Conversely, in Europe, although the average tax rate on the highest earners declined from 1995 through 2009, it has been increasing since then, according to Eurostat data, reaching an average of approximately 40% in 2019.

A Closer Look at Europe

An approach for tackling inequality.

Governments need to understand the dominant forms of inequality within their country and the drivers of those challenges in order to craft the right response. At the same time, they need to work in concert with the private sector and players in the social sector, including nongovernmental organizations and nonprofits, to identify the right steps and implement them effectively.

Most critically, governments need to balance income and wealth redistribution with policies that promote regeneration. In this way, governments can shift from establishing safety nets for citizens to creating trampolines—conditions that give people equal access to opportunities and empower them to thrive socially and economically.

On the basis of our work with governments around the world, we believe governments will need to move in two primary areas to begin tackling inequality. (See Exhibit 5.)

First, governments must redouble their efforts to improve the three elements (or inputs) that allow people to advance their situation:

• Education and Training. Governments should ensure that all citizens have access to a quality education. This especially includes early childhood programs that not only give youngsters a strong head start but also allow parents to participate fully in the labor market. In many regions, additional funding for schools and the expansion of the teaching workforce will be required. Governments should also partner with the private sector to design effective school-to-work transition programs. Critically, governments must take steps to make education a broad societal priority—including steps that support the efforts of parents to encourage their children to focus on their education. Research dating back as far as the 1960s has demonstrated a link between parental aspirations and child academic achievement. Parents who support the education of their children set them up not only for academic achievement but also for better opportunities and outcomes that reduce income inequality.
• Health Care and Well-Being. Restricted access to health care—both physical and mental—will severely limit the ability of citizens to advance their education and their careers. Governments should, in partnership with the private sector, address major gaps in those systems. And they must ensure broad and equitable access to COVID-19 vaccines in order to ensure that no groups are left behind as economic activity picks up steam.
• Employment. Events in recent years have underscored the importance of this component, with high levels of unemployment contributing to social unrest in a number of countries. Governments must implement robust policies, regulations, and processes to advance job creation, inclusive employment (such as incentives for hiring people with disabilities), and entrepreneurship. They should reduce barriers to starting a business. And they should expand the availability of reskilling and upskilling programs . These efforts should focus on both high- and low-skilled workers and give particular attention to improving employment opportunities for groups in society that are particularly disadvantaged, including new immigrants. Governments should also consider actions that recognize unpaid care and domestic work (with an estimated value of 10% to 39% of GDP, according to the UN) that is currently largely shouldered by women.

Second, governments must put three system-level enablers in place to ensure increased equity:

• Fiscal and Social Protection Systems. Governments must explore tax reform—on personal income and on corporations—in order to expand public spending on education and health care and to support disadvantaged groups. Any tax reforms, however, should be designed to avoid significant negative impact on job creation. At the same time, governments should assess social programs and systems . Such an assessment should include a close look at whether those programs and systems adequately protect those working in the informal economy. The findings of the assessment should be used to improve access to social programs and systems for those who need them most, including women, those with disabilities, and those in minority groups. These safety nets for vulnerable groups, however, should not be the primary means of support. Rather, governments should increase their focus on developing systems that provide vulnerable groups with enablement programs—essentially trampolines to improve their situations sustainably.
• Governance and Policies. Public sector leaders should push to improve or protect effective governance of public institutions and the rule of law. The latter, in particular, is vital, because corruption in many parts of the world limits the growth of small businesses. In addition, governments should adopt policies that prohibit discrimination and protect workers’ bargaining rights to ensure fair minimum wages. Governments should also adopt and enforce antitrust policies to block the excessive concentration of market power among large companies. Robust antitrust policies can have significant, positive ripple effects throughout an economy, including on the pace of new business creation.
• Infrastructure. As governments invest to develop physical and digital infrastructure within their country, they should pay particular attention to the regions most affected by inequality. Significant infrastructure investments in such regions can create jobs and power strong economic growth by lowering barriers to starting new businesses and smoothing the transportation of goods. The private sector can be a powerful partner in infrastructure development, and governments should find ways to leverage the private sector’s contribution, including through public-private partnerships. Such partnerships can be effective not only in the development of infrastructure such as roads and bridges but also in the construction and maintenance of assets such as social housing, hospitals, and schools.

The right mix of policies in all these areas can lead to a more equitable distribution of income and access to opportunities, improved social mobility, and enhanced well-being. As governments push to put these policies in place, they must also track and measure their progress.

Inequality remains a real and pernicious threat to societies around the globe, undermining growth and political stability. But any discussion on inequality should not lose sight of the fact that there has been great economic progress globally over the past two decades, with hundreds of millions of people rising out of poverty.

Of course, the COVID-19 pandemic threatens to reverse some of that progress. But it also creates a potent opportunity. Just as major social changes and advancements were born out of world wars and the Great Depression, this period of turmoil could yield significant change. With borrowing costs at historically low levels, governments have an opening now to strengthen education, health care, and employment within their borders and to build a solid foundation for progress that includes balanced tax systems and social safety nets, strong governance, and a robust infrastructure. Those governments that get it right will be able to protect the most vulnerable while giving everyone a chance to reach their full potential.

The authors would like to thank Noor Abdelhafez for her assistance in the research and analysis for this article.

Managing Director and Global Chair Emeritus

Managing Director & Senior Partner; Vice Chair, Public Sector Practice

Managing Director & Senior Partner; Global Leader, Education, Employment, and Welfare

Lead Knowledge Analyst

Managing Director & Partner

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How can the world address inequality? 7 experts explain

Leave no one behind. Image:  Priscilla Du Preez/Unsplash

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• The COVID-19 pandemic has exacerbated socioeconomic inequalities.
• Mitigating inequality requires a mix of bottom-up and top-down changes that address the underlying social and economic systems.
• Seven experts shine a light on creating a future that leaves no one behind.

The COVID-19 pandemic has exacerbated socioeconomic inequalities within and across countries. The policy responses designed to mitigate them in the form of either relief and recovery packages or welfare protections have mostly proved to be short-term fixes. In the long-term, however, the distributional consequences of the pandemic between and within countries, as in during previous pandemics and recessions, are bound to widen inequality.

According to the World Inequality Database 2020 update, Latin America and the Middle East stand as the world’s most unequal regions, with the top 10% of the income distribution capturing 54% and 56% of the average national income respectively. Despite Gulf countries (Bahrain, Kuwait, Oman, Qatar, UAE, Saudi Arabia) having among the highest GDP per capita levels, they have also marked extreme inequality levels, with little variation since the 1990s. However, the starkest change has been the rise in concentration of incomes in the US, with the top 10% witnessing an increase from 34% to 45% of the national income between 1980 and 2019.

The data are an indicator that countries with strong investments in public services, social protection, and labour market policies have the lowest inequality levels, with Europe standing as the most equal of all regions driven by its redistribution and progressive taxation, seen in the Commitment to Reducing Inequality Index .

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Looking at global inequality beyond purely from an income distribution lens, it is critical to take into consideration multidimensional factors such as social mobility, gender equality, livelihood infrastructure, technology access, the voice of civil society, privacy, social and environmental protections, progressive tax laws and labour rights when examining the how societies perform on reducing inequality and serving public interest.

The COVID crisis has forced us to reimagine our shared futures as the world attempts to rebuild. From proposals relating to basic income and collecting the tax deficit to the more emerging debate on inheritance for all , the asymmetric impact of the pandemic and divergent recovery beckon a universal call for us to build back broader .

Mitigating inequality will now demand a mix of bottom-up and top-down changes that recognize the social and economic systems aggravating inequality are a matter of choice. Where do we go from here?

We asked seven global experts from the World Economic Forum Expert Network to provide their perspective on how we can build a better future where we leave no one behind. Here’s what they said.

‘It is particularly crucial to increase the minimum wage'

Tak Niinami, Chief Executive Officer, Suntory Holdings and Senior Economic Advisor to the Prime Minister of Japan

The pandemic has made it apparent that Japan also faces the issue of inequality. A widening in the gap must be prevented by all means as it would bring social unrest and social divide. In the short-term, given Japan’s comparatively low wages, it is particularly crucial to increase the minimum wage and thoroughly implement an “equal pay for equal work” policy to bridge the gap between regular and non-regular workers.

The acceleration of redistribution of wealth is also imperative. Taxation on assets and capital gains should be increased so that this resource can be utilized to fund NPOs (nonprofit organizations) that can take measures against issues such as poverty and isolation.

Furthermore, in the long-term, I believe education is key in mitigating inequality. The widening education gap can spill over from generation to generation, creating a chain effect that must be avoided. Technology can prove to be a solution if it can be applied to ensure equal opportunities, enabling high-quality education to anyone and anywhere, no matter where you live.

‘ Well-funded and quality universal healthcare must be the legacy of the pandemic ’

Deepak Xavier, Head of Inequality Advocacy and Campaigns, Oxfam International

The world risks the greatest rise of inequality since records began , and today it is inequality that perpetuates COVID-19, which is ending so many lives. The grotesque inequality in accessing healthcare is proving fatal. To be without a hospital bed or medical oxygen in the face of a pandemic is frightening enough. However, for most of the world that has long been the case. Pre-pandemic 10,000 people were dying daily due to lack of access to healthcare.

Progress on universal healthcare is achievable – as countries such as Costa Rica have shown . Implementing a fair and progressive tax system to avoid concentration of wealth to the top 10% is one way to provide a fiscal boost. A 0.5% extra tax on the wealth of the richest 1% alone could raise $418bn each year which could be redistributed towards resilient healthcare systems. Issuing US$1 trillion of IMF’s Special Drawing Rights (SDRs) global reserve asset would dramatically increase the funds available to countries – for example, the Ethiopian government will have access to an additional $630 million — enough to increase its health spending by 45%.

Well-funded and quality universal healthcare must be the legacy of the pandemic: to save lives and better tackle future pandemics.

'Support our people outside of the "nine to five".'

Leslie Parker, Partner and Member of the Board of Directors, Kearney

It used to be that there was very little crossover between our work and personal lives. Since COVID, that has changed. The new work-from-home model has given us intimate access to our colleagues’ personal lives – and surfaced a whole new set of inequalities.

We see family members juggling caring responsibilities with the demands of their jobs. We see people who live alone, who might not physically encounter another human being that week. We see housemates sitting three to a table, trying to work at the same time. And we see laptops propped on kitchen counters, stacks of boxes and pairs of knees, as people search for an elusive quiet space or change of scenery.

The ability to work from home is an incredibly privileged position for many. But with working patterns and norms changed beyond all recognition, we need policies that take on these and other new inequalities – including lack of choice over working location – into account. It’s not enough to dish out some grants for home office equipment. What about some let-up from home schooling or eldercare, or help to tackle loneliness? Why not help our teams create better connections with one another that can offer more than the virtual happy hour and more time behind a laptop? We need to go beyond one-dimensional Diversity, Equity, Inclusion programmes and policies, and really support our people outside of the ‘nine to five’.

At Kearney we have taken a first step by asking employees around the world to tell us what would improve their lives and how we can help as leaders. We are already seeing wellbeing, both physical and mental, as a major theme. We introduced more mental and physical health programmes with free classes available to employees, redesigned our future work model strategies to allow for flexibility of working hours and location (no longer adopting five-days-a-week office model), offered an option to go to co-working spaces to employees whose current situation is not supportive of their work or mental health and improved coaching and mentoring guidelines in the absence of in-person onboarding and support.

‘ Promote more transparent and accountable systems ’

Ibrahima Hathie, Distinguished Fellow, Initiative Prospective Agricole et Rurale (IPAR), Senegal and Southern Voice network member

Sustainable Development Goal 10 of the 2030 Agenda seeks to “reduce inequality within and among countries”. Yet, the goal’s targets and indicators focus on horizontal inequality and exclu­sion of the vulnerable and marginalized population from opportunities. The United Nations’ overarching principle of “ Leave No One Behind ” reflects this orientation and calls for a transformative agenda. However, it fails to address deep-rooted social, economic, and political systemic problems that preserve and often amplify vertical inequalities.

A path to achieving this must seek to reduce the political influence of elites in the formulation and implementation of public policies. It would promote more transparent and accountable systems. Tackling inequalities between countries is also imperative if we are to face the consequences these have on the most vulnerable in developing countries. Addressing overlapping disadvantages through a comprehensive development strategy can be an excellent response to horizontal inequalities. Vertical inequalities require more: progressive economic institutions with pro-poor taxation, investment, and trade.

In Senegal, for example , the government should choose and invest heavily in food value chains, funding of research of these value chains, training of family farmers, agricultural entrepreneurs, technicians, and engineers and introduce multisector governance to ensure smooth coordination to achieve the goals set out by the Malabo Declaration . This would lead to increased industrial development, improved health and nutrition, and decent and abundant jobs for young people and women.

‘The basic fundamentals of knowledge creation and collaboration must be addressed’

Marie McAuliffe, Head, Migration Research Division, International Organization for Migration

In addition to measures on improving social protection of migrant workers, reducing costs of international remittance transfers, and bolstering migrants' rights throughout the migration process, the fundamentals of knowledge creation and collaboration must be addressed. Affected communities impacted by increasing inequality must be part of processes aimed at formulating effective responses.

Developing country experts and research institutions must be able to meaningfully participate in researching, proposing, designing, and evaluating solutions according to their priorities and needs. A much greater focus on leveraging opportunities to undertake participatory and collaborative research with (and for) marginalized populations is needed. Only then can the programmatic and policy responses designed to reduce inequality globally be truly sustainable.

We advocated this approach as part of consultations on the UN Research Roadmap on COVID-19, which makes a strong case for participatory research to support long-term global transformations. In 2017, IOM invited the world’s leading migration researchers from around the world to join in sharing their expertise and knowledge in support of the 2018 global compact on safe, orderly and regular migration. As a consequence, the resolution on the Global Compact for Safe, Orderly and Regular Migration was adopted by the United Nations General Assembly in 2018.”

‘Increase public investments in the formal and informal care economies’

Susan Ferguson, Women Representative for India, UN Women

The COVID-19 crisis in India has impacted millions, not only those suffering from the disease, but also those who care for them. As always, women have taken on the heavy burden of caring for the sick and finding ways to meet their family’s basic needs. A recent Oxfam report shows that Indian women and girls put in 3.26 billion hours of unpaid care work every day — a contribution of at least ₹19 trillion a year to the Indian economy.

Yet in India, duties performed at home have historically not been considered “work,” because of unequal gender and caste norms. And now, with after the second wave of COVID-19, the combination of illness, unpaid care, economic slowdown and lack of access to financing for female entrepreneurs means that many women are unable to return to work.

If these trends aren’t reversed, they will have a devastating impact on the economy and further exacerbate gender inequality. For this generation of women to emerge relatively unscathed from this pandemic and be able to return to the workforce, we must invest seriously in education and livelihoods of women and girls in India. UN Women’s Second Chance Education programme is a prime example of how we can and must focus on women’s livelihoods right now, before the equality gaps widen even more. Another way to mitigate the inequality crisis would be to increase public investments in the formal and informal care economies and tap into the job creation potential of the care economy.

In the end, it will come down to changing attitudes. Whether it’s at home, in the office or in the fields, we must stop taking women’s work for granted.

Read more here .

Don’t use the pandemic as a justification to discriminate and exclude

Melody Patry, Advocacy Director, Access Now

From Singapore to Jamaica, governments are scrambling for solutions to help the world return to a pre-virus normality. Vaccine certificates — or “passports” — that record and authenticate vaccination statuses, however, are short-term fixes that potentially pose long-term risks to human rights. These fast-tracked stopgaps are a blueprint for exclusion and discrimination, and present serious and disproportionate threats to the privacy and security of millions of people.

COVID-19 and its reverberations already impact our most vulnerable and underserved individuals and communities — from limited health care, to increased economic instability — we cannot allow techno-solutionism to exacerbate the divide further.

Global leaders, and their industry counterparts, must stop, recalibrate, and ensure technology plays a positive, cornerstone role in pandemic recovery. As laid out by U.N. Special Procedures on the eve of RightsCon 2021 , "we need to act together to embrace the fast-pace expansion of digital space and technological solutions that are safe, inclusive and rights-based."

World Economic Forum Strategic Intelligence , in partnership with the Institute for Global Prosperity , University College London (UCL) launched the transformation map on Inequality .

The experts cited in this article are part of the World Economic Forum Expert Network .

• Economic and Social Council
• Commission for Social Development

Inequality Must Be Addressed through Social Protection Policies, Speakers Stress, as Commission for Social Development Opens 2019 Session

Inequality has become a defining issue of the present time that must be addressed through social protection policies, including progressive taxation in favour of low-income families as well as public spending to support vulnerable populations, delegates told the opening of the fifty-seventh session of the Commission for Social Development today.

“With the adoption of the 2030 Agenda for Sustainable Development, combating inequality and social protection has moved to the centre of the policy agenda in all countries,” said Cheikh Niang (Senegal), the Commission Chair, following his election to the role.

He said that a growing body of evidence shows that income inequality has been on the rise in many countries while unequal social opportunities continue to persist, whether its access to decent work, quality education and health care or to productive assets such as land and credit, calling on delegates to not only highlight the impact of inequality on people and communities but also to point to fiscal, wage and social protection policies that have shown to be effective in addressing inequality and challenges to social inclusion.

United Nations Deputy Secretary-General Amina Mohammed outlined some measures to rectify inequality, namely through public financing, wage growth and social protection policies, arguing that Governments should raise revenues rather than cutting social expenditures.

Valentin Rybakov (Belarus), Vice-President of the Economic and Social Council, said that inequality is becoming the “defining issue of our time”, with health and education disparities remaining high.  In some countries, children in the lowest 20 per cent of income distribution are nearly three times more likely to be underweight and twice as likely to die before their fifth birthday.  “These figures show that we are currently moving in the wrong direction,” he stressed, adding that “a world in which extreme wealth coexists with extreme poverty is a world of strife”.

Alya Ahmed Saif Al-Thani (Qatar), Vice-President of the General Assembly, said that the extension of pensions has been shown to be the most notable advance in expanding social protection in recent decades.  Almost 68 per cent of older persons received a pension in 2016.  However, only 28 per cent of persons with severe disabilities, 35 per cent of children and 22 per cent of unemployed workers received benefits.

Also addressing the opening segment was a representative from a non-governmental organization, who said the Commission is meeting when many Governments are implementing austerity measures or turning to the private sector to fill the gaps.  But it is at this time that States must step up, protecting people and promoting more social inclusion by distributing resources more justly, he emphasized.

Echoing the previous speaker, a youth representative called for a tax regime that is people-centred and planet-sensitive, and proposed the creation of a global, universal body tasked with taxing wealth and resource extraction. 

During the ensuing general debate, Mohammad Shtayyeh, Minister of the Palestinian Economic Council for Development and Reconstruction of the State of Palestine, delivered a statement on behalf of the “Group of 77” developing countries and China and expressed deep concern that more than 20 years after the World Summit for Social Development, progress has been slow and uneven and major gaps remain.  In this regard, he went on to highlight the fundamental role of international cooperation, North-South, South-South and triangular cooperation and renewed partnerships to support national efforts.

Romania’s delegate, speaking on behalf of the European Union, pointed out that high inequality hampers growth and undermines social cohesion.  “Income inequality in the European Union would have been much higher without the redistributive effects of taxes and transfers.”  Significant public expenditure on health care, education, employment, social cohesion, pensions and long-term care are also key parts of the European model, he noted. 

In the afternoon, the Commission held a high-level panel discussion titled “Addressing inequalities and challenges to social inclusion through fiscal, wage and social protection policies.”

Also speaking during the general debate were representatives of Viet Nam (for the Association of Southeast Asian Nations), Trinidad and Tobago (for the Caribbean Community), Benin (for the African Group), Ghana (for the Economic Community of West African States), Chile (for the Group of Older Persons), Peru, and Austria.  Ghana’s delegate also delivered a national statement.

The Commission will reconvene at 10 a.m., Tuesday, 12 February, to continue its work programme.

Opening Remarks

Following his election, by acclamation, as the Chair of the fifty-seventh session of the Commission for Social Development, CHEIKH NIANG (Senegal) noted that the theme for the 2019 session is “addressing inequalities and challenges to social inclusion through fiscal, wage and social protection policies”.  He explained that with the adoption of the 2030 Agenda for Sustainable Development, combating inequality and social protection has moved to the centre of the policy agenda in all countries.  A growing body of evidence shows that income inequality has been on the rise in many countries while unequal social opportunities continue to persist, whether its access to decent work, quality education and health care or to productive assets such as land and credit.  And too many people are trapped in extreme poverty and they don’t benefit from the rising tide driven by economic growth, a reminder that market-driven growth alone is not enough to guarantee that no one is left behind.  The Commission’s deliberations should not only highlight the impact that inequality is having on people and communities, it should also point to fiscal, wage and social protection policies that have shown to have more and better impact in addressing inequality and challenges to social inclusion.

VALENTIN RYBAKOV (Belarus), Vice-President of the Economic and Social Council, delivered a statement on behalf of the organ’s President, noting that the its high-level political forum will review six of the Sustainable Development Goals — all under the theme “Empowering people and ensuring inclusiveness and equality” — during its July session.  That topic is closely aligned with the Commission’s own annual theme, he said, emphasizing that inequality is indeed becoming the “defining issue of our time”.  Research reveals that where people are born and where they live has a strong influence on their life opportunities.

Noting that income inequality has increased in many parts of the world and that health and education disparities remain high, he pointed out that in some countries children in the lowest 20 per cent of income distribution are nearly three times more likely to be underweight and twice as likely to die before their fifth birthday.  “These figures show that we are currently moving in the wrong direction,” he stressed, adding that “a world in which extreme wealth coexists with extreme poverty is a world of strife”.  The Council is committed to addressing those challenges, and to strengthening the role of its functional commissions — including the Commission for Social Development — to do the same.

ALYA AHMED SAIF AL-THANI (Qatar), Vice-President of the General Assembly, delivering a statement on behalf of organ’s President, María Espinosa Garcés of Ecuador, declared:  “At a time when multilateralism is facing headwinds, it is imperative that we demonstrate that [it] constitutes the best and only way to address the global challenges that stand in the way of sustainable development.”  First and foremost, the global community must deliver on the 2030 Agenda’s central goal of eradicating poverty and leaving no one behind.  Those at risk currently lack opportunities for participation; are excluded due to age, gender, disability or indigenous or migratory status; endure isolation due to their place of residence or face disadvantage due to inequitable laws, policies or institutions; face income or food insecurity; and have less chances to benefit from quality education, health care or social protection.

In that regard, she said, the extension of pensions has been shown to be the most notable advance in expanding social protection in recent decades.  Almost 68 per cent of older persons received a pension in 2016.  However, only 28 per cent of persons with severe disabilities, 35 per cent of children and 22 per cent of unemployed workers received benefits.  Without a sustainable development paradigm shift, the furthest behind will continue to be locked out of global progress, unable to benefit from or participate in the global economy or frontier technologies.  Noting that a Summit of Heads of State and Government — slated for September — will review overall progress on the 2030 Agenda, she said the meeting will also raise political momentum and mobilize further action.  The Commission must provide inputs both to that summit and to the Economic and Social Council’s political forum, including concrete policy advice on how countries can leverage fiscal, wage and social protection policies to address inequality and challenges to social inclusion.

AMINA MOHAMMED, Deputy Secretary-General of the United Nations, said that the 2019 theme of the Commission highlights the critical aspect of the 2030 Agenda, with about 1.3 billion people facing multidimensional poverty and 3 billion people living without decent employment.  Identifying three areas for action, she stressed the importance of public investment in social protection, including through innovative financing, reforming tax administration and fighting illicit financial flows.  The focus should not be on cutting social expenditures.  Since the end of the global financial crisis, wage growth has remained stagnant while the unemployment rate has declined.  In particular, gender pay gaps leave many people behind.  Government policies favouring the few privileged are responsible for this stagnation in wage growth.  There is increased recognition about the need for the social protection floor, she said, welcoming the International Labour Organization (ILO) instrument adopted in 2012 for guaranteeing basic levels of social protection.  About 4 billion people live without social protection.  The United Nations and its country teams help them improve their lives.  She said she has great expectations on the work of the Commission, which can recalibrate social contracts, calling on the body to achieve robust outcomes from this session and take them forward to the General Assembly.

DANIEL PERELL, Chair of the Non-Governmental Organization Committee for Social Development , said the Commission is meeting against the backdrop of widespread dissatisfaction with the prevailing economic order.  Facing challenges, many Governments are implementing austerity measures or turning to the private sector to fill the gaps.  But it is at this time that States must step up, protecting people and promoting more social inclusion, he said, adding that while the international community has been able to identify many of the symptoms of an “ailing world order”, it has still failed to address its root causes.  What was once a shortage of resources is now a matter of ensuring that resources are more justly distributed.  Urging the Commission to focus on the social dimension of those challenges, he spotlighted Sustainable Development Goal 10 on reducing inequality as the core of its work.

Recalling that the 1995 Copenhagen Declaration on Social Development paired the concept of inclusion with that of social cohesion, he said today many groups are struggling to define themselves and their place in the world.  There are competing ideologies, power struggles and divisions.  However, young people in particular are increasingly demanding more unity.  Therefore, he proposed that the Commission focus in 2020 on the theme of social cohesion.  Emphasizing that a unified vision of that kind will require a “historic feat of statesmanship” from the world’s leaders, he pointed out that summoning the common will of humanity is possible today in ways that were unthinkable to previous generations.  Against that backdrop, the non-governmental community stands ready to play its part.

REGINE GUEVARA, Youth Representative, delivered a statement on behalf of the Major Group for Children and Youth , noting that climate change and social inequality represent two of the greatest challenges to people and the planet.  Underlining the importance of addressing the world’s complex interdependences, she said the least fortunate are nevertheless inherently left behind in today’s prevailing economic system.  Drawing attention to the plight of tens of millions of people who have been forced to flee their homes in recent years, for example, she said conversations about how economic growth and efficiency can improve lives must focus on enabling humanity to thrive within planetary boundaries.  “We need to learn to collectively share our resources,” she said, calling for a tax regime that is people-centred and planet-sensitive.  In addition, she called for the creation of a global, universal tax body tasked, among other things, with taxing wealth and resource extraction.  Meanwhile, divisions should be broken down between urban and rural populations, men and women, older and younger generations.  “We already know what to do and where to start,” she stressed, asking:  “Will your generation work with mine?”

Election of Officers and Adoption of Agenda

The Commission proceeded to elect by acclamation Carolina Popovici (Republic of Moldova), Helene Inga Stankiewicz Von Ernst (Iceland) and Fabricio Araujo Prado (Brazil) as Vice-Chairs of the session.  Mr. Prado will serve as Rapporteur.

The Commission then adopted the provisional agenda contained in document E/CN.5/2019/1 and its corrigendum.

Introduction of Reports

DANIELA BAS, Director, Division for Social Policy, Department of Economic and Social Affairs, introduced several reports of the Secretary‑General:  “Addressing inequalities and challenges to social inclusion through fiscal, wage and social protection policies” (document E/CN.5/2019/3); “Social dimensions of the New Partnership for Africa’s Development” (document E/CN.5/2019/2); “Accelerating the implementation of the 2030 Agenda for Sustainable Development by, for and with persons with disabilities” (document E/CN.5/2019/4); “Policies and programmes involving youth” (document E/CN.5/2019/5); “Implementation of the objectives of the International Year of the Family and its follow-up processes” (document A/74/61–E/2019/4); and “Emerging issues: Empowerment of people affected by natural and human-made disasters to reduce inequality: addressing the impacts on persons with disabilities, older persons and youth” (document E/CN.5/2019/7).

General Debate

MOHAMMAD SHTAYYEH, Minister of the Palestinian Economic Council for Development and Reconstruction of the State of Palestine , speaking on behalf of the “Group of 77” developing nations and China, said that the bloc remains deeply concerned that more than 20 years after the adoption of the World Summit for Social Development, progress has been slow and uneven and major gaps remain.  Current trends reflect that income inequality has persisted or even increased within many countries, undermining efforts to eradicate poverty.  Environment degradation and climate change exacerbate inequality by overexposing the poorest and most vulnerable among them as they tend to have few means to cope and adapt.  The Group believes that fiscal, wage and social protection policies can significantly contribute to reducing inequality, including sustained investments in public services and progressive tax systems.  The Group notes, however, national capacities differ, reiterating the fundamental role of international cooperation, North-South, South-South and triangular cooperation and renewed partnerships to support national efforts.  The Group is committed to removing obstacles to the full realization of the rights of peoples to self-determination in all cases, in particular for those living under colonial and foreign occupation and other forms of alien domination.

ION JINGA ( Romania ), speaking on behalf of the European Union, recalled that the bloc’s first Social Summit in 20 years was held in 2017.  Members, as well as the European Parliament and the European Commission, jointly proclaimed the “European Pillar of Social Rights” as their main guidance for implementing the social dimensions of the 2030 Agenda, focusing on three main ideas:  Equal opportunities and access to the labour market; fair working conditions; and social protection and social inclusion.  Pointing out that high inequality hampers growth and undermines social cohesion, he noted:  “Income inequality in the European Union would have been much higher without the redistributive effects of taxes and transfers.”  Significant public expenditure on health care, education, employment, social cohesion, pensions and long-term care are also key parts of the European model.  Meanwhile, statutory minimum wage floors and collectively bargained minimum wages are also in place.  Outlining the kinds of support provided by the bloc’s social protection schemes, he also stressed the importance of the environmental pillar and linked the transition to a low-carbon economy to fair, inclusive and supportive policies.  In addition, the Union has invested in a youth guarantee providing good education and employment options — leading to the lowest youth unemployment level on record in Europe — as well as policies to reduce gender wage gaps and promote a balance between work and family life.

DANG DINH QUY ( Viet Nam ), speaking on behalf of the Association of Southeast Asian Nations (ASEAN), said that the 2030 Agenda and the group’s Vision 2025 are both entering their fourth year of implementation.  These two frameworks share many complementarities in uplifting the living standards of peoples.  But persistent disparities remain in access to education, employment and health services on the basis of gender, urban-rural location and other factors.  The Initiative for ASEAN Integration, which was launched in 2000, has served as a framework for mutual assistance and cooperation to narrow the development gap in the region.  ASEAN is committed to fully tapping the opportunities arising from the digital revolution and applying new technologies and innovations to enhance the quality of life for its citizens.  ASEAN is unwavering in its commitment to enhance the well-being and improve the quality of life of older persons, children, women, youth, persons with disabilities and other vulnerable groups.  In 2016, ASEAN leaders adopted the Vientiane Declaration on transition from informal to formal employment towards decent work promotion.

PENNELOPE ALTHEA BECKLES ( Trinidad and Tobago ), speaking on behalf of the Caribbean Community (CARICOM), said that this session’s theme is well-aligned to the agenda of the small island developing States comprised of the Barbados Programme of Action, the Mauritius Strategy and the Samoa Pathway, as well as the 2030 Agenda.  “For our region, higher education spending has been the most important driver behind the declining trend in income inequality”.  However, despite these notable advances and significant milestones such as reductions in maternal and child mortality, expansions in basic education, improvements in infrastructure and access, social development has been uneven and fragile.  The Community continues to grapple with key challenges including the adverse impacts of climate change, the deleterious effects of natural hazards and skill gaps in major economic sectors.  The rising level of youth unemployment is a serious concern as it contributes to a widening poverty gap.  To promote decent work, the Community’s Council on Human and Social Development developed the 2030 Human Resource Development Strategy.  The members of the Community cooperate in public health through the establishment of the Caribbean Public Health Agency.

JEAN-CLAUDE FÉLIX DO REGO ( Benin ), speaking on behalf of the African States and associating himself with the Group of 77, said the world’s poorest people need access to credit, education and training, as well as job opportunities and decision-making.  Calling for a structural transformation enabling inclusive economic growth, he said stronger universal health care systems are also needed to address the consequences of poverty — including malnutrition and nutrition — in many African countries.  Investments should focus on balanced rural development and an inclusive infrastructure benefiting poor people and persons with disabilities.  Noting that development has not sufficiently benefited the region’s poorest people, he said the continent has among the world’s highest income inequalities and its economic backbone remains highly dependent on the informal economy.  Across the continent, countries are addressing such challenges under the auspices of the New Partnership for Africa’s Development (NEPAD) and are working to mobilize the necessary domestic resources.  However, those funds are insufficient to address Africa’s economic bottleneck, he stressed, calling for international coordination, debt alleviation, new funding sources and the full implementation of the Addis Ababa Action Agenda for development financing.  He also expressed concern over such challenges as human trafficking and modern-day slavery, which are present in the region, and called for justice for victims.

CYNTHIA MAMLE MORRISON, Minister for Gender, Children and Social Protection of Ghana , speaking on behalf of the Economic Community of West African States (ECOWAS), said the subregion promotes cooperation and regional integration as a tool for accelerated economic development in West Africa.  Its Vision 2020 plan aims to significantly raise the standard of living through inclusive policies that guarantee a bright future, she said, adding that States of the region are also committed to implementing the 2030 Agenda and leaving no one behind.  “To improve the terms on which people take part in society means to enhance their ability, opportunity and dignity,” she said, noting that social exclusion can be based on membership in groups such as gender, race, caste, religion and others.  Those often lead to lower social standing and lower income and access outcomes.  Women in the region are more likely to be poor, marginalized from decision-making, unemployed or employed in unpaid labour.  Outlining ECOWAS policies to promote opportunities for women, she said skills development programmes and employment access plans are also in place for young people.  Turning to the challenge of child marriage — a major threat to the region’s social fabric — she drew attention to the ECOWAS Strategic Framework for Strengthening National Child Protection Systems as well as other response strategies.  Noting that social protection rates in most West African countries stands below 10 per cent, she described that number as unacceptable and described efforts to extend and enhance social protection coverage.

SEBASTIÁN VILLARREAL, Vice-Minister for Social Development of Chile , speaking on behalf of the Group of Friends of Older Persons, said that the increased number of older persons globally and the growing trend of ageing societies all over the world represent a significant change to the demographic structures of societies.  The number of older persons is projected to grow by 46 per cent globally between 2017 and 2030, outnumbering youth and children under 10 years old.  While this presents significant opportunities, it imposes a series of new challenges to development.  Greater attention must be paid to the specific challenges faced by older persons, including poverty, inadequate living conditions, homelessness, neglect, abuse, violence, malnutrition, unattended chronic diseases, lack of access to safe drinking water and sanitation, unaffordable medicines and treatments and income insecurity.  It is vital to design and implement programmes and policies that meet the needs of older persons.

ROSA HUERTAS ( Peru ) said that her country is proactively addressing social protection issues, including the fight against corruption that makes governance impossible.  Social protection policies are reaching all concerns of her country.  One clear example is progress on the fight against child anaemia.  The rate of children who die from anaemia is still high but has already begun to move in the right direction.  To improve the life of the population, the Government has designed policies based on investments.  It has also created State policy based on the fundamental rights of people throughout the life cycle and during crisis times, such as climate-related disasters.  Peru’s social protection policy is in line with the 2030 Agenda and the United Nations social protection floor.  Peru faces new challenges, such as urban poverty and demographic changes driven by international migration, which require new policies and responses.

CYNTHIA MORRISON ( Ghana ) said her country has made major strides towards reducing poverty and eradicating extreme poverty.  Its economy expanded by 8.5 per cent in 2017, and since 2008 the Government has been implementing social protection interventions in such areas as ageing, education and affirmative action.  Outlining five flagship initiatives, she described the Livelihood Empowerment Against Poverty programme; the Ghana School Feeding Programme; the National Health Insurance Scheme; and an Education Capital Grant, among others.  Beginning in 2019, the country’s productive safety net project — supported by the World Bank — will support graduated beneficiaries of other anti-poverty schemes with training, coaching and mentoring to take part in labour markets.  Addressing inequality and related challenges also require innovative and robust social protection systems, institutional structures and strong political commitments.  Notwithstanding such work, she said inadequate funding and a lack of sustainable finance still poses a threat and called for stronger partnerships and collaboration among States.

BEATE HARTINGER-KLEIN, Federal Minister for Labour, Social Affairs, Health and Consumer Protection of Austria , associating herself with the European Union, said her Government is planning to adopt a new “minimum income scheme” law providing more assistance for single parents and persons with disabilities, as well as others in need of care.  “On the other hand, we are linking benefits even more closely to people’s willingness to participate in the labour market and this to integrate into society,” she said, describing Austria’s contribution-based, pay-as-you-go pension system.  Other measures are aimed at raising employment levels and quickly integrating people into the national labour market, she said, adding that active market policies provide tailored, personalized employment programmes for young people, lower-skilled people, mothers re-entering the workforce, persons with disabilities and elderly persons.  Meanwhile, unemployment insurance contributions for low and middle-income earners will benefit up to 900,000 people.  Outlining additional policies — including family bonuses and longer-term care benefits — she said Austria adopted its first National Action Plan on Disability in 2012 and established a Senior Citizen’s Council to represent the interests of one quarter of the population.

High-level Panel Discussion

This afternoon, the Commission convened a high-level session on the priority theme “Addressing inequalities and challenges to social inclusion through fiscal, wage and social protection policies”.  Moderated by Elliott Harris, United Nations Chief Economist and Assistant Secretary-General for Economic Development, it featured a keynote address by Lucas Chancel, Co‐Director of the World Inequality Lab and of the World Inequality Database at the Paris School of Economics and Lecturer at the Paris Institute of Political Studies (Sciences Po).

The discussion also featured six panellists:  Andrei Dapkiunas, Deputy Minister for Foreign Affairs of Belarus; Sebastian Villarreal, Under-Secretary for Social Services, Chile; Hao Bin, Director General of the Department of International Cooperation, Ministry for Human Resources and Social Security of China; Stanfield Michelo, Master Trainer, African Regional Social Protection Leadership Curriculum (TRANSFORM) and former Director of Social Protection of Zambia; Rosa Pavanelli, General Secretary of the global union federation, Public Services International (PSI); and Manuela Tomei, Director of the Conditions of Work and Employment Department, International Labour Organization (ILO).  Participating as the lead discussant was Gil S. Beltran, Deputy Minister for Finance and Undersecretary of the Department for Finance, Philippines.

Mr. CHANCEL, delivering a keynote address, said there has always been — and will always be, to some extent — inequality between and within countries.  However, if those levels get too high, they can lead to catastrophe.  Today’s financial system “has been built around principles of opacity” and public statistics have largely been built around averages, leading to a data gap and an overall lack of transparency.  To shed more light, the World Inequality Lab and Database tracks tax data and surveys, finding in its 2018 “World Inequality Report” that despite high growth in the developing world, there has been an overall rise in global inequality.  Since 1980, the top 1 per cent of earners captured twice as much income growth as the bottom 50 per cent of the world population.

Citing a rise in private capital — and a simultaneous sharp drop in public capital — across wealthy nations, he warned that “that gives countries much less room to manoeuvre” through public investments.  In that context, he underlined the importance of egalitarian investments in education in public health, urging the United Nations to push forward new, more realistic indicators — that finally go “beyond [gross domestic product]” — and to create a global financial registry to fight tax evasion.

Mr. HARRIS declared:  “We are finally looking at the problem of inequality in its face.”  Indeed, the world finally sees the many harms caused by extreme inequality, which curtails important public investments, undermines trust in institutions and social cohesion and can even lead to conflict.  “This is not automatic, it is the result of policy choices,” he stressed, asking the panellists to provide perspectives and propose solutions to reverse those trends.

Mr. DAPKIUNAS said his country, Belarus, shares a common problem with many other middle-income nations — increasing inequality and a growing gap in the standard of living between the poor and the wealthy.  Calling for more support from regional organizations, the United Nations and global financial institutions, he said States, society and business must all play a role in addressing inequality.  Belarus also strives to develop social entrepreneurship and involve civil society in those efforts, including by providing support for small and medium-sized enterprises and woman-run businesses.  In addition, he said, the Government is working to provide more support for ageing persons; predict and respond to the social changes resulting from technological progress; and progressively develop education systems and labour markets.  Countries should also work together, assisted by the United Nations, to address emerging social challenges.

Mr. HAO outlined China’s efforts to address the challenges and social barriers facing rural migrant workers.  Noting that a significant percentage of China’s labour force consists of such workers, he said the Government has put in place safety schemes for those employed in the construction sector as well as a plan to ensure the full payment of wages.  New pensions and medical insurance plans were introduced in the 1990s, but by the end of 2008, only a small percentage of workers were covered by pensions — and most were in urban areas.  Since that time, the Government facilitated a sharp increase in that coverage, and today 95 per cent of the population has access to health insurance.  Displaying a graph showing the progressive drop in China’s rural poverty rate since 2012, he said the Government has committed to a clear, people-centred vision backed by firm political will.

Mr. VILLAREAL, sharing Chile’s experience, spotlighted the country’s success in reducing its poverty rate by 20 per cent since 2006.  Its inclusive social policies are rooted in the principles of creativity, innovation, justice and solidarity, with particularly strong support for families.  Many benefits — including basic health care and both primary and secondary education — are universal and free across society.  In 2018, Chile introduced a draft law aimed at ending inequality in higher education which will ensure that no qualified person will be left out based on a lack of resources.  The country’s social protection scheme targets families in the greatest need with cash transfers and economic incentives targeting women and others likely to work in the informal sector.  Emphasizing that today’s inequalities are complex, he stressed that, like Chile, countries should put in place a range of responses — even if the costs are significant.

Mr. MICHELO, outlining inequalities within Zambian society, said extreme poverty rates are higher among the country’s female-headed households and individuals with disabilities, among other marginalized groups.  Between 2003 and 2005, the Government undertook a series of interventions — including cash transfers — under the auspices of the National Social Protection Strategy.  As a result, a 2013 impact evaluation study revealed a drop in “headcount poverty” of 5.4 percentage points and a reduction in the poverty gap of more than 10 per cent.  In addition, the Government is enhancing income opportunities for poor and marginalized groups, especially girls and women.  Those programmes aim to expand women’s empowerment, not only in decision-making but also over their own bodies, he said.

Ms. PAVANELLI said a “new liberal age” beginning in the 1980s drove a shift to privatize resources that should be public, while introducing new asset classes such as student loans.  Every year, millions fall below the poverty line and fewer young people can complete their studies.  Warning that wage inequality remains high and wages remain insufficient to cover basic needs in many countries, she said fair labour relationships are needed to increase wages and create decent jobs.  The current “broken system” allows large corporations to benefit from tax evasion and corruption, she said, calling for a flat tax for multinational corporations and ultimately for the creation of an intergovernmental tax oversight and transparency body in the United Nations.  Public-private partnerships — called for in the 2030 Agenda — are in fact at odds with the goal of leaving no one behind, as they do not expand access to quality services and are driving States’ long-term debt.

Ms. TOMEI said economic trends in rich countries reveal that changes in employment patterns and wage distribution have been drivers of inequality.  Social transfers correct inequalities in part, but do not address the source of the problem.  Calling for measures that combine both social protection policies and wage policies, she said ILO has always advocated for wage-related policies — including a minimum wage — as an important social justice tool and a way to “level the playing field”.  Minimum wage laws, while sometimes controversial, can reduce gender wage gaps and reduce inequality.  However, minimum wages only set a floor — collective bargaining can set wages above that floor while enabling workers to benefit from a fair share of the fruits of their labours.  In addition, minimum wages should be regularly adjusted in consultation with employers, and not lie dormant for years while inflation rises, and must be strictly enforced.

Mr. BELTRAN shared the Philippines’ experience, describing national efforts to strike a balance between keeping the growth high and protecting people.  Recent fiscal reforms include a marginal tax increase aimed at accelerating infrastructure investment as well as boosting investments in the population — including through education, health care and social protection programmes.  The role of Government has evolved from that of an active player several decades ago to that of a “referee” and enforcer of collective bargaining agreements.  The private sector, meanwhile, is driving the country’s growth today.  Those changes are set against the backdrop of a broad national microinsurance initiative, which helped thousands of people rebuild their lives following Typhoon Haiyan in 2013.

In the ensuing discussion, several speakers said the panellists’ presentations demonstrated that all countries are struggling with the same challenges.  Many outlined their own countries’ experiences and achievements in reducing inequality, describing concrete policies such as those incentivizing employers to provide more stability and higher wages.  Meanwhile, some delegates cited stubborn challenges including slow wage growth, limited domestic resources and increasing digitalization, calling for a “new paradigm” to address inequality and poverty.

The European Union’s was among the speakers who welcomed recent progress in expanding social protection schemes around the world.  However, he also asked the panellists what can be done to ensure social protection coverage for the more than 50 per cent of people who still lack it.

One delegate asked the panellists for their thoughts about pre-tax market outcomes, in other words, whether they considered inequality to be acceptable at any stage or level — provided Governments later swoop in to redistribute such wealth.  Another speaker asked them to elaborate on the appropriate balance between private and private capital.

Several speakers, including the representatives of Algeria and the Dominican Republic, spotlighted the importance of education and reducing illiteracy.  The former stressed that “it is only when an individual is educated that one knows one’s rights” and can address the challenges before him or her.

Mr. HARRIS, posing several additional questions, asked all speakers to consider whether they felt the tools needed to drive down inequality are currently available.  He also asked how effective fiscal and wage policies can be in informal employment settings.

Ms. TOMEI, responding to the questions posed by the European Union’s delegate, said social protection systems must be linked to the quality of employment.  The idea is to reduce the pressure on social protection schemes by improving work, she said, noting that all workers — irrespective of their contractual status — should be able to benefit from social protection systems.

Mr. HAO agreed with various speakers who called on the United Nations — and the Commission in particular — to promote social protection schemes at the global level.

Mr. MICHELO said expanding social protection to the informal employment sector will require stronger capacity at the national, organizational and individual levels.

Ms. PAVANELLI called for a return to policies that recognize the value of both labour and workers.

Mr. DAPKIUNAS cautioned that specific States — such as middle-income countries — face specific problems, some of which are not currently addressed in international development plans.

Meanwhile, Mr. VILLARREAL said assessment and compliance schemes will be needed to ensure that all implemented policies and programmes actually achieve the goals they were put in place to achieve.

Also speaking were representatives of France, Netherlands, Morocco and Finland.

The representatives of the non-governmental organizations Baha’i International Community, Our Lady of Charity of the Good Shepherd and UNANIMA also participated.

*     The 1 st Meeting was covered in Press Release SOC/4863 of 7 February 2018.

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Addressing education inequality with a next generation of community schools: A blueprint for mayors, states, and the federal government

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February 24, 2021

This report was written by the Brookings Institution’s Task Force on Next Generation Community Schools .

During few times in our country’s history has leadership in education been more critical. Far too many communities continue to face the enduring impacts of systematic racism and generational poverty. Our nation’s schools have also been impacted by COVID-19 and, for many, the effects are staggering and could last for years. At the same time, as the pandemic shuttered school doors across the country, numerous education allies rose to the occasion—from families to community nonprofits to employers to media companies. As argued in the Brookings report “ Beyond reopening schools: How education can emerge stronger than before COVID-19 ,” public support for the central role schools play in community life has never been higher.

Taken altogether, this situation presents a series of linked challenges, as well as what may be a once-in-a-century opportunity to reimagine school in ways that nurture the gifts and talents of every child and family. By seizing the moment, we can lay the foundation for a new way of schooling that our nation needs—one that is flexible, customized to local needs and equitable, and that brings together educators, communities, and families to support every student every day. This will require an immediate investment in the scaling of a proven solution that addresses educational inequities and leapfrogs our school system toward a new way of teaching and learning that honors local assets and helps students develop the competencies and skills they need to thrive in work, life, and citizenship.

Community schools integrate, rather than silo, the services that children and families need, thus ensuring that funding for health, mental health, expanded learning time, and social services is well spent and effective.

We, the Brookings Institution’s Task Force on Next Generation Community Schools, recommend the transformation of U.S. schools into community schools—centering initial efforts on the 4 percent of school districts that educate approximately 40 percent of the country’s children, include urban and rural communities across the nation, and have the greatest concentration of unmet student needs (see Figure 1). Community schools integrate, rather than silo, the services that children and families need, thus ensuring that funding for health, mental health, expanded learning time, and social services is well spent and effective.

By taking this approach of progressive universalism, the mayors, states, and the federal government would rapidly reach the greatest numbers of students and families most in need of support today and create a critical mass of schools that embody a powerful and community-informed educational approach that closes the equity gap and lays the foundation for 21st century teaching and learning.

What are community schools?

According to the Coalition for Community Schools , a community school is “both a place and a set of partnerships between the school and other community resources. Its integrated focus on academics, health and social services, youth and community development, and community engagement leads to improved student learning, stronger families, and healthier communities.” In community schools , every family and community member is a partner in the effort to build on students’ strengths, engage them as learners, and enable them to reach their full potential. Although community schools look a little different in each community, research indicates that four core pillars of work drive improved student outcomes:

• Expanded and enriched learning time. This includes after-school and summer programs, as well as enriching the curriculum through culturally relevant, real-world learning opportunities.
• Active family and community engagement. This includes both service provision and meaningful partnership with students, families, and community members in which families and communities support children’s learning through leadership and decisionmaking roles in the school.
• Collaborative leadership and practices. This includes the coordination of community school services, as well as site-based, cross-stakeholder leadership teams, teacher learning communities, and the ongoing sharing and use of early warning data to drive continuous improvement in support of students and their families.
• Integrated student supports. This includes supports such as mental and physical health care, nutrition support, and housing assistance, which are often provided through strategic community partnerships.

The synergy and interaction among the four pillars create the necessary conditions for a robust learning environment for students within and beyond the classroom.

7 reasons why a next generation of community schools can address education inequality and lay the foundation for 21st century teaching and learning

1. Community schools serve as an equity strategy . A growing body of evidence shows that community schools increase equitable access to resources and whole child supports that create the conditions for learning and healthy development for all children, including students of color, English language learners, students from low-income families, and students with disabilities.

2. Community schools improve teaching and learning. Community schools actively engage students as learners by blurring the lines between school and community and by offering rigorous, project-based curricula and culturally responsive pedagogy that connect to students’ lived experiences .

3. Community schools are community driven. A predominant feature of the country’s most mature and effective community schools initiatives is that they value and embrace community knowledge and assets and have been launched and sustained through authentic collaboration and shared leadership across school districts, students, families, and community-based organizations.

4. Community schools partner with students and families . A growing body of evidence indicates the benefits of family engagement and leadership in driving student academic outcomes. Schools that have developed trusting relationships with families and provided leadership training, family networking and mentoring opportunities, and information on the education system and how to navigate it experience improved student attendance, achievement, graduation rates, and engagement in post-secondary education.

5. Community schools create a culture of connectedness. Evidence indicates  that being connected to school is the strongest universal prevention strategy that we have as a society to help young people stay and succeed in school. A culture of connection in school leads not only to better attendance, grades, test scores, high school graduation rates, and post-secondary success, but also to better physical and mental health, fewer suicides, less depression, reductions in teenage pregnancies, and reduced involvement with the juvenile justice system.

6. Community schools serve as “post-secondary success accelerators.” Research indicates the benefits of supporting students with college and career readiness activities . To set students up for future success, community schools have provided college and career development exposure that has led to positive student outcomes both before and during the pandemic.

7. Community schools are incubators of innovation. Community schools are laboratories of learning and have been well suited to spreading innovations developed by schools and community partners. Important to this are the data-informed collaborative structures that community schools have in place.

4 recommendations to scale next generation community schools nationally

The conditions for scaling exist with a diverse array of organizations dedicated to advancing next generation community schools, including the Coalition for Community Schools , teachers’ unions, parent organizations, advocacy groups, and state and local coalitions, as well as expanded learning providers, higher education institutions, not-for-profit organizations (e.g., Communities In Schools), charter school networks, and capacity-building intermediaries. And the time to scale is now. As such, the four steps below provide a blueprint for scaling a next generation of community schools that can be used by federal, state, and local level policymakers.

STEP 1: Prioritize

The U.S. administration should take the following immediate executive actions to galvanize key stakeholders at the federal, state and local levels to scale the community schools approach to at least half of the 4 percent of school districts with greatest unmet need:

A) Reinstate a principal office. Reinstate a principal office—with senior political leadership—at the U.S. Department of Education focused on supporting the whole child.

B) Establish a White House Office of Children and Youth. Establish a White House Office of Children and Youth that will organize cross-departmental and interagency efforts, including to ensure rapid recovery from COVID-19, address longstanding impacts of structural inequality and systematic racism, and advance opportunity.

STEP 2: Promote

Promote policies and high-quality capacity building that result in broader, effective implementation of the community schools strategy:

A) Support children’s cabinets. Support expansion and enhancement for state and local level children’s cabinets that facilitate the integration and coordination of cross-sector resources for whole-child supports.

B) Expand AmeriCorps. Expand AmeriCorps to meet the social, emotional, and academic needs of students, particularly those in the 466 school districts most adversely impacted by COVID-19.

C) Address food insecurity. Address food insecurity to support students’ engagement in learning.

D) Support local capacity. Build capacity within the U.S. Department of Education to support local educational agencies (LEAs) and state education agencies (SEAs), as well as their governmental (e.g., Department of Health) and nongovernmental (e.g., community nonprofits) partners, to strengthen community school partnerships through high-quality technical assistance .

E) Establish technical assistance centers. Establish next generation community school national and regional technical assistance centers to build the professional capacity of community school leaders and to create national peer-learning communities, with a focus on the 4 percent of school districts most affected by the hardships of COVID-19.

F) Develop state and local policies. Develop state and local level community school policies and regulations that enable the advancement of robust community school initiatives through financial, implementation, and technical support.

STEP 3: Innovate

Pursue a robust research agenda that examines the impact of next generation of community schools on educational outcomes:

A) Invest in an improvement science learning agenda. Make community schools a priority area for a rapid-cycle learning agenda and a 10-year improvement science research and development effort, as well as a focus area for Institute of Educational Science (IES) and Education and Innovation (EIR) grants.

B) Assess lost learning. Assess the scale and scope of lost learning opportunities.

STEP 4: Sustain

Repurpose and provide funding to initiate and sustain systemic scaling of a next generation of community schools.

A) Use ESSA guidance and regulations. Within the Department of Education, use Every Student Succeeds Act (ESSA) guidance and regulations to advance a next generation of community schools.

B) Utilize community schools for COVID-19 recovery. Utilize community schools as a critical COVID-19 recovery strategy and an eligible use of federal COVID-19 relief dollars.

C) Form a community school success corps. Form a Community School Success Corps (CSSC) to provide diverse teams of critical additional “people-powered” support and infrastructure to expand community schools with the capacity needed to provide holistic, personalized support to positively impact students, families, and communities across the country.

D) Support children and youth. Direct the U.S. Department of Education to work with other departments that support children and youth to reduce barriers associated with braiding and blending funding from multiple federal departments, agencies, and programs that support community schools.

E) Reinvigorate and expand the Promise Neighborhood Grants Program . Center the promise neighborhood grants program around the community school strategy and focus funding on the 4 percent of school districts most impacted by COVID-19, as a way to activate and connect local community resources to invigorate building back better.

F) Include community schools in Title 1 plans. Create incentives for local school districts most affected by the pandemic and use the community school strategy as part of their Title I plans.

G) Increase federal funding. Ensure robust support for the federal funding streams that support community schools.

Download the full report>>

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• Covid-19 and the Social Sciences
• Democracy and Pandemics

How Does Social Inequality Affect Government’s Ability to Deal with Covid-19?

In this “ Covid-19 and the Social Sciences ” essay, Julia Lynch asks how social inequality affects government’s ability to deal with the Covid-19 crisis. She argues that social inequality makes pandemics more severe not just for the most vulnerable, but for the whole of society. Lynch notes that many of the preexisting conditions that increase the severity of Covid-19—medical and not—are consequences of social inequality and that this same inequality will likely prolong the pandemic. She insists that additional income support and personal protective equipment guarantees in the short term, as well as a more equal distribution of income in the long term, are required to mitigate social inequality, lowering society’s vulnerability to a global pandemic like Covid-19.

SARS-CoV-2, the virus responsible for Covid-19, is not an equal opportunity killer. That the burden of disease, even novel diseases like Covid-19, is distributed unequally according to social rank is a central finding of the scholarly discipline of social epidemiology, built on nineteenth-century scholarship by Friedrich Engels, Louis-René Villermé and Rudolf Virchow. It is heartening that journalists, policymakers, and medical professionals have become sensitized over the last few weeks to the strikingly disparate Covid-19 outcomes across race, ethnicity, and class. However, less attention has been paid to the fact that social inequality makes the pandemic more severe, not only for the most vulnerable, but for all of us. It’s worth thinking clearly about why that is so. I outline three main mechanisms: First, inequality makes it more likely that the people who get the virus will spread it—and while people at the bottom of the social hierarchy are more likely to get it, everyone is at some risk. Second, social inequality makes the load on health systems at the peak of pandemic waves higher than it would be in a more equal society, which places anyone who needs hospitalization for any reason at greater risk. Third, social inequality creates pressure to lift social distancing restrictions too quickly, which puts all of us at risk of second and subsequent waves.

We won’t be sure until we have access to more complete and cross-nationally comparable data, but given what we know about the social determinants of health more broadly, it seems safe to conclude that social inequality has very likely increased the rate of spread of SARS-CoV-2 in the first wave of the Covid-19 pandemic in the United States. This is because social inequality affects the distribution of epidemiologic risks and protective factors in ways that make the novel coronavirus more likely to spread.

For example, early in the pandemic, people with limited access to high-quality health information were less informed about the need for social distancing and handwashing. As it spread, lower incomes made it more difficult to avoid social contact by ordering delivery of groceries or staying home from work. A lack of protective social policies made staying home from work in order to avoid infection impossible for many lower-wage workers. Members of racial and ethnic minorities are highly concentrated in the essential jobs with most limited access to personal protective equipment—e.g., public transportation, meat packing, and the lower rungs of the healthcare sector—further exposing them to the risk of infection. Decades of stagnant investment in public housing and transportation have also increased the likelihood that people of lower socioeconomic status living in major cities will live and travel to work in crowded conditions, leading to still greater exposure. All of these differential exposures mean that people of lower socioeconomic status—i.e., those who belong to stigmatized minority groups, have low incomes and wealth, low levels of education, and work in low-status occupations—have borne the brunt of exposure to the virus.

Social inequality also structures the prevalence of preexisting conditions which increase the severity of illness from SARS-CoV-2. The stresses of poverty and racism, occupational hazards, living in areas with higher levels of particulate air pollution, and lack of timely access to affordable medical care are all associated not only with lower socioeconomic status, but also with conditions such as diabetes, cardiovascular disease, and chronic pulmonary disease that worsen the course of Covid-19. 1 For example, see Amir Emami et al., “ Prevalence of Underlying Diseases in Hospitalized Patients with Covid-19: A Systematic Review and Meta-Analysis ,” Archives of Academic Emergency Medicine 8, no. 1 (2020): e35.; Eric B. Brandt et al., “ Air Pollution, Racial Disparities, and Covid-19 Mortality ,” Allergy and Clinical Immunology , May 7, 2020; and Javier Valero-Elizondo et al., “ Persistent Socioeconomic Disparities in Cardiovascular Risk Factors and Health in the United States: Medical Expenditure Panel Survey 2002–2013 ,” Atherosclerosis 269 (2018): 301–305. Those who are most severely affected by the disease carry higher viral loads, shed more virus, and are hence more likely to infect those with whom they come into contact. They are also those who are least able to social distance, stay home from work, and avoid communicating the disease to others. In this way, social inequality has led to a faster spread and a higher peak of the pandemic than would be expected in a more equal society.

Social inequality worsens Covid-19

Even before the first wave of the pandemic had begun to flatten and subside in the United States, pressure to reopen the economy was mounting. Of course, some degree of reopening makes sense. As we reinforce our healthcare systems and learn more about how the virus does and does not spread, as well as who has already acquired immunity, it is becoming possible to identify economic and social activities that present minimal risk. But reopening economic activity too quickly increases the risk and severity of subsequent waves, and pressure to do so is intensified by high levels of inequality.

One source of pressure to reopen is the dire financial circumstances affecting those whose livelihoods have been hit by the pandemic. In a survey conducted in late April by the Pew Research Center , more than half of adults living in households with incomes below two thirds of the median reported that someone in their household had lost a job or taken a pay cut due to the coronavirus outbreak. But less than a quarter of adults in this income range reported having savings sufficient to cover their expenses for three months in case of an emergency.

Stimulus checks issued to taxpayers will buffer the impact of the economic shutdown for many families, but a one-time payment of $1,200 will not be a long-term replacement for lost jobs and wages. Meanwhile, weak administrative systems and restrictive rules in many states mean that of the more than 44 million Americans who have filed for unemployment benefits since the beginning of March 2020, and a study released in May showed almost half had yet to receive benefits. In the absence of universal, comprehensive insurance against job and income losses, most Americans will be unable to survive a long-term shutdown of the economy.

The large number of families that cannot afford to remain out of work with only the meager public supports available to them will inevitably create pressure to reopen the economy—not only those sectors of the economy that can safely begin to operate with social distancing, but also those services such as schools and child care where such distancing is far more difficult and which will also need to reopen if adults with children are to return to work. Recurrent waves of infection generally occur in pandemics similar to the novel coronavirus outbreak; they are likely to be steeper and closer together as a result of the intense pressure to reopen that our unequal economy generates.

The political consequences of gross inequality are also likely to provide fodder for a too-hasty and inadequately supported reopening of the economy. Socioeconomic inequality translates into political inequality: People of lower socioeconomic status participate in politics at lower rates (and are even further underrepresented in politics because of their higher rates of incarceration and death). 2 David Cottrell et al., “ Mortality, Incarceration, and African American Disenfranchisement in the Contemporary United States ,” American Politics Research 47, no. 2 (2019): 195–237. Furthermore, political elites are less responsive to the policy preferences of constituents with lower socioeconomic status than to those of economic elites. 3 See Martin Gilens, Affluence and Influence: Economic Inequality and Political Power in America (Princeton, NJ: Princeton University Press, 2012). Outside of the electoral arena, the preferences of the superrich and business elites are even more thoroughly reflected in US policy, not least because of a decades-long strategy of reducing the influence of working-class people by undermining organized labor.

To the extent that socioeconomic elites prefer a faster reopening of the economy, their unequal influence in politics is likely to hasten a second wave of the pandemic. The concentration of resources at the top of the social hierarchy leads to hoarding behavior in highly unequal societies, as those at the top of the hierarchy seek to protect their social and economic privileges—including the privileges of resuming prepandemic patterns of business, consumption, and social life—despite risks to workers.

Enlightened political and economic elites may recognize that reopening the economy prematurely will do more harm than good. But when schools, neighborhoods, and social worlds are segregated by race and class, it becomes more difficult for the powerful to imagine that they share a common fate with the “lower” social orders. Consider, for example, Wisconsin Supreme Court justice Patience Roggensack’s comment during a hearing of a lawsuit brought by the Wisconsin Republican legislators against Governor Tony Evers’ stay-at-home order. Roggensack appeared to downplay the seriousness of a coronavirus outbreak among meatpacking workers on the grounds that it didn’t affect “the regular folks in Brown County.”

Mitigating social inequality and Covid-19

What, if anything, can we do at this point to break the cycle of inequality, infection, shutdown, and premature reopening? First, robust income support policies that allow people who are infected or at risk of infection to stay home from work without fearing loss of livelihood are essential. Given both the political benefits of universal social policies and the underfunded, overstretched information systems on which most government transfer programs are currently running, access to income replacement should be made unconditional, rather than means-tested or subject to proof of medical condition.

Second, the people whose labor keeps society going—both as “essential workers” during waves of active pandemic and those who must work in the early stages of economic reopening—must be supplied at no cost with effective personal protective equipment. No bus driver, sanitation worker, grocery store clerk, nursing home aide, meat packer, hospital orderly, or teacher should be sent to work without a face shield and daily supplies of N-95 masks, gloves, and hand sanitizer.

Third, after decades of declining returns to labor, we urgently need macroeconomic and labor market policies that will equalize how the benefits of economic activity are distributed. Policies that stimulate job creation and promote wage growth for low- and middle-income workers will not only boost the economic recovery, but also make recurrent waves of the pandemic less severe. That is because well-paid workers with job security are less prone to the preexisting conditions that make them vulnerable to Covid-19, and are better able to weather time off work without pressuring for premature reopening. More equal distribution of income will also, over the long run, help to correct some of the political imbalances that have contributed to the uncontrolled growth of economic inequality and create a sense of linked fate as Americans that is critical for effective pandemic response.

References:

Julia Lynch

Julia Lynch is a political scientist who studies the comparative politics of health and social policies in advanced industrial democracies, particularly Western Europe and North America. For the last ten years, her research has centered on three themes: public beliefs about equity in the realm of health and health care, mainly in the United States; the relationship between health and home mortgage foreclosure, again mainly in the United States; and the politics of policymaking surrounding health inequalities by race, gender, socioeconomic status, and region in the United States and Europe. Prof. Lynch is a former fellow of the SSRC’s International... Read more

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Society after pandemic, digital media, religious authority, and the covid-19 pandemic, in china, pandemic diaries unite, and divide, a nation, health econometrics and the covid-19 pandemic.

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Policy Plans to Reduce Poverty and Inequality

What set of policy interventions can best mitigate and prevent poverty and reduce inequality? Drawing on poverty data and available research evidence, the Center has developed comprehensive recommendations for promising policy strategies to address poverty and inequality now while disrupting their upstream drivers.

The Center produced a white paper outlining an  all-inclusive plan to cut poverty in California , on behalf of  EPIC (End Poverty in California) :

• Read the report (2022):  Ending Poverty in California: A Blueprint for a Just and Inclusive Economy  

The Center developed a plan of comprehensive policy recommendations to  permanently reduce California poverty by focusing on children  - through providing access to long-term asset- and skill-building opportunities, while also addressing families' needs now. Partial funding for this research was provided by GRACE, Inc. The research was utilized to inform areas of focus for the  End Child Poverty in California  coalition.

• Read the executive summary (2015):  The Equal Opportunity Plan
• Read the  Pathways Magazine  excerpt (2015):  Reducing Poverty in California ... Permanently
• Read the full report (2015):  Why Is There So Much Poverty in California?

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Addressing inequalities and challenges to social inclusion through fiscal, wage and social protection policies

February 13, 2019.

Abdoulaye Mar Dieye

Special Advisor to the Administrator

Excellencies, Ladies and Gentlemen,

Yesterday we had a very insightful G 77 high-level interactive dialogue on this very central topic!

Today’s CSD dialogue will certainly provide added perspectives to our yesterday's discussion.

In fact, this year must be the “inequalities year”!

The August 2019 Biarritz G7 Summit will focus on inequalities.

UNDP’s next series of Human Development Reports, starting this year, will zoom on how the world can accelerate the reduction of inequalities!

This over focus on inequalities is not surprising! simply because reducing inequalities is at the heart and the intersection of all our global agendas; be it sustainable development, sustaining peace or prevention.

Yet we are collectively walking a snail’s pace!

And yet we have powerful weapons in our policy arsenal to address inequalities. Fiscal policy, our topic of today, is one of them.

We are all well too familiar with what is known as the Nordic Welfare Model. While many economies struggle with sizeable deficits and high unemployment, the Nordic countries have, by and large, enjoyed favorable economic growth with, at the same time, social gaps that continue to be narrow.  The Nordic model provides an example of how fiscal policy can be more actively used to achieve equity, while at the same time enhancing efficiency. The experience of this group of countries shows that it is possible to achieve a strong economy while relying upon a large public sector to achieve a more equitable society through high taxes that fund extensive social insurance and welfare programs.  And these countries have the lowest income inequality.

Target 10.4 of SDG Goal 10 is then achievable! It just needs some acceleration.

It will require three sets of policies.

i.    Expanding the fiscal space, which is quite narrow in many developing countries (the tax to GDP ratio stands at 13-17% on average in developing countries; compared to an average of 45% in Nordic Countries). As domestic resources become more significant in the face of changing fiscal landscape (with ODA declining), it is increasingly important to strengthen the domestic resource base and channel that for national development. For example, the UN estimates that LICs will have to increase their annual public spending by up to 30 percent of GDP to achieve the SDGs.

UNDP has been active in supporting countries to strengthen their tax base, for example through our joint initiative with OECD, called Tax Inspectors without Borders. At TIWB we have been supporting some 30 countries in boosting domestic revenue mobilization by improving tax auditing and tightening compliance efforts across Africa, Asia, Europe, Latin America and the Caribbean. TIWB is on track to meet its goal of delivering 100 deployments of tax auditor experts to developing countries by 2020. And this is a high return investment. On average, for 1$ invested in improving a country’s tax administration’s capacity there is a return of US $ 100 in tax collection.

ii.    Re-distribution policies (including redistributive taxes, anti-poverty programs, minimum wage policies) are key instruments governments have used to tackle poverty and inequality. However, the degree to which these policies are progressive vastly differ across countries. In general, there has been a decline in the progressivity of taxes, and this is cause for concern. One example is a sharp decline in corporate income taxes. Attention will need to be placed on how such a policy (meant to attract more capital) is also having adverse implications on inequality. iii.    But it is equally important to think of broader macroeconomic policies that can tackle inequality at its core and prevent the kind of market failures it leads to. For example, countries are more unequal when there is ‘jobless growth’ i.e. economic growth is driven by a few sectors, such as oil or capital-intensive sectors. UNDP has been advocating for countries to adopt integrated policies that can enable countries to progress, ensuring no one-is left behind, including through MAPS (which is Mainstreaming, Acceleration and Policy Support) Engagements for the SDGs.  These include creating opportunities for people – especially women- in lower income thresholds, for example, through promoting labor intensive sectors; developing higher skilled jobs (for example moving from producing textiles and garments to electronics and automobiles); leveraging trade policies (that can promote certain categories of employment, while also reducing price of consumer goods for low-income households); ensuring equal opportunity to quality education; providing better access to finance and banking for the poor; and access to health care and social services, among others. Let me conclude by saying that to achieve these accelerations, it will be critical that policy debates in countries are less inequality-blind by using the 2030 Agenda as a guiding framework. It will be critical that policy dialogues, including article IV consultations with the IMF and Budget discussions at national parliaments factor in such considerations.

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PHILIPPINES: Reducing Inequality Key to Becoming a Middle-Class Society Free of Poverty

MANILA, November 24, 2022 – Policies that support employment and workers, raise education quality and improve access, boost rural development, and strengthen social protection can reduce inequality, thus enhancing Filipino peoples’ chances for improving their well-being.

In a report titled “Overcoming Poverty and Inequality in the Philippines: Past, Present, and Prospects for the Future” released today, the World Bank said that the Philippines has made important gains in poverty reduction. Driven by high growth rates and the expansion of jobs outside agriculture, poverty fell by two-thirds—from 49.2 percent in 1985 to 16.7 percent in 2018. By 2018, the middle class had expanded to nearly 12 million people and the economically secure population had risen to 44 million.

Yet inequality remains high: the top 1 percent of earners together capture 17 percent of national income, with only 14 percent being shared by the bottom 50 percent. With an income Gini coefficient of 42.3 percent in 2018, the Philippines had one of the highest rates of income inequality in East Asia.

“The Philippines aims to become a middle-class society free of poverty by 2040, but we know from global experience that no country has managed to make this transition while maintaining high levels of inequality,” said Ndiamé Diop, World Bank Country Director for Brunei, Malaysia, Philippines, and Thailand . “Inequality of opportunity and low mobility across generations wastes human potential and slowdown innovation, which is crucial for building a competitive and prosperous economy that will in turn improve the well-being and quality of life of all Filipinos.”

The report highlights that the expansion of secondary education, mobility to better-paying jobs, access to basic services, and government social assistance have started to reduce inequality since the mid-2000s. However, unequal opportunities, slow access to tertiary education among low-income households, inequality in returns to college education, and social norms putting the heavier burden of childcare on women has slowed down the narrowing of inequality in the Philippines.

Despite the strong recovery of growth and the labor market, COVID-19 pandemic has partly reversed decades-long gains in reducing poverty and inequality in the Philippines. It halted economic growth momentum in 2020, and unemployment shot up in industries that require in-person work. In 2021, the national poverty rate rose to 18.1 percent despite government assistance.

Recovery in the Philippines is uneven across the income distribution and the poorest who suffered the most from COVID have yet to fully recover their incomes. With food prices going up, many families coped by reducing their consumption, including eating less. These coping strategies can have serious consequences on the health and nutrition of children in these vulnerable households.

The report says that inequality starts even before birth and is perpetuated over the life cycle. It starts with maternal nutrition and health during pregnancy. Differences continue into childhood, where disparities in access to health care, proper nutrition, safe drinking water, sanitation, and quality education determine the extent to which a child’s human capital develops.

“Inequality shapes outcomes later in life, such as employment opportunities and income, which in turn influence how much support adult Filipinos are able to provide for their children to help maximize their potential,” said Nadia Belhaj Hassine Belghith, Senior Economist with the East Asia Poverty Global Practice covering Thailand and the Philippines who led the study.

The report says that policy priorities to reduce inequality in the Philippines can be structured around three themes, including healing the pandemic’s scars and building resilience, setting the stage for a vibrant and inclusive recovery, and promoting greater equality of opportunity.

Healing pandemic’s scars will require promoting greater vaccine booster uptake, overcoming the learning loss due to COVID-19, strengthening social assistance, unemployment insurance programs for the informal sector, and taming inflation.

Setting the stage for vibrant recovery entails reskilling of workers, promoting entrepreneurship, increasing the participation of women in the labor force, and raising the productivity of agriculture.

Promoting greater equality of opportunity entails increasing access to quality health care, increasing equality of opportunity in education, and improving access to quality housing, among others. Equality of opportunity needs to target the lagging regions and other people disadvantaged in accessing these because of the circumstances of their birth.

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Six policies to reduce economic inequality

• September 10, 2014
• By john a. powell

Almost three years to the date since Occupy Wall Street first raised the consciousness of Americans about the wide economic disparities between the richest one percent versus the 99 percent of U.S. earners,  new Federal Reserve data confirms that wealth and income inequality in the U.S. is accelerating.

Results from the Fed's 2013 Survey of Consumer Finances show that the top 3 percent own 54.4 percent of America's wealth, an increase of almost 45 percent since 1989 and the bottom 90 percent own only 24.7 percent of wealth, a drop of 33.2 percent over the same time period. Similarly, the share of total income for the top 3 percent of families rose when compared to 2010 but the bottom 90 percent of families saw their share of total income declinePerhaps not surprisingly, the survey found significant disparities by race, class, homeownership status and education; with income and wealth increasing for non-Hispanic whites, the rich, homeowners and those with more education while it decreased for blacks, lower income households, renters and those with less than a college education.

While discouraging, it is important for Americans to understand that inequality is not the inevitable side effect of capitalism. Public policy can help to reduce inequality and address poverty without slowing U.S. economic growth.

Toward this goal, researchers from the  Haas Institute for a Fair and Inclusive Society at UC Berkeley  point to the following six evidence-based policy solutions that can have a positive effect on reversing rising inequality, closing economic disparities among subgroups and enhancing economic mobility for all:

1. Increase the minimum wage.

Research shows that higher wages for the lowest-paid workers has the potential to help nearly 4.6 million people out of poverty and add approximately $2 billion to the nation's overall real income. Additionally, increasing the minimum wage does not hurt employment nor does it retard economic growth.

2. Expand the Earned Income Tax.

In recent years, the EITC has been shown to have a positive impact on families, lifting roughly 4.7 million children above the poverty line on an annual basis. Increases in the EITC can pull more children out of poverty while providing more economic support for the working poor, especially single parents entering the workforce.

3. Build assets for working families.

Policies that encourage higher savings rates and lower the cost of building assets for working and middle class households can provide better economic security for struggling families. New programs that automatically enroll workers in retirement plans and provide a savings credit or a federal match for retirement savings accounts could help lower-income households build wealth. Access to fair, low-cost financial services and home ownership are also important pathways to wealth.

4. Invest in education.

Differences in early education and school quality are the most important components contributing to persistent inequality across generations. Investments in education, beginning in early childhood with programs like Head Start and Universal Pre-K, can increase economic mobility, contribute to increased productivity and decrease inequality.

5. Make the tax code more progressive.

It is a great irony that tax rates for those at the top have been declining even as their share of income and wealth has increased dramatically. The data show we have created bad tax policy by giving capital gains -- profits from the sale of property or investments -- special privileges in our country's tax code; privileges that give investment income more value than actual work. Capital gains tax rates must be adjusted so that they are in line with income tax rates. Savings incentives structured as refundable tax credits, which treat every dollar saved equally, can provide equal benefits for lower-income families.

6. End residential segregation.

Higher levels of racial residential segregation within a metropolitan region are strongly correlated with significantly reduced levels of intergenerational upward mobility for all residents of that area. Segregation by income, particularly the isolation of low-income households, also correlates with significantly reduced levels of upward mobility. Eliminating residential segregation by income and race can boost economic mobility for all.

But getting policymakers to prioritize these policies will depend on the actions of advocates, voters and other supporters with a vision for a fair and inclusive society so strong that they overwhelm powerful forces that seek to maintain the status quo. 

Each of these policies, if carefully implemented, has the potential to lift working families out of poverty, support greater economic mobility and/or reduce the growth of inequality. All of these policies could be enacted at the local, state and federal levels if there is political will. While there is still some disagreements of the best way to reduce inequality, there is a growing consensus that inequality should be reduce.

Recently the  IMF joined this consensus in finding  that inequality reduces overall economy growth as well as challenges basic democratic principle and fairness. But getting policymakers to prioritize these policies will depend on the actions of advocates, voters and other supporters with a vision for a fair and inclusive society so strong that they overwhelm powerful forces that seek to maintain the status quo.

This article originally appeared on the Huffington Post .

The ideas expressed on the Haas Institute blog are not necessarily those of UC Berkeley or the Division of Equity & Inclusion, where the Haas Institute website is hosted. They are not official and not of one mind. Thoughts here are those of individual authors. We are committed to academic freedom, free speech and civil liberties. 

Social Equity in the Philippines: A Continuing but Elusive Promise

• First Online: 26 May 2019

Cite this chapter

• Alex B. Brillantes Jr 2 ,
• Maria Victoria R. Raquiza 2 &
• Maria Pilar M. Lorenzo 3  

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In this chapter, Brillantes, Raquiza, and Lorenzo focus on the imperatives of social equity as a fundamental—but normative—principle for contemporary Philippine public administration. The pursuit of social equity may be seen as a response to the problems of pervasive poverty and inequality in spite of, paradoxically, rapid economic growth. The chapter cites two government programs that ostensibly aim to bring about social equity, the Conditional Cash Transfer program and the Tax Reform for Acceleration and Inclusion law. Evidence has shown that both programs have yet to make a significant impact to redistribute wealth in a lasting way within the context of social equity. Hence, the chapter argues that social equity in the Philippines is a continuing process but remains an elusive goal.

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These senior scholars of public administration included Raul P. de Guzman, Onofre D. Corpuz, Ledivina V. Carino, Nestor N. Pilar, and Romeo B. Ocampo whose essays addressing the question were included in a special issue of the Philippine Journal of Public Administration , 30, p. 4, October 1986.

Ledivina C. Carino, Maria Concepcion Alfiler, Nestor Pilar, and Emmanuel Buendia led the calls to indigenize and localize the theory and practice of public administration in the Philippines. The Philippines Journal of Public Administration devoted a special issue on the search indigenous forms of governance and public administration: Domingo, M.O. (2004). Indigenous Leadership and Governance. Philippines Journal of Public Administration, 48 , 1–2. Manila: PJPA.

Brillantes and Fernandez ( 2008 ) argued that the homegrown movement called Gawad Kalinga (which means “to give care”) was an example of a uniquely Philippine governance (civil society taking the lead here, in partnership with government and business sectors) approach that bore distinctive traits of Philippine public administration with a very distinct social equity character. Founded by Antonio Meloto, GK has been recognized not only locally but internationally as well.

The New Public Administration (NPA) movement emerged in the US in the late 1960s and early 1970s during the Minnowbrook conference where social equity emerged as a normative base of public administration (Frederickson 2010 , p. 3).

Over the years, Brillantes and Perante-Calina have argued for the imperatives of equity, ethics , and accountability to be among the classic 3Es of management. This has been included in the public sector reform framework. See, for instance, Alex, Brillantes Jr., and Lizan, Perante-Calina. “Antonio Meloto: Empowering the Filipino Poor Toward Sustainable and Innovative Communities” in Ayano et al. (eds.), Knowledge Creation in Community Development. Institutional Change in Southeast Asia and Japan , Palgrave: Macmillan. (2018), where our public sector reform framework has been developed.

We use praxis liberally to suggest the combination of “theory and practice” of public administration.

That Philippine “independence ” was set by the Americans to coincide with American independence day was no coincidence. This essentially reflected America’s desire for its erstwhile colony to continue to reflect the image and values of its former colonial master. This has since been rectified by President Diosdado Macapagal in the early 1960s by announcing the date of independence of the Philippines as 19 June 1898, when the Philippines declared its independence from Spain after the Philippine revolution. Strangely, on the Philippine side, July 4 has been declared as “Philippine-American Friendship day” naively celebrated only by the Philippines, betraying the continued colonialism still present in the Philippines.

The Philippine civil service and bureaucracy was set up by the US at the turn of the century on 19 September 1900 with the Act No. 5 entitled “An Act for the Establishment and Maintenance of an Efficient and Honest Civil Service in the Philippines”. Its structure and processes were largely patterned after the American civil service , including the adoption of the principles of efficiency and meritocracy in the civil service.

Poverty incidence is the proportion of families/individuals with per capita income less than the per capita poverty threshold to the total number of families /individuals.

According to the Asian Institute of Journalism and Communication (AIJC), Filipino Muslims are “not integrated as one definable and united society” but possess characteristics endemic to them such as “1. language 2. political structure 3. history and degree of Islamic integration with cultural traditions and customs already existent. Each of the subgroups has been proud of its separated identity and conflict between communities has been endemic throughout Philippine Muslim history. However, there common experiences, especially in relation to non-Muslim Filipinos, have somehow brought them together time and again” on (27 January 2019 from http://www.muslimmindanao.ph/Islam_phil2.html )

Today, reducing poverty in the short- to medium-term stages of the program objective has since been dropped. The program is currently presented as a ‘human development measure to improve the health, nutrition and the education of children aged 0–18’ (Accessed at: http://www.officialgazette.gov.ph/programs/conditional-cash-transfer/ Downloaded: 14 May 2018). The program’s other objectives are to provide cash assistance to poor families ‘to respond to their immediate needs’ and to address ‘intergenerational poverty cycle by investing in the health and education of poor children’.

Even if the country’s poverty incidence, as measured by the Philippine Statistics Authority, declined from 26.3 to 21.6 at the end of 2015, this could not be attributed to Pantawid Pamilya given the findings of the two earlier impact evaluations and the fact that was no other impact evaluation was conducted to cover 2015 when the 2015 PSA finding on poverty was released.

Infrastructure here covers personnel, facilities, and supplies.

US$ 1 = PhP 53.13 (2 November 2018 conversion rate).

Since 2003, Gawad Kalinga has been receiving various awards, some of the most prominent ones are the following: 2006 The Outstanding Filipino Award (TOFIL) Awardee for Community Service, 2006 Ramon Magsaysay Award for Community Leadership, 2009 Hilton Humanitarian Award Finalist, 2010 Reader’s Digest Asia Philippines’ Most Trusted, 2010 Schwab Foundation for Social Entrepreneurship, 2010 Asia CEO Awards, 2010 Ernst & Young’s Social Entrepreneur of the Year Philippines, 2011 Nikkei Asia Awards, and 2012 Skoll Award for Social Entrepreneurship.

In the back cover of the book Social Equity in Public Administration (Frederickson 2010 ) the following “for whom” questions were raised within the context of social equity: “Social equity values have to do with the fairness of the organization, its management, and its delivery of public services. Social equity asks these questions: For whom is the organization well managed? For whom is the organization efficient: For whom is the organization economical? Are public services more or less fairly delivered?”

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Brillantes, A.B., Raquiza, M.V.R., Lorenzo, M.P.M. (2019). Social Equity in the Philippines: A Continuing but Elusive Promise. In: Johansen, M. (eds) Social Equity in the Asia-Pacific Region. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-15919-1_11

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15.6: Government Policies to Reduce Income Inequality

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Learning Objectives

• Explain the arguments for and against government intervention in a market economy
• Identify beneficial ways to reduce the economic inequality in a society
• Show the tradeoff between incentives and income equality

No society should expect or desire complete equality of income at a given point in time, for a number of reasons. First, most workers receive relatively low earnings in their first few jobs, higher earnings as they reach middle age, and then lower earnings after retirement. Thus, a society with people of varying ages will have a certain amount of income inequality. Second, people’s preferences and desires differ. Some are willing to work long hours to have income for large houses, fast cars and computers, luxury vacations, and the ability to support children and grandchildren.

These factors all imply that a snapshot of inequality in a given year does not provide an accurate picture of how people’s incomes rise and fall over time. Even if we expect some degree of economic inequality at any point in time, how much inequality should there be? There is also the difference between income and wealth, as the following Clear It Up feature explains.

Clear It Up

How do you measure wealth versus income inequality.

Income is a flow of money received, often measured on a monthly or an annual basis. Wealth is the sum of the value of all assets, including money in bank accounts, financial investments, a pension fund, and the value of a home. In calculating wealth, one must subtract all debts, such as debt owed on a home mortgage and on credit cards. A retired person, for example, may have relatively little income in a given year, other than a pension or Social Security. However, if that person has saved and invested over time, the person’s accumulated wealth can be quite substantial.

In the United States, the wealth distribution is more unequal than the income distribution, because differences in income can accumulate over time to make even larger differences in wealth. However, we can measure the degree of inequality in the wealth distribution with the same tools we use to measure the inequality in the income distribution, like quintile measurements. Once every three years the Federal Reserve Bank publishes the Survey of Consumer Finance which reports a collection of data on wealth.

Even if they cannot answer the question of how much inequality is too much, economists can still play an important role in spelling out policy options and tradeoffs. If a society decides to reduce the level of economic inequality, it has three main sets of tools: redistribution from those with high incomes to those with low incomes; trying to assure that a ladder of opportunity is widely available; and a tax on inheritance.

Redistribution

Redistribution means taking income from those with higher incomes and providing income to those with lower incomes. Earlier in this chapter, we considered some of the key government policies that provide support for people experiencing poverty: the welfare program TANF, the earned income tax credit, SNAP, and Medicaid. If a reduction in inequality is desired, these programs could receive additional funding.

The federal income tax, which is a progressive tax system designed in such a way that the rich pay a higher percent in income taxes than the poor, funds the programs. Data from household income tax returns in 2018 shows that the top 1% of households had an average income of $1,679,000 per year in pre-tax income and paid an average federal tax rate of 25.4%. The effective income tax , which is total taxes paid divided by total income (all sources of income such as wages, profits, interest, rental income, and government transfers such as veterans’ benefits), was much lower. The effective tax paid by that top 1% of householders paid was 20.4%, while the bottom two quintiles actually paid negative effective income taxes, because of provisions like the earned income tax credit. News stories occasionally report on a high-income person who has managed to pay very little in taxes, but while such individual cases exist, according to the Congressional Budget Office, the typical pattern is that people with higher incomes pay a higher average share of their income in federal income taxes.

Of course, the fact that some degree of redistribution occurs now through the federal income tax and government antipoverty programs does not settle the questions of how much redistribution is appropriate, and whether more redistribution should occur.

The Ladder of Opportunity

Economic inequality is perhaps most troubling when it is not the result of effort or talent, but instead is determined by the circumstances under which a child grows up. One child attends a well-run grade school and high school and heads on to college, while parents help out by supporting education and other interests, paying for college, a first car, and a first house, and offering work connections that lead to internships and jobs. Another child attends a poorly run grade school, barely makes it through a low-quality high school, does not go to college, and lacks family and peer support. These two children may be similar in their underlying talents and in the effort they put forth, but their economic outcomes are likely to be quite different.

Public policy can attempt to build a ladder of opportunities so that, even though all children will never come from identical families and attend identical schools, each child has a reasonable opportunity to attain an economic niche in society based on their interests, desires, talents, and efforts. Table 15.8 shows some of those initiatives.

Some have called the United States a land of opportunity. Although the general idea of a ladder of opportunity for all citizens continues to exert a powerful attraction, specifics are often quite controversial. Society can experiment with a wide variety of proposals for building a ladder of opportunity, especially for those who otherwise seem likely to start their lives in a disadvantaged position. The government needs to carry out such policy experiments in a spirit of open-mindedness, because some will succeed while others will not show positive results or will cost too much to enact on a widespread basis.

Inheritance Taxes

There is always a debate about inheritance taxes. It goes like this: Why should people who have worked hard all their lives and saved up a substantial nest egg not be able to give their money and possessions to their children and grandchildren? In particular, it would seem un-American if children were unable to inherit a family business or a family home. Alternatively, many Americans are far more comfortable with inequality resulting from high-income people who earned their money by starting innovative new companies than they are with inequality resulting from high-income people who have inherited money from rich parents.

The United States does have an estate tax —that is, a tax imposed on the value of an inheritance—which suggests a willingness to limit how much wealth one can pass on as an inheritance. However, in 2022 the estate tax applied only to those leaving inheritances of more than $12.06 million and thus applies to only a tiny percentage of those with high levels of wealth.

The Tradeoff between Incentives and Income Equality

Government policies to reduce poverty or to encourage economic equality, if carried to extremes, can injure incentives for economic output. The poverty trap, for example, defines a situation where guaranteeing a certain level of income can eliminate or reduce the incentive to work. An extremely high degree of redistribution, with very high taxes on the rich, would be likely to discourage work and entrepreneurship. Thus, it is common to draw the tradeoff between economic output and equality, as Figure 15.10 (a) shows. In this formulation, if society wishes a high level of economic output, like point A, it must also accept a high degree of inequality. Conversely, if society wants a high level of equality, like point B, it must accept a lower level of economic output because of reduced incentives for production.

This view of the tradeoff between economic output and equality may be too pessimistic, and Figure 15.10 (b) presents an alternate vision. Here, the tradeoff between economic output and equality first slopes up, in the vicinity of choice C, suggesting that certain programs might increase both output and economic equality. For example, the policy of providing free public education has an element of redistribution, since the value of the public schooling received by children of low-income families is clearly higher than what low-income families pay in taxes. A well-educated population, however, is also an enormously powerful factor in providing the skilled workers of tomorrow and helping the economy to grow and expand. In this case, equality and economic growth may complement each other.

Moreover, policies to diminish inequality and soften the hardship of poverty may sustain political support for a market economy. After all, if society does not make some effort toward reducing inequality and poverty, the alternative might be that people would rebel against market forces. Citizens might seek economic security by demanding that their legislators pass laws forbidding employers from ever laying off workers or reducing wages, or laws that would impose price floors and price ceilings and shut off international trade. From this viewpoint, policies to reduce inequality may help economic output by building social support for allowing markets to operate.

The tradeoff in Figure 15.10 (b) then flattens out in the area between points D and E, which reflects the pattern that a number of countries that provide similar levels of income to their citizens—the United States, Canada, European Union nations, Japan, and Australia—have different levels of inequality. The pattern suggests that countries in this range could choose a greater or a lesser degree of inequality without much impact on economic output. Only if these countries push for a much higher level of equality, like at point F, will they experience the diminished incentives that lead to lower levels of economic output. In this view, while a danger always exists that an agenda to reduce poverty or inequality can be poorly designed or pushed too far, it is also possible to discover and design policies that improve equality and do not injure incentives for economic output by very much—or even improve such incentives.

Bring It Home

Occupy wall street.

The Occupy movement took on a life of its own over the last few months of 2011, bringing to light issues that many people faced on the lower end of the income distribution. The contents of this chapter indicate that there is a significant amount of income inequality in the United States. The question is: What should be done about it?

The 2008-2009 Great Recession caused unemployment to rise and incomes to fall. Many people attribute the recession to mismanagement of the financial system by bankers and financial managers—those in the 1% of the income distribution—but those in lower quintiles bore the greater burden of the recession through unemployment. This seemed to present the picture of inequality in a different light: the group that seemed responsible for the recession was not the group that seemed to bear the burden of the decline in output. A burden shared can bring a society closer together. A burden pushed off onto others can polarize it.

On one level, the problem with trying to reduce income inequality comes down to whether you still believe in the American Dream. If you believe that one day you will have your American Dream—a large income, large house, happy family, or whatever else you would like to have in life—then you do not necessarily want to prevent anyone else from living out their dream. You certainly would not want to run the risk that someone would want to take part of your dream away from you. Thus, there is some reluctance to engage in a redistributive policy to reduce inequality.

However, when those for whom the likelihood of living the American Dream is very small are considered, there are sound arguments in favor of trying to create greater balance. As the text indicated, a little more income equality, gained through long-term programs like increased education and job training, can increase overall economic output. Then everyone is made better off, and the 1% will not seem like such a small group any more.

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A modest intervention that helps low-income families beat the poverty trap

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Many low-income families might desire to move into different neighborhoods — places that are safer, quieter, or have more resources in their schools. In fact, not many do relocate. But it turns out they are far more likely to move when someone is on hand to help them do it.

That’s the outcome of a high-profile experiment by a research team including MIT economists, which shows that a modest amount of logistical assistance dramatically increases the likelihood that low-income families will move into neighborhoods providing better economic opportunity.

The randomized field experiment, set in the Seattle area, showed the number of families using vouchers for new housing jumped from 15 percent to 53 percent when they had more information, some financial support, and, most of all, a “navigator” who helped them address logistical challenges.

“The question we were after is really what drives residential segregation,” says Nathaniel Hendren, an MIT economist and co-author of the paper detailing the results. “Is it due to preferences people have, due to having family or jobs close by? Or are there constraints on the search process that make it difficult to move?” As the study clearly shows, he says, “Just pairing people with [navigators] broke down search barriers and created dramatic changes in where they chose to live. This was really just a very deep need in the search process.”

The study’s results have prompted U.S. Congress to twice allocate $25 million in funds allowing eight other U.S. cities to run their own versions of the experiment and measure the impact.

That is partly because the result “represented a bigger treatment effect than any of us had really ever seen,” says Christopher Palmer, an MIT economist and a co-author of the paper. “We spend a little bit of money to help people take down the barriers to moving to these places, and they are happy to do it.”

Having attracted attention when the top-line numbers were first aired in 2019, the study is now in its final form as a peer-reviewed paper, “ Creating Moves to Opportunity: Experimental Evidence on Barriers to Neighborhood Choice ,” published in this month’s issue of the American Economic Review .

The authors are Peter Bergman, an associate professor at the University of Texas at Austin; Raj Chetty, a professor at Harvard University; Stefanie DeLuca, a professor at Johns Hopkins University; Hendren, a professor in MIT’s Department of Economics; Lawrence F. Katz, a professor at Harvard University; and Palmer, an associate professor in the MIT Sloan School of Management.

New research renews an idea

The study follows other prominent work about the geography of economic mobility. In 2018, Chetty and Hendren released an “Opportunity Atlas” of the U.S., a comprehensive national study showing that, other things being equal, some areas provide greater long-term economic mobility for people who grow up there. The project brought renewed attention to the influence of place on economic outcomes.

The Seattle experiment also follows a 1990s federal government program called Moving to Opportunity, a test in five U.S. cities helping families seek new neighborhoods. That intervention had mixed results : Participants who moved reported better mental health, but there was no apparent change in income levels.

Still, in light of the Opportunity Atlas data, the scholars decided revisit the concept, with a program they call Creating Moves to Opportunity (CMTO). This provides housing vouchers along with a bundle of other things: Short-term financial assistance of about $1,000 on average, more information, and the assistance of a “navigator,” a caseworker who would help troubleshoot issues that families encountered.   

The experiment was implemented by the Seattle and King County Housing Authorities, along with MDRC, a nonprofit policy research organization, and J-PAL North America. The latter is one of the arms of the MIT-based Abdul Latif Jameel Poverty Action Lab (J-PAL), a leading center promoting randomized, controlled trials in the social sciences.

The experiment had 712 families in it, and two phases. In the first, all participants were issued housing vouchers worth a little more than $1,500 per month on average, and divided into treatment and control groups. Families in the treatment group also received the CMTO bundle of services, including the navigator.

In this phase, lasting from 2018 to 2019, 53 percent of families in the treatment group used the housing vouchers, while only 15 percent of those in the control group used the vouchers. Families who moved dispersed to 46 different neighborhoods, defined by U.S. Census Bureau tracts, meaning they were not just shifting en masse from one location to one other.

Families who moved were very likely to want to renew their leases, and expressed satisfaction with their new neighborhoods. All told, the program cost about $2,670 per family. Additional research scholars in the group have conducted about changes in income suggest the program’s direct benefits are 2.5 times greater than its costs.

“Our sense is that’s a pretty reasonable return for the money compared to other strategies we have to combat intergenerational poverty,” Hendren says.

Logistical and emotional support

In the second phase of the experiment, lasting from 2019 to 2020, families in a treatment group received individual components of the CMTO support, while the control group again only received the housing vouchers. This way, the researchers could see which parts of the program made the biggest difference. The vast majority of the impact, it turned out, came from receiving the full set of services, especially the “customized” help of navigators.

“What came out of the phase two results was that the customized search assistance was just invaluable to people,” Palmer says. “The barriers are so heterogenous across families.” Some people might have trouble understanding lease terms; others might want guidance about schools; still others might have no experience renting a moving truck.

The research turned up a related phenomenon: In 251 follow-up interviews, families often emphasized that the navigators mattered partly because moving is so stressful.

“When we interviewed people and asked them what was so valuable about that, they said things like, ‘Emotional support,’” Palmer observes. He notes that many families participating in the program are “in distress,” facing serious problems such as the potential for homelessness.

Moving the experiment to other cities

The researchers say they welcome the opportunity to see how the Creating Moves to Opportunity program, or at least localized replications of it, might fare in other places. Congress allocated $25 million in 2019, and then again in 2022, so the program could be tried out in eight metro areas: Cleveland, Los Angeles, Minneapolis, Nashville, New Orleans, New York City, Pittsburgh, and Rochester. With the Covid-19 pandemic having slowed the process, officials in those places are still examing the outcomes.

“It’s thrilling to us that Congress has appropriated money to try this program in different cities, so we can verify it wasn’t just that we had really magical and dedicated family navigators in Seattle,” Palmer says. “That would be really useful to test and know.”

Seattle might feature a few particularities that helped the program succeed. As a newer city than many metro areas, it may contain fewer social roadblocks to moving across neighborhoods, for instance.

“It’s conceivable that in Seattle, the barriers for moving to opportunity are more solvable than they might be somewhere else.” Palmer says. “That’s [one reason] to test it in other places.”

Still, the Seattle experiment might translate well even in cities considered to have entrenched neighborhood boundaries and racial divisions. Some of the project’s elements extend earlier work applied in the Baltimore Housing Mobility Program, a voucher plan run by the Baltimore Regional Housing Partnership. In Seattle, though, the researchers were able to rigorously test the program as a field experiment, one reason it has seemed viable to try replicate it elsewhere.

“The generalizable lesson is there’s not a deep-seated preference for staying put that’s driving residential segregation,” Hendren says. “I think that’s important to take away from this. Is this the right policy to fight residential segregation? That’s an open question, and we’ll see if this kind of approach generalizes to other cities.”

The research was supported by the Bill and Melinda Gates Foundation, the Chan-Zuckerberg Initiative, the Surgo Foundation, the William T. Grant Foundation, and Harvard University.

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Home — Essay Samples — Social Issues — Homelessness — Combating Homelessness: Structural Inequalities and Policy Solutions

Combating Homelessness: Structural Inequalities and Policy Solutions

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Published: Jun 6, 2024

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Structural inequalities and homelessness, inadequate social safety nets, systemic failures and policy interventions.

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This note provides general guidance on the operationalization of the strategy for IMF engagement on social spending. Social spending plays a critical role as a key lever for promoting inclusive growth, addressing inequality, protecting vulnerable groups during structural change and adjustment, smoothing consumption over the lifecycle, and stabilizing demand during economic shocks. Social spending policies have also been playing an important role in tackling the structural challenges associated with demographic shifts, gender inequality, technological advances, and climate change. This note builds on a series of notes on IMF engagement on specific social spending issues since the publication of the 2019 strategy paper and provides operational guidance on when and how to engage on social spending issues, in the context of surveillance, IMF-supported programs, and capacity development.

1. The Strategy for IMF Engagement on Social Spending was endorsed by the Executive Board in May 2019 . The strategy underscores the critical role of social spending—defined as social protection, health and education spending—as a key policy lever for promoting inclusive growth, addressing inequality, protecting vulnerable groups during structural change and adjustment, smoothing consumption over the lifecycle, and stabilizing demand during economic shocks. 1 More recently, social spending policies have played a critical role in mitigating the impact of COVID-19 pandemic, including helping address its long-term scarring. Social spending policies have also been playing an important role in tackling the structural challenges associated with demographic shifts, gender inequality, technological advances, and climate change.

2. The 2019 strategy outlines a framework for a more effective, systematic, and evenhanded engagement on social spending issues . It provides broad principles and key steps on (i) when and how to engage with members countries on social spending issues, including in the context of surveillance and IMF-supported programs (henceforth “programs”); (ii) enhancing collaboration with International Development Institutions (IDIs); and (iii) improving communications and leveraging input from a broad set of stakeholders.

3. This guidance note builds on existing work and analyses . These include the How-To-Notes on IMF Engagement on Social Spending during and in the Aftermath of the COVID-19 Crisis and the Technical Notes and Manuals (TNMs) on IMF Engagement on Pensions, Social Safety Nets, Health, and Education. The guidance note will be periodically updated to reflect the evolving nature of social spending issues and the building up of knowledge, including at the Fund.

4. This note aims at providing operational guidance to staff on the implementation of the 2019 strategy . 2 It covers:

the scope and key challenges (e.g., data) of engaging on social spending issues, including a roadmap to guide such engagement (Section II);

when to engage (Section III), providing practical guidance in assessing the macrocriticality of a specific social spending issue in the surveillance context and determining when to engage and the extent of engagement in surveillance, programs, and capacity development (CD);

how to engage (Section IV), discussing (i) key considerations in formulating policy advice—along with a list of typical social spending reform options—in surveillance and programs; (ii) specific issues in program engagement such as the design of social spending conditionality; and (iii) engagement under CD; and

how to strengthen and leverage collaboration with external stakeholders and design outreach strategies (Section V).

• A Framework for Fund Engagement on Social Spending Issues

This section discusses the definition and key challenges of social spending issues and their implications for Fund engagement. It also outlines a roadmap for Fund engagement .

5. The definition of social spending adopted by the 2019 strategy paper specifies both the areas and the scope of Fund engagement . Social spending is broadly defined in the 2019 strategy paper and consists of social protection, health, and education spending. The strategy paper suggests that Fund engagement should focus on both the spending level and the designs of social spending systems ( Box 1 ).

Defining Social Spending and the Implications for Fund Engagement

The definition of social spending specifies the areas of focus for Fund engagement on social spending issues . According to the 2019 strategy paper, social spending comprises social protection, education, and health spending. Furthermore, social protection includes both social insurance (e.g., pensions, unemployment insurance, and sickness and maternity leave) and social assistance programs (e.g., universal and targeted transfers, child benefits, and active labor market programs). Social insurance aims at protecting households from shocks that can adversely impact their incomes and welfare and is typically financed by contributions or payroll taxes. Social assistance aims at protecting households from poverty and is financed by general government revenue. Consistent with practice in other IDIs, the terms social assistance and social safety net are used interchangeably. The definition sets the areas for Fund engagement, but whether the Fund should engage on any specific social spending issue in a country would depend on a number of factors (see Section III for more details).

The broad definition implies diverse policy challenges. Social spending, as defined here, covers several functional spending categories and sectors . Thus, policy challenges may vary not only by country, given country-specific conditions, but also by type of social spending within the same country. For example, a low-income country may need to strengthen social assistance to protect the most vulnerable, while at the same time, pension benefits, which mostly go to rich households, may be too generous and need to be reduced. Even for the same type of spending, for example on education, too much may be spent on wages while too little on capital spending or too much on tertiary education while too little on basic education such as primary and secondary education.

Fund engagement should focus on public social spending and the designs of social spending schemes to achieve macroeconomic and development objectives . While public social spending often plays a central role in addressing social issues, in some areas and under certain designs, private spending can also have an important role to play, such as in pensions, education and health. Public social spending and the designs of the social spending schemes are two key policy levers to maximize the overall effectiveness and efficiency of such systems, including through incentivizing private behaviors, and ultimately to promote inclusive growth, social cohesion, and achieve macroeconomic stability.

6. When engaging on social spending issues, staff should carefully consider various constraints and challenges . For example, social spending issues tend to be complex and multifaceted , reflecting a mix of different designs and the involvement of different public and private entities; local capacity on social spending issues can be limited; and the role of social spending and the designs of social spending systems vary by country, reflecting differences in social preferences and available resources . In particular,

Expertise . Given the complexity and breadth of social spending issues, the Fund does not have expertise in all areas of social spending issues. Close collaboration with external stakeholders, particularly the World Bank, should be leveraged for areas that are outside Fund’s expertise, such as sector specific analyses and policy designs. 3

Quality, consistency, and timely availability of data as well as comparability across countries are often challenges for in-depth engagement, particularly in low-income countries (LICs) where IMF engagement on social spending issues is especially needed (Annex I). While a wide range of cross-country databases are available for social spending (Annex II), coverage is still incomplete (e.g., for LICs and for certain spending such as education and social assistance), and cross-country comparability remains lacking in certain areas (e.g., test scores in education). For administrative data, the main issue is the lack of consistency in the definition both across countries and over time. Furthermore, functional classification is not always available on a timely basis or sufficiently disaggregated. In addition, data needs typically differ by surveillance and programs, with surveillance relying more on cross-country data and programs administrative data.

7. A well-structured approach with a clear roadmap can help guide Fund engagement with the membership . Main steps of such a roadmap include ( Figure 1 ):

Initiation of discussions on social spending issues . This can be triggered by authorities’ requests and interests or by team’s recognition that social spending is an important tool in addressing the macroeconomic challenges a country faces, including through discussions with external stakeholders. Social spending issues can arise in both surveillance and programs in various contexts, including for:

tackling existing poverty and income inequality;

mitigating the impacts of economic shocks (e.g., the COVID-19 pandemic) or macroeconomic adjustments (e.g., fiscal consolidation);

improving access to and quality of education and health services to enhance human capital and growth potential;

addressing structural challenges—such as demographic shifts, gender inequality, climate change, and technological advances—which may have important poverty and inequality implications and/or for which social spending is an important policy tool ( Box 2 ).

Preparation work . Intense preparation is often needed for engagement on social spending issues, as the teams may not be familiar with the specific social spending issue and/or there is a lack of necessary information and expertise. Key aspects include:

involving FAD at an early stage. FAD, as a hub for information and collaboration, can help identify relevant counterparts in other IFIs and facilitate the collection of initial information and background materials.

taking stock of existing analyses and collecting any relevant background information, including data. Potential sources include Fund staff reports, FAD tools, and capacity development reports, the World Bank’s Public Expenditure Reviews and poverty assessments, and other external policy discussions.

having a good understanding of the relevant social spending issue, including key design features of the existing system—such as coverage, benefit levels, modalities of delivery, financing sources, and role of the private sector—and potential concerns such as on adequacy, efficiency, cost, and administrative capacity.

understanding the member’s needs and priorities, as the role of social spending and the design of social spending issues to an important extent reflect preferences. It is thus important to understand the context of the social spending issues, collect relevant background information, and hear the views of the authorities.

When to engage on social spending issues (Section III):

Assessing macrocriticality in surveillance is a key step in determining whether the Fund should engage in surveillance and requires country-specific assessment.

Determining whether to engage and the extent of engagement. This differs by surveillance, lending, and CD, depending on various factors including macrocriticality in surveillance, criticality under conditionality guidelines, Fund expertise, and whether requested by the authorities (see Section III for further discussions). In some instances, the Fund may decide not to engage. For example in surveillance, staff may not engage on issues such as the design of school curriculum or whether specific medical treatments should be covered by health benefits, as they, while important for the education and health systems, may not be macrocritical and are outside Fund’s expertise.

How to engage on social spending issues (Section IV): This typically includes analyses of social spending issues and providing policy advice in surveillance and programs, drawing on expertise of external partners; specifically for programs involves incorporating social spending issues in program design including the design of conditionalities; and engagement under CD includes how Fund’s CD can complement and support the engagement in surveillance and programs.

External collaboration and outreach (Section V). Collaboration with external partners should typically be maintained throughout the engagement process, as many of them tend to have more experiences and expertise on social spending issues. It is also important to reach out to Civil Society Organizations (CSOs) and the public on Fund’s engagement.

Social Spending and Gender Inequality

Gender inequality is macrocritical and the Fund has developed a gender strategy to mainstream gender issues in its core activities ( IMF, 2022a ) . An interim guidance note has been issued ( IMF, 2024a ). 1 Social spending is an important policy tool to close gender gaps and reduce gender inequality, and this highlights the importance of having a gender lens in the design of social protection schemes.

Targeted social spending measures can help close gender gaps and reduce gender inequality and ultimately support macroeconomic outcomes . Typical measures include (un)conditional cash transfers to girls previously dropped out of school, targeted cash transfers to poor women, paid maternity leave, and programs to improve women’s education and health outcomes. In addition, directing social assistance payments to women is not only more effective in reducing poverty, but also helps reduce gender inequality.

Nongender targeted social spending measures can also help address gender inequality . These include (un)conditional cash transfers, measures to improve access to and quality of education and health services, and public spending on childcare and active labor market programs, as women and girls are often disproportionately represented in the vulnerable populations. Paid parental leave can improve health and development outcomes for children through increased earnings for mothers, higher female labor force participation, and a more equitable division of labor at home.

The choice between gender targeted measures and nongender targeted measures involves various tradeoffs . Conceptually, gender targeted policies are less efficient as they exclude males who may be better suited for the opportunities. That said, with the presence of gender inequality, nongender targeted policies can also be inefficient in the sense that preference may be given to less qualified males (Shang, 2022). The exact tradeoffs in the effectiveness and efficiency of the two types of policies likely vary by policy areas and country contexts ( Evans and Yuan, 2022 ).

A range of internal and external toolkits and data sources are available to assess the cost and impact of social spending measures that directly or indirectly affect gender gaps .

The IMF’s modeling work allows to quantify the impact of different social spending measures on gender gaps and key macroeconomic outcomes. Applications include: cash transfers to women in poverty (Senegal) , family allowances and social security contributions (Argentina) , paid maternity leave (United States) , subsidized childcare (Mexico, United States) ; investment in education to close gender gaps (Niger, Nigeria, Sierra Leone) .

The IMF’s analytical work can help quantify the impact of active labor market programs, public childcare, unemployment benefits, and pension spending on female labor force participation.

Impact 40 tool by United Nations Population Fund (UNFPA) estimates the cost and impact of different categories of health spending targeted at women.

The ILO Care Policy Investment Simulator highlights the investment requirements for different care policy areas and related employment and gender equality benefits for 82 countries.

A Roadmap on Fund Engagement

Citation: Policy Papers 2024, 022; 10.5089/9798400272271.007.A001

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When to Engage on Social Spending Issues

This section provides specific guidance on how to assess the macrocriticality of a social spending issue in surveillance and how to determine whether to engage and the extent of engagement in surveillance, programs, and CD .

A. Assessing Macrocriticality in Surveillance

• Conceptual Considerations

8. The macrocriticality of a social spending issue ultimately rests on whether it affects or has the potential to affect domestic or external stability . Social spending is a key policy lever, for example, in promoting inclusive growth including through better education and health outcomes, reducing poverty and inequality, closing gender gaps, or facilitating climate mitigation reforms. This implies that when assessing the macrocriticality of social spending, special attention should be paid to the macrocriticality of the policy objectives.

9. The 2019 strategy paper identifies three channels to assess the macrocriticality of a social spending issue .

Spending adequacy . The general question is whether social spending is adequate for achieving the policy objectives such as inclusive growth and protecting the vulnerable. The TNMs on Pensions, Social Safety Nets, Health, and Education provide operational definitions in their specific context, typically referring to the aggregate spending level/capacity in line with a country’s policy objectives in the area, while considering the country’s economic, historical, political, and social background.

Spending efficiency . The general question is whether social spending is efficient in achieving social outcomes. More concrete and informative questions are: can the same social outcomes be achieved with less social spending? Or can better social outcomes be achieved with the same level of social spending? These questions capture any waste, poor allocation of spending, distortions, and design issues and behavior incentives in the social spending area. The assessment should also consider any spillovers, positive or negative, to other areas or any unintended consequences. For example, means-tested social assistance may lead to work disincentives, maternity leave schemes that cover an extended period of time can lead to skill losses and miss career opportunities and widen gender gaps in labor force participation, and tax-financed pension and health insurance schemes may lead to informality, which should be incorporated into the overall assessment of spending efficiency.

Fiscal sustainability . The general question is whether social spending is sustainably financed, without undermining macroeconomic stability, including through increasing fiscal deficits and debt, or crowding out other critical expenditures. The assessment may need to be based on whether spending is (or will be) too high, relative to revenues and fiscal space, and thus put undue pressures on public finances. Where the private sector plays an important role in financing and providing benefits, the assessment needs to consider any contingent liabilities from private spending in the social spending areas, for example, unfunded liabilities from employment-based pension or health schemes.

10. The assessment should be based on the macrocriticality of a specific social spending issue and the associated component of social spending . The key question for macrocriticality is whether the specific social spending component is adequate, efficiently designed, or fiscally sustainable to achieve its intended objectives. Assessments therefore require clearly defined spending level, policy objectives, and outcomes, and thus it is generally advisable to examine spending components separately. The typical social spending component for such assessments is a functional-level spending (e.g., on education, health, pensions, or social assistance) which can be linked to relatively self-contained government priorities and objectives and be associated with clearly defined and measurable outcomes (e.g., test scores, health outcomes, and poverty level). In some cases, assessments can also be done at sublevels of functional spending, such as primary education, secondary education, and tertiary education. While assessing each spending component separately is sufficient in determining macrocriticality, the interlinkages between different channels (e.g., spending adequacy, spending efficiency, and fiscal sustainability) for the same spending component and across different spending components need to be carefully considered in formulating policy options (see Section IV for further discussions).

• Practical Considerations

11. While the conceptual discussions provide the guiding principles to assess macrocriticality, actual assessments are often based on suggestive evidence and staff judgement is typically required . For example, adequately answering the questions on spending adequacy, spending efficiency, and fiscal sustainability often requires macroeconomic modeling, which can provide important insights on the macroeconomic impacts of social spending. Even so, various assumptions underlying model design may still leave some question marks on the results. To be more practical, the assessments can be based on simpler approaches such as cross-country comparisons, combined with findings from the literature and staff judgement (Annex II provides a summary of the main indicators that can be potentially used to assess spending adequacy, spending efficiency, and fiscal sustainability of social spending). Teams can refer to the Technical Notes and Manuals on IMF Engagement on Pensions, Social Safety Nets, Health, and Education for guidance on specific issues in each of these areas.

How to Assess Spending Adequacy

12. Spending levels are a starting point for assessing spending adequacy . While recognizing that adequate social spending level likely varies by country, the level of spending relative to peer countries at a similar level of development can provide an initial assessment on whether spending is particularly low or high. Typically, advanced economies spend more on health and pensions, while LICs spend more on education (as a share of government spending) ( Figure 2 ). Additional adjustments can be made to account for other drivers of social spending level, such as social preference, demographics (leading to different health and education needs), geography (e.g., service delivery in remote areas), and the design of the social spending schemes (which can lead to different private financing to complement public financing).

Government Spending in Health, Education, Social Safety Net and Pensions by Country Group

13. Social spending related inputs, outputs, and outcomes can also help inform spending adequacy . Examples of social spending inputs include the number of medical professionals and hospital beds per capita and student-teacher ratios. Social spending related output may include, for example, the coverage of the poor by social assistance programs and access to education and health services. Social spending related outcomes include poverty level, and education and health outcomes (e.g., test scores, literacy rate, mortality rate, and life expectancy) of particularly the vulnerable populations. However, spending inefficiency is also a potential driver of poor outcomes, and its role should also be analyzed.

14. In some specific cases, additional spending needed to achieve Sustainable Development Goals (SDGs) are useful benchmarks over medium term . Using a benchmarking approach to high performing peer countries by income level, an IMF-FAD tool, the SDG additional spending assessment, can help estimate the additional amount that a country would need to perform well in the SDGs, including in health, education, roads, water and sanitation and electricity ( Gaspar and others, 2019 ; Carapella and others, 2023 ). 4 These are the targets that countries should strive to achieve over the medium term but are constrained by limited financing and/or capacity in the short run.

How to Assess Spending Efficiency

15. The assessment of spending efficiency varies by types of social spending . Efficiency frontier analysis is frequently used in education and health to assess how a country is performing, in terms of education and health outcomes for a given level of spending ( Figures 3a and 3b and Garcia-Escribano and others, 2022 ). For pensions and social assistance, the focus tends to be on whether the spending reaches the targeted population (e.g., targeting efficiency), the cost of financing, and the economic and labor market distortions (e.g., work disincentives) ( IMF, 2022b ; IMF, 2022c ).

16. Looking into components of spending often helps identify the drivers of spending inefficiencies . Some sub-categories of spending may tend to be inefficient (such as pharmaceutical spending or the mix between hospital and primary care); some sub-schemes may absorb disproportional resources and jeopardize the functioning of other sub-schemes, leading to poor overall performance (e.g., generous civil service pension and social benefits); and the wage bill is often a source of inefficiencies, with wages being too low or too high (with adverse effects on recruitment and retention or fiscal pressures), excessive employment level, or high allowances and other benefits.

An Assessment of Spending Efficiency in Health and Education

How to Assess Fiscal Sustainability

17. Different approaches are needed for assessing pressures to fiscal sustainability from social insurance and from non-contributory social spending . For social insurance schemes, the assessment should be based on whether the contributions, dedicated revenue sources, and assets are sufficient to sustain the benefits—putting pressures on public finances—both in the short term and over the long run, as it typically takes a long time for reforms to have material fiscal impact (e.g., raising retirement ages). Assessments on current and projected financial status of these schemes are typically available from various sources, including the IMF and the schemes themselves (e.g., Social Security and Medicare Trustees Reports and the ageing reports by the European Commission). For non-contributory social spending, comparing spending levels and growth rates—relative to revenues—with those of peer countries is an important starting point to assess fiscal pressures from the specific social spending. In addition, the assessment needs to consider available fiscal space, both in the short run and the long run.

18. Fiscal sustainability concerns can arise from a variety of factors ( Figures 4a and 4b ). Fiscal pressures from pensions and health due to population aging have been particularly concentrated in high-income countries to date but are expected to intensify in middle income countries in coming decades. Many EMEs and LICs have large development spending needs, including in human and physical capital, which, combined with low fiscal space and low growth, can drive fiscal sustainability concerns and alter the assessment on the levels of social spending that are fiscally sustainable (e.g., Greece in 2010–12).

Main Sources of Fiscal Pressures by Country Group

Impact on Macroeconomic Outcomes

19. In addition to the three channels, the assessment of macrocriticality can also be based on direct assessments of the impacts of any social spending on macroeconomic outcomes . There is strong evidence that social spending can be an important driver of inclusive growth (see Box 3 of the 2019 strategy paper for a summary), and this can be directly assessed through macroeconomic modeling. While this would involve greater efforts, it helps with not only the assessment of macrocriticality but also the assessment of reform options and the formulation of Fund policy advice. It will also lead to richer engagement with the authorities on social spending issues. The modeling work can be built on existing models and toolkits (e.g., the Inequality Toolkit), with support from SPR and RES.

• Country Cases

20. Several country cases help illustrate the assessment of macrocriticality of a social spending issue in surveillance ( Box 3 ). For example, health spending was assessed as macro-critical in Thailand, because of rising costs from population aging and a fragmented health system. While government education spending in Sierra Leone was similar to peer countries, it was deemed macrocritical because of concerns about low secondary enrollment, financing constraints and the associated missed opportunities of an economic dividend. Health and pension spending were macrocritical in Japan because, as its population ages, the existing health and pension systems are not fiscally sustainable without reforms.

Country Case Studies on Assessing Macrocriticality in Surveillance Thailand (2016) – Health spending efficiency and fiscal sustainability

Policy context . Thailand achieved universal health care coverage under its 2002 reforms. Before the reform, there were four different state health insurance schemes, which collectively covered over three-fourths of the population. The 2002 reforms consolidated two of those programs and extended coverage to everyone who did not already benefit from the country’s health insurance programs for civil servants and formal sector workers.

Key metrics:

Fiscal Sustainability: Public health expenditure as a share of GDP expected to increase by more than 2 percentage points by 2050.

Spending Efficiency: Thailand public health expert review identified significant efficiency savings in health spending. The public health insurance system remained fragmented, with wide differences in benefits, contributions, and financing schemes, which risked hindering service quality and access.

Japan (2012, 2018) – Pension and health spending fiscal sustainability and efficiency

Policy context : The authorities made progress on pension reform but tackling pressures from healthcare proved challenging. Preserving Japan’s public finances sustainability in the face of aging pressures would require revenue collection efforts and expenditure containment. Financing such a large increase in healthcare and pension costs with additional revenues would imply potentially disruptive large tax hikes. This situation necessitated Japan to advance healthcare system reforms.

Fiscal Sustainability: Contribution of increase in health spending (due to population aging) as a share of GDP to structural primary balance (Fiscal Sustainability). Without reforms, public spending on medical and long-term care was projected to double to near 20 percent of GDP by 2050.

Spending Efficiency: Contribution of health policy changes to containment of structural primary balance (Fiscal Sustainability) while preserving population welfare. There is limited room for further containing non-social security spending, which is already low by OECD standards.

Sierra Leone (2022) – Education spending adequacy and efficiency

Policy context : Sierra Leone is a small, young, low-income country in West Africa. It has been through a range of governance and security challenges over recent decades. The young population provides an opportunity to benefit from a demographic dividend. Reforms under the Government’s Free Quality School Education program were showing some progress.

Spending efficiency: Sierra Leone’s population is young with more than 40 percent younger than 15, providing an opportunity for spending on human capital to have a high return (demography). World Bank Public Expenditure Review highlights governance and policies that are leading to poor learning outcomes (policy assessment). Expenditure is characterized by high teacher wages and low capital expenditure (spending mix).

Spending adequacy: Low enrollment and low completion rates of secondary school, and poor learning outcomes highlight high education spending needs (despite government spending on education as a share of GDP is similar to peer countries).

B. Engagement in Surveillance, Programs, and Capacity Development

21. Whether to engage and the extent of engagement differ by surveillance, programs and CD and depend on various factors .

Surveillance 5

For issues that are macrocritical and where the Fund has expertise, staff analysis and policy advice are required.

For issues that are macrocritical but where the Fund does not have expertise, staff should analyze the issue, drawing on the expertise of, and in collaboration with, external partners as needed, but staff is not expected to provide specific policy advice.

For issues that are not macrocritical but for which the Fund has expertise, staff may provide analysis and policy advice if requested by the member.

For issues that are not macrocritical and where the Fund does not have expertise, analysis and policy advice should not be provided.

While macrocritical issues need to be covered in bilateral surveillance, not all macrocritical issues will be covered in the same depth in every Article IV consultation, particularly given many social spending issues are structural and slow moving.

For social spending issues, whether they should be part of the program design and conditionality depends on the criticality standard under conditionality guidelines, including (i) whether social spending issues are critical for meeting program objectives or for monitoring the program’s implementation, or (ii) whether social spending issues are necessary for implementing specific provisions of the Fund’s Articles of Agreement or policies adopted under them. In the context of PRGT-supported programs, the objectives of the programs should be consistent with strong and durable poverty reduction and growth, and thus programs are expected to safeguard and whenever appropriate, increase social and other priority spending that would be needed to achieve this goal.

Capacity development (including Technical Assistance (TA) and training)

CD in areas of Fund expertise, when requested by members, can also support them in addressing social spending issues to improve macroeconomic outcomes and/or support economic and financial stability.

How to Engage on Social Spending Issues in Country Work

This section covers a number of key issues on social spending engagement in both surveillance and programs. It clarifies the role of social spending in achieving program objectives and discusses specific considerations in designing social spending conditionality, including drawing from recent program experiences. It also discusses the role of capacity development and how it can complement and support engagement in surveillance and programs .

• A. Formulating Policy Advice in Surveillance and Programs

22. Providing tailored policy advice to address social spending challenges is important . Below are several considerations that can help develop well-designed policy advice in achieving the policy objectives, while also enabling country ownership for policy traction in implementation:

Accounting for members’ specific circumstances, needs, and preferences . This is particularly important for social spending issues for two reasons: (i) the role of social spending and designs of social spending systems highly depend on the social and political preferences of a country, while economic and capacity considerations also play an important role. However, it is critical to distinguish between long-term structural needs/preferences and short-term policy responses to political/election cycles, and careful consideration is needed for engagement on social spending issues related to the latter; and (ii) the authorities are more likely to take ownership of reforms, and this would help improve traction of the policy advice. Furthermore, this consideration applies to both setting the reform agenda for social spending issues in general and formulating policy advice to address a specific social spending issue. On the former, many countries, especially EMDEs, often face multiple social spending challenges, and members’ needs and preferences should be an important factor in the prioritization of different social spending issues ( Box 4 ).

Recognizing the macro focus of Fund expertise . When the Fund has expertise for a social spending issue for which it should engage, teams are expected to fully engage and offer specific policy advice. In this case, it is essential for country teams and experts to work closely from the start. As many institutions are working on social spending issues, often with complementary experiences and knowledge, close coordination with them is also important, particularly to align policy messages when appropriate and avoid duplication of work. For social spending issues for which the Fund should engage but lacks expertise, it is critical to collaborate with other stakeholders to leverage their expertise. However, in such cases, it is often challenging to balance between staying within our areas of expertise and being helpful with concrete policy advice ( Box 5 ).

Taking into account measurement and data limitations . Measurement and data limitations are often a barrier to high-quality analysis and policy advice. This has several important implications, including: (i) in the near term, the need to formulate policy advice based on existing imperfect information, which may require complementing data analysis for the member with lessons from the experiences of peer countries having a similar social spending design, relying on cross-country data from international organizations when available, and making the appropriate adjustments when administrative data from the member needs to be used—for example, in the case of programs. Good planning—leaving sufficient time for data-related preparation—and reaching out to FAD at an early stage would be particularly important; (ii) the need to work closely with partners, which may have access to additional data and experiences dealing with data limitations; and (iii) the-medium term need to improve social spending data, including through capacity development.

Recognizing possible interlinkages between spending adequacy, spending efficiency, and fiscal sustainability as well as across different components of social spending. Effective policy advice needs to account for the interlinkages of the three channels, as policies to address one of the three typically have implications for the other two. For example, measures to address spending adequacy—through increasing coverage or benefit levels—could jeopardize fiscal sustainability, which means measures would need to be introduced to raise revenues, reallocate spending from other areas, or enhance spending efficiency (e.g., by reducing waste and administrative cost and/or improving allocation and targeting). Similarly, different social spending components can contribute to achieving the same policy objectives and thus policy designs need to consider their composition, for example between education and health spending in building human capital in the long term.

Articulating policy advice and its social and macroeconomic implications . As social spending issues are often long-term and structural in nature, addressing them requires a long-term strategy often through a reform package:

design of the reform, including sequencing and phasing of the different measures . For example, to address fiscal sustainability of a pension scheme, retirement age would be gradually raised over time. To strengthen the protection of the poor, a targeted cash transfer program would be introduced, with clear eligibility criteria and benefit levels and supported by first an information campaign to raise awareness and participation, the establishment of a social registry, and tax administration and policy reforms to provide the needed financing. The benefits may need to be gradually withdrawn above a certain income level to limit work disincentives.

assessment of the social and macroeconomic implications of the reform . This includes the impacts of the reform on poverty, inequality including on gender, and economic growth, among others. This can help better understand the effectiveness of the reform and also communicate with the member and other stakeholders.

Ensuring consistency in social spending policy advice in achieving near-term and medium-term objectives . There is sometimes a tension between medium-term policy advice in Article IVs (for example, the need over the medium term to increase the number of teachers and education spending) and near-term policy objectives in programs (for example, the need for fiscal consolidation and a reduction in the wage bill in the education sector in the near term to close the BOP gap). In this case, lowering the wage bill through a temporary reduction in wages may be best aligned with the medium-term policy objective for the education sector.

23. Typical policy reforms in social spending vary by spending area . These are discussed in more detail in the TNMs. Some general lessons from this analysis are below, with some country examples ( Box 6 ).

Pensions – A frequent pension policy trade-off is between addressing short-term fiscal adjustment and long-term objectives (such as expanding coverage or maintaining benefit adequacy for retirees), and the need to maintain the pension systems’ credibility and sustainability in the eyes of taxpayers (contributors) and benefit recipients.

Social Safety Net (SSN ) – Typical social safety net reforms focus on expanding coverage, better targeting benefits (see Box 7 on targeted versus universal benefits), or adopting information technology and other mechanisms to improve the efficiency and equity of the SSN ( Fiscal Monitor, 2018 ).

Health spending – Health reforms can focus on lifting health coverage and financing, constraining costs through the identification of savings (in pharmaceutical and hospital spending) and addressing weaknesses in health system design (for example, fragmentation and duplication).

Education spending – Education spending can be increased to support student enrollment or support approaches to lift teaching quality (including through wages and/or increasing the number of teachers) 7 ; tertiary systems can become more responsive to the labor market or improving efficiency by supporting disadvantaged students, particularly in the early years.

Prioritization Across Social Spending Issues in Fund Engagement

Many countries face multiple social spending challenges, potentially for example, in advanced economies, fiscal sustainability in pensions and health, spending efficiency in education, health and social protection, and spending adequacy for some segments of the population, and in EMDEs, spending adequacy and efficiency for nearly all social spending areas, constrained by fiscal space and administrative capacity. Country teams can draw on the following when considering prioritization of social spending issues in a specific Article IV:

Needs and preferences of the member . As discussed earlier, significant weight, when appropriate, should be put on long-term structural needs and preferences of members—not short-term policy responses to political/election cycles—in prioritizing of social spending engagement.

Complementarity with other stakeholders . Fund engagement should prioritize social spending issues or aspects of social spending issues that it has expertise and avoid duplicating efforts with other stakeholders.

Social and macroeconomic impacts . Even among macrocritical policy issues, the degree of their macrocriticality may vary. Priority should be given to those that have greater social and macroeconomic impacts, and some assessments of costs and benefits could be useful. Recent literature on marginal value of public funds (MVPFs) can help make such assessments ( Finkelstein and Hendren, 2020; Hendren and Sprung-Keyser, 2020 ).

Policy traction . The likelihood of a successful implementation should also be an important consideration. This may be related to administrative capacity of the member and/or its resource constraints when there are competing needs.

Addressing constraints . Some reforms can help ease the constraints on administrative capacity and resources, such as revenue mobilization (e.g., Georgia, Maldives, Dominica, and Ghana), improving social spending efficiency, and institution building (particularly the use of MTEFs and MTFFs to embed spending plans in fiscally sustainable medium-term frameworks).

These considerations can also help prioritize the engagement on social spending issues in programs, particularly in assessing the extent to which different social spending issues meet the criticality standard under the conditionality guidelines.

Depth of Engagement

The 2019 strategy paper outlines several principles on the depth of engagement in surveillance, indicating the depth of policy advice should reflect urgency of the issue, the authorities’ policy agenda and capacity, and the Fund’s comparative advantage and in-house expertise to provide specific policy advice. More specifically:

When the Fund has deep knowledge in the specific social spending issue, staff should fully engage, staffing and resources permit. In addition, in-depth engagement can be spread over multiple surveillance cycles.

When the Fund lacks expertise, staff should focus on macroeconomic aspects of the issue, leaving sector-specific policy advice to IDIs that with relevant expertise and capacity.

When the Fund has some expertise, in addition to focusing on macroeconomic aspects of the issue, staff may offer some sector-specific advice including reiterating recommendations from other IDIs, provided they are consistent with Fund expertise and vetted by Fund expert. Staff should restrain from getting into controversial issues, including those for which key IDIs have different views.

Programs typically focus on implementing already developed policy advice and urgent policy issues. While specific policy advice on social spending issues may be deferred to the next Article IV cycle, in a program context, conditionality on an issue might be needed if it is critical to the program’s success.

In all cases, staff should consult FAD early in the process to understand if the Fund has expertise on the issue and for further collaboration as appropriate.

Social Spending Reforms: Key Options and Country Cases

Pension reforms include parametric adjustments, structural reforms or paradigm shifts to address core system weaknesses. Parametric adjustments leave a pension system’s overall objectives (e.g., defined benefit, defined contributions, level and mode of funding) and basic features unchanged but adjust key parameters related to eligibility, benefits, and contribution levels. The focus of structural changes is on the mix of fundamental features such as public and private management and risk sharing (e.g., defined benefit and defined contributions). Paradigm shifts involve overhauling the objectives of a pension system, such as the creation of a zero-pillar scheme dedicated to poverty alleviation.

Retirement age increases are commonly used to improve the fiscal sustainability of the pension system (e.g., Cyprus, Denmark, Estonia, France, Greece, Italy, Portugal, United Kingdom). The increase the statutory retirement age delays the date at which beneficiaries can retire and receive pension benefits. When implemented in isolation from other parameters, this reduces the overall generosity of the pension system since beneficiaries contribute for a longer period and, on average, receive benefits for a shorter period, avoiding the need to reduce pension benefits. Equalizing the retirement age for men and women by raising women’s retirement age has the same impact but may also help reduce the pension gender gap.

Social Safety Nets :

Countries employ a variety of (non-contributory) programs and policy instruments to protect households that make up the Social Safety Net. These range from poverty-targeted cash transfers (family, children, and orphan allowances) to social pensions, nutrition programs, and fee waivers (e.g., reduced medical fees, housing allowances, transportation benefits). There is no one-size-fits-all approach to the reform of SSNs as the focus of the reform will depend on whether weaknesses of the system are about adequacy, efficiency, or fiscal cost. The design of the SSN should also reflect complementarity with social insurance and labor market programs.

Mauritania committed in September 2020 to protect the most vulnerable impacted by the pandemic and droughts/climate change by scaling up the targeted cash transfer scheme for the poor and vulnerable from 34,000 households to a target of 55,000 households by October 2020, and 70,000 households by end-2020. This required achieving an expansion of both the social registry of vulnerable households and the cash transfer program to cover the whole country, with support from the World Bank.

Policy reforms can target system wide issues (“macro”), incentive issues and governance (“micro”), and services provided (“coverage and adequacy”). Macro level policies may include budget controls and caps to monitor health expenditure, defining the scope of health services covered by public schemes (e.g., general criteria of treatments and coverage of specific services such optical and dental), and workforce management (staffing levels, remuneration policy). Micro level policies focus on economic incentives to enhance health spending efficiency. Coverage and adequacy can involve expanding access and affordability (e.g., subsidizing immunization and nutrition services).

Thailand’s policy toward universal health coverage started in the early 2000s and expanded Thai citizens’ access to preventive, curative, and palliative health services (Sumriddetchkajorn and others 2019). Over time, the disparities in per capita spending between the Universal Coverage Scheme and the scheme for private sector workers were reduced, and the provider payment mechanisms managed expenditure growth. In the decade after Universal Coverage Scheme was initiated, life expectancy at birth rose from 72 to 74 years and out-of-pocket spending came down.

Education :

Reforms can focus on better translating education spending into schooling and learning that meets the government’s education objectives (e.g., inclusive and equitable learning opportunities including by gender, social mobility, poverty reduction). Policy reforms can focus on investment on basic education, expanding access to education (including lifting enrollment, the teaching and professional workforces, and other reforms to improve the quality of learning outcomes.

Kenya made gains in education from increasing spending, increasing enrollments, and improving learning outcomes before the pandemic. The World Bank highlights the following critical priorities: (1) adequate resources to achieve sector objectives and implement ambitious reforms; (2) allocating resources more equitably, particularly development spending, teachers and school capitation grants and (3) using resources efficiently by exploiting data in management, particularly at the local level, as well as reducing fragmentated management of the sector.

Targeted vs. Universal Social Benefits

The relative merits of targeted versus universal social benefits have attracted much attention and remain a policy challenge for staff and country authorities. The use of targeted and universal social benefits, as well as the targeting methods, varies by country and social spending issue. While social assistance benefits tend to be targeted in most countries (though a growing number of countries have adopted universal guaranteed minimum income schemes), education and health benefits are typically universal. The 2019 strategy paper, including one of its background papers, and the Technical Note and Manuals on IMF Engagement on Social Safety Nets:

provide extensive discussions on the key considerations of targeted versus universal social benefits and the benefits and costs of targeting and different approaches to targeting; and

emphasize that the appropriate use of targeted and universal social benefits depends on country preferences and circumstances and should be consistent with fiscal and administrative constraints.

A desirable income/welfare distribution can be broadly achieved through universal social benefits and progressive taxation, targeted social benefits and proportional/regressive taxation (e.g., through a consumption tax such as VAT), or somewhere in between with targeted benefits and progressive taxation. The comparison ultimately comes down to the advantages and disadvantages between targeting benefits and targeting taxation. They both face similar challenges, including:

Efficiency cost . Means or proxy means-tested targeting for social benefits creates work disincentives. The main form of progressive taxation is a personal income tax (PIT) or a wealth tax, which also disincentivizes work.

Administrative feasibility and cost . Both benefit targeting and taxation targeting requires collecting information on and verifying household income, as well as applying for and collecting benefits and filing tax returns, with private monetary and time costs.

Social and political cost from targeting error . Means- or proxy means-tested targeting can never be perfect. Some poor may be wrongly excluded from receiving social benefits, while some high-income may be identified as eligible. Similarly for PIT, people may not pay their fair share, through tax avoidance and evasion. Alternative targeting methods for social benefits (e.g., categorical targeting) and for taxation (e.g., exemptions in consumptions tax) would lead to different tradeoffs between efficiency cost and targeting error.

Efficiency and administrative cost of universal social benefits and consumption taxes are expected to be relatively low but can also be considered.

The consideration should take into account that targeting can be improved over time with CD and also with technological developments. In some cases, when the available resources are fixed, this leads to an additional tradeoff between low benefits for the poor and thus limited impact on poverty alleviation with a universal scheme and a larger poverty impact with a targeted scheme. Here are a few country examples of targeted and universal social benefits (Mauritania 2020 ECF; Sri Lanka 2023 ECF; Argentina 2018 SBA; Nepal 2022 ECF).

• B. Specific Issues on Social Spending in IMF-Supported Programs

24. Social spending can play an important role in achieving program objectives .

Addressing spending adequacy can help protect the vulnerable from economic shocks, mitigate any adverse impacts of program policies on the vulnerable, and reduce disruptions to learning and the provision of healthcare during the program period, ultimately contributing to poverty reduction and inclusive growth. Addressing adequacy can also help build public support and political ownership of the program.

Improving spending efficiency (e.g., reducing administrative cost by streamlining social programs, improving designs to reduce waste and distortions, and enhancing public financial management to raise the effectiveness of social spending) can help further improve social outcomes, for a given resource envelop which is typically the case in programs. Alternatively, improving spending efficiency can help strengthen fiscal sustainability, without jeopardizing the poverty reduction and inclusive growth objective.

Some social spending reforms can contribute to fiscal consolidation and fiscal sustainability. For example, social protection benefits to the rich may be reduced through better targeting, parameter reforms to the pension systems can help improve its long-term sustainability, and there may be scope to make the health systems more sustainable by increasing private financing, depending on country circumstances.

25. Engagement on social spending in programs should be relevant for achieving program objectives, while supporting countries’ policy objectives . While programs typically have a relatively short-term horizon to help countries restore macroeconomic stability, they are also designed to support countries’ own long term development objectives, including on social spending, where this is consistent with the primary macroeconomic goals of the programs. This highlights the importance to work closely with development partners during and after the programs, as well as continued efforts in surveillance after programs end.

26. Social spending issues can enter into program design in two main ways : (i) social spending can be part of authorities’ policy commitments as described in the Memorandum of Economic and Financial Policies (MEFP) or embedded in broader program conditionality such as ceiling on fiscal deficit, contributing to achieving program objectives; and (ii) when social spending is critical to achieve program objectives, quantitative conditionality—including Prior Actions (PAs), Quantitative Performance Criteria (QPCs), and Indicative Targets (ITs)—and/or structural conditionality—including PAs and Structural Benchmarks (SBs)—on social spending can be introduced to ensure commitments and progress.

27. The design of social spending conditionality (SSC) should be guided by the principles of realism, granularity, gradualism, and parsimony (2018 ROC). The starting point of designing effective SSCs is to apply these principles in the social spending context:

Realism : program conditionality should reflect various constraints such as macroeconomic conditions, administrative capacity including governance, political constraints, availability of high-quality data, and complexity of the issues. 8 These are the key characteristics of social spending issues, and thus being realistic should be a key consideration in the design of SSC for it to be successful.

Granularity : program conditionality should be specific. Where components of social spending are not well-designed, or/and inefficient, SSC focusing on specific schemes or issues can potentially be more effective.

Gradualism : a gradual approach may work better, as reform implementation may require time, ownership, capacity building, and substantial financing. As many countries, particularly low-income countries, have weak capacity, including in implementing social spending reforms, and are constrained by limited fiscal space, a gradual approach would allow time to address the various constraints step by step.

Parsimony : program conditionality should focus on fewer but deeper reforms. Many countries face a diverse set of social spending issues and SSCs should focus on those that are most critical to achieve program objectives, leaving other long-term structural reforms for surveillance.

28. The use of quantitative and structural conditionality should reflect the intended objective, the nature of social spending issues, and local capacity constraints . Quantitative and structural conditionality should be used in accordance with their specific purposes and conditions, as set out in the Guidelines on Conditionality. The relevant conditionality will depend on the type of social spending issues to be addressed, as well as country-specific conditions. 9 In broad terms,

For spending adequacy , quantitative conditionality (e.g., QPCs or ITs on spending, coverage and/or benefit level), coupled with structural conditionality (e.g., SBs to help improve coverage, for example, through a social registry, and targeting) could potentially work the best. 10 On quantitative conditionality, the choice between QPCs and ITs heavily depends on the extent to which social spending issues are critical for program success, the administrative capacity and availability of high-quality data on social spending by the authorities to avoid misreporting, and uncertainty associated with social spending issues. Additional consideration may be given to QPC to help enhance commitments and ownership of the authorities when data availability allows. In addition, an IT can be initially adopted and be converted into a QPC as administrative capacity and/or data quality improves, or an IT can be elevated to a QPC to improve policy traction when data availability allows (Pakistan 2019 EFF and Tunisia 2016 EFF, which helped achieve the inclusive growth objective of the programs).

As improving spending efficiency often involves enhancing the designs of social spending programs, it is difficult to set quantitative targets. Even when quantitative criteria are possible (e.g., composition of spending, student-teacher ratio, or doctors per 100, 000 population), meeting the quantitative targets may not necessarily mean better efficiency as these reforms tend to be complex and often takes time. For example, increasing the number of teachers to reach a target on average student-teacher ratio may not necessarily mean that the best candidates are retained at the schools in most need. In addition, there may not be a widely acceptable evidence-based target, which may depend on country-specific conditions, and these types of reforms involve large uncertainty, with changes to employment framework, possibly through negotiation among stakeholders. Therefore, a bottom-up approach is likely to work better with SBs on, for example, employment framework, which would gradually lead to an increase in average student-teacher ratio.

Even though it may be easier to set a quantitative target for fiscal sustainability than for spending efficiency, a bottom-up approach based on SBs would also likely work better to address fiscal sustainability . To resolve long-term fiscal sustainability, changes to the designs of social spending programs are likely to be needed to address the root causes of the issues. For example, parameter reforms for pensions, or reforms to increase private financing and improve efficiency for health systems, may be necessary. Quantitative targets, if more stringent than what the SBs can deliver, would likely lead to ad hoc cuts in spending which may lead to inefficiencies, equity concerns and potentially also arrears or rationing of services. For spending that are less subject to design issues (e.g., capital spending, wage bill, or spending on goods and services), it would make more sense to include them within the broader set of spending measures, supporting the overall fiscal balance target. With this, the authorities can balance the need for fiscal adjustment in different spending areas, without singling out any specific social spending. This is also more consistent with the parsimony principle on setting program conditionality.

Recent program experiences indicate a mix of different types of conditionality, particularly ITs and SBs, broadly consistent with the discussions above (Annex IV; Hanedar and Munkacsi, forthcoming).

29. Social spending floors are the most common form of SSC and their design is of particular importance ( Box 8 ). The design of a social spending floor should reflect and be aligned with program objectives to help improve adequacy or prevent a decline in adequacy under challenging macroeconomic conditions. In this respect, social spending floors do not aim at setting ideal or normative levels of social spending as a whole or for certain categories. More specifically, a social spending floor, better if combined with relevant SBs, can be an effective tool to protect the most vulnerable during the program period, for example, by excluding key social programs from fiscal adjustment or ensuring a steady increase in their spending levels. The design of a social spending floor involves defining its coverage, operationalizing the definition based on available data and administrative capacity, and setting the target.

30. The coverage of a social spending floor depends on the specific purpose of the floor in supporting program objectives and usually involves decisions along two key dimensions ( Figure 5 ):

Coverage of recipients: targeted vs. universal . This refers to whether the coverage of the social spending floor is only limited to the intended recipients, per the program objective, or is available for a broad population of recipients. 11 For example, if the program objective is to protect the poor, a targeted approach would mean limiting benefits only to the poor, while a universal approach would mean providing the benefits to the entire population. The policy options (e.g., benefit targeting, taxation targeting, low universal benefit with no targeting, and high universal benefit with no targeting and high fiscal cost) and their tradeoffs, as discussed in Box 7, still apply, though in the program context with a short-term horizon and often tight fiscal space.

Coverage of spending categories and programs: narrow vs. broad . The choice, for example, involves specific social assistance programs vs. all social assistance programs, capital spending in education vs. total education spending, primary care spending vs. total health spending. Narrowly defined social spending is consistent with the granularity principle. If the social spending floor targets well-designed programs or spending categories, it can be more cost effective. However, this may come at the potential cost of a reduction in program flexibility or reaching only a small share of the intended recipients. For example, if the program objective is to protect learning and limiting any scaring effect during a crisis (which can help reduce poverty and achieve inclusive growth), the social spending floor can target capital spending and good and services in the education sector or be set on entire education spending. In the former case, this would allow continued investment in the education sector and ensure that teachers and students have what they need, while leaving room for potential adjustment on the wage bill if needed. In the latter case of a broader floor, the design could make it difficult for the education sector to contribute to fiscal adjustment during the crisis, even if wages in education sector become too high related to the private sector and disincentivize reforms to improving spending efficiency. However, in the event when the education sector needs more teachers and less capital investment (contrary to the program assumption), the narrowly defined social spending floor would not be able to respond. Also, in the case of narrowly defined floor, if the specific social assistance programs under the floor have limited coverage in terms of the vulnerable, this could jeopardize the program objective of protecting the vulnerable, leaving a large portion of them unprotected. 12

The design would also need to consider additional factors such as data availability (e.g., disaggregated data), administrative capacity, how well-designed different social spending programs are, and the potential for crowding out across spending components covered by the social spending floor. For example, disaggregated spending data for narrowly defined targets (e.g., specific social assistance programs) may not be available on a timely basis. When direct measurement of the spending is not available, proxies based on other data may be considered. In the case of Madagascar 2021 ECF, under the IT on social spending floor, social spending was defined as domestically financed spending, excluding salaries, of the ministries of health, education, water and sanitation, and population. Putting in place new targeted programs may take time, particularly for countries with limited capacity, though some countries were able to create a social registry in a relatively short period during the COVID-19 pandemic. One feasible approach is to take an existing program—how well it is designed is thus critical—and gradually improving its targeting and coverage through SBs. For broadly defined targets, there are risks that resources may disappointedly go to certain areas (e.g., wages in the case of education and health spending), leading to spending inefficiency. The design of social spending floors may also need to be regularly revisited to reflect changing conditions (e.g., the 2017 expansion of the floor in Tunisia 2016 EFF).

31. Mixing different components of social spending or mixing social spending with other spending should be avoided . Consistent with granularity in designing program conditionality, it is not advisable to mix different social spending components or mix social spending with other spending in setting a social spending floor. This could jeopardize achieving program objectives, as the target could be met by too much spending on some and too little on the others.

Coverage of a Social Spending Floor: Two Key Dimensions

32. Some basic considerations should be weighed when setting social spending floor targets . Social spending floors are typically expressed in nominal terms in program documents. The underlying design could be based on constant or increasing (i) spending as percent of GDP (the target varies with the state of the economy and could decline in real terms when the economy is weak), (ii) aggregate spending in real terms (a more robust target, which does not vary with the state of the economy), or (iii) per capita spending in real terms (likely the most robust target, which could lead to higher spending in real terms if coverage is expanding). There is clearly a tradeoff between protection of social spending and fiscal costs and risks, depending on the ability to project GDP, inflation, and coverage. Social spending floors could also set target on coverage when it is a key policy concern (Nepal, ECF/EFF, 2022). Adjustors, however, can potentially help manage the risks. For instance, the floor could increase if revenues overperform or coverage expansion is larger than expected.

33. SBs play a key role in addressing social spending issues in programs . 13 In addition to the discussion above, the design of SBs should also consider:

Ensuring consistency between QPCs/ITs and SBs in case they are both used in a program. For example, when SBs help improve targeting and coverage of social assistance programs, they have implication on fiscal cost of the programs as well, which should be reflected in the design of QPCs/ITs.

QPCs/ITs and SBs can potentially complement each other in achieving program objectives, with QPCs/ITs ensuring available resources and SBs improving the efficiency and coverage of social spending programs. Appropriate sequencing and phasing of SBs, including aligning with technical assistance, can help maximize the benefits, and this requires realistic estimates of the time needed for each step, particularly those involving IDIs (see also Section VI).

Country Case Studies on Social Spending Floor Argentina (2018 – SBA) .

Classification and objectives . Social spending floor under the program was set as a QPC with the objective of protecting society’s most vulnerable by strengthening social spending (both recurrent and capital).

Definition and coverage . The Technical Memorandum of Understanding (TMU) definition of the “Floor on Federal Government Spending on Social Assistance Programs” indicated the federal universal program of social protection as main beneficiary of the priority spending and provided a detailed list of all its social protection schemes. The QPC aimed at providing universal benefits to children (including disabled), pregnant women, and education, and included additional targeted benefits for specific groups of families.

Calibration of the floor and implementation . The level of the social spending floor was calibrated starting from an ambitious but realistic spending in percent of GDP (1.3) coupled with the identification of the expected number of beneficiaries under each scheme (total recipients higher than the official census of people in poverty). The QPC included an adjustor to ensure that under worsening economic conditions spending for benefits under the universal child allowance program could be increased by up to 0.2 percent of GDP per calendar year. The QPC was met at each of the completed reviews.

Main lessons . The Success of the social spending conditionality benefited from a careful and tailored design of the QPC in collaboration with the authorities and experts. The target was ambitious but realistic and fully aligned with program objectives and priorities. The choice to favor existing social schemes efficiently administered and with wide coverage contributed to the success.

Barbados (2018 – EFF).

Classification and objectives . The social spending floor was set as an IT with the objective of mitigating any adverse effects on the vulnerable from the fiscal adjustment under the program reform agenda. The MEFP included commitments to strengthen social safety nets, streamline and integrate existing benefits programs, and improving social protection targeting.

Definition and coverage . The TMU clarified that the indicative floor on social spending would apply only to expenditures incurred by the Central Government on programs supporting the vulnerable—the unemployed, poor households, vulnerable children and youth, and the elderly—in education, health, social protection, housing/community services and recreational activities. The authorities worked closely with the IDB to improve the efficiency and effectiveness of social spending.

Calibration of the floor and implementation . No specific information on the calibration of the IT was included in the TMU or program description. The level of the social spending floor reached a maximum level of about 0.5 percent of GDP, and approximately 10–25 percent of IFIs budget support over the life of the program and did not include an adjustor. The IT was met at each review.

Main lessons . This is a typical case of social spending floors to mitigate the temporary adverse effects of program reforms on the most vulnerable. With no information on the calibration of the IT, it is unclear whether the spending floor level could have been more ambitious. Lack of specific information on the allocation of resources, the effectiveness of the existing social safety nets, and the quality of their administration prevents from an assessment of spending efficiency.

Benin (2022 – EFF/ECF) .

Classification and objectives . The social spending floor IT was set to achieve the core program objective of improving socioeconomic outcomes, building on the authorities’ social spending plans and taking into consideration data availability, timeliness, and measurability. The IT was also considered necessary to mitigate fiscal pressures on the most vulnerable part of society and improve Benin’s social safety nets. The IT is supported by structural conditionality and the development of a national registry.

Definition and coverage . The TMU definition of the priority social spending (PSE) included expenditure executed from the State budget relating mainly to the areas of education, health and nutrition, the establishment of social safety nets, access to electricity, water and sanitation, microfinance security and civil protection. The PSE was set to be very selective, covering a specific list of recipients, and to capture only spending that directly reduces poverty.

Calibration of the floor and implementation . The level of the social spending floor has been calibrated at about 1.5 percent of GDP on annual basis, which seems at the same time sizable and realistic. The MEFP clearly identifies the expected groups and number of beneficiaries under each category of social spending. The IT was met at each of the completed reviews.

Main lessons . Social spending conditionality has been successful under the program until now thanks to the extensive analysis of Benin social system, challenges, and prospects, coupled with the rigorous design of an IT based on execution instead of allocation and of supporting SBs. The target, fully aligned with program objectives and priorities, is expected to be financed by a reduction of distortionary subsidies and other inefficiencies. Cooperation with the authorities and other IFIs, and the ongoing governance and capacity building reforms can help further accelerate progress.

Madagascar (2021 ECF) .

Classification and objectives . The social spending floor was set as an IT with the objective of improving social spending execution and outcomes compared to previous programs, on the back of increased budgetary allocations. The MEFP included commitments to strengthen budget execution and transparency to support better performance on social spending conditionality.

Definition and coverage . In the TMU, priority social spending includes domestic spending for interventions in nutrition, education, health, and the provision of social safety nets. The floor is set as the sum of the budget allocations in the Loi de Finance to the Ministries of Health, Education, Population and Water, excluding salaries and externally financed investment. Coverage of beneficiaries and targeting are not defined in the program documents.

Calibration of the floor and implementation . Madagascar faced continuous challenges in meeting the floor—which was originally calibrated on increased resources devoted to social spending. Although the sources of social spending funding were clearly identified and available, the level of social spending remained significantly below target, despite the repeated downward revisions of the IT and continued technical assistance by the Word Bank and the European Union.

Main lessons . The main reasons behind this poor performance are related to low capacity, severe weaknesses in budget execution and monitoring, lack of transparency, and poor traction of the authorities under program conditionality.

• C. Capacity Development

34. Capacity development is an integral part of Fund engagement on social spending, complementing and supporting surveillance and programs. In addition to helping members build their capacity, capacity development can be particularly useful for country engagement on social spending issues, under both surveillance and programs, by facilitating the development of policy advice and its implementation. 14 The IMF provides capacity development directly in several social spending areas ( Table 1 ). In addition, capacity development in the general areas of public financing management, tax policy and revenue administration can also help improve the efficiency of social spending and create fiscal space for enhancing social spending adequacy.

Examples of IMF Capacity Development in Social Spending

External Collaboration and Outreach

This section outlines the approaches to external collaboration and outreach at both the institutional level and the country team level .

• A. Collaboration with External Development Partners

35. Collaboration with external stakeholders is a key part of the 2019 social spending strategy . Given extensive experiences and knowledge of some IDIs on social spending issues, close engagement with IDIs, such as the World Bank, the International Labor organization (ILO) and the World Food Program (WFP), can be very valuable, in several ways, including:

Exchanging views and coordinating policy messages. The Fund and IDIs sometimes have different views on policy priorities and messages, partly reflecting differences in institutional focus, for example, the Fund’s focus on short-term stabilization in programs versus the longer-term development focus of IDIs. It is thus important to exchange views—better understanding each other’s policy objectives and line of thinking—and look for common grounds. Consistent policy messages from the Fund and IDIs send a more powerful signal to the authorities and the public and can help improve policy traction. The opposite, on the other hand, can lead to confusions and policy inaction.

Leveraging specialized expertise and knowledge by IDIs. Many IDIs have deep knowledge and experiences in certain social spending issues, particularly related to detailed designs and implementation of social spending schemes. In addition, IDIs also have been engaging on social spending issues for many decades, much longer than the Fund, have greater presence in the field, and thus have a better understanding of country-specific institutional settings, past experiences and contexts of social spending issues, have a closer relationship with country authorities, and often have better access to the data. The Fund can benefit from leveraging the expertise and experiences of IDIs in both developing broad policy messages on social spending issues and provide country-specific support, especially when the Fund has no or little expertise.

Complementing each other’s work and avoiding duplication. Each institution has its comparative advantage in addressing different aspects of social spending challenges (i.e., macroeconomic-related issues for the Fund), but there is also overlap among different institutions in their policy focus. One benefit of close collaboration is to amplify complementarity, while limiting duplication of efforts. For example, a number of international institutions have been developing cross-country databases, and close collaboration can help harmonize data collection efforts and share best practices in social spending data management and reporting.

36. Collaboration at the institutional level can help exchange policy views on broad social spending issues and facilitate further collaboration at the country team level . More specifically,

FAD would act as a hub for identifying relevant counterparts and provide guidance on where IDIs take the lead or provide complementary support. FAD has been in close contact with IDIs on different social spending issues—for example with the World Bank on education, health, and social protection. In addition to developing and coordinating broad policy messages social spending issues, FAD can also help country teams identify relevant experts from the World Band and other IFIs and facilitate collaboration at the country level. 15

Joint events and country-level collaboration with external stakeholders on issues of common interests can be effective ways to foster knowledge exchange and enhance collaboration. 16

37. Collaboration at the country team level can focus on policy issues in a specific country context (see Box 9 on the experiences of Jamaica) . This includes:

Reaching out to FAD and SPR at an early stage, so they can help identify the relevant IDIs and the right counterparts within those IDIs.

Recognizing different institutional priorities and cycles of engagement, it is important to have early dialogue with IDIs—particularly when a country strategy is being developed—to better understand their workplans, priorities for the country, and policy views.

Understanding that ultimately IMF staff is responsible for its policy advice and collaboration with IDIs help country teams in formulating such policy advice. Thus, frequent update and consultation with Fund expert (e.g., FAD) is strongly encouraged, while working with IDIs on social spending issues.

• B. Outreach and Communication

38. Outreach and external communication can help raise awareness of Fund engagement, articulate policy advice, and increase policy traction . Given the high political sensitivity of social spending issues, outreach and communication should be a key part of Fund engagement, with important roles for FAD, SPR, COM and country teams. This can help:

highlight that the Fund sees social spending as an important issue and is actively engaging through its activities in surveillance, programs, and capacity development. However, the Fund’s engagement can only focus on social spending issues that are macrocritical in the surveillance context or meet the criticality standard in programs, given its mandate and expertise.

explain the considerations and rationales underlying Fund policy advice and counter any unfounded and unfair criticism of Fund engagement.

improve the traction of Fund policy advice, including for social spending issues.

39. A structural approach should be taken at both the institutional level and country team level .

At the institutional level, FAD and SPR should take the lead, with support from COM, regularly interacting and updating external stakeholders, including CSOs, on Fund engagement on social spending issues, as a group during the Spring and Annual meetings and bilaterally as needed with selective external stakeholder.

Country teams, in collaboration with COM, should have a clear communication plan, if social spending issues are covered in surveillance or programs:

Before the mission: early collaboration between country teams and COM during the surveillance cycle and early stages of program design; engaging IDIs to explain the Fund views; and reporting back to FAD and SPR and consulting internally, particularly if there are strong disagreements.

During the mission: meeting with CSOs, academics, labor unions, local experts to explain Fund engagement; gather information to better understand social needs and the political economy; including references to social spending issues in concluding statement and press release as needed; and preparing to respond to potential questions during the press conference.

After the mission: ensuring adequate dissemination of the staff report to the authorities and other stakeholders within and outside the country; further engagement and outreach by the team and the IMF Resident Representative (ResRep) addressing any additional feedback; and considering upgrading ResRep webpages on the issues with COM support, as needed.

Collaboration With IDIs: the Case of Jamaica

The Fund quickly engaged on social spending issues with Jamaica’s government agencies . Jamaica requested assistance from the Fund twice during 2010–20 to tackle high public debt and development challenges. Strengthening the social safety net to better protect the vulnerable during adjustment was seen as an essential condition for program success. In 2016, the authorities asked for a comprehensive assessment of existing social programs to identify those that should be improved/expanded. Fund staff engaged early on with the Ministry of Finance and Public Service, the Planning Institute of Jamaica, as well as the ministries of education, health, labor, and social security. To assist the authorities in their reform efforts, staff sought in-house expertise to analyze the impact of reforms on the most vulnerable and propose policy measures to support them.

Technical assistance played an important role in informing policy measures implemented under the program, including from IDIs . FAD provided TA on expenditure rationalization to help create fiscal space in support of fiscal consolidation and the social protection system. The Fund and the World Bank jointly provided TA in the summer of 2016, designing reform options to offset the negative welfare effects of the regressive tax reform—in particular, boosting the PATH (Programme of Advancement through Health and Education) program—and reforming pensions. The authorities drew heavily on the findings of the TA mission in designing their reform measures.

The Fund, the World Bank, and the Inter-American Development Bank (IADB) continued to jointly monitor progress . For instance, the IADB and World Bank completed a review of benefit adequacy and engaged on a plan to regularly reassess the effectiveness of eligibility rules for PATH and extend of coverage of selected active labor market programs (on track).

To support reform momentum, staff regularly interacted with local stakeholders . These included the Jamaica Confederation of Trade Unions, the Private Sector Organization of Jamaica, local media, and the opposition political party.

• Annex I. Social Spending Data: Measurement, Availability, and Challenges

Data gaps arise for many reasons including different definitions and coverage. These gaps often impede the authorities’ ability to adequately assess, plan and execute social spending programs. Improving data availability and quality is essential to strengthen staff’s engagement on social spending issues. Efforts could focus on improving data collection, reporting, management procedures, and institutions .

1. Effective engagement on social spending typically requires a broad range of data and information that goes beyond public spending . Availability of high-quality data is key to effective engagement on social spending, including assessing the macrocriticality of social spending issues, formulating well-designed policy advice, and putting policies into practice. The data requirements are broad;

Spending data . This includes public spending data from various sources (e.g., central government, local governments, public financial corporation, state-owned enterprises, and mandatory private schemes) and private spending data (e.g., by voluntary private schemes, firms, households, charities, and donors). They help provide a complete picture of total resources for different social policy areas and assess spending adequacy and efficiency.

Data on output and outcomes . For example, information on student-teacher ratios, the number of medical professionals (e.g., doctors or nurses) per 100,000 population, and coverage of the vulnerable by social assistance schemes can help understand spending adequacy. Data on education and health outcomes (e.g., school enrollment, test scores, infant mortality, and life expectancy) are key to assess spending efficiency. Household survey data are particularly useful to understand the incidence of overall and main social spending programs.

Data and information on designs of social spending schemes . Information on the designs of social spending schemes (e.g., eligibility criteria, targeting methods, benefit levels, and method of delivery) can help identify the drivers of inadequacy, inefficiency, and fiscal pressures and formulate policy reforms.

Other data . This includes, for example, demographic trends and projections to assess future spending needs, information on contingent liabilities to assess fiscal sustainability, a database/social registry for targeting and benefit delivery.

2. Data on social spending may vary because of different definitions . For example, the GFSM 2014 has a broader definition for overall social spending that also includes housing, though the definitions are broadly in line with those of the strategy paper and guidance note, when it comes to health, education, and social protection. In some cases, the boundary of spending may not be clear because there may be more than one statistical concept associated with it. For example, in health, there are differences in the treatment of certain categories of spending depending on whether a GFS definition, a System of Health Accounts definition, or the System of National Accounts definition is used. Moreover, social safety nets may be defined more broadly (e.g., treatment of subsidies) which may impact the delineation of social spending.

3. The definition of government may also impact social spending data . Social spending can be analyzed at the level of central government, general government (including social security), or overall economy, depending on the issue. Social spending is often delivered at the local or state levels and outside the scope of the central government. Therefore, general government level is typically preferred, particularly given its importance for assessing fiscal sustainability. However, data availability at general government level can be challenging, particularly in fiscally decentralized countries, where both central and local governments can have social spending responsibilities, often with parallel schemes and unintegrated databases.

4. Off-budget social spending may be an important source of data differences . Crosscountry data for off budget spending (e.g., social spending financed by donor support) can be challenging to identify. This is particularly the case for some cash transfer schemes, as well as for health and education programs in LICs. COFOG will also not be sufficient where there is a high level of private spending.

5. Data on social benefits can be understated because of large in-kind payments . For many less advanced economies, national accounting and budget systems are not equipped to capture and/or properly report in-kind social assistance.

6. Data weaknesses may reflect capacity constraints . In many LICs or EMDEs, social spending data sources are fragmented. Data may be provided through individual line ministries and/or individual public entities and may differ from budget execution data used for the macro-fiscal framework. Countries that have adopted GFSM 2014 are likely to have better quality data because the GFSM 2014 presentation has cross checks that ensure consistency between COFOG and economic expenditure.

7. Consistency and timely availability of data are often a challenge, particularly for low-income countries where IMF engagement is especially needed . Given the complexity of social spending systems and the broad range of data requirements, it takes time and efforts to collect and consolidate data from different sources. In addition, the measurement of social spending may vary by cross-country database and country. For example, certain categories of health spending are treated differently in the GFS, the System of Health Accounts, and the System of National Accounts. While the availability and quality of social spending data have been improving over the past decades, there are still some significant gaps:

Cross-country data. Most databases are published with a considerable lag, and coverage of low-income countries is still uneven in some cross-country databases, often with missing data (e.g., education spending and social assistance spending). Private spending data (e.g., for education) are still lacking for many countries. In addition to coverage, outcome data (e.g., test scores) often lack compatibility, as different tests are administered at different countries.

Administrative data from authorities. The main issue is the lack of consistency in the definition both across countries and over time. In addition, functional classification is often not available on a timely basis or sufficiently disaggregated, with difficulties in consolidating data from the many different sources.

8. Cross-country databases are the most reliable data sources for cross-country comparisons, while the availability of country-level data is essential in the context of a program .

Social spending engagement in surveillance can be primarily based on cross-country data, complemented by administrative data from the authorities. For countries with limited crosscountry data, lessons from countries with a similar design and socioeconomic circumstances may be useful. Administrative data can be useful in two ways. First, it can provide useful information on the latest development of social spending programs; and second, it can provide more granular information that is often not included in cross-country data, such as more detailed classification of spending, program designs, and coverage of different schemes. Close collaboration among IDIs and capacity development to improve statistical capacity of the authorities can both help improve data availability and quality.

For programs, with broad policy advice from surveillance work and maybe complemented with additional analysis using cross-country data, the focus is typically the implementation of policy advice and monitoring progress and administrative data from the authorities are central to this effort. In countries where functional classification of social spending is inexistant, a proxy based on a combination of administrative classification and other available classification (e.g., program or economic) may be considered (Sierra Leone, 2018 ECF). Staff has an important role to play in identifying data weaknesses and proposing a reform agenda, in cooperation with CD departments, to close these data gaps. Where data gaps adversely impact program success or its monitoring, staff should propose conditionality to ease data constraints.

• Annex II. Social Spending Data Sources for Surveillance

1. There is a wide range of data sources available on social spending . The Government Finance Statistics database covers functional expenditure, including on social spending elements. The UN, World Bank and OECD also collect information across a wide group of countries for the social spending elements. Most of the cross-country data in this annex are published with a lag of 2 years or longer and many have coverage gaps.

2. There are a number of different sources of pension data, depending on the issue of interest . The World Bank provides detailed data through its ASPIRE database. The OECD website presents various pensions-related datasets, covering design, replacement rates, demographics, pension wealth, income, and poverty among elderly people. The ILO compiles numerous databases related to labor markets and social protection. The databases are internally consistent (i.e., they correspond to the same definitions), but the vintages are often old. The United Nations has historic and projected population data by gender, by 5-year and single year age groups until 2100.

3. The World Bank Atlas of Social Protection Indicators of Resilience and Equity (ASPIRE) is the World Bank’s compilation of indicators to analyze the scope and performance of SP programs . ASPIRE provides indicators for 139 countries on social assistance, social insurance and labor market programs based on program-level administrative data and national household survey data. The European System of Integrated Social Protection Statistics (ESSPROS) is a common framework which enables international comparison of the administrative national data on social protection. The OECD Social Spending Database includes reliable and internationally comparable statistics on public and (mandatory and voluntary) private social expenditure at program level.

4. The Global Health Expenditure Database and the World Bank Health Data are primary sources of cross-country health spending data . Additional information includes: (1) the WHO’s Global Health Observatory Data, (2) OECD Health Statistics, (3) The UN health statistics, (4) Eurostat’s Health database. Generally cross-country health expenditure data is published with an 18 month to 2-year lag (i.e., 2020 health spending data was published at the end of 2022).

5. A primary source of education financing statistics is Education Finance Watch . This is a collaborative effort of the World Bank, the Global Education Monitoring Report, and the UNESCO Institute of Statistics – the latest (2022) publication available is here and the latest database here. Other sources include: (1) UNESCO Institute for Statistics, (2) World Bank Education Statistics, (3) OECD Education statistics, (4) UNICEF, and (5) UNSD — Education statistics. Education spending data is typically published with a longer lag than for health, and the availability of private education spending is often limited.

6 . The Expenditure Assessment Tool (EAT) is a tool that provides information to assess public expenditures, including spending on pensions, SSN, health and education, and allows benchmarking with country peers. The TNMs on the social spending areas also provides more detailed guidance within social spending areas.

• Annex III. Main Indicators of Spending Adequacy, Spending Efficiency, and Fiscal Sustainability
• Annex IV. Social Spending Conditionality: Recent Experiences

1. The share of programs that included SSC has steadily increased over the past two decades. 1 82 percent of the programs approved during the period January 2002-June 2023 included at least one SSC, with quantitative conditionality in 56 percent of programs and structural conditionality in 57 percent. The use of quantitative conditionality increased in the past decade— notably after the global financial crisis—and most quantitative targets take the form of ITs ( Annex IV. Figure 1 ). The use of structural conditionality has remained largely stable over time. The share of social spending quantitative conditionality is higher in PRGT or blended PRGT/GRA programs than in GRA programs, whereas the share of structural conditionality is more or less the same. The share of programs with at least one SSC in GRA and PRGT/blended programs increased during 2012–2017, but then dropped slightly in the more recent period, likely reflecting COVID-19.

Share of Programs With Social Spending Conditionality (Percent) 1

2. Most SSC are set by means of ITs and SBs . In the 58 programs approved from January 2018 to June 2023, 48 percent of SSC were set as ITs and 45 percent SBs, accounting together for more than 90 percent of total SSC and with QPCs consisting of only 4 percent and PAs of 3 percent respectively. Of the 57 structural SSCs in programs between Jan. 2018-June 2023, 95 percent (54) were set as SBs, whereas PAs (3) are used for pension reforms that are critical to proceed with a program (Argentina 2022 EFF (2), Moldova 2021 ECF-EFF). All of the total 62 quantitative targets (57 ITs and 5 QPCs) across 58 programs approved during January 2018-June 2023, are in the form of social spending floors.

3. Social spending floors are the most prevalent form of quantitative SSC . These floors help preserve social spending, mitigating the adverse impacts of fiscal adjustments, but they are usually not earmarked to a specific use. A target is typically calibrated as a nominal value, 2 and target values are generally calibrated to ensure increases in social spending during the program period both in nominal and real terms ( Annex IV. Figure 2 ). The median increase in the social spending floor from the first review to the review in the last year of the program is 27.7 percent with the inter-quantile range covering 7.5 to 57.5 percent. The increases in real terms are modest, with the median increase being 12.5 percent, whereas some programs experience declines of the floor in real values, including due to higher-than-expected inflation. 3 The target values relative to total government expenditure follow a similar pattern with the median increase during the program period around 0.1 percent point.

Developments of Social Spending Floor Targets During Programs 1

4. Flexibility has been often used in setting social spending floors, taking into account country specific situations . While most programs set one quantitative SSC in a program, in some cases, more than two quantitative SSC are set to closely monitor social spending. These include cases where a target is set for each social spending area, separately (e.g., cash transfer, health, and education spending) (Pakistan 2019 EFF, Moldova 2021 ECF-EFF), and where multiple targets were used to discipline social spending at different levels (i.e., one target for a broad-based social spending; the other for a narrowly defined one) (Uganda 2021 ECF). In some cases, a quantitative SSC was introduced later in the program, following a carefully tailored sequencing of reform implementations, reflecting the authorities’ capacity (Nepal 2022 ECF).

5. Structural SSC are used to achieve various objectives, including improvements in monitoring and calibration of social spending . These measures are aimed at (i) improve the efficiency in social spending including through better targeting of social assistance, (ii) scaling up the amount of social spending (Congo 2019 ECF/2021 ECF, Pakistan 2019 EFF, Tanzania 2022 ECF, Mauritania 2023 ECF-EFF), (iii) enhancing sustainability of social spending system (e.g., pension) to help ensure overall fiscal sustainability (Barbados 2018 EFF/2022 EFF, Argentina 2022 EFF, Cameroon 2021 ECF-EFF, Moldova 2021 ECF-EFF). The first category includes but is not limited to: (i) improving the existing system associated with social spending (e.g., education, health) (Senegal 2020 PCI, Kenya 2021 ECF-EFF); (ii) enhancing the measurement of social spending (e.g., validation of vulnerable households) (Benin 2022 ECF-EFF); (iii) ensuring the publication of eligibility thresholds (Ecuador 2019 EFF); and (iv) improving efficiency through digitalization (Costa Rica 2021 EFF, Armenia 2019 SBA).

Broad Categories of Structural Social Spending Conditionality

(Number of Conditionality, 2018-Jun. 2023)

6. To this end, specific structural SSC could be set to support consistent implementation in different phases during the program . They would broadly fall under one of the four categories ( Annex IV. Figure 3 ): (i) set up a registry or develop a database, (ii) expand coverage (benefit level and/or number of beneficiaries), (iii) complete a study or paper or set up definitions or thresholds, and (iv) draft or pass a law or decree or complete a related government review. Of the 57 structural SSCs in programs between Jan. 2018-June 2023, 95 percent (54) were set as SBs, whereas PAs (3) are used for pension reforms that are critical to proceed with a program (Argentina 2022 EFF (2), Moldova 2021 ECF-EFF).

7. In recent programs, most SSC focused on social assistance . In the period of Jan. 2018-Jun. 2023, 77 percent of targets are set on social assistance, which is followed with a wide margin by education (10 percent), pensions (8 percent), and health (4 percent) ( Annex IV. Figure 4 ). 4 The situation is in stark contrast with the earlier period of 2002–17 when SSC on pensions and health were used much more often. This shift reflects the increased use of social spending floors in recent years, as well as pressing needs for pension reforms in earlier years (e.g., Greece 2012 EFF, Ukraine 2015 EFF, Bosnia and Herzegovina 2012 SBA), many of which resulted in a series of structural SSC in each program.

Social Spending Conditionality by Economic Category

(Percent, Share in Total Number of SSC)

8. Though relatively limited, some SSC are set on broad areas, tailored to country specific situations . Several recent programs incorporated structural SSC to enhance the sustainability of pension systems (Argentina 2022 EFF, Barbados 2018 EFF/2022 EFF, Moldova 2021 ECF-EFF, Cameroon 2021 ECF-EFF). Support to education and health spending has been provided through the adoption of a financing strategy (Uganda 2021 ECF), spending rationalization (Kenya 2021 ECF-EFF) and reduction of associated risks (Georgia 2022 SBA), improvement in the organization and operation of school and health systems (Benin 2022 ECF-EFF, Tanzania 2022 ECF).

9. The implementation rate 5 for quantitative SSC is broadly consistent with that of similar conditionality, but structural SSC implementation remains somewhat lower compared to other conditionality during Jan. 2018-June 2023 ( Annex IV. Figure 5 ) . The implementation rate of quantitative SSC (ITs and QPCs) in programs is around 70 percent, whereas structural reforms (SBs) have a rate of about 50 percent, with around 30 percent of measures falling under the ‘implemented with delay’ category. No clear difference can be observed between GRA and PRGT programs. The implementation rates for quantitative SSC, which is predominantly in the form of IT, are similar to average rates for other types of ITs, although somewhat lower than those of all quantitative conditionality and fiscal quantitative conditionality (which however predominantly rely on QPC). The implementation rates of structural SSC are significantly lower than those of other structural conditionality, which may reflect the difficulties of implementing socially and politically sensitive reforms in a timely manner, especially at times of macroeconomic challenges.

Implementation Rates of SSC (2018-Jun. 2023) 1 , 2

10. There does not seem to be a clear correlation between how specifically SSC is defined and implementation rate ( Annex IV. Figure 6 ) . Quantitative SSCs are classified into three broad categories, most specific, medium specific defined, and least specific, based on their definitions in the TMU. 6 As defined, most specific and medium specific definitions cover the cases where spending implementation, rather than budget allocation, are monitored, when social programs are implemented by entities outside of the central government (e.g., Mozambique 2022 ECF). The results may suggest that targets are calibrated according to the authorities’ implementation and monitoring capacity of quantitative SSCs.

Implementation Rates by Category (2018-Jun. 2023) 1

11. Combination of quantitative and structural conditionality could improve the implementation rate of SSC ( Figure 6 ) . Among 58 programs that had at least one SSC between Jan. 2018-June 2023, 27 programs had both quantitative and structural SSCs. These programs had a slightly higher implementation rate of quantitative SSC. This result seems to suggest that structural SSC could support the provision of adequate resources for social spending and improve the authorities’ monitoring capacity, which could contribute to the implementation of quantitative SSC.

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Alternatively, tax expenditures can also be considered in achieving these policy objectives, such as refundable tax credits.

The 2022 Guidance Note for Surveillance under Article IV Consultation and the 2024 Operational Guidance Note on Program Design and Conditionality provide operational guidance in general on surveillance and programs ( IMF, 2022d ; IMF, 2024b ). To limit duplication and confusion, this note focuses on social spending specific issues, while leaving more general considerations that apply similarly to social spending and other issues to the surveillance and program guidance notes (i.e., specification of program objectives; contingency plans if financed by donor support).

See Annex I of the 2019 strategy paper for examples of areas where the Fund can provide policy advice and areas for which external expertise is needed.

In 2015, world leaders endorsed the 17 UN SDGs. Gaspar and others (2019) , using a dataset of 155 countries, estimate the additional annual spending for progress in education, health, roads, electricity, and water and sanitation.

For details, see the 2022 Guidance Note for Surveillance under Article IV Consultation ( IMF, 2022d ).

For details, see the 2024 Operational Guidance Note on Program Design and Conditionality ( IMF, 2024b ).

While many studies show that higher teacher pay and smaller class size are associated with increased student achievement, the relationship may vary by country-specific conditions. Furthermore, limited resources should be targeted at the most cost-effective interventions.

Please see the discussions under capacity development on related CD support by the Fund.

PAs are steps a country agrees to take before the IMF approves financing or completes a review and ensure that a program will have the necessary foundation for success; QPCs are specific, measurable conditions for IMF lending that always relate to macroeconomic variables under the control of country authorities; ITs are flexible numerical trackers, may be set for quantitative indicators to help monitor progress in meeting a program’s objectives. Heightened uncertainty and limited capacity may justify greater use of ITs under certain circumstances. As uncertainty is reduced, these targets may become QPCs, with appropriate modifications; and SBs are reform measures that often cannot be quantified but are critical for achieving program goals and used as markers to assess program implementation (see Guidelines on Conditionality for further details).

Development partners may be better positioned to deliver some of these complementary structural reforms, given their capacity and expertise (Cameroon 2021 ECF-EFF, Ecuador 2020 EFF). This, however, requires close coordination.

An example of universal coverage is the Sudan Family Support Program (SFSP), a quasi-universal basic income scheme supported by the donor community and World Bank and a key component of the social spending floor. It was designed to alleviate the short-term effects of subsidy removal and exchange rate reform on the majority of the population and to help generate the political and economic space for a comprehensive program of economic reform. The program also served as a platform for the development of a future targeted social safety net system via the provision of national unified digital identity documents (Sudan 2021 ECF).

The social spending floor will initially focus on the child grant spending. While a universal child benefit, its relative low spending and coverage suggests that its impact on vulnerable households is likely limited (Nepal 2022 ECF).

Structural public financial management conditionality (such as on budget execution and control) has proven to be effective in boosting the long-term level of education, health, and public investment expenditures ( Gupta, Schena, and Yousefi. 2018 ).

Please see Operational Guidelines for Integrating Capacity Development with Surveillance and Lending for further discussions.

SPRAIIG can help identify the relevant counterparts on issues related to social spending and gender.

For example, the Fund and ILO co-organized a workshop on labor market issues, and the Fund piloted country-level collaboration with ILO and WFP. The collaboration between the IMF and ILO has been effective and has shown that collaboration is mutually reinforcing. As a next step, the Fund is working with ILO’s social protection directorate to mainstream the collaboration at country level.

The MONA database contains annual comparable information on all quantitative and structural conditionality of all programs from year 2002 onward. The results were manually filtered to ensure that all the captured conditionalities are in the area of social spending.

All but one social spending floors are in nominal values; the remaining one (Senegal 2020 PCI) is defined as a percentage of total spending given the difficulty for the authorities to precisely control an amount relative to GDP or a share in total spending due to fluctuations in denominators.

In Figure 2 , realized inflation rates are used where available in the October 2023 WEO database.

This is in line with Hanedar and Munkacsi (forthcoming) that reports a vast majority of conditions are in the areas of energy subsidies and social safety nets.

Following the methodology used in the ROC 2018 paper, the implementation rate is measured in terms of whether the SSC was met. Looking at the life cycle of the program through its latest review, we determine the percentage of SSC that was met. We then compute the average completion rate for quantitative and qualitative SSC across GRA and PRGT, and by category. Implementation is categorized as “Met” or “Unmet” for quantitative SSC, and as “Met,” “Implemented with Delay,” or “Unmet” for structural SSC.

A quantitative SSC falls under “narrowly defined”, if the definition provides detailed information on specific social programs included under the SSC, specific entities mandated to its implementation, and an exact methodology to measure both targets and actual values of spending. If the definition SSC only specifies certain sectors, certain communities, or capital expenditure, it falls under “mediumly defined”. Finally, if the SSC’s description does not meet the criteria for either most or medium specific, it would be defined as “broadly defined”.

Table of Contents

• Front Matter
• Operational Guidance Note for IMF Engagement on Social Spending Issues
• Surveillance5
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