Essay 2: Where Does Targeting Fit Practically within Universal Social Protection?

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BOX 1.1 (continued)

how is that defined? In health insurance, the goal is to provide coverage to all so that in the event people fall sick, they can obtain health services. For contributory pensions, unemployment, or disability insurance programs, coverage is used in an analogous way and measured based on inscription or contribution to the financing pool. In most periods, people who are covered by such insurance will benefit from the guarantee or promise of help when needed (should they get sick, become disabled, or reach a pensionable age), but not necessarily from a payout. For social assistance, in contrast, coverage is often interpreted as receiving an actual transfer. This is quite different, and it is a critical issue to clarify given the implications for universal social protection. For instance, if a country has a guaranteed minimum income program that provides cash when incomes fall below a threshold, the social insurance interpretation would be that—as in the case of health insurance or pensions—everyone is covered independently of the event occurring (that is, income falling) or whether they are currently in receipt of a payout. Those who are covered would be the whole population, which is usually severalfold greater than the roster of recipients at any point in time. A guaranteed minimum income is universal in insurance terms, but it is poverty-targeted from a social assistance perspective.

And, of course, coverage is not the only requirement for universal social protection. Coverage must include benefits that are adequate and fit for the intended purpose. In health, the degree of resources needed for each person in each time period will vary according to whether they are ill or the severity of their illness. Similarly, in social protection, people will need different degrees of support depending on their exposure to various risks and the tools available to them to manage those risks.

Source: Modified based on Gentilini, Grosh, and Rutkowski 2019.

Essay 2: Where Does Targeting Fit Practically within Universal Social Protection?

Universal social protection is commonly conceived to be achieved by a system of programs meant to serve different risks and populations (Cecchini and Nieves Rico 2015; Jorgensen and Siegel 2019; Ortiz, Cummins, and Karunanethy 2017; UNRISD 2013). In their joint initiative on universal

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social protection, the International Labour Organization and World Bank say the following:

Universal social protection refers to the integrated set of policies and programs designed to provide income security and support to all people across the life cycle, with particular attention to the poor and the vulnerable. Universal social protection includes adequate cash transfers for all who need them, especially children; benefits/support for people of working age in case of maternity, disability, work injury or for those without jobs; and pensions for all older persons. This protection can be provided through social insurance, tax-funded social assistance/safety nets benefits, public works programmes and other schemes guaranteeing basic income security. Social protection programs aim at specific demographic groups of the population (e.g., children, persons with disabilities, women and men of the working age, older persons, etc.) and at households in chronic or transient (for instance, caused by shock such as a natural disaster) poverty. The objective of the social protection programmes is often not only to provide income support, but also to build up resilience to shocks and enhance connections to productive activities.4

In all countries, especially those with the highest coverage, social protection is built from a series of programs of different sorts—some programs pay out depending on the state of the worker (for example, for unemployment, retirement, illness, or disability) or individual (for example, age), and some pay out depending on the state of the family (for example, due to poverty or a natural disaster). Some programs pay small benefits to supplement the resources of families that are assumed to have at least some earned income (for example, for child allowances or some poverty benefits), and some pay larger benefits to substitute for income (for example, for unemployment, retirement, or disability). Some programs calibrate benefits to establish a minimum floor of well-being and some to compensate in whole or part for loss of income or assets. All these programs imply differentiation between groups and therefore require the administrative capacity to discern differences in needs.

Targeting is used in many aspects of social protection in countries that espouse the goal of universal social protection. The differentiation of eligibility or benefits is used to prioritize those most in need and/or fit benefit or services to purpose.

Universal social protection may require giving subsidized insurance to those with higher risk, worse outcomes, or lesser ability to self-insure. Subsidized health insurance has been an important means of moving toward universal health coverage. Cotlear et al. (2015) trace 24 countries seeking universal health care through bottom-up reforms. In several of these countries, the same social registries used to determine priority or eligibility for poverty-targeted programs were used to determine the

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eligibility or degree of subsidization for subsidized health insurance or as a means to ensure outreach and enrollment in such programs. Packard et al. (2019) propose similar subsidies for pensions. For example, Chile provides subsidies to the solidarity fund portion of its unemployment insurance savings account (Sehnbruch and Carranza 2015).

Social pensions (pensions granted based on age, without the requirement of prior contribution) are another way to ensure that one of the functions of traditional social insurance is available, although without prior affiliation and collection. Nearly 100 countries have such programs, with various ways of combining them with contribution-based schemes—a score are universal for all individuals older than the defined age threshold; 28 countries grant social pensions only to those who do not receive contributory pensions; 55 use some type of welfare assessment or means test; and others are available only to those without (some minimum level of) contributory pension (HelpAge 2018).

Again, in something of an insurance role, governments often provide responses to natural disasters—by providing basic assistance in cash or in kind to maintain minimum living conditions in the immediate aftermath and/or providing assistance in rebuilding housing or the assets on which people’s livelihoods depend (Bowen et al. 2020; UNICEF 2019). The population served may be those who suffer large losses, those whose losses drop them into a category of poverty, those who were already poor and are expected to become still poorer, or a combination of these groups. (Chapter 3 provides further discussion on this topic.)

Although broad-based or universal insurance programs and age-based programs can reduce some of the reasons that households fall into poverty, they cannot prevent it altogether. Thus, there is a need for programs of last resort income support for those who remain in poverty. A variant of these is the guaranteed minimum income programs that are common in Europe (Coady et al. 2021), which simultaneously target poverty and serve an insurance function (box 1.1). To work effectively as insurance, last resort income support must be funded as entitlements so that all eligible applicants receive benefits, and it must have excellent outreach and delivery systems so that all the eligible individuals apply and receive benefits.

Most countries have programs for the poor or extreme poor or a subset of them. If such programs are not surrounded by sufficient insurance or complementary programs, they may seem to be more “first resort” than “last resort” and therefore often have higher coverage than last resort income support. Most of the conditional cash transfer programs in Latin America and the Caribbean and East Asia fit this niche, at least at their outset, with coverage usually in the range of 10 to 25 percent of the population. These programs act as a single square in the patchwork quilt5

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that builds toward the country’s social protection system, or as a step along the path of the progressive realization of universal social protection (World Bank 2018b).

There is often a range of other programs that aim to cover larger shares of the population than just the poor, although not necessarily reaching universal coverage. Common examples are school lunch programs, “social tariffs” for utilities, and cash transfers in lieu of fuel subsidies, which may reach quite high into the income distribution. For example, Jordan’s bread subsidy cash compensation reaches nearly 80 percent of households, and the (currently nonoperational) fuel subsidy cash compensation reached about 70 percent (Rodriguez and Wai-Poi 2020).

The COVID-19 stay-at-home orders and the ensuing economic crisis called forth a huge set of policy responses across the social protection sector. A common thread was to scale up support quickly and often quite broadly to reach groups well beyond the focus of the usual (often small) programs for the chronic poor. Coverage of large swaths of the “missed middle” or urban informal sector was desired, and countries innovated as best they could to approximate it. The Philippines initially planned to cover threequarters of its population for two months under its emergency support program to support those most affected by enhanced community quarantine, with the coverage and length later extended in some areas and sectors.6 Namibia rolled out its one-off Emergency Income Grant for working-age citizens who lost their jobs and were not receiving other forms of social protection, which eventually reached about 30 percent of the population (Gentilini et al. 2020, v12).

Occasionally, programs combine universality with selectivity, recognizing that the most disadvantaged need more, not equal, support. Various studies have put forth the notion of universal or high coverage with differentiated benefits as an option to be considered. Examples include the United Nations Children’s Fund–Overseas Development Institute (UNICEF–ODI 2020) treatise in support of universal child benefits and Coady and Le’s (2020) discussion of the role of universal and targeted programs in fiscal redistribution. Soares, Bartholo, and Guerreiro Osorio (2019) propose a country-specific program—a universal child allowance in Brazil. There are a few cases of such designs in current policy. Germany’s child allowance covers all children up to age 18 but provides supplemental benefits to the needier children (ISSA 2018). In a cross-sectoral understanding of the same idea of helping those who are furthest behind, the Brazilian Bolsa Familia means-tested conditional cash transfer program was viewed by its designers as a means to help the poorest realize their rights to health and education (Campello and Neri 2013). India’s Public Distribution System is a highcoverage but not universal program (covering about 75 percent of the rural population and 50 percent of the urban population). It provides the