Ensuring universal social protection for the future of work

Abstract

The debate about the future of work has sparked a debate about how to ensure that social protection systems can provide full and effective coverage for workers in all forms of employment, including ‘new’ ones. While some emerging work and employment arrangements may provide greater flexibility for workers and employers, they may lead to significant gaps in social protection coverage, at a time when demands on social protection systems are increasing. It is therefore necessary to strengthen and adapt social protection systems for a changing world of work. More than ever, they have a key role in preventing poverty, reducing inequality, enhancing income security and enabling workers and their families better to navigate work and life transitions. Comprehensive approaches, including contributory and non-contributory social protection mechanisms, with equitable and sustainable financing mechanisms available through taxes or contributions, stand the best chance of offering adequate social protection to all.

Keywords

Universal social protection social security future of work non-standard forms of employment social protection systems social protection floor

Introduction

As the world of work continues to evolve, shaped by global trends such as digitalisation, automation and globalisation, as well as socio-demographic changes, social protection systems will need to adapt to changing contexts and demands (ILO, 2017d, 2018b; ISSA, 2016).¹ In particular, the growing diversification of work arrangements has become a distinct feature of today’s labour markets in both developed and developing countries. While some of the more traditional forms of employment are disappearing or being transformed in the wake of automation and digitalisation, new forms of employment have been growing, with newly emerging occupations and sectors, such as the so-called ‘platform’ economy (ILO, 2017a, 2017c; OECD, 2016).

The debate about the future of work has also sparked a debate about how to ensure that social protection systems can provide full and effective coverage for workers in all forms of employment, including those in ‘new’ ones. These ‘new’ forms of employment offer both opportunities and challenges for labour markets and social protection (ILO, 2017b). Many are non-standard forms of employment (NSFE),² a range of contractual arrangements that deviate from the ‘standard’ open-ended, full-time, dependent employment relationship that constitutes the key reference for most labour and social security legal and policy frameworks (ILO, 2016a; Degryse, 2016). In many cases, non-standard forms of employment can result in precarious or insecure work, both for those working in traditional non-standard forms of employment, and for those in new forms of employment, such as people working via digital platforms (ILO, 2016a).³ Many, but not all, workers in such non-standard forms of employment have lower job and income security, poorer working conditions and lower social protection coverage than employees in standard employment forms, namely with full-time and indefinite employment relationships. Women, young people and migrants are overrepresented in this group (ILO, 2016a). Part-time and temporary work are often considered to be mechanisms that increase labour market flexibility. Platform work and other forms of remote work can provide opportunities to earn additional income in a more flexible way, for instance for persons with restricted mobility or persons with care responsibilities (ILO, 2016b). While such employment arrangements can allow some people better to reconcile work and family life, workers in non-standard employment are often more vulnerable to financial consequences and social risks, including higher poverty risks, thus increasing the demand for comprehensive and adequate social protection (ILO, 2016a; Spasova et al., 2017).

In advanced economies, although standard forms of employment are still clearly dominant, a rise in the number of workers engaged in non-standard forms of employment has caused concern. While standard employment has never been the norm in developing countries, the increased use of non-standard employment has made inroads into various segments of the economy, including manufacturing and the digital economy. As a result, this can potentially exacerbate developing countries’ persistent challenge from high levels of informality (Berg, 2017).

In addition, demographic change is likely to affect labour markets and social protection systems (ESCAP, 2017; ILO, 2013). The world population is expected to further increase, entailing rapid population ageing due to lower fertility coupled with lower mortality rates and increasing life expectancy. Whereas the expansion of the working-age population in the developing world creates a window of opportunity for developing and financing social protection systems, the opposite trend in high-income countries gives cause for concern with regard to an eroding contribution and tax base. Meanwhile, investments need to be stepped up for children and young people, who constitute a much larger share of the population in many countries (ILO, 2017d). Particular efforts should be invested in facilitating labour market entry into decent employment for young people, who in many countries face a disproportionate risk of becoming trapped in unprotected forms of employment.

Gaps in social protection provision, coupled with growing levels of informality, insecurity and inequality and weakened labour institutions, risk putting existing social protection systems and the implicit social contract under increasing strain (Berg, 2015; ILO, 2016b). Greater job and income insecurity and low pay increase the demand for social protection and put more pressure on both social insurance and social assistance schemes. Simultaneously, these trends erode their existing financing base, with regard to both social insurance contributions and taxation. In particular, gaps in contributory social protection tend to weaken the adequacy of social protection systems (Spasova et al., 2017). Limited fiscal capacities in many countries and global tax competition have bound the hands of governments, hampering their ability to respond to demands for the higher social investments necessary to prepare societies and economies for the future of work. Indeed, many governments around the world respond with fiscal consolidation measures and austerity policies, reducing their social protection expenditure and constraining public policies to target the poor only (ILO, 2016b, 2017d). It is clear that governments need to change course to prepare for the future of work, and invest in people’s health, education and social protection so as to reduce inequality, support health and education outcomes, promote gender equality, bolster the structural transformation of labour markets and the economy, and help people to adjust for tomorrow’s challenges (ILO, 2017d, 2018a).

Whereas most high-income countries have relatively well-established social protection systems, many low- and middle-income countries have recently developed or expanded social protection schemes and are progressively building up their systems, recognising the importance of social protection policies as an integral component of their economic and social development strategies (ILO, 2017d). Despite these positive developments, significant coverage gaps remain, with 55 per cent of the global population – 4 billion people – being left unprotected and only 29 per cent enjoying comprehensive social protection coverage.

The recently published report of the Global Commission for the Future of Work (2019) highlights the importance of closing coverage gaps and adapting social protection systems to evolving contexts and demands by ensuring adequate protection to workers in all types of employment. The report thereby amplifies similar commitments by the European Union in its Pillar of Social Rights adopted in 2017 (European Commission, 2017). The future of work demands the development of equitable, inclusive and sustainable social protection systems, which ensure protection to meet people’s needs over the life cycle. It is paramount for countries to step up their measures to extend coverage by developing a strong social protection floor that covers the whole population, based on equitable and sustainable financing mechanisms, as well as building a comprehensive social security system that ensures progressively higher levels of protection.

The main objective of this article is to review innovative policy responses that countries have put forward better to adapt their social protection systems to evolving demands in a changing world of work. In particular, this article identifies and reviews policy innovations to extend social protection to those in non-standard forms of employment, as well as, more generally, the self-employed and, specifically, workers on digital platforms. The objective here is not to offer a complete review of these policy innovations, but to highlight selected approaches and policy options, as a contribution to the discussion of how social protection systems have been, and can be, adapted to respond to changing contexts.

The article is structured as follows. Section 2 will revisit some of the key issues regarding the coverage of workers in non-standard forms of employment by clarifying the links between employment and social protection and reflecting on a comprehensive approach to strengthening social protection for a changing world of work, including contributory and non-contributory mechanisms. Section 3 zooms in on social insurance and other contributory mechanisms, and addresses relevant policy innovations for different categories of workers. Section 4 discusses the strengthening of non-contributory mechanisms to guarantee a social protection floor for all. Section 5 sets out a number of considerations aimed at ensuring universal social protection for the future of work.

Strengthening social protection for the future of work: key issues

The growing number of workers in non-standard employment, which is often associated with gaps in social protection coverage, especially for women, has been identified as one of the main challenges for social protection systems in the future (ILO, 2016a, 2017b; Spasova et al., 2017). Many observers agree that strengthening and adapting social protection schemes will be key to protecting these workers as it provides them with income security and ensures effective access to health care and other social services (ILO, 2016a).

In the debates on non-standard forms of employment, informality and the future of work, some observers argue that social protection should be ‘decoupled’ from employment and limited to ‘safety nets’ for the poor, replaced by a universal basic income and/or by private health and pension plans or other individualised arrangements (World Bank, 2018a, 2018b; World Economic Forum, 2017).

Much of the debate on ‘decoupling’ social protection from employment, however, fails to distinguish between different forms of social protection and the ways in which they are, or are not, linked to employment. Before addressing policy options that can ensure better protection for workers in non-standard employment, clarification is needed regarding different forms of social protection and their distinct implications for workers (ILO, 2016b, see Figure 1):

Social protection linked to a contract with a specific employer, such as severance pay, employer liability for paid maternity leave, sick leave, workers’ compensation, employer-sponsored (private) health or pension insurance. Benefits under these mechanisms may either be mandated by labour or social security legislation, or provided voluntarily by the employer. As these benefits are usually lost at the end of a contract with a specific employer, they carry the highest risk of exclusion for workers in non-standard forms of employment. For these reasons, ILO standards and policy advice recognises such forms of protection as less effective than other forms of protection based on collective risk-sharing and solidarity (ILO, 2017d, 2019; Behrendt et al., 2017).

Social protection linked to salaried employment, which typically includes social insurance schemes, such as health insurance, maternity protection insurance, employment injury insurance, old age, disability and survivor pensions, or unemployment insurance.⁴ As the entitlements and benefits under this mechanism are associated with the type of employment as opposed to a contract with a specific employer, workers moving from one job to another usually continue to be covered, including, in many cases, during spells of unemployment or temporary inactivity (for example, caring for family members). While most salaried workers (including part-time and temporary workers) are included in principle, some may be legally or effectively excluded (see Table 1).

Social protection linked to participation in gainful employment (including self-salaried employment), which may be provided through social insurance (if open to self-employed and other non-salaried workers), as listed under (ii) or tax-financed programmes, such as in-work benefits for low-income earners. This category of schemes may in principle be more inclusive of workers in non-standard forms of employment than category (ii), particularly where low-income earners benefit from subsidised coverage or tax-financed benefits.

Social protection linked to residency status, which is usually provided through tax-financed schemes, whether means-tested or not, such as social assistance, social pensions, child/family benefits, disability benefits, as well as a national health service or residency-based health insurance. This category is explicitly not linked to employment status and may even be explicitly linked to non-employment in the case of schemes targeting people out of work. Because many schemes are household-based (and only paid to the prime earner), however, women and young people are often excluded.

Figure 1.

Employment and social protection: how is social protection coverage (potentially) linked to employment?

Table 1.

Extending social insurance coverage for workers in non-standard forms of employment: policy options.

	Factors determining coverage or exclusion	What can be done to ensure effective coverage for this group?
Part-time employment	Covered if thresholds on minimum working hours/days or earnings are met. In case of multiple employers, specific regulations may apply. Marginal part-time work often excluded or covered through special regulations.	Lower thresholds regarding working hours or earnings. Allow practical solutions for workers with multiple employers, and those combining part-time dependent work and self-employment. Facilitate coverage of marginal part-time workers through adapted social insurance solutions, or a combination of social insurance and tax-financed mechanisms.
Temporary employment	Covered if thresholds on minimum duration of employment are met. Casual workers are often excluded.	Lower thresholds regarding the minimum duration of employment to expand legal coverage. Allow for more flexibility with regard to the number of contributions required to qualify for benefits; allow for interrupted contribution periods (for example, x number of contributions during y months). Enhance portability of entitlements between different social security schemes to facilitate mobility between jobs. Simplify administrative procedures for registration and contribution payments.
Temporary agency work	Covered through employing agency (thresholds with regard to duration of employment and working time apply).	Ensure compliance with legislation; introduce joint liability. Measures taken to facilitate coverage for temporary and part-time workers are likely to benefit temporary agency workers as well.
Dependent self-employment and disguised employment relationships	Covered if self-employed workers are covered, or if specific measures are taken to prevent misclassification and ensure adequate protection.	Prevent the misclassification of workers and ensure adequate protection for those in dependent self-employment. Simplify administrative procedures for registration and contribution payments. Ensure non-discrimination and equal treatment. Adapt social security mechanisms to the needs and circumstances of self-employed own-account workers.
Complement these efforts with the implementation of a social protection floor that provides a universal minimum level of protection.

Source: Behrendt and Nguyen (2018), based on ILO (2016a).

Figure 1 shows the different forms of protection in overlapping circles to outline the diversity of policy options and the possible combination of different sources of protection. Generally speaking, there is no ‘one size fits all’ solution: countries combine these different types of protection in different ways.

It is important to recognise that workers in non-standard forms of employment are not automatically excluded from social protection (including social insurance). In fact, many workers in non-standard forms of employment are covered in a similar way to workers in standard forms. The availability and conditions under which social protection benefits are provided to workers in non-standard forms of employment, such as those in temporary, part-time or non-salaried work, heavily depend on rules set out in national legislations and their effective implementation.

A combination of different types of social protection that are linked to gainful employment or residence, with an appropriate mix of financing mechanisms, including taxes and contributions, can ensure a better level of protection. Social protection schemes linked to residence, usually financed through taxation, are key means to realising the right to social security for all, including for those not covered by employment-based social security schemes, and are thus essential in guaranteeing a social protection floor. In many cases, however, the level of benefits provided is minimal and does not allow workers to maintain their standard of living and stable levels of consumption over time. Contributory mechanisms, in particular social insurance, therefore have an important role to play in ensuring broader scope and higher levels of protection and in meeting the social protection needs of the larger groups of the population, including the middle classes (ILO, 2017d).

Strengthening private insurance and savings arrangements will probably increase poverty and exacerbate inequality, including gender gaps, due to their limited potential for risk pooling and redistribution compared with social insurance mechanisms (Alfers et al., 2017; ILO, 2016a, 2018b). Individual savings arrangements can only act as a voluntary option to complement stable, equitable and adequate mandatory social insurance benefits (Global Commission for the Future of Work, 2019). Moreover, it should be noted that every contributory form of social protection, including private insurance and savings mechanisms, is inevitably linked to an individual’s ability to work and earn a certain level of regular income (ILO, 2016a). For these reasons, particular care is necessary when discussing a ‘decoupling’ of social protection from employment to ensure that this does not lead to a weakening of its fundamental principles and erode coverage and benefit levels. It is essential to safeguard sufficient space for redistribution and risk pooling based on different financing mechanisms, including both contributory and non-contributory elements.

Many observers agree that the way forward to universal social protection requires a combination of contributory and non-contributory social protection mechanisms. The two-track approach of extending social protection, outlined in ILO Social Protection Floors Recommendation No. 202, reflects the importance of effectively coordinated schemes that entail contributory and non-contributory mechanisms in closing coverage gaps, thereby guaranteeing a social protection floor and ensuring more adequate and comprehensive social protection.

The growing significance of non-standard forms of employment and self-employment in today’s labour markets adds to the importance of ensuring that those engaged in such employment are adequately covered by social protection systems. Extending social protection to all forms of employment is not only about ensuring fairness and better protection for workers and their families, but also about creating a more level playing field for different forms of employment, as well as facilitating labour market transitions and labour mobility. Ensuring adequate social protection for all workers in all types of employment is one of the elements of the Social Pillar of the European Union, and has also been formulated as a policy objective of the G20 (European Commission, 2017; G20, 2017).

The social protection systems of the future will need to be based on a set of broad policy principles that can ensure universal and adequate coverage, and sufficient adaptability to new requirements. The following broad principles can help to guide policy-makers in strengthening social protection systems, including floors (European Commission, 2018b; ILO and OECD, 2018):

– Universality of protection and accessibility: ensuring effective access for workers in all types of employment, adapted to their situation and needs.

– Adequacy: ensuring that social protection systems not only effectively prevent poverty, but provide appropriate income replacement, in an equitable and sustainable way.

– Transferability: ensuring that social protection systems positively support labour market mobility, ensure the portability of rights and benefits and take into account the structural transformation of the labour market and the economy.

– Transparency: ensuring that all actors are fully aware of their rights and responsibilities; that legal frameworks provide for clear and predictable entitlements; and that administrative procedures are as simple and clear as possible, fully harnessing the potential of digital technology, while protecting personal data and respecting privacy.

– Gender equality: ensuring that social protection systems are responsive to the realities that women and men face in the labour market, employment and society, and that they promote gender equality.

– Good governance: ensuring that social protection systems are financed in a sustainable and equitable way, as well as efficient management and administration.

Adapting social insurance and other contributory mechanisms

Strengthening and adapting social insurance schemes will be key to protecting workers in non-standard forms of employment and self-employment as they usually provide higher levels of protection than non-contributory, tax-financed schemes. A combination of both contributory and non-contributory social protection schemes is fundamental to achieving broader scope and higher levels of protection in line with the Social Security (Minimum Standards) Convention, 1952 (No. 102), the ILO Social Protection Floors Recommendation, 2012 (No. 202) and other ILO social security standards.

Extending social insurance coverage to workers in non-standard forms of employment and self-employed workers can also help to achieve a better financing mix in social protection systems. Gaps in social insurance coverage can put non-contributory schemes under greater strain if many of these workers have to rely solely on the latter for a level of social protection (albeit sometimes extremely basic). If more people are included in social insurance schemes, the pressure on tax-financed social protection schemes is likely to be reduced (European Commission, 2017). Contributory elements are thus essential in ensuring equity in both financing and benefits and help to ensure the sustainability and adequacy of social protection systems in the long run (ILO, 2014, 2017d).

The effective coverage of workers depends to a large extent on the eligibility rules set out in national legislation. Certain categories of workers, such as casual and seasonal workers, temporary agency workers, on-call workers and those on zero-hour contracts, may be completely excluded from legal coverage. Other workers may face lower benefits, in terms of both levels and duration, because they tend to have lower earnings, shorter working hours and interrupted employment careers (Matsaganis et al., 2016). In other cases, they may be unable to contribute to a scheme or claim benefits if they do not fulfil eligibility conditions on minimum period of employment, working hours and/or earnings. As a result, many of these workers are at risk of being ineligible for benefits. Unless mechanisms are in place to ensure at least a minimum level of protection, these workers are even more vulnerable to risks over their lifespan, in particular with regard to income security and access to health care (ILO, 2016a, 2017b). Different conditions can affect women in particular, for example regarding their entitlement to maternity benefits (Spasova et al., 2017).

Table 1 identifies some of the key factors that determine social insurance coverage or exclusion for workers in various non-standard forms of employment and highlights some of the policy measures that could enhance effective coverage for this group of workers (ILO, 2016a). It is important to complement these efforts with the implementation of a social protection floor that guarantees a basic level of protection for all.

The extension of legal coverage is certainly a critical step, but it does not always translate into effective coverage. Despite important progress made in extending legal coverage, substantial coverage gaps exist, especially for self-employed workers, marginal part-time workers and casual workers. Limited contributory capacities, complex administrative procedures and weak compliance and enforcement mechanisms may hinder the take-up and adequacy of benefits for some workers, even when they are legally covered. To close the gaps, carefully designed measures must target specific systemic weaknesses and barriers, such as those mentioned above.

In many countries, social protection systems are fragmented, which leads to protection gaps for some categories of workers and hampers labour market mobility. Some countries have extended coverage of existing schemes to uncovered groups of workers for most or all policy areas. Where all workers are under the same scheme irrespective of their employment status, workers may more easily move between different forms of employment, including self-employment, and combine salaried employment with self-employment or even frequently transit between employment statuses. In countries in which several schemes co-exist, effective coordination mechanisms are necessary to avoid inefficiencies and inequalities in social protection coverage, ensuring transferability of rights and benefits (ILO, in preparation a).

Some recent policy innovations in both developing and developed countries have shown the capacity of social protection systems to adapt to changing circumstances (Behrendt and Nguyen, 2018; ILO, 2018b).⁵ Some countries have introduced adapted mechanisms to facilitate social protection coverage for different categories of workers who are often particularly vulnerable to protection gaps, such as part-time workers, workers on temporary contracts, self-employed workers and workers with unclear employment relationships and, specifically, workers on digital platforms, who often share characteristics with the above categories.

– Lowering minimum thresholds on working time, duration of employment or earned income. The Netherlands, for instance, recently reduced the entitlement conditions for the temporary disability benefit from 52 working days to 208 hours per year. Viet Nam has reduced the qualifying period for social insurance coverage from three months to one month (ISSA, 2017).

– Facilitating coverage for workers with multiple employers, for example, by streamlining administrative procedures, including the simplification and facilitation of electronic access to registration, consultation and contribution payment mechanisms, as well as unified social security numbers. Measures may also include the use of intermediary bodies (such as cooperatives) that fulfil some functions of employers, particularly with regard to aggregating information and contributions across multiple employers and facilitating interactions with social insurance institutions.

– Mechanisms to deal with situations of complex or unclear employment relationships, for example through alternative financing arrangements. In Germany, social insurance covering performing artists and writers (Künstlersozialversicherung) on short-term contracts is financed through a (non-individualised) global contribution on total contract value by the contracting ‘employer’, plus workers’ contributions if earnings are above a certain level, as well as a government subsidy. Similarly, in France, a specific scheme for artists and authors (le régime de sécurité sociale des artistes-auteurs) ensures coverage for health care, pensions and family benefits through an adapted mechanism, taking into account the specificities of the sector, linked to the general scheme.

– Adapted solutions for registration, contribution collection and benefit payment mechanisms, for example, simplified tax and contribution collection mechanisms (as found in Argentina, Brazil, France and Uruguay); establishing contributory categories according to income or proxy measures (as in Cabo Verde, Costa Rica and Korea); allowing for more flexibility in terms of interrupted contribution periods and minimum contributory periods required to qualify for social insurance coverage (as in Luxembourg). A recent example includes Belgium, where maternity benefits for self-employed women are provided in the form of so-called service vouchers, usually a form of payment provided by certified firms providing domestic workers (European Commission, 2018a).

– Measures to facilitate labour market transitions, for example, allowing contribution periods from previous employment to be counted towards unemployment benefits (as in Belgium, Denmark, France, Croatia, Luxembourg, the Netherlands and Sweden) or allowing workers to transfer their pension entitlements to the new place of employment or residence. Denmark for instance has reduced its qualifying conditions for unemployment benefit by counting all work-related income earned within the past three years (including from wage employment and self-employment).

– Facilitating coverage for platform workers, many of whom combine such work with a regular main job through which they may have access to some social protection benefits. This includes measures such as adapting and completing legislative frameworks and clarifying the nature of the employment relationship.⁶ Some countries have sought to ensure equal treatment for dependent self-employed workers and to curb disguised employment (as in Austria, Estonia, Italy, Germany, Netherlands, Portugal, Romania, Spain and Slovakia) (Berg et al., 2018). It is also essential to clarify the applicable legislation and institutional arrangements to ensure that in the case of cross-border arrangements, where platforms, requesters and workers are based in different countries, workers are effectively covered, and to establish appropriate coordination mechanisms. Trade unions can also contribute to facilitating social protection for platform workers. For example, the trade union 3F has negotiated the world’s first collective agreement in the platform economy with the Danish online platform, Hilfr.dk, which offers cleaning services. The platforms’ freelance workers are reclassified as ‘employees’ once they have worked at least 100 hours of work, which provides them with higher wages and social protection (Vandaele, 2018).

– Harnessing the potential of digital innovation to develop adapted registration and contribution payment mechanisms. This can include developing electronic and mobile registration and payment systems, coordinated data systems, smart cards as well as other emerging technologies, such as artificial intelligence and big-data analytics. For example, in Indonesia, the social security institution BPJS Ketenagakerjaan and the on-demand platform GoJek are collaborating to facilitate the payment of social insurance contributions by means of a mobile application (ILO, in preparation b).

Strengthening tax-financed mechanisms to guarantee a social protection floor for all

Non-contributory social protection schemes, financed by general taxation, are key to closing coverage gaps and ensuring at least a basic level of protection for everyone, including those who are not covered or not sufficiently covered by contributory schemes, in accordance with the Social Protection Floors Recommendation, 2012 (No. 202). For example, contributory, tax-financed benefits may close gaps in social protection coverage for workers in non-standard forms of employment and self-employed workers. In fact, many countries are strengthening the tax-financed elements of social protection systems, such as tax-financed pensions (as in Algeria, Bolivia, Chile, Denmark, Sweden, Thailand and Viet Nam) or universal child benefits (as in Australia, Botswana and Mongolia), to guarantee at least a basic level of protection for all (ILO, 2017d). The ongoing debate on universal basic income has spurred a vibrant debate on this issue, yet serious questions remain with regard to the adequacy of benefits, financing requirements and affordability, and redistributive justice (Ortiz et al., 2018).

Many countries, including Brazil, Cabo Verde, China and Thailand, have extended coverage to previously unprotected population groups through a combination of contributory and non-contributory schemes (ILO, in preparation a). The combination of different elements and financing sources is key to building a strong social protection floor and to progressively ensuring higher levels of protection, ensuring fiscal and economic sustainability with due regard to social justice and equity. Such an approach has the potential to promote a social contract that allows for risk pooling and redistribution among different groups (ILO, 2016b).

It is commonly agreed that more emphasis on tax financing of social protection systems will be necessary in light of the higher demands placed on social protection systems, taking into consideration possibly higher levels of unemployment and population ageing, combined with a possible erosion of the contribution base for social insurance. There is little agreement on how this can be achieved, however. Proposals for additional revenue sources range from taxation of robots, carbon emissions or capital to the reprioritisation of public expenditure, broadening the tax base, increasing the taxation of wealth, increasing consumption taxes in a non-regressive way, such as taxes on tobacco, alcohol and luxury goods,⁷ reducing fuel subsidies, curtailing illicit financial flows and more favourable macroeconomic policies (ILO, 2017d; Ortiz et al., 2017).

While it is essential that more effective tax systems ensure an adequate and sustainable funding base for tax-financed benefits, it is likely that social insurance contributions will continue to play an important role as a source of financing for social protection systems. Recommendation No. 202 emphasises the potential of combining different financing sources in ensuring the financial, fiscal and economic sustainability of national social security systems and in achieving universal social protection.

Ensuring universal social protection for the future of work: which way forward?

Ensuring universal social protection for the future of work requires closing coverage gaps and adapting to new contexts related to the emergence of new forms of employment, such as work on digital platforms, and responding to specific situations and needs of such workers, so as to realise the human right to social security for all. Many countries have already implemented innovative policy solutions to address these challenges, but more can and should be done to ensure that social protection systems are fit for purpose. The Global Commission for the Future of Work (2019) calls for guaranteed universal social protection from birth to old age, financed through a combination of taxes and social security contributions, and based on the principles of solidarity and risk-sharing, so as to realise the human right to social security and support workers and their families through future-of-work transitions.

Social protection systems, including both contributory and non-contributory schemes and programmes, are an essential component of national policies to ensure decent work. They contribute to preventing poverty and reducing inequality, including gender inequality. A significant proportion of the world’s population, however, still has insufficient social protection coverage, or none at all, leaving them vulnerable to social risks throughout their lives, particularly with regard to income security and access to health care (ILO, 2017d). This trend of growing precariousness among a large share of the population, alongside concerns of increasing inequality and informality, has fuelled debates about the future of social protection. While new changes in the years ahead are likely to affect the world of work in general, and national social protection systems in particular, there can be no doubt that work will remain important for people’s livelihoods and personal well-being.

Many countries have introduced policy innovations to facilitate access to social protection for workers in non-standard employment and the self-employed. The first set of policy measures includes the adaptation of social insurance and other contributory mechanisms, while the second aims at strengthening tax-financed mechanisms so as to guarantee a basic level of social protection for all.

Although proposals for a universal basic income and individualised arrangements may partially address the possible disruption of jobs and changing work and employment arrangements, they also raise fundamental questions about the balance between personal freedoms and societal needs, the meaning of work in individuals’ lives and for societies, as well as the fair sharing of responsibilities between employers and workers with regard to social security contributions (ILO, 2018b; Ortiz et al., 2018).

Building comprehensive social protection systems with strong, nationally appropriate social protection floors for all is fundamental to promoting more equitable and sustainable social protection systems. In this regard, ILO Recommendation No. 202 underlines the potential of combining different mechanisms of social protection linked to either employment or residence, with appropriate financing through taxes or contributions. Fundamental to any reform is effective social dialogue, involving the social partners, including voice and representation of those in non-standard forms of employment and in the informal economy.

The Global Commission for the Future of Work (2019) is very clear that a human-centred agenda for the future of work hinges on the key role of social protection systems and their capacity to adapt in order adequately to address the challenges in the world of work, based upon the principles of risk pooling and equity in financing and benefits. Reinforced social protection systems are a key instrument of social justice and cohesion. The principles laid out above – universality of protection and accessibility, adequacy, transferability, gender equality and good governance – can guide the way for measures to adapt and strengthen social protection systems.

Footnotes

Author note

The responsibility for opinions expressed in the contribution rests solely with its authors, and publication does not constitute an endorsement by the International Labour Office of the opinions expressed in it.

Funding

This research has been funded by the International Labour Office.

Notes

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