ILO Paper Highlights $1.4 Trillion Gap for Universal Social Protection in Low-Income Countries

The paper emphasizes the importance of universal social protection in addressing the consequences of the climate crisis by reducing vulnerabilities and mitigating climate shocks.

A new working paper from the International Labour Organization (ILO) sheds light on the significant financing gap of approximately US$1.4 trillion needed for low- and middle-income countries to achieve universal social protection. Titled "Financing Gap for Universal Social Protection: Global, regional and national estimates and strategies for creating fiscal space," the paper underscores the immense financial challenge governments face in providing basic social protection for all citizens.

According to the paper, this financing gap represents 3.3 percent of the combined annual GDP of low- and middle-income countries, with low-income countries bearing the brunt, facing an overwhelming 52.3 percent gap of their annual GDP.

To achieve universal coverage, governments will need to increase spending by 10.6 percent of annual government expenditure, primarily through domestic resources such as taxation, social security contributions, and better management of sovereign debt. However, bridging the gap for low-income countries would require mobilizing resources equivalent to four times their annual government expenditure, necessitating international solidarity and increased development assistance focused solely on social protection.

Regionally, Africa faces the most substantial challenges, with a financing gap of 17.6 percent of the continent's GDP per year, followed by low- and middle-income countries in the Arab States, Latin America and the Caribbean, Asia and the Pacific, and Europe and Central Asia.

The paper emphasizes the importance of universal social protection in addressing the consequences of the climate crisis by reducing vulnerabilities and mitigating climate shocks. It suggests that international climate financing can play a crucial role in reinforcing and adapting social protection systems in low- and middle-income countries.

Based on estimates for 133 countries, the working paper outlines the investment necessary to ensure universal coverage of basic benefits for children, mothers of newborns, persons with severe disabilities, the elderly, the unemployed, and universal essential health care.