Posts Tagged 'income redistribution'

Interview with Mr Rys, former ISSA Secretary General, on the occasion of the publication of his book Reinventing social security worldwide

An extract from the ISSA newsletter, Update

Mr Rys, thank you for agreeing to this interview and giving ISSA members the opportunity of learning more about your views on some key issues of social security policy and on the future development of the institution.

What was your motivation in writing this book now?
I would single out three main motives for writing this book. In the first place, I noticed that the younger generations of policy analysts did not seem to have a full picture of social security concepts which prevailed at the time of its expansion. Due to such gaps in the knowledge of the historical background of the institution, they sometimes considered as new emerging issues certain questions which had been researched and debated many years ago. My conclusion was that people of my generation have not succeeded in passing down the full accumulated knowledge of the subject and that some effort should be made to improve the situation.

The second reason was the wish to provide a correct historical account of the beginnings of international sociological research in the field of social security in the sixties and seventies of the previous century. As head of the research service of ISSA, I had the opportunity to develop a certain number of projects which made considerable impact on the promotion of social security research worldwide. This history reflects a collective effort of ISSA member organisations and forms an integral part of the institutional memory of the Association.

The third motive was the sudden outbreak of the world financial crisis during the last stages of the preparation of the manuscript. This event supplied a new evidence to prove some points made in the first part of the book regarding the mistaken belief in the reliability of the financial markets as providers of income capable to replace social security benefits. And perhaps more importantly, it underlined the danger concealed in recent trends in the evolution of social security which consist in a progressive abandonment of the principles of social insurance. The institution comes out always weaker after each repeated crisis and gradually loses its capacity to fulfil its original mission. Given the importance of social security for the preservation of the existing world socio-economic order, steps should be taken to review its functions so as to make the institution politically widely acceptable and economically sustainable.

What are the main messages you wish to convey?
The chief message concerns the need to preserve social insurance in its role of the main social security technique. Its contributory system with benefits granted as of right ensures to all beneficiaries their full human dignity while promoting the spirit of participation and self-help. Many social policy reactions to current social needs keep mixing social insurance principles with those of social assistance and encourage the use of social insurance benefits to cover needs, which are beyond their scope.

In order to regain confidence in the institution, it would seem necessary to reduce the volume of income redistribution through social security measures between different income classes of the population and transfer all income redistributive functions to the taxation system. This policy should be accompanied by an increased transparency of income flows generated by social insurance and regular information of insured persons concerning their future benefits.

What lessons do you see for social security in the light of the global financial and economic crisis?
One of the main lessons concerns the irreplaceable role of the state as a final guarantor of social security rights of the individual. It is not the case of the state as a direct provider of benefits but rather that of the state as an active supervisor of all measures. In the same way as in the financial and economic sector, the state must closely supervise and control the private and occupational welfare institutions so as to ensure that they correctly fulfil their functions.

Another lesson points in the direction of the need for building up financial reserves to permit the institution to function normally during the periods of economic crises. In view of the close dependence of social security on the performance of national economy, it is inevitable that the income of the institution decreases when the volume of benefits paid is at the maximum. Such financial reserves should hence be constituted outside the regular financial system of the institution possibly out of levies on some excessively high salaries or on earnings from speculative investments.

According to the ILO, 70 to 80% of the world population has no social security coverage. How would you answer the challenge of covering those in the informal sector and poor particularly in developing countries and countries in transition?
This challenge is real and there is no point in trying to hide the difficulty of providing an adequate answer. According to Beveridge, social security was meant to combat only those physical and social risks of human existence which exist even when the state of the society as a whole is as good as it can possibly be – it has never been created as an instrument for combating global poverty or even societal dysfunctions such as mass unemployment. These are basically two different sets of problems requiring different defensive approaches. However, the socio-economic and political reality in developing countries commands that the two targets be tackled at the same time. Under these circumstances, classical social insurance schemes should no doubt continue their advances, even at a slower pace, to protect the growing skilled manpower, indispensable for the creation of national wealth, while other source of finance such as general taxation should be sought to deal with the problem of global poverty. In this perspective, the main task of governments would be to keep an appropriate balance between these two types of social protection approaches.

Vladimir Rys is the author of Reinventing social security worldwide: Back to essentials

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