The International Labour Organisation (ILO) on Thursday said that to guarantee at least basic income security and access to essential health care for all in 2020 alone, developing countries should invest approximately US$1.2 trillion, representing on average 3.8 per cent of their GDP.
The global labour organization in its latest Policy brief, noted that since the onset of the COVID-19 pandemic, the social protection financing gap had widened by approximately 30 per cent.
According to the study ‘Financing gaps in social protection: Global estimate and strategies for developing countries in light of the COVID-19 crisis and beyond’ the ILO confirmed that the huge financial commitment by developing countries was the result of the increased need for health-care services and income security for workers who lost their jobs during the lockdown and the reduction of GDP caused by the crisis.
Specifically, it noted that the situation was particularly dire in low-income countries who would need to spend nearly 16 per cent of their GDP to close the gap – around US$80 billion
The brief indicated that regionally, the relative burden of closing the gap was particularly high in Central and Western Asia, Northern Africa and Sub-Saharan Africa (between 8 per cent and 9 per cent of their GDP).
The ILO further clarified that even before the COVID-19 crisis, the global community was failing to live up to the social protection legal and policy commitments it had made in the wake of the last global catastrophe – the 2008 financial crisis.
“Closing the annual financing gap requires international resources based on global solidarity”, Director of the ILO’s Social Protection Department, Shahrashoub Razavi said.
The labour organization stated that currently, only 45 per cent of the global population is effectively covered by at least one social protection benefit. The remaining population – more than 4 billion people – is completely unprotected.
The study reflected that national and international measures to reduce the economic impact of the COVID-19 crisis had provided short-term financing assistance, with some countries exploring innovative sources to increase the fiscal space for extending social protection, like taxes on the trade of large tech companies.
Other sources identified by the study are, the unitary taxation of multinational companies as well as taxes on financial transactions or airline tickets. With austerity measures already emerging even with the crisis ongoing, these efforts are more pressing than ever, the study says.
Razavi further clarified: “Low-income countries must invest approximately US$80 billion, nearly 16 per cent of their GDP, to guarantee at least basic income security and access to essential health care to all.
“Domestic resources are not nearly enough. Closing the annual financing gap requires international resources based on global solidarity”, the director added.
The ILO stated that mobilization at the international level should complement national efforts, as international financial institutions and development cooperation agencies have already introduced several financial packages to help governments of developing countries tackle the various effects of the crisis but more resources are needed to close the financing gap, particularly in low-income countries.