The Addis Ababa Action Agenda presents a new social compact. This compact contains two components: a commitment to deliver social protection systems and measures for all, including floors; and a package of essential social services. While social protection generally refers to cash transfers and social insurance,such as adequate pensions for older persons, essential public services include the provision of basic social services, such as health and education. Countries are encouraged to set national spending targets for quality investments in these areas. As part of the social compact, the international community commits to provide support to country efforts and to explore funding modalities.
Specifically, in the Addis Agenda, countries:
- Commit to provide fiscally sustainable and nationally appropriate social protection systems and measures for all, including floors, with a focus on those furthest below the poverty line and the vulnerable, persons with disabilities, indigenous persons, children, youth and older persons
- Are encouraged to consider setting nationally appropriate spending targets for quality investments in essential public services for all, including health, education, energy, water and sanitation, consistent with national sustainable development strategies
- Commit strong international support for these efforts, and [to] explore coherent funding modalities to mobilize additional resources, building on country-led experiences
Social protection for workers on digital platforms: Despite significant progress made in the past, large gaps in coverage and financing in social protection still exist today. Only 45 per cent of the global population are effectively covered by at least one social protection cash benefit. Digitalization is facilitating good governance in the administration of social protection systems. But it also creates new challenges for coverage and adequacy gaps. This is particularly the case for workers in precarious forms of employment mediated by digital platforms in developing countries. While such diverse forms of employment may provide greater flexibility to enterprises and workers and lower the cost of services for clients, for workers, they also often translate into lower and volatile earnings and higher levels of income insecurity, inadequate or unregulated working conditions, and no or limited social security entitlements. It is difficult to identify the party responsible for contributing to social insurance since neither buyers (requesting the service) nor the organizers (digital platforms) may recognize an employment relationship entailing responsibilities with regard to social protection. Such gaps in social insurance coverage can also create a higher burden on the current and future expenditure of social assistance and poverty alleviation programmes.
Several policy options can address these gaps:
- Legislative frameworks should be adapted to cover workers on digital platforms. Workers are almost invariably classified as independent contractors in the gig economy, and thus fall outside of the legal requirements attached to the standard employment relationship. If misclassified crowdworkers were reclassified as employees, platforms would be obliged to pay minimum wage and ensure social protection coverage;
- To cover all workers and create a level playing field for employers, minimum thresholds on enterprise size, working time or earnings for contributions should be lowered or removed;
- Administrative and financing requirements and procedures can be simplified. Uber drivers in Uruguay, for example, can download a phone application that automatically deducts social security contributions.
Relevant SDG indicator
- 1.3.1 Proportion of population covered by social protection floors/systems, by sex, distinguishing children, unemployed persons, older persons, persons with disabilities, pregnant women, newborns, work-injury victims and the poor and the vulnerable
- 1.a.2 Proportion of total government spending on essential services (education, health and social protection)
- 2019 FSDR Domestic Public Resources chapter: progressivity of spending
- 2018 FSDR Domestic Public Resources chapter: social protection finance update
- 2017 FSDR Thematic chapter: financing investment and social protection