A new report by the International Labor Organization (ILO) highlights critical financing gaps in social protection and provides policy recommendations on how these gaps could be closed.

According to the report, Measuring Financing Gaps in Social Protection for Achieving SDG Target 1.3: Global Estimates and Strategies for Developing Countries, more than 500 billion USD a year needs to be invested if countries are to meet a basic set of social protection measures – known as a social protection floor – by 2030. 

Spending on coverage reportedly needs to increase dramatically to achieve universal coverage of a basic set of social protection measures.

This would include: cash transfers to children; maternity benefits for mothers with newborns; disability benefits; and old age social pensions.

Based on research carried out in 134 countries, the findings show that at current levels social protection covers only 8.5 percent of children and 15.3 percent of older persons in low-income countries. By contrast, in upper-middle income countries 35 percent of children and 90 per cent of older persons are covered.

Social protection plays a central role in efforts to reach by 2030 the targets set out in the UN Sustainable Development Goals (SDGs), including those for poverty, gender equality, decent work and economic growth, among others.

Many middle- or upper-middle-income countries have the domestic capacity to generate the resources to finance a universal social protection floor, say the report’s authors.  However, substantial amounts of overseas development aid will be needed to close the financing gap in the 28 low-income countries covered in the research, to achieve universal coverage by 2030.

According to the report the low-income countries would need to spend 5.6 per cent (US$27 billion per year) of their Gross Domestic Product (GDP) to close the financing gap.  The lower middle-income countries would need to earmark 1.9 per cent of GDP (US$ 136 billion per year), whereas the upper-middle income countries would need to spend 1.4 per cent of their GDP (US$ 365 billion per year).

Policy options to create the necessary financing presented in the report include, among others, increasing tax revenue, extending social security coverage and contributions, increasing official development assistance (ODA) with priority given to low-income countries, and eliminating illicit financing flows.