What Social Model Are We Heading For? The World Bank’s ‘New Social Contract’

ANALYSIS, UNITED NATIONS, CAPITALISM, ECONOMICS, DEVELOPMENT, 16 Dec 2019

Francine Mestrum | CETRI – TRANSCEND Media Service

10 Dec 2019 – In a recent report the World Bank proposes a ’New Social Contract’. After decades of structural adjustments, is it changing its discourse and its practices? This article tries to find out what the financial institution is really up to and whether the new approach can make a positive end to the neoliberal era.

It has been said and it has been repeated: social policies have been the major victims of neoliberal globalisation. During the past forty years, attention for social protection and social development, everywhere, shifted towards ’poverty reduction’, the IMF’s (International Monetary Fund) and the World Bank’s prescriptions continuously implied cuts in social spending and targeted policies in the South, while ’austerity’ was introduced in the North with negative consequences on welfare states and labour law.

The changing world of work and the fundamental societal changes – migration, ageing, women on the labour market – recently gave rise to some timid discussions on social protection. The only real debate that took place in the North concerned the possible introduction of a ’Universal Basic Income’, a basically liberal idea that almost inevitably would make an end to welfare states. [1]

While the Asian crisis of 1998 and the global financial crisis of 2008 clearly demonstrated the need for protection of people in general and workers in particular, the resistance that existed within several UN-organisations towards the poverty focus of the Bretton Woods organisations gained momentum and slowly the IMF and the World Bank adopted a more open attitude, agreeing with some of the basic ideas of the ILO (International Labour Organisation), Unicef (the UN’s Fund for Children), UNRISD (Research Institute on Social Development) and UNDESA (Department on Economic and Social Affairs).

However, the road is bumpy and while the ILO and the World Bank now cooperate in a project for ’universal social protection’, several questions remain on if and how and why the World Bank is changing its discourse and its practices. In a recent report the World Bank proposes a ’New Social Contract’. This article tries to find out what the World Bank is really up to and whether the new approach can make a positive end to the neoliberal era.

Members of the « Boston Direct Action Project » dressed as vampires impersonate public relations associates of the World Bank, Washington DC
(Photo: Matt Osborn)

A Bit of History

When, in 1990, after ten years of structural adjustment, the World Bank proposed to make ’poverty reduction’ the main objective of all development policies, the first reactions were very positive. However, it soon became clear that this poverty focus did not in any way change the structural adjustment policies and that, moreover, the World Bank and UNDP (United Nations Development Programme) explicitly condemned social security policies beyond poverty reduction. [2] Furthermore, the comprehensive action programmes that were adopted at a whole series of UN world conferences – on the environment, on human rights, on women, social development, habitat, population…) were swept away in 2000 by a very short list of eight ’Millennium Development Goals’ (MDGs). The objective was to reduce extreme poverty by half between 1990 and 2015, an objective that was globally met thanks to China and India, but that regionally fell short of its stated aim.

The MDG’s were replaced in 2015 by the Sustainable Development Goals (SDGs) with a broader ambition but with a limited potential of being achieved by 2030.
In the meantime, all UN organisations worked on programmes of social protection and even inequality. The World Bank published a first proposal for ’social protection’ in 2000 and called it ’risk management’. The research department of the IMF examined the impact of labour market institutions, tax systems and even neoliberalism, noting it might have had negative consequences in terms of inequality.

At the ILO, the eight major international conventions on labour were bundled as ’Core labour standards’ in 1998, a programme of ’decent work’ was adopted as from 1999, an independent report on the social dimension of globalisation was written in 2005, a declaration on social justice was adopted in 2008, and in 2012 a Recommendation on Social Protection Floors was welcomed. It was minimal and did raise some important questions, but it was clearly a step in the right direction.

In 2013 the World Bank published its World Development Report on ’Jobs’ with some innovative ideas that showed a willingness and at the same time a reluctance to move forward. In a document of 2012, it had added ’labour’ to its new strategy of ’sharing prosperity’ : ’Employment laws are needed to protect workers from arbitrary or unfair treatment’, it said. It claimed its indicators are consistent with ILO conventions, though they do not cover its Core Labour Standards.

But ’upholding Core Labour Standards is central to protecting workers and improving their productivity’. [3] While this was a huge step forward for the World Bank, it wanted ’to strike the right balance between protection and competitiveness’… It was one of the first texts in which the World Bank implicitly accepted trade unions and collective bargaining. In the World Development Report 2013 [4] on jobs it is said that ’collective bargaining does not have a major impact’ [5], as well as that ’there is little evidence on the impact of trade unions’. [6] Though it also added that ’there is no consensus on what the content of labour policies should be’. [7]

As for the IMF, it started to question its own policies and its possible role in the promotion of social protection in a report of its Independent Evaluation Office.

This report of 2017 noted that ’the IMF has moved beyond its traditional « fiscal-centric » approach to recognize that social protection can also be « macro-critical » for broader reasons including social and political stability concerns.’ However, the IMF warns that it will not follow the rights-based and universal approach of the ILO. ’The IMF and the ILO staff do not speak the same language’. [8]

If some social policy is accepted today by the IMF, it is only to the extent that it contributes to stability and that it avoids social protest, not scaring the public and to avoid ’reputational risk’. [9] If it is now concerned about inequality, it is because its research department pointed out that it hampers growth. The IMF – in the same way as the World Bank – only agrees with targeted policies to the poor and insists continuously on ’better targeting’. Even if IMF studies speak about the possible role of trade unions and of taxes, redistribution is not on the agenda. [10]

In its 2019 ’Strategy for social spending’ the IMF notes that in a significant number of instances, social spending decreased in program countries. There is a demand for a clear strategy that would provide guidance on a more effective IMF engagement on social spending issues, more particularly on specific areas such as pensions reform, minimum wages, or unemployment insurance. Also, reporting on a meeting on this topic, it is said that the IMF should not take a leading role on this and that social protection should never become a condition for help. [11]

Finally, the 2019 World Development Report of the World Bank on the changing world of work gives more clarity on the ideas already launched in 2013 and a first proposal for a comprehensive social protection plan.

These ideas are now coherently presented in a ’white paper’ on social protection or better ’risk sharing policies’ [12], with a full programme of what it might become in the future. It is the document that will be analysed below. While this slow but clear evolution of the financial organisations should be welcomed, it also contains some worrying ideas.

New Proposals

What is it the World Bank wants us to think about?

First of all, what we are talking about is a ’white paper’. ’Its objectives are to scrutinize the relevance and effects of prevailing risk-sharing policies in low- and middle-income countries ; to take account of how global drivers of disruption shape and diversify the ways in which people work ; in light of this diversity, to propose alternative and more relevant risk-sharing policies and ways to augment and improve current policies to make them more relevant and responsive to peoples’ needs ; and to map a reasonable transition path from the current policy approach to an alternative approach that substantially extends protection to a greater portion of working people and their families. This volume is a contribution to the broader global discussion of the changing nature of work and how policy can shape its implications for the well-being of people’. [13]

The World Bank now prefers to speak of ’risk sharing’ instead of ’social protection’, probably because it wants to focus on the insurance idea and discard ideas about redistribution and indeed also on ’protection’ of people itself. It is a purely economic approach with an insurance logic. It speaks of ’risk-sharing policies’ broadly in reference to the set of institutions, regulations, and interventions that societies put in place to help households manage shocks to their livelihoods. These policies include formal rules and structures that regulate market interactions (worker protections and other labour market institutions) and instruments that help people pool risks (social assistance and social insurance), save and insure affordably and effectively (mandatory and incentivized individual savings and other financial instruments), and recover from losses in the wake of shocks to their livelihoods (active reemployment measures). [14]

The programme consists of four ’packages’:

The most important part for the World Bank and in fact the bulk of what this document is about is a ’guaranteed minimum’ of transfers and subsidized premiums. This is what formerly was called ’poverty reduction’ but has now become a poverty prevention package with a minimum income and minimum insurances.

In the second circle is what is usually called ’social insurance’ or ’social security’, that is obligatory contributions to a ’risk sharing pool’. However, the World Bank remains strongly against obligatory contributions burdening the wage bill and hopes to minimize them thanks to the first ’guaranteed minimum package’ and a consequential reduction of the redistribution element. This second layer is purely for ’consumption smoothing’ and premium subsidies can be paid out of the general budget. It becomes then a mandated and individually financed insurance system.

In the third circle are the privately financed systems for which governments can organize some ’nudges’, since too many people do not feel inclined to buy insurances.

The fourth circle is purely voluntary and privately funded.

’How each segment of the proposed package is financed matters for the efficiency and effectiveness of risk sharing. A key principle shaping the package is that poverty-prevention and redistribution objectives (that is, vertical redistribution) should be pursued transparently with instruments financed from broad-based taxes, whereas statutory contributions should be reserved to finance consumption-smoothing instruments with actuarially fair parameters (that is, horizontal redistribution)’ [15]

Interestingly, for the guaranteed minimum package the World Bank thinks of a possible version of a Universal Basic Income, though ’tapered’, that is, limited to the lowest incomes and decreasing with the rise of incomes and consumption.

Negative income taxes are also examined, while another intermediate option is a smaller Guaranteed Minimum supplemented with age-categorical transfers, such as a child allowance or a cash transfer for the elderly, or combined with an earned income tax credit for low-income workers above the eligibility threshold.

’The common, essential feature of all these alternatives is that the minimum guarantee is financed from the largest available risk pool, the national budget (often supplemented with international sources of aid and development financing), and is available when and where required’ [16].

’By consolidating poverty prevention and any other redistributive objectives in the core of the policy package of protection, governments can increase coherence and reduce perverse incentives and evasion. A pervasive problem in prevailing social protection systems is the segmentation and lack of coherence between social assistance and the redistributive elements of employment-based, contributory social insurance programs. As mentioned previously, the pursuit of redistribution objectives—« vertical » income redistribution as well as « horizontal » risk redistribution—is implicitly combined in the design of most contributory social insurance arrangements. However, the mingling of policy objectives is often done with little reference to other income-transfer programs.

This lack of coherence can distort individuals’ labour supply decisions, increase the costs to employers of making formal employment offers, and ultimately result in inequitable outcomes. Greater coherence can be achieved by tapering subsidies for insurance premiums, as with the tapered guaranteed minimum income. In the lexicon we have introduced in this chapter, a UBI or TUBI (Tapered Universal Basic Income) would be combined with a USI or TUSI (Tapered Social Insurance). Given their demonstrated higher impact on poverty, the combination of a TUBI and a TUSI is likely to be superior where governments’ administrative and implementation capacities allow them to observe people’s means. The tapered subsidy for risk-pooling premiums could purchase contingent coverage for longevity, health, and long unemployment spells’. [17]

’To be broadly applicable in a diverse set of countries, our proposal gives greater weight to policy objectives than to specific instruments or programs. For example, to provide effective and affordable coverage, the core of the package includes two indispensable components of public risk-sharing policy : transfers to prevent poverty and subsidies to cover the premiums for contingent coverage of catastrophic losses. Both components draw resources from the national general expenditure budget.’ [18]

As for labour markets, the World Bank works with a similar four circle model. Labour policies are also risk-sharing policies, and thus, according to the World Bank, ’labour market policies—just like social assistance and insurance—provide tools and protections that help workers and their families prevent, save, and pool to mitigate the risks of losses and to cope better in the wake of a shock’. [19]

The core of this package is aimed at preventing abusive exploitation. It has to be financed from general revenues as it is for all people who work, whatever their status. It also should increase workers’ voices, but it is mainly to enforce core labour standards, provide safeguards on freedoms of association and collective action, intermediation and employment assistance…
Beyond this, there needs to be mandated, nudged and fully voluntary policies that point to the responsibilities of workers and employers.

New and Positive: Prevention, Universalism and the State

A first absolute new idea that has to be mentioned from the outset is poverty ’prevention’. [20] In the past, prevention was said to be impossible, ’risks and shocks’ occurred and all that people, households and governments could do was to cope with them or to mitigate their consequences. [21] It gives the impression that the new policy approach of the World Bank is less about poverty than about preventing this poverty with a broad set of policies. This certainly is a very positive step, since social protection can indeed stop the impoverishment processes if intervention with income support and social services happen before people effectively are rendered poor.

A second idea that is clarified in this document is ’universalism’ and it even gets something like a definition as ’universality’: ’As with the public policy and provision of health care and education, universality does not necessarily mean that every person will receive a payout in a given period or, equally, from each part of the package. The essential, inalienable meaning of universality in many policy arenas is that a benefit or service is available when and where it is needed to all citizens, and, in many cases, even to all residents. Many benefits and services will not be needed by many people in a given period, or even at all, or people might choose to forgo receipt of goods or services to which they are entitled. In a discussion of risk-sharing policy, what is vital is the universality of entitlement to coverage of impoverishing losses. Those who do not suffer such losses may be covered by the guarantee but never receive a payout’. [22]

Many questions were raised when the World Bank and the ILO signed a Joint Statement in 2015 on the universality of social protection. ’Since the 2000s, universality has re-entered the development agenda. First it was education: universal primary education became a Millennium Development Goal in 2000. Then it was health: in December 2013, the World Bank and WHO committed to universal health coverage. Now it is time for universal social protection. For the World Bank and the ILO, universal social protection refers to the integrated set of policies designed to ensure income security and support to all people across the life cycle – paying particular attention to the poor and the vulnerable. Anyone who needs social protection should be able to access it’. [23]

However, the World Bank did not develop a new practice yet and it looks as if it might not happen soon. In the examples given in 2016 of 23 country cases, the universalism was each time limited to just one sector: child benefits, pensions or maternity protection… These are certainly positive steps, but one can hardly call them ’universal social protection’. [24] One could expect that at least the different elements of the ILO’s Social Protection Floors are all included, but they are not. Universalism remains an aspirational objective.

In practice then, nothing much is changing. The IMF, the World Bank’s sister organisation, continues till today to impose targeting in social spending. In the Independent Evaluation Report of the IMF on social protection [25], it is noted that the IMF ’consistently favoured targeted (means-tested) benefits over Universal Child Money Entitlement’. In a report on loan conditionality the ONG Eurodad also points to systematically targeting of social spending [26], and the UN Special rapporteur on extreme poverty [27] did the same. The ILO itself refers to the case of Mongolia which had introduced a universal child benefit, whereas the IMF insisted on ’strengthening and better targeting of social safety nets’ [28]

In fact, what the World Bank is promoting is a ’progressive universalism’:

‘First, simply striving for universality does not necessarily make the poorest better off. As countries expand social protection, those at the bottom of the distribution should benefit before, or at least at the same time as others in society. This concept is encapsulated in the notion of progressive universalism’. [29]

In other words, target the poor, later, if possible, you might (or not) expand the programmes … A third important novelty in this document is the role of the State. While in the past, at the peak of the neoliberal wave, States were said to be only responsible for help to the extremely poor people, while all those above the poverty line were recommended to buy an insurance on the market. Now, States are said to be responsible for managing this market.

’Given the various failures of product and factor markets—and the markets for risk in particular—it is no longer controversial for the state to intervene to augment people’s options for managing shocks to their livelihoods. Indeed, it has become widely accepted in policy circles that risk-sharing interventions contribute to the fight against poverty and to greater equity.

Second, by helping to prevent vulnerable people from falling into poverty and prevent people in the poorest households from falling deeper into poverty, risk-sharing interventions can dramatically reduce the number of poor and the likelihood that poverty will carry forward from one generation to the next.

Third, risk-sharing policies can make economic growth more equitable by safeguarding the population’s human and physical capital and ensuring that all enterprising people are able to grasp economic opportunities for advancement. But if the state intervenes with policy instruments designed for a different context and to cover forms of employment held by only a few people, its interventions will lack relevance (at best) and become distortive and regressive (at worst). [30]

In other words, and once again, nothing much might have changed : the State has to intervene to help the poor, but should not go beyond …

These three apparently new ideas have to be welcomed, though taking a closer look at them they may not bring about real change in World Bank policies. Universalism has to be progressive, attention should first go to the poor, the State has to intervene but not too much… Poverty prevention is an excellent idea but it will only be effective if policies do also focus on non-poor people in the first place, which does not seem to be the case.

Points of Discussion

The World Bank did not change its position relative to ’traditional’ elements of labour market policies. Core labour standards are now accepted, but one should ’avoid regulatory extremes’. [31] This means the World Bank is not in favour of minimum wages that risk to be ’distortionary’ and ’redistributive’ [32] ; severance pays or unemployment benefits can be ’inefficient and unreliable’ and can be replaced by mandatory saving accounts [33], flexible jobs are better than no jobs, so labour contracts should not be regulated [34], fixed working time with possible overtime to be paid is not recommended. [35]

The World Bank also questions tripartite institutions. Workers need to have a voice but when a majority of them work outside the formal sector, this can be problematic. Therefore, digital tools might help to file complaints and requests, to convert demands in petitions, etc. Trade unions have played an important role, according to the World Bank, but again, they are less important for non-formal workers or the self-employed.

Tripartite institutions, then, cannot be sufficient anymore. ’Traditional labour unions have tried to exercise a monopoly in representing working people in dialogue with the government and employers’ associations and have failed to represent the views of many who do not work in dependent wage or salaried employment relationships. An analogous concern can be raised about employers’ associations and their shortcomings in representing small businesses or the self-employed.’ ’More representative structures are essential to give working people a voice and to hold all market actors accountable. [36]PROT, p. 161.

In other words, labour unions are not representative enough and the deals they may succeed to strike for their members often come at the expense of non-organised labour.

’The same is true of employer and professional associations. This observation suggests a need for revitalized efforts to counter the concentration of market power and new institutions to give working people greater voice. This volume argues for changes to the institutions of social dialogue that would make them more representative of a diverse and diversifying world of work’. [37]

But, ’this agenda also includes mechanisms to increase the influence of workers, especially those in the informal sector, who are often not organized and whose voices are not always heard in policy debates. The government’s role in this context is to ensure that all working people, including those in the informal economy, are represented in the social dialogue that informs and
shapes labour policy’. [38]

The World Bank, then, is not against workers’ voice, not against social dialogue, not against trade unions and tripartite relationships, but all these mechanisms seem to be insufficient and can better be replaced by totally new ones. It suggests it might be better to look for formulas of shared ownership: ’Bringing shared ownership structures more boldly into the mainstream and broadening
profit-sharing practices beyond niches of high-income economies would also help address concerns about income distribution and inequality.

However, the new enthusiasm for shared ownership models has recently veered to the extremes of coercion and expropriation, which raises the risk that these models will become yet another state mandate that firms will seek to avoid and, in low- and middle-income countries, an additional implicit tax on firms that would otherwise grow to more productive scale. Some proposals for « true industrial democracy » challenge bedrock principles of liberal democratic market capitalism and protections of property rights’. [39] It seems as if there is another delicate balance to take care of but at any rate, power relations being what they are within large companies, without a ’true industrial democracy’ workers will always be on the losing end.

All these proposals ’are built on the argument that a country’s public finance system is the largest, most effective and efficient risk pool that the government can offer to households to redistribute risks, manage uncertainty, and pursue greater equity. Although larger risk pools with regional and even global breadth are increasingly available, in most contexts a country’s public finance system will remain the largest and most efficient mechanism for pooling risks and managing uncertainty.

In the approach proposed in chapter 3, statutory employer and worker contributions have an important role. But this role is more limited than the role they are assigned in prevailing employment based contributory social insurance. The so-called Bismarckian approach to risk sharing that prevails in many countries (and which is still being considered in several countries) is to use statutory employer and worker contributions, and the benefits they nominally finance, as an instrument for « vertical » and « horizontal » redistribution— that is, to prevent poverty and redistribute wealth within and between generations as well as to redistribute exposure to risks and uncertainty.

We argue that for the purposes of poverty prevention and other wealth redistribution objectives, the traditional approach offers households a relatively inefficient and ineffective instrument where and when the superior alternative of a larger risk pool, financed with a range of tax instruments with a much broader base, is available.’ [40]

This is a very clear statement and constitutes the heart of all World Bank’s proposals, together with the focus on the poor, now the ’not to be rendered poor’ people. This is what the social contract is about. The dividing line between social insurance and social assistance has to disappear. One should avoid regulatory extremes, there are questions to be raised on tripartism, one should broaden the social dialogue and pay all ’risk sharing’ policies for those non-rendered poor by taxes instead of workers’ and employers’ contributions.

Some Tentative Conclusions

At this point it is possible to draw some conclusions:

First of all, the ’labour market regulations’ the World Bank has in mind are not meant to create better labour markets with more security and protection for workers. In order to ’cover all workers’ the World Bank in fact proposes to cancel all existing regulations and start anew. Trade unions can continue to work and organize, can continue with collective bargaining, but in fact their power will be strongly eroded by the ’new world of work’, unless they succeed in organizing all non-organized workers, an option the World Bank does not even consider. It is true that in a highly competitive labour market where companies prefer zero hour contracts or self-employed people with low wages or retributions, it is highly improbable since too many people have to struggle to survive.

Secondly, the World Bank does not propose to re-regulate the labour market and try to formalize workers or fight the current precariousness induced by the GIG economy. The labour market is what it is, decided by big and small corporations. We should not try to change it but adapt to this changing world. Standard labour contracts are not coming back, according to the World Bank. The time we thought people and societies could shape the world they live in, is over. ’Robust social protection instruments with broad coverage … would relieve much of the social and political upward pressures on the statutory minimum wage’. [41] This means that social risk policies replace demands for higher wages and better working conditions. It means governments have to come in where employers fall out. Markets decide on the reality of workers.

Thirdly, the contributory system that made workers and employers the owners of social protection systems is bound to disappear. This will inevitably take away power from workers and make them entirely dependent on States, governments and budgets. The second layer of what the World Bank proposes and which should in fact come down to current mandatory contributions system, is reduced to its minimum and is only meant for consumption-smoothing, not for redistribution which is, as in the past of Bretton Woods institutions, largely forgotten. As was noted already in a comment on the draft World Development Report of 2019 [42] to separate social protection from work is a very dangerous road to go. Workers will not have to address their demands to their bosses, but to their governments that, in today’s authoritarian and ’austeritarian’ regimes, dispose of strong repressive mechanisms.

Fourthly, the ’guaranteed minimum package’ for ’people not rendered poor’ sounds very positive, but again, one can have doubts about how sufficient this will be to effectively ’prevent’ poverty. The proposed TUBI mechanism is not very generous; it only covers 5 % of average per capita income or consumption. Furthermore, it is not meant as a substitute for income, but to complement it. [43] In other words, without high enough minimum wages companies may go far below the poverty lines, and governments will complement workers’ incomes. This is precisely the Speenhamland system so adequately described by Karl Polanyi [44] and responsible for hindering the emergence of labour markets with trade unions and workers’ demands. This basic layer becomes in fact a ’comprehensive insurance assistance’ with minimal solidarity and redistribution.

Fifthly, while the role given to governments sounds positive, in fact it does not de-privatise insurance and other mechanisms, on the contrary. Governments may give subsidies for insurance premiums and ’nudge’ people to buy private insurances. Labour market mechanisms, such as for training or employment assistance can be totally private, governments will pay. Governments should become ’purchasers rather than providers of services’. [45] One can doubt on the efficiency of these new rules.

Sixthly, the World Bank rightly denounces the limited tax contributions of corporations and welcomes the international initiatives against tax havens and other tax avoiding mechanisms. However, this is not within its mandate and it is wishful thinking that these solutions will be put into place tomorrow.
Finally, needless to say, and contrary to the ILO, the World Bank does not speak about human rights. It may be another reason for abandoning the concept of ’social protection’ which is mentioned in the Universal Declaration on Human Rights. ’Risk sharing policies’ are not about protecting people against the whims of the market ; it is about creating and promoting markets for insurance, health and education, it is about promoting growth and productivity, it is about ’consumption-smoothing’, it is about pushing all people on the labour market. It is about ’risks and shocks’ that people may have to cope with without catastrophic consequences. It is about subsidizing basic social security.

The objective of this whole exercise then is not social justice, it is not social citizenship. is not protection of people against the whims of the market. Once again, what one sees, is that many responsibilities of corporations are shifted towards governments who will use citizens’ tax money to pay for a guaranteed minimum. Even if the World Bank and the ILO are together in an exercise for universalism, the objectives of both organisations are very different.
There is no fundamental ‘re-thinking’ [46] of its old ideas of the past thirty years, there is only a re-ordering, using some of the more attractive concepts from the ILO. Poverty now becomes a ’state of high frequency losses’. [47]

A New Social Contract?

The idea of a new social contract is not elaborated in this document; it is just confirmed [48] and was fully explained in the World Development Report of 2019.
It should be clear by now that what the World Bank is talking about is not a real social contract, the result of a public and democratic debate between citizens, their organisations and governments. It is not about the relationships between society, markets and the State. It is not about shaping and regulating markets, labour relations and social protection with rights and duties for all. What it is about is a set of rules for fragmented arrangements, such as child care, or pensions, or basic literacy and numeracy. ’It can also include elements of social protection’. [49] In other words, it is about specific objectives for specific policies. This was certainly not how the ’social contracts’ in Western Europe after the Second World War were understood.

In fact, the World Bank did not change its basic philosophy. It has adapted its discourse, it uses the concepts en vogue when they are without risk, its changes its vocabulary when it is needed to avoid the traps of more solidarity and redistribution. Its basic ideas remain the same as in 1990, target the poor, even if governments can help to allow corporations and workers to do more, even nudge and make a small part of contributions mandatory. Do away with labour market regulations. There is a more important role for governments. But the major neoliberal achievement of taking the whole economy and the major objective of fiscal balance out of democratic debate remains untouched. People just have to adapt. Markets reign.

This is indeed a discourse for ’human capitalists’ [50], for those who consider people to be a capital that has to produce a return for the education they get, that have to be active on the labour market, that have to optimize their productivity, that have to be available for all the changes occurring on markets, and that, for this special reason, need a basic risk-sharing insurance. This philosophy is very different indeed from what then ILO is working with.

Where then, Do We Stand?

Many of the ideas mentioned and suggested in this white paper are already applied in several countries, including advanced economies. But they are brought together in a coherent way in order to look like a new programme. This is not only useful for the Low and Middle Income Countries this report is meant for, but also for rich countries that want to reduce or get rid of their existing welfare states.

As Claus Offe rightly analysed some decades ago, capitalism does not want welfare states, but at the same time, it knows very well that it cannot survive without them. [51] What the World Bank is doing is making a synthesis of these elements the system needs to sustain itself, abandoning all the rest. Its ’risk sharing’ does offer basic protection to people but is mainly aimed at good functioning markets.

This report is part of a global discourse, it is not reality. But it helps to shape the global thinking on social policies as the World Bank and other international institutions and meetings have been doing these past decades.

There is, then, no reason to panic, if only there was an alternative discourse with better ideas on what social protection could be or become. But there is not.
Today, the debate on the future of social protection is entirely in the hands of till now neoliberal and right-wing forces. Joseph Stiglitz and José Antonio Ocampo can be considered to be on the margins of the dominant system, but they are economists with a long experience of work with the international organisations. When The Economist puts ’universal health care’ on its cover, it does not mean to promote Jeremy Corbyn. As for the OECD, it also promotes a purely economic perspective on social policies. [52]

Progressive alternatives are missing. For the moderate left, the existing international alternatives of social protection floors and sustainable development goals are more than enough. However, without strong social struggles, they may end up in the World Bank net. At a moment that, all over the world, people are claiming the streets demanding social justice and at twenty years after the ’Battle of Seattle’ or the emergence of the alter-globalist movement, comprehensive thinking on how social justice can be achieved is almost totally lacking within progressive political forces. Surely, there is quiet some literature on different, fragmented elements of social justice and social protection, from health care to education to housing and, obviously, climate.

But very few authors have taken it upon themselves to try and make a concrete and comprehensive proposal on where developing countries should be heading to, or how the Western welfare states should be modified? If a ’new social contract’ is what is now being offered, should not progressive forces be their main author, trying to achieve global convergence, trying to help the millions of desperate young people on the streets of our cities?

Climate justice rightly has become the top priority of all movements. But all know that environmental justice has to go hand in hand with social justice. How? I propose to look at the potential of a concept like ’social commons’ and to make from social protection a tool for systemic change. [53]

What neoliberalism is about and hence also these World Bank proposals is the erosion of democracy. It is about working and doing within the framework of a system that defines its own immutable rules. It is not about shaping our own world.
Should we not try to do just that?

Notes:

[1] For some articles in favour and against the UBI see www.socialcommons.eu

[2] For a full analysis of the World Bank discourse on poverty, see Mestrum, F., Mondialisation et Pauvreté. De l’utilité de la pauvreté dans le nouvel ordre Mondial, Paris, L’Harmattan, 2002.

[3] World Bank, 2012, Resilience, Equity, and Opportunity, Washington, The World Bank, 2012, p. XVII.

[4] World Bank, World Development Report 2013, Washington, The World Bank, 2013.

[5] World Bank, 2013, op. cit., p. 26.

[6] World Bank, 2013, op. cit., p. 263.

[7] World Bank, 2013, op. cit., p. 25.

[8] IMF, Independent Evaluation Office, The IMF and Social Protection, Washington, 2016, § 66.

[9] IMF, 2016, op. cit., p. VII.

[10] IMF, 2013, Taxing Times. Fiscal Monitor, October ; Redistribution, Inequality and Growth, February ; Spillover in international corporate taxation, May, Staff reports, Washington, IMF.

[11] IMF, Strategy for social spending, Policy Paper June 2019.

[12] World Bank, Protecting All Risk Sharing for a Diverse and Diversifying World of Work, Washington, 2019 ; ’PROT’ in further references.

[13] PROT, p. 2.

[14] PROT, p. 2.

[15] PROT, p. 10.

[16] PROT, p. 11.

[17] PROT, p. 109.

[18] PROT, p. 91.

[19] PROT (p. 16)

[20] PROT, p. 8.

[21] Holzmann, R. and Jörgensen, S., Social Risk Management : A new Conceptual Framework for Social Protection and Beyond, Social Protection Discussion Paper n° 0006, World Bank, Washington, 2000.

[22] PROT, p. 92.

[23] ILO/WBG, A shared mission for universal social protection, Concept Note, https://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/documents/genericdocument/wcms_378996.pdf.

[24] Global Partnership for Universal Social Protection to achieve the Sustainable Development Goals, 21 September 2016, https://www.social-protection.org/gimi/gess/NewYork.action?id=34 .

[25] IMF, 2017, op. cit.

[26] Eurodad, Unhealthy Conditions, IMF Loan Conditionality and its impact on Health Financing, Brussels, 2018.

[27] UN, Report of the Special Rapporteur on Extreme Poverty and Human Rights, Res. A69/297, 11 August 2014.

[28] ILO, World Social Protection Report 2017-2019, Geneva, ILO, p. 16.

[29] PROT, p 236.

[30] PROT, p. 30-31.

[31] PROT, p. 140.

[32] PROT, p. 144.

[33] PROT, p. 152 and 182.

[34] PROT, p. 156.

[35] PROT, p. 156.

[36] ’

[37] PROT, p.18.

[38] PROT, p. 181.

[39] PROT, p. 239.

[40] PROT, p. 205.

[41] PROT, p. 146.

[42] Alfers, L., 2018, How the draft WDR 2019 Got it Wrong : Rethinking and Relinking Social Protections for the Future of Work, WIEGO.

[43] PROT, p. 126.

[44] Polanyi, K., 1957, The Great Transformation. The Political and Economic Origins of pour Time, Boston, Beacon PressPolanyi, K., 1957, The Great Transformation. The Political and Economic Origins of pour Time, Boston, Beacon Press

[45] PROT, p. 170.

[46] PROT, p. 89.

[47] PROT, p. 71.

[48] PROT, foreword p. xvi.

[49] World Bank, World Development Report 2019, The Changing Nature of Work, Washington, p. 129.

[50] PROT, p. 238.

[51] Claus Offe, 1984, Contradictions of the Welfare State, ed. John Keane, London, Hutchinson.

[52] Stiglitz, J. ands Ocampo, J.A. (eds), The Welfare State Revisited, New York, Columbia ,University Press, 2018 ; OECD, Tackling Wasteful Spending on Health, Paris, 2017 ; ’Within Reach, Universal Health Care, worldwide’ in The Economist, 26 April 2018.

[53] Mestrum, F., The Social Commons. Re-thinking social justice in post-neoliberal societies, Global Social Justice, 2015, www.socialcommons.eu.

____________________________________________________

 

Francine Mestrum  – Director of CETRI, member of the International Council of the World Social Forum and responsible for Global Social Justice (www.globalsocialjustice.eu)

 

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