Final Communiqué of the Ministerial Meeting on OECD Social Policy: Building a Fairer Future: The Role of Social Policy

 

1. We, the OECD Social Policy Ministers, together with our counterparts from Russia, Brazil, Indonesia and South Africa met in Paris on 2-3 May 2011, under the chairmanship of Mrs. Ursula von der Leyen, Minister of Labour and Social Affairs, Germany. The Vice Chairs were the Hon Ms. Jenny Macklin, Minister for Families, Housing, Community Services and Indigenous Affairs of Australia, and Mr. Guðbjartur Hannesson, Minister of Welfare of Iceland. The meeting was preceded by a Policy Forum on “Tackling Inequality”. Representatives from the Business and Industry Advisory Committee (BIAC) and the Trade Union Advisory Committee (TUAC) participated in both the Policy Forum and in the first session of our meeting on social policies for the recovery.


2. The purpose of our meeting was to exchange views on the serious short- and long-term challenges citizens are facing today and on what we could do to address them. We discussed the social impact of the global economic crisis and compared our countries’ approaches to adapt social policy to support the recovery. Under the broad umbrella of family policies, we discussed good practices in removing barriers to family formation, enhancing the well-being of children, promoting gender equality in employment, and innovative approaches to improve service delivery for vulnerable families. Our final session focused on social policy strategies to balance the needs of different generations, the fiscal and social impact of pension reforms, and caring for children, adults with long-term health conditions and /or disabilities, and for an increasing number of vulnerable older persons.


3. Our meeting was preceded by a Policy Forum on Tackling Inequality, chaired by Mrs. Ursula von der Leyen. We discussed the trends of rising income inequality experienced by many of our countries, as well as policy approaches to counter this trend.

 

Key conclusions of the meeting


Noting that our countries are in very different economic and fiscal situations and recognizing a diversity of governance arrangements, we nevertheless agreed that several common principles apply to promote social cohesion:


Social policies for the recovery

  • We reaffirmed our commitment to combating poverty and social exclusion and providing adequate and financially sustainable social protection.

  • Redistributive policies and strong growth of quality employment remain key elements in strategies to close income gaps and contribute to reducing income inequality. Employment-oriented policies, including those making work pay, have a clear role to play here. In-kind services, such as health and education, are also of crucial importance.

  • Well-designed social policies contribute to long-term sustainable growth and limit the social and economic effects of the crisis. We should avoid a too-narrow focus on short-term expenditures only and also take into account the future benefits of social protection.

  • Given the serious public finance constraints facing most OECD countries today, we need to seek ways to maximize the efficiency of social protection systems. Determined measures on both the social spending and the revenue sides are necessary to achieve an appropriate balance between social objectives and fiscal sustainability.

  • In many countries, social dialogue helped to minimise the adverse effects of the crisis on employment and vulnerable families and it will be important to maintain this dialogue going forward to help set the most suitable social policy package.

  • Social cohesion should be promoted as appropriate by civil society, in partnership with the public sector.

Policies for families, youth and children

  • Every family with children should be guaranteed access to appropriate support, paying special attention to vulnerable families. Family-friendly policies and accessible, affordable quality childcare services should be promoted more.

  • Creating more and better jobs is the best way to tackle poverty. Among other things, this requires greater diffusion of family-friendly policies.

  • Fathers and mothers should be equally encouraged to make appropriate use of family-friendly work arrangements, with due recognition of this in leave entitlements. Better sharing of responsibilities between women and men in the household should be promoted.

  • Large gender gaps in employment and wages could be addressed through promoting equal access to quality education and by ensuring equal opportunities and treatment of men and women in employment.

  • Investing in children’s well-being, rights and development, including early childhood education and care, should start as early as possible and the costs should be shared fairly among all actors in society, including all levels of governments, employers and individuals. Support for all children should be based on their needs and sufficient to address these needs. Vulnerable children should be identified promptly and supported throughout childhood and into adulthood.

  • It is vital to ensure that our social and employment policies give youth the support and opportunities they need to gain a firm foothold in the labour market and in society more broadly.

  • Integrated service delivery combining housing, health, welfare, education, training, employment, early childhood education and care, family and parenting supports can increase efficiency and effectiveness of policies for all families, especially vulnerable populations.

Sustaining intergenerational solidarity

  • While it is our objective to provide adequate social protection to all age groups, including cash benefits and care, it should not lead to a too-high burden on the active population.

  • Pension systems need to be adapted to demographic trends; longer working lives, higher employment rates and effective retirement ages would improve their adequacy and sustainability.

  • Pension reforms need to be timely in light of rapidly ageing societies and ensure adequate retirement income and coverage as well as financial sustainability.

  • More efforts are needed to create both employment opportunities and the employability of older workers as well as healthier ageing.

  • While taking due account of the country-specific situation, diversification of retirement income provision, combined with improved regulation of private pension funds and financial literacy initiatives, may have a role to play in coping with population ageing.

  • Most countries are strengthening their formal long-term care systems. Policies supporting informal care should be considered as complements to formal systems but should not perpetuate gender inequalities in unpaid work nor encourage carers’ withdrawal from the labour force.

 

4. The Leaders’ Declaration at the G20 Seoul Summit recognised the importance of addressing the concerns of the most vulnerable. Ministers reaffirmed their commitment to combating unemployment and poverty as well as providing adequate and financially sustainable social protection, including a basic social protection floor in emerging and developing economies. Ministers also recognised the important role social policies had as automatic stabilizers during the crisis and emphasized the need to foster the creation of more and better jobs in the recovery and beyond for more inclusive labour markets. We welcome the contributions of the OECD to this work, and encourage the conclusions of our Ministerial to be conveyed to the upcoming G20 Employment and Labour Ministerial meetings.


Social policies for the recovery

5. We agreed that effective and efficient social policies are as important as ever. Social policies contributed to minimize the duration and severity of the recent recession, and are critical to help us manage effectively future economic shocks. Well-designed social policies not only limit the negative social and economic effects of widespread job and income losses, they also help families make the most of the economic recovery. Some social spending has a distinct social investment character with payoffs in later periods, such as measures that safeguard child well-being and employment support for young job seekers.  We should avoid focusing too narrowly on short-term expenditures and also take into account the future benefits of social protection. At present, given the substantial fiscal challenges the majority of OECD countries face, it is particularly important to seek ways to maximize the value for money that social protection systems provide.


6. Long-term trends towards greater income inequality were a major concern before the crisis. Past experience has shown that low-income groups fall even further behind during recessions, illustrating the importance of redistributive policies during the recovery. But there are limits to this approach and strong and sustained employment growth remains a key element in strategies aiming to close income gaps. Employment and skills-oriented social policies are thus important policy levers.


7. Budget crises are not just spending crises.  A substantial erosion of tax revenues is a major driver of reduced fiscal space.  Employment-oriented social policies can help to restore the tax base. There is also a need to review whether existing tax provisions are optimal in the light of equity considerations and current revenue requirements.


Policies for families, children and young people

8. Much progress has been made in the area of family and child policies since we discussed this issue at the 2005 OECD Social Policy Ministerial meeting. Many of our countries have undertaken important reforms to improve the opportunities for women and men, especially when they become parents, to reconcile work and family responsibilities and increasing attention is being paid to policies that support families’ ability to provide for their children’s well-being and healthy development, including the availability, affordability, accessibility and quality of early childhood education and care.


9.  Family policy also has to adapt to the evolving patterns of family structures and living arrangements, such as increasing numbers of two-earner families, births to parents who are not married, reconstituted families and sole-parent households. Policies that promote the reconciliation of family and work commitments can help parents realize their wishes regarding children and family life and enable them to participate in the labour market, which in turn will help reduce the risk of poverty and social exclusion among children and women.


10. Family-friendly options should be created at the workplace, including flexible and part-time work and parental leave entitlements, which both parents should be encouraged to use and share more equally while keeping in mind the best interest of the child. Gaps in the provision of formal and informal childcare, for example, when parental leave runs out before affordable childcare of good quality becomes available, can be a barrier for parents to maintain their attachment to work. Also, most care responsibilities and the bulk of unpaid work within households are still borne by women, making their participation in the labour market and life-long learning activities as well as career progression more difficult. The cost of raising young children, in particular expenditures to support the work-family life balance should be shared by society as a whole, including central and local government, employers and individuals.


11. Early investment in the well-being of children is crucial for their development and transition into adulthood. A suite of family policies building on universally available supports to families with children is the foundation of the most successful systems. Furthermore, early identification, targeted interventions, affordable and accessible child-care facilities, and a follow-up throughout childhood are of key importance for all children, including those who are at high risk of poverty and social exclusion due to economic and social living conditions.


12.  Adolescence is a turning point that provides an opportunity to consolidate the gains acquired in early childhood. In order for young people to cope with current and future challenges, policies need to promote education and training which equip young people with the skills and opportunities to participate in the labour market and in society more broadly. Policies should also address the barriers young people often face in accessing benefits and essential services.


13. Some families are exposed to multiple risks, such as unemployment, low pay, substance abuse, disability, mental illness, and domestic or family violence. Some countries have developed innovative policies to assist families with complex needs through integrated service delivery, which combines housing, health, education, employment, early childhood education and care, family and parenting supports. Such approaches can increase efficiency through economies of scale and improve effectiveness through better access to services and knowledge sharing among service providers benefitting not only vulnerable families, but all families. One way to deliver integrated services is via one-stop service counters at the local level which also involve key actors in the private sector.


Gender equality in the economy

14. Despite much progress in educational attainment of women, some countries still have large gender gaps in employment and wages. Particular attention should be paid to measures which help reduce the segregation of the labour market between men and women and provide equal professional development opportunities. This would also help reduce old-age poverty, which particularly touches women in most countries. Prerequisites for lower gender gaps are family-friendly public policies and workplace practices, and, in some countries, measures to ensure equal opportunity and treatment of men and women in employment. A better sharing of caring responsibilities at home between men and women should also be encouraged.

 

Intergenerational solidarity

15.  Our societies need to adapt to the trend of increasing life expectancy and longer and healthier lives. Faced with population ageing, policies to foster intergenerational solidarity are particularly important. Pension spending and long-term care needs are projected to rise sharply. Providing adequate benefits to all age groups through social security and care schemes needs to be balanced with maintaining expenditures at a manageable level. Adequate social protection provision should also be designed so as to avoid disincentives to work and poverty or benefit dependency traps. Intergenerational family support is coming under strain when families in many countries are smaller and policies for prolonging working lives are being encouraged. Working more and longer affects the possibilities for informal care of children and elderly, especially for women who are still the primary caregivers. Many countries should also consider promoting: healthier and more active patterns of ageing through volunteer work, autonomous and partly supported living arrangements, and improved access to information technologies.


Pensions and retirement

16. We agreed that pension systems should remain socially adequate and financially sustainable. The design of reforms should focus not only on pension expenditures, but also on securing adequate financial resources and coverage of schemes. We call upon the OECD to continue to monitor closely these reforms paying particular attention to their timeliness, their contribution to financial stability and their impact on the incomes of retirees.


17.  Most of our countries have reduced financial incentives to retire early but pension policies should also seek to increase the effective age of retirement to reflect increasing life expectancy. More efforts may be required in some countries, notably employer-driven initiatives to provide suitable working conditions, including flexible working time, retraining opportunities and health and safety at work, in order to promote employment and employability of older workers and new forms of work organisation throughout the life-cycle.


18. Despite the financial and economic crisis, diversification of pension provision remains one of the ways of addressing the financial consequences of an ageing population. The crisis, however, has demonstrated the vulnerability of some private pension products. While taking due account of the country-specific situation, it is important to design appropriate regulation of private pensions as well as measures to improve financial literacy to ensure that these schemes contribute to ensuring adequate and safe old-age income. Ensuring comprehensive coverage also remains essential and contributes to reducing old-age poverty.


Caring

19. Both younger and older generations provide valuable support today, such as grandparents supporting young families and adult children caring for the elderly. However, population ageing and changes in family structure are making it more difficult for families, and especially for women, to provide such care. We agreed that policies must better support existing forms of intergenerational solidarity provided by families, friends, communities and volunteers. They should aim to help individuals balance work and caring responsibilities and provide financial support to carers and/or carees. We agreed that support for informal caring arrangements should not come at the expense of investment in formal support systems, which provide cash and in-kind services, including institutional, home-based, and community long-term care.


20.  We recognise that some people may not have access to sufficient formal or informal care. In particular, there is a need to develop innovative ways to meeting the housing, health, and social service needs of older people who are at risk from poverty and social exclusion. Some countries are taking innovative approaches to elderly care through integrated care services at the local level, combining healthcare, preventive, long-term care, housing and support for daily life activities enabling independent living. We want to share such experiences and learn from each other.

 

Social dialogue

21.  The experience of the recent crisis confirms that, in a number of our countries, a constructive dialogue between the government and the social partners has been a key factor in promoting social policy reforms and helping to stabilize employment. Building on such experience, and depending on national practice, we agreed on the importance of promoting a continued social dialogue to identify the most suitable social policy packages for the recovery and beyond, and ensure that key stakeholders are, to the extent possible, involved in its implementation.

International co-operation

22.  We are committed to promoting dialogue and co-operation with governments of emerging and developing countries to address together the common social policy challenges we face. We offer to share our experiences with these countries as they seek to strengthen their social protection systems and move towards a social protection floor. We can also learn from their innovative approaches in social policy. The OECD, working in concert with other relevant international organizations, notably the ILO, the UNDP, the ISSA, the World Bank and regional development banks, can play an important role in organizing and informing this effort. We call for coordination and coherence in the work developed by the international organisations in that field and welcome the current work of the G20 on global social protection issues.

 

ANNEX – FUTURE ORIENTATIONS FOR OECD WORK ON SOCIAL POLICY


23. We encourage the OECD to continue to provide us with valuable comparative social data and to help us identify and design effective and efficient evidence-based social policies. We invite the OECD Employment, Labour and Social Affairs Committee (ELSAC) to carry out further work in the following areas, subject to sufficient resources being available.


Extending the monitoring and evaluation of social policies


24.  ELSAC has been providing us with valuable comparative data and information on social policies, such as social expenditures, social indicators, income inequality and poverty, pensions, policies for families and children, including gender, as well as tax-benefit systems. We urge the OECD to continue this work and update the relevant databases on a regular basis while maintaining efforts to improve the accuracy, comparability, transparency and user-friendliness of the data in close cooperation with member countries, and develop uniform definitions and statistical tools for measurement, monitoring and evaluation of social services and policies. The OECD work should be at the forefront of new developments in social policy and should explore future challenges to social protection and support a pro-active approach of member countries. We call upon the OECD to review the efficiency and effectiveness of cash benefits compared with in-kind services.


25.  We would also welcome more use of the existing information and databases for the analysis and evaluation of national social policies. In particular, we would like to see more policy analysis in the following areas:


Expanding the work on families and children


26. Following the OECD’s report on child well-being, we request that further work be carried out analyzing the effectiveness of prevention measures aimed at avoiding damaging experiences, such as neglect, physical and emotional abuse, witnessing domestic violence and breakdown of parental relationships, and at supporting parents to meet their children’s needs. Cross-country reviews could fill existing knowledge gaps by analysing national prevalence of child maltreatment, child protection delivery mechanisms, institutional and foster care services, as well as policy recommendations on how to improve such services. We would also like to see more work analyzing the specific challenges for the design and promotion of family-friendly policies in small and very small enterprises, including innovative solutions for family policies in emerging economies.


Inequality, poverty, and social exclusion


27.  We call on the OECD to continue the work on poverty and inequality, including analysis of the inequality and poverty impacts of the crisis, and we would welcome further work on income mobility as well as on other dimensions of inequality, such as the distribution of wealth, of social capital, and the impact of in-kind services, such as health and education.


28.  We welcome the OECD’s initiative to undertake more analysis of the drivers and measurement of poverty and social exclusion and identify comprehensive policy responses to reduce the incidence of long-term socio-economic marginalization.  This should include comparative analysis of national approaches targeted toward other populations living (or at risk of living) in poverty, such as single parents, recent immigrants, aboriginal populations, persons with disabilities, vulnerable youth and the working poor, including from gender and geographical perspectives.


Ageing and intergenerational solidarity


29.  The OECD’s monitoring and analysis of pension systems has been providing us with highly relevant inputs. As population ageing progresses and the pressure on intergenerational solidarity grows, we request more work on how best to balance the needs of generations and provide socially adequate and financially sustainable pensions, including pension policy issues for the immigrant population. Work should also be undertaken on the interfaces between and pressures on pension systems, health and long-term care systems and caregiving. We would also welcome work on policy approaches to support seniors’ independence.


New strategic directions for OECD work on social policy

 

Better social policies for youth


30.  Young people have been hard hit by the economic crisis and may continue to suffer from scarring effects in the future. We request the OECD to undertake work on the social policies and benefits available for and targeted to young people. Particular attention should be paid to active social policies that promote the labour market and social integration of youth and help young people become self-sufficient and economically independent.


Social housing policies


31.  The economic crisis has dramatically increased the number of homeless persons and families in some of our countries compounding the effects on the more vulnerable for whom homelessness was and remains an ever present risk. Public housing policies, which have always been an important part of social protection, have become even more important today in supporting households affected by unemployment and income losses and preventing social exclusion. We call on the OECD to start new work to assess the effectiveness and efficiency of different approaches to social housing, including the impact of housing policies on labour market mobility and the integration and co-location of service delivery combining housing and other social policy supports.


Extending effective coverage of social protection systems


32. In some OECD countries and, in particular, in emerging economies, social protection systems still do not cover an important part of the population, and there are also significant gaps in coverage levels. Policy-makers are facing challenges of how to reach the excluded populations, how to ensure access to adequate social protection in a context of limited resources and geographical dispersion. Another topic would be how to ensure the portability of benefits in countries that are experiencing major migratory movements within their borders. We request the OECD to analyse these challenges taking into account some experiences already available at regional and inter-regional levels and propose policy approaches to deal with them.

 

 

 

 

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