To Meet Challenges, Social Security Systems Need to Be Proactive

KonkolewskySocial security is a key factor for ensuring the sustainable economic development of any nation, and Kazakhstan is no exception. To discuss the current trends in providing social security to global citizens, The Astana Times spoke to Mr. Hans-Horst Konkolewsky, Secretary General of the International Social Security Association (ISSA).

You’ve been theSecretary General of the prestigious InternationalSocial Security Association(ISSA)since 2005. Could youhighlight the maingoals, objectives and current prioritiesofthe ISSA?

The ISSA is the principal international organisation for social security institutions, government departments and agencies. The ISSA is one of the oldest international organisations (founded in 1927), and today has more than 340 members in 159 countries, including three members from Kazakhstan: the Ministry of Labour and Social Protection; the State Social Insurance Fund and the Centre of Payment of Pension Benefits.

Our constitutional mandate is to promote and develop social security worldwide in order to advance the social and economic conditions of the population on the basis of social justice. This vision is at the heart of all our work, which is aimed at supporting the extension of social security in all regions, and to develop social security where it already exists. We give high priority to supporting excellence in administration, to enable effective and efficient social security systems, at the service of the well-being of people.

Our Association has developed and is implementing a new concept for social security at the global level, which we have called Dynamic Social Security. This concept includes proactive and innovative approaches to ensuring accessible and sustainable social security systems that not only provide protection, but also encourage prevention of social risks, support reintegration of recipients of social benefits, and contribute to the socio-economic development of countries.

To further promote our understanding that successful administration is a prerequisite for dynamic social security programmes, we have recently published a series of internationally-recognised professional guidelines for administrators in social security systems.

Mr. Konkolewsky, what does social security represent today?

Throughout human history, the problem of providing protection to those in need has been a major concern. Continuous evolution of such protection from family support mechanisms to social solidarity suggests constant search for means in order to meet this challenge adequately. Today, social security systems have become an inalienable part of modern societies.

Professionally speaking, social security is defined as any programme of social protection established by legislation which guarantees a certain level of income security for people when faced with unforeseen circumstances (social risks) like old age, survivorship, incapacity, work injury, disability or unemployment. Social security may also include supporting maternity and families with children, as well as medical care.

Speaking more broadly, the ISSA considers social security a fundamental human right for all people and workers, and one of the most significant global social achievements of the last century, which is enshrined in Article 22 of the Universal Declaration of Human Rights.

In practice, the form and scope of social security systems vary a great deal across the world, and depend on the historic, economic and cultural context as well as the political choices of each country. However, it is important to emphasise that social security is developing in all regions, and more people benefit from national systems of social protection than ever before.

Mr. Secretary General, what is the role of social security and what are the key challenges it faces?

In addition to providing income security, modern social security systems also invest in prevention, and they support health, facilitate employment and help empower people.

Moreover, social security systems represent a major component of modern economies: for example, public social spending is on average 22 per cent of GDP in Organisation for Economic Co-Operation and Development (OECD) countries, and this is rising. But social security should not simply be considered as expenditure, on the contrary: evidence confirms that spending on social protection is an investment in the human capital and development of a country and a major factor of social peace and economic development.

The ISSA has accumulated a considerable number of good practices showing that strong engagement with social security can become not only the catalyst for economic growth but also a source of innovation affecting many areas of a modern society.

It goes without saying that social security systems cannot exist in a vacuum. They depend on external factors and therefore they will always face challenges, related primarily to global economic and social trends.

For example, the labour market, which is closely linked to social security systems, is changing. In some regions, there has actually been an increase in the proportion of the population working in the informal sector in recent years. Youth unemployment remains an issue for many countries, especially in the wake of the economic and financial crisis, and may be further exacerbated in the future.

Another example is related to new healthcare challenges. The increase in non-communicable diseases, such as diabetes and cardiovascular diseases, often related to changes in lifestyles, is placing growing demands on healthcare systems and disability provision.

Perhaps the most important external challenge relates to long-term demographic trends, such as population ageing, the reduction in birth rates and changing family structures, which affect all regions. These changes, which are closely linked to improved life expectancy and better health care, raise fundamental issues regarding the sustainable financing of retirement benefits.

There are other examples of challenges which impact social security, including natural catastrophes caused by hurricanes, floods, tsunamis or man-made industrial accidents.

For example, the tragic Chernobyl catastrophe of 1986, which resulted in huge medical, ecological and social-economic problems for the entire region, affected some five million people, particularly in Belarus, Russia and Ukraine. In response, special social support programmes and pension programmes came into existence in those countries. The main administrators of these programmes are social security bodies. I know that Kazakhstan also provides social support to people who were exposed to radiation during Soviet nuclear tests.

Social security systems around the world often have to deal with extraordinarily complex issues, affecting the livelihoods of hundreds of millions of people, and social developments, combined with global economic volatility, have exacerbated the challenges. In this context, the situation requires social security administrations to innovate, to transform their provision of benefits and services for citizens, and to constantly improve and modernize management techniques and the appropriate use of information technology.

Mr. Secretary General, Kazakhstan is developing its social protection system. How do you assess the social security in our country and what international practices would be useful to adopt?

After the disintegration of the Soviet Union 23 years ago, national social security and pension systems of the CIS countries went through several, often difficult, stages of reform. Today, Kazakhstan has emerged as a regional leader in Central Asia with its unique social security model which features both an individual account pension scheme and universal social security for all. I am sure many ISSA member organizations would be interested to learn from this experience.

For instance, the introduction of the mandatory fully-funded and privately managed pension system in 1998 was considered by many experts as a radical move away from a Soviet paternalistic model, in which the state carried responsibility, to a system in which a person was obliged to take nearly full individual responsibility for a number of social risks and for his or her future. However, a few years after, it became apparent that a person’s social security cannot be left at the mercy of market performance.

As a result, the State Social Insurance Fund of Kazakhstan was created ten years ago, with the aim of enhancing social security protection of the most vulnerable groups of the population by coveringthe risks of disability, survivorship, unemployment and maternity.

I recall that the ISSA welcomed this important reform of 2004, as it confirmed that that the role of the state in social security in your country had been revisited. ISSA member organisations, especially from the Latin American region, have studied this experience and followed the same trend by strengthening the principle of solidarity in the design of their national programmes.

I would like to take this opportunity to congratulate the Government of Kazakhstan on the 10th anniversary of the State Social Insurance Fund, and to personally congratulate Mr. Almas Kurmanov, the Chairman of the Fund on his recent election as Member of the ISSA Bureau, which is the governing body of our Association.

Modern social security also owes a lot to an important development which was born in your country. As I told you earlier, the ISSA concept of Dynamic Social Security is based on proactive approaches where the prevention is a key. And actually, your country was the cradle of the recognition of the value of prevention for health protection. By this I refer to the landmark World Health Organization’s Declaration of Alma-Ata of 1978, which called on governments and health stakeholders to protect and promote the health for all people. The Declaration was the first international commitment underlining the importance of primary healthcare based on a principle of prevention. I believe that the principle of prevention is highly relevant and equally important for all social security branches.

As for my advice regarding what would be useful for Kazakhstan to further strengthen its social protection system, I would encourage you to look at the experience of mutual benefit societies. These programmes may allow enhancing coverage of so-called difficult-to-cover groups of population such as migrant workers, self-employed, domestic or rural workers via simple and cost-efficient mechanisms that might be easily adapted in your country. Mutual benefit societies are particularly recognised in Western Europe and some Asian, African and Latin American countries, as a dynamic tool to provide supplementary health protection.

I would also suggest nurturing the promotion of a social security culture from an early age via education programmes. This is an effective way to encourage responsible work-place attitudes and healthy lifestyles later in life, which are critical for the sustainability of social security. A number of good practices could be borrowed from Uruguay and Canada.

Mr. Secretary General, at the end of 2013, the ISSA held its third World Social Security Forum, in Doha, Qatar. What were the key messages of this major event for the global community? 

The WSSF was an exceptional event for social security and for the ISSA in many ways, and I would uphold two key outcomes of the Forum.

Central and spectacular moment of the Forum was the opening of the ISSA Centre for Excellence (centre on improvement of the management standards in social security), new major strategic initiative for the ISSA, introducing professional standards, enhanced by a range of support services, to promote improvements in governance, performance and service quality for social security administrations.

The Forum highlighted the critical importance of high-performing administrations as a basis for effective delivery of social security, and confirmed the power and uniqueness of the ISSA – as a community of professionals committed to excellence – to promote and develop social security worldwide.

The Forum also recognized that there is a “paradigm shift” that is underway in the form and scope of social security, with a growing political consensus on the necessity to provide all people with adequate social protection, a shift to a more holistic view of social security that encompasses protective, proactive and preventive approaches, and recognition that social security is an investment, and not a cost, for societies. The participants recognised that we cannot develop modern societies without adequate social security for all people.

It is probably not an exaggeration to say that social security programmes are experiencing a time of accelerated change. The economic crisis in many countries has resulted in sometimes difficult restructuring and cuts to social protection. Simultaneously, recent years have seen what is probably the largest extension of social security in history, as many tens of millions of people are gaining access to pensions, healthcare and other basic social security, especially in the emerging economies including Brazil, China, South Africa and India.

The Forum reflected this complex and evolving situation, but the main message that I would like to share is one of realistic optimism, as social security administrations witness and measure the extraordinary benefits of their efforts for people, societies and economies. We need to celebrate this fact, and in each national context, strive to develop and improve the benefits of social security, for today and for future generations.

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