Under crisis conditions, providing social assistance and paying security benefits to unemployed workers and other vulnerable recipients act as social and economic stabilizers. Such actions help people to avoid falling further into poverty, and also limit the fall in aggregate demand, thereby curtailing the potential depth of the recession.

A potential response to a crisis is therefore to improve social assistance cash transfer schemes, widen eligibility conditions and increase benefit amounts of social security schemes where such schemes exist, as well as introducing new schemes, such as employment guarantee schemes. While cash transfer programmes may help adress short-term crisis effects in terms of poverty and a lack of social security, social transfers are most valuable as a systemic component of an overall national poverty reduction strategy. The Asian crisis of the 1990s showed that building a system of basic social security also enhances national crisis preparedness.

In particular, in countries that currently lack strong social security and income support programmes, a basic package of state-financed social transfers - as a part of a wider social floor - would mitigate the poverty fall-out of the crisis while at the same time providing a significant stimulus to the economy.

In the framework of its Campaign for the Extension of Social Security to All and as part of its constitutional mandate to promote the Extension of Social Security to All, the ILO is promoting a basic and modest set of essential social transfers that could ensure:

• universal access to essential health services for all residents;
• income security for all children through child benefits;
• modest income support for working-age poor combined with employment guarantees through public works programmes; and
• income security for the elderly, the disabled and families that have lost the main breadwinner, through basic tax-financed pensions.

Our actuaries and economists have shown that such a set of minimum guarantees is affordable at least partially in almost all countries.

According to an ILO costing study of 12 developing countries, the initial gross annual cost of an overall basic social protection package (excluding access to basic health care that to some extent is financed already) should be in the range of 2.3 to 5.5 per cent of GDP in 2010. Individual elements of such a package appear even more affordable. The annual cost of providing universal basic old-age and disability pensions, for example, is estimated in 2010 at between 0.6 and 1.5 per cent of GDP in the countries considered.

In some low-income countries, this may still require a joint effort between the countries and the international donor community for a transition period. However, even low-income countries may be able to increase domestic resources or reallocate some of their existing resources over the next decade.

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