Fiscal stimulus packages varied in size as a proportion of GDP, and close to 90 per cent of the total global stimulus packages came from G20 nations. Some packages represented significant proportions of GDP (see Figure 1). For example, the People’s Republic of China announced the biggest total package, equivalent to 13 per cent of GDP, followed by Saudi Arabia (11.3 per cent), Malaysia (7.9 per cent), and the United States (5.6 per cent).
On average rescue packages represented around 1.4 per cent of GDP. Social security expenditure represented a minor portion of the total spending of national fiscal response packages. Of course, the low share of overall spending dedicated to social security measures does not mean that the role of social security should be considered insignificant.
According to a study (see Figure 2) by the International Institute of Labour Studies, which was based on 22 countries (10 high-income and 12 developing and emerging economies), social security spending (i.e. transfers to low-income families and employment measures) represented 11.7 per cent of the total spending of national fiscal stimulus packages.
The share of spending assigned to social security measures was often complemented by other aspects of the stimulus packages. For example, tax cuts to help increase the spending power of low- and middle-income households may have bolstered income from social cash transfers. Moreover, other measures helped keep the economy functioning by restoring public confidence and thereby helping to stimulate aggregate demand and therefore maintain liquidity in the economy. These measures also kept workers in employment, which has helped sustain contribution income to social security programmes.
There is a perception that governments – and public opinion – now better acknowledge the important social and economic roles played by social security programmes. Social security has played a key role as part of integrated national crisis responses and its roles in helping to alleviate social risks and to support the economy are, perhaps more than ever, readily accepted. As a result, social security administrations, and the values of risk-pooling solidarity they represent, may have emerged politically stronger. This is a positive development. However, with fiscal cut-backs in the wake of the crisis now on the horizon, the continuing uncertainty remains one of how these will impact social security budgets. While these decisions, inevitably, will be tough ones, social security should take heart from the fact that it is not only unrivalled as “the” necessary societal response to crises, but, on a day-to-day basis, is integral to the smooth functioning of society.
International Institute for Labour Studies, ILO. 2009. World of Work Report 2009.
Khatiwada, S. 2009. Stimulus packages to counter global economic crisis: A review (Discussion paper No. 196). Geneva, International Institute for Labour Studies.
Orton, I. 2010. "The impacts of the crisis on social security administrations: A review of the findings of an ISSA Survey”, in International Social Security Review, Vol. 63, No. 2.