Excellence in administration

  • ISSA Guidelines:
  • Administrative Solutions for Coverage Extension

Excellence in administration

  • ISSA Guidelines:
  • Administrative Solutions for Coverage Extension

Administrative Solutions for Coverage Extension -
Objectives of the ISSA Guidelines on Administrative Solutions for Coverage Extension

The ISSA Guidelines on Administrative Solutions for Coverage Extension aim at strengthening the capacities of social security administrations to deliver effective contributory programmes and to work towards the extension of coverage to groups that are typically difficult to cover. In the context of these guidelines, groups that are typically difficult to cover refer to a wide variety of workers, such as self-employed workers and those workers encapsulated by the concept of the “missing middle”, migrant workers and domestic workers, who are often engaged in the informal economy, and workers in the agricultural and fisheries sectors.

Different comprehensive strategies to extend coverage to hard-to-reach groups

Universal social security coverage can be achieved through a combination of: mandatory contributory programmes, subsidized contributory programmes (i.e. where part of the premium is tax financed), non-contributory, tax-financed programmes, voluntary contributory schemes, and in-kind benefits. Specific national challenges require country-specific approaches. While universal basic non-contributory/tax-financed programmes can be realized within a relatively short period of time – the development of mobile technologies, for instance, is helping to realize more rapid coverage extension – many countries continue, in a manner that mirrors the earlier expansion of social security throughout the twentieth century, to introduce and extend contributory social security programmes gradually, by first providing access to selected groups of workers and employers. In the first instance, prioritized selected groups are typically those who are most readily capable of being formally registered by administrations and who have the capacity to pay regular contributions. Thereafter, countries move progressively to improving the comprehensiveness – in scope and depth – of national social security coverage in line with labour market developments and social and economic advancement. This is often referred to as the five-step developmental approach, i.e. from no provision to the introduction of a first programme, from a limited to a greater number of covered people, from one programme to more comprehensive coverage for a greater number of risks, from a basic to a more generous level of benefits, and from fragmented schemes to more coordinated and integrated systems with due consideration given to issues of adequacy, equity, portability and long-term sustainability.

With the aim of ensuring that all members of society have effective access to at least a basic level of social security throughout their lives, the International Labour Organization (ILO) Recommendation concerning National Floors of Social Protection, 2012 (No. 202), has reinforced the existing international social security standards. It provides guidance on ensuring coverage for all, thus including the formerly unprotected, an important group among which in many countries are workers in the informal economy and their dependent family members.

Establishing and maintaining national floors of social protection is of critical importance to extend social security coverage. According to the ILO’s normative instruments, national floors of social protection should comprise at least the following basic social security guarantees, as defined at the national level:

  • Universal access to essential health care, including maternity care;
  • Basic income security for children, providing access to nutrition, education, care and any other necessary goods and services;
  • Basic income security for persons in active age who are unable to earn sufficient income, in particular in cases of sickness, unemployment, maternity and disability;
  • Basic income security for older persons.

In addition, the ILO Recommendation concerning the Transition from the Informal to the Formal Economy, 2015 (No. 204), recognizes the lack of protection of workers in the informal economy, and provides guidance for improving their social security protection and facilitating their transition to work in the formal economy.

The administrative solutions proposed in these guidelines are, in many respects, useful in the implementation of both recommendations.

All social security programmes have explicit and often multiple aims (e.g. poverty alleviation, redistribution, consumption smoothing, insurance). The pursuit of these aims determines to a large extent the financing mechanism chosen to fund the programme. While non-contributory programmes have a particularly important positive impact on alleviating poverty and have resulted in rapid basic coverage extension in many countries – especially for the female population and vulnerable and disadvantaged groups – the introduction and extension of such schemes require a commitment of fiscal resources in the long term. Programmes designed to compensate workers for income lost when they are economically inactive or, after retirement, when they have exited the workforce, are typically financed predominantly by contributions by the worker and the employer. For the benefits provided by contributory programmes, there is an expectation that the level of benefit be linked to some measure of the worker’s former earnings; according to the national economic context, this measure determines the relative (consumption smoothing) adequacy of the cash value of the benefit. As people’s living standards improve and their expectations rise, and as greater household income and fiscal space and institutional capacity permit, the scope and depth of social security coverage may expand. To ensure the sustainable realization of the multiple aims of social security programmes that comprise the national social security system, it is important to make coherent use of contributory and non-contributory financing mechanisms and to take into account the relative incentives and disincentives for workers, employers and the covered population created by the use of both contributory and non-contributory coverage mechanisms.

Opportunely for the managers of such programmes, many functions are similar. With the goal of improving administration, when comparing registration mechanisms, back-office processing, communications, service delivery, payment of benefits and appeals processes, there is much to be gained in leveraging these similarities and, where possible, compatible business approaches should be developed. Furthermore, the benefits provided by the programme should incentivize their interest in joining it.

Major challenges to extending contributory programmes

With regard to contributory programmes, the stated coverage priority of populations is often to ensure effective access to quality and affordable health care insurance. In terms of social security institutional practice, the most common contributory programmes offering cash benefits to formal economy workers are those for old age, disability and survivorship, followed closely by work injury and health care. Contributory long-term care programmes are rare, even among the most developed economies, a situation that will undoubtedly need to be addressed in the medium term, given the ageing of the population. Unemployment insurance programmes are becoming more commonplace, but are available in fewer than half of all countries in the world. In many countries, cash benefits for sickness, maternity and family allowances are financed by employers’ and employees’ contributions.

To better extend coverage and support the formalization of work, the administration and design of contributory programmes should take into account the characteristics and special circumstances of those groups that are difficult to cover (or hard to reach), which typically include those who have:

  • Frequent changes of jobs and place of work. For social security administrations, such frequent changes result in difficulties in registration, record-keeping and the collection of contributions, as well as the totalization of benefits, especially when schemes are fragmented according to groups and regions, and lack effective coordination and the support of an appropriate information and communication technology (ICT) system. In such conditions, the challenges are multi-registration and the duplication of benefit payments, which are likely to result in integrity issues and increased programme costs. Consequently, wider and improved coordination is required between different schemes.
  • Low and fluctuating contributory capacity. Such a condition makes it difficult to determine the appropriate bases for calculating contributions and benefits, which presents challenges for the full and regular payment of contributions, even for priority areas such as health care, as well as for long-term benefits such as pensions. Contribution levels and the resulting benefit structures should seek to accommodate the contributory capacity of workers with low and fluctuating (including seasonal) income flows. Incentives can be put into place, including contribution subsidies, to support the payment of contributions.
  • No formal employer-employee relationship. Employers provide a formal interface with the social security institution, often with a legal obligation regarding the registration of employees and the timely and full payment of their own contributions and those of their employees. The challenge for the social security institution is to develop appropriate administrative solutions to support workers who are not active in the regulated formal economy or who are self-employed workers, to simplify administrative processes for and to reduce bureaucratic obstacles to the registration, enrolment and payment of contributions.
  • Lower levels of literacy. The hard-to-reach population is often illiterate or may not speak the national official language, for example in the case of migrant workers. They may not have the skills to use, or have access to, modern web-based tools.
  • Lower degrees of organization compared with formal economy workers. Workers among the difficult-to-cover population are often less organized than workers in the formal economy. Where trade unions or professional organizations such as co-operatives, fishers’ associations and migrant workers’ organizations exist, the social security institution should prioritize collaboration with these bodies to act as a bridge to formalize workers through registration and the collection of contributions.
  • Barriers to administrative access. The lack of necessary formal identification documents, difficulties in communicating in the official language and with conventional communication tools, geographical remoteness, discrimination and stigma experienced by certain groups such as domestic workers, and a lack of access to the formal banking and financial services sector are some of the barriers that result in higher programme administrative costs compared with programmes covering workers in the formal economy. The challenge is to adopt appropriate and cost-effective means to improve access, for example through appropriate modern communications channels, well-equipped mobile offices and community-based, third-party organizations.