SPACE - Social Protection in the COVID-19 Recovery: Opportunities and Challenges (September 2020)

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COVID-19 has triggered a global economic slowdown and it seems unlikely there will be a rapid rebound in growth and a V-shaped economic recovery. Other scenarios appear more likely, the worst being an L-shaped recession with growth not recovering for several years. The pandemic has exacerbated pre-existing vulnerabilities (‘COVID-19-intensified’) and created new vulnerabilities (‘COVID-19-specific’).

Social protection measures have been widely used to help address economic impacts but have varied in type and coverage (e.g. cash transfers have reached 8 percent of people in low vs 87 percent in high income countries); many measures are temporary and a large proportion of newly poor and vulnerable remain excluded.

Governments can address existing and new social protection needs while ‘building back better’ with a focus on inclusive and resilient long-term systems. Such efforts should be proactive and systematic, understanding current and future risks and enhancing social protection systems accordingly, rather than reactive ‘fire-fighting’ of each individual shock.

The pandemic presents a narrow opportunity for bold reforms. These will require attention across governance, coordination, administrative structures and capacities, and delivery systems, together with sustained political will to deliver the necessary fiscal space. Yet clearly trade-offswill be necessary, given the depth and scale of social protection needs, and the levels of investment required.

Our recommended priorities for the medium term – defined loosely as the period from the present day to the end of 2022 – include the following:

• Continue to build more comprehensive social protection systems and joined up approaches within the sector (across social assistance, insurance and labour markets) and with humanitarian response.Identify new sources of finance while ensuring current financing is maintained in the face of intensified competition for limited funds.

• Progressively expand social assistance coverage to include both pre-existing and newly poor and vulnerable populations, and ideally create a broader base of potential beneficiaries, to facilitate expansion and contraction in response to future crises.