Few would deny the revolution that the digital economy has brought to our lives. People and companies are using the power of the internet, and the networks and leverage that it brings, to transform the way they shop, sell, socialize, seek medical advice – and work. The benefits of the new economy are multiple, but the impact on social security as we know it is significant, and will require innovative responses.
Economic growth and social development
The promises and risks of technology are not new. Since the dawn of the industrial revolution, waves of change to the economy have generated new wealth, as well as upheaval for millions of workers. In response, the first social security schemes emerged as a way of ensuring the basic rights of workers, and of redressing the balance between corporations and workers.
Unprecedented economic development in the 20th century was accompanied by multiple new conventions and rights, many spearheaded by the ILO: the regulation of working hours, safety and health and union rights became the foundation of work and worker’s rights.
Above all, the advance of social security, and the protection that it provides to people and their families, is surely one of the greatest societal achievements of the last century. But it is precisely this foundation that must adapt to new developments in the world of work.
The challenge of digital disruption
During the past century, economic growth was assumed to be largely accompanied by wage growth, social progress and the development of a strong middle class. In contrast, in recent decades, inequality has grown, and real growth has not always been accompanied by increased wages and improved social conditions. Significantly, a large proportion of workers in developing countries are still excluded from formal labour markets and the protection that employment protection legislation and social security bring.
“What happens when you take ride with an Uber driver? Who pays for the driver’s health insurance and pension? What happens if the driver falls ill? And, importantly – what happens to the taxi driver who has become redundant?”
New forms of enterprises in the “gig” economy, symbolised by the taxi service Uber, have created economic activity and brought flexibility, but for many workers, this activity is low-paid and outside formal arrangements. The traditional lines between “employer” and “employee” are increasingly blurred, and franchising, subcontracting and the globalization of supply chains mean that responsibility for worker’s basic rights is diluted – or ignored.
Beyond the growth of de-standardised work are the looming transformations brought by the advances in artificial intelligence and automation. The digital economy is changing our world, and we need to find new and adequate responses if we are to ensure that we harvest the benefits for all.
Social security under pressure
The disruptive potential of current and future changes to labour markets for social security are major. Much of the financing of social security is built on the model of contributions to schemes shared by employer and employee or by the self-employed. What happens when you take ride with an Uber driver? Who pays for the driver’s health insurance and pension? What happens if the driver falls ill? And, importantly – what happens to the taxi driver who has become redundant?
“Social security will be one of the keys to ensuring that this new economy serves society, and not the reverse.”
The extent of the transformation on the world of work is only starting to become apparent. Along with part-time and temporary jobs, new forms of “atypical” work and flexible careers are becoming more prevalent. Liberating for some, “new ways of working” place increasing pressures on people, and there is a concerning growth in work-related psychosocial issues, leading in some cases to burnout and even exclusion due to invalidating mental health conditions, with consequences for both access to social security and its financing.
Transformation will require innovation in social security
The transformation of the global economy is inevitable, but the way in which we organize our society will depend largely on our collective choices. We will need to harness the potential of the digital economy for our benefit and welfare – including social security. Our systems will need to be more efficient and effective.
Our common task is to ensure that the promise of progress is both economic and social, and that growth benefits all, and not only the few.
Person-centred prevention of both work- and non-work related risks, ensuring universal protection, along with the smart targeting of benefits to the most vulnerable, better portability of rights and new forms of contribution collection are just some of the possible responses. Many countries are already complementing their pension systems by a minimum pension guarantee which based on conditions that are different from only a person’s contributions. Some others are looking for new ways of defining the financing base for social benefits, going beyond only income from work.
As the only international organization for social security institutions and agencies, the ISSA is uniquely positioned to analyse and coordinate efforts to strengthen innovation and improve the governance of social security programmes. The ISSA’s World Social Security Forum in November this year will be a privileged platform for analysing and engaging with some of these issues, and building strategies to prepare for the future.
Perhaps most of all, social security systems need to be more effectively aligned with measures that support health, employability and empowerment of individuals, to facilitate economic participation and new types of activity for all. Social security will be one of the keys to ensuring that this new economy serves society, and not the reverse.
More, but better, social security
Writing after the Great War one hundred years ago, Albert Thomas, the charismatic first Director-General of the ILO and a leading figure in the creation of the ISSA, stated that “economic and social questions are indissolubly linked, and economic reconstruction can only be sound and enduring if it is based on social justice.” His words still carry a profound relevance today.
Our common task is to ensure that the promise of progress is both economic and social, and that growth benefits all, and not only the few. I am convinced that, to achieve this, we will need more and better social security. And I am convinced that based on our nine decades of common history and close collaboration, the joint work of the ISSA and the ILO will be instrumental in this regard.
Hans-Horst Konkolewsky is the Secretary General of the International Social Security Association (ISSA). Founded by the ILO in 1927, the ISSA works with public social security ministries, institutions and agencies to improve and develop social security administration worldwide. The ISSA has 322 member organizations in 156 countries.