A new International Labour Organization (ILO) working paper, “Financing Gap for Universal Social Protection: Global, regional and national estimates and strategies for creating fiscal space,” reveals that low- and middle-income countries need to increase spending by an estimated US$1.4 trillion to achieve universal social protection. This amount represents 3.3% of the combined annual GDP of these countries. However, the challenge is particularly severe for low-income countries, where the financing gap equates to a staggering 52.3% of their annual GDP.
To ensure universal social protection, these countries must boost government spending by 10.6% of their annual expenditure, leveraging domestic resources such as taxation and social security contributions, and improving sovereign debt management. For low-income nations, closing this gap requires quadrupling their annual government expenditure, highlighting the critical need for international solidarity. The paper suggests that development assistance for these countries should more than triple and focus exclusively on social protection.
Regionally, Africa faces the highest financing gap at 17.6% of GDP, followed by the Arab States at 11.4%, Latin America and the Caribbean at 2.7%, Asia and the Pacific at 2.0%, and Europe and Central Asia at 1.9%. The paper underscores the importance of universal social protection in mitigating the impacts of climate change, proposing that international climate financing should support the adaptation of social protection systems in these regions. The study estimates the investment needed to provide universal coverage of essential benefits, including healthcare, for vulnerable populations across 133 low- and middle-income countries.
