Universalism … really?

How the World Bank turns meanings to its advantage.

15 January by Francine Mestrum


With all the paradigmatic changes the World Bank has been promoting in the field of social policies, one element never changed in the past thirty years. Social policies were meant for the poor, governments had to find the best ways to target those who really needed their help.

The reasoning is simple: poor people, as was spelled out in its first World Development Report on Poverty of 1990 [1], were those left behind by growth and by governments. The wrong policies were applied so that poor people did not get access to labour markets and, moreover, these labour markets were made more difficult to enter because of minimum wages and other ‘protective’ rules the poor did not really care about. If one really wanted to help the poor, one had to abolish all these well-meant but adverse policies. Open, deregulated markets, at the local and the global level, were the best programmes for the poor. In its ‘Doing Business’ Report of 2013 [2], the World Bank World Bank
WB
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

still considered fixed term contracts and 50-hour workweeks as positive achievements, whereas premiums for night-work and paid annual leave were on the negative side [3].

As for the not-so-poor or middle classes, these people are said to have enough resources to buy the insurances they want on the market. Insurances are an economic sector and there is no reason why States or governments should get involved in it [4]. Solidarity is one of the words that has always been shunned by the international financial organisations.So, from its poverty reduction programmes, started in the 1990s, up to its first thinking on social protection in 2000 [5] and its new programme for ‘sharing prosperity’ in 2013 [6], the World Bank remained loyal to its ‘targeting’. When publishing its new strategy, it did not say anything about its scope, but it seems clear it does not concern a ‘universal’ social protection. ‘Well designed, well targeted social protection [7]’, ‘Resilience for the vulnerable, equity Equity The capital put into an enterprise by the shareholders. Not to be confused with ’hard capital’ or ’unsecured debt’. for the poor, opportunities for all’ [8].


ILO’s ambiguity

It has long remained the major difference between the World Bank and the ILO (International Labour Organisation) which, in all its documents on social protection, favours a ‘universalist’ approach. Other organisations, such as UNRISD (United Nations Research Institute on Social Development), are doing the same.

It was a bit disappointing therefore to read the ambiguous ‘Recommendation’ (202) for social protection floors the ILO adopted in 2012 [9]. From the preparatory documents up to the final Recommendation, the ILO said it wanted a ‘universal’ social protection, while at the same time it spoke of systems ‘for the needy’. It looks like the SPF (Social Protection Floor) does not go beyond poverty reduction and it is not a ‘universal social protection’. Being limited to the poor, SPF looks like a rights-based social assistance programme with the potential of being extended, in the long term, to a universal social security programme. The terminological confusion can lead to many divergent interpretations and gives the SPF an aura it maybe does not deserve. The ILO is playing with words like ‘universalism’ which is then qualified as being only valid for the poor or only for the guarantees Guarantees Acts that provide a creditor with security in complement to the debtor’s commitment. A distinction is made between real guarantees (lien, pledge, mortgage, prior charge) and personal guarantees (surety, aval, letter of intent, independent guarantee). . [10]

An even bigger surprise came with the adoption in 2015 of a ‘Joint Statement’ of both the World Bank and the ILO in favour of an initiative for universal social protection. [11]

In their concept note, here is what the organisations write: ‘Since the 2000s, universality has re-entered the development agenda. First it was education: universal primary education became a Millennium Development Goal in 2000. Then it was health: in December 2013, the World Bank and WHO committed to universal health coverage. Now it is time for universal social protection.

For the World Bank and the ILO, universal social protection refers to the integrated set of policies designed to ensure income security and support to all people across the life cycle – paying particular attention to the poor and the vulnerable. Anyone who needs social protection should be able to access it’. [12]

The Initiative ‘Global Partnership for Universal Social Protection’ was officially launched in September 2016. The aim is to make pensions, maternity, disability and child benefits, among others, available to all persons, closing the gap for hundreds of millions currently unprotected worldwide.

In the examples of 23 country cases that were given, however, the universalism was each time limited to just one sector: child benefits, pensions or maternity protection… These are certainly positive steps, but one can hardly call them ‘universal social protection’. [13] One could expect that at least the different elements of the Social Protection Floors are all included, but they are not.


No clarity yet

In practice, nothing much was changing. The IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org
(International Monetary Fund), the World Bank’s sister organisation, continues till today to impose targeting in social spending.

In a report of the Independent Evaluation Report of the IMF on social protection [14], it is noted that the IMF ‘consistently favoured targeted (means-tested) benefits over Universal Child Money Entitlement’. In a report on loan conditionality the ONG Eurodad also points to systematically targeting of social spending [15], and the UN Special rapporteur on extreme poverty [16] did the same. The ILO itself refers to the case of Mongolia which had introduced a universal child benefit, whereas the IMF insisted on ‘strengthening and better targeting of social safety nets’ [17]

The IMF is not the World Bank, though it would be the very first time that the two institutions of Bretton Woods differ on such a very important strategic point.

The Sustainable Development Goals, adopted by the UN General Assembly in September 2015, do mention for several targets a ‘universal access’, such as for sexual and reproductive health care services, for health coverage, for safe drinking water, for energy, etc. [18] It does not, however for social protection: ‘Implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable’ (Target 1.3).

In practice, then, nothing much changed. So, while the joint statement of WB and ILO had no immediate consequences, people continued to wonder if anything really had changed, and if so, who had changed? The World Bank? The ILO? Now that an international conference is going to put meat on the bone of this initiative, the time has come to take a closer look at it.


Looking at labour

In a document of 2012, the World Bank did add ‘labour’ to its new strategy of ‘sharing prosperity’. ‘Employment laws are needed to protect workers from arbitrary or unfair treatment’, says the World Bank. It claims its indicators are consistent with ILO conventions, though they do not cover its Core Labour Standards. But ‘upholding Core Labour Standards is central to protecting workers and improving their productivity’. [19] Once again, while this is a huge step forward for the World Bank, it wants ‘to strike the right balance Balance End of year statement of a company’s assets (what the company possesses) and liabilities (what it owes). In other words, the assets provide information about how the funds collected by the company have been used; and the liabilities, about the origins of those funds. between protection and competitiveness’. This is one of the first texts in which the World Bank implicitly accepts trade unions and collective bargaining, included in the Core Labour Standards. The same happens in its World Development Report 2013 [20] on jobs, where it is said that ‘collective bargaining does not have a major impact’ [21], as well as that ‘there is little evidence on the impact of trade unions’. [22] Though it also adds that ‘there is no consensus on what the content of labour policies should be’. [23]

More clarity is given in the latest World Development Report of 2019 on the future of work. [24]

In fact, what we find in this report, are the same objections as in 1990 against social insurances, though framed in a different way. Because yes, the World Bank defends ‘universal social protection’, but ‘the Bismarckian model is withering’. [25] ’More universal approaches are desirable’, but they demand significant additional resources. [26] And it goes on saying that a contributory approach is not good for developing countries, since there are no stable jobs, since it is unfit in view of the nature of work … ‘re-thinking of this model is a priority’. [27] For social assistance however, the World Bank accepts to think of a ‘progressive universalism’. [28]

Not more than a couple of sentences, but they reveal the thinking of the World Bank.

We can summarize it as follows. The World Bank is in favour of ‘universal’ minimum social assistance, a new way of saying ‘poverty reduction’, a non-contributory minimum pension, minimal health care, help for the disabled, universal primary education … Exactly the points that are mentioned in the ILO’s social protection floors Recommendation, so there are no differences with the ILO on this point.

The World Bank is not in favour of social insurances linked to the labour market, it can accept some minimal presence of trade unions, though the acceptance of the core labour standards – with fundamental economic and social human rights – is still is a bridge too far.

Once again, we must conclude that the World Bank is not concerned at all about people’s rights, but only about labour costs.

If the World Bank accepts the principle of universal social protection, it will have to be paid by the State, not by the companies. Its funding will come from taxes, not from social contributions.

In other words, its thinking is not so very different from what some NGO’s are proposing in terms of ‘guaranteed minimum’ for all, whether it be in cash (basic income) or in social services. Cash, such as the highly promoted ‘CCT’s’ (conditional cash transfers) is very useful because it can allow the poor to buy services from the privatised health care or school system.

For companies who do want to do something more for their workers, the World Bank will have no problems at all with the ‘occupational pensions’ or other types of services, such as health care. These services, at any rate, can also be bought on the market and will only raise the labour costs when and if the companies think they can allow it. It is not an obligation for all and the State is not involved.

We can start to see, then, the future the World Bank is preparing: with the ILO, it will promote a ‘universal social protection’, a minimum for all so that all can survive. It is totally de-linked from the labour market and does not concern wages or social contributions. The World Bank thinks that at any rate, stable jobs will more and more disappear, if not jobs as such.

Companies will not have to bother about social policies. If they want to do something for their workers/employees, they can, but they do not have to. In the same way as many big companies have stopped paying taxes, they can work ‘hors sol’, looking for the best environment and the lowest wages. They do need the State of course, in order to make ‘rulings’ (to limit their tax obligations), to preserve property rights, to pay minimal or no social benefits to their workers, to enhance competition.

As for workers, they have no reason to address the companies anymore with their social demands. They can directly address governments if they are not happy with what they get. Trade unions may try and negotiate for better wages and better working conditions, surely, but their role will be seriously diminished.

What this means is the end of welfare states implying a mutual strengthening of economic and social policies. This process has been started several decades ago and now finds its more or less final shape. Companies can produce, but do not have to care in any way about the reproduction of labour.


Conclusion

There is no reason to think that this is the reality that will unavoidably be prepared by the ILO and the World Bank. The major advantage of discourse analysis is to reveal the hidden messages in documents that do show a certain continuity, even if, at first sight, they are contradictory. These hidden messages and the political projects they reveal can be resisted if social movements are aware of them and can get organised. It means the resistance can be organised as from today, one does not have to wait till the triumphant announcements about the ‘universal social protection’ will be made. As we have seen, however positive it would be to give all people access to minimal social benefits, it may be a very negative move in taking away from workers their economic and social human rights, a direct way to put pressure on companies to respect their workers. Several movements have indeed reacted already to the proposals of the latest World Development Report. [29]

In the new context that is being shaped right now, with major changes on the labour markets and with a threatening climate crisis, much has been said and written about the role of companies. Is their role limited to making profits for their owners, the shareholders? Or do they have a broader responsibility for the environment and for society? The World Bank seems to have made its choice, but it is hard to believe this choice will be accepted without any debate

What it comes down to is that companies are given a free hand for (more) exploitation of workers, whereas they can shift to the State and public funds the responsibility for guaranteeing the re-production of their labour force.

The current way companies have been shunning away from their responsibilities towards society and the environment – avoiding taxes and social contributions, as well as through the characteristics of their activities, especially in the extractive sector and with global value chains – is one of the major causes of the fiscal restraints of States. Universal social protection means that social protection, as part of a coherent social process, should be at the benefit of all, that is, the whole of society. Taxes are needed for providing a whole series of social services that gives meaning to ‘society’ and are crucial for its sustainability. This automatically means that all of society, including the rich and owners of capital, have to contribute by paying. We can never have decent work with decent wages and decent social protection if we do not bring capital back in.

It is certainly true that our welfare states need a serious effort of renewal in order to fit societies and labour markets of the 21st century. But this cannot be done by giving a free hand to companies and burden the already impoverished States with social protection. Because in the end, if only citizens pay direct and indirect taxes to receive in return a minimal social protection, the world of capital escapes, while production and re-production cannot and should not be dissociated. By separating production and reproduction, we go back to the early stage of capitalism and industrialisation where risks were considered to be individual, outside of the production process. This new philosophy is making an end to the acceptance of collective responsibilities.

Global Social Justice has been working with its partners and allies to conceptualize another philosophy of social protection, one that is not compatible with the World Bank’s one. We think that social protection is a major element of a re-production process, and that it cannot be separated from the production process. It must play a role in the shaping of the other world we want to promote. As production cannot be separated from re-production, social protection cannot be separated from all the other sectors we are concerned about, from climate justice to democracy and peace. Social protection should be more than the minimal benefits in case of illness, disability or old age. It also consists of labour rights, assistance to the poor and social services. If we really want to promote ‘another world’, we must make the links between these different topics, not separate them. The economy is part of society and should be embedded in it, as Polanyi explained so brilliantly, and it is society we want to make more coherent.

In the end, then, what it is all about is the objective we want to give to social protection, something totally apart from the economy while all the same enhancing it and promoting growth, a help against market failure, or an instrument to really protect people, give them more security and contribute to social justice and system change.

Social protection is a human right, if we want to resist the further neo-liberalisation of our policies and societies, with an autonomous economic sector and a State to cover all people’s needs, we have to organise a debate about social protection.

What the World Bank is doing is, through the positive message of a ‘universalisation’ of social protection, fundamentally changing the old philosophy of welfare states, thereby reducing the economic and social rights of workers and breaking the necessary link between production and re-production.

The French philosopher Bruno Latour writes in his latest book ‘Où atterrir?’ (Where to land?) that since the end of the 1980s, the death of communist regimes, globalisation and the denial of the climate crisis, elites have stopped to be pretending to lead the world. What they are now trying to do is to hide from the rest of the world. They do not believe anymore in the existence of a common world we have to share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. . Your world may be threatened, but ours is not, is the reasoning. We do not belong to the same world anymore. Hence the rising inequalities, the rejection of migrants and refugees, the withdrawal from the climate agreement. In a way, this is exactly what is also behind the World Bank’s reasoning. Companies want to create wealth and consider this wealth to be theirs and not to be shared with anyone. It is the creation of a split word that, in the end, can never be sustainable.



Footnotes

[1World Bank, World Development Report 1990, Poverty, Washington, The World Bank, 1990.

[2Doing Business 2013, Washington, World Bank, 2013.

[3Doing Business, 2013, op.cit., p. 216.

[4World Bank, World Development Report 1997, The State in a Changing World, Washington, The World Bank, 1997.

[5Holzmann, R. and Jörgensen, S., Social Risk Management: A new Conceptual Framework for Social Protection and Beyond, Social Protection Discussion Paper n° 0006, World Bank, Washington, 2000.

[6Development Committee (Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries) DC2013-0009, September 18, 2013, World Bank Group Strategy.

[7World Bank, Resilience, Equity, and Opportunity, Washington, The World Bank, 2012, p. XII.

[8World Bank, 2012, op. cit., p. 1.

[9ILO, Recommendation (202) on Social Protection Floor, 2012.

[11ILO/WBG, Joint statement by World Bank group president Jim Yong Kim and ILO Director General Guy Ryder, 30 June 2015.

[12ILO/WBG, A shared mission for universal social protection, Concept Note, https://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/documents/genericdocument/wcms_378996.pdf.

[13Global Partnership for Universal Social Protection to achieve the Sustainable Development Goals, 21 September 2016, https://www.social-protection.org/gimi/gess/NewYork.action?id=34.

[14IMF/IEO, The IMF and social protection, 5 July 2017.

[15Eurodad, Unhealthy Conditions, IMF Loan Conditionality and its impact on Health Financing, Brussels, 2018.

[16UN, Report of the Special Rapporteur on Extreme Poverty and Human Rights, Res. A69/297, 11 August 2014.

[17ILO, World Social Protection Report 2017-2019, Geneva, ILO, p. 16.

[18United Nations, Sustainable Development Goals, https://sustainabledevelopment.un.org/?menu=1300.

[19World Bank, 2012, op.cit., p. XVII.

[20World Bank, World Development Report 2013, Washington, The World Bank, 2013.

[21World Bank, 2013, op. cit., p. 26.

[22World Bank, 2013, op. cit., p. 263.

[23World Bank, 2013, op. cit., p. 25.

[24World Bank, World Development Report 2019, Washington, The World Bank, 2018.

[25World Bank, 2018, op. cit., p. 118.

[26World Bank, 2018, op. cit., p. 109.

[27World Bank, 2018, op. cit., p. 113.

[28World Bank, 2018, op. cit., p. 119.

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