Khalid Malik: Statement at the launch of the 2014 Human Development Report

Jul 24, 2014

Honourable Helen Clark, UNDP Administrator.

Honourable Akihiko Tanaka, President of JICA.

Distinguished colleagues, friends.

It is indeed a great privilege to be in Tokyo to join in the launch of the 2014 Human Development Report on Vulnerability and Resilience.

The core message of this report is that real progress on human development is not only a matter of enlarging people’s choices-to lead a healthy, long life, to be educated and to enjoy a decent standard of living.  It is also about ensuring that these choices are secure.  And that requires us to understand - and tackle - vulnerability.

This report is particularly important for the global debate around the post 2015 development agenda.  Progress will not be sustainable unless vulnerability is addressed.   There is for instance growing consensus about getting to zero poverty. But this is not enough. We have to stay at zero, so that people do not fall back into poverty when shocks occur.

The 2014 Report shows that human development progress is slowing down and is increasingly precarious for many.  Globalization, for instance, which has brought benefits to many, has also created new risks.  Financial and food crises have swept through nations. And this year has seen the highest ever number of people displaced by violence: 45 million.

This shows that in our increasingly connected world we face new vulnerabilities. Traditionally, most analysis of vulnerability is in relation to specific risks: disasters, conflicts.  In this report, we take a wider approach, to understand the underlying drivers of vulnerabilities, and how individuals and society can become more resilient and recover better and quicker from setbacks.

The report focuses on those who are particularly vulnerable such as the poor and other disadvantaged groups and asks why some people or communities are more resilient than others, even when they face the same risks?

The Report develops two basic propositions.  One, that people’s vulnerability is influenced by their levels of capabilities – i.e. health, education, income, personal security – and their social position. The other is that failures to protect people against vulnerability are often a consequence of inadequate policies and poor social institutions.

Vulnerability is a critical concern for many people. Despite recent progress, almost 1.5 billion people still live in multidimensional poverty.   Nearly 80 percent of the world lack social protection.  About 12 percent, or 842 million, suffer from chronic hunger, and nearly half of all workers— more than 1.5 billion—are in informal or precarious employment.

And one must look more closely at these figures.  Consider poverty.  As I just said, 1.5 billion live in poverty.  But half as many again – another 800 million - live just above the poverty threshold.  A shock could easily push them back into poverty.

And more than 1.5 billion people live in countries affected by conflict.

The report builds on two underlying principles for promoting human development.

First, universalism.  Everyone has the right to education, health care and other basic services. Universalism is about pursuing equal life chances for all. Equal consideration for all demands unequal treatment in favour of the disadvantaged.

The second principle:  ‘putting people first’.  All policies, especially macroeconomic ones, must be seen as means to an end, not as ends in themselves. Policymakers must ask some basic questions: Who is benefiting from economic growth? Are people feeling more vulnerable? Are people being left behind?

For instance, in the 1980s UK household income grew 3.2% a year, but adjusting growth for income inequality reduced it to only 2.1%. Similar to the adjusted growth of what was seen as the lacklustre 1990s.

The report introduces the concept of structural vulnerabilities.  These occur when particular groups suffer disadvantage on multiple fronts. The structurally vulnerable include, for example, the poor who suffer more from many risks, such as natural disasters; women, who suffer pervasive discrimination in most countries; or older people who are more likely to be poor or disabled.

The Report also looks at how capabilities are formed over a person’s life-time and the threats that people face at different stages of their life—from infancy through youth, adulthood and old age.  It pays particular attention to sensitive phases when we are particularly susceptible.

Consider, for example, children’s early exposure to language even before they go to school. Evidence from the USA and Ecuador highlights that children’s success is connected to the quality of their home environment.  Gaps in the vocabularies of children from richer and poorer families open up even at age 3 and widen thereafter.

The transition from school to the labour force is another sensitive transition.  In many developing countries the proportion of young people has increased over the past 40 years, creating a ‘youth bulge’. But the growing numbers of youth have not been matched by increases in jobs.  By 2050, under a ‘business as usual’ scenario, the gap will continue to grow in most regions. But ambitious policies - fast track education and accelerated, inclusive economic growth - can close the gap for South Asia and reduce it substantially for Sub-Saharan Africa.

Understanding and reducing vulnerability is only one half of the report.  The other half focuses on building resilience in individuals and across societies.

First, universal access to basic social services—education, health care, water and sanitation —enhances resilience.    When benefits are narrowly targeted, the middle class is often less willing to fund them through taxes. Targeting also has high transaction costs. A broader, more inclusive approach works better and can be more cost effective.

Many have argued that you need to be “rich to finance universalism”. History shows us otherwise.

In Costa Rica, Scandinavia, the Republic of Korea and others, the first step towards universal provision of basic social services was taken at relatively low levels of income per capita; lower than South Asia today.

And yes, universal coverage can take time, even decades. However the gains from expanded coverage start to accrue long before coverage is universal.

The report also reminds us that social spending should occur when it is most needed.  But most countries don’t do this. Sweden is a notable good example here. Children’s development and brain growth are extremely rapid during the earliest years. But this is exactly when the budget allocations for public social services are currently the lowest.

Third, the report makes a strong call for the return of full employment as a central policy goal as it was in the 1950s and 1960s. Now is the time to return to that commitment. Full employment brings social benefits that far exceed the wages paid. Jobs foster social stability and social cohesion, and decent jobs strengthen people’s ability to manage shocks and uncertainty.

Fourth, protecting choices is another critical part of building resilience.  In 2009 the Social Protection Floors Initiative set out a global framework for universal access to essential social transfers and services, such as health care, primary education, pensions, unemployment protection and childcare.  This too is affordable.  Indeed, the ILO estimated the cost of such an initiative in 12 low-income as ranging from 4 to 10 percent of GDP. This is where global partnerships can be so critical.

Still, these broader universal policies of services and jobs may not be enough if social norms and laws do not protect the rights of groups that face discrimination.

And a final vital part of attacking vulnerability at the national level requires us to tackle long standing discrimination because persistent vulnerability is rooted in historic exclusions and uneven access to social services.

To do so, responsive and accountable institutions are particularly critical. Better norms and stronger collective action can help ensure that states and markets recognize and reflect the interests and rights of vulnerable people, especially the poor and minorities.

But national action can only go so far. International action is also required to address these challenges.

First, there is an under provision of global public goods—ranging from disease control to global market regulations.  This under provision permits shocks to have global reach. Managing and controlling food price volatility, global recessions and climate change are all essential public goods that markets so far are ill-equipped to provide.

Second, there are ‘structural deficits’ in governance architectures that limit the pace of progress. This needs to be addressed since no single country or community can alone resolve global market failures. Moreover, regional or global shock absorbers – such as regional financial institutions - are now pressing to reduce the transmission of shocks and diminish the potential for global contagion.

Many national measures are also easier when global commitments are in place. That is why the post- 2015 agenda must include universal public services, social protection floors and full employment as key goals.  People should, for example, not have to choose which of their children should leave school when jobs are lost.

In conclusion there is a pressing need to move towards resilient, sustainable human development. The 2014 Human Development Report makes the case this is feasible and necessary.

It is clear that markets alone will not provide adequate social and environmental protection. We need to strike a better balance between private and public interests. And we need policy norms that welcome the public provision of social protection.

Progress takes work. Many of the Millennium Development Goals are likely to be met by 2015, but future success is not automatic, and the gains are not necessarily permanent. Helping vulnerable groups and reducing inequality are essential to sustaining development both now and across generations.

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