Closing the Gap: Safety nets where the needs are greatest

Ministers, colleagues, ladies and gentlemen. 

First of all, I would like to thank the Bank for the invitation to this Round Table to discuss the broad, complex and vital issue of Social Protection.  I would particularly like to thank the staff of the Human Development Network, headed by Mrs. Tamar Atinc, and congratulate you with the well made strategy for the next decade, on Social Protection and Labour. 

Progress in poverty reduction has been substantial on a global level, but inequality has also increased in many countries. The impact of growth on poverty reduction has been disappointing. In too many countries we are witnessing jobless growth. And in many countries the growth has been commodity drive. We do not see the same kind of distribution and job growth needed for this to be fair growth. Populations are continuing to grow fast, with an enormous need for jobs in the years to come. Financial turmoil, as well as volatility in food and fuel prices has increased the vulnerability of populations.  I find the strategy broadly relevant as a guide and framework for meeting these challenges and intensify efforts and progress towards poverty eradication. 

I would like to recommend a book that was really enlightening to me. It is a book called "Spirit Level: Why equal societies almost always perform better”. The key aspect of the book was to look at trust. If you look at countries where inequality is small, then the trust is predominant.  "Trust" means that we support each other. It means that when somebody needs help then we help the person, because we feel that we are in the same boat.  And trust is key to good societies and their development. Needless to say, trust is important for markets to function, because if you don't have trust, then you don't have well functioning markets. 

We know from broad experience that better social protection systems are important beyond their main purpose - they are also likely to promote economic growth.

And, we know from broad research that social security transfers’ adverse effects are close to non-existent in the context of poverty – the transfers’ main effect is on the contrary, to increase the opportunity for work. 

So, does developing safety nets in poor countries require a different approach than what we have in many of the rich countries? Yes, I believe it does. Not only in design and approach, it also calls for “smart economics”. The Bank has showed us how small contributions builds capacity to take up bigger loans, and gives positive effects on investment in social safety nets in many countries. I would like to share with you some of the lessons about growth in Norway. Everyone knows that Norway is fairly rich from oil revenues. But actually the prosperity in Norway did not start with the oil revenues. It came from a combination of factors in place. Our society was built on a strong social dialogue, where productivity increase led to both growth in wages and growth in profits. Also, we had a decrease in inequality in Norway, from 1938 up to 1989.This also links up to the fact that we had a strong gender agenda in Norway from the 60’s through the 70’s and onwards – an agenda that also my mother took part in. As a matter of fact, if we had the same amount of women working as the average OECD level, this would be a loss of income in Norway equal to the total gains of our pension fund, the oil revenues. So, having a clear gender agenda is extremely important. 

So what are the opportunities and future role for the development-partners and the World Bank? I believe encouraging a strong focus on the core messages in the new strategy, is a common endeavour. We need to push for building social safety nets in more countries. It is good for growth, it is good for equality, it is good for the welfare of people and thereby fulfilling fundamental human rights. We also need a broader debate, as a social safety net is only one part of the building blocks needed to create more inclusive growth, with more equality. And more equality leads to better societies for all.