Let’s take a quick break from the empirical literature to focus more deeply on practical action: are countries scaling up social protetion to respond to inflation? But by how much? In what form? At what cost? For whom, and for how long? The third version of our tracker helps answering these question by providing global, regional and country-level data on social protection and related responses to price shocks.
Here are some headline numbers about what we know:
609 x 158
A total of 609 social protection and related measures to counter inflation have been announced or implemented across 158 economies. This represents a growth in programs by 62% since July 2022 and almost a threefold increase since April, when our tracking was launched.
36%
Subsidies are the most common measure in terms of number of programs available, claiming 36% of social protection responses to inflation. There are at least four types of subsidy programs, including related to fuel, food, fertilizers, and various forms of fees. The latter subsidies are the most used form (39% of total subsidies); about 47% of such fee subsidies concern utility bills discount. Fuel, food, and agricultural inputs account for 31%, 20% and 11% of total subsidies, respectively. (As we will see, however, subsidies are not the instrument with highest coverage or spending.)
76%
Social assistance accounts for almost a quarter of responses, 76% of which is provided in the form of cash transfers. Unconditional cash transfers are reaching large shares of the population in select countries, such as 90% in Iran, 52% in Poland, 48% in Italy and 38% in Pakistan. In-kind transfers include energy and fertilizer coupons (e.g., Croatia and Mauritius) and vouchers (e.g., France and Romania). Other programs include school feeding (e.g., Cape Verde), social pensions (e.g., Poland and France), and public works (e.g., Malawi and Niger, which expanded pre-crisis programs horizontally).
22%
Tax-related measures account for 22% of the global response to high prices with 134 measures across 71 economies. Most of the tax responses (87%) pertain to indirect taxes (e.g., VAT) and the remaining relate to direct taxes (e.g., income tax). These measures relate to some forms of adaptation, such as exemption of tax, reduction of tax, tax rebate, increase in the base/bar for tax-free allowance (i.e., increase in the tax exemption limit), deferral of payment, and suspension of annual indexation.
10%
Trade measures represent 10% of total responses and are implemented in 44 economies. These measures mostly reflect import/export restrictions (84%), mainly focused on food items. A slimmer share involves restrictions on the export of livestock, animal feed and fertilizers.
4% x 2
Active labor market policies and social insurance account for 4% each. Most activation programs (present in 17 countries) relate to wage increases (i.e., minimum wage and public sector wage increases), especially in high and upper-middle income countries. Select countries are increasing old-age pensions (e.g., Egypt) and reducing insurance contributions (e.g., UK and France).
43%
Both universal and targeted programs were widely used during the crisis. Most programs are provided on a targeted basis, but a substantial share (43%) is provided universally. A wider share of universal programs (mostly taxes and subsidies) is found in Latin America and Sub-Saharan Africa (with the lowest levels recorded in South Asia). Two countries (Germany and Portugal) offered universal social assistance benefits.
900M
Social protection programs have or are planning to cover 900.1 million people. Such a number includes the program with the highest coverage per country (irrespective of whether it is a subsidy or social assistance intervention). Disaggregated data by measure shows that subsidies reach nearly 329.5 million people, while social assistance covers 722.5 million individuals. Among social assistance programs, cash transfers reach 622.6 million individuals in 36 countries.
$328B
Based on 90 countries or territories with available data, a total of $328.2 billion is being invested in social protection responses. Most spending is directed to subsidies ($133.3 billion), followed by social assistance ($126.7 billion) and tax measures ($47.7 billion). A total of $14.1 billion and $6.5 billion were dedicated to social insurance and the labor market, respectively. In terms of spending as percentage of GDP, data for 90 countries spent shows an average investment of 0.8% of GDP. Spending ranges from 0.12% of GDP in North America to 1.78% in MENA – and from 0.62% in HICs to 1% of GDP in LMICs. Spending on subsidies accounts for an average of 0.59% of GDP, slightly higher than the 0.46% of GDP devoted to social assistance.
1/5
The size of social assistance transfers represents about one-fifth of median income. In terms of adequacy of support, social assistance transfers account for a higher portion of average median daily income (22%) compared to subsidies (12%). Information on adequacy is available only for 20% of total measures. Most transfers take the form of one-off payments (52%, or 76 out of 146 programs with data) compared to monthly instalments (38%, or 56 programs out of 146 measures with data). Daily, bi-monthly, quarterly, and yearly account for 10% of the total measures with data combined.
449
Enjoy the 449 pages inclusive of data, trends, descriptive statistics and country-level interventions. Of course, feedback on our “living paper” is welcome as we prepare v.4 of the tracker!
Next week I will resume the normal newsletter with plenty of empirical studies and publications waiting to be explored. Happy weekend everyone!