chapter  12
53 Pages

Extending social insurance to informal wage workers

The argument often made is that the low and low-middle income countries are too poor to be able to offer social security to its population. The welfare state came into being in the advanced capitalist countries during the twentieth century as their incomes rose rapidly, and that it was rising GDP that made it possible to increase social spending. However, what is interesting is that the rise of social spending went hand in hand with rising national incomes, it did not follow it. Social spending began rising after 1880. In the late nineteenth century about 1870, the average for general government expenditure in Europe as a per cent of GDP was around 10.8 per cent. During post-First World War it had risen to 19.6 per cent, and by pre-Second World War (1937) to 23.8 per cent (Tanzi and Schuknecht, 2000). The latter are also the shares of government expenditure in GDP in most developing countries under discussion here (closer to the low teens in sub-Saharan Africa, but around the low twenties in the rest of the developing countries) – and should rise with economic growth. There is, little in history to justify the argument that social security in the twenty-first century must remain the preserve of the advanced capitalist countries.