Poverty alleviation through

social and economic

transformation
Paper prepared for the Employment
Working Group under the 2020 Russian
presidency of the BRICS

International Labour Organization

September 2020
Contents
Introduction ......................................................................................................... 1

I. Trends in poverty alleviation globally and in the BRICS .............................. 3

Poverty and labour income trends in the BRICS ................................................................ 3

II. Social and economic transformation for poverty reduction: the

employment-social protection-poverty nexus ................................................. 8

The role of economic transformation and productive employment to reduce

poverty ............................................................................................................................................ 8

The importance of social protection systems, including floors, for reducing and
preventing poverty throughout the lifecycle ..................................................................... 15

III. Policies and measures for poverty reduction in BRICS countries ........... 22

Recent examples and good practices from the employment side .............................. 23

Recent examples and good practices from the social protection side ......................30

Extending social insurance coverage to uncovered groups of workers ....... 31

Strengthening tax-financed mechanisms to ensure a social protection floor

for all ..................................................................................................................... 33

Conclusion: The case for a more systematic coordination between

employment and social protection policies for poverty reduction .............. 37
Abstract
The BRICS countries have made substantial progress in alleviating poverty over
many decades, spurred on by, on the one hand, rapid economic growth in some
cases, and on the other hand, policies, including employment and social
protection measures, which have helped lift millions of people out of poverty.
Nonetheless, disparities remain. As countries have become richer, relative
poverty has emerged as a greater challenge than absolute deprivation (though
pockets of the latter do persist). Income inequality is a key challenge for the
BRICS. Against this backdrop, the COVID-19 crisis has had a severe impact on
economies and labour markets around the word, which threatens to reverse
some of the important gains made in recent years. Building on the successes in
the BRICS countries in tackling poverty, further efforts are needed in response to
both the immediate impact of the COVID-19 crisis and the longer-term
challenges, especially through more integrated policy approaches, with a strong
focus on employment and social protection measures, as a means to further
eliminate poverty and reduce income inequality.
Introduction

The BRICS countries have made significant progress towards reducing poverty
over a number of decades. The process of economic transformation has, in some
cases, spurred productivity growth and wages, helping lift people out of poverty.
At the same time, economic growth and the functioning of labour markets have
not always been inclusive enough to keep people out of poverty. For this reason,
redistributive policies, including social protection measures, have played a
central role in tackling inequality and reducing poverty. However, despite these
successes, challenges and gaps remain, especially in terms of relative poverty
and inequality, including for specific groups (e.g. informal workers and
businesses, women) and regions (e.g. rural areas). On top of these challenges,
employment was increasing being shaped by rapid changes in the labour market
through different drivers of the future of work, such as the spread of global
supply chains, technological progress, climate change and demographic trends.

In this context, the COVID-19 crisis has become, in a matter of months, the most
severe economic and labour market downturn since the Second World War. To
control the spread of the disease, nearly all countries have implemented
containment measures, including lockdowns, physical distancing and border
closures. As reported in the 6th ILO Monitor1 released on 23 September 2020, the
vast majority of the world’s workers (94 per cent) continue to be affected by some
sort of workplace closure measures, despite the relaxation of controls in most
countries in recent weeks. These measures have precipitated a sharp decline in
both demand (consumption and investment) and a disruption of the supply of
goods and services. In addition to these shocks, there is a heightened level of
uncertainty, which further impacts the economy and labour market.

The consequences have been devastating: according to the latest ILO estimates,
there was a 17.3 per cent drop in global working hours during the second quarter

1
ILO (2020) ILO Monitor: COVID-19 and the World of Work – 6th Edition.

1
of 2020 (compared with the fourth quarter of 2019), equivalent to the loss of 495
million full-time jobs (based on a 48-hour working week).2 Women, youth and
workers and businesses in the informal economy have been hit hard. In the
BRICS countries, the average decline in working hours in the second quarter is
estimated at 15.7 per cent, which is equivalent to 205 million full-time jobs. The
latest prognosis also shows that a quick recovery is not happening as the
pandemic continues and subsequently, labour market losses will persist
throughout 2020 and well into 2021.

Given the multidimensional and complex nature of both these shorter and
longer-term challenges, an integrated strategy of policy interventions and
institutional support is needed to enable countries to achieve the SGDs by 2030,
and to spur transformative change across the three dimensions of sustained,
inclusive, and sustainable growth.3 Economic growth, employment, and social
protection policies need to act in tandem to ensure that poverty can be
sustainably reduced and living standards of the population enhanced. A key part
of this process is facilitating the transition of workers and businesses from the
informal to the formal economy, in line with the Recommendation No. 204
concerning the Transition from the Informal to the Formal Economy. The ILO
Centenary Declaration for the Future of Work (2019) provides a framework for a
human-centred approach and guidance on investing in people’s capabilities,
institutions and decent and productive work. In these contexts, previous BRICS
commitments and BRICS Labour and Employment Ministerial Meeting (LEMM)
declarations have made a strong commitment to inclusive employment policies
and building universal social security systems.4

2
See the 6th ILO Monitor.
3
ILO (2019) Time to Act for SDG 8 : Integrating Decent Work, Sustained Growth and Environmental Integrity.
4
BRICS Labour and Employment Ministers’ Declaration: Quality Jobs and Inclusive Employment Policies, Ufa,
Russian Federation, January 2016; BRICS Labour and Employment Ministers’ Declaration: Employment
generation, social protection for all and transition from informality to formality, New Delhi, September 2016;
BRICS Labour and Employment Ministers’ Declaration, Chongqing, July 2017; BRICS Labour and Employment
Ministers’ Declaration, Durban, August 2018; BRICS Labour and Employment Ministers’ Declaration, Brasilia,
September 2019. The BRICS Social Security Cooperation Framework, adopted in Chongqing in July 2017,

2
In light of the COVID-19 crisis, integrated approaches are needed more than ever,
as part of both the immediate response and efforts to promote an inclusive, job-
rich recovery and a shift towards a better future of work over the longer term.
Governments, including the BRICS countries, have taken often unprecedented
measures, including large fiscal stimulus packages, to mitigate the impact of the
current crisis through support to workers and businesses. However, measures
will need to be further adapted as the crisis evolves and targeted to address the
impact on certain groups and regions, which are suffering more from the labour
market downturn in terms of increased risk of poverty.

I. Trends in poverty alleviation globally and in

the BRICS

Poverty and labour income trends in the BRICS5

Globally, 630 million people are estimated to live in extreme or moderate poverty
despite having work, pointing to the fact that work is not a guarantee of escaping
poverty.6 Figure 1 shows the evolution of extreme and moderate working poverty

includes in particular a commitment to promote, through bilateral and multilateral exchanges and
cooperation, “the reform and improvement of social security systems in the BRICS countries, [to] expand
social security coverage and enhance the sustainability of social security so as to adapt to the ever evolving
national and international environment”.
5
Despite the fact that poverty is multi-dimensional, income poverty is the most widely used concept because
it is relatively easy to measure it in an internationally comparable way. The World Bank defines absolute
levels of income below which people are considered to be extremely poor at less than US$ 1.90 in purchasing
power parity (PPP) terms per day or moderately poor at between US$ 1.90 and 3.20 PPP per day.
6
See ILO (2020) World Employment and Social Outlook Trends 2020. Geneva: ILO. In 2010 in South Africa,
the poverty rate among those not in employment was 2.5 times higher than for those in employment; this
ratio was almost 3 in Brazil in 2012. In India, on the other hand, the poverty rate of those not in employment
was slightly higher than for the employed population in 2010. The World Bank Povcal database shows for
2010 in South Africa that 35.8 per cent of the population lived in extreme or moderate poverty. Among those
in employment, 17.3 per cent lived in poverty, where 27.8 per cent of the population was in employment. In
Brazil, the total poverty rate was 8.7 per cent, and 4.6 per cent among the employed, with 45.5 per cent of
the population in employment. The ratios in the text follow from these figures.

3
in the BRICS countries and other middle-income countries.7 Panel (a) shows that
the working poverty rate has declined much more in BRICS than in other middle-
income countries. In fact, the BRICS are responsible for the lion’s share of the
global halving of the number of working poor over the last two decades. Between
2000 and 2019, the number of working poor (using the USD 3.20 PPP per day
threshold) fell by more than 540 million in the BRICS, compared with a decline of
around 120 million in other middle-income countries (Figure 1b). However, there
has been an overall deceleration in the reduction of working poverty in the BRICS
since 2014 as a result of the “slowdown” in the reduction of absolute poverty in
China8 and the economic downturn in Brazil, among other factors.

Figure 1. Extreme and moderate working poverty in BRICS and other middle-income countries, 2000-2019

a) Working poverty rate (per cent) b) Number of working poor (millions)

70 900 2000 2019
Other middle- 800
60 income
countries 700
50
600
BRICS
40 500
400
30
300
20
200
10 100
0
0
Other middle-income BRICS
2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

countries

Note: Working poverty refers to the people in employment whose household lives on less than USD 3.20 per
day in purchasing power parity (PPP).
Source: ILOSTAT, ILO modelled estimates, November 2019.

It should be noted that as countries develop, the USD 3.20 absolute poverty line
becomes less and less relevant. For instance, almost no one in the Russian

7
Middle-income countries are defined using the World Bank classification.
8
When the poverty rate approaches zero, it cannot decline further in large steps. Incomes are still rising,
but beyond the poverty line.

4
Federation lives on less than USD 3.20 PPP per day and the absolute poverty rate
is also very low today in China. For this reason, the concept of relative poverty
that is used in most advanced economies, becomes more relevant for BRICS
countries9 as an indicator of whether the population (and groups/regions within
the county) benefit from economic growth and the wealth created in the
economy to the same extent.10

Figure 2. Labour income distribution, 2019 estimates

a) Average share in total labour income b) Labour income share by employment status
70 relative to employee status
Average share in labour income

200.0
60
180.0
50 160.0
140.0
40
120.0
30 100.0
80.0
20
60.0
10 40.0
20.0
0
0.0
Non-BRICS middle- BRICS Non-BRICS middle- BRICS High-income
income countries income countries countries

Bottom 20% Middle 60% Top 20% Employees Employers

Own-account workers Contributing family workers

Note: Panel a) shows the average share in labour income of the bottom 20%, the middle 60%, and top 20%
of workers, across countries weighted by GDP. Panel b) shows the labour-related income of different
categories of workers relative to employees (wage and salaried workers), in per cent. Employees=100.
Source: ILOSTAT, ILO modelled estimates, November 2019.

While labour income inequality at the global level has declined over the past 15
years – as a result of economic convergence driven by countries, such as India

9
This concept refers to the number of people below an income threshold that is usually set at a percentage
of the median income in the country. For example in the EU, the relative poverty rate is defined as share of
people living on an income of less than 60 per cent of the median income. See e.g. ILO (2020) Beyond the
Goal of Eradicating Absolute Poverty in China: Relative Poverty Indicators and Social Security Policies.
10
See ibid. The OECD has data on relative poverty covering the whole population and all incomes for the
Russian Federation and South Africa. In the former, 12.7 per cent of the population earn less than half of
the median income, in the latter that share amounts to 26.6 per cent, which is by far the highest among all
of the countries in the OECD database.

5
and China, which have enjoyed a rise in average labour income – inequality within
countries has, in general, stagnated over the same period.11 Panel a) of figure 2
shows that inequality in labour incomes in the BRICS is higher than in non-BRICS
middle-income countries, with the bottom 20 per cent receiving, on average, only
2.1 per cent of labour income, versus 3.2 per cent in the non-BRICS countries. At
the other end, the top 20 per cent receive 63.6 per cent of total labour income in
the BRICS, versus 52.7 per cent in other middle-income economies.

The distribution of labour income also is unevenly distributed among different

types of workers. Own-account and contributing family workers constitute more
than half of all employment in developing and emerging economies, including
the BRICS, as opposed to only 9 per cent in high-income countries. In this respect,
own-account workers12, both in BRICS and other middle-income countries, earn,
on average, much less than half of the labour-related income of employees
(figure 2b). In high-income countries, their earnings are almost as high as those
of employees. The implicit labour income of contributing family workers, who
receive income or in-kind contributions via the family, is estimated to be even
lower, reaching less than 20 per cent in BRICS and other middle-income
economies, and slightly more in high-income countries. Employers earn, on
average, more than employees in all countries.

This inequality is greater in rural areas where 74 per cent of workers in BRICS
countries are either own-account or contributing family members.13 In
comparison, only 30 per cent of urban workers fall in these two categories.
Although the overall share has declined by 10 percentage points between 2004
and 2019, the urban-rural contrast in labour market conditions remains an
important driver of income inequality and poverty in the BRICS.

11
See ILO (2020) World Employment and Social Outlook Trends 2020.
Own-account workers are those workers who, working on their own account or with one or more partners,
12

hold the type of jobs defined as “self-employment jobs”, and have not engaged on a continuous basis any
employees to work for them. See ILOSTAT.
13
ILOSTAT, ILO modelled estimates, November 2019.

6
In summary, decent work, which includes an adequate income, is a critical means
to escaping poverty. Working poverty defined with an absolute income threshold
has declined significantly in the BRICS over the past decades. While data on
relative poverty measures for the BRICS countries is relatively scarce, the highly
unequal distribution of labour incomes indicates that significant parts of the
workforce are likely to fall below a national poverty threshold. The high
prevalence of low-income own-account and contributing family workers in the
BRICS, especially in rural areas, is one of the factors explaining high inequality
and poverty.

Against the backdrop of these existing inequalities, the COVID-19 crisis has
impacted all countries around the world, including the BRICS. The latest ILO
estimates14 indicate that in the second quarter of 2020, global working-hour
losses reached 17.3 per cent (relative to the fourth quarter of 2019), which is
equivalent to 495 million jobs (assuming a 48-hour working week). In the BRICS
countries, the estimates indicate that working hours declined in the second
quarter of this year by 15.7 percent, representing the equivalent of 205 million
full-time jobs. Overall, the COVID-19 crisis has resulted in a massive disruption to
the labour market around the world and a jobs recovery is still far off for most
countries. While employment and social protection measures played an
important role in cushioning some of the impact of the crisis on jobs and
incomes, this situation threatens to reverse gains made in poverty reduction,
while exacerbating inequalities in the labour market (e.g. for certain groups,
regions, etc.).

14
See the 6th ILO Monitor: COVID-19 and the world of work.

7
II. Social and economic transformation for
poverty reduction: the employment-social
protection-poverty nexus

To shape a job-rich and inclusive recovery from the COVID-19 crisis, policy efforts
will need to address the longer-term impact of the pandemic on the labour
market in terms of job and income losses, along with the specific effects for
certain groups, sectors and regions. Addressing these issues will require
adapting policies, including those focusing on employment and social protection,
to shape an economic and social transformation process that supports the
creation of decent and productive jobs. The trends in BRICS countries over recent
years provides important insights into both the opportunities and challenges in
driving this process in the future.

The role of economic transformation and productive

employment to reduce poverty

People can potentially benefit from economic growth through two channels: (1)
productivity growth leading to employment expansion and increased earnings
(both for salaried workers and the self-employed), conditional on the level and
type of growth, as well as the distribution of the returns to productivity growth
(i.e. who benefits); and (2) redistribution of incomes (which is discussed in the
next section in more detail). Therefore, the challenge for countries is ensuring
that productivity not only grows, but that it also benefits workers and households
in a way that is supportive of overall economic and social development.

In terms of the first channel, economic transformation, which can be

characterized as the movement of labour and capital from low-productivity
economic activities into higher productivity sectors, has been a key driver of
poverty reduction and rising prosperity witnessed since the Industrial Revolution.
The key transition borne out by the experience in advanced economies and, more

8
recently, in East Asia, is the shift from agriculture to manufacturing, which
spurred an increase in overall production and per capita incomes that helped
workers and their families escape poverty.15 Higher overall productivity growth is
associated with faster poverty reduction in terms of both productivity growth
within sectors and that resulting from shifts between sectors (i.e. economic
transformation).

However, beyond stylized facts, the path of economic transformation is far from
singular and display considerable variation across countries, including within the
BRICS, which has had important implications for growth and, ultimately, the
creation of productive employment and reduction in poverty. In general,
economic growth alone has not been enough: what matters is the nature of
growth (a high growth elasticity of poverty), its impact on employment, and vice
versa (growth-poverty-employment nexus).16

In the BRICS group of economies, the relationship between growth, structural

transformation, employment and poverty is complex and differs over time and
across countries. As noted above, poverty reduction in the BRICS was rapid,
especially in China and India, which was accompanied by fast and sustained
economic growth (from 2000 to 2019, these two countries grew, on average, by
9.0 and 6.5 per cent, respectively).17 While fast economic growth had help the
acceleration of poverty reduction in the cases of China and India, poverty has
been alleviated in other BRICS countries with a lower rate of growth.18 Despite a

15
See, for example, the seminal work of Lewis, W.A. (1954) “Economic Development with Unlimited Supplies
of Labour”, The Manchester School, Vol. 22, No. 2, pp. 139–191. Kaldor (1966) shows that growth in output,
productivity and employment are all related with the performance of the manufacturing sector (Kaldor, N.
(1966) Causes of the Slow Rate of Economic Growth of the United Kingdom: An Inaugural Lecture, Cambridge
University Press, Cambridge).
16
Empirical evidence over the last couple of decades has shown that the growth elasticity of poverty also
depends on inequality and initial income levels (see, for example, Ravallion, M. (1997) “Can high-inequality
developing countries escape absolute poverty?”, Economics Letters, Volume 56, Issue 1, 1997, pp. 51-57).
17
Source: World Bank, World Development Indicators database
18
In earlier periods, the responsiveness of poverty reduction to GDP growth was higher in Brazil than China
and India (for the period 1981-2005) since Brazil achieved a higher rate of poverty reduction with a lower
GDP growth rate and poverty reduction accelerated in China, see S. Jain-Chanda et al. (2018) Inequality in
China – Trends, Drivers and Policy Remedies.” WP/18/127. IMF Working Paper; Ravallion, M. (2011) “A

9
far lower GDP growth rate, Brazil was, for example, still able to reduce poverty
and inequality in the 2000s, helped by wage policies, including minimum wage
schemes, and social protection policies, such as Bolsa Família (see next section).19

Figure 3. Manufacturing as a share in gross value added (%) in the BRICS, 2000-2019
35

CHN CHNCHN
CHN CHN CHN
CHN CHN CHN
CHN
30

CHN

CHN
CHN
CHN CHN
CHN
25
20

ZAF
ZAF
ZAF
IND INDINDIND ZAF
IND ZAF
IND INDINDIND IND ZAF
IND IND RUS
INDINDINDIND
15

IND BRA RUS RUS RUSRUS

IND
IND ZAFBRA RUS
BRAZAF
ZAF BRA RUS
BRA BRA
IND ZAF
BRAZAF BRA RUS
RUS RUS
RUS
BRA RUS
BRA RUS
ZAF
ZAF
ZAF
ZAF
ZAF BRA RUS
ZAF RUS
RUS
RUS
BRA RUS
BRABRA
BRA
10

BRA
BRA
BRA

8 8.5 9 9.5 10
GDP per capita (log, PPP 2017 dollars)

Source: World Bank World Development Indicators, accessed 9 September 2020.

The process of structural change has contributed to the reduction of poverty but
this has been driven by different sectors in the BRICS as it has been witnessed in
many other economies around the world. For example, trends for the BRICS
countries from 2000 to 2019 show that, apart from China, the share of
manufacturing in gross value added is not only low (well below 20 per cent) but
it has also been declining for countries at very different income levels (in GDP per
capita terms) (figure 3).20

Comparative Perspective on Poverty Reduction in Brazil, China and India.” The World Bank Research
Observer 26 (1): 71–104. A key factor noted by Ravallion in this article is that rising income inequality is
associated with a lower poverty elasticity.
19
ILO (2011) Brazil: An Innovative Income-Led Strategy’.
20
Some commentators have referred to the low peak in manufacturing earlier in country’s development
trajectory as ‘‘premature deindustrialization’’ (Dasgupta, S. and A. Singh (2006) “Manufacturing, Services and
Premature Deindustrialization in Developing Countries: A Kaldorian Analysis”, United Nations University

10
However, the situation is more complex than a “failure” of manufacturing to take
on the leading role in the process of economic transformation. While the
contribution of agriculture has declined in all BRICS economies, the share in
services has risen. India stands out as a service-driven economy, which has
enabled the economy to grow faster but poses challenges in terms of creating
enough decent jobs for the burgeoning labour force.21

Turning to outcomes in the labour market as a result of structural change, the

share of manufacturing in total employment in the BRICS has remained relatively
low, far less than the peaks reached in older industrialized economies in earlier
times (e.g. Western Europe) (figure 4).22 Using total industry employment, which
includes manufacturing, utilities, mining and construction, the share in 2019
ranged from 20 per cent in Brazil to 27.5 per cent in China. In terms of the specific
sectoral contribution of manufacturing, employment shares are much lower and
have fallen from 2000 to 2019 in all countries, apart from India where it has
increased marginally from 10.6 to 12.2 per cent. The share of employment in
manufacturing in China, for which there isn’t the equivalent data as presented in
figure 4, reached 18.5 per cent in 2008.23 Thus, the real differences within the
BRICS is the share of manufacturing in gross value added (China versus the other
BRICS countries) rather than employment (which also reflects differences in
labour productivity across these economies).

While economic transformation has created opportunities for women to join the
labour force and engage in wage employment outside the home, significant
gender disparities are evident around the world, including in BRICS countries.

Research Paper No. 2006/49, UNU‐WIDER, Helsinki; Rodrik, D. (2015) “Premature industrialization”, NBER
Working Paper No. 20935). It is argued that, though a decline in the share of manufacturing in output and
employment is to be expected, it should take place only once an economy has matured. This concept has
been applied by various commentators to the situations witnessed in Brazil, India and South Africa.
21
See for a discussion on this issue in Verick, S. (2016) “Manufacturing and jobs: is India different?”, The
Indian Journal of Labour Economics, Vol. 59, No. 1, pp. 57-84.
22
Verick (2016).
23
Naudé, W., A. Szirmai and A. Lavopa (2013) “Industrialization Lessons from BRICS: A Comparative Analysis”,
IZA Discussion Paper, No. 7543.

11
Though manufacturing has generated significant jobs for women, the majority
of working women are found in the services sector in Brazil, Russian Federation
and South Africa, while in India, agriculture remains the predominant sector for
women.24 In addition to the sectoral distribution, gender disparities are evident
in terms of gender wage gaps and poorer quality employment that women
experience in the labour market.
Figure 4. Share of employment in industry and manufacturing, 2000 and 2019 (or nearest year) (%)

Note: Data for Brazil is 2001 not 2000. Data for India is 2018 not 2019. Data on manufacturing is not available
for China.
Source: ILOSTAT

As outlined above, economic transformation has centred on the transition of

capital and people from low-productivity sectors, namely agriculture, to more
productive sectors in the economy, particularly manufacturing. Evidence on the
dynamics of productivity in BRICS countries shows that shifts are happening but
not always with a clear link to productivity growth. As pointed out by Pages
(2010)25, Brazil has had slow growth in total factor productivity, while structural
change has contributed little to the low level of aggregate productivity growth.
In Brazil, the contribution of manufacturing to labour productivity growth was, in

24
ILO (2018) “Decent Work and Economic Growth: Women’s Participation – Equal Pay for Work of Equal
Value”, BRICS BRIEF SERIES - Gender Equality, 2 August 2018. See also ILO (2020) “A gender-responsive
employment recovery: Building back fairer”. Policy Brief.
25
Pagés, C. (ed.) (2010) The Age of Productivity: Transforming Economies from the Bottom Up.
Washington, D.C.: Inter-American Development Bank.

12
fact, negative over 1995-2009.26 In the Russian Federation, there has been some
improvements in labour productivity since the early 1990s and, despite the
overall deindustrialization trends in the economy, labour productivity in
manufacturing increased by 60 per cent from 2002 to 2010. 27 Productivity growth
in India has been faster in the service sector than manufacturing with continuing
challenges in getting workers to move from low productive informal sectors to
high productive formal parts of the economy. More than 43 per cent of workers
in India remain in agriculture, which has suffered from a decline in productivity
over a number decades.28 In contrast, China’s rapid economic growth has been
accompanied by significant economic transformation driven by productivity
growth in manufacturing, which created jobs, especially for rural migrants and
other workers.29 In South Africa, manufacturing as a share in GDP has declined,
as noted above, while the services sector’s importance has grown over a number
of decades.

Sustaining poverty reduction in the future requires going beyond economic

growth to addressing the challenges stemming from the quality of employment.
As evident around the world, one of the key aspects is informality in the labour
market, which is characterized by the lack of protections and benefits for workers
and the exclusion of businesses from the formal economy. The existence and
persistence of informal employment has important implications for shaping how
economic growth impacts employment and earnings. The share of workers in
informal employment (non-agriculture) (SDG 8.3.1) ranges from under 40 per
cent in the case of the South Africa and Russian Federation, to almost 80 per cent
in India (see figure 5). In Brazil and South Africa, the proportion of women in
informal employment is higher than found for men. Despite rapid economic

26
UNIDO and UNU-MERIT (2012) Structural Change, Poverty Reduction and Industrial Policy in the BRICS.
UNIDO, Vienna.
27
Kuznetsov, B., Gimpelson V. and Yakovlev, A. (2012) Manufacturing Sector in Economic Development,
Employment and Incomes: The Case of Russia, paper presented at the UNIDO and UNU-MERIT International
Workshop on “The Untold Story: Structural Change for Poverty Reduction – The Case of the BRICS”, Vienna,
16-17 August.
28
2018 data from the Periodic Labour Force Survey accessed from ILOSTAT, https://ilostat.ilo.org/data/
29
UNIDO/UNU-MERIT, 2012.

13
growth (for example, as achieved in India during the 2000s), employment quality
remains subjected to both old and new forms of informality (e.g. informal jobs in
new sectors).

Figure 5: Share of informal employment in non-agricultural employment (%) in BRICS countries (SDG 8.3.1), by sex

Source: ILO calculations based on national labour force or similar household survey data. See ILO, 2018.
Women and men in the informal economy: A statistical picture. Third edition. ILO, Geneva.

The eradication of extreme poverty and a further decline in moderate (and

relative) poverty in the BRICS will require a much more robust process of
economic transformation that is accompanied by the creation of decent jobs in
sectors with higher productivity and earnings, along with social transformation
that addresses the persistent inequalities across various dimensions, including
gender, racial/social groups and spatial. Environmental sustainability will be key.

Against this longer-term backdrop, the COVID-19 crisis has impacted all countries
through the spread of the virus around the world and the subsequent imposition
of containment and lockdown measures, which have brought economic activity
to a halt. The shock to both demand and supply, along with the heightened level

14
of uncertainty, has resulted in severe labour market disruptions. The next steps
towards economic and social transformation will have to take into account the
impact of the COVID-19 crisis on not only the BRICS but the global economy. New
opportunities in technology are already evident but this needs to be made more
accessible through employment (e.g. active labour market programmes), skills
development and other measures.30

The importance of social protection systems, including

floors, for reducing and preventing poverty throughout the
lifecycle

Complementing economic and employment policies, social protection policies

are key in reducing poverty and inequality, promoting decent work and
contributing to inclusive growth.31 Social protection systems contribute to
reducing poverty and inequality by guaranteeing effective access to health care
and income security throughout the life course. They obviously play an important
role for reducing and preventing poverty of those who cannot rely on earned
income, such as children or older persons, or families without an economically
active member. They also play a key role for those in employment: by providing
income security to those who have lost their job and seek new employment, and
those who are temporarily unable to work due to sickness, maternity, work injury
or disability. Through these mechanisms, social protection systems contribute to
better labour market outcomes in terms of better job matching, preserving and
enhancing human capabilities and enabling people to seize economic
opportunities. Furthermore, social protection is also pivotal for reducing the risk
of poverty associated with various key life and work transitions, such as
transitions from school to work, from work to retirement, during job transitions,

30
See ILO (2020) the future of work in the digital economy. Background paper prepared for the Employment
Working Group under the 2020 Russian presidency of the BRICS.
31
ILO (2017) World Social Protection Report 2017-19: Universal Social Protection to Achieve the Sustainable
Development Goals.

15
facilitating labour mobility and migration, caring for family members,
rehabilitation, participating in training and education and return to work: In
coordination with other policy areas, it is crucial in supporting and protecting
people during these transitional moments. Social protection can also promote
transitions from the informal to the formal economy. Moreover, social health
protection fosters better access to quality health care throughout people’s lives,
with important long-term effects.

Social protection systems do not only reduce vulnerability at a given point in time,
but also break the intergenerational transmission of poverty through better
access to nutrition, health, education, skills and lifelong learning, as well as
preventing child labour, thereby improving human development and preventing
people from falling into poverty. Especially social insurance schemes have a
strong preventive function, supporting people in maintaining a certain standard
of living and smoothing consumption across the life cycle, thereby protecting
them in the event of a risk and preventing poverty. This is a prudent social policy
approach, as it is often costlier to lift people out of poverty than to prevent them
falling into it.

All these factors highlight the essential role of social protection in reducing and
preventing poverty, breaking the cycle of the intergenerational transmission of
poverty, addressing inequality and fostering decent and productive employment.
This contributes to unlocking a society’s productive capacity by investing in
people’s capabilities, productive employment and inclusive growth.

When it comes to the reduction and prevention of poverty, robust evidence

demonstrates that social protection policies contribute to reducing income
poverty and other forms of poverty through multiple channels.32 Taking into

32
Poverty is often being conceptualized as a multidimensional concept, encompassing income poverty, but
also other dimensions of deprivation, including poor health, lack of access to education, and social exclusion.
See ILO (2014) World Social Protection Report 2014/15: Building Economic Recovery, Inclusive Development
and Social Justice; ILO (2017) World Social Protection Report 2017-19: Universal Social Protection to Achieve
the Sustainable Development Goals; ILO (2019) Work for a Brighter Future. Global Commission on the Future

16
account that most people experience periods in their lives when they are more
vulnerable than at other times, it is essential to ensure that social protection
systems cover everyone throughout their lives. Consequently, establishing
and/or strengthening nationally-defined social protection systems, including
floors, is indispensable for containing and reducing poverty and inequality.

Looking at the immediate effects of social protection systems on the reduction

of poverty, this paper assesses the impact of redistribution through taxes and
transfers on poverty rates, comparing poverty rates based on market incomes
with those for disposable incomes. This paper uses a relative definition of income
poverty in order to facilitate comparability among countries, taking into account
each countries’ living standards.33 It uses a common poverty threshold of 50 per
cent of median equivalised household income.34 For this reason, the poverty rates
reported in this paper can deviate from poverty rates calculated on the basis of
national poverty lines; depending on the distribution of incomes in each country,
relative poverty rates can be higher or lower or absolute poverty rates.35

Figure 6 shows that social security transfers and taxes have a considerable effect
on reducing relative poverty rates in BRICS and G20 countries, even in the
absence of strong economic growth, as noted above. By comparing relative
poverty rates based on market incomes (red bars)36 and disposable incomes (blue
bars), the impact of redistribution through social security transfers and taxes
(difference between red and blue bars) can be estimated. For example, 28.8 per
cent of the population in the Russian Federation would have lived in relative

of Work; F. Bastagli et al. (2016) Cash Transfers: What Does the Evidence Say? A Rigorous Review of
Programme Impact and of the Role of Design and Implementation Features; ODI.
33
Some BRICS countries are already using a relative definition of poverty, others are considering this option.
34
The analysis uses the modified OECD equivalence scale to account for economies of scale depending on
the household size, using an equivalence factor of 1.0 for the head of household, 0.8 for other adult
household members and 0.5 for children.
35
In China, the use of a relative poverty line in addition to the currently used absolute poverty lines is
currently under discussion, see ILO (2020) Beyond the Goal of Eradicating Absolute Poverty in China: Relative
Poverty Indicators and Social Security Policies.
36
Market incomes include earnings, income from capital (interests, dividends) and other incomes.
Disposable incomes reflect the net incomes that people have at their disposal, broadly defined as market
incomes plus social security benefits, minus taxes and social insurance contributions.

17
poverty based on their market incomes, but redistribution through transfers and
taxes reduced this poverty rate by 17.8 percentage points to 11 percent of the
population. Similarly, redistribution reduced relative poverty rates from 35.3 per
cent to 15.5 percent of the population in Brazil (reduction by 14.5 percentage
points); from 37.6 to 27.2 per cent of the population in South Africa (reduction of
10.4 percentage points) and from 22.0 to 19.2 per cent of the population in India
(reduction by 2.8 percentage points).37

Figure 6: The role of social security transfers and taxes in reducing relative poverty, BRICS countries and other G20
countries

Note: The poverty line is defined as 50% of the median equivalised income in each country. For China, only
the poverty rate after transfers and taxes is displayed due to data constraints. LIS Data for China do not
include market incomes, therefore the volume of redistribution cannot be calculated.
Source: ILO calculations based on Luxembourg Income Study (LIS) Data.

37
It was not possible to conduct this analysis for China, as the available LIS data do not include market
incomes.

18
Depending on the structure of the social protection system in each country, the
impact of redistribution through social security transfers and taxes can vary. For
example, in South Africa, 42.0 per cent of children would be considered as poor
based on market incomes, but thanks to transfers and taxes, real poverty rates
based on disposable incomes are 27.4 per cent, that is the impact of
redistribution through transfers and taxes accounts for a reduction in poverty
rates of 14.6 percentage points. Similarly, transfers and taxes reduce relative
child poverty by 12.3 percentage points in the Russian Federation, 7.4 percentage
points in Brazil and 2.9 percentage points in India (see Figure 7).

Figure 7: The role of social security transfers and taxes in reducing relative poverty for children, persons of working
age and older persons, BRICS countries and other G20 countries

Note: The poverty line is defined as 50% of the median equivalised income in each country. For China, only
the poverty rate after transfers and taxes is displayed due to data constraints. LIS Data for China do not
include market incomes, therefore the volume of redistribution cannot be calculated.
Source: ILO calculations based on Luxembourg Income Study (LIS) Data.

For the working-age population, redistribution through transfers and taxes

accounts for a reduction in relative poverty rates of 12.5 percentage points in the

19
Russian Federation, 10.5 percentage points in Brazil, 9.2 percentage points in
South Africa and 2.7 percentage points in India.

The most sizeable impact of redistribution through taxes and transfers can be
recorded for older persons. This is largely due to the redistributive impact of
public pensions, that is particularly large in countries with a larger share of older
persons and mature public pension systems, such as in Brazil and the Russian
Federation. It is therefore not surprising that redistribution through transfers
and taxes accounts for a reduction in relative poverty rates of older persons by
59.0 percentage points in the Russian Federation, 57.4 percentage points in
Brazil, 30.7 percentage points in South Africa, but only 4.3 percentage points in
India.

Similarly, BRICS countries achieve different levels of income redistribution

through social security transfers and taxes (see figure 8). As the redistributive
impact of pensions depends to a large extent on demographic factors, pensions
are shown separately from other social security transfers. Other social security
transfers include unemployment benefits, child and family benefits and sickness
benefits. The relative redistributive impact of non-pension social security
transfers is comparatively large in the Russian Federation and South Africa, and
smaller in India and Brazil.38 The redistributive impact of taxes in BRICS countries
tends to be significantly lower than in most G20 countries for which data are
available.

38
It was not possible to conduct this analysis for China, as LIS data do not include market incomes.

20
Figure 8: The role of transfers and taxes in reducing income inequality in BRICS countries and selected G20
countries

Note: The Gini index measures the extent to which the distribution of incomes among households deviates
from perfect equal distribution. A value of 0 represents perfect equality and a value of 1 extreme inequality.
Redistribution is measured by the difference between the Gini coefficient before personal income taxes and
transfers (market incomes) and the Gini coefficient after taxes and transfers (disposable incomes). Indian
household incomes are only available net of personal income taxes, implying that inequality can only be
measured after taxes and before transfers. For China, redistribution through taxes and transfers was not
possible to calculate due to data constraints.
Source: ILO calculations based on Luxembourg Income Study (LIS) Data.

Despite the acknowledged importance of social protection systems for reducing

poverty, major social protection gaps still exist in BRICS countries. Recent trends
in social protection coverage and expenditure (based on Social Security Inquiry
and World Social Protection Database) demonstrate this. Closing these gaps
involves extending coverage to all, ensuring comprehensive provision (i.e.
covering all life-cycle contingencies) and adequate benefit levels that are
sufficient to prevent and effectively lift people out of poverty, and provide them
with the health protection and income security that allows them to seize
economic opportunities for decent and productive employment.

21
This in turn requires that sufficient levels of investments into social protection
are made and sustained. Evidence shows that higher levels of social protection
expenditure are generally correlated with lower levels of poverty and other
positive outcomes. Expenditure must also be equitable in order to ensure
maximum impact in reducing poverty.39 Equitable financing implies that
revenues must be raised in a progressive manner, to avoid, for example,
increased value added taxes on basic consumption items, and by reducing
possibilities for tax avoidance as well as preventing tax evasion.

The goal of universal social protection can be achieved more effectively through
integrated policy approaches, by coordinating social protection policies with
wider social, employment and economic policies. Such integrated policy
approaches can support, for example, the extension of social security to workers
not yet covered.40 Such integrated policies are also essential in facilitating
transitions from the informal to the formal economy.

Social protection also has an important role in mitigating and addressing

structural shocks, whether they are economic, natural or health shocks. Realising
the SDG commitment of universal access to social protection is rendered even
more important as a result of the COVID-19 crisis which shows that protection
gaps must be closed worldwide.

III. Policies and measures for poverty reduction

in BRICS countries

As noted above, the process of economic and social transformation has varied
considerably across the BRICS countries. Drawing from the different trends and

39
ILO (2018) Developmental Impacts of Expanding Social Protection.
40
See ILO policy resource package “Extending Social Security Coverage to Workers in the Informal Economy:
Lessons from International Experience.”.

22
current outcomes, a number of insights can be made on the role of economic
and employment policies in promoting structural transformation and the
creation of productive employment, leading to a reduction in poverty. In addition,
other types of policies also matter for the reduction of poverty, including those
covered in the second sub-section on social protection. To be effective, policies,
therefore, need to take an integrated approach, combining both employment
and social protection policy objectives.

Recent examples and good practices from the employment

side

At the broadest level, countries, including in the BRICS, have taken a

comprehensive approach to dealing with employment and poverty reduction.
One overarching approach is often labelled industrial policies, which encompass
a range of interventions, including technology and innovation (R&D), trade and
investment (including FDI) policies, measures that support demand and the
development of specific sectors, such as manufacturing, and competition policies
and regulations.

Departing from their import substitution industrialization policies in the 1980s

and 1990s, the BRICS countries embarked on different paths towards an
industrial policy that focused increasingly on export orientation, liberalization
and privatization (with significant variations in policy design and outcomes across
the economies). At the same time, countries have maintained a strong role for
the state, particularly in the area of industrial policy, though this has also varied
between and within economies. For example, the coordination and
implementation of industrial policy in Brazil was undertaken by the Industrial
Development Agency (ABDI), while India’s National Manufacturing Policy of 2011
set the goals of increasing the share of manufacturing in GDP to 25 per cent and
creating 100 million jobs over the following decade.

Trade, most notably, export-orientation, has had an important impact on

economic growth, structural transformation and jobs around the world, which is

23
most apparent in China but also to varying degrees in Brazil, India, Russian
Federation and South Africa. The share of exports from the BRICS countries in
the global total increased for 5.8 per cent in 2000 to 16.3 per cent in 2019 (table
1).

Table 1. Trade in BRICS, 2000 and 2019

Source: World Bank, World Development Indicators (WDI)

Foreign direct investment (FDI) has also brought considerable resources to these
economies, though in different sectors (manufacturing in China, services in India,
extractive sectors in Brazil, Russian Federation and South Africa) (table 2). FDI as
a percentage of GDP has declined from 2000 to 2019 but, as a share in the global
total flows of FDI, it increased from 5.2 per cent to more than 24 per cent.

The success in industrial and trade policies in driving growth in manufacturing

output and jobs has been far from universal within the BRICS grouping. UNIDO
and UNU-MERIT argue that industrial policies have been “most successful in
China, moderately successful in India and Brazil and slightly less successful in the
Russian Federation and South Africa, the two mineral rich economies.”41

41
p. 155, UNIDO/UNU-MERIT, 2012.

24
Table 2. Foreign direct investment (FDI) in BRICS, 2000 and 2019

Source: World Bank, World Development Indicators (WDI)

Beyond macroeconomic and sectoral measures, other employment policies have

played an important role in addressing poverty in terms of both short- and long-
term goals. One set of measures that has received increasing attention in recent
years is public employment programmes (PEPs), which are schemes that seek to
provide job opportunities for poor households through their engagement in such
activities as rural infrastructure projects or community programmes. PEPs have
an important employment role, particularly for the unemployed and
underemployed, especially for those residing in rural areas. The most well-known
and largest PEP in the world is India’s Mahatma Gandhi National Rural
Employment Guarantee Scheme (MGNREGA), which guarantees up to 100 days
of work to rural households. In 2019-20 financial year, MGNREGA was used by
around 55 million households and 79 million workers. 42 South Africa’s Expanded
Public Works Programme43, which covers infrastructure, environment, culture
and non-state sectors, created 1 million work opportunities in 2019-20. Overall,

42
https://www.nrega.nic.in/netnrega/mgnrega_new/Nrega_home.aspx
43
http://www.epwp.gov.za/

25
PEPs are a means to achieving integrated employment and social protection
policy responses, especially in developing and emerging economies.

Wage policies have also been utilized in the BRICS countries to promote more
inclusive outcomes from economic growth. In this regard, a key policy instrument
has been minimum wages, which aim to set a floor for the distribution of wages,
below which no worker can legally be paid. If properly implemented and set at
an appropriate level – minimum wages can have positive effects on the wages of
low-paid workers and reduce gender pay gaps, at little or no cost to employment.
The minimum wage systems in BRICS countries vary considerably in terms of
coverage, degree of tripartite consultation, criteria for setting the minimum
wage and adjustment procedures.44 In recent years, countries have enhanced
their systems in a number of dimensions (e.g. strengthening of policy in China
from 2004; readjustments to minimum wages in line with growth in Brazil from
2005; Russian Federation complemented its national minimum wage with
regional floors in 2007; adoption of Wages Code in 2020 in India, which expanded
coverage; introduction of a national minimum wage in South Africa in 2019). In
addition, South Africa has established a wage subsidy for youth, called the
Employment Tax Incentive (ETI) recently extended to 2029. Evidence from the
BRICS and beyond show that an effective wage policy can help redistribute the
returns to growth without damaging employment and subsequently contribute
to reducing poverty and inequality.

While these policies have an important role to play, such interventions alone
cannot fix the deficiencies on the demand side in terms of creating more decent
and productive employment, which requires the right type of investment,
supported by infrastructure and overall capabilities to spur structural change
that is pro-employment and pro-poor. This situation for policymakers has been
further complicated by the COVID-19 crisis, which has hit economies and labour
markets around the world, including the BRICS countries. The crisis is

44
Government of India, 2019, Redesigning a Minimum Wage System in India for Inclusive Growth, Chapter
11 in Economic Survey 2018-19.

26
threatening to reverse gains made in poverty reduction. The ILO estimates that
global labour income has declined by 10.7 per cent in the first three quarters of
2020 (relative to the same period in 2019), which represents around USD3.5
trillion.45 The World Bank estimates indicate that, under their baseline scenario,
the COVID-19 crisis could result in 176 million additional poor at the USD3.20 per
day threshold (2011 PPP) and 177 million additional poor at USD5.50 threshold.46

In response to the COVID-19 crisis, policymakers have deployed existing and new
policy interventions, to tackle both immediate crisis (health impact along with the
necessary lockdown and other containment measures). Countries have put
together large fiscal packages to support the economy (backed up by
accommodative monetary policies), while protecting incomes of businesses and
workers. Many measures have been used to keep workers in their jobs
(employment retention) while liquidity support has gone to enterprises to keep
them solvent and ready to open up their businesses once recovery has
commenced.

Fiscal support in the BRICS countries has been significant, particularly in terms of
direct government spending, which exceeds the G20 average in the case of Brazil,
China and South Africa (i.e. the government spending component only) (figure
9). The other countries have smaller fiscal support packages, including tax relief
and credit enhancement. While it is too early to assess the impact of the fiscal
stimulus in supporting employment and preventing poverty, measures will be
needed for some time given the likely long and uncertain recovery. Policies will
have to be adapted as the pandemic evolves and workplaces open up, though
governments will need to continue to balance health and economic objectives for
some time to come. Given the impact of the crisis on certain groups, sectors and
regions, targeted measures will be needed to ensure that the crisis doesn’t lead
to long-lasting poverty and rising inequality.

45
See ILO, ILO Monitor: COVID-19 and the world of work. 6th edition, 23 September 2020.
46
See World Bank, Projected poverty impacts of COVID-19 (coronavirus), 8 June 2020.

27
Figure 9. Fiscal support in BRICS countries in response to the COVID-19 crisis (% of GDP)

Source: CSIS G20 COVID-19 Fiscal Relief Tracker, CSIS Economic Program, Last Updated June 29, 2020

Promoting a job-rich and inclusive recovery from the crisis will, therefore, be a
key priority over the coming months and years, which will require a combination
of the employment policy measures that address both the pre-existing deficits
and the challenges facing hard-hit sectors and groups, such as women, young
people and businesses and workers in the informal economy. In terms of the
latter, a key focus of the longer-term strategy will be to promote formalization of
enterprises and workers in line with the Transition from the Informal to the
Formal Economy Recommendation, 2015 (No. 204), which will help reinforce
efforts to reduce inequalities and strengthen resilience in the labour market.
Recent examples of formalization efforts include the expansion of labour laws in
India to include informal workers (e.g. under the Code on Wages enacted in
August 2019) and the use of a combination of incentives and enforcement for
microenterprises to register in Brazil through rises through the Simples Nacional
regime.47

47
ILO (2019) Simples National: Monotax Regime for Own-Account Workers, Micro and Small Entrepreneurs:
Experiences from Brazil.

28
In addition, the ILO Employment and Decent Work for Peace and Resilience
Recommendation, 2017 (No. 205) promotes a multi-track approach
implementing coherent and comprehensive strategies for promoting peace,
preventing crises, enabling recovery and building resilience that includes
stabilizing livelihoods and income through immediate social protection and
employment measures.

The BRICS countries had already made some notable steps towards these goals
before the COVID-19 crisis. As highlighted during the BRICS LEMM in Brasilia in
2019, many actions have been taken by countries.48 To build capacities, efforts
have been made to promote lifelong learning (e.g. India’s Skill India Initiative)
and entrepreneurship (China), and narrow gender participation gaps (such as
providing childcare facilities in the Russian Federation). Institutions have been
enhanced (e.g. public employment service in the Russian Federation and China,
labour regulations of new forms of work in South Africa, policies for older people
in Brazil). China and India have placed a lot of emphasis on the green economy
as reflected, for example, by the establishment of the International Social Alliance
by India, which now has 121 member countries. South Africa’s Green Economy
Accord seeks to take advantage of opportunities in this sector. At the same time,
Brazil’s Digital Transformation Strategy (E-Digital) of 2018 strives to integrate
various digital initiatives within a single policy framework.

The intersection of the impact of the COVID-19 crisis and the ongoing future of
work trends due, in particular, to technological progress and climate change, will
arguably define the key employment policy priorities over the coming years. To
this end, the ILO Centenary Declaration for the Future of Work (2019) provides
guidance on shaping a new generation of national employment policies, which
link the COVID-19 crisis response and the longer-term goal of moving towards a
better future of work, through its human-centred approach with a focus on
investing in people’s capabilities, labour institutions and decent and sustainable

48
ILO (2019) Promoting Decent Employment for a Sustainable Social Security System, Short Paper Prepared
for the 1st EWG under the 2019 Brazilian Presidency of the BRICS.

29
work. In this regard, South Africa is currently in the process of developing a
national employment policy that corresponds to the notion of a new generation
of national employment policies, which seek to actively address the country’s
employment challenges, especially as they arise as a result of the COVID-19 crisis.
South Africa has also increased the Employment Tax Incentive by R750 per month
per employee as part of the country’s Covid-19 relief effort.

Recent examples and good practices from the social

protection side

Complementing their employment policies, BRICS countries have actively used

social protection policies to support the structural transformations of their
economies and to reduce poverty. Such policies have contributed to significant
progress in the extension of social protection, using a combination of
contributory and non-contributory schemes and programmes, such as social
insurance and tax-financed schemes, particularly where they have been
implemented in a gender-responsive way.49 This section reviews some successful
examples and good practices of social protection policies in BRICS countries for
extending social protection coverage to protect workers in all forms of
employment, and building social protection systems, including with regard to
recent policy responses to the COVID-19 crisis.

These examples demonstrate the capacity of social protection systems to adapt

to change and support the recovery from the crisis. The challenge for national
social protection systems will be to transform temporary measures into a
sustainable reinforcement of their social protection systems, that can provide an
adequate level of social protection for workers in a changing world of work,

49
ILO (2019): World Social Protection Report, ibid.

30
including those in the digital economy50, and contribute to decent work and
inclusive growth.

Extending social insurance coverage to uncovered groups of workers

All BRICS countries rely on social insurance as a core element of their social
protection systems, and have made efforts to progressively extend coverage to
previously unprotected groups of the population through a combination of non-
contributory and contributory schemes.51 Extending social insurance coverage to
uncovered groups of workers is essential, as such coverage usually provides
higher levels of protection than non-contributory, tax-financed schemes.52 It is
also an essential component of policies to facilitate the transition of enterprises
and workers from the informal to the formal economy, as reflected in ILO
Recommendations No. 202 and 204. In addition, social protection policies can
also play an important role in facilitating a just transition towards
environmentally sustainable economies and societies for all.53

As COVID-19 unfolded, BRICS countries have used their social insurance schemes
to protect lives and help attenuate rises in poverty and income insecurity that
otherwise would have been more pronounced if no action were taken.54 At the
same time, the crisis revealed weaknesses in the existing social protection system

50
See e.g. ILO (2018) Innovative Approaches for Ensuring Universal Social Protection for the Future of Work.
Issue Brief Prepared for the 2nd Meeting of the Global Commission on the Future of Work; C. Behrendt, Q,
A. Nguyen, U. Rani (2019) “Social Protection Systems and the Future of Work: Ensuring Social Security for
Digital Platform Workers.” International Social Security Review 72 (3): 17–41.
51
ILO and ISSA (2018) Moving towards a Universal and Sustainable Social Security System in the BRICS; ILO
and OECD (2020) Ensuring Better Social Protection for Self-Employed Workers, Paper Prepared for the G20
Virtual EWG Meeting, Riyadh, 8 April 2020.
52
ILO (2019) Extending Social Security Coverage to Workers in the Informal Economy: Lessons from
International Experience; OECD and ILO (2019) Tackling Vulnerability in the Informal Economy. See also
http://informaleconomy.social-protection.org.
53
See ILO (2015) Guidelines for a just transition towards environmentally sustainable economies and
societies for all; ILO (2018) World Employment and Social Outlook 2018: Greening with Jobs, especially
Chapter 4.
54
ILO and OECD (2020) The Impact of the COVID-19 Pandemic on Jobs and Incomes in G20 Economies, Paper
prepared for the G20.

31
that needed to be urgently closed by ad-hoc measures, such as with regard to
unemployment protection (including employment retention schemes)55, sickness
benefits56 and the extension of coverage to workers in the informal economy,
including the self-employed.57

In Brazil, the extension of social protection coverage achieved prior to COVID-19,

for example through rural pensions or the introduction of simplified tax and
contribution collection mechanisms for certain categories of micro-enterprises58,
increased the capacity of the social protection system to respond to the COVID-
19. Unemployed workers and micro-entrepreneurs (both formal and informal)
who lost their earnings could apply for a means-tested three-month emergency
benefit. Those not yet registered in the national single social protection register
can enrol through a website or phone application. The health insurance
administration (Agencia Nacional de Saude Suplementar) included COVID-19 tests
in its mandatory coverage plans.

Thanks to earlier investment in social health insurance and its health system,
China integrate prevention, testing and treatment measures for COVID-19,
including telemedicine, into healthcare benefit packages. These policies were
facilitated by China’s earlier efforts in extending health coverage to residents of
rural areas.59 Further, unemployment benefits were extended to those registered
in the scheme but who had not yet completed their mandatory one year of
contributions.

55
ILO (2020) Unemployment Protection in the COVID-19 Crisis: Country Responses and Policy
Considerations. Social Protection Spotlight.
56
ILO (2020) Sickness Benefits during Sick Leave and Quarantine: Country Responses and Policy
Considerations in the Context of COVID-19; ILO (2020) Sickness Benefits: An Introduction.
57
ILO (2020) Extending Social Protection to Informal Workers in the COVID-19 Crisis: Country Responses and
Policy Considerations; ILO (2020) COVID-19 Crisis and the Informal Economy: Immediate Responses and
Policy Challenges; ILO and OECD (2020) “Ensuring Better Social Protection for Self-Employed Workers, Paper
Prepared for the G20 Virtual EWG Meeting, Riyadh, 8 April 2020.
58
ILO and ISSA (2018) Moving towards a Universal and Sustainable Social Security System in Brazil.
59
ILO and ISSA (2018) Moving towards a Universal and Sustainable Social Security System in China.

32
In South Africa, the Unemployment Insurance Fund compensated affected
workers through a new national disaster benefit. 60 This included domestic
workers and agricultural workers who have been brought under unemployment
insurance coverage through earlier reforms.61 A flat-rate benefit equal to the
minimum wage of US$200 per employee was paid for 21 days to cover part of the
national shutdown period or up to a maximum period of three months. If an
employee is sick or unemployed for longer than three months, the normal
unemployment benefits apply.

In the Russian Federation, sickness benefits were increased to reach at least the
level of the minimum wage of 12,130 roubles (US$162) per month. These benefits
were also prolonged without beneficiaries having to complete any additional
qualifying procedures. In April, the minimum unemployment insurance benefit
was increased to 12,130 roubles per month for those who lost their jobs after 1
March 2020. For those who were registered unemployed before 1 March 2020,
the minimum unemployment benefit has been increased threefold, to 4,500
roubles. Additional payment amounting to 3,000 roubles per child is provided to
unemployed with children up to 18 years of age. This arrangement had been
announced as temporary, but was extended in summer 2020.

Strengthening tax-financed mechanisms to ensure a social

protection floor for all

Providing a nationally-defined social protection floor ensuring at least basic

social security guarantees is key to protecting those most in need, and to
preventing or at least reducing poverty. Non-contributory social protection
schemes, usually financed by general taxation, are key to closing coverage gaps

60
ILO (2020) Unemployment Protection in the COVID-19 Crisis: Country Responses and Policy
Considerations; ILO (2020) Social Protection Responses to the COVID-19 Pandemic in Developing Countries:
Strengthening Resilience by Building Universal Social Protection.
61
ILO and ISSA (2018) Moving towards a Universal and Sustainable Social Security System in South Africa.

33
and ensuring at least a basic level of protection for everyone, in accordance with
Social Protection Floors Recommendation, 2012 (No. 202).

Such tax-financed social protection schemes include both non-means-tested

schemes covering large categories of the population (such as universal child
benefits in the Russian Federation or the universal health care system in Brazil),
and means-tested schemes targeted at population living in poverty (such as
China’s Dibao social assistance scheme or Brazil’s Bolsa Família scheme).
Combining features of both types of schemes, South Africa ‘s social grants are a
special case: although they include a means-test, they cover the large majority of
the respective target groups, with more than two thirds of older persons
receiving an old age grant, and four out of five children benefiting from child
support grants.62

The capacity of tax-financed schemes to prevent, or at least reduce poverty

depends on three key factors: their extent of coverage, the adequacy of their
benefits, and the extent to which benefits are actually being used by the eligible
population. For example, while social assistance schemes play an important role
in improving the well-being of those benefitting them, narrowly targeted
programmes often exclude a large share of those they intend to target, especially
where it is not possible for people to ask for their reassessment in case their
situation changes. This is why many countries prioritize tax-financed schemes
that cover broad categories of the population, such as universal child benefits or
old age pensions, which tend to reach more people in need than narrowly
targeted programmes and have lower administrative cost.63 However, to fulfil
their objectives in terms of the prevention of poverty, benefit levels need to be
set at an adequate level.

62
The child support grant in South Africa, covering 11.7 million poor children in 2015, equivalent to 85 per
cent of the target group, has shown to have a positive developmental impact on children and their families.
While the benefit is currently means-tested, plans to universalize the grant could help include currently
vulnerable children that are excluded from the programme. The Older Persons Grant has reduced old-age
poverty from 55.6 per cent in 2006 to 36.2 per cent in 2011.
63
ILO and UNICEF (2019) Towards Universal Social Protection for Children: Achieving SDG 1.3.

34
BRICS countries used their tax-financed schemes to respond to the challenges
posed by COVID-19, and further extended and adapted them to meet the most
urgent needs. This included both the allocation of funding to extend the coverage
of universal benefits and social assistance.

For example, China increased the level of social assistance benefits for vulnerable
population groups. Local governments were instructed to increase the benefit
levels provided under the national social assistance scheme (Dibao) for either all
beneficiaries or those who were infected, depending on the province.

India paid a top-up of Rs1000 (US$ 13) to all beneficiaries under the National
Social Assistance Program for elderly, widows and person with a disability
receiving social pensions (approximately 35 million beneficiaries). 87 million
farmers who are beneficiaries of the Pradhan Mantri Kisan Samman Nidhi (PM-
Kisan) programme received a top up of Rs2000 (US$ 26.50) for three months. At
the state level, new temporary benefits were introduced. For example, Uttar
Pradesh provided a new benefit to workers who lost their job, and Kerala
provided advance payments of old age, widow or disability pensions and
transfers to self-employed and informal workers. Wages under the Mahatma
Gandhi National Rural Employment Guarantee scheme (MGNREGS) were also
moderately increased from Rs180 (US$ 2.38) to Rs202 (US$ 2.67).64

Brazil’s Bolsa Família programme played a key role during the crisis, ensuring
access to nutrition, health, education and skills, prevent child poverty and ensure
better opportunities for the next generation. While the funding had been
reduced before the COVID-19 crisis, it was again increased, so that the
programme can continue to provide an important source of income for nearly 48
million persons.65 In addition, in some federal states, additional cash transfers

64
ILO and ISSA (2018) Moving towards a Universal and Sustainable Social Security System in India; ILO (2020)
Social Protection Responses to the COVID-19 Pandemic in Developing Countries: Strengthening Resilience
by Building Universal Social Protection.
65
https://g1.globo.com/economia/noticia/2020/03/16/ministerio-da-economia-anuncia-novas-medidas-
para-reduzir-impacto-do-coronavirus-veja-lista.ghtml.

35
were provided to families who had normally benefited from school feeding
programmes.

The Russian Federation significantly enhanced its social assistance and family
benefit provision.66 All social benefits and special entitlements were extended for
six months. In April a universal one-off cash transfer of RUB 10,000 (US$136) was
disbursed to all children aged 3–16. In July, an additional universal one-off cash
transfer of RUB 10,000 (US$136) was paid to families for each child under 16.
Families eligible for the Maternity Capital benefit received an additional 5,000
roubles (US$63) for 3 months (April-June) for children aged 0-3, and the
programme was also extended to previously ineligible mothers. In 2020,
Maternity Capital has been extended to 1st born child (USD 5,825), and increased
for 2nd and 3rd (USD 7,708). Families are guaranteed a state subsidized
mortgage interest rate at 6.5%, land for house building and other benefits, to
improve living conditions.

The South African social grants system was used to channel additional income
support to recipients. Child support grant beneficiaries received an extra R300 in
May and an additional R500 each month from June to October. All other grant
beneficiaries received an extra R250 per month for a period of six months. In
addition, a special Covid-19 Social Relief of Distress grant of R350 a month is
being paid for six months to individuals who are currently unemployed and do
not receive any other form of social grant or benefit under the Unemployment
Insurance Fund.

66
ILO and ISSA (2018) Moving towards a Universal and Sustainable Social Security System in the Russian
Federation.

36
Conclusion: The case for a more systematic
coordination between employment and social
protection policies for poverty reduction

Progress to prevent, or at least alleviate, poverty requires more and better quality
jobs. Transformation of the economic structure, in particular a transition to
higher value-added sectors, can lead, with appropriate policy measures, to the
creation of productive employment and a reduction in poverty. At the same time,
investment in social protection, including health protection and income
transfers, such as pensions, as well as education, is necessary to provide equal
opportunities and protect from the risk of falling into poverty.

As the previous sections have demonstrated, employment and social protection

policies both play a key role in poverty reduction, yet their potential could be
exploited even more by further strengthening the coordination between these
policies and promoting integrated policy frameworks in line with previous BRICS
Labour and Employment Ministers’ Declarations.

The close link between employment and social protection policies has been a
recurrent theme in the deliberations of the BRICS Employment Working Group.
LEMM Declarations have highlighted this strong link and the commitment to
decent work and universal social security systems.67 The BRICS countries have
recognized the important link between employment and social protection
policies for reducing poverty and achieving inclusive growth in various national
development plans68, such as the China’s 13th Five-Year Plan (2016-20) for the

67
See above footnote 1.
68
ILO (2019) Promoting Decent Employment for a Sustainable Social Security System, Short Paper Prepared
for the 1st EWG under the 2019 Brazilian Presidency of the BRICS; ILO (2019) Universal Social Protection for
Human Dignity, Social Justice and Sustainable Development: General Survey Concerning the Social
Protection Floors Recommendation, 2012 (No. 202).

37
Development of Human Resources and Social Security and the South Africa’s
National Development Plan 2030.69

BRICS countries already dispose of large public employment programmes that

combine employment objectives with income support. For example, India’s
Mahatma Gandhi National Rural Employment Guarantee Schemes provide
employment opportunities and a basic level of income security to the rural
population.

One of the areas that would benefit from integrated policy frameworks relates to
a better coordination between unemployment protection and active labour
market programmes.70 These play an essential role in fostering a quick recovery
from the crisis, supporting the structural transformation of the economy,
facilitating labour mobility and supporting the re-skilling of the labour force.
South Africa’s Unemployment Insurance Fund (UIF) includes a labour market
activation programme to promote the creation of employment opportunities,
skilling and re-skilling, enhancing the employability of UIF beneficiaries,
supporting return-to work; and its Expanded Public Works Programme was
established to provide basic income security and temporary work and skills
development opportunities for the most vulnerable groups of the population,
such as unemployed, poor and persons with disabilities. China’s unemployment
insurance funds are also used for training purposes and other active labour
market measures. Going forward, such initiatives could be further developed to
further enhance their contribution to poverty reduction and supporting
structural transformation of the economy. Having in mind that integrated
employment and social protection services, including public employment
schemes, are channelled through institutions, attention should be paid to

69
See P. Benjamin and A. Cawe (2020) A Review of the NDP in Meeting its Labour Market Objectives: Progress
Report, National Planning Commission, ILO and NDP.
70
ILO (2020) Unemployment Protection in the COVID-19 Crisis: Country Responses and Policy
Considerations; C. Peyron Bista and J. Carter (2017) Unemployment Protection: A Training Package and Good
Practices Guide: Experiences from ASEAN.

38
strengthening their capacity and funding, staff skills and innovative policy
implementation tools.

The lessons already learnt from the COVID-19 policy responses (and earlier
crises) also highlight the importance of a close coordination between
employment and social protection policies in establishing and scaling up
employment retention measures in times of crisis. While countries have used
different institutional arrangements to channel the necessary resources to
support employers in retaining their employees, and workers to have income
security in times of crisis (short-time work benefits, temporary wage subsidies),
they demonstrate the key importance of a well-coordinated policy and delivery
framework.71

In order to fully reap the benefits of a more integrated approach, coordination

between employment and social protection policies should be strengthened at
all levels, including in the formulation, implementation and monitoring of
strategies and policies, as well as at the operational level, such as through one-
stop shops for employment services and social security.72 Particular attention
should be given to designing such policies in a gender-responsive and inclusive
way. This can create a virtual cycle of integrated policies for decent work.

Another area that offers significant potential for an integrated policy approach
are policies to promote better access to child care and long-term care. Such
policies, if designed well, potentially have a positive effect on gender equality and
women’s employment and social protection.73 More broadly, such policies are key
in responding to demographic change.

71
ILO (2020) Unemployment Protection in the COVID-19 Crisis: Country Responses and Policy
Considerations; ILO (2020) Temporary Wage Subsidies.
72
ILO (2013) Coordinating Social Protection and Employment Policies: Experiences from Burkina Faso,
Cambodia and Honduras: EU/ILO Project on Improving Social Protection and Promoting Employment.
73
See ILO (2017) World Social Protection Report 2017-19, ibid; ILO (2018a) Care Work and Care Jobs for the
Future of Decent Work; ILO (2019) A Quantum Leap for Gender Equality: For a Better Future of Work for All.
Geneva: International Labour Office); ILO and WIEGO (2020) Extending Childcare Services to Workers in the
Informal Economy: Policy Lessons from Country Experiences; ILO (2019) Promoting Decent Employment for

39
The COVID-19 crisis has reinforced the need for integrated approaches to
employment and social protection as a means to protect incomes and jobs,
especially for those hard hit by the crisis, including women, youth and those in
the informal economy. As countries move towards reopening their economies,
these measures are equally important to promote an inclusive and job-rich
recovery with a longer-term vision of creating a more equitable, sustainable and
resilient labour market. These longer-term goals are juxtaposed against the
impact of the future of work trends that predated the COVID-19 crisis and have,
in many ways, accelerated as a result of the pandemic (e.g. digitalization). For this
reason, the ILO Centenary Declaration for the Future of Work 2019 provides
guidance to addressing the rapid changes witnessed in the labour markets of the
BRICS countries and beyond through investing in human capabilities, institutions
of work and decent and sustainable work.

a Sustainable Social Security System, Short Paper Prepared for the 1st EWG under the 2019 Brazilian
Presidency of the BRICS.

40