Extending social protection during times of crises: The data revolution

This working paper is  a product of the EU's thematic social protection programme 'Improving synergies between social protection and Public Finance Management'. The paper analyses the adaptation of social protection systems to changes in economic conditions and discusses how these can be made more responsive and inclusive during crises by leveraging newly available data systems.

 In examining data for 106 countries from the 1980s onwards, it transpires that social protection is the most countercyclical type of public expenditure and that social assistance spending has typically been more responsive during economic contractions. Preliminary data suggests that social protection spending has been more adaptive during the COVID-19 pandemic than it was following the global financial and economic crisis of 2007–2009;it is expressed by the adoption of countercyclical policy interventions in both developed and developing economies, with a strong expansion of non-contributory interventions.

The discussion then reviews recent policy innovations that were introduced during the pandemic to track the impact of the socio-economic crisis and identify potential beneficiaries. These innovations demonstrate that governments can respond to a crisis in a timely manner and even reach individuals who are typically outside the scope of social protection (e.g. informal workers).

The overarching conclusion of the paper is that new data and methodologies, which are becoming increasingly available and have been used in other areas of policy interventions, can improve the adaptability of social protection systems. Especially where informality is high, these innovations will enable developing countries to address a lack of information about the social protection needs and loss of income of the population. While the full potential of novel technologies has yet to transpire, in the meantime the socio-economic conditions of informal workers will be better known to governments, thus facilitating social protection (and taxation) mechanisms of greater pertinence.