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1、A new social welfare modelEncouraging economic participationContactsDubaiSami ZakiPartner+971-4-436-3000sami.zaki Rasha SalemPartner+971-4-436-3000rasha.salem Nour OueidatPrincipal+971-4-436-3000nour.oueidat About the authorsSami Zaki is a partner with Strategy&Middle East,part of the PwC network.Ba

2、sed in Dubai,he is a member of the government and public sector practice in the Middle East.He specializes in public-sector governance.He has led projects in GCC countries to modernize the whole-of-government structure,design and empower centers of government,transform core government functions,and

3、reform the civil service.He also has expertise in social development;most recently,he has advised GCC governments on the development of their social agendas,enablement,and empowerment of the not-for-profit sector,and the design of social assistance policies and programs.Rasha Salem is a partner with

4、 Strategy&Middle East.Based in Dubai,she is a member of the government and public sector practice in the Middle East.She specializes in social development.She has worked extensively in setting social sector policy;developing strategies related to social protection and supporting and empowering famil

5、ies and vulnerable groups;and advancing sector restructuring and enablement.Nour Oueidat is a principal with Strategy&Middle East.Based in Dubai,she is a member of the government and public sector practice in the Middle East.She specializes in social development.She has led multiple engagements rela

6、ted to family cohesion and protection.She has also advised GCC government agencies on the revamp of social assistance programs and how to activate social welfare beneficiaries.Efe Savas,formerly of Strategy&Middle East,also contributed to this report.Strategy&|A new social welfare model1Social welfa

7、re has long existed in Gulf Cooperation Council(GCC)1 countries,primarily as generous social assistance.In their move toward economic diversification and greater private-sector participation,GCC countries are rethinking their social welfare systems,which have grown organically thus far.Beyond provid

8、ing a safety net for the disadvantaged and the needy,GCC countries should build a holistic social welfare model that incentivizes those who can work to participate in the labor force.The existing social welfare model in GCC countries can appear incoherent and fragmented.As in many countries,that is

9、an unintended consequence of the models organic development over the years,which has been guided by the development of the economy and the social contract.Often,multiple ministries oversee various aspects of social welfare.Different programs are commonly designed independently to serve specific poli

10、cy objectives,with limited integration and coordination with the broader social welfare system.That can render initiatives inconsistent,or at times in conflict with each other.In some cases,governments have introduced short-term programs to respond to urgent needs,relegating the long-term impact to

11、an afterthought.Social welfare programs can lack a proper contextual understanding of the beneficiarys situation,and other programs they could be receiving,because of limited data sharing and a single beneficiary view.Consequently,these programs are less efficient than they could be in how they are

12、designed and implemented.Another issue is that social welfare programs can prioritize relief to low-income citizens,focusing on income supplementation and not deliberately encouraging economic participation.However,some GCC countries started to correct his by introducing benefit conditionality as of

13、 2023.This emphasis on social assistance can be better complemented with a varied offering of social insurances,whereby beneficiaries contribute to reduce the uncertainty that can arise from potential future loss of income.GCC countries can develop a holistic social welfare model that encourages act

14、ivation(getting people from welfare into work),enables beneficiaries to improve their skills,and supports people joining the workforce.To achieve this change,GCC countries should follow three imperatives:Strengthen coherence among social protection programs by designing integrated beneficiary-orient

15、ed programs Expand social insurance with a clear link between social policy and the labor market Focus on the activation and behavioral change of beneficiariesGovernments also need to change public perceptions given that some people perceive welfare to be an entitlement.That requires effective publi

16、c engagement to communicate the need for a new social welfare model that promotes prosperity.EXECUTIVE SUMMARYStrategy&|A new social welfare model2SOCIAL PROGRAMS ARE CRITICAL FOR ECONOMIC DEVELOPMENTOver the past four decades,discussions about social programs in developed countries have often focus

17、ed on cost reduction.However,the conversation in GCC countries is markedly different because social programs are growing in line with regional economic development.The expansion of welfare is often a functional requirement that emerges as market economies become the core resource allocation mechanis

18、m and economic activity becomes more diversified.A market-led economy requires a well-designed social welfare system for several reasons.Such a system creates a protection mechanism for society against both the risk of interrupted income and the negative outcomes of poverty;it also balances possible

19、 inequalities.A properly designed social welfare system can sustain spending and consumption levels should government spending decline.It can use financial transfers to the needy and a social safety net to provide dignified living conditions to the disadvantaged and those unable to work.A well-desig

20、ned social welfare system is also a critical functional input to sustainable growth.The system can provide methods to get people into the workforce and help them acquire the skills to thrive and become self-sufficient,thereby building the countrys human capital wealth,and supporting economic develop

21、ment.That is particularly important for GCC countries,because their move toward higher value-added activities increases the demand for skilled labor.Some GCC countries are already changing their social welfare systems along these lines.For example,Saudi Arabia and the United Arab Emirates(UAE)have a

22、nnounced initiatives to strengthen labor market competitiveness and provide a social safety net for those seeking employment.In 2020,Saudi Arabia announced a Job Seekers Benefit Program to allow people who lose their job to claim unemployment insurance.2 In July 2022,the UAE Ministry of Community De

23、velopment revamped its social welfare program for low-income citizens,including a housing allowance,a higher education allowance,a job-seeking allowance,an allowance for unemployed citizens over the age of 45,and increased allowances for employed household heads.3A market-led economy requires a well

24、-designed social welfare system.Strategy&|A new social welfare model3Strategy&|A new social welfare model4THE INEFFICIENCIES AND SHORTCOMINGS IN SOCIAL WELFARE PROGRAMSSocial welfare programs in the GCC are realizing less impact than they should.The core issue in GCC countries is that there is no co

25、herent philosophy behind these programs,which have developed organically over time.Sometimes programs are out of date and do not align with national economic development programs.Countries frequently have a plethora of programs managed by various ministries and agencies that target too many groups,w

26、hile the most vulnerable can fall through the cracks.The result is unnecessary spending and unequal distribution of funds.The problem of fragmentationToo often there is fragmentation and inconsistency at the governance,programmatic,and operational levels,which leads to inefficiencies as these progra

27、ms expand.At the governance level,multiple ministries oversee various aspects of social welfare,which means no central oversight or monitoring of programs exists.For example,there are numerous federal and emirate-level social custodians and agency-led programs in the UAE responsible for the provisio

28、n of housing as a form of social assistance.At the programmatic level,policymakers design initiatives in silos,with the unintended effect that one program offsets the intended outcome of another.Sometimes,governments introduce temporary programs to address imminent challenges without taking a long-t

29、erm view of how these initiatives integrate into the social welfare system.At the operational level,there are delivery inefficiencies because of the lack of unified beneficiary and household information,along with limited opportunities for knowledge sharing among government agencies.Meanwhile,the si

30、los and lack of a holistic approach undermine the effectiveness of achieving goals and create other issues.One such problem is that countries create initiatives that are complementary to social welfare programssuch as food and fuel subsidiesleading to increased spending,an unequal distribution of fu

31、nds,and operational complexity associated with administering an uncoordinated portfolio of initiatives.There are also inconsistencies among some programs intended outcomes and design rules that hinder the achievement of desired outcomes.Strategy&|A new social welfare model5Overreliance on social ass

32、istance,underuse of social insuranceGCC countries tend to rely on social assistance programs while underutilizing unemployment and social insurance,which is a mutual relationshippeople pay into the system and then take out funds when they need to.The result is pressure on government budgets that may

33、 not be fiscally sustainable over the long term.Social assistance is a one-way relationship as the state provides funds and help to recipients.By contrast,GCC countries do not sufficiently use social insurance to.In the GCC,social insurance is limited to basics such as old age and survivor pension,a

34、long with disability and work-injury insurance;it often excludes unemployment insurance and additional options common in other regions.Moreover,the absence of well-developed social insurance offerings,such as defined-contribution pensions,discourages people from remaining active in the GCC labor mar

35、ket for a long time.Early exits from the labor market and career interruptions,such as people taking time off unproductively,are more common than in comparable economies.For instance,the minimum retirement age in the UAE by law is 49,compared with age 60 or greater in OECD countries.This greater pop

36、ulation of early retirees places further pressure on social assistance.Given the underdeveloped social insurance ecosystem,smooth transitions between the systems of social assistance and social insurance are not yet possible for beneficiaries.In developed welfare states,the two systems work in tande

37、m.To illustrate,beneficiaries of social assistance receive training and job search support under the guidance of a caseworker to maintain conditional benefits,and after they graduate from the social assistance program,they can be gradually transferred to a social insurance scheme.On the other hand,w

38、orkers who lose their job and whose unemployment benefits expire may be temporarily transitioned into the social assistance program until they can get back on their feet.These handovers between the two systems can be made possible and the beneficiary journey made smooth and uninterrupted if governme

39、nts take a systemic view.Limited focus on activationThe greatest hindrance to social welfare programs having more impact is that too few of them stress activation,that is,getting people off welfare and into work.Many social welfare programs in the GCC provide economic relief to low-income segments w

40、ithout encouraging or requiring economic activity from those who can work.Governments have not sufficiently sought effective social policy instruments that promote activation because of the popular belief that welfare is an entitlement rather than an earned benefit.This entrenched belief prompts gov

41、ernments to avoid negative perceptions by directly or indirectly providing handouts that create dependencies.Despite some changes,too few programs seek to encourage people to join the workforce or impose conditions that require them to receive capability development and readiness or placement suppor

42、t to become economically active.Nor are there enough mechanisms for people graduating from social welfare programs who are able to work to eventually stop depending on the state.However,GCC governments realize that by not improving labor market participation,they are indirectly undermining their own

43、 economic development and diversification ambitions.Strategy&|A new social welfare model6Strategy&|A new social welfare model7A PROPOSAL FOR A NEW SOCIAL WELFARE MODELThe goal of a new social welfare model is to increase efficiency and effectiveness to ensure the greatest social benefit for individu

44、als and society.Each GCC country should also consider how state and private-sector roles should change with respect to social welfare systems that promote economic participation while considering their distinct social solidarity,cultural,economic,and governance contexts.The ability to evaluate trade

45、-offsWhat GCC countries need is a social welfare system that enables policymakers to make trade-offs and consider specific contexts while operating a coherent,beneficiary-centered,holistic model.Policymakers need to be able to design and operate programs that complement one another and that are cons

46、istent with national economic development ambitions.The primary considerations of social welfare designSocial welfare design has two primary considerations:the functional mix and the target groups.The functional mix means activation,consumption smoothing(i.e.balancing saving and spending),and povert

47、y reduction.The target groups are those who either permanently or temporarily require assistance.Defining the functional mix and target groups simultaneously allows policymakers to select the programmatic mechanisms and financing for the welfare model as a whole,rather than having to decide them for

48、 each program in isolation.That also allows policymakers to decide how much they should fund the social welfare model directly from budget contributions and how much from insurance programs to which participants contribute.Programming mechanismsWhen designing programming mechanisms,policymakers have

49、 to make choices as to whether a benefit or program is universal or targeted.They must detail the eligibility criteria based on beneficiary profiles and circumstances,while keeping in mind broader national strategic objectives such as promoting fertility and family cohesion.They also need to decide

50、the nature of the transfer to the recipients,such as cash transfers,minimum income guarantee schemes,and benefits.They should consider conditionalities,such as a means test,participation in training,or adoption of positive behaviors(for example,requiring high attendance of the beneficiarys children

51、in school).Programs can include earnings-related social insurance,such as pensions,unemployment,and parental health insurance.Strategy&|A new social welfare model7Strategy&|A new social welfare model8THREE IMPERATIVES FOR RESHAPING THE SOCIAL WELFARE MODELGiven their economic and development ambitio

52、ns,GCC countries should adopt a social welfare model that is activation-oriented and,where possible,financed by contributions.In such a model,programs become earnings-related or conditional,rather than universal and social assistance-oriented.Activation-focused conditional benefits could include req

53、uiring registration for employment insurance programs,means testing,investment in training and empowerment,and creation of job opportunities or job placement support.These approaches reduce dependence on government assistance and promote individual self-sufficiency.The gradual introduction of these

54、activation-focused benefits can further redirect government resources to the most productive uses.No country designs its social welfare model from scratch.GCC countries therefore need to reshape their social welfare programs by following three imperatives and then communicating the changes to the pu

55、blic.By doing so they can make trade-offs,design choices,and select programming mechanisms in a manner that strengthens the system rather than resulting in more fragmentation and inefficient use of resources(see Exhibit 1).1.Strengthen coherence among social protection programsBuilding a new model c

56、alls for systemic adjustments in program design and funding.Social welfare programs should aim to deliver predefined national economic,human capital,and social policy objectives.Accordingly,GCC governments can design beneficiary-centered programs that are integrated into one portfolio.That provides

57、the maximum coordinated impact and the best use of resources.To do so,GCC governments need a new architecture for program administration that will ensure proper coordination,oversight,and data gathering.The information aspect is vital so that policymakers can evaluate impact,share data,and learn les

58、sons.Knowing what impact their choices will have allows policymakers to design programs that are flexible enough to withstand shifting economic conditions and remain relevant.It also means that they have the necessary data and understanding to end programs that no longer serve their purpose.One exam

59、ple of a successful framework is the Social Protection Information System(SPIS),a unified and integrated system with benefits received at the individual level.It is used as a best practice by the World Bank to manage and deliver benefits to poor and underserved communities.4Strategy&|A new social we

60、lfare model9StrengthencoherenceExpandsocial insuranceFocus oneconomic activationTailor beneficiary journeys and support services through active multi-sectoral case managementDeploy behavioral interventions to nudge beneficiaries toward activation and address obstaclesDeliver predefined national econ

61、omic,human capital,and social policy objectivesDesign integrated beneficiary-centered programsDeploy a unified system view to optimize operational coordination and resource useProvide eligible recipients with training,incentives,and opportunities to jointhe workforceIntroduce social insurance progra

62、ms to shield workersfrom income disruption shocksReform existing social insurance programs to enhance sustainabilityPosition social assistance as second line of defense following social insuranceEXHIBIT 1Three imperatives for reshaping the social welfare model in GCC countriesSource:Strategy&Strateg

63、y&|A new social welfare model102.Expand the social insurance offeringGCC governments should establish a clear link between the labor market and social policy to improve the efficiency of the overall social protection framework.That is achieved through a comprehensive social insurance system.GCC coun

64、tries need a social insurance system that is beneficiary-centered,i.e.,one that stems from,and is designed for,beneficiaries needs and circumstances.It should provide financial support to workers and families during specific events or conditions such as accidents,disability,involuntary job loss,and

65、retirement.GCC governments can achieve this by reforming existing social insurance programs to enhance sustainability and instituting new ones to ensure they maximize workforce coverage and achieve labor market policy objectives.Such an approach would allow governments to ensure that social assistan

66、ce,which is a handout,goes to the neediest cases and those unable to participate in the labor market.3.Focus on economic activation and behavioral changeAn internally consistent social welfare strategy should accompany and align with the goals of the national economic transition.It should serve as a

67、n input to increase labor market participation.GCC countries can incorporate mechanisms into social programs that activate and motivate beneficiaries who are able to work to become active participants in the economy.Such mechanisms provide eligible recipients with the necessary skills,training,educa

68、tion,and incentives to join the workforce.They also provide work opportunities to beneficiaries that match their skills.Governments can engage relevant multi-sectoral agencies and beneficiaries in a coordinated manner through a case management approach.They can also integrate beneficiary data manage

69、ment to make it easier to assess eligibility,tailor services,and monitor impact.Further,governments can use behavioral interventions to encourage people to enter the workforce(see Exhibit 2).Strategy&|A new social welfare model11Income generatedActivation journeyFinancial independenceand graduation

70、from thesocial welfare programSkills improvement programsEmployment/self-employment incomeGovernment social welfare allowanceIndividualized case managementBehavioral changeActivationservicesJob matching/self-employment supportTransition supportCareer counseling and mentorshipOn-the-job trainingEXHIB

71、IT 2Social welfare beneficiary journeySource:Strategy&The need for public engagementPromoting activation also requires engagement and dialogue with communities that is designed to change public perceptions.Long-term generous government-financed assistance has given some people a sense of entitlement

72、.People are understandably wary of reforms that could take away their benefits,particularly when they are locked into long-standing programs.Governments need to communicate these changes through effective public engagement,which can include the use of behavioral interventions focused on promoting sh

73、ared responsibility,evoking reciprocity,or a sense of“earning”benefits.Strategy&|A new social welfare model12GCC countries are going through significant economic changes,with new sectors emerging and vast investments being made in infrastructure and cities.Social welfare reforms will be critical for

74、 these countries transition to diversified,private sectorled economies.The development of a modern,internally consistent,holistic social welfare model can support economic transformation and a new era of prosperity;improve labor market efficiency;and provide people with a stake in the system.CONCLUS

75、IONStrategy&|A new social welfare model13ENDNOTES1.The GCC countries are Bahrain,Kuwait,Oman,Qatar,Saudi Arabia,and the United Arab Emirates.2.SaudiArabia,UnifiedNationalPortal,SocialProtection,SocialWelfareSystem(https:/ Welfare Programmes(https:/ Williams and Vanessa Moreira,“Making Social Protect

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