54 Can productivity in SMEs be increased by investing in workers’ health?
9. Conclusion
This extensive international literature review of social protection, working conditions and productivity in SMEs has shown the economic and social importance of SMEs, the
complexity of the sector and an often unfathomed understanding of how social protection legislation will affect pro-poor economic growth. What clearly emerges from the study,
however, is that the simplistic neoclassical economic logic that “social protection disturbs efficient markets and is hence counterproductive to growth” can safely be discarded. Apart
from their intrinsic value, good health, security and a more equitable share of gains will result in better availability of staff, the development of their expertise and motivation,
lower costs of sickness and less replacement. As Tomassi 2010 writes:
Recent theories stress more complex relationships between economic and social issues. First, trickle-down is not so obvious, as is demonstrated by growing inequalities in the advanced
countries in the last 30 years although they have seen economic growth. Second, some conditions for perfect competition to hold are not met in our real world – due to heterogeneity
of individuals, aversion to risky activities, second best outcomes, uncertainty and information asymmetries – jeopardizing the feasibility to protect people from increasing risks. Third,
social protection represents not only consumption or redistribution among individuals “Robin Hood”, but also insurance not efficiently provided by private markets and redistribution over
the life cycle “Piggy Bank”. Fourth, according to the concepts of capabilities and functionings, social protection provides individuals with wider liberty of choice and more
opportunities of participation in economics, politics and social life.
Tomassi’s report brought together available data and analysis on barriers to coverage and access in social protection. It became clear that wherever ownersmanagers of SMEs
were asked about social protection, lack of information, misunderstanding and prejudices were common. So far, solid evidence and robust data to make a business case for social
protection at the individual enterprise level are not available.
The ILO’s Social Protection Floors Recommendation, 2012 No. 202 is the latest international instrument on social security and has set the stage for comprehensive social
protection. It puts emphasis on access to essential health care, making it one of the four basic social security guarantees that should constitute, at the minimum, national social
protection floors. Employment-based social protection can use this Recommendation as guidance for mid-to long-term social security development.
There are many gaps in specific quantitative and qualitative research on SMEs and social protection, not least due to non-uniform definitions and categorizations. Key areas
of possible activities are research, pilot projects and surveys, most importantly to: -
Provide evidence at company level that social protection does not negatively affect the revenue and profit per worker but can even improve it, thus ultimately increasing
the survival rate of an SME.
- Document best practices and possible options for reducing administrative burdens and
collective agreements of SMEs when registering for social protection. -
Conduct studies and pilots on organizational development and economies of scale creation.
- Initiate capacity building and awareness raising of best practices.
- Develop high-quality statistics and data documenting the total number of employees
in enterprises that are affected by social protection-related questions, to initiate
Can productivity in SMEs be increased by investing in workers’ health? 55
country studies piloting comprehensive data collection and regular update mechanisms.
- Provide concrete advice on the practical challenges of SMEs in the area of staff
management and staff benefits. -
Develop further the emerging theoretical framework that links government regulation with working conditions and overall benefit, in particular productivity.
International organizations could initiate comprehensive research and development programmes to better understand and monitor progress in this specific field of social
protection. Possibly the most promising approach lies with general improvements in and support to business regulation and compliance, as these have been shown to both decrease
informal employment and promote a healthy SME sector.
In summary, there are many tasks concerning social protection in SMEs that need to be addressed by governments, international organizations and academics in order to
support the formalization and development of the SME sector, mainly in developing countries. The key issues are robust data on the impact of social protection on working
conditions and productivity, reducing administrative burdens, information, compliance and proof of the concept that social protection is good for small business.
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