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Social security extension and CSR.docx
1.2.2. Possible contributions by CSR to the extension of social security
1.2.2.1. Entry points in the context of the ILO’s two-dimensional strategy for the extension of social security
States have the primary responsibility for providing social security to all residents and children ILO Convention No. 102 and Recommendation No. 202. They have a range of
means of implementation and funding at their disposal in order to achieve this goal. In this regard, enterprises can play an important role in extending social security in the context of
national policy and legislation. Of course, they must make their contribution as employers and taxpayers, but they can also support the extension of social security voluntarily
through their CSR strategies and related practices. This section undertakes a conceptual examination of the possible entry points see figure 4.
Figure 4. Entry points into the two-dimensional strategy for the extension of social security
Schematically, it is possible to distinguish several entry points for a contribution by business to the two-dimensional strategy for the extension of social security:
– The mandatory entry point: through the payment of social contributions, i.e. the
employer’s contribution to compulsory national social security thus depending on the nature of the statutory social security provisions in each country, as well as taxes that
serve to finance social security benefits and floor-level protection. This raises a range of governance, compliance and transparency issues that are identified by international
organizations as key challenges for MNEs.
– The CSR entry point the subject of this study: two types of possible contributions
may be identified: First, through the voluntary establishment by the company of social protection coverage programmes for employees, in addition to the statutory
provisions. This may involve providing benefits for contingencies that are not covered by statutory provisions andor providing employees with higher levels of
protection than those offered by the system of compulsory social security. Ultimately, these mechanisms may be extended progressively, through social dialogue, to be
included in compulsory social security. This first type of contribution is detailed below in the sections “Voluntary supplementary social protection” and “Social
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dialogue”. Second, through the introduction of innovative responses to social needs identified as essential at the national level, thus contributing to the floor-level social
protection system. This may be considered, in particular, in the context of partnerships with public authorities on issues such as access to water, health services,
etc., even though this entry point appears less direct than those currently available.
Those CSR entry points are the focus of this study. The mandatory entry point detailed above relates to compliance with corporate legal obligations, as with all formal
economic activity. i.
Voluntary supplementary social protection for employees The first two boxes of the ILO two-dimensional strategy fall under the responsibility
of States. It should be recalled that the ILO MNE Declaration includes the social protection of employees in the form of benefits within the ILO’s vision of CSR. Conceptually, the
corporate contribution as employers and through CSR policy is at the highest level of the diagram below figure 5; it is voluntary and does not correspond to nationally guaranteed
protection.
Figure 5. The main entry point to the ILO’s two-dimensional strategy
for the extension of social security
It should be noted that in practical terms only a few countries in the world currently have a social security system that accurately reflects the above graph. In many countries,
the state-guaranteed social security systems the first two steps of the diagram have significant gaps in their coverage in terms of the range of benefits not covering all
contingencies associated with health or loss of income, the levels of protection not providing a level of service enabling effective access to essential health care or not offering
sufficient minimum income compensation and the population covered covering only certain categories of the population. In this context, “voluntary insurance under
government regulation” can take on an important role in offsetting the low levels or lack of protection offered by the state-guaranteed social security system.
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Social security extension and CSR.docx
ii. Social dialogue
By contributing as employers to the two dimensions of the extension of social security wider range andor higher levels of benefits, enterprises could contribute to the
inclusion of social protection issues in social dialogue at the enterprise level,
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whether the impetus itself originates from workers’ representatives or they are involved in its
implementation. Introducing the theme of social protection into social dialogue at the entry level may
have two complementary effects: –
Appropriation of the theme by workers and employers organizations sectoral, regional and national federations, thus nourishing the national dialogue concerning
national strategies to extend social security.
– Potential domino effect throughout the sector, the region and ultimately the entire
country, due to the appropriation by the social partners of social security demands. Such domino effect may result from either of two possible reactions. First,
competition among employers might lead them to align employee benefits nationally or within sectors. Second, the appropriation of the subject by workers organization
may lead them to make greater demands for extended statutory benefits at the national level.
1.2.2.2. Enterprise-level entry points From the MNE perspective, social protection can be integrated into CSR concerns
through three main entry points. Following Michael E. Porter’s representation of business activities analysed by value chain see figure 6, the three main entry points for social
protection-related action are HR, procurement and production.
Figure 6. Entry points for social security across the corporate value chain
Source: Created by the authors on the basis of the value chain analysis by Porter, 1985.
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The ILO has conducted extensive work on social dialogue, a core theme under its mandate. As regards the evolution of social dialogue in relation to MNEs, see in particular Papadakis K. 2011.
Shaping global industrial relations: the impact of international framework agreements Geneva, ILO.
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