Labour Markets, Institutions and Inequality

Labour Markets, Institutions and Inequality

Building Just Societies in the 21st Century

Edited by Janine Berg

Labour market institutions, including collective bargaining, the regulation of employment contracts and social protection policies, are instrumental for improving the well-being of workers, their families and society. In many countries, these institutions have been eroded, whilst in other countries they do not exist at all.

Chapter 9: Pensions and other social security income transfers

Christina Behrendt and John Woodall

Subjects: development studies, development economics, economics and finance, development economics, labour economics, social policy and sociology, labour policy

Extract

Rising levels of inequality have been acknowledged as a major concern by various international organizations and other observers over recent years (ILO, 2000, 2008; World Bank, 2006; OECD, 2008, 2011a; UNRISD, 2010; IMF, 2012). As a consequence, many of these observers have called for a greater emphasis on policies that can contain inequality and foster more inclusive growth, with a view to promoting not only sustainability but also, importantly, social cohesion. However, much of the debate around institutional responses to inequality has been limited to policies aiming at the reduction of poverty in a narrow sense, while policy approaches that could address inequality more broadly have not yet been explored to a full extent. One such area is that of pension systems, which play a major role in preventing poverty and vulnerability for large groups of the population, and thus reach far beyond poverty reduction in a narrow sense. Inequality has many dimensions, and, to the extent that the different dimensions call for a variety of labour market solutions and institutions, these are explored throughout this book. Certain dimensions have particular relevance to the design of social security systems. Along one such dimension, we may note that differences in the levels of income received by individuals give rise to issues of poverty, either actual or potential, in which case our concern is with the relative status of individuals and groups who are vulnerable to this condition.

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