The world economy has come to the realization that it may not at this present phase of uncertainty sustain the support it provides to those under benefit or state relief.
To buttress this fact, the effect of global economy scale down and the resulting state financial recovery package, though helped to prevent a massive scale recession, but the physical effect of the initial plunge still rests with us.
The fall in productivity, a diminishing industrial base and heavy fiscal indiscipline of various governments has lead to necessary spending cuts by governments.
Financing pensions, unemployment benefits and other forms of state support has now become a daisy political hot potato.
In the developing world, the fact still remains that most economies do not have a social safety net as such millions of people not employed or not having the capacity to work remain at the fringes of subsistent living.
Remedying this situation for most states is seen as a secondary budgetary luxury which can only be met by future growth or massive participation by the private sector using contributory investment schemes.
Looking at a continent like Africa, a few countries do make budgetary commitments for the aged, orphaned and disabled but find it difficult to sustain these when market prices for commodity export drops as these are the mainstay of these economies.
Secondly, the payout is so meager that it ends up negating any poverty alleviation drive the scheme may be aimed at.
On the bases of these, I have considered that the need for a form of financial support to citizens who can't earn an income will be vital to growth and ultimate development of an economy.
There are factors that must be present before a state can even consider initiating such payout.
There must exist: 1.
An economy with stable indexes; a stable foreign exchange rate, conducive interest rates, an independent Central Bank and fiscal discipline.
2.
Political and policy stability.
3.
Investment in basic infrastructures and property security.
4.
And a general investment friendly environment.
What all these boil down to is creating the tools to sustain a growing economy.
In a free market, this then creates a middle class and upper middle class that will serve as the back bone of any government social policy.
It should be borne in mind that emerging economies create the greatest gap in income distribution.
Instituting a national contributory social security scheme through a Pay as You Earn (PAYE) mechanism or any locally adapted scheme will reduce the burden on the poor and have the well off subsidizing the poor to some extent.
This may sound socialist, but imagine the payoff to the wider economy; 1.
The burden on millions of working class who support family members and old relatives will be reduced.
Their excess income can then be diverted into improving their living standard.
2.
The more circulatory money is, the more wealth it generates in a society as people give away money in exchange for services, to acquire assets or satisfy a basic need.
3.
Increase commerce builds up the retail sector and ultimately the industrial base, putting more money into the hands of the middle class and emancipating the poor.
It is a fact that social security support helps generate growth, but I won't want to be simplistic about it as a lot of structures and policy strategies need to be put in place to turn this program into an engine of growth.
To buttress this fact, the effect of global economy scale down and the resulting state financial recovery package, though helped to prevent a massive scale recession, but the physical effect of the initial plunge still rests with us.
The fall in productivity, a diminishing industrial base and heavy fiscal indiscipline of various governments has lead to necessary spending cuts by governments.
Financing pensions, unemployment benefits and other forms of state support has now become a daisy political hot potato.
In the developing world, the fact still remains that most economies do not have a social safety net as such millions of people not employed or not having the capacity to work remain at the fringes of subsistent living.
Remedying this situation for most states is seen as a secondary budgetary luxury which can only be met by future growth or massive participation by the private sector using contributory investment schemes.
Looking at a continent like Africa, a few countries do make budgetary commitments for the aged, orphaned and disabled but find it difficult to sustain these when market prices for commodity export drops as these are the mainstay of these economies.
Secondly, the payout is so meager that it ends up negating any poverty alleviation drive the scheme may be aimed at.
On the bases of these, I have considered that the need for a form of financial support to citizens who can't earn an income will be vital to growth and ultimate development of an economy.
There are factors that must be present before a state can even consider initiating such payout.
There must exist: 1.
An economy with stable indexes; a stable foreign exchange rate, conducive interest rates, an independent Central Bank and fiscal discipline.
2.
Political and policy stability.
3.
Investment in basic infrastructures and property security.
4.
And a general investment friendly environment.
What all these boil down to is creating the tools to sustain a growing economy.
In a free market, this then creates a middle class and upper middle class that will serve as the back bone of any government social policy.
It should be borne in mind that emerging economies create the greatest gap in income distribution.
Instituting a national contributory social security scheme through a Pay as You Earn (PAYE) mechanism or any locally adapted scheme will reduce the burden on the poor and have the well off subsidizing the poor to some extent.
This may sound socialist, but imagine the payoff to the wider economy; 1.
The burden on millions of working class who support family members and old relatives will be reduced.
Their excess income can then be diverted into improving their living standard.
2.
The more circulatory money is, the more wealth it generates in a society as people give away money in exchange for services, to acquire assets or satisfy a basic need.
3.
Increase commerce builds up the retail sector and ultimately the industrial base, putting more money into the hands of the middle class and emancipating the poor.
It is a fact that social security support helps generate growth, but I won't want to be simplistic about it as a lot of structures and policy strategies need to be put in place to turn this program into an engine of growth.