Social welfare has long existed in GCC 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 providing 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 goal of a new social welfare model is to increase efficiency and effectiveness to ensure the greatest social benefit for individuals 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.
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The ability to evaluate trade-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 consistent with national economic development ambitions.
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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 poverty 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 each program in isolation. -
Programming mechanismsWhen designing programming mechanisms, policymakers have 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.
GCC countries need to reshape their social welfare programs by following three imperatives and then communicating the changes to the public. 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.
GCC 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 these countries’ transition to diversified, private sector–led 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.
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Insights: Rethinking a new social welfare model for GCC countries
GCC welfare systems can be enhanced by strengthening coherence among social protection programmed, expanding the social insurance offering, and focusing on the economic activation of social assistance beneficiaries.
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