Mind the Gap Coverage, Adequacy, and Financing Gaps in Social Protection for the Extreme Poor and the Poorest Quintile

Mind the gap evaluates the progress in strengthening social protection and labor systems in emerging and developing economies (EDEs) in three areas: coverage, adequacy of benefits for the poor, and level of financing. The paper explores policy options to reduce the coverage and income gap for the world's poorest. Over the past decade, social protection coverage in the average EDEs has increased by 10 percentage points, from 41 percent around 2010 to approximately 51 percent in 2022. In absolute terms, as of 2022, 4.7 billion out of 6.3 billion people in low- and middle-income countries were covered by social protection, while 1.6 billion were not covered at all. Moreover, about 0.4 billion people from the poorest quintile received insufficient social protection support. Overall, 2 billion people in low- and middle-income countries remain uncovered, or inadequately covered while poor, by social protection. Apart from coverage, Mind the gap also evaluates the extent to which EDEs are progressing toward universal social protection across various policy dimensions: benefit adequacy, financing levels, and targeting accuracy of social assistance programs. The findings indicate variable adequacy in benefit levels, significant government spending but persistent financing gaps, and generally modest pro-poor targeting with potential for improvement. These challenges are more pronounced in low-income countries. The paper also assesses the impact of social assistance programs on reducing extreme and relative poverty gaps, quantifies the annual costs needed to address these income shortfalls in EDEs, and explores options for closing these gaps, such as enhancing the efficiency of social assistance transfers and expanding fiscal space