Mind the Gap

SOCIAL PROTECTION DISCUSSION PAPER No. 2508|MARCH 2025 State of Social Protection Report 2025The 2-Billion-Person ChallengeBackground Paper #1 Mind the Gap: Coverage,Adequacy and Financing Gaps inSocial Protection for the ExtremePoor and the Poorest Quintile Emil Daniel TesliucAna Sofia Martinez Cordova © 2025 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington DC 20433Telephone: +1 (202) 473 1000; Internet: www.worldbank.org. This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do notnecessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shownon any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement oracceptance of such boundaries. RIGHTS AND PERMISSIONS The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, inwhole or in part, for noncommercial purposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW,Washington, DC 20433, USA; fax: +1 (202) 522 2625; e-mail:pubrights@worldbank.org. Abstract Mind the Gap evaluates the progress in strengthening social protection and labor systems inemerging and developing economies (EDEs) in three areas: coverage, adequacy of benefits forthe poor, and level of financing. The paper explores policy options to reduce the coverageandincomegap for the world’s poorest. Over the past decade, social protection coverage intheaverageEDEs has increased by 10 percentage points,from 41 percent around 2010 toapproximately 51 percent in 2022.In absolute terms, as of2022, 4.7 billion out of 6.3 billionpeople in low-and middle-income countries were covered by social protection, while 1.6billion were not covered at all.Moreover, about 0.4 billion people from the poorest quintilereceived insufficientsocial protectionsupport. 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 progressingtoward Universal Social Protection across various policy dimensions: benefit adequacy,financing levels, and targeting accuracy of social assistance programs. The findings indicatevariable adequacy in benefit levels, significant government spending but persistent financinggaps, and generally modest pro-poor targeting with potential for improvement. Thesechallenges are more pronounced in low-income countries. The paperalsoassesses the impact of social assistance programs on reducing extreme andrelative poverty gaps, quantifies the annual costs needed to address these income shortfallsin EDEs, and exploresoptionsfor closing these gaps, such as enhancing the efficiency of socialassistance transfers and expanding fiscal space. JEL Codes:H53, I38, J28, O15 Keywords:social protection system,coverage gap, social protection spending, adequacygap,social protection targeting. Acknowledgments This paper was prepared by the Social Protection Global Department at the World Bank as apart ofitsflagship report‘The State of Social Protection 2025-The 2-Billion-Person Challenge:Strengthening Social Protection and Labor for a World in Transition’.This paper was authoredby Emil Daniel Tesliuc andAna Sofia Martinez Cordova with contributions from Maria BelenFonteñez, Muhsine Senart, Ingrid Mujica, Johanna Estefania Andrango Brito, Xuejiao Xu, andClaudia P. Rodriguez. Thepaper was made possible thanks to the ASPIRE database which served as the primary datasource for the analyses.Theauthorswould also like to thank Zurab Sajaia and Sergiy Radyakinfor the fruitful collaboration to enrich ADePT functionalities to expand the level of analysisand automate the production of the indicators presented in the report. The team is also deeply grateful for the guidance provided by the peer reviewers: AlineCoudouel, David Coady (IMF), Carolina Diaz-Bonilla, Phillippe Leite, Anita Schwarz, Joana Silva,and Ruslan Yemtsov at the concept stage, and Brooks Evans (IMF), Ugo Gentilini, Ruth Hill,Harry Edmund Moroz, and Joana Silva at the decision stage.Thebackground paperwasproduced under the guidance of Iffath Sharif (Global Director, Social Protection), MichalRutkowski (former Global Director, Social Protection), and Loli Arribas-Baños (PracticeManager, Social Protection). Lastly, the team benefited from valuable support from MatthewNaumann(editor), FionaMackintosh(acquisitions editor), Agnes Nder