The Current Column

Social Protection

Social protection is essential to tackle poverty, hunger and inequality

Burchi, Francesco / Markus Loewe
The Current Column (2026)

Bonn: German Institute of Development and Sustainability (IDOS), The Current Column of 3 June 2026

Bonn, 3 June 2026. Poverty and inequality are increasing in many countries. Investing in social protection may be the only way out.

Over the last decades, the share of world population living in extreme poverty has been declining, except in the period just after the Covid-19 pandemic. However, in recent years the absolute number of people in poverty has slightly increased and is expected to rise even more after 2030. This is due to various factors, including the increased number of conflicts and extreme weather events and the stagnation of economies. At the same time, inequality and the number of people suffering from hunger remain high at the global level and are even increasing in many countries.

These worrisome predictions call for renewed efforts in the fight against poverty, hunger and inequality. It is therefore very welcome that Germany’s Federal Ministry for Economic Development and Cooperation (BMZ) has maintained the eradication of poverty, hunger and inequality as the first of four goals in its recent reform plan. It is less clear, though, what instruments will be used to achieve this goal. This will be impossible without social protection, which includes contributory schemes like social insurance and non-contributory programmes like cash transfers or cash-for-work. The experience of countries around the world shows that social protection systems are crucial for combating poverty, hunger and inequality. It is no coincidence that social protection is the first policy area mentioned in the first Sustainable Development Goal, which deals with poverty eradication. BMZ, however, plans to fade out its commitment to social protection in most partner countries.

Scholars from Tulane University provide evidence that most low- and middle-income countries have reduced poverty and inequality primarily through non-contributory social protection, health and education programmes. This result has previously been detected also in high income countries. Even China could not have achieved its remarkable poverty reduction without combining a major economic transformation with redistributive policies, such as land reform and social protection schemes targeting the poor. World Bank reports indicate that the world will not be able to reduce the share of people living in extreme poverty to under 3% over the next 20 years if countries do not significantly intensify income redistribution by raising taxes and strengthening social protection.

Just promoting economic growth will not solve the problem, as this year’s Report of the United Nations Special Rapporteur on extreme poverty and human rights emphasises. Especially when accompanied by high levels of inequality and driven by resource extraction or capital-intensive modes of production, growth has only limited effects on poverty. Such patterns are particularly widespread in Sub-Saharan Africa, for example in Nigeria and South Africa.

The observation holds even more for multidimensional poverty, which has declined much less than income poverty during the last decades, especially in sub-Saharan Africa. In fact, economic growth has hardly any effect on non-monetary dimensions of poverty in low- and middle-income countries.

In order to make a lasting contribution to the fight against poverty and hunger, economic growth should be labour-intensive and complemented – or even preceded – by investments in social protection, education and health. Especially non-contributory social protection programmes such as cash transfers are essential to address pockets of poverty, i.e. to reach out to those who do not benefit from economic growth. These pockets include people living in remote areas, people with limited education and training, people with health impairments or disability, and older adults. Contrary to what is sometimes claimed, these social protection schemes do not discourage people from working.

German development cooperation should therefore support crisis-affected countries, but also other low-income countries, in establishing and expanding reliable and well-targeted non-contributory social protection schemes and not end its commitment to social protection in large parts of the world. Other instruments, like social insurance, are also useful but do not help low-income people who cannot afford to pay their social contributions, especially if they make their living from informal, unstable employment.

Investing in social protection does not necessarily mean that donors like Germany should pay the cash transfers themselves. Through technical cooperation, they could support partner countries build up stable social protection systems, ideally incorporated in national constitutions or other legislative frameworks. People must know what kinds of benefits they are entitled to, and when. Only if they can rely on the long-term existence of social protection schemes, they can invest in human capital and in more remunerative economic activities, which could substantially improve their wellbeing. This is a prerequisite for the full unfolding of social protection's potential to promote social, economic and political development in all parts of the world.