State of Social Protection Report 2025: The 2-Billion-Person Challenge

This World Bank report assesses the global state of social protection, focusing on low- and middle-income countries (LMICs). While documenting significant expansion over the past decade, it highlights the “2-billion-person challenge”—1.6 billion people remain uncovered and an additional 400 million receive inadequate support. The report provides crucial data and analysis on coverage, adequacy, financing, and shock responsiveness, offering insights and policy recommendations for closing these gaps and building more effective, resilient, and equitable systems.

Core Arguments & Findings

The Persistent Coverage Gap

• Scale of the Challenge: Despite record expansion reaching 4.7 billion people in LMICs, 2 billion are still missed or inadequately covered (p. xvii/19, p. 2/28, p. 21/47). 1.6 billion receive no benefits and make no contributions.
• Uneven Progress: While average coverage in sample countries rose from 41% (circa 2010) to 51% (circa 2022), progress is slow and uneven (p. xvii/19, p. 30/56). At current rates, full coverage for the extreme poor would take until 2043 (p. 5/31).
• Income Disparities: Coverage is lowest where needs are highest. Only 25% are covered in LICs and 42% in Lower-Middle Income Countries (LMICs), compared to 61% in Upper-Middle Income Countries (UMICs) (p. 5/31, Fig 1.1b).
• Poorest Left Behind: Globally, 53% of people in the poorest quintile are missed or inadequately covered (p. 23/49, Fig 1.3). Among the extreme poor, 88% lack adequate protection globally, rising to 98% in LICs (p. 24/50, Fig 1.4).
• Role of Program Types: Social assistance has driven most expansion, especially in LICs (p. 5/31, p. 31/57, Fig 2.2). Social insurance coverage is limited outside UMICs/HICs, and labor market program coverage remains very low globally (<5% avg) (p. 5/31, p. 6/32, p. 41/67, Fig 2.2).

Inadequate Levels of Support

• Low Benefit Values: Social protection benefits are often too low to lift people out of poverty, averaging only 27% of recipient household welfare (income/consumption) (p. 5/31, p. 43/69, Fig 2.8).
• Social Assistance Adequacy: Social assistance transfers, while crucial for the poor, are particularly meager, representing only 11-15% of recipient welfare on average (p. 5/31, p. 43/69). In LICs, they constitute just 11% of the poor’s already-low income (p. xix/21, p. 8/34).
• Gender Disparity: While women are more likely to receive social assistance transfers, they receive substantially lower average transfer amounts than men. Across a sample of 27 countries, women received only 81 cents for every dollar received by men (p. xix/21, p. 5/31, p. 45/71 Box 2.4, p. 46/72 Fig B2.4.1).

Financing Constraints and Opportunities

• Spending Disparities: Spending on social protection averages less than 2% of GDP in LICs, compared to 3.7% in LMICs and over 6% in UMICs (p. xxi/23, p. 5/31, p. 48/74, Fig 2.11). HICs spend 85 times more per capita than LICs (p. 48/74).
• Funding Sources: LICs and fragile states rely heavily on international grants for social assistance (up to 77% in fragile LICs), while MICs and HICs primarily use domestic resources (p. 51/77, Fig 2.13).
• Need for More & Better Spending: Closing gaps requires increased financing, especially in poorer countries (p. xxi/23, p. 10/36). However, significant progress can also be made by reallocating existing resources.
• Efficiency Gains: Improving the poverty targeting of current social assistance could substantially reduce extreme poverty, potentially eliminating it in half the countries with headcounts below 20% (p. xxi/23, p. 10/36, p. 71/97-72/98).
• Subsidy Reform: Replacing regressive subsidies (fossil fuels, agriculture, fisheries - exceeding $7 trillion annually, ~8% global GDP) with targeted transfers offers significant fiscal space for social protection (p. xxi/23, p. 10/36, p. 73/99-74/100).

Shock Responsiveness and Delivery Systems

• COVID-19 Lessons: The pandemic demonstrated the critical role of social protection in crises but also exposed system weaknesses (p. 6/32, p. 53/79). Countries with stronger pre-existing coverage and delivery systems responded faster and more effectively (p. 6/32, p. 56/82, Fig 2.16).
• System Foundations: Robust delivery systems (dynamic social registries, digital payments, case management) are crucial for routine support and shock response (p. xviii/20, p. 8/34, p. 75/101). Many countries still lack basic elements or interoperability (p. xix/21, p. 75/101).
• Adaptiveness: Systems need to be adaptive, with pre-agreed triggers, financing, and operational plans to scale up support rapidly during shocks (p. xx/22, p. 10/36, p. 79/105-81/107).
• Integration: Integrating delivery systems across social assistance, social insurance, and labor market programs is essential for providing coordinated, multifaceted support but remains a challenge (p. xx/22, p. 9/35, p. 76/102).

Key Statistics & Data

• The Gap: 2 billion people in LMICs lack adequate social protection (1.6bn uncovered + 400m inadequately covered) (p. xvii/19).
• Coverage Levels (Avg % Population): LICs: 25%; LMICs: 42%; UMICs: 61% (p. 5/31).
• Extreme Poor Gap: 88% globally missed or inadequately covered; 98% in LICs (p. 24/50).
• Poorest Quintile Gap: 53% globally missed or inadequately covered (p. 23/49).
• Social Assistance Adequacy (LICs): Transfers average 11% of poor recipients’ income (p. xix/21).
• Gender Transfer Gap: Women receive 81 cents per $1 received by men, on average (p. xix/21).
• Spending (% GDP): <2% (LICs); 3.7% (LMICs); >6% (UMICs) (p. xxi/23).
• Regressive Subsidies: Exceed $7 trillion annually (~8% global GDP) (p. xxi/23).
• COVID-19 Spending Surge: Avg. real per capita spending increased 28% in peak response year vs 2019 (p. 6/32, p. 53/79).

Methodology

• Data Source: Primarily the World Bank’s Atlas of Social Protection Indicators of Resilience and Equity (ASPIRE) database, combining household survey data and administrative program-level data (p. 12/38).
• Scope: Analysis covers up to 153 countries (25 LICs, 105 MICs, 23 HICs). Gap estimate uses data from 104 countries (96% LMIC population) + estimates for the rest. Performance indicators use smaller samples (e.g., 67 LMICs/MICs + HICs for coverage trends) (p. 12/38).
• Approach: Cross-country analysis comparing “circa 2010” (2006-2014 data) and “circa 2022” (2015-2022 data) (p. 14/40, Note 4). Focuses on LMICs, using simple cross-country averages.
• Key Definitions:
  • Coverage: Proportion of individuals living in households where at least one member receives a benefit or contributes to social insurance (p. 14/40, Note 9).
  • Inadequate Coverage: Individuals in the poorest quintile receiving support <20% of the relative poverty line (consumption/income at 20th percentile) (p. xxii/24, Note 1; p. 14/40, Note 2).
  • Adequacy: Transfer value as a percentage of beneficiary household’s total consumption/income (p. 43/69).
• Limitations: Significant data gaps persist, especially in LICs and fragile contexts, regarding recent surveys, specific program details, administrative data access, and individual-level/sex-disaggregated data (p. 13/39, p. 78/104 Box 3.1).

Key Conclusions & Recommendations

Conclusions

• While social protection expansion is commendable, the 2-billion-person challenge underscores a critical shortfall in coverage and adequacy, particularly affecting the poorest in LICs.
• Progress towards universal social protection is too slow, demanding accelerated efforts and investment.
• Benefit inadequacy limits poverty reduction impact, even where coverage exists.
• Financing is a major constraint, but significant efficiency gains are possible through better targeting and subsidy reform.
• Robust, integrated, and adaptive delivery systems are fundamental for effective routine support and crucial for timely shock response.
• Growing global headwinds (climate change, conflict, food insecurity, demographic shifts, changing work nature) amplify the urgency for stronger social protection systems.

Recommendations (Four Policy Action Areas)

1. Extend Social Protection to Those in Need:

   • LICs: Prioritize expanding noncontributory cash transfers and economic inclusion programs for the poor; build capacity for rapid expansion during shocks (p. xviii/20, p. 7/33, p. 68/94).
   • MICs: Close remaining coverage gaps (esp. poor/vulnerable); broaden program offerings (social insurance for informal sector, LMPs, social services); strengthen delivery systems (p. xviii/20, p. 7/33, p. 69/95).
   • Ensure social insurance expansion doesn’t crowd out support for the poor via subsidies or unfunded liabilities (p. 10/36, p. 69/95).

2. Strengthen the Adequacy of Social Protection Support:

   • Increase benefit levels where feasible, particularly for social assistance programs (p. xix/21, p. 8/34).
   • Expand the mix of programs offered over time (LMPs, economic inclusion, social insurance innovation for informal sector, social services) to address diverse vulnerabilities (p. xix/21, p. 8/34-9/35).
   • Tailor support to specific needs and profiles, addressing constraints like gender inequality (e.g., ensure women receive adequate benefit levels) (p. xix/21, p. 45/71).

3. Build Shock-Proof Social Protection Delivery Systems:

   • Invest continuously in foundational delivery systems (dynamic social registries, digital payments, grievance mechanisms, case management) (p. xx/22, p. 8/34, p. 75/101).
   • Integrate systems across social assistance, social insurance, and labor market programs for holistic support and efficiency (p. xx/22, p. 9/35, p. 76/102).
   • Build adaptive capacity explicitly: develop early warning systems, pre-agreed expansion rules/protocols, contingency financing, and integrate climate vulnerability into targeting (p. xx/22, p. 10/36, p. 79/105-81/107).

4. Optimizing Social Protection Financing:

   • Increase the overall financing envelope, particularly in LICs, through domestic revenue mobilization and external support (p. xxi/23, p. 10/36).
   • Improve efficiency of spending by strengthening the poverty focus of social assistance (p. xxi/23, p. 70/96-72/98).
   • Generate fiscal space by reforming regressive subsidies (energy, agriculture) and redirecting funds to targeted support (p. xxi/23, p. 73