Universal child benefits critical in reducing poverty, new ODI and UNICEF report finds

NEW YORK/TORONTO, 17 June 2020 – Universal child benefits, such as unconditional cash payments or tax transfers, are critical in the fight against child poverty, according to a new report from UNICEF and the Overseas Development Institute. 

The report found that in 15 high-income countries, delivering universal child benefits alone led to a 5-percentage point reduction in child poverty, on average. Universal child benefits are also proven to improve children’s overall well-being, health, education, food security, productivity and ability to contribute to their societies and economies when they reach adulthood.   

“The Canada Child Benefit (CCB) is a substantial increase in child-focused income benefits, which has lifted more children out of poverty today. However, Canada’s investment is average when compared to other rich countries,” said David Morley, UNICEF Canada President & CEO. “More children may slide deeper into poverty in the wake of the COVID-19 pandemic. The Government of Canada can re-imagine childhood by increasing the CCB for children in the critical first year of life, when poverty can have the most severe impacts, promised in the last federal election. Every child has the right to grow up free from poverty.”  

The report, Universal Child Benefits: Policy Issues and Options, highlights that the CCB leaves out many vulnerable children in Canada. For example, around 10 per cent of eligible households did not take up their entitlements, as they were unable to file their income tax returns – particularly those living in remote areas or living on reserves.

“Investing in children not only changes their lives but yields high dividends for their communities and for society as a whole,” said Henrietta Fore, UNICEF Executive Director. “Now more than ever, as the economic fallout of COVID-19 threatens to roll back years of progress in reducing poverty, universal child benefits can be a lifeline. They can protect vulnerable families from deepening levels of poverty and deprivation, and can save countries from catastrophic societal and economic impacts.”

The report highlights that universal cash benefits provided to children in middle-income countries at a cost of just 1 per cent of GDP would lead to 20 per cent decline in poverty across the entire population. Yet they are only available in 1 in 10 countries worldwide.

Universalizing benefits reduces risks often associated with narrow means testing whereby some families in need are left without financial support, including due to exclusion errors. Universalizing social protection programmes such as cash or tax transfers also helps to remove stigma associated with benefit schemes overall. 

“Universal child benefits play a critical role in reducing poverty while promoting social cohesion and public support for social protection. In countries with established universal child benefits, they constitute a cornerstone of national social policy systems and are effective in scaling up social protection in times of crisis,” says Sara Pantuliano, Chief Executive at ODI. 

Francesca Bastagli, lead author of the report and Director of Equity and Social Policy at ODI, adds “In practice, countries have achieved high population coverage, or full UCBs, following different trajectories. Progressive realization is common, through an iterative process involving the adoption of UCB legislation and policy regulation, strengthening administrative and financing capacity, and building political and public support for policy.”

Importantly, the report notes that cash transfer programmes generally do not lead to a reduction in participation in paid work among the working-age population. Rather, cash transfers help parents balance the demands of employment with the needs of their families. 

The report makes clear that expanding coverage of child and family benefits schemes requires national prioritization and international solidarity in financing – especially for lower-income countries grappling with large populations and more constrained budgets due to COVID-19. It also stresses that universal child benefits must be supported by comprehensive social protection systems and quality social services, including healthcare, early child care and development, and education.

The report further highlights pathways to achieving universal coverage, including ways low-income countries can implement transfers for young children and build up to universality for all age groups. Steps including the adoption of legislation and policy regulation, strengthening administrative and financing capacity, and building political and public support for policy are all critical to achieving universal child benefits. 

###
 

Notes to editors:

Read the report here: https://www.unicef.org/reports/universal-child-benefits-2020