Ahead of the fourth International Conference on Financing for Development (FFD4), UN member states endorsed the landmark Compromiso de Sevilla (Sevilla Commitment), which renews the global financing for development framework. Amid trade conflicts, rising debt, limited fiscal space, and what the United Nations has reported as a $4 trillion annual financing gap to fund sustainable development initiatives, the document reaffirms commitments to multilateral cooperation and to implementing the 2030 Agenda for Sustainable Development.
We sat down with WIEGO’s Florian Juergens-Grant and the ICTD’s Max Gallien to discuss their involvement with the process and outcomes relevant to workers in informal employment.
What is the International Conference on Financing for Development and how is it significant in setting the agenda for development financing and cooperation?
Max: It’s a large UN-driven process that brings together governments alongside a variety of other stakeholders to discuss financing development. Topics include taxation and domestic resource mobilization, debt, mobilizing private finance, so it’s a very wide-ranging discussion.
This year had a particular urgency given that we're looking at a substantially changed international environment. US politics had a distinct impact, but also there was the urgency of a context where – from climate to debt – a lot of issues that have been central to this process are at a breaking point.
The conference ended with the adoption of the Compromiso de Sevilla, which is often mistranslated as “compromise”, but the correct translation is “commitment”. It was unanimously adopted by all countries that were still part of the process – the United States had tried to derail the process and then withdrew.
What is the process to arrive at the text for the Compromiso de Sevilla, and how were you involved in the negotiations?
Florian: I co-chair the Finance Working Group of USP2030 – a global coalition of governments, international institutions and civil society organizations pushing for universal social protection. We recognized early on that we had to mobilize to ensure that social protection is adequately recognized as a central pillar of development in Sevilla, and that we need commitment and creativity from all sides to start closing the substantive funding and coverage gaps – which particularly affect workers in informal employment.
Collectively, we agreed on key demands and used our networks to try to influence the negotiations from start to finish: from the initial draft, which did not mention social protection at all, to revisions that included it in the preamble but with no concrete commitment, to the final text – adopted in Seville – which includes very specific language on social protection. It has a measurable commitment to expand social protection coverage by at least 2 percentage points a year, which was among the calls in our joint statement with the UN Special Rapporteur on Extreme Poverty and Human Rights.
We helped organize side events throughout the negotiations – there were three preparatory conferences in New York – and jointly issued statements with demands that we then sent to member states.
Max: Throughout the process, the ICTD (International Centre for Tax and Development) has sought to provide evidence-based input to the delegations negotiating the text, especially on taxation. We had made concrete recommendations on the text – these included adjusting the language on formalization and broadening the tax net in a way that seeks to protect lower-income operators in informal economies. We were happy to see that some of them were reflected in the final document. In addition, we have tried to help frame how we think about what we call the “tax era for development”, and were also involved in some of the Sevilla Platform for Action initiatives, particularly on tax expenditures. Engaging in this process was certainly a learning process for us as well – what I’ve taken away from it was that there is a real demand for research and evidence even in these more high-level conversations, and that there is power in partnerships.
Why is the Compromiso de Sevilla relevant for the movement of workers in informal employment?
Florian: It is critical that the text explicitly recognizes that international labour standards need to underpin social protection systems, including efforts to raise funding and extend coverage. The emphasis on a rights-based approach will help workers insist on equitable financing, good benefits that are aligned with their demands, and their inclusion in the social dialogue mechanisms that govern social protection systems.
It is also important to see a global commitment to support developing countries in “ensuring predictable, adequate and uninterrupted funding on appropriate terms of social protection and other essential social spending during shocks and crises”. Workers in informal employment are among the most vulnerable to climate-change-induced crises.
Max: The Compromiso de Sevilla will influence public policies in countries with large informal economies and will consequently have an effect on workers in informal employment – as citizens, as voters, as users of public services. With collapsing development aid and the protracted debt-servicing crisis in many low-income countries, there’s pressure to raise revenues, and many countries are under enormous pressure to dramatically expand and raise domestic revenues. With this comes the real risk that this is done inequitably, with a poor evidence base and unrealistic targets. We are very worried that workers in informal employment may bear the brunt of some of these policies.
Consequently, in our inputs into the process, we highlighted the dangers of language that would indicate relying on informal economies in broadening the tax net. We have drawn on joint research conducted by the ICTD, WIEGO and the University of Ghana to highlight that many workers in informal employment are already paying a variety of taxes and fees, and that many of the taxes that are currently used to target informal economies are not only inequitable but also inefficient. It costs a lot to collect them, and the revenue raised is not high. So if one is looking for ways to increase taxes, this is not the place to look.
You are experts on taxation and social protection. Is there language in the Compromiso de Sevilla that you would consider a “win” in moving the needle towards tax justice and/or universal social protection, particularly for workers in informal employment?
Max: It was touch and go whether a pledge to double support for Domestic Resource Mobilization (DRM) in developing countries would make it into the final document – but ultimately, it did. This is really important. Low-income countries need support to do this revenue raising in a way that is evidence-based, strategic, realistic and done in communication with the taxpayers. All these elements are extremely important for workers in informal employment.
Throughout the different iterations of the text, there was always a section encouraging the “broadening of the tax base and continuing efforts to integrate the informal sector”. We were happy to see that in the final version of the document, this sentence now includes a reference to doing this “in a socially inclusive..., in line with countries’ circumstances, as well as focusing on undeclared income and wealth”.
Florian: There is now a global commitment to support countries that haven’t yet achieved universal social protection to increase coverage by at least 2 percentage points every year. While this may not sound like much – and we should certainly push for faster expansion – sustained progress over time should provide millions with social protection coverage for the first time in their lives. While there have always been calls for greater coverage, what sets this commitment apart from such rhetoric is that it is concrete and measurable, meaning both governments and international actors can be held accountable. It’s also very important that it’s “coverage”, not just “spending”, because increasing coverage means covering new people and, in most countries, these will be workers in informal employment.
With healthcare, too, the reference to coverage – “… We commit to realizing universal health coverage ...” – is significant for the same reason. While the document doesn’t specifically mention workers in informal employment, it speaks to efforts to expand coverage and, in this way, these workers will benefit.
The document also emphasizes the importance of the social and solidarity economy, which is crucial for workers in informal employment:
“… We encourage support for social and solidarity economy entities, including access to tailored financial and non-financial assistance from local, national and international financial institutions…”.
What is most concerning in the Compromiso de Sevilla from a social protection and tax justice perspective?
Max: The most commonly raised concern has certainly been that the Compromiso de Sevilla has lacked sufficient ambition – I think that point is especially understandable in relation to debt. However, in a way this is in the nature of the type of document that this is – it will be important to now look to the next steps and what countries make of the compromiso.
What are the next steps now that the document has been adopted?
Max: Attention will now turn to the Sevilla Platform for Action (SPA) – ways to implement the commitment – and on seeing that countries follow through. Here, we have been particularly involved in a coalition that argues for reforms of tax expenditures through evidence-based policymaking. If one is thinking of quick gains for low-income countries, tax expenditure reform is one of the most effective, efficient and equitable things to prioritize.
We will also closely watch a range of other processes at the United Nations that have existed somewhat in parallel to the FFD4 process – the negotiations around a UN tax convention, for example, as well as similar conversations around debt.
Florian: Through USP2030, we’re involved in two SPA initiatives that aim to connect global advocacy and resources with national-level debates on how to expand social protection coverage. Together we will track whether governments act on their commitment to expand coverage, share resources and implement capacity development initiatives to help countries unlock the needed financing.
As WIEGO, we will work to ensure that organizations of workers in informal employment are included in these processes and together explore ways of leveraging the commitments made in Seville to boost their ongoing advocacy for improved social protection and services. Governments have made clear commitments to grow social protection, and we should hold them accountable.