UN Report Warns Delayed Social Protection Could Cost Economies 12 Percent of Output

Countries that delay investment in social protection could lose up to 12 percent of economic output compared with those that act earlier, according to a United Nations report that warns rapid economic, digital and energy transitions are failing to deliver equal benefits across societies.

The World Social Report 2026, released by the UN Department of Economic and Social Affairs (UN DESA), argues that social inclusion is an economic investment rather than simply a matter of fairness, helping countries strengthen productivity, resilience and the distribution of gains from structural change.

The report’s simulations across a set of countries suggest that delaying social protection investment by a decade could leave economic output 12 percent lower than in countries that invested earlier.

The warning comes as large sections of the global population remain excluded from formal employment, digital connectivity and economic opportunities. In 2025, 58 percent of workers worldwide were informally employed, while 27 percent of young women aged 15 to 24 were not in employment, education or training.

An estimated 26 percent of the world’s population also lacked internet access, limiting participation in economies increasingly shaped by digital technology and artificial intelligence. The report puts the number of people without internet connectivity at 2.2 billion.

The UN argues that access alone is insufficient to close the digital divide, as affordability, service quality and limited digital skills continue to prevent many people from benefiting from online services and emerging technologies.

Climate exposure adds to these disadvantages. Of the 1.1 billion people living in multidimensional poverty, 887 million are exposed to at least one major climate hazard, leaving many vulnerable to disruptions to livelihoods, essential services and economic activity.

The report draws on evidence from 168 countries over 25 years to assess whether economic, digital and energy transformations translate into wider social and economic inclusion. Its Socially Inclusive Transformation dashboard finds that countries with similar income levels or transformation performance can achieve markedly different inclusion outcomes.

Malta, Ireland and Denmark rank highest in the report’s overall transformation and inclusion assessment, while African countries are disproportionately concentrated at lower levels. Latin American countries generally perform relatively well but show greater variation, while results across Asia are more widely dispersed.

The findings point to a gap between countries’ capacity to transform their economies and their ability to distribute the resulting benefits. The report notes that none of the five leading countries in its transformation pillar — Malta, Ireland, the United States, Singapore and China — features among the five highest-ranked countries for inclusiveness, led by Belgium, Finland, Iceland, the Netherlands and Sweden.

The report attributes these differences partly to national policies, institutions and governance, arguing that economic growth and technological progress do not automatically produce broadly shared prosperity.

It recommends expanding access to education, lifelong learning, healthcare and social protection; making digital connectivity and reliable energy more affordable; strengthening labour-market protections and workers’ bargaining power; and using wage-setting institutions and progressive tax systems to distribute economic gains more widely.

The UN also calls for greater international support for developing countries facing debt pressures, limited fiscal space and barriers to technology and long-term development finance.

Without such investment, the report warns, countries risk allowing rapid economic and technological change to deepen existing inequalities rather than create opportunities for wider participation.

Source: FSX Business News