OIT - A fighting chance - Closing social protection gaps in small island developing states as climate justice in action

 Social Protection Spotlight 1

A fighting chance: Closing social protection gaps in small island developing States as climate justice in action

 Social Protection Spotlight May 2025

A fighting chance: Closing social protection gaps in small island developing States as climate justice in action

 Small island developing States (SIDS) are acutely vulnerable to the climate crisis. They are reeling from more frequent and intense extreme weather events and rising sea levels that threaten to destroy livelihoods and erase some SIDS from the map. Despite contributing minimally to global emissions, SIDS are disproportionately impacted by the climate crisis. Furthermore, their ability to cope and adapt is often hampered by issues such as inadequate access to financing, high levels of poverty , inequality, and human development and decent work deficits.  Substantial and persistent social protection gaps continue to hold SIDS back and limit their resilience . Only 43.5 per cent of the population of SIDS have access to at least one social protection benefit , leaving more than half uncovered and lagging behind the current global average of 52.4 per cent . Significant gaps persist in key areas such as child benefits and unemployment protection.  Underinvestment in social protection largely accounts for these protection gaps. SIDS allocate on average 7.1 per cent of GDP to social protection and health – far below the global average of 19.3 per cent . Achieving universal social protection in SIDS will require an additional US$35.8 billion annually (3.7 per cent of the GDP of SIDS). This constitutes a large but not unsurmountable financing gap. Filling this gap demands both national policy action by SIDS to expand domestic fiscal space and increased international financial support, including through climate finance.  Social protection can support climate adaptation and enhance the resilience of SIDS, provided that social protection systems are strengthened. This will enhance people’s ability to cope and adapt to

policy action by SIDS to expand domestic fiscal space and increased international financial support, including through climate finance.  Social protection can support climate adaptation and enhance the resilience of SIDS, provided that social protection systems are strengthened. This will enhance people’s ability to cope and adapt to shocks, including in the case of irreversible climaterelated impacts (loss and damage). Measures such as forecast-based income support can offer pre-emptive protection, and the greening of pension funds and reforming fossil fuel subsidies can help with global mitigation efforts. Payments for ecosystem services tied to social protection entitlements can strengthen the natural ecosystems of SIDS while providing income security.  In a difficult global fiscal context, SIDS and the international community must continue to find ways to fill social protection financing gaps. Some SIDS can do more to expand their fiscal space through progressive income and wealth taxes and social insurance contributions, enabling coverage extension and enhanced benefit adequacy. However, international support remains critical for filling financing gaps , including for loss and damage . The gradual wa ning and reduction of international financial solidarity further imperil SIDS and prevent them from ensuring their social protection systems are strong enough to withstand climate challenges.  SIDS are not impotent to build or further enhance their social protection systems. While greater financing is pivotal, it is important for SIDS to strengthen their institutional and administrative capacities to deliver social protection. This requires ensuring that systems are underpinned by strong legal frameworks that are informed by international social security standards. Key points Social Protection Spotlight 2

A fighting chance: Closing social protection gaps in the SIDS as climate justice in action

Introduction1 Small island developing States (SIDS) 2 are home to 67.4 million people3 and are hunkered down on the frontline of the climate crisis (OHCHR 2025). Yet their populations are among the least culpable for the human activity driving

Introduction1 Small island developing States (SIDS) 2 are home to 67.4 million people3 and are hunkered down on the frontline of the climate crisis (OHCHR 2025). Yet their populations are among the least culpable for the human activity driving “global heating ” (Guterres 2025) . Moreover, SIDS can do little to stop this heating unless major emitters take the action truly required to mitigate4 the climate crisis and pursue new forms of sustainable and equitable growth , which need to be rapidly implemented on a global scale in order to ensure the well -being of humankind and the planet (UNHRC 2024; UN 2024). However, SIDS would be better placed to contend with the impact of the climate crisis if they c ould strengthen their social protection systems. Under their current social protection systems, the populations of SIDS are exposed to escalating climate risks that interact with everyday life-cycle risks. Social protection is a powerful policy tool that SIDS can wield to enable climate change adaptation,5 as it addresses the root causes of vulnerability by preventing poverty and social exclusion and reducing inequality. Social protection enhances people’s capacity to cope with climate -related shocks ex ante by providing an income floor and access to healthcare. It also contributes to raising adaptive capacities, including those of future generations, through its positive impacts on human development, productive investment and livelihood diversification (ILO 2024g) . Crucially, leveraging social protection systems offers an effective, inclusive and sustainable approach to addressing loss and damage related to income, livelihoods, health and well-being. While the current climate projections – that is, rising global emissions and temperatures (WMO 2024; 2025) – present a grim outlook for some SIDS , t his brief asserts there is considerable scope for SIDS to take more decisive action to strengthen their social protection systems ( for example, either by better reprioritizing fiscal resources or by

grim outlook for some SIDS , t his brief asserts there is considerable scope for SIDS to take more decisive action to strengthen their social protection systems ( for example, either by better reprioritizing fiscal resources or by

1 This brief builds on t he focus of the ILO World Social Protection Report 2024 –26, which examines the role of u niversal social protection in supporting climate action and a just transition (see ILO 2024g), and the manner in which social protection can accelerate social development (ILO 2025). 2 SIDS include 39 countries: Antigua and Barbuda, Bahamas, Barbados, Belize, Cabo Verde, Comoros, Cook Islands, Cuba, Dominica, Dominican Republic, Fiji, Grenada, Guinea-Bissau, Guyana, Haiti, Jamaica, Kiribati, Maldives, Marshall Islands, Mauritius, Micronesia (Federated States of), Nauru, Niu e, Palau, Papua New Guinea, Samoa, S ao Tome and Principe, Seychelles, Singapore, Solomon Islands, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname, Timor-Leste, Tonga, Trinidad and Tobago, Tuvalu and Vanuatu. SIDS also include 18 territories that are Associate Members of the United Nations Regional Commissions. See https://www.un.org/ohrlls/content/list-sids. 3 Based on the United Nations Department of Economic and Social Affairs (UN -DESA) 2024 Revision of World Population Prospects for 39 SIDS countries.

See https: //population.un.org/wpp/. 4 Climate change mitigation refers to actions that reduce the rate of climate change (for example, keeping fossil fuels in the ground or enhancing and protecting greenhouse gas sinks (such as forests, soils and oceans) that reduce the presence of greenhouse gases in the atmosphere). 5 Climate change adaptation refers to the process of adjustment to actual or expected climate change and its effects in order t o moderate harm or exploit beneficial opportunities. exploiting untapped fiscal space and building institutional and operational capacities). Furthermore, even in a very

5 Climate change adaptation refers to the process of adjustment to actual or expected climate change and its effects in order t o moderate harm or exploit beneficial opportunities. exploiting untapped fiscal space and building institutional and operational capacities). Furthermore, even in a very challenging global fiscal environment, SIDS need a greater and fairer share of the remaining official development assistance, loss and damage funding and other climate financing. The allocation of international financial assistance to SIDS would constitute an act of climate justice and give SIDS a fighting chance of coping with the climate crisis and maintain ing a decent quality of life for their populations. Unique and significant challenges that demand rapid action SIDS face unique climate challenges due to their remote geography, dense populations, reliance on external markets, and remittances (Panwar et al. 2024; OHCHR 2025), as well as their stymied development engendered by colonialism and its ongoing legacy (Oxfam 2025) . Despite some SIDS being classified as high - or upper -middleincome, the majority face a high level of vulnerability . Poverty prevalence is significantly higher in SIDS (72 per cent) than in non -SIDS (42 per cent ) at the same income level (Panwar et al. 2024). Yet, for many SIDS, their incomelevel classification limits access to international development finance. The high vulnerability of SIDS to climate breakdown intensifies the challenges that they face, including frequent extreme weather, loss of life, damaged infrastructure and disastrous socioeconomic dislocation . Many SIDS risk becoming uninsurable, deterring investment and harming competitiveness (Mottley 2024). Without private corporate disaster insurance, foreign investors face the threat of climate-driven losses that cannot be recouped. Climate breakdown also threatens the biodiversity of SIDS and harms vital tourism and fisheries sectors, while also weakening the protective role that natural ecosystem Social Protection Spotlight 3

disaster insurance, foreign investors face the threat of climate-driven losses that cannot be recouped. Climate breakdown also threatens the biodiversity of SIDS and harms vital tourism and fisheries sectors, while also weakening the protective role that natural ecosystem Social Protection Spotlight 3

A fighting chance: Closing social protection gaps in the SIDS as climate justice in action infrastructure provides (for instance, protection against storm surges). Diminished biodiversity also causes irreparable harm to the cultural identity and value of SIDS, which are intimately entwined with identification with their unique ecosystems (OHCHR 2025).

At the same time, slow-onset events such as rising seas are gradually rendering entire societies untenable (OHCHR 2025; Lenton et al. 2023) . For instance, i n atoll countries, this risk is now a reality. Tuvalu is so concerned that the country will disappear as a result of rising seas, that it has digitalized the entire nation to virtually preserve its existence for the identity of its future diaspora population (Yeo 2024; World Bank 2021). In 2014, Kiribati acquired land in Fiji, representing the first instance of a country purchasing land abroad explicitly for the resettlement of its population due to climate change (Lenton et al. 2023). Given the environment al damage experienced and the rising sea levels poised to erase entire ways of life and cause whole -population displacement , i t is little wonder that SIDS are on the offensive. For example, in 2024, Fiji, Samoa, and Vanuatu jointly submitted a proposal for a new international crime of “ecocide” – already considered as a crime by Belgium – to be recognized by the International Criminal Court as the fifth international crime alongside genocidal or war crimes (Harvey 2024). Moreover, SIDS – spearheaded by the Alliance of Small Island States6 – have long advocated for more ambitious climate action, supported by adequate international climate finance, including loss and damage. The recent Bridg etown

genocidal or war crimes (Harvey 2024). Moreover, SIDS – spearheaded by the Alliance of Small Island States6 – have long advocated for more ambitious climate action, supported by adequate international climate finance, including loss and damage. The recent Bridg etown Initiative7 calls for reform of international financial architecture to ensure the existence of adequate financing, and the exploration of mechanisms such as a global solidarity levy for populations (which would be charged, for example, on fossil fuels or windfall profits) , to support adaptation in SIDS and elsewhere (Mottley 2024). Social protection as an enabler of mitigation and adaptation, and key component of SIDS’ loss and damage strategies This section outlines some of the different ways that social protection can help SIDS experience a just transition by

6 See AOSIS. 7 See https://www.bridgetown-initiative.org/. 8 TheGlobalEconomy.com, “Jamaica: Pension Fund Assets to GDP”. supporting and enabl ing equitable climate change mitigation and adaptation efforts everywhere. Crucially, it also asserts that social protection systems are an essential element for addressing loss and damage in SIDS. Supporting mitigation Mitigation to support SIDS requires action at the global and national level, and social protection can be an important enabler to ensure that mitigation is effective and fair. The greening of pension funds holds promise for driving global decarbonization, given that enormous tranches of capital – US$53 trillion – sit in funds of countries in the Organisation for Economic Co-operation and Development (OECD) alone (UNCTAD 2023) . Prudently divesting these funds from fossil fuels would help mitigation (ILO 2024f; UNCTAD 2023) . Some SIDS also manage not insignificant pension funds , especially in the Caribbean , where , for example, in Jamaica, such funds represent as much as a third of gross domestic product ( GDP).8 More thought

funds from fossil fuels would help mitigation (ILO 2024f; UNCTAD 2023) . Some SIDS also manage not insignificant pension funds , especially in the Caribbean , where , for example, in Jamaica, such funds represent as much as a third of gross domestic product ( GDP).8 More thought should be devoted to how these funds c ould not only be strategically reallocated to lessen emissions but also to prompt more strategic green investment in SIDS (ILO 2024g, section 4.3.9). Social protection can also help garner public acceptance of mitigation and environmental policies by providing compensation for any displacement of workers or (temporary) price increases caused. For example, seasonal unemployment benefits (Brazil) or early retirement pensions (China) can support fishers affected by fishing bans implemented to protect biodiversity and sustainably manage fish population s (ILO 2024f; Monbiot 2017) . In addition, many SIDS are committed to the energy transition (UNDP 2025), which may result in some workers losing their jobs or needing to re-skill. A combination of unemployment support and active labour market and skills policies can facilitate this process (Bischler et al. 2024) and secure greater public acceptance of just transition policies. The energy transition will also require progressive and careful phasing out of (often regressive) fossil fuel subsidies globally. Several SIDS spend significant percentages of their GDPs on explicit fossil fuel subsidies , including Suriname ( 5 per cent), Maldives (3 per cent) and Social Protection Spotlight 4

A fighting chance: Closing social protection gaps in the SIDS as climate justice in action the Bahamas (2.3 per cent ).9 Given the negligible contribution of SIDS to global emissions , the primary impetus for a transition to a renewable energy mix go es beyond carbon emission reductions: lower dependence on expensive fossil fuel imports, more resilient energy systems and the promise of cleaner and more cost-effective

contribution of SIDS to global emissions , the primary impetus for a transition to a renewable energy mix go es beyond carbon emission reductions: lower dependence on expensive fossil fuel imports, more resilient energy systems and the promise of cleaner and more cost-effective sources of energy (IRENA 2024). The phasing out of fossil fuel subsidies can help incentivi ze investments in renewable energy. It can also free up fiscal space that can be used to expand social protection cash benefits to compensate people for price increases and potential financial hardship resulting from the subsidy removal, and improve air quality and reduce adverse health impacts . In turn, this enhances the public acceptance of transition policies and strengthens the social contract. Investment in nature -based solutions presents another opportunity to support environmental and mitigation goals, while simultaneously providing social protection (income security) and creating decent jobs (ILO 2024a) . Payment for ecosystem services 10 can be designed to achieve social protection goals, including the reduction of poverty and vulnerability. Public employment programmes can help restore and protect ecosystems, while providing income security for people unable to earn sufficient income. For example, Pakistan’s “Ten Billion Tree Tsunami Programme”11 exemplifies public works that seek to enhance carbon sinks through afforestation, while creating temporary jobs and providing modest income security. Similar initiatives, such as mangrove planting, could benefit SIDS. Fiji’s “Jobs for Nature” initiative is already embracing this approach, creating over 10,000 temporary jobs for people who lost their incomes during the COVID -19 pandemic (World Bank 2022). These programmes not only support mitigation , especially if they are at scale, by expanding carbon sinks , but also foster “rewilding”, biodiversity renewal and cultural identity preservation (Monbiot 2017) . However, public works prog rammes focused on nature-based solutions must ensure decent work. Workers in too many such programmes experience poor conditions, low pay, lack of skills development, and

biodiversity renewal and cultural identity preservation (Monbiot 2017) . However, public works prog rammes focused on nature-based solutions must ensure decent work. Workers in too many such programmes experience poor conditions, low pay, lack of skills development, and missing social protection entitlements (Razavi, Orton , Behrendt, et al. 2024). As this work provides a major public good, such work should be better valorised and workers in

9 IMF, “Fossil Fuel Subsidies by Country and Fuel Database : 2003” (unpublished). 10 Payments for ecosystem services refer to a wide range of potential initiatives through which financial incentives are provided to discourage individuals or other actors from causing environmental harm. This could be through the provision of remunerated work or be tied to social protection benefits – as exemplified by the Bolsa Verde programme in the Brazilian Amazon, in which payments are conditional on the rural population’s non -participation in environmentally harmful activities such as illegal logging (Schwarzer, van Panhuys and Diekmann 2016) – as well as other mechanisms. 11 See Ten Billion Trees Tsunami Programme – Phase-I Up-scaling of Green Pakistan Programme. these programmes should be considered as key public servants and benefit from social protection entitlements (such as unemployment, health insurance and pension rights) just as other public servants do already and as all worker should too. The g reening of social protection administrative operations is an option in all SIDS , and changes can be made to all social protection institutional operations in order to green them further (ISSA 2023b) . For instance, there has been a move towards paperless administration in some Caribbean SIDS, and their institutions running health and social care schemes can use their purchasing power in procurement to support the greening of those services (ILO 2024c). This can be additional motivation for further digitalization of administration systems and can enhance efficiency gains and service delivery. Supporting adaptation Strengthening social protection in SIDS can enhance

procurement to support the greening of those services (ILO 2024c). This can be additional motivation for further digitalization of administration systems and can enhance efficiency gains and service delivery. Supporting adaptation Strengthening social protection in SIDS can enhance climate adaptation by reducing vulnerabilit y, while building adaptive capacities and increasing resilience. Regular predictable benefits, such as child benefits, old-age pensions, disability benefits and social assistance, can act as an income floor to maintain at least a basic standard of living during extreme weather events . S ocial health protection will help people cope with heat stress and the spread of new and existing diseases engendered by the climate crisis and biodiversity loss , without falling into poverty due to rising health costs. A healthier population is also much better placed to cope with challen ges such as higher temperatures and the associated cardiovascular risks (ILO 2024b; 2024g). Social protection is also crucial to support the adaptation and diversification of livelihoods in SIDS by allowing people to invest in their human capabilities, and to enhance their assets, productivity and savings. For example, Brazil’s Bolsa Família was found to increase the likelihood of lowincome farming households adopting irrigation practices (Lemos et al. 2016). SIDS could further enhance the impact of social protection on adaptive capacities by linking income support measures to other complementary services such as agricultural extension services, in -kind Social Protection Spotlight 5

A fighting chance: Closing social protection gaps in the SIDS as climate justice in action transfers (for example, drought -resistant seeds and tools) or education and training for sustainable fishing or agriculture.

Adaptation also means social protection systems themselves must be more resilient and responsive to shocks. The COVID-19 pandemic and frequent climate shocks have underscored the importance of social protection in safeguarding income, health and jobs, and in maintaining social cohesion and human development gains. SIDS need little reminding of this, and action is

shocks. The COVID-19 pandemic and frequent climate shocks have underscored the importance of social protection in safeguarding income, health and jobs, and in maintaining social cohesion and human development gains. SIDS need little reminding of this, and action is evolving in ways th at correspond to increased responsiveness to shocks. It is encouraging to note that the pandemic has spurred Belize,12 Jamaica13 and Saint Vincent and the Grenadines 14 to explore the adoption of an unemployment insurance scheme. Such policy action represents important systems -strengthening whereby more people are protected by more comprehensive coverage, which can be expanded during shocks, and which can also safeguard against everyday life shocks . Similarly, in the Pacific, a “steady and gradual ” approach seems to be making headway in improving coverage as per parametric reforms to the old -age pension in Tonga , enabling higher coverage of older persons and greater pension adequacy (P4SP 2025). Additional approaches to enhance the resilience and responsiveness of social protection systems could include:  Forecast-based triggers. The United Kingdom and New Zealand15 provide cold -weather payments when extreme cold is forecast by metrological authorities (Etoka, Sengupta and Costella 2020). SIDS could apply this logic for heatwaves, droughts or storms and floods, as Kenya does for drought-prone areas through its social assistance system (ILO 2024g, box 2.7).  Weather-related wage compensation . Algeria compensates workers for lost wages due to extreme heat by providing an adapted unemployment protection scheme to workers in certain exposed sectors.16 This also has the advantage of preventing sickness and work injury related to heat stress, which means that sickness or work injury benefits do not need to be used. These

12 See ILO (2023). 13 See Jamaica, Jamaica Information Service (2024). 14 See IMF (2024). 15 Work and Income (Government of New Zealand), “ Winter Energy Payment”.

or work injury benefits do not need to be used. These

12 See ILO (2023). 13 See Jamaica, Jamaica Information Service (2024). 14 See IMF (2024). 15 Work and Income (Government of New Zealand), “ Winter Energy Payment”. 16 ISSA, “ISSA Country profiles: Algeria”, see section on “Weather-related unemployment benefits – Weather-related unemployment benefit (social insurance” (p. 19). 17 ISSA, “ISSA Country profiles: Barbados”. unemployment protection and occupational safety and health protection functions are an approach that SIDS could adopt in the case of unsafe work conditions during inclement weather or high temperatures.  Adjustment of contributory schemes during crises . Adaptation in response to extreme weather events could include temporarily delaying, subsidi zing or reducing contributions to ensure continued social security coverage and financial breathing space for employers and employees (ILO 2020; Orton 2012).  Financial preparedness. Tax revenue or small amounts of social security contributions can be used as a solidarity mechanism to build up contingency funds for shocks. For instance, in Barbados, 0.1 per cent of pension social security contributions is earmarked for a catastrophe fund, which provides financial aid to lowincome earners whose houses are damaged or destroyed by a catastrophe.17 Better linking and aligning social protection systems with parametric (or index -based) insurance may constitute another relevant adaptation strategy for SIDS. For instance, where parametric insurance is designed following the principle of social solidarity between workers, employers and the government, and is heavily supported with public finances and ensures that affordability does not constitute a barrier to access, it becomes fundamental in guaranteeing income security, particularly that of smallholder farmers and fishers (Sato and Mohamed 2022). At the same time, parametric principles may also hold growing importance for the design of social protection schemes that compensate lost wages or income in the case

guaranteeing income security, particularly that of smallholder farmers and fishers (Sato and Mohamed 2022). At the same time, parametric principles may also hold growing importance for the design of social protection schemes that compensate lost wages or income in the case of extreme events, and their addition as short -term benefits may make social security packages more attractive for certain types of workers (ISSA 2023a). Finally, SIDS may opt to channel pay -outs from parametric sovereign insurance provided through regional risk pools such as the Caribbean Catastrophe Risk Insurance Facility or Pacific Catastrophe Risk Insurance Company , through their national social protection systems in response to extreme events (WFP 2023) (see following section). Social Protection Spotlight 6

A fighting chance: Closing social protection gaps in the SIDS as climate justice in action Addressing loss and damage at scale In its essence, social protection is about addressing loss of income and supporting people through income replacement to maintain a t least a minimum standard of living when affected by different shocks and vulnerabilities across their lives. Increasingly, many countries – including SIDS – leverage their social protection systems to provide additional support to people affected by shocks caused by irreversible climate-related impacts. For example:  Dominica provided additional benefits to existing social assistance beneficiaries as well as emergency income support for people who lost their incomes and/or whose houses were damaged or destroyed during Hurricane Maria in 2017. Special increments were available for families with children (Beazley 2018).  Fiji temporarily topped up existing non-contributory benefits for older people, poorer households and vulnerable children when Cyclone Winston hit in 2016

(Mansur, Doyle and Ivaschenko 2017).  Grenada provided exceptional unemployment assistance to registered national insurance members in the aftermath of the 2004 Hurricane Ivan (Mohan and Strobl 2021; World Bank 2005).18

(Mansur, Doyle and Ivaschenko 2017).  Grenada provided exceptional unemployment assistance to registered national insurance members in the aftermath of the 2004 Hurricane Ivan (Mohan and Strobl 2021; World Bank 2005).18 These experiences show that SIDS have started to recognize the potential advantages of addressing loss and damage through their existing social protection systems , as opposed to counting on unintegrated disaster or humanitarian responses. This approach has multiple advantages, as it:  constitutes a n effective way to directly provide compensation in cash or in kind to affected people, including vulnerable populations , workers and businesses (for example , through wage subsidies or worker retention/furlough schemes);  can increase efficiency and timeliness through the use of existing administrative and delivery systems (as opposed to setting up parallel systems);

18 However, only 58 per cent of funds earmarked for the programme were disbursed, indicating a stronger recovery , not least due to policies focusing on employment-intensive reconstruction (Mohan and Strobl 2021). 19 UNFCC (United Nations Framework Co