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59. The Social Security (Minimum Standards) Convention, 1952 (No. 102), laid down the general principle regarding the cost sharing of social security as follows: "The cost of the benefits
and the cost of administration of such benefits shall
be borne collectively by way of insurance contributions or taxation or both in a manner which avoids hardship to persons of small means and takes into account the economic situation of the Member country and of the classes of persons protected." The Convention has also set a maximum limit for the contributions of employees: "The total of the insurance contributions borne by the employees protected shall not exceed 50 per cent of the total of the financial resources allocated to the protection of employees and their wives and children. For the purpose of ascertaining whether this condition is fulfilled, all the benefits provided by the Member in compliance with this Convention, except family benefit and, if provided by a special branch, employment onjury benefit, may be taken together."
60.
One of the most important problems in the field of social security financing is the maintenance of the real value of benefits, particularly those payable in the case of long-term contingencies. It may be accepted that benefits should bear a certain relationship to the value of labout at the time when they are payable. In other words, certain safeguards must be worked out to protect the value of benefits during an inflationary period. Another important problem in this sphere is the ever-increasing cost of medical care and medicine, which has an impact on security financing, irrespective of whether medical care is provided through public services or social insurance. Even where the morbidity rate is decreasing or not increasing, the cost per case per person tends to go up. This is probably, and to a considerable extent, due to the increasing price of drugs, development of medical science and demands by public for medical care of higher standards.
social
61. Where a social insurance scheme is financially self-supporting, i.e. where it
does not receive any state subsidies, there is the rather serious problem of the salaries and conditions of work of the staff for administration.
While every effort may be made to reduce administrative expenses to the minimum, the social insurance institution should have well qualified staff and these cannot be retained without appropriate remuneration and conditions of work. Thus it is always necessary to examine carefully the possibility of staffing in the light of financial resources available to the administration, particularly when a new scheme is introduced.
62. The financial reserves built up under a social security scheme providing pensions has important economic influence. This is particularly significant in developing countries, where domestic savings are insufficient to meet the requirements of capital for economic development. The ultimate effect of such savings will depend on the manner in which they are utilised. But if appropriately invested, the reserves accumulated under a social security scheme can help to an important degree in meeting the acute shortage of capital. It should, however, be mentioned that too often these big accumulations of capital under social security schenes have been misused and dissipated as they can be wrongly handled by those in charge of the social security fund.
Administrative organisation
63. Any social security laws, however well formulated, will be useless if they are not properly implemented, and the implementation of social security involves many administrative operations, such as the registration of protected persons and their employers, identification of the persons concerned, collection of contributions, adjudication of claims, payment of benefits, inspection, procedures for appeal, etc. These administrative operations must be completed quickly and accurately in accordance with law and regulations and there should not be any gap between legislation and administration. The ultimate responsibility for social security measures rests with the government, but there is a choice as to the form of body responsible for administering a social security scheme. It lies between direct administration by a government department and administration by a statutory board to which the government delegates administrative powers. One advantage of a statutory board is that it can be made to give representatives of employers and employees a direct interest in the administration of the scheme; usually such a board consists of representatives of various government departments (e.g. departments of labour, health and finance), and those of workers' and employers' organisations; and the board directs and supervises the operations of the social security institution headed by a chief executive officer. Where direct administration by a government department is adopted, employers and employees play their part by providing the bulk
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