Building Economic Stability: The Role of Families and Arab Banks

• Empower Families to Thrive: As family structures evolve, governments must shift social protection policies to strengthen family bonds and promote economic resilience.
• Intergenerational Solidarity Matters: Robust family connections serve as natural buffers against economic shocks, fostering stability and cohesion amid global challenges.
• A New Role for Banks: Arab banks can drive growth by supporting family-centric initiatives, enhancing economic stability and social cohesion in the region.

In today’s rapidly evolving world, the concept of family is undergoing significant transformations. Social-protection programs, historically designed to reduce family poverty, must adapt to these changes. Governments should focus on empowering families to act as natural buffers against economic and social shocks by promoting policies that foster intergenerational integration and solidarity. This shift is crucial for building economic resilience and social cohesion, especially in the face of unprecedented global challenges.

The Need for a New Approach

The 30th anniversary of the United Nations’ International Year of the Family (IYF) marks a pivotal moment to revisit and rethink social-protection strategies. Over the past three decades, demographic shifts, technological advancements, migration, urbanization, and climate change have dramatically altered societies worldwide. Responding effectively to these changes requires a departure from traditional social protection frameworks that treat families as static demographic categories. Instead, policies should strengthen the agency of families, enabling them to act as cohesive units capable of withstanding and recovering from economic and social disruptions.

Current Social Protection Frameworks

Since the adoption of the International Labour Organization Convention 102 in 1952, which sets minimum standards for family benefits, many countries have implemented various social-protection measures. These include periodic cash transfers, in-kind assistance, and other family-sensitive support like medical care, school tuition, and food rations for female-headed households. In the European Union, family and children benefits accounted for 8.3% of total social benefits expenditure in 2020, with some countries like Poland and Luxembourg dedicating as much as 16.2% and 15.7%, respectively. More than 120 low- and middle-income countries have also adopted cash-transfer programs to support poor families.

Towards a Holistic Approach

While these measures have alleviated family poverty and improved outcomes such as nutrition and education, a more holistic approach is necessary. Research indicates that strong family ties significantly contribute to economic resilience. For instance, in countries with robust family connections, such as Italy and Spain, families help buffer consumption losses during periods of unemployment. This familial support acts as a form of insurance against income fluctuations, fostering economic stability.

The Role of Family Solidarity

As climate change intensifies and the global push towards net-zero emissions continues, the importance of family solidarity cannot be overstated. Families serve as vital sources of social cohesion, mediating between individuals and the state and pooling resources across generations. The rise of intergenerational living arrangements, even in developed countries like the United States, underscores the growing relevance of family-based support systems. Policymakers can encourage such integration through tax benefits, paid family leave, and support for intergenerational care.

Policy Recommendations

To promote intergenerational solidarity, governments can implement policies that support multigenerational living. Housing interventions, such as Singapore’s Multi-Generation Priority Scheme and Canada’s On-Reserve Residential Rehabilitation Assistance Program, facilitate extended families living near each other, providing a stable environment for all members. These initiatives reflect the concept of economies of scope, where a single policy intervention addresses multiple social issues.

Significance to the Arab Banking Sector

For the Arab banking sector, understanding and supporting family-centric social protection policies can lead to enhanced economic stability and growth. Banks play a crucial role in financing and promoting policies that foster intergenerational integration. By developing financial products and services tailored to the needs of multigenerational families, banks can contribute to social cohesion and economic resilience. Moreover, supporting housing projects and family-centric community initiatives can help mitigate the impact of economic and environmental shocks on families.

As we navigate an era of rapid change, it is essential for Arab bankers to recognize the evolving nature of families and the critical role of intergenerational solidarity. By aligning financial strategies with these insights, the banking sector can foster a more resilient and cohesive society, ultimately contributing to long-term economic stability in the Arab world.