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Social Policy toward Population Change
Chompoonuh K. Permpoonwiwat, Ph.D.School of Economics and Public Policy
Srinakharinwirot UniversityBangkok, THAILAND
Topics
• Population Change : A Case of Thailand• Ageing Population: Celebration/Challenge?• Social Policy/Programs?
Population Change
Population Change in Thailand
Key Factors affecting population composition and population structure– Fertility (birth)– Mortality (death)– Migration
Population Change in Thailand
1. Thailand Population and the Rate of Increasing (Growth)– 1st half of 20th Century (1901-1940s): Thailand
population has a slow rate population growth (1+%)
– In the 1950s and 1960s: Rapid growth in population (about 3%)
* HH survey from 1947-1959, 3.2% (17.4 Million- 26.4 Million)
Population Change in Thailand
• Concerned Policy
– Obstacles for country development• scarcity of resources• Income/earnings couldn’t catch up with development
– Research for controlling numbers of population
Population Change in Thailand
• Main Reasons for population growth in the 50s and 60s
1. Reduction in death rate due to a success in public health policy and medical advancement
2. Stimulating Policy for Pronatality toward East Asia leading country, e.g. choosing to invest in the form of children
Population Change in Thailand
Policy Toward decreasing in birth rate and Fertility
• 1969 began the Birth Control Campaign • 1977 had successful in evident of slower number birth
rate• Now: very low increasing rate of population
Population Change in Thailand
2. Demographic Transition2.1
Population Change in Thailand
2.2 Early Expanding Period
1947-1977 - Dramatically decline in death rate - High rate of birth expectancy- Resulting to the present population (35-65 years
old)- The group going to be in their retirement soon
(some are)- The next group/ generation has a decreasing in
numbers continuously
Population Change in Thailand
2.3 No Returning to the High Stationary
Complete Transition! Affect labor market, welfare, and other
infrastructures
Population Change in Thailand
3. Age Structure demographic transition is dynamic1947 the beginning of transition 1980 the middle of transition where birth rate has decline significantly 2000 the end of the high stationary period
What’s next???
Population Change in Thailand
• Summary– Youth group has declined both in number and
growth rate– The peak age group around 25-65 has increased
both in number and growth rate– Thai people tend to live longer (decreasing of
death rate)– We are now facing “Ageing Population,” or “Aging
Society!”
Population Change in Thailand
Population Pyramid
Population Change in Thailand
3. Urbanization and Urban Growth– Weak Explanation in terms of urbanization index– In Thailand, urban means “within municipality”– Reports show increasing number of people
moving in to municipalities every year
Population Chang
e
Productivity
Consumption
& Savings
Investment
Government
Spending
International Trade
Business/IndustryRegional EconomyCommuni
ty
Public Policy toward Aging
Society
Back Effect to
Country’s Economy
Household
Ageing Population: Celebration /Challenge?
• Ageing is a triumph of development. People are living longer because of better nutrition, sanitation, medical advances, health care, education and economic well-being.
• Although population ageing poses social and economic challenges to individuals, families and societies, with the right policies in place, societies can prepare for an ageing world, address the challenges and take advantage of the opportunities.
Population Ageing: A Celebration and a Challenge
Ageing Population Around The world
UNFPA (2012)
Aging: dependency ratio goes up
Population in ASEAN
Ageing society
Source: UN Population Division (2012)
Did you know ???
UNFPA (2012)
UNFPA (2012)
Did you know ???
SOCIAL POLICY/PROGRAMS???
Income Supporting Program
Developed Nation has some forms of universal income support for their elderly population
The differences in the structure of income support programs among countries for example:
- Canada 3 programs : Universal Demo grant at age 65, Earning related pension at age 60, and mean-tested transfer at age 60
- Italy = 35 years of Labor market Experience ( Started work 20 , Retries 55 get full Benefit)
Health Insurance
Health care is a universal entitlement. ( The elderly do not receive particularly special care)
Only Japan , Separate system of health care for elderly
Developed countries use a variety of mechanisms to attempt to control medical cost
Non-Health In Kind Transfer Program
Residential Care Home-help services Rehabilitation service. Housing Benefit Food Subsidized public transport
"If men were angels, no government would be necessary.”
James MadisonFederalist Paper No. 51
1788
Government & Social Security
Government & Social Security
Social Security Policy
37
In advanced countries,- Especially in Japan, social security expenditure is increasing due to aging.- As a consequence, burden is generally rising in these economies, though it has declined in Japan.
Gov
ernm
ent S
ocia
l Sec
urity
-rel
ated
Exp
endi
ture
s to
GD
P
National Burden to GDP
(Source) Social Security-related Expenditures: IMF “Government Finance Statistics Yearbook 2002”, OECD “Economic Outlook 76” , “Stat Extracts” and “National Accounts 2011 vol.II” National Burden Ratio: OECD “National Account 2011 vol.II” and “ Revenue Statistics”, CAO “National Accounts” etc.(Note ) Figures represent the general government-based data (including the central/local governments and the social security funds).
※National Burden Ratio = Total Taxes as a percentage of National Income (NI) + Social Security Contribution as a percentage of NI
(Unit: %)
Transitional Analysis of Social Security-related Expenditure and National Burden Ratio in Major Advanced Countries
United Kingdom
Germany
France
37
38
In Japan, social security is realized through burden sharing by “self-help”, “mutual help” and “public help”. Actually, “self-help” is a foundation of burden sharing, complemented by “mutual help” to share risks of life mutually, and then, “public help” is positioned to provide the necessary security for life against situations which are not to be covered by “self-help” and “mutual help”.
自助Self-help
公助Public help
共助Mutual
help
The systems based on social insurance: insurance payment would be provided in case of disease, old-age, need in long-term care , or unemployment. Subscribers would make premium payment, while public expenses which secured by tax revenues would cover a part of resources of insurance payment.
Public assistance (1950 – )
Pension insurance (1961 – )
Long-term care insurance (2000 – )
Employment insurance (1974 – )
Worker’s accident compensation insurance (1974 – )
Health insurance (1961 – )
The concept that people sustain their lives by working on their own and keep their good health on their own.
Measures for the disabled, etc.
The systems such as public assistance to ensure the healthy and cultured living of necessitous persons, as well as social welfare to provide a certain amount of goods and human services to the socially vulnerable.
38
Basic Concept of Social Security in Japan
39
1950 1970 2000 2030 20500
5
10
15
20
25
30
35
40
（％）
● Japanese Life Expectancy
(Source) “Abridged Life Tables 2010” (Ministry of Health, Labour and Welfare) (July, 2011)
(CY)
Japan
Germany
France
U.K.
U.S.
(Source) Japan 1950-2010: “National Census” (Ministry of Internal Affairs and Communications) 2011-2050: “Japanese Future Demographic Projections” (National Institute of Population and Social Security Research) (January, 2012) Other countries: “World Population Prospects: the 2010 Revision” (United Nations)
● Ratio of People Older than 65 years to the Total Population
1970 2000 2030
1970 → 2000
2000 →2030
Japan7.1 17.4 31.6 10.3 14.
2
Germany 13.7 16.3 28.0 2.6 11.
7
France 12.9 16.1 23.1 3.2 7.0
U.K. 13.0 15.8 21.1 2.8 5.3
U.S. 9.8 12.4 19.9 2.6 7.5
Aging Population Current Fiscal Situation (Contd.)
1961 1973 2011
Life Expectancy (male) 66.0 70.7 79.4
Life Expectancy (female) 70.8 76.0 85.9
Life Expectancy at age 65(male)
11.9 13.2 18.7
Life Expectancy at age 65(female)
14.1 16.1 23.7
Life Expectancy at age 75(male)
6.7 7.4 11.4
Life Expectancy at age 75(female)
7.8 9.1 15.2
39
Japanese Population Pyramid in 1950
Source: National Institute of Social Security and Population Problems
ชาย
หญิ�ง
Population Pyramid in 1970 – 1990 - 2010
Source: National Institute of Social Security and Population Problems
Projection: 2030-2050 Source: National Institute of Social Security
and Population Problems
43
Population (thousand) / Com
ponent ratio
43
Population aging will progress furthermore in the future, and then, our country will face the severe society where one elderly person is supported by only one young person.
＜ 2050 ＞＜ 1965 ＞ ＜ 2012 ＞
- - ;
- - ;
- - ;
> <
＾＾ ＾
＾
＾＾ ＾
＾
＾＾ ＾
＾
＾＾ ＾
＾
＾＾
9.1 people supported 1 person aged 65 or
over
1.2 people will support 1 person aged 65 or over
(estimates)
＾＾
Efforts are needed to increase in people on the support side as much as possible through the
social security reform.
＾＾
^ ^0 ^ ^
0
2.4 people support1 person aged 65 or over
Assistance to child and child-raising
Making an environment to enable the elderly to work longer period.
(Source) Ministry of Internal Affairs “National Census”, “Population Estimates” National Institute of Population and Social Security Research “Population Projection for Japan (middle fertility and mortality projection)”
Age 65 and over
Age 20-64
Age 19 and under
44(Note) Data is based on Initial budget
(Unit: trillion yen)
・ Most of expenditure increase is due to the growth of social security-related expenditure.
・ Increase of government bond issuance is due to the growth of social security-related expenditure as well as falling tax revenues.
Comparison of General Account Budget between FY1990 and FY2013
44
Pension System in Japan
Minimum: $670/month
Long Term Care Insurance System
Mandatory for people at the age of 40
Minimum payment is around $ 41 (Depend on residents and individual economic status)
Social Security Benefits Expenditure
Source: Japan Statistical Yearbook 2009
Fiscal
Year
Social Security Benefits (billions of
JPY)
Per capit
a socia
l secur
ity benefits
(1,000 JPY)
National income(billions of
JPY)
Ratio of social security benefits to national
income (%)
Total Medical
care
Pension
Welfare and other
s
Total Medical
care
Pension
Welfare and other
s
197511,76
9 5,713 3,883 2,173 105123,9
91 9.49 4.61 3.13 1.75
198024,77
410,73
310,45
3 3,588 212203,8
79 12.15 5.26 5.13 1.76
198535,68
014,28
316,89
2 4,504 295260,5
60 13.69 5.48 6.48 1.73
199047,22
018,38
024,04
2 4,799 382346,8
93 13.61 5.30 6.93 1.38
199564,72
424,05
233,49
9 7,174 515368,9
37 17.54 6.52 9.08 1.94
200078,11
925,99
541,20
110,92
3 616371,8
04 21.01 6.99 11.08 2.94
200587,78
328,10
946,29
313,38
0 687365,8
78 23.99 7.68 12.65 3.66
200689,11
028,10
347,32
513,68
2 697373,5
91 23.85 7.52 12.67 3.66
200791,43
028,94
648,27
414,21
1 716374,7
68 24.40 7.72 12.88 3.79
Ageing society in Thailand
Challenge!
:This issue leads to big concern for Thai government about “the financial stability” of public finance to “provide social security services”.
The extrapolation of changes in Thai population divided by ages.
Potential support ratio for old age in Thailand in 1960 – 2035.
Reforming the social security in Thailand to cope with aging society
Social security system
In Thailand, the social security system can be regarded as the mixed model
social service social insurance
Thailand Social Security System
• (1) social service is provided to improve human capital for eligible person by free of charge, e.g. national health insurance and free compulsory education
• (2) social insurance is provided to guarantee income security by requiring a certain amount of financial contribution from eligible person, e.g. social security fund and government pension fund.
Growth of expenditure, Revenue and GDP
1997-2006 2007-2011Total Expenditure 4.9 8.8Social welfare 7 12.5Other expenses 4.5 6.6Net revenue 4.7 4.2Nominal GDP 6.3 6.5
Source: Bank of Thailand (2012)
Public finance situation
• 90% come from taxes, mainly VAT, CIT, PIT.
• Relies more on indirect taxes, especially VAT (7% of sales); CIT is greater than PIT.
• High tax rates compared to other Asian countries but effective rates are low.
• One-fourth of labor force actually file PIT.
PIT CIT
Pay PIT =9 mil.
Potential PIT payers= 27 mil.
Unemployed = 0.7 mil.
Tax
base
Labo
r for
ce =
38
mil.
Government revenue
Public debt to GDP
2011201020092008200720062005200420032002
• More than 70% of total expenditure is current expenditure, i.e. salaries, transfer payments.
• Education is the largest share about 25%; health care & social security is significantly increasing in recent years.
Government expenditure
General services
Defense Internal security
Education Social security
Heath care
Economic services
Fiscal sustainability
• Public debt to GDP reduced from 55.82% in 2002 to 41.71% in 2011.
• Unbalanced revenue and expenditure, i.e. average growth of revenue was about 2 times lower than expenditure growth.
Public finance situation
Percentage of Ageing Popultion/Total Population
Countries 2005 2010 2020 2030
Japan 19.9 22.6 28.5 30.8
Thailand 7.8 8.7 12.4 17.4
*** The critical issue is that Thailand is expected to reach a certain level of aging at the much lower levels of per capita GDP compared to Japan, South Korea and Singapore (UNFPA, 2010)
Pension system The current pension system in Thailand can be
categorized into three pillars (ILO, 2012b) The formal workers can be included in multi-
pillar income security for old-age The informal workers can only access the
universal 500 baht scheme which is an old-age allowance.
Challenges : Thailand Aging Society
The Structure of pension systemPillar 1 Pillar 2 Pillar 3
Government Pension Scheme
Social Security
Fund
Universal 500 baht scheme
Government Pension
Fund
Provident Funds
Retirement Mutual Funds
Coverage Government employees
Compulsoryprivatesector
Automatic informal
sector
Automatic government
sector
voluntarybased oncollective
agreements
Voluntary individual
Contribution None(General tax)
6% None
(General tax)
3-12% 2-15% Private, tax deductible
Coverage 1.5 million 10 million 23 million 1.16 million 2 million n.a.
Source: adapted from ILO (2012b)
The pension system : Challenges The challenge of existing system is improvement of coverage, adequacy of
benefits and management. In particular, on the coverage side, Thai pension system for income security after retirement can cover only the employed in formal sector but a large number of the informal workers have not been covered. ILO (2012b)
The consumption of Thai elderly relies on labor income*, asset-based income** and transfer income from their child(ren)*** but income from public transfer is negligible. Hence, graying of population is likely to cause the Thai elderly more vulnerable, particularly those who do not have secured sources of income. Paitoonpong et al. (2010)
• *37.8, **31.7%, *** 82.7%
Who’s taking care of the elderly?0.76 million from 7.02 millions elderly population have (main) caregivers. 40.5 % are daughter, 28.0 % are spouse. To employ caregivers (as servant/employees) is 3.3%. (Source: การสำ�ารวจผู้สำงอายุ�ในประเทศไทยุ พ.ศ. 2550)
214,624
92,055
310,101
52,605
25,82715,51624,674
2,22577325,067
2,5730
50,000
100,000
150,000
200,000
250,000
300,000
350,000 Spouse
Son
Daughter
Son-in-Law/Daughter-in-Law
Grandchildren
Brother/Sister
Relatives
Friend/Neighbor/Known People
Nurse/Nursing Aid
Servants/Employee
Others
Market
Family
Relatives
Persons
Main Caregiver in Urban and Rural
Currently Main Caregiver Urban-Area Rural-Area
Spouse 24.6 29.6
Son 11.8 12.1
Daughter 38.0 41.6
Son-in-Law/Daughter-in-Law 6.7 7.0
Grandchildren 2.9 3.6
Brother/Sister 1.8 2.1
Relatives 3.2 3.2
Friend/Neighbor/Known People 0.9 0.0
Nurse/Nursing Aid 0.3 0.0
Servants/Employee 8.8 0.7
Others 0.8 0.1
Total (No. of the Elderly who have caregivers)
100.0 (241,446)
100.0 (524,59
4)
The pension system : Challenges
However, currently, Thai government has been preparing to extend the coverage of current pension system to all citizens, including the informal workers, by introducing the National Saving Fund which will be contributed by government and member.
Policy Recommendation
• Extend the retirement age–Increase Thailand Productivity–Reduce Fiscal Burden/Budget
• Supporting National Saving Fund for Long Term Care
64
Health care system The Thai health care systems are publicly
managed Civil Servant Medical Benefit Scheme (CSMBS) Universal Coverage Scheme (UCS) Social Security Scheme (SSS) **These systems provide universal coverage for
all citizens but their financing are relied heavily on tax revenue **
Health Care System : Challenges
Key characteristics of health care system in Thailand
CSMBS UCS SSS
Eligible group Government employee, pensioners and their
dependents
The rest Thai population, who are not qualified to
CSMBS and SSS.
Private employee in formal sector
Coverage (% of pop.) 7% 76% 15%
Source of funds General tax General tax Tri-parties contributed by employee, employer
&government
Payment mechanism Fee for service for OP, DRG for IP
Capitation Capitation
Copayment No generally, but only for some inpatient care and for private hospitals
No No generally, only for some services beyond
budget ceiling
Per capita expense
(as of 2008)
12,100 Baht
(about 403.33 US$)
2,200 Baht
(about 73.33 US$)
1,800 Baht
(about 60.00 US$)
The key challenges are that they have relied heavily on public finance through general tax and channels for financial contribution from beneficiaries, e.g. copayment and premiums, are limited.
The government subsidies are unequally distributed among schemes in terms of coverage and per capita expense, e.g. CSMBS is the most subsidized scheme but its coverage is only 7 percent of total population.
The health system : Challenges
The Health Insurance Model
The Cost of health care will continue to increase
The increase inequality among schemes needed to be solved
Fiscal Burden and Risk!
Future Challenges
Fiscal Burden due to CSMBS system
71
Fiscal Burden from Health Care
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
232,704
2,151,010
ระบบ UC ระบบประก�นสำ�งคม 4 กรณี� ระบบ CSMBS สำว�สำดิ การร�กษาพยุาบาลรวม
ล้านบาท
UC ม�สำ�ดิสำ#วนเพ $มขึ้&'นจากรอยุละ 63.4 ในป( 2557 เป)นรอยุละ 90.4 ในป( 2606
ขึ้ยุายุตั�วเฉล�$ยุรอยุละ 3.57 ตั#อป(
Policy Recommendation
72
Distributed the risk: Cost Sharing (Fair/Equity/Equality/Efficiency?)
Covered both Formal and Nonformal Sectors
Reform the CSMBS System
UC CSMBS SSS
UC CSMBS SSS
Independent Organization to Control and Manage
(Negotiate with Health Care Center and taking care of financial Situation)
Healthy VS. Non Healthy
High Income Vs. Low Income
Working Gr. Vs Aging
73
การ Distribution of Risk
SSS 10 Million
SSS (with families) 30 Million
UC 20 Million UC (with families) 30 Million
CSMBS4.5
Million
3,000 Baht/Capita
2,150 Baht/Capita
74
3,800 Baht/Ca
pita
Increasing the Base of Social Security Coverage
Preventive Healthcare
Gate-keeper system
Incentives through
drug pricing
structure
CSMBS Reform
75
