Social Protection Systems in Asia and Pacific: Patterns and

Emerging Challenges

Philip O’KeefeWorld Bank Practice Manager

Social Protection & Jobs Global Practice, East Asia and Pacific

ISPA TOOLS Regional Training EventYogyakarta, March 2018

Outline of presentation

• What are we talking about when we say “social protection systems” ?

• Regional and global trends in social protection coverage and spending

• Questions and issues in SP systems in Asia and Pacific

We can describe SP systems in terms of policy objectives...

Or by clusters of programs under one or more of those objectives…

RESILIENCE

Preventive Programs

• Pensions• Unemployment & disability

insurance• Health insurance• Crop & weather insurance• Catastrophic risk insurance

(country level)

EQUITY

Protective Programs

• Conditional & unconditional cash transfers

• In-kind transfers• Social care services• Targeted consumer

subsidies• Disaster relief

OPPORTUNITY

Promotional Programs

• Nutrition benefits• Microcredit• Skills training• Conditional cash transfers• Active labor interventions/

employment services

SP System

Some programs may be characterized under all three headings depending on design – e.g., public works

Or as interventions to support people across the life cycle…

Whatever the mix of objectives and programs, an SP system has three levels that need to be

understood…

Regional and global patterns of SP system coverage and

spending

There has been major expansion of flagship social assistance programs in the developing world in recent

years…

By 2017: 149 developing countries with SA

programs(WB, 2017)

Apart from general SSN schemes, elderly social pension programs have expanded rapidly at all income levels

(# countries introducing social pensions and GDP pc)

SSN programs are having impacts on poverty, though variably across country groupings

As SSN programs have expanded, contributory pension systems have largely failed to expand coverage to the

informal sector…

% of working age covered by contributory pensions and GDP PC (2015)

Despite lack of progress, countries are setting ambitious coverage expansion targets…

• Increases in pension coverage through the traditional model have been very modest & inadequate as ageing accelerates

• Despite this, countries are committed to rapid coverage expansion but often without matching fiscal commitment

• With the slow pace of labor market formalization and casualization of the formal sector, the challenges of coverage expansion are likely to increase rather than lessen

Overall, coverage of SP systems remains partial and mixed across regions, even for the poorest

(share of total population receiving any SP or active labor program)

Across regions, average safety net spending shows some variation but differences are greater for pensions

0

1

2

3

4

5

6

7

8

9

SSAfrica SAR EAP LAC MENA ECA OECD

SSN + pension spending as % of GDP

Pension SSN

It is important though to look beyond simple regional averages…

(EAP spending by country as share of GDP, ASPIRE)

The importance of different safety net instruments also varies across regions…

(% spending by SSN instrument by region as share of total)

In EAP and SAR, spending on active labor market interventions has remained minimal in most countries

(% GDP spending on ALMP, WB forthcoming)

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

0.35%

0.40%

0.45%

0.50%

Spending on consumer subsidies continues to outstrip SSN spending in all regions, despite reforms

(% of GDP spending on SSN and subsidies, ASPIRE)

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

SSAfrica SAR EAP LAC MENA ECA

SSN Energy Elec Food

Emerging questions and issues in SP systems in Asian and Pacific

1. What does a commitment to “universal social protection” mean?

• Globally, there is an emerging dialogue on “universal social protection” (USP) as a parallel to universal heath care

• However, there are varying interpretation of what USP means:

- truly universal, as in Universal Basic Income

- “categorical universal” as in UN Social Floor Initiative

- “universal when in need” – but with what definition(s) of need and what systems for identifying those in need?

• Growing efforts to estimate the fiscal costs and welfare impacts of different forms of universalism of SP

2. SP interventions increasingly seen as investments and not just welfare

• Rise of conditional cash transfers (CCT) & functions of SP to leverage education, health, nutrition & other outcomes

• Increased emphasis on graduation & productive inclusion in social assistance programs

• Macroeconomic emphasis on role of SP in reducing inequality & its contribution to economic growth (IMF 2014)

• SP interventions as tools to facilitate economic reforms which enhance overall economic performance (e.g. subsidy reform; tax reform; labor law and SOE reforms)

• Improved labor policies & active labor programs to promote labor market efficiency

3. Many SP systems are trying to move from fragmentation to harmonization or integration

• at institutional level: institutional consolidation and coordination reforms (SP sector coordinating bodies)

• at policy level: e.g., national SP strategies; integration of pension systems; social assistance program consolidation

• at delivery system level: e.g., social registries/MIS; one-stop shops; common targeting and payment systems

But agenda remains incomplete and with challenging political economy of consolidating reforms

4. The limitations of the contributory social insurance model has led to “blurring” between SI and social assistance – and need for fundamental reconsideration of the financing model

There is an increasing role for general revenue financing in “insurance” programs, most notably health insurance but increasingly also for pensions through:

• Matching defined contribution schemes, e.g. Korea, Mexico, Thailand

• Innovative hybrids, e.g., China’s “contributory social pension”

• Direct subsidization of contributory schemes, e.g., Japan basic pension; Mongolia pension scheme

As ageing accelerates across EAP, reliance solely on social contributions will become increasingly unsustainable if societies

want to provide widespread financial protection in old age

5. SP systems are trying to become more adaptive & “scaleable” to respond to more frequent shocks

• SA programs are aiming to expand & contract as shocks hit and subside (weather, economic, and commodity shocks & conflict/displacement)

• Better portfolio of ex ante shock response programs (insurance; CAT DDOs; reserve funds etc)

• Information systems that include wider group of non-poor to facilitate response

6. Technology is transforming what is possible in SP delivery systems but is not a panacea…

Technology is already transforming SP delivery at each step of the delivery chain:

• In identifying people through improved ID systems and linking ID, mobeil phones and bank accounts, e.g. India “JAM trinity”

• In profiling beneficiaries to tailor services better to their needs, e.g. data scraping and profiling in employment services

• In payment systems and financial inclusion, including mobile payments• By allowing cloud-based inter-operability of databases to improve SP program

administration & giving potential for better client data protection through new technologies such as blockchain

• In “nudging” beneficiary behavior to improve outcomes of CCT programs, e.g. mobile and social media messaging

However, technology alone cannot fix outmoded business processes or achieve mindset reorientation to client-focused services

Thank you