Social Protection Systems in Asia and Pacific: Patterns and Emerging Challenges

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1 Social Protection Systems in Asia and Pacific: Patterns and Emerging Challenges Philip O Keefe World Bank Practice Manager Social Protection & Jobs Global Practice, East Asia and Pacific ISPA TOOLS Regional Training Event Yogyakarta, March 2018

2 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

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

4 Or by clusters of programs under one or more of those objectives SP System 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 Some programs may be characterized under all three headings depending on design e.g., public works

5 Or as interventions to support people across the life cycle

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

7 Regional and global patterns of SP system coverage and spending

8 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)

9 Apart from general SSN schemes, elderly social pension programs have expanded rapidly at all income levels (# countries introducing social pensions and GDP pc)

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

11 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

12 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)

13 Across regions, average safety net spending shows some variation but differences are greater for pensions 9 SSN + pension spending as % of GDP SSAfrica SAR EAP LAC MENA ECA OECD Pension SSN

14 It is important though to look beyond simple regional averages (EAP spending by country as share of GDP, ASPIRE)

15 The importance of different safety net instruments also varies across regions (% spending by SSN instrument by region as share of total)

16 In EAP and SAR, spending on active labor market interventions has remained minimal in most countries (% GDP spending on ALMP, WB forthcoming) 0.50% 0.45% 0.40% 0.35% 0.30% 0.25% 0.20% 0.15% 0.10% 0.05% 0.00%

17 Spending on consumer subsidies continues to outstrip SSN spending in all regions, despite reforms (% of GDP spending on SSN and subsidies, ASPIRE) SSAfrica SAR EAP LAC MENA ECA SSN Energy Elec Food

18 Emerging questions and issues in SP systems in Asian and Pacific

19 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

20 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

21 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

22 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

23 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

24 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

25 Thank you