Written by Michelle N. Domingo-Palacpac, Senior Social Development Officer
In an often harsh and unpredictable world, social protection schemes provide an essential buffer against extreme events like job losses, as well as support during times of ill health or in old age, but in Developing Asia coverage levels are falling well short of the region’s vast needs.
In the case of the region’s workforce, the numbers are immense. Developing Asia, which accounts for about 57% of the world’s total labor force, had around 1.7 billion workers in 2005, and this figure is expected to rise to about 2.0 billion in 2015.
Against this backdrop ADB recently undertook a study on social protection spending in 35 countries. The report found that on average, social insurance programs reach only 6.5% of potential beneficiaries, leaving the vast bulk of workers without coverage. Of course, the actual situation differs from country to country. But the overall message is clear ― there is not enough social protection given to Asia’s workers.
Some workers do have health insurance and/or pension scheme coverage, but this generally applies to only a small percentage of the labor force, employed in the formal sector (typically in the civil service and some private firms). By contrast, the great bulk of workers in the informal sector have no social insurance protection at all.
It is worth noting at this point, that both health insurance and pension schemes are considered forms of social insurance, along with unemployment, and disability insurance.
Of course social insurance is not the only form of assistance which governments can provide to workers. Labor market programs like skills development, training, re-training and public works programs also provide valuable support to workers.
However the ADB study found that labor market programs generally feature little in social protection programs in Asia and the Pacific. Of the existing programs, a little over half of all investments went into cash-or food-for work programs (54%), with skills development and training programs attracting the remainder (46%).
The data shows that South Asia is doing better than other subregions in support of labor market programs but even there spending levels remain inadequate, and the overall reach, or breadth, of programs across the region remains narrow at 22% of potential beneficiaries. In terms of gender, while results show a minimal difference, men do tend to receive more benefits from labor market programs than women.
In any economy, workers are a key element in the production function, and there is some evidence to show that the provision of social protection can be linked to productivity increases, although the literature on this subject is limited.
Nonetheless, even a small spending increase on social protection for Asia’s vast workforce could reap substantial dividends for the region. With that in mind, I hope the region’s policymakers will give greater urgency to policy-relevant discourse on this important topic soon.