Asia’s Poor Need Stronger Social Protection
Well-designed and targeted social protection programs, and particularly safety nets for the disadvantaged, deliver high returns in terms of poverty reduction.
Social protection is moving up in the global development agenda with good reason. Sweeping social and demographic changes will be an unstoppable driver of demand for governments to provide social protection—as will widening wealth gaps, economic crises, and, especially in Asia and the Pacific, the increased severity of natural disasters.
Population ageing now affects many parts of the region and fertility rates are declining in some countries. This has huge implications for policymakers. Yet Asia for the most part is woefully unprepared for the rising challenge to provide, as part of the macro-economic policy mix, a minimum level of social protection to meet basic needs.
Despite the region’s impressive economic achievements over the past two decades, public spending on social protection in Asia is lower than in any part of the world except sub-Saharan Africa. The reasons for this are varied. But they reflect in part the historic reliance in some countries such as India on food, fuel and other subsidies as substitutes for direct social protection interventions, such as cash transfers to the poor.
But there is now a convincing body of international evidence that shows well-designed and targeted social protection programs, and particularly safety nets for the disadvantaged, deliver high returns in poverty reduction and human capital development. For example, the Philippine government’s conditional cash transfer program launched in 2008 to uproot extreme poverty is showing great promise, judging by evaluations of the program.
A new Independent Evaluation study—Asian Development Bank: Social Protection Strategy 2001—makes clear that social protection programs are affordable for poorer countries. And it stresses that the best time to build them up is during stable years. In practice (and not surprisingly), the reverse has happened. Demand for ADB lending support for social protection has been highest during periods of stress. It was in response to the Asian financial crisis that ADB formulated its social protection strategy. Lending for social protection surged during the 2008–2010 global economic crisis, but fell sharply after that.
Providing affordable pensions, health insurance, and childcare will be a process that needs to be sustained over years and to calibrate carefully policies to individual country needs.
Providing affordable pensions, health insurance, and childcare will be a process that needs to be sustained over years and to calibrate carefully policies to individual country needs. Some countries in the region, such as Japan and Republic of Korea are grappling with the effects of ageing populations, and others such as Bangladesh and Pakistan with expanding working-age populations.
But both situations, in different ways, show the cost of neglecting the social policy and human capital sides of sustaining productivity. Both situations also demonstrate a weakness in social policy capacity in Asia, which has traditionally relied on the extended family to provide care for the young and the old.
Some countries are indeed rising to the challenge: the Republic of Korea has introduced a basic universal pension system, and pensions are spreading rapidly in the People’s Republic of China. But many emerging economies are also starting practically from scratch. So how can ADB play a bigger role in helping developing member countries build comprehensive national social protection systems?
Independent Evaluation’s study makes a strong case for making social protection an integral part of ADB’s corporate strategy and for it to feature prominently in country strategies as part of the approach to achieving inclusive growth and poverty reduction.
Conducting impact evaluations on social protection projects and programs will be crucial for strengthening the evidence base in the region—especially for policymakers in countries that remain skeptical about the effectiveness of social safety nets for reducing poverty. And when crisis support ends, it pays to sustain experience-based advocacy for social protection in policy dialogue.