Expanding social protection for the ‘missing middle’ in Asia-Pacific

Published on Monday, 01 August 2016

Published by Sri Wening Handayani on Monday, 01 August 2016

An Armenian woman with her grandchildren.
An Armenian woman with her grandchildren.

Many of ADB’s developing member countries are reforming, strengthening, and expanding social protection policies and programs. National social protection strategies have been developed in Bangladesh, Cambodia, Indonesia, Kyrgyz Republic, Mongolia, Nepal, Pakistan, Uzbekistan, and Viet Nam. However, most of the social assistance programs that directly target the poorest of the poor offer inadequate benefits and, in general, experience some leakages to people who are not living in poverty.

Recent data from ADB’s Social Protection Indicators show that more than 50% of the region’s population has no access to social protection. It means that they have no pension to look forward to when they are old; always worry if they got sick because they don’t have health insurance; and when they are temporary unemployed, there is nothing to fall back on because they don’t have unemployment insurance. Their lives are thus very precarious and always on the margins of poverty and vulnerability.

The ‘missing middle’ represents a big number of vulnerable people who do not qualify as extremely poor and employed in the informal sector. They do not have access to social assistance programs such as cash transfers directed at the extreme poor, and are also not benefiting from any social security system—including pension funds—that are so far limited to workers who are in public service or at least formally employed in the private sector. This situation creates large gaps in social protection coverage for those working in the informal sector and among the transient poor.

ADB defines social protection as a set of policies and programs designed to reduce poverty and vulnerability by promoting labor markets functioning, diminishing people’s exposure to risks, and enhancing their capacity to protect themselves against hazards and interruption or loss of income.

It is widely accepted among policy makers and development practitioners in Asia and the Pacific that growth alone is insufficient to raise average income while tackling inequality, promoting inclusiveness, reducing vulnerability, and ending abject poverty. ADB’s Strategy 2020 recognizes that the region must promote greater access to economic opportunities by expanding human capacities through investment in social protection to prevent extreme deprivation.

There are at least four main ways in which social protection advances inclusive growth. First, social protection facilitates access to productive resources and economic opportunities, provides income security, and assists individuals to manage risks. Second, it improves human development outcomes and increase social inclusiveness. Third, social protection—when provided through transfers—reduces inequalities. At the macroeconomic level, growing evidence suggests that redistribution has a positive effect on growth, particularly in countries where inequalities are high. Fourth, social protection programs held reduce vulnerabilities by targeting marginalized and disadvantaged groups, including the poor, elderly, unemployed, children in poor households, and persons with disabilities.

Furthermore, social protection contributes to gender empowerment and equity goals. Most of poor women in Asia and the Pacific work in the informal economy and often rely on men for their income security. They sometime find themselves in very difficult financial circumstances if their household loses its breadwinner. Although tremendous progress has been achieved in raising the education level and labor force participation of women, most of the low-skilled, low-salaried, and temporary workers in the region tend to be women. They are among the most at risk of losing their job during an economic downturn. A gender-sensitive, comprehensive social protection system can provide women with basic income security and access to essential services.

Over 200 representatives from governments, development partners, NGOs, the private sector, academe, and youth groups across the world will attend the Asia Pacific Social Protection Week from 2-5 August 2016 at ADB headquarters in Manila. The event will bring together key persons in government, think tanks, CSOs and the private sector to discuss current and emerging issues on social protection – and call for greater government investment to build comprehensive social protection systems for the ‘missing middle.’

The gathering hopes to promote sustainable, efficient and equitable social protection systems for people in the region. Sustainability captures the aspect of financing requirements, and cost-effective program designs follow an integrated approach using ICT. Efficient social protection system will be achieved through improvements in reducing leakages in program delivery given the already limited financing resources available to social protection; this can be done through improved targeting and payment delivery mechanisms. Finally, the system should be equitable to provide social protection for all, encompassing the groups that are not yet covered by any social protection program (the ‘missing middle’) and include informal sector workers and older people.