Poverty, Inequality and RecentDevelopment of Social Protection–

The Social Protection Index:Assessing Results for Asia and the Pacific

2013 Asia Policy ForumJakarta, 28-30, May 2013

Sri Wening Handayani, ADB

The views expressed in this presentation are those of the author and do not necessarily reflect theview of ADB or its Board of Governors or the governments they represent.

Outline of Presentation

Poverty and Inequality in Asia

Why Social Protection is important toaddress poverty and inequality?

What is Social Protection Index?

The SPI Results

Conclusions and Policy Implications

2

Poverty and Inequality in Asia

3

Poverty and Inequality in Asia

4

Poverty and Inequality in Asia

5

Poverty and Inequality in Asia

6

Definition and Concept of SocialProtection ADB defines social protection as the set of policies

and programs designed to reduce poverty andvulnerability by promoting efficient labor markets,diminishing people's exposure to risks, and enhancingtheir capacity to protect themselves against hazardsand interruption/loss of income.

Social Protection as part of ADB's inclusive growthagenda 2020, aims to assist individuals to break thecycle of poverty and enhance the ADB's developingmember countries quality of growth by investing inhuman capital, increasing productivity, andreducing citizen's vulnerability to risks.

7

Why Social Protection? Essential instrument for poverty reduction Promotes empowerment and security Supports human capital development Provides effective support for broader development

objectives Promote empowerment and more balanced gender

relations Contributes to social cohesion Investment in pro-poor growth Other powerful tool for government and donors to

strengthen their responses to emerging globalchallenges such as disaster risk reduction andclimate change adaptation.

8

What is Social Protection Index?

SPI is a simple unitary indicator instead of acomposite index

It is constructed to be concrete and readilyunderstandable

It is not designed for ranking purposes

9

What are the Components ofSocial Protection Index?

Social Insurance

Health insurance, pensions and other formsof social insurance (unemployment benefits,severance payments, benefits from providentfunds)

Social AssistanceSocial transfers, child welfare, healthassistance, assistance to the elderly, disabilityprograms, and disaster relief

Labor MarketPrograms

Cash or Food for Work Programs and SkillsDevelopment and Training

10

Objectives of Developing SPI: Assess the nature of SP programs in countries

Design to assist governments monitor SPprogress

Help evaluate coverage to intendedbeneficiaries and size of benefits

Provide useful information on the relative scaleof the three components of SP

Identify SP programs’ broad impact on the poorand vulnerable

Useful analytical assessment tool for countries’SP programs

11

The indicators of SPI:

Public expenditure on SP programs

Coverage of SP programs◦ Size of the benefits (depth of coverage)

◦ Extent of the coverage (breadth)

Number of intended beneficiariesdisaggregated by◦ Poor and non-poor beneficiaries

◦ Men and women beneficiaries

12

How is the SPI constructed? The SPI is the ratio of total social protection expenditures

to total intended beneficiaries.

For each of the sample of 35 countries in Asia and thePacific, the value of its national poverty line has beenapproximately one-quarter of GDP per capita.

GDP per capita is expressed in national currency. The SPIhas formulated the second essential ratio for SPI as totalGDP divided by total population (GDP per capita)multiplied by one-quarter:

0.25 (GDP/Total Population)

The Social Protection Index of each country can beexpressed as:

[Total SP Expenditures/Total Intended Beneficiaries]divided by [0.25 (GDP/Total Population)]

13

Data Collection for SPI:

Administrative data on SP programs

Data were collected for 2008, 2009 and2010 from many line agencies

Data analysis based on the SPI Formula

14

The 2009 SPI in Asia and Pacific

0.0050.0200.0250.0260.0340.0360.0390.0430.0440.0450.0460.0470.051

0.0600.0660.0680.073

0.0850.085

0.1100.1190.121

0.1370.1370.1390.140

0.1480.1510.155

0.1670.169

0.1870.2000.206

0.3430.416

0.000 0.100 0.200 0.300 0.400 0.500

Papua New GuineaCambodia

VanuatuLao PDR

NauruBhutan

TajikistanBangladesh

IndonesiaSolomon Islands

AfghanistanPakistan

IndiaFiji, Rep. of

SamoaNepal

MaldivesArmenia

PhilippinesASIA AND THE PACIFIC

ThailandSri Lanka

GeorgiaViet Nam

China, People's Rep. ofTimor-Leste

PalauKyrgyz Republic

MalaysiaMarshall Islands

SingaporeAzerbaijan

Korea, Rep. ofMongolia

UzbekistanJapan

Social Protection Index: 2009

Source: ADB (2012) 15

Social Protection Expenditure(% of GDP): 2009

0.10.70.90.91.01.21.21.21.21.31.31.41.72.02.12.22.32.5

3.03.23.53.63.73.9

4.64.74.8

5.45.96.16.4

7.98.0

9.610.2

19.2

0.0 5.0 10.0 15.0 20.0 25.0

Papua New Guinea

Nauru

Cambodia

Indonesia

Tajikistan

Solomon Islands

Fiji, Rep. of

Nepal

Samoa

Maldives

Singapore

Malaysia

Palau

Marshall Islands

Timor-Leste

Georgia

Kyrgyz Republic

Uzbekistan

Source: ADB (2012) 16

SPI and GDP per capita, 2009

R² = 0.2982

0.000

0.050

0.100

0.150

0.200

0.250

0.300

0.350

0.400

0.450

100 1000 10000 100000

SPI

GDP per capita (log)

JPN

SIN

KORMON

TIM

RMI MAL

VIEGEO PRC

SRI THA

MLD

PHI ARMNEP

FIJINDPAKAFG SOL

BAN INOTAJ BHU NAU

LAOVAN

AZE

CAM

UZB

KGZ

PNG

PAL

SAM

AFG = Afghanistan, ARM = Armenia, AZE = Azerbaijan, BAN = Bangladesh, BHU = Bhutan, CAM = Cambodia, FIJ = Fiji,GEO = Georgia, IND = India, INO = Indonesia, JPN = Japan, KOR = Republic of Korea, KGZ = Kyrgyz Republic, LAO = LaoPeople’s Democratic Republic, MAL = Malaysia, MLD = Maldives, MON = Mongolia, NAU = Nauru, NEP = Nepal, PAK =Pakistan, PAL = Palau, PNG = Papua New Guinea, PHI = Philippines, PRC = People’s Republic of China, RMI = Republic ofMarshall Islands, SAM = Samoa, SIN = Singapore, SOL = Solomon Islands, SRI = Sri Lanka, TAJ = Tajikistan, THA =Thailand, TIM = Timor-Leste, UZB = Uzbekistan, VIE = Viet Nam.Source: ADB staff estimates based on SPI country reports (Appendix 2).

17

The SPIs for the Poor and Non-Poor

18

Source: ADB staff estimates based on SPI country reports (Appendix 2).

0.024

0.006

0.016

0.002

0.086

0.068

0.016

0.002

0.000

0.010

0.020

0.030

0.040

0.050

0.060

0.070

0.080

0.090

0.100

Overall Social insurance Social assistance Labor marketprograms

Soci

al P

rote

ctio

n In

dex

SPIpoor SPI nonpoor

Gender Equity Compared to Incomeper Capita

R² = 0.2792

0.000

0.050

0.100

0.150

0.200

0.250

2.5 3 3.5 4 4.5 5

SPI w

omen

GDP per capita, 2009 (log)

SPI women vs GDP log, 2009

Japan

Singapore

KoreaMongolia

Timor-Leste RMI

MalaysiaVietnam

Georgia

PRCSri Lanka

Thailand

MaldivesPhilippines Armenia

Nepal

Fiji

India

Pakistan

Afghanistan Solomon IslandsBangladesh Indonesia

Tajikistan BhutanNauruLao PDR

Vanuatu

Azerbaijan

Cambodia

Uzbekistan

KyrgyzRepublic

Papua New Guinea

Palau

Samoa

Source: ADB (2012)

19

Summary of Results

The SPI Majority of countries have SPI expenditures

equivalent to less than 5% of average GDP percapita Many of them middle-income, have SPIs in the

range between 0.1 and 0.2; The remaining 19 countries have spending less

than 2.5% of GDP

20

Summary of ResultsSocial Protection Programs Social insurance dominates most SP programs The average size of pensions tend to be larger than

most other forms of SP programs Large segment of the population is considered the

‘missing middle’ of SP Social assistance systems appear to be relatively

undeveloped Social assistance has a smaller ‘depth’ but wider

‘breadth’ of coverage than social insurance Labor market programs do not play a major role

in SP

21

Summary of ResultsThe Poverty Impact The poor receive relatively more benefits from social

assistance programThe Gender Impact Women benefit less from SP programs Women benefit less from social insurance than from

social assistance due to lack of access to formal-sector employment

Labor market programs disproportionately benefitmen than women.

22

Policy Implications Despite impressive economic growth, the majority of

countries in the region have no comprehensive SP systems Most countries need to scale up and broaden the SP

systems. Spending that corresponds to 5% of GDP—as inthe Republic of Korea—is a reasonable strategic target.

Broadening the coverage of social insurance would be animportant contribution to this effort.

Social assistance benefits the poor and women muchmore than social insurance, increasing its average benefitsshould be a priority.

Policymakers should examine closely how labor marketprograms could be expanded to strengthen SP systems

Identifying practical ways of scaling up cash- or food-for-work programs and skills development and trainingappear promising ways of overcoming shortcomingof LMP. 23

Thank you

24