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Social Protection for the Poor in Asia Can Be Affordable and Deliver Big Gains
Source: adb.org
Source Date: Tuesday, November 27, 2012
Created: Dec 04, 2012

MANILA, PHILIPPINES — Social protection systems in most Asian countries fall far short of meeting the needs of the poor and vulnerable even though better safety nets can be affordable for poorer countries, says a new study from Independent Evaluation at the Asian Development Bank.

Despite high economic growth in much of the region, public spending on social protection in Asia and the Pacific is lower than in any part of the world except for sub-Saharan Africa.

Recent economic and financial crises, food and fuel emergencies, and the rapidly increasing frequency of natural disasters have starkly exposed the inadequacy of the region’s national social protection systems to guarantee a minimum level of subsistence and meet people’s basic needs.

The evaluation study—Asian Development Bank: Social Protection Strategy—finds convincing evidence that social protection programs, and especially well-designed safety nets that transfer resources to the poor, can reduce the depth and severity of poverty and inequality.

“Governments around the world tend to scramble to adopt social protection programs in times of crisis,” says the Director General of Independent Evaluation Vinod Thomas. “But comprehensive systems built in stable years are much more effective in coping with the human impact of future economic or political crises or natural disasters.”

Widening wealth gaps are also drawing attention to the need for greater social protection in Asia, where income disparities over the past two decades have widened in 11 countries that account for more than four-fifths of the region’s population.

All countries spend on the poor in some form or another, although there are considerable country variations in the levels and effectiveness of the spending. Concerns over the cost of universal social protection are deterring some countries, but well-targeted safety nets are not prohibitively expensive, says the study.

In the Philippines, for example, the government’s conditional cash transfer program to uproot extreme poverty costs less than 0.5% of the country’s gross domestic product, yet reaches 15 million people.

The program makes regular cash payments to mothers conditional on their children attending school and public health clinics. After just three years of implementation, evaluation findings show positive results on elementary education school enrollment and beneficiary households spending more on the health and education of their children.

While safety nets, and particularly conditional cash transfers, can reduce poverty, some countries still prefer to retain food and fuel subsidies for their social programs. In India, the government distributes food, fuel, and fertilizer instead of cash, but these subsidies are vulnerable to misuse and leakage. In addition, such subsidies generally cost more, benefit the better-off relative to the poor and are politically difficult to unwind.

Rapid social and demographic changes are highlighting the need for affordable pensions, health insurance, and childcare. Governments across the region are trying to respond to these challenges. As such, social protection needs to be higher on their development agenda.

“While Asia has traditionally relied on the extended family to provide protection, this is proving inadequate and declining,” says the study’s principal author Joanne Asquith.

The Asian Development Bank’s experience in helping countries build comprehensive social protection systems—which began in response to the Asian financial crisis—suggests that governments are generally reluctant to borrow for social protection except in times of crisis. Indeed, lending surged during the global economic crisis of 2008–2010, but then sharply declined.

Says Asquith: “Social protection systems are not best built by providing a one-off response to a crisis, but that’s when political support for social protection is usually highest.”

“Development partners need to step up their engagement with governments to sustain political support for social protection in stable years,” she says.

Because social protection is an integral part of ADB’s strategy to reduce poverty and promote inclusive growth, the study recommends that ADB, in partnership with others, strengthen its support for this area.

ADB’s portfolio of loans for social protection projects and programs totaled $2.2 billion between 2002 and 2011.
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