1

Emerging Markets: prospects for inclusive growth policies

Fabio Veras Soares – IPC (UNDP/SAE/IPEA)Brasilia, 18th April 2013

ECONOMIC AND SOCIAL SURVEY - ESCAP

The economic and Social Survey of Asia and The Pacific identifies the following key areas for public investment to ensure inclusive and sustainable development:

Ensuring productive and decent employment;

Providing better access to social services, including health and education;

Protection for people with disability and old-age income security

Ensuring affordable access to energy;

The survey presents two rationales for “investment” in social protection: Rights-based argument Economic and social benefits of ensuring income security and access to basic

services to all – enhancing human capital for productivity increases.

2

ECONOMIC AND SOCIAL SURVEY - ESCAP

The survey makes the case for Social Protection Floors (SPFs) as per the 2012 ILO recommendation (#202) in the region.

SPFs are defined as “nationally defined sets of of basic social security guarantees with secure protection aimed at preventing and alleviating poverty, vulnerability and social exclusion.”

The idea of plurality of SPFs is welcomed in the survey given the diversity of social protection mechanisms adopted in the region and largely explained by different human development needs, fiscal space, policy inertia and trade-offs.

3

ECONOMIC AND SOCIAL SURVEY - ESCAP

SPFs initiative has a normative force for the developing countries in Asia and The Pacific due to the fact that Social Protection is often limited contributory social insurance system.

This limitation leads to the exclusion of large numbers of workers in the informal sector, children, older people, and has a particular negative impact on women.

According to ILO’s World Social Security Report Asia-Pacific countries spend 6.9% of the GDP on social security, which is the second lowest figure in terms of world regions.

Higher social protection expenditure is associated with lower poverty prevalence in the region.

4

EMPLOYMENT FOR ALL

Despite rapid economic growth, a large number of workers in the Asia-Pacific region work in informal and vulnerable jobs.

Moreover in many countries the share of the labour force engaged in the agriculture is larger than the agricultural sector GDP, which implies low productivity and wages (e.g. Nepal, India, Viet Nam and Papua New Guinea).

Informality ranges from 12% in Russia to 80% in India and Nepal.

The challenge of youth unemployment

Policy recommendations: public works, employment guarantee schemes and wage subsidies linked to active labour market programmes.

5

Employment Guarantee Schemes (EGS)

EGSs represent a move from short-term safety nets towards a long term approach encompasses large-scale government employment programmes that offer some form of employment guarantee as well as initiatives that promote the labour intensification of government infrastructure spending.

Bangladesh Employment Generation Program for the Poorest (EGPP)

Nepal Karnali Employment Programme (KEP)

South African experience (EPWP): Incorporation of Social Services (economy of care) and environmental component.

6

Employment Guarantee Schemes (EGS)

Some programme examples… NREGA, India (2005) Framework: Right to work Objective: to create durable assets and strengthen the livelihood

resource base of the rural poor. Self targeting: all rural households willing to do unskilled manual

work are entitled up to 100 days of work/year (45 million hhs benefited 2008-9).

60:40 wage and material ratio has to be maintain. No contractors or use of machinery is allowed.

Selection of the project at the local level (participatory) Social audits (transparency). Unemployment insurance (paid by the state) if work is not

provided within 15 days.

7

Income security for the elderly

In a context of greater longevity, the survey recommends the implementation of social pensions for the elderly

Demographic changes that have eroded informal family-based support systems for old-age income security.

In the developing economies of Asia, 80% of workers are not covered by a pension scheme, those who are covered tend to be formal workers in urban areas.

Countries such as Thailand, India, Nepal, Brunei Darussalam, Viet Nam, Samoa, Kiribati have non-contributory social pensions.

8

Old age pension in Asia

9

Old age pension in Asia

10

Social Pensions in Asia – ADB (2012)

Social pensions represent an important policy instrument for addressing old-age poverty and social exclusion in Asia.

Evidence indicates that social pensions offer limited income support due to the low value of benefits and insufficient coverage of poor older persons in means-tested schemes.

They nevertheless provide an important institutional foundation for subsequent expansion and strengthening of the existing schemes.

Economic growth can allow greater redistribution in the future and make it possible to extend the coverage, lower the retirement age, and finance more generous benefits.

Development of effective pension schemes requires strengthening the administrative and delivery capacity of national social protection institutions.

Eventually, the existing social pension schemes must be integrated with contributory pensions to form consolidated systems for old-age social protection.

11

Income Security for People with Disability

The formal sector bias of social insurance system of developing countries in the Asia-Pacific tend to leave persons with disability without social protection coverage.

Ageing population will certainly contribute for an increase in the number of people leaving with disability.

12

Health for all

Public health expenditure averages around 60% of total health expenditure, but there is huge regional variation (e.g. Pakistan and Myanmar – 12%, India – 30%).

Large inequities in access to health.

Only 20% of the regional population has access to health-care assistance and out-of-pocked medical expenses are among the highest in the world.

This scenario is even worse in South Asian countries were only 8% of the population is covered by health-care.

Policy recommendation: universal health coverage: equity, quality and affordability.

13

Education for all

Many countries in the region have already achieved universal primary education and other are on track to do so.

South Asian countries are lagging behind as 7% of primary school age children are out-of-school and girls are 55% of the total share of out-of-school children.

Competitive and globalized labour markets require more than primary education.

Quality challenge.

14

Energy for all

Universal access to energy services is considered essential for increasing economic activities, which create opportunities for employment (not only for the poor)

Bangladesh, China and India account for more than half of the population who live without clean cooking facilities.

15

Recent Innovations in the region…

Some recent innovations have been overlooked or not commented in the survey… in the next slides we show some of these initiatives.

It is worth mentioning the adoption of Conditional Cash Transfer Schemes with some adaptations of the Latin American model in countries like The Phillippines (4Ps); Indonesia (PKH) and the innovative community-based CCT (Generasi); some state-level schemes in India (e.g. Bihar child support programme) but also unconditional cash transfers such as Benazir Income Support Programme (BISP) in Pakistan and Di Bao in China that work as minimum income guarantee.

The issue of targeting and the discussion around phasing-out fuel and food subsidies which is quite present is many countries (e.g. Indonesia and India) was also overlooked in this survey

Jointly with the targeting discussion there is the issue of registries (and single registry of beneficiaries) – Indonesia is doing major progress with Basis Data Terpadu to target Raskin (rice benefit); Jamkesmas (health insurance, PKH and BSM (school grants).

16

Recent Social Protection Initiatives (De Haan, 2013)

17

Recent Social Protection Initiatives (De Haan, 2013)

18

Many Thanks

19