Regional Conference on Enhancing Social Protection Strategy in Asia and the Pacific

Manila, 21-22 April 2010

A Social Protection Index for Asia
J. Wood, Halcrow Group Ltd.
Disclaimer: The views expressed in this paper/presentation are the views of the author and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence of their use. Terminology used may not necessarily be consistent with ADB official terms.

Study Objectives
• To provide quantitative information on Social Protection in Asia which would:

1. increase awareness about SP as a means of reducing poverty. 2. support and strengthen SP activities in DMCs.

• AND for the first time:
3. enable inter-country comparisons of SP provision. 4. provide the basis for monitoring changes in SP provision over time. 5. establish a database of social protection schemes covering the whole of Asia.

Definition of Social Protection - the SPI Definition
The set of policies and programs that enable vulnerable groups to prevent, reduce and /or cope with risks, AND that: – are targeted at the poor or the vulnerable; – involve cash or in kind transfers; and – are not activities which are usually associated with other sectors such as rural development, basic infrastructure, health and education.

Definition of Social Protection
- Main Types of Programs Included • • • • • Labour market programs Social security and insurance Social assistance/ welfare. Micro-credit/ finance programs. Child protection programs including those providing educational assistance.

The Social Protection Index (SPI)
The SPI is: • calculated for each country following the same methodology • a single summary measure of a country’s Social Protection programs. • similar to other commonly used indexes, e.g. the HDI, FTSE100 and the CPI • a summary of a quite complex system. GUIDING PRINCIPLES: • Simplicity and ease of computation. • Understandable and interpretable • Availability of data. • Use existing and accepted models like the HDI.

The Social Protection Index (SPI)
• The SPI is derived from four Summary Social Protection Indicators (SPSIs):

– SP EXP: Total SP Exp. / GDP – SPCOV: SP beneficiaries / target population – SPDIST (poverty targeting): Poor beneficiaries/ Poor population. – SPIMP: Per capita SP expenditure on the poor as % of poverty line income. The SPSIs are then scaled, weighted and combined into a single, summary measure of a country’s Social Protection provision– the SPI.

The SPSIs
There is a symmetry about these 4 indicators: • two are related to expenditure • two to coverage; • two involve general targeting and • two relate specifically to the poor.
Variable Targeting General Pro-Poor SPEXP SPIMP SPCOV SPDIST

Expenditure

Coverage

Results - The SPSIs
Region Central Asia South Asia East Asia Pacific HDI Group High High medium Low medium Low ALL ASIA Countries 7 7 9 8 Countries 4 12 6 9 31 SPEXP 6.8% 3.1% 4.8% 4.5% SPEXP 7.8% 4.4% 6.8% 3.0% 4.8% SPCOV 50% 23% 43% 22% SPCOV 66% 39% 36% 17% 35% SPDIST 75% 55% 64% 35% SPDIST 75% 55% 64% 35% 57% SPIMP 33% 15% 32% 11% SPIMP 33% 15% 32% 11% 23%

The Results – SPI Values
Above average Japan Korea Kyrgyzstan Mongolia Uzbekistan Cook Islands Kazahkstan Azerbaijan Sri Lanka India China 0.96 0.76 0.62 0.60 0.57 0.55 0.54 0.53 0.47 0.46 0.45 Nauru Vietnam Malaysia Marshall Islands Armenia Bangladesh Indonesia Tajikistan Tuvalu Maldives Average* 0.42 0.38 0.36 0.34 0.34 0.34 0.33 0.33 0.30 0.30 Below average Philippines Laos Nepal Cambodia Bhutan Fiji Tonga Vanuatu Pakistan PNG 0.20 0.19 0.19 0.19 0.17 0.15 0.08 0.08 0.07 0.01

The Results – A (very) Brief Overview
• SP Expenditure is dominated by social insurance: apart from Japan and Korea, and some Central Asian countries, SI generally only benefits the formal and public sectors; exceptions are mostly countries with extensive MCF programs. SP coverage varies considerably within and between countries, regions and HDI groups reflecting different approaches and priorities in SP provision, as well as historical considerations, across Asia.
1.00 0.90 0.80 Coverage Ratios 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 Unem‐ /Underemployed E lderly Health C are High P oor‐S A A ll medium P oor‐MC F L ow Dis abled C hildren

The Results – A (very) Brief Overview (2)
• Coverage of, and expenditure on, formal social assistance/ welfare programmes also tends to be By limited. region • Greatest coverage is usually achieved by the targeted programs, e.g: - food aid, food/ cash for work - educational assistance, - targeted/ subsidised health care, - MCF schemes (especially in South Asia). By HDI • These programmes enable around half the poor Group population in Asia to receive some social protection. • However the average ‘impact’ of these programmes is only equivalent to around 23% of the poverty line.

The Results – A (very) Brief Overview (3) • The extent of social protection is linked to a country’s levels of human development and wealth. • BUT the correlation is not perfect. Some countries have much higher levels of social protection than one would expect from their HDI or GDP per capita rankings, and vice versa. • This indicates that governments have the potential to provide some level of social protection irrespective of their developmental situation.

The SPI and the HDI
Korea Japan

1.00 0.90 0.80 0.70

Mongolia, Kyrgyzstan, Uzbekistan

Korea

Japan

SPI Value

0.60 0.50 0.40 0.30 0.20 0.10 0.00 0.5

PNG Pakistan
0.6

Vanuatu
0.7 0.8

Tonga
0.9

r= 0.58

.
1

HDI Value

Uses and Applications of the SPI (1)
Level of Analysis SPI Value to Policy Makers Inter-country comparisons of social protection provision; changes over time. Possible Applications Policies to improve SP provision; targeting of countries for assistance; demonstration of effectiveness of new (or extended) SP programs. more

SPSIs Distribution of SP Expenditure/ target group coverage ratios SP Programs

Aspects of SP which are Where to concentrate above and below average. detailed investigations. Categories of SP where expenditure is ‘lagging’; target groups where coverage is particularly low.

Increased SP provision/ expenditure to target groups with below average coverage ratios.

Targeting of programs; Reviews of the effectiveness average benefits; extent of and targeting of existing coverage, etc. programs.

Uses and Applications of the SPI (2) • Initial policy implications can be generated by simple analysis: - Coverage is high → improve existing programs
- Coverage is low → develop new programs - Country is poor → emphasise targeted programs - Country’s SPI rank is low relative to its GDP per capita or HDI ranks → potential to improve its social protection provision should be greater through extensions to existing programs or development of new ones. - Country’s SPI rank is high relative to its GDP per capita rank → improve effectiveness of existing programs.

Uses and Applications of the SPI (3)
SP Provision in Urban and Rural Areas - China
SPEXP 1 0.8 0.6 0.4 0.2 SPIMP 0 SPCOV RURAL URBAN

Changes in SP Provision over time – Mongolia, 2002 - 2004
0.8 0.7 S c a le d In d ic a t o r V a lu e s 0.6 0.5 0.4 0.3 0.2 0.1 0 The SPI SPEXP SPCOV SPDIST SPIMP

SPDIST

Conclusions (1)
• The bottom line is that SP is becoming more firmly established within poverty reduction strategies and these activities need to be regularly monitored and evaluated – this requires quantitative information. • The SPI, the SPSIs and associated database and country reports now cover 31 Asian and Pacific countries which together provide an important addition to the previously limited statistical information. • These data can be used as the starting point for more detailed studies and monitoring of SP activities by international agencies, governments and SP programme deliverers. • The study also showed that updating is not a particularly onerous task.

Conclusions (2)
• • • • • The SPI methodology is considered to be generally robust, simple to produce and easy to interpret . Above all, it can be used to generate policy implications. There will always be interpretation issues so attention should not be too focussed on the headline results. The SPI methodology is not perfect and some issues (e.g. health provision) are still problematic. BUT 2 years after the study was completed, the basic methodology is still considered to be sound with no obvious alternatives suggesting themselves. The priorities are therefore to establish: - the regular collection of data on expenditure, beneficiaries and targeting for major SP programmes. - a periodic updating of the national SPSIs and SPI.

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