Wednesday, 5 May 2010 9:25 AM

Broader Social Protection Will Spur More Inclusive Growth in Asia, Says ADB

TASHKENT, UZBEKISTAN - Expanding social protection programs in Asia and the Pacific will give poor and vulnerable people more opportunities to benefit from renewed growth in the region while boosting domestic consumption, building human capital, and helping to rebalance economies, a seminar audience heard today.

The seminar - "Promoting Inclusive Growth through Social Protection" - looked at how measures such as social assistance payments, guaranteed work programs, and contributory pensions can limit the social impacts of economic crises, serious illness, and natural disasters.

The seminar examined actions taken by the region's governments to address the harsh human impacts of the recent crisis, and discussed measures that policymakers can adopt to limit the damage from future shocks. Participants were reminded that, along with stimulating domestic consumption, social protection measures also develop healthier, more educated, and better skilled workers.

Panelists included Sujana Royat, Deputy to Minister for Poverty Alleviation-Coordinating Minister for People's Welfare, Indonesia; Sarah Cook, Director of United Nations Research Institute for Social Development; Duncan Campbell, Director, Department of Policy, Employment Sector, International Labor Organization; and Ursula Schaefer-Preuss, Vice President for Knowledge Management and Sustainable Development, ADB.

The global crisis caused millions to lose their jobs, suffer a reduction in their working hours, or remain trapped in poverty. Many urban migrant workers were forced to return to their rural homes to eke out a living. In response, Asian and Pacific governments provided fiscal stimulus packages which included some social spending for affected and at-risk groups.

"The crisis reminded us that strengthening the social protection systems of developing Asia and the Pacific is as important as building up the region's physical infrastructure. In addition to mitigating the impact of economic shocks, social protection also contributes to human capital by providing access to education and health care," ADB President Haruhiko said in his introductory remarks to the seminar.

The seminar heard that the crisis has spurred efforts to expand social protection, including conditional cash transfer programs, which provide poor families with direct stipends in exchange for sending their children to school and the doctor. However, social spending as a share of gross domestic product still remains very small in developing Asia and the Pacific compared to major industrialized economies.

Along with anti-poverty benefits, social protection programs reduce the need for precautionary household savings, thereby contributing to domestic demand. They also reduce reliance of the region's export-oriented economies on markets abroad. Unemployment benefits during downturns allow people to continue to make purchases, while old age pensions provide post-retirement incomes in a region where the elderly form a growing share of the population.

Several Asian countries, including People's Republic of China, India, Indonesia and Viet Nam have taken significant steps to build up their social protection systems, but across the region there remains broad scope for policy reforms to expand coverage to those employed in the informal sector, to improve targeting of assistance, and to address issues such as aging societies, degrading environments, and migratory labor.

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