UN agency seeking wider social protection coverage

DEVELOPING ASIA-PACIFIC countries such as the Philippines should expand social protection programs to cover all low-income groups and minimize persistent income inequality amid economic gains, a United Nations agency said in a study released on Wednesday.

“In recent years, economic growth in Asia and the Pacific has been accompanied by a rise in income inequality and hence has not translated into commensurate gains in human development,” UN Economic and Social Commission for Asia and the Pacific (UNESCAP) reported.

Waiting for the benefits of progress to trickle down to the poor explains the disproportionate development in growing middle-income economies, according to the UNESCAP study, entitled “The Promise of Protection: Social Protection and Development in Asia and the Pacific.”

For instance, the UN Development Program ranked the Philippines 97th among 167 countries in the income inequality index last year with a Gini coffecient of 0.355, despite posting a record 7.3% economic growth.

But social protection can narrow such gaps by “improving health outcomes, increasing school attendance, promoting equality between men and women, reducing hunger, improving dietary diversity, and promoting livelihoods and asset accumulation,” the study noted.

“Rather than seeing social protection as costly measures, governments should see effective social protection now as an investment that will increase productivity and security and reduce the need for future spending,” the report read.

Contrary to popular belief, “such interventions are affordable and represent a significant opportunity for governments to invest in both social and economic development for the benefit of all,” it added.

If the Philippines introduced a more comprehensive social protection scheme, however, with supporting policies, poverty reduction can occur much faster, the UN body suggested.

The country currently has a Conditional Cash Transfer (CCT) program, branded by the government as “Pantawid Pamilya Pilipino Program,” which gives money to the poorest households provided the mother and children comply with the health and education programs accompanying the financial assistance.

Specifically, the conditions of the program are the following: pregnant women must receive prenatal and postnatal care, child birth must be attended by a skilled or trained midwife or medical professional; children 5 years and below must receive regular health check-ups and vaccinations; and children between 6 and 14 years must attend school at least 85% of the time.

The report noted, however, that the targeting designed into the CCT may not be sufficient to achieve a larger scale change in overall human development.

Nevertheless, the Social Welfare and Development department’s flagship social program is a crucial “building block” to widening the coverage of government social protection, UNESCAP noted.

Effective social protection schemes help redistribute income vertically, toward low-income classes, and horizontally, for groups with specific risks and vulnerabilities, such the disabled, those with poor health, and those with obstacles to paid labor market participation, the report described.

“Transferring resources to the poor will stimulate particular demand for local goods and services,” it explained, noting the example of Zambia where 80% of cash transfers have been spent on purchasing goods.

In terms of health, developing economies should note that healthier workers live longer and are also more productive, the report noted.

“It has been estimated, for example, that a 10% increase in life expectancy adds 0.3-0.4 percentage points to annual growth in per capita incomes,” UNESCAP cited.

Regarding education, social protection schemes underscore capacity building as a means to open employment opportunities to the poor.

Furthermore, social protection has political dividends as well as it helps groups the disadvantaged by economic reforms that improve their condition.

Countries with universal social protection based on progressive taxation are also likely to have a more even income distribution compared to countries with targeted social protection, as supported by the case of the United States.

“While reducing poverty and inequality, stronger social protection also broadens opportunities and deepens the quality of economic growth,” UNESCAP concluded. — Eliza J. Diaz, Businessworld