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Social Protection Strategy

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Introduction

1. Social protection is defined as the set of policies and programs designed to reduce poverty and vulnerability by promoting efficient labor markets, diminishing people's exposure to risks, and enhancing their capacity to protect themselves against hazards and interruption/loss of income¹.

Social protection consists of five major elements:

1. labor markets
2. social insurance
3. social assistance
4. micro and area-based schemes to protect communities
5. child protection

When implemented properly, these policies and programs can make a major contribution to the overarching goal of the Asian Development Bank (ADB) of reducing poverty. Social protection, as an integral part of social development, one of the three pillars of the ADB Poverty Reduction Strategy,² aims to assist individuals to break the cycle of poverty and enhance the ADB’s developing member countries (DMCs) quality of growth by investing in human capital, increasing productivity, and reducing citizen's vulnerability to risks.

2. Recent events underscore the need for greater attention to social protection issues in the Asia and Pacific region

1. The countries affected by the Southeast Asia crisis have discovered that inadequate and underdeveloped social protection systems have exposed their working populations to excessive risk, increased the incidence of poverty, and threatened to undermine longer term human capital investment efforts.

2. Transition economies are discovering that the comprehensive social protection systems they traditionally maintained have become too expensive to sustain, are poorly designed for a market economy, and create barriers to further economic development.

3. Modernization has been accompanied by a process of social mobility, migration, urbanization, and disintegration of family and community networks. Household informal safety nets are no longer adequate—modernization requires the provision of social protection systems for the workforce to ensure higher productivity gains, increased domestic demand, and economic growth.

4. Globalization, while increasing the opportunities for growth, will also increase the risks of future macroeconomic shocks. As unemployment and poverty result from economic downturns, the adequacy of social protection and assured future progress in social development are issues in the forefront of the development agenda of many DMCs.

3. Different kinds of reforms and policies are needed in different economies. Where social protection systems have become too expensive and are no longer appropriate to serve a country's vulnerable populations, they need to be restructured and consolidated. Where these systems are inadequate to deal with the major risks faced by rural and urban populations, social protection needs to be extended and expanded. The vision of the ADB's Social Protection Strategy (SPS) is the provision of social protection to all citizens of the Asia and Pacific region through the development of sustainable, statutory programs with universal coverage to effectively assist DMCs to reduce poverty, achieve growth by enhancing productivity, and create opportunities for individual self-reliance.

4. This strategy paper reflects three years of research and consultations at ADB and its DMCs, to build strategies for effective social protection for the Asia and Pacific region. The consultation process is described in Supplementary Appendix A. The paper begins with a discussion of the social protection needs in Asia and the Pacific, the components of social protection, the social protection systems in the region, and the work of ADB and other development agencies. It then focuses on the criteria that might be used to prioritize social protection interventions in a determined DMC. Social protection policies will vary from one country to another owing to variations in needs, available resources, institutions, and the political economy of reforms. Once a specific intervention is chosen, or a mix of them, selected programs will have to attend to critical principles such as coverage, targeting of vulnerable populations, sustainability, good governance, and institutional and political capacity for reforms, this topic is explored next. The paper ends with the recommendations to ensure proper implementation of this Social Protection Strategy in ADB's DMCs.

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