Catalog

	Table of Contents
p. 12 of 18 BACK | NEXT I. Introduction II. Overview of Social Protection III. Priorities for Social Protection IV. Operational Implications A. Investing in Social Protection B. Operational Implications for the ADB C. Staffing and Staff Skills D. Operational Assignments and Responsibilities E. Strategic Partnerships and Coordination among Development Agencies F. Monitoring Progress V. Recommendation

Social Protection Strategy : IV. Operational Implications

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A. Investing in Social Protection

41. Rationale. The overarching mission of ADB is to help its DMCs achieve accelerated and irreversible reductions in poverty. Social protection, as part of social development, the second pillar of the ADB Poverty Reduction Strategy, is an integral component of that mission by assisting vulnerable populations to better manage risks and develop their human capital. Since 1985, ADB has assisted its DMCs to improve their social protection systems. The share of social protection interventions have increased noticeably in the total ADB portfolio, particularly since 1995. Of the social protection portfolio, investments have centered on labor markets (39 percent of volume), micro and area-based approaches to protect communities (27 percent), and child protection (19 percent). ADB will continue to support its DMCs in their efforts to reduce poverty and provide effective protection for the Asia and Pacific population in the social protection sub-sectors that ADB has demonstrated expertise.

42. Regional Need for Reforms. Asia and the Pacific is a largely young, rural, and poor region: social protection programs and policies should be built to respond to its needs. The region is still experiencing the effects of the demographic explosion and 40 percent of its population is below 19. The region’s population is 3.1 billion, half of the world's total, and of this, 900 million people are poor. About 60 percent of the total population live in rural areas and most of the population belongs to the informal sector. The majority of DMCs have some form of institutionalized social protection system; however, most social protection programs have low effectivity due to limited coverage, insufficient funds, and inadequate instruments. Most employees in the informal sector are unable or unwilling to contribute a relatively high percentage of their incomes to financing social protection benefits that do not meet their priority needs. In general, the informal sector prioritizes immediate needs, such as health, employment or the source of livelihood, shelter, food, clothing, and survival from natural disasters, rather than traditional social security schemes such as old-age insurance. A host of other factors restrict access to statutory social protection schemes, including legal impediments, administrative bottlenecks, and problems with compliance. Reforming existing social security systems to extend protection to the majority of citizens in the Asia and Pacific region is a critical priority.

43. Economic Justification. Welfare systems have not been a priority for most DMC policy-makers in the Asia and Pacific region; social protection has been largely neglected, or at best addressed with inadequate resources. However, a closer look at economic history shows that the most advanced economies of the region—Japan; Hong Kong, China; Republic of Korea; Singapore; and Taipei,China—built development policies through active public or public-private interventions in medical care, social and housing assistance, minimum retirement levels, and education. Investing in social protection was an essential part in the modernization programs of these wealthier societies at the early stages of their development. Precisely, higher levels of social security allowed high productivity gains in the workforce, expanded domestic demand, and increased economic growth. Social protection is a logical extension of ADB's overarching objective to reduce poverty because the benefits of economic growth will not automatically reach to all poor. Lack of adequate social protection may actually put a severe limit on future economic growth. In children, malnutrition and poverty damage health, cause death, harm reproduction, reduce intelligence, and lower productivity and opportunities for the future adult, a high tax on future economic development. Social protection is an economic need in the Asia and Pacific region.

44. Priorities. The social protection priorities for the Asia and Pacific region in the period 2000- 2015 are the design of sound, comprehensive social protection programs to effectively reduce poverty and vulnerability, including (i) interventions to protect communities and the informal sector; (ii) child protection; and (iii) labor market programs to ensure productive employment, good working conditions and improved human capital development. In its policy dialogue, ADB will encourage DMC governments to improve social protection systems and shift away from funding activities that either benefit the wealthy upper income groups or that have low benefit-cost ratios. The specific country priorities will be determined in the country poverty analyses and country strategic programs, as described in paras. 77-78. Investments in social protection should never undermine necessary expenditures for other social development areas such as education and health.

45. Creating Synergies with other ADB Priorities. ADB has developed social protection interventions either as stand-alone loans or as components of other loans where social protection is not the direct objective of the loan. ADB should maintain this existing practice. This will generate positive synergies with other priority sectors. For instance, child protection programs can easily be attached to basic education or health projects, reenforcing the development effectiveness of interventions, as requested by ADB Board of Directors in recent sector policies¹⁰

46. Project Lending vs. Program Lending: ADB assistance in social protection should focus on project lending, or a combination of project and program lending, with selective technical assistance. Particular attention needs to be paid to (i) the development of in-country capacity to sustain interventions, and (ii) the creation of domestic expertise to monitor performance and the extent to which interventions meet their objectives. Care must be taken to ensure a balance between the two areas. Experience shows that one of the most common causes of failure in social protection lending is a result of the lack of attention to these aspects. Program lending alone is not an adequate instrument and good practice to develop social protection systems.

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