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p. 13 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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B. Operational Implications for ADB

47. Within ADB operations, social protection issues arise in six contexts:

1. country poverty analysis and programming strategies,
2. ADB project activities,
3. safeguards,
4. staffing and staff skills,
5. operational assignments and responsibilities,
6. strategic partnerships, and
7. monitoring progress.

1. ADB Country Poverty Analysis and Country Strategy and Program

48. The decision on whether ADB should assist a specific DMC to address social protection priorities will require an assessment of social protection issues and priorities in the context of the country poverty analysis, to be reflected in the country strategy and program. The assessments should be brief and concise, attending to the objective of prioritizing which interventions, if any, maybe necessary for a specific DMC. Given the variety of reform priorities and possible interventions (labor markets, social insurance, social assistance, area-based schemes, and child protection), the ADB Social Protection Strategy recommends prioritizing investments based on ADB’s goals¹¹ of reducing poverty, promoting country focus and ownership, enhancing strategic alliances and partnerships, and having a long-term approach. This is summarized below:

1. Country Needs. The country needs assessment will include a vulnerability profile and labor market analysis, and will conclude with a rational prioritization of the country's top social protection needs, based on quantitative evidence. The summary vulnerability and risk profile will identify the main causes of vulnerability and social risks, and quantify affected populations by age group, geographical area, and other relevant criteria. A summary labor market analysis will critically review the capacity of the labor market to absorb new entrants and recommend ways to ensure efficient and inclusive development patterns. Such an analysis is a key element in the poverty assessment's strategic link to economic growth.

2. Available Resources. The resources available for social protection programs will be assessed in a social expenditure review as part of the country governance assessment¹² in coordination with the ILO, IMF, World Bank, and aid assistance organizations. Social expenditure reviews evaluate the capacity of current support programs in assessing the effectivity of current allocations to reduce poverty and vulnerability, including distribution issues. Many existing social protection systems and programs are underbudgeted or their benefits mistargeted to upper/middle income groups; the level of resources available for social protection will influence a country’s social protection choices.

3. Existing Institutions. The efficiency and coverage of existing social protection programs, and the possible roles, and risks involved, in using public and market-based and civil society/NGO mechanisms will be evaluated to assess the feasibility of new social protection programs.

4. Political Economy of Reform. Social protection strategies are complex undertakings in which some groups may benefit more than others—reforms should be articulated in an integrated manner and discussed with all relevant stakeholders.

49. ADB operations may appropriately include social protection lending and nonlending activities to serve country-specific needs. The proposed social protection policies should complement one another and help countries to meet their international commitments for poverty reduction and social development (e.g., International Development Goals, Basic Social Services 20:20¹³ and UN conventions and laws).

2. Strategic Guiding Principles for ADB Social Protection Activities

50. ADB interventions in social protection should be selective. If any social protection intervention (labor markets, social insurance, social assistance, micro and area-based schemes, or child protection) has been identified as a priority in a DMC, the project should ensure the following:

1. Adequate Coverage. Formal social protection systems should be built with the ultimate objective of ensuring effective protection for the majority of the population so poverty and vulnerability are effectively reduced; this is a top priority in Asia and the Pacific as most citizens are excluded from any formal social protection system.

2. Targeting Vulnerable Population Groups and Gender Issues. Where allocated public funds are limited and country needs are large, public programs will likely be unable to provide adequate coverage; resources should thus be targeted to those most in need. Priority vulnerable groups will have been identified and prioritized in the country's vulnerability profile. Given the status of women in the region, gender development, including positive discrimination policies, deserve particular attention to ensure inclusive societies.

3. Sustainability and Good Governance. Sound financial management, good governance; and adequate institutional arrangements are essential to secure effective administration and minimize charges and impacts on the budget. Evaluating the distribution impacts and cost-effectiveness of interventions will further assist in determining priorities and economic and social benefits.

4. Integrated Approach. Establishing or consulting existing National Commissions for Social Protection is the best institutional mechanism to ensure consistency across programs, appropriate prioritization of in-country social protection needs, and adequate sequencing of reforms.

51. The principles described in the earlier sections are also applicable to social protection components in loans where social protection is not the direct objective of the loan.

52. Examples of ADB's role in technical assistance and lending programs for the priority social protection interventions include

• aligning current social protection programs to ensure that available resources serve priority needs;
• assisting governments to improve labor market operations to reduce poverty, facilitate human development, address gender inequalities, remove obstacles to job creation, improve productivity, and create an environment enabling economic activity;
• continuing to support direct interventions that contribute to the elimination of violations of the Core Labor Standards;
• expanding the role of microfinance to include new objectives such as microinsurance and reinsurance;
• promoting the development of social funds;
• designing projects that empower communities and develop disaster preparedness programs to secure less vulnerable and more self-reliant communities; and
• increasing child protection programs either as stand-alone projects or components of basic education and health projects.

53. Social insurance and social assistance are areas where the ADB has lesser expertise and, if any, interventions should be developed in close collaboration with strategic development partners. Such assistance might include

• rethinking pension reform programs and insurance/nonbanking financial services, to ensure that, additional to market-based mechanisms and sustainability aspects, pension reform programs are designed to balance equity considerations, addressing issues such as expansion of coverage and provision of adequate benefits to the population; and
• ensuring adequate distribution impacts in the reform of social assistance programs.

3. Collateral Issues and Safeguards

54. Social protection issues also emerge as important collateral issues in lending where social protection is not the direct objective of the loan. Incorporating social protection dimensions in such cases and where feasible, will extend the reach of social protection concerns.

1. The existing ADB social impact assessments, mandated by Management and the Board since 1991 (Operations Manual OM 47: Incorporation of Social Dimensions into Bank Operations) will continue to ensure that vulnerable groups are not negatively affected by an ADB intervention. Specific social protection issues include the following:

1. vulnerable groups that maybe negatively affected by an ADB intervention must be adequately compensated and mitigation measures put in place to avoid creating further poverty (e.g., in case of public or private sector restructuring, workers, particularly low income workers, should not be unfairly disadvantaged, regardless of race, skills, gender, age, or religious and political beliefs)¹⁴ ; mitigation measures should always aim to adequately balance social objectives and economic sustainability; and

2. in the design and formulation of its loans, ADB will comply with the internationally recognized core labor standards;

2. Take all necessary and appropriate steps to ensure that for ADB financed procurement of goods and services, contractors, subcontractors and consultants will comply with the country's labor legislation (e.g., minimum wages, safe working conditions, and social security contributions, etc.) as well as with the Core Labor Standards;

3. As part of its regular loan reviews, ADB will monitor that (i) and (ii) are complied with.

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