Remarks by Ursula Schaefer-Preuss, ADB Vice President, on Social Protection in the Asia Pacific Region from the Perspectives of Workers, the Youth, and the Aged, Ha Noi, Viet Nam
Good afternoon, Ladies and Gentlemen. I feel very much at home here with friends from the labor movement and the NGO world, addressing social challenges that are of great concern to all of us.
I would like to take advantage of this opportunity within this year's Annual Meeting's Civil Society Program to briefly address a few key challenges that confront developing Asia and the Pacific, which are imposing an unacceptable human cost on all of us and the society as a whole.
By now we are all familiar with the remarkable success story of this dynamic region, which has featured unprecedented rates of economic growth, and a sharp reduction in the number of people living in absolute poverty. Despite these achievements, growth has been highly uneven, and inequality has increased in most developing countries. As highlighted by the economic and financial crisis of 2008-2009, many remain highly vulnerable to economic, social, and environmental risks. The region continues to undergo a dramatic demographic transition, rapid modernization, and fundamental restructuring of economies. While generating net positive gains, these developments also have heightened risks, particularly among those least equipped to deal with them.
Hundreds of millions of people in Asia and the Pacific remain mired in extreme poverty or are vulnerable to crises, such as economic downturns, natural disasters, or severe illness. Unemployment and underemployment among youth is a growing problem with potentially serious consequences for the society. Government measures that promote decent employment and provide social protection can limit human suffering and contribute to inclusive growth.
Social protection is also highly relevant to the region's demographic transition. The share of people over 65 is expected to triple between now and 2050 as fertility rates fall and life expectancy increases. The "graying" of the population is creating significant public policy implications and giving decision makers plenty to ponder as the ratio of retired persons to those of working age increases with time. Most of those reaching the end of their working years in developing Asia and the Pacific do not enjoy guaranteed pensions or an adequate public safety net of old-age grants or subsidies. At the same time, family bonds are loosening, and the elderly cannot rely on their children to support them to the extent that they once did. Greater social mobility, migration, and disintegration of family and community networks are weakening traditional forms of "informal social protection." Those with minimal education, little savings and few assets are particularly susceptible to the impacts of a shock of one kind or another.
Countries with weak social protection systems could experience mounting unemployment, chronic poverty, marginalization, and, ultimately, social unrest and conflict. When times are tough, state-provided social protection can help keep the poorest in society out of the most desperate circumstances, while stimulating economic revival through continued consumption. Labor market measures, another form of social protection, can provide the jobless with work experience and new skills, not to mention a regular income.
Many countries in the region, including the People's Republic of China, India, Pakistan, Viet Nam, Philippines and Indonesia, are undertaking policy and institutional reforms to strengthen their contributory pension systems and address the needs of the populations not covered by formal social insurance.
ADB's Strategy 2020 recognizes that economic growth alone is not sufficient for addressing social vulnerabilities, and that it must be complemented with policies and programs that strengthen the capacity of individuals to protect themselves. Without additional measures, the benefits of a growing economy will accrue overwhelmingly to those from privileged backgrounds. In order to ensure that growth reaches the impoverished and disadvantaged, it is important to promote greater access to opportunities by investing in social protection, as well as education, health, and other basic services. It must also be kept in mind that women and girls bear a disproportionate share of social risk and vulnerability for a variety of social, cultural and economic reasons.
ADB's Social Protection Strategy supports policies and programs designed to facilitate employment and promote the efficient operation of labor markets. The efficient operation of labor markets is important in the region because informal employment is a major source of income in most communities. The economic and financial crisis had a particularly negative impact on employment among young adults. By 2030, the Asia and Pacific region's labor market will need to absorb 420 million new workers. The task of creating sufficient decent employment opportunities is daunting and highlights the pressing need for policy makers to expand access to education at all levels and to adapt technical, vocational, and higher education to changing labor market requirements.
On the subject of labor, I wish to reiterate ADB's support for decent working conditions, which provide dignified opportunities for people to improve their living conditions. In this context, ADB applies the core labor standards in our operations. The CLS are explicitly endorsed in our Social Protection Strategy, and are often included in loan covenants and in standard bidding documents used in the procurement of ADB-financed construction contracts.
The economic and financial crisis clearly demonstrated the need for Asia and the Pacific to substantially improve social protection systems. While the region's growth rates rebounded relatively quickly, recovery in the job market has been slower. For those who lost jobs, including many young people, the negative impacts of the latest crisis will be felt for some time, due in part to lost opportunities to acquire and nurture skills.
It is heartening to witness so many countries embrace the need for more inclusive growth, which necessarily entails more spending on programs that protect the weakest and most vulnerable in society. Such action is in part a response to the last crisis. But it is also being undertaken in light of emerging trends, and to looming threats to stability, such as commodity and food price hikes, uneven economic performance in key developed country export markets, unsustainable environmental practices, inadequate urban infrastructure under growing strain. Not to forget in this context an increase in extreme weather events.
While governments bear the primary responsibility for taking action to limit vulnerability, a range of stakeholders all have an important role to play – including donor agencies, civil society, and the business community. By pursuing innovation and creative partnerships, today's formidable challenges could soon become problems on their way to being solved.
Thank you very much for your time and attention, and for the opportunity to share these thoughts with you today.