[Letters] Asia needs social protection resilient against shocks

The recent global financial crisis showed how a globalized world brings a globalization of shocks. Solid social protection systems are vital to protect livelihoods and cushion economies against them. Income poverty has fallen drastically in Asia and the Pacific, and millions of people have benefited from the strong economic gains of the past two decades. Yet progress has been uneven. Over 900 million people, more than the combined population of North America and Western Europe, still live in extreme poverty and are vulnerable to economic, social and environmental shocks.

Many Asian countries have traditionally relied on family- or community-based social protection structures. These informal and semi-formal arrangements have two major weaknesses: First, they may collapse or fail under certain circumstances and payouts may be too small. Second, they may not cover all vulnerable groups.

Family- and community-based systems are now eroding in the face of changing working habits, cultural values, family structures and urbanization. People are being left vulnerable and exposed. They need social safety nets to protect them. Many countries recognize that social protection must be part of their national socio-economic development strategies, so the big questions they face are “How do we do it?” and “Which model makes sense?”

Asia’s share of over-65s will rise significantly over the next half-century. Pension demands will grow rapidly. Social protection systems tend to get more expensive over time, especially with rapidly aging populations, so another key question is “How can we afford it in the short and long term?” Each country faces its own unique challenges and will have its own unique answers. Solid cost-benefit and cost-efficiency analysis will help shape decisions.

Senior policy makers from 20 developing countries from different regions discussed these issues at a policy dialogue event in Seoul sponsored by the Ministry of Foreign Affairs and Trade and hosted by the Korea Development Institute and the UNDP Seoul Policy Centre. The event should contribute to discussions under the G-20 and the group’s efforts to share knowledge between nations and achieve resilient growth.

Economic crises and other shocks test social protection systems, exposing limitations and vulnerabilities. With the globalization of such shocks and demographic and societal changes at home, Asia must further develop its social protection systems to boost resilience of its people and economies against the shocks of the future.

by Anne-Isabelle Degryse-Blateau Director of the UNDP Seoul Policy Centre for Global Development Partnerships.