Transcript DEVELOPMENT Social assistance: lessons for Viet Nam Dr. Stephen Kidd 18th July 2014

DEVELOPMENT
Social assistance: lessons for Viet Nam
Dr. Stephen Kidd
18th July 2014
Social security: a fundamental human right
Universal Declaration
of Human Rights
• Art 22: Everyone …… has a right
to social security
• Art 25: Everyone has the right to
a standard of living adequate
for health and well-being of
himself and his family…and the
right to security in the event of
unemployment, sickness,
disability, widowhood, old age or
other lack of livelihood…
Motherhood and childhood are
entitled to special care and
assistance
Convention on the
Rights of the Child
• Art 26: States Parties shall
recognize for every child the right
to benefit from social security,
including social insurance
• Art 27: States Parties recognize the
right of every child to a standard
of living adequate for the child's
physical, mental, spiritual, moral
and social development
2
Social insurance and social
assistance
Social Security
Social Insurance
Social Assistance
Financed from
contributions
Financed from
general
government
revenues
3
Definition of social assistance
Do Son workshop
Alternative
Government’s and
community’s support in cash
or in-kind on non-contributory
basis to help the targeting
beneficiaries to afford the
minimum subsistence level
defined by laws.
Regular and predictable
transfers – usually in the form
of cash – that are financed
from general government
revenues and which aim to
provide all citizens with a
minimum income guarantee
4
Social security systems develop to address
lifecycle risks and challenges
• Formal social
security is
established by
governments as
informal and
community
assistance
breaks down
• Lifecycle risks
can no longer be
addressed by
families and
communities
5
Priorities for middle income countries:
From tackling poverty to tackling insecurity
Insecurity
Poverty
28.50%
39.45%
57.64%
17.20%
Social assistance
Social insurance
6
Growth has not been inclusive:
Long-term threat to stability
Annual growth rate in incomes in rural areas: 2004-2010
9
Falling behind
8
Percentage
7
6
5
4
3
2
1
0
Wealth decile
7
Undernutrition: up to 5 years of age
8
Viet Nam: an ageing society
Proportion of population aged over-60
35
Percentage of population
30
25
20
15
10
5
0
2015
2020
2025
2030
2035
2040
2045
2050
9
Social security systems are designed around
the lifecycle
10
South Africa and Brazil:
Lifecycle systems
South Africa
Brazil
11
Viet Nam:
Lifecycle system
12
Social security within the broader social
protection system of Viet Nam
13
Approaches to social assistance:
Entitlement based or poor relief?
Approaches
Entitlement
Poor relief
Higher investment
Lower investment
Higher coverage
Lower coverage
Higher impacts
Lower impacts
Countries usually use a mix
14
Challenge of targeting the “poor”
Exclusion errors
from targeting
100
Exclusion
80
60
40
20
0
POOR LIST
Brazil
Mexico
Targeting is like hitting
a moving target
15
Links between social insurance and social
assistance: example of pension system
16
Low level of investment:
Social pensions
4
3.5
% of GDP
3
Over 70%
coverage
2.5
2
1.5
Under 70%
coverage
1
0.5
Viet Nam
0
17
Low value of benefits:
Social pensions and merit payments
70
Percentage of GDP per capita
60
50
Over 70%
coverage
40
30
20
Under 70%
coverage
10
0
Viet Nam
18
Social assistance is an investment and
essential component of a successful market
economy
•Household level impacts
• Strengthens development of children, the future labour
force
• Enables people to engage in the labour force and deal with
risk and shocks
•Community level impacts
• Promotes more dynamic local markets
•National level
• Enables a more flexible labour market
• Helps tackle inequality and promotes social stability
• Generates greater consumption and demand in the
economy
19
Impacts on early childhood nutrition:
South Africa
Old Age Pension
Child Support Grant
Reduces stunting by
3-5 cm
Reduces stunting by up to
3 cm
Contributes to
cognitive
development
The earlier children
enrol on CSG, the higher
their test scores in
Reading and Maths
OUTCOME: increase
in lifetime earnings
20
Providing predictable cash offers people the
opportunity to engage in employment
Brazil: labour participation
increased by 2.6
percentage points (4.3 for
women)
Social protection
transfers creating
“dependency” is a
myth in developing
countries, where
transfers are low
South Africa CSG: 15%
more likely to be in work;
18% more likely to look for
work (buy better clothes for
interviews: can pay bus
fares)
However care
needs to be taken
in design:
•
•
Viet Nam: in 2004, social
assistance increased
probability of women
engaging in economic
activity by 2.5% and in
employment by 5%
Targeting the “poor”
may encourage
people to remain
“poor”
If transfers are too
high, people may
withdraw labour
21
Increased investment in “own account”
income generating activities
Mexico: 14% of transfer
invested in productive
assets
Nicaragua: Investment in
agricultural machinery
Can obtain credit
and loans
Brazil: investment in
small businesses
Recipients of SP
transfers are seen as
better credit risks so
are more likely to
access a loan
Good evidence from
Lesotho, Uganda, South
Africa and Nepal of older
people engaging in small
enterprise and employing
others
People have
security and
predictability in
their lives
More willing to invest
in higher risk but
higher return
activities
22
Greater consumption can help drive economic
growth at a national level or support recovery
during recessions or crises
OECD:
China:
Developed countries benefit from
average consumption of 14% of
GDP from social security,
redistributed through tax system.
Recently expanded pension
system to 484 million members, to
encourage people to reduce
savings, which are highest in world
Uzbekistan:
USA:
With fall of Soviet Union, invested
4% of GDP in child benefits,
suffering less from crisis than other
countries. Boosted spending again
during global recession,
maintaining GDP growth of 7%
During global recession, expansion
in food stamps and unemployment
insurance had as much impact on
economy as investment in
infrastructure
23
Masterplan needs to be strategic
•Set out long-term objective and direction e.g.
• “Ensure that all citizens of Viet Nam have access to a minimum
income to contribute to human development, economic growth and
shared prosperity”
•Set out objectives for next five years:
• Prioritise social assistance schemes for expansion (categories of
population; coverage; value of benefits; overall costs)
• Outline new governance and institutional arrangements for the
social assistance sector
• Propose investment in strengthening delivery systems and provide
broad design
•Leave detailed design to further studies and proposals
24
What is possible?
Investment of 1% of GDP
Scheme
Category
Proportion
reached
Size of benefit
Cost (% of
GDP)
Social
Pension
65+
100%
VND 360,000
0.68%
Disability
grant
Working age
1.5%
VND 360,000
0.1%
0-4s
70%
VND 145,000
0.21%
Child grant
Total
0.99%
Bolivia invests 1.1% of GDP in its social pension only
Lesotho invests 1.3% of GDP in its social pension only
Nepal already spends 0.8% of GDP in its social assistance system
Expansion could take place over 5-10 years
25