Inaction is costly, investment pays dividends
Inaction on social protection is costly, threatening millions with poverty, yet investment pays dividends and is within reach.
Price of inaction on social protection is high
About 266 million additional people could fall into poverty by 2040 under a worst-case scenario due to multi-hazard risks induced by climate change, lack of policy response to demographic transition, including ageing, and insufficient adaptation to digital technologies.
The cost of reversing this increase in poverty in 2040 is estimated to be between 6 and 9 per cent of GDP, which is much higher than the cost of acting today.
Spending on social protection remains low
One third of countries (with data) in Asia and the Pacific spend less than 2 per cent of GDP on social protection.
Low spending on social protection across Asia and the Pacific
Source: ILO World Social Protection Database accessed online on 16 June 2024.
Spending on social protection is a wise investment
Public spending on social protection is a solid investment in people that delivers high returns and cutting it from budgets brings severe costs. Such spending depends on a society’s willingness to redistribute and finance social protection policies.
Funds for social protection can be found by shifting money away from less beneficial efforts—such as fossil fuel subsidies—clamping down on fraud, improving tax systems, partnering with international funding mechanisms, and even by increasing short-term debt.
Universal social protection is within reach
Were countries to introduce a combination of only non-contributory universal social protection schemes—child, maternity, disability and old age benefits—in addition to their existing non-contributory schemes, the cost would be relatively low— on average 3.3 per cent of GDP in 2030.
Introducing this universal combined package even at the basic level would have significant positive impacts on poverty and inequality. On average, 85 per cent of the population in the 27 countries looked at would be covered by at least one social protection scheme and help countries advance on Sustainable Development Goal 1.3.
Cost of introducing universal social protection schemes in Asia and the Pacific
Source: ESCAP Social Protection Simulator (2024) accessed online on 22 May 2024 via https://spot.unescap.org/simulator. Note: The cost of introducing a combination of child, maternity, disability and old-age benefits are presented for 27 countries with available household income and expenditure survey data. Benefit amounts used in the basic package (global average benefits) include monthly transfers in the magnitude of (i) 4 per cent of per capita GDP for child benefits, (ii) 14 per cent of per capita GDP for disability benefits, (iii) 15 per cent of per capita GDP for maternity benefits and (iv) 16 per cent of per capita GDP for old age pensions. In the advanced package (OECD average benefits), benefit amounts remain the same for child benefits while for others benefit amounts increase to 22, 23 and 23 per cent of per capita GDP, respectively. Maternity benefits are provided for 24 weeks.