SEGONA PART
FUNDAMENTOS DE DERECHO
The coverage of Asia’s workers in the informal economy by social protection schemes is limited. In most countries, few workers in the informal economy are covered; when schemes do reach some (usually those living in extreme poverty), their effectiveness is limited by low transfer values of their overall investment in social protection and the relative value of the transfers that they provide.
Decisions on the shape of national social protection systems in countries are highly influenced by politics, ideologies, and beliefs. Much of the evolution of social protection across Asia can be explained by an adapted political settlement approach. In Asia, the dominance of a paradigm reflecting the values of the Washington Consensus has hindered the development of social protection, with policy making across the region influenced by a commitment to a minimal social spending and poverty targeting. As ADB (2014a) noted, Asia has focused on using fiscal policy to support economic growth rather than income distribution. Further, the weakness of democratic institutions in many countries has meant that electoral politics have not yet resulted in significant expansion of social protection, although there are signs that this is beginning to change.
However, social protection in Asia is still in the early stages of its evolution. Developed countries took decades to establish comprehensive systems of social protection, and it could be argued that social protection in Asia is, in fact, progressing more rapidly. Nonetheless, it is evident that the only means of guaranteeing access to social protection for informal economy workers is through social transfers financed from general taxation. Social insurance and other forms of contributory social protection are not the solution, except for a small proportion of more affluent informal economy workers who may be in a position to contribute consistently to well-designed schemes.81
If politicians and elites are to be convinced that investment in social protection should increase so that the majority of informal economy workers are covered, they need to understand that expansion is in their interest. Small schemes that target the “poor” bring few benefits to politicians and elites, as the “poor” are
81 Even those countries introducing health insurance to improve access to health systems are dependent
politically weak and are much less influential in elections than those in the middle of the income spectrum and the affluent. Furthermore, the “poor” are much less likely to actively engage in political protests than the majority of the informal economy workforce, many of whom still experience high levels of income insecurity. Across middle-income countries in recent years, it has been those in the middle of the income spectrum who have been protesting in the streets. In a democracy, the citizens ultimately determine the shape of social protection systems, and they will respond to politicians who offer schemes to the majority—building alliances across economic classes—rather than only to those living in extreme poverty or the affluent.
To build political commitment for social protection, there needs to be a push back against the ideology that values minimal social spending and low taxation. Politicians and other politically influential groups, including powerful civil servants, need to be presented with the evidence that social protection is an essential component of a market economy, and that markets will function much more effectively if a comprehensive social protection system is in place. An important shift in thinking for policy makers is likely to happen once they recognize that social transfers can be entitlements rather than handouts. There are a number of national constitutions in Asia that already recognize the right to social security for all, such as Bangladesh, Indonesia, and Viet Nam, and the shift from a “hand-out” mentality to that of a rights perspective will be visible once countries move away from a commitment to poor relief and toward inclusive life cycle schemes.
Ultimately, a significant expansion in effective social protection for the informal economy workforce in Asia will only happen as democracy strengthens and the majority of workers begin to vote for political parties that promise and deliver inclusive schemes. As has happened in developed countries, politicians will begin to realize that social protection should be a key area of debate in elections, and that progressive commitments can help them win power. Gradually, this should lead to growing investment in inclusive social transfer schemes, with higher coverage and higher-value transfers.
Development partners can play a key role in this evolution. They should ensure that their policy proposals are based on evidence, challenging the myths that have been used to promote small-scale, poverty-targeted schemes. They can invest in research that demonstrates the benefits of greater investment in social protection and can build evidence on the inclusive life cycle schemes in the region, such as universal pensions and the child benefit in Mongolia, challenging the current tendency to evaluate mainly poor relief schemes. In addition, they can ensure that policy makers and other influential stakeholders across Asia are
exposed to the evidence and question the neoliberal consensus that has held back the development of social protection in the region.
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