SOCIAL POLICY REFORMS IN ASEAN:
SOME CONSIDERATIONS


Gloria O. Pasadilla
Research Fellow, ADB Institute

Prayoga Wiradisu...
I. SAVINGS IN ASEAN


II. SOCIAL PROTECTION IN ASEAN


III. ECONOMIC EFFECTS OF SOCIAL PROTECTION SPENDING


IV. SUMMARY A...
HOW BIG IS ASEAN’S SAVINGS?
                               ASEAN-5 Saving rates in comparison
                            ...
SAVINGS MAGNITUDE WITHIN ASEAN HAD VARIED


                     ASEAN-5 countries saving rates

                      54
...
HOUSEHOLD SAVINGS, HOWEVER, IS NOT UNIFORMLY
RESPONSIBLE FOR THE OVERALL HIGH NATIONAL SAVINGS
                           ...
HOUSEHOLD SAVING AS SHARE OF HOUSEHOLD DISPOSABLE
INCOME SUGGESTS CONSIDERABLE DIFFERENCES WITHIN ASEAN

                 ...
HOUSEHOLD CONSUMPTION HAS LEFT LITTLE SPACE FOR EXPANSION
                          Household Final Consumption Expenditur...
I. SAVINGS IN ASEAN


II. SOCIAL PROTECTION IN ASEAN


III. ECONOMIC EFFECTS OF SOCIAL PROTECTION SPENDING


IV. SUMMARY A...
ASEAN COUNTRIES HAVE MANY DIFFERENT SOCIAL PROTECTION
POLICY PROGRAMS
      Country            Social                    S...
BUT IN TERMS OF OVERALL SOCIAL PROTECTION STAND, MOST
ASEAN COUNTRIES ARE RELATIVELY BEHIND OTHER COUNTRIES


            ...
IN TERMS OF EXPENDITURE, SOCIAL PROTECTION IN ASEAN HAS
RECEIVED RELATIVELY LESS ‘ATTENTION’


            Overall social ...
A CONSIDERABLE VARIATION IN SOCIAL PROTECTION EXPENDITURE
DISTRIBUTION CAN BE OBSERVED AMONG ASEAN COUNTRIES


          D...
ASEAN SOCIAL SECURITY PROFILES (1/2)

   Country     Organization          Benefits                    Type of Scheme     ...
ASEAN SOCIAL SECURITY PROFILES (2/2)
   Country       Organization      Benefits                            Type of Scheme...
ASEAN Social Security Profile

• Social security schemes in ASEAN contains not only
  retirement benefits but other insura...
COVERAGE RATE OF SOCIAL SECURITY PENSIONS/SAVING


                                         Percentage of               Co...
CONTRIBUTION




                                              Social security reform is constrained by
                  ...
PRESSURES FOR REFORM IN SOCIAL SECURITY ARRANGEMENT (1/2)
   For the moment, the old-age dependency ratio is low but the t...
NEED FOR REFORM IN SOCIAL SECURITY ARRANGEMENT (2/2)




   ASEAN-5’s Increasing Old-age Dependency Ratio
   8.6          ...
PROJECTION OF OLD AGE DEPENDENCY RATIO UP TO 2050


                               oitaR ycnednepeD ega-dlO 5-NAESA
%53
%0...
I. SAVINGS IN ASEAN


II. SOCIAL PROTECTION IN ASEAN


III. ECONOMIC EFFECTS OF SOCIAL PROTECTION SPENDING


IV. SUMMARY A...
ON ECONOMIC EFFECT OF SOCIAL PROTECTION SPENDING


 What to consider       • The policy to reform social protection spendi...
THE EFFECTS ON LABOR SUPPLY


  Labor supply distortion • To the extent that social insurance is usually financed through
...
PRIVATE TRANSFERS AND PRIVATE INSURANCE

 Government’s attempts to alter the distribution of economic well-being can be
 t...
SAVINGS, CONSUMPTION, AND DEMAND (1/3)

Reforms can   Type of reform will affect the direction of impact on savings and co...
SAVINGS, CONSUMPTION, AND DEMAND (2/3)

   Empirical         Mixed empirical result of effect of SS on aggregate savings b...
SAVINGS, CONSUMPTION, AND DEMAND (3/3)



      • Specific impact on private savings and aggregate savings will still
    ...
Investment, Growth, and Welfare

• In pure lifecycle model where young have higher MPS, redistribution
  via PAYG (from yo...
Investment, Growth, and Welfare

• Potential policy trade off in between welfare and growth

• However, social security or...
I. SAVINGS IN ASEAN


II. SOCIAL PROTECTION IN ASEAN


III. ECONOMIC EFFECTS OF SOCIAL PROTECTION SPENDING


IV. SUMMARY A...
SUMMARY & CONCLUSION


   • Not all countries in ASEAN are in a position to boost private
     consumption because: 1) the...
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Social Policies in ASEAN: Economic Impacts

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Social Policies in ASEAN: Economic Impacts

  1. 1. SOCIAL POLICY REFORMS IN ASEAN: SOME CONSIDERATIONS Gloria O. Pasadilla Research Fellow, ADB Institute Prayoga Wiradisuria Research Associate, ADB Institute ADBI Annual Conference 4 December 2009, Tokyo - Japan
  2. 2. I. SAVINGS IN ASEAN II. SOCIAL PROTECTION IN ASEAN III. ECONOMIC EFFECTS OF SOCIAL PROTECTION SPENDING IV. SUMMARY AND CONCLUSION
  3. 3. HOW BIG IS ASEAN’S SAVINGS? ASEAN-5 Saving rates in comparison 55 East Asia & Pacific Compared to 50 other regions like 45 Europe & Central Latin America or 40 Asia Euro area GDP (%) Europe, ASEAN 35 savings is fairly 30 Latin America & Caribbean high… 25 South Asia 20 15 Sub-Saharan Africa 10 ASEAN 90 92 94 96 98 00 02 04 06 19 19 19 19 19 20 20 20 20 35 …and around the same level as the 30 average for middle 25 GDP (%) income countries 20 High income 15 Middle income 10 Low income ASEAN 5 90 92 94 96 98 00 02 04 06 19 19 19 19 19 20 20 20 20 Sources: ASEAN-5 data is referring to Gross National Saving as percentage of GDP taken from ADB Statistical System. Other data is using Gross saving as percentage of GDP download from the World Bank’s World Development Indicator Database. Authors’ calculation.
  4. 4. SAVINGS MAGNITUDE WITHIN ASEAN HAD VARIED ASEAN-5 countries saving rates 54 Individual 04 countries in ASEAN had 53 followed different 03 ) savings path 52 % ( P D 02G ais e n od n I 51 aisyalaM d nalia hT 01 s e nippili h P 5 ma nt eiV )gva( NAE SA 0 88 09 29 49 69 89 00 20 40 60 80 91 91 91 91 91 91 02 02 02 02 02 Source: ADBI Statistical Database System, downloaded 1 November 2009, authors’ calculation
  5. 5. HOUSEHOLD SAVINGS, HOWEVER, IS NOT UNIFORMLY RESPONSIBLE FOR THE OVERALL HIGH NATIONAL SAVINGS Selected ASEAN-5 countries’ saving compositions Philippines In the Philippines saving contribution has been 20% constantly and largely 18% 16% Saving to GDP ratio dominated by corporations 14% Government since 2002… 12% Corporations 10% Households 8% 6% 8.3% 9.2% 8.7% 4% 7.7% 2% 3.3% 2.9% 1.9% 1.9% 2.2% 0% 0.6% -2% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Thailand 20% … meanwhile in Thailand, 18% Saving to GDP ratio corporate saving has 16% Government 14% increased over the years Corporations 12% 10% Households and is now responsible for 8% one third of total saving 6% 10.1% 4% 8.5% 7.2% 7.3% 5.0% 4.5% 4.2% 5.0% 2% 3.6% 3.9% 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Corporations saving is composed of both private and government corporations. Sources: CEIC Data Company Ltd, downloaded 2 November 2009, authors’ calculation
  6. 6. HOUSEHOLD SAVING AS SHARE OF HOUSEHOLD DISPOSABLE INCOME SUGGESTS CONSIDERABLE DIFFERENCES WITHIN ASEAN Household saving as percentage of household disposable income for selected countries While households in Country Average household saving Indonesia and Thailand as percentage of household seem to have a relatively disposable income larger space to increase Thailand 9% their consumption by saving Indonesia 17% less, households in the Philippines has less elbow Philippines 4% room Korea, Rep 10% Australia 0% US 3% Note: Averages of yearly data of 2004-2008 period for Thailand, Philippines, Republic of Korea, and US. Averages of 2003 and 2004 for Indonesia. Australia experienced negative household saving rates in 2004 and 2005 and positive from 2006 onwards. Australia’s and Republic of Korea’s Yearly data are averages of quarterly data. US yearly data is average of monthly data. Source: CEIC Data Company Ltd, Downloaded 2 November 2009, Indonesia data is obtained from Santoso and Sarie (2007), authors’ calculation.
  7. 7. HOUSEHOLD CONSUMPTION HAS LEFT LITTLE SPACE FOR EXPANSION Household Final Consumption Expenditure and General Government Expenditure as percentage of GDP in 2007 100 The share of private 90 consumption to GDP in 80 70 this region is already 60 Household markedly higher than 50 57 58 57 76 70 Government 40 60 other countries private 30 33 45 56 54 62 61 consumption share.. 20 10 0 nd a y na n s a ce am s a N an si pa ne te di si A la an hi ne In ta ay tn m SE Ja pi ai C Fr S ie do lip er al Th A V d M G In hi te P ni U Household Consumption as share of GDP (%) 90 … and some ASEAN 85 members might actually 80 75 China need to reduce their 70 Indones ia 65 Thailand consumption instead of 60 Vietnam increasing it 55 Malays ia 50 Philippines 45 ASEAN 40 35 30 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: World Bank’s World Development Indicator Database, downloaded 1 November 2009
  8. 8. I. SAVINGS IN ASEAN II. SOCIAL PROTECTION IN ASEAN III. ECONOMIC EFFECTS OF SOCIAL PROTECTION SPENDING IV. SUMMARY AND CONCLUSION
  9. 9. ASEAN COUNTRIES HAVE MANY DIFFERENT SOCIAL PROTECTION POLICY PROGRAMS Country Social Social Insurance Micro and Area-Based Schemes Assistance 1 2 3 4 5 6 7 8 Cambodia ● ● Indonesia ● ● ● ● Lao PDR ● ● Malaysia ● ● ● ● Myanmar ● ● ● ● Philippines ● ● ● ● ● ● ● ● Thailand ● ● ● ● ● ● ● ● ● Vietnam ● ● ● ● ● Note: 1) Old age, disability, death insurance; 2) sickness, maternity insurance; 3) medical care; 4) work injury; 5) micro insurance; 6) agriculture insurance; 7) disaster management; 8) social fund Source: Soeharto (2007)
  10. 10. BUT IN TERMS OF OVERALL SOCIAL PROTECTION STAND, MOST ASEAN COUNTRIES ARE RELATIVELY BEHIND OTHER COUNTRIES Social Protection Index (SPI) of Selected Asian Countries Japan 0.96 Korea 0.76 Mongolia 0.6 Uzbekistan 0.57 Sri Lanka 0.47 India 0.46 China 0.45 Viet Nam 0.38 Malaysia 0.36 Indonesia 0.33 Philippines 0.2 Cambodia 0.19 0 0.2 0.4 0.6 0.8 1 1.2 Source: ADB, Wood 2009
  11. 11. IN TERMS OF EXPENDITURE, SOCIAL PROTECTION IN ASEAN HAS RECEIVED RELATIVELY LESS ‘ATTENTION’ Overall social protection expenditure (Government, NGO, private sector) as percentage % of GDP Japan 16.0% Uzbekistan 11.1% Mongolia 9.8% Korea 7.5% Sri Lanka 5.7% China 4.6% Viet Nam 4.1% Malaysia 4.0% India 4.0% Philippines 2.2% Indonesia 1.9% Cambodia 1.4% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% Source: ADB, Wood 2009
  12. 12. A CONSIDERABLE VARIATION IN SOCIAL PROTECTION EXPENDITURE DISTRIBUTION CAN BE OBSERVED AMONG ASEAN COUNTRIES Distribution of overall social protection expenditure by social protection components 100% 1% 3% 6% 7% 4% 17% 14% 12% 7% 80% 20% 4% 20% 27% 26% 10% 60% 8% 90% 84% 40% 79% Child Protection 71% 60% 60% Micro Area based 50% Social Assistance 20% Labor market Social Insurance 0% na a a sia m sia s di re ne na i ne In Ch ay Ko pi et do ilip al Vi M In Ph Source: ADB, Wood 2009
  13. 13. ASEAN SOCIAL SECURITY PROFILES (1/2) Country Organization Benefits Type of Scheme Coverage Indonesia TASPEN (1963) Lump sum payment: Provident fund/ DC Government civil invalidity, death, Defined Benefits servants retirement, separation Pension (1981): retirement, survivorship, invalidity JAMSOSTEK (1977) Health care benefits, Provident fund/ Compulsory for work accident and Defined enterprises with 10 or death insurance Contribution more employees or payroll of at least 1 million Rp a month Malaysia Employees Provident Retirement benefits, Defined Compulsory: private Fund (EPF) (1951) pre-retirement benefits, Contribution employees and non- death, incapacity, pensionable public sector members’ investment employees; program Voluntary: self-employed, domestic helpers, foreign employees, pensionable public sector Social Security Employment injury, Defined Benefits Compulsory to all Organization occupational diseases, employers employing (SOCSO) (1971) invalidity, death one or more workers; Compulsory for workers who earn no more than RM2000/month.
  14. 14. ASEAN SOCIAL SECURITY PROFILES (2/2) Country Organization Benefits Type of Scheme Coverage Philippines Social Security Pension and insurance covering Defined Benefits Compulsory for private System (SSS) sickness, maternity, disability, employees and self- (1954) retirement, death, medical care, employed below 61 yrs old; accident; allows borrowing Voluntary: Overseas privilege workers, non-working spouses of members, employees under foreign government; separated members from employment Government Pension and insurance: Defined Benefits All public employees; Service retirement, disability and death, Voluntary for former public Insurance unemployment, sickness, loan employees that have System (GSIS) windows, optional life insurance resigned or retired early (1937) from government service Singapore Central Retirement, health care, Provident fund/ All private and public Provident Fund homeownership, family Defined employees and self- (CPF) (1953) protection, asset enhancement Contributions employed Thailand Social Security Social security (medical, Defined Benefits Compulsory for large Office (SSO) sickness, maternity, invalidity, private enterprises (10 or (1990) death); survivorship, disability, more employees) survivorship, funeral; Pension – added in 1999 Vietnam Social Security Pension and death benefits, Defined Benefits Mandatory for all Organization sickness, maternity, and enterprises (private and (1995) occupational accidents/ state-owned); diseases Voluntary for small enterprises (less than 10 employees)
  15. 15. ASEAN Social Security Profile • Social security schemes in ASEAN contains not only retirement benefits but other insurance components: medical care, death benefits, unemployment, etc. • Singapore, Malaysia, Brunei, and Indonesia have provident funds (defined contribution scheme); the rest have PAYG schemes (defined benefit) • Coverage varies: social security is not mandatory for all firms of all sizes
  16. 16. COVERAGE RATE OF SOCIAL SECURITY PENSIONS/SAVING Percentage of Coverage rate Percentage of non wage earners in Percentage of agricultural workers the total Percentage of Percentage of urban in the total working working population 15-64 labor force population population population Cambodia 29.6 12.9 - - 20.0 China 53.1 - 17.2 20.5 40.0 India 33.2 - 5.7 9.1 29.0 Korea 91.9 66.4 - - 81.0 Mongolia 60.1 39.3 23.6 39.6 57.0 Nepal 32.7 - 2.5 - 16.0 Sri Lanka 59.6 58.2 22.2 35.6 15.0 Lao PDR 20.3 10.4 5.7 7.2 27.0 Singapore 99.6 86.0 45.2 76.2 100.0 Malaysia 85.2 76.2 32.2 49.6 68.0 Indonesia 56.0 32.8 11.1 15.5 48.0 Philippines 63.0 50.4 18.7 27.1 63.0 Thailand 57.3 43.8 24.4 30.4 32.0 Viet Nam 42.1 25.6 12.9 16.2 26.0 Source: Yamabana (2009)
  17. 17. CONTRIBUTION Social security reform is constrained by the increased burden on employers who normally take the larger share of contributions. Source: ILO Social Security Expenditure Database, authors’ compilation
  18. 18. PRESSURES FOR REFORM IN SOCIAL SECURITY ARRANGEMENT (1/2) For the moment, the old-age dependency ratio is low but the trend points to increased aging of the population due to low population growth and longer life span. Total Old-age Population fertility5 Population structure based on age Labour force to Dependency Dependency Growth4 (children (% of total, 2005) population ratio1 ratio2 Ratio3 (Annual, %) per woman) Aged 0-14 Aged 15-64 Aged 65+ Canada 18% 69% 13% 74 44 19 1.00 1.6 France 18% 65% 17% 64 54 25 0.70 1.9 Germany 14% 67% 19% 68 50 30 -0.03 1.3 Japan 14% 66% 20% 61 53 32 0.07 1.3 United States 21% 67% 12% 69 49 19 0.93 2.1 China 21% 71% 8% 77 40 11 0.60 1.8 Malaysia 32% 63% 5% 47 54 7 1.87 2.6 Thailand 24% 69% 7% 70 42 10 0.87 1.8 Viet Nam 30% 65% 5% 75 51 9 1.10 2.1 Indonesia 28% 66% 6% 52 50 9 1.33 2.2 Philippines 35% 61% 4% 51 63 7 1.77 3.1 Ø 64 Ø 50 Ø 16 Ø 0.9 Ø 2.0 1Average of 2005, 2006, and 2007 data 2Average of 2006, 2007, and 2008 data. Aged <15 and 65+ in proportion of 15-64 years old 3Average of 2006, 2007, and 2008 data. Aged 65+ in proportion of 15-64 years old. 4Average of 2003, 2004, and 2005 data. 5Average of 2007, 2008, and 2009 data. Source: World Bank’s World Development Indicator, downloaded 9 October 2009, authors’ calculation
  19. 19. NEED FOR REFORM IN SOCIAL SECURITY ARRANGEMENT (2/2) ASEAN-5’s Increasing Old-age Dependency Ratio 8.6 8.5 8.4 8.3 8.4 8.3 8.1 8.2 8.0 8 7.9 7.8 7.8 7.7 7.6 7.4 7.2 2000 2001 2002 2003 2004 2005 2006 2007 2008 ASEAN-5: Indonesia, Malaysia, Philippines, Thailand, and Vietnam. Source: ILO Social Expenditure Database, downloaded 1 November 2009
  20. 20. PROJECTION OF OLD AGE DEPENDENCY RATIO UP TO 2050 oitaR ycnednepeD ega-dlO 5-NAESA %53 %03 %52 %02 %51 %01 0002 %5 0102 0302 %0 0502 aisenodnI aisyalaM senippilihP dnaliahT maN teiV Source: UN World Population Prospect (2008 Revision), Population Database, authors’ computations
  21. 21. I. SAVINGS IN ASEAN II. SOCIAL PROTECTION IN ASEAN III. ECONOMIC EFFECTS OF SOCIAL PROTECTION SPENDING IV. SUMMARY AND CONCLUSION
  22. 22. ON ECONOMIC EFFECT OF SOCIAL PROTECTION SPENDING What to consider • The policy to reform social protection spending has to be evaluated for its overall impact on the economy. There could be conflicting incentive forces at play on one side and competitions for limited resources on the other. • Striking the optimum level is sometimes more normative than purely economics • Studies on overall social protection spending impacts on various aspects of the economy are limited What the literatures • Much of the literature has been devoted to the effects of provide social insurance, pension systems in particular, and less on the other elements of social protection. • The paper focused more on impacts of social insurance
  23. 23. THE EFFECTS ON LABOR SUPPLY Labor supply distortion • To the extent that social insurance is usually financed through from tax contributions or ‘payroll tax’, labor supply distortion arises from the tax imposition. Early retirement • In OECD, significant evidence of adverse incentives where older workers stop working earlier than the mandatory retirement age, effectively reducing the potential productive capacity of the labor force • By design, early retirement opportunity was to give room to new entrants in labor force, but no corresponding reduction in unemployment rates had resulted from old workers’ early exit Social assistance • (Moffitt, JEL1992): beneficiaries of the social assistance do not ‘graduate’ to become self-sufficient but rather stay on as ‘permanent’ recipients of what ought to have been temporary assistance .
  24. 24. PRIVATE TRANSFERS AND PRIVATE INSURANCE Government’s attempts to alter the distribution of economic well-being can be thwarted by private behavioral responses (Cox, et. al., JPE 2004) Private transfers • In countries where state-based (social security system) or market-based (formal credit markets) economic support is limited, family transfers constitute a major source of household income. Private transfers, however, have been found to have been crowded out by public social welfare expenditure. Private insurance • Medicaid coverage expansion has resulted in workers reducing their own private insurance coverage (Cutler and Gruber, QJE 1996).
  25. 25. SAVINGS, CONSUMPTION, AND DEMAND (1/3) Reforms can Type of reform will affect the direction of impact on savings and consumption. effect both Case Impact ways • Increase contribution rate (to Negative short-run impact on consumption improve sustainability) due to reduction in disposable income • Expansion to informal sector (to Positive impact particularly on the informal increase coverage) sector labor-headed household due to rising expected social security wealth Theoretical Social insurance impact depends on assumptions of individuals saving motivation, financial market development, labor supply assumption and other factors. Case Impact • Consumption smoothing motive SS has no effect on aggregate saving in basic life cycle model, fixed LS (Diamond, 1965) SS effect on private savings depends on • Labor supply is not fixed income and substitution effect; aggregate savings may increase • Bequest and precautionary SS has positive result in aggregate saving motive
  26. 26. SAVINGS, CONSUMPTION, AND DEMAND (2/3) Empirical Mixed empirical result of effect of SS on aggregate savings but when the expected change in pension wealth is large, a negative relationship with savings is more perceptible. However the offset between private savings and pension is imperfect and magnitude of increase in aggregate savings varies across countries (Kohl and O’Brien, OECD 1998) Cross-sectional Factors Impact study results • Education provide glimpse of The better educated and relatively well off have stronger saving reduction in response to possible cause public pension country variations • Income Low income HH saving is not affected by pension provision • Vintage effect Different generations have different saving propensity • Age Old people save less • Household size Bigger size, smaller displacement of saving by SS • Existence of occupational Higher displacement for state employees and pensions; Urban vs rural self-employed as well as for urban dwellers. • Liquidity constraint Size of impact depends on constraint but sign is ambiguous
  27. 27. SAVINGS, CONSUMPTION, AND DEMAND (3/3) • Specific impact on private savings and aggregate savings will still depend on the specific design of the reform • Social insurance policy reforms in ASEAN will likely be undertaken not in response to short-term macroeconomic policy concerns but in response to demographic considerations. • In contrast, social assistance has a different effect on the economy and may be a useful countercyclical policy due to its more immediate effect on savings and consumption.
  28. 28. Investment, Growth, and Welfare • In pure lifecycle model where young have higher MPS, redistribution via PAYG (from young to old), results in lower savings, capital stock, and growth •Other studies highlight insurance aspect of social security that helps increase welfare • Theoretical impact of SS coverage extension to informal sector labor: K Y but magnitude of effect on output depends on financing source (higher impact if government use capital vs. consumption tax) • Effect on welfare differs whether it is a HH headed by informal labor (+) or HH headed by formal labor (-). • Implication: net welfare change of SS extension depends on inequality; more unequal (higher informal sector), the higher the net welfare effect (i.e. the redistribution and insurance function dominate the savings and labor distortion
  29. 29. Investment, Growth, and Welfare • Potential policy trade off in between welfare and growth • However, social security or social safety nets are not the only way to address high income inequality •While inequality has a long-term negative relationship with growth, inequality in assets rather than inequality in income has greater influence on growth (Deininger and Squire, 1998) •Accumulation of new assets is recommended than redistribution of existing assets is recommended if redistribution will cause investments to go down •education and human capital investments or microfinance are investment- oriented policies that are beneficial to the poor while not being detrimental to long-term growth •Government should focus more on social sector expenditures (education, health) instead of social protection exp?
  30. 30. I. SAVINGS IN ASEAN II. SOCIAL PROTECTION IN ASEAN III. ECONOMIC EFFECTS OF SOCIAL PROTECTION SPENDING IV. SUMMARY AND CONCLUSION
  31. 31. SUMMARY & CONCLUSION • Not all countries in ASEAN are in a position to boost private consumption because: 1) their savings ratios are not really that high compared to other countries in East Asia; and 2) private consumption is already a big component in total domestic demand, that further increase may render them vulnerable to macroeconomic volatility • Reforms or changes in social protection schemes will seem to be driven more by “natural” factors such as the aging population, low population growth, urbanization, and the fraying of family ties / informal support, than short-term countercyclical policy consideration • There are important multi-faceted trade-offs that social protection expenditures impinge on an economy which policy makers need to consider in the design of any social protection reforms
  32. 32. Thank you

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