Is Social Protection Ready for Ageing ASEAN?

This post was originally published on The Povertist.

ASEAN countries are enjoying a rapid economic growth. However, most of them are likely vulnerable to some changes that would happen in the post-2015 era, as increasingly exposed to the global economy, and ageing with a relative lower level of income. The challenges that ASEAN countries will have are what the world has never seen in the history. As ageing, lowering fertility rates, changing family sizes, and shrinking labour force participations, researchers suggest strong social security system is crucial for sustaining economic and political stability.

The latest research discusses a role of pensions or old-age income arrangements as a component of social protection among the region. What will the ASEAN member countries encounter, and how can they cope with those challenges?

The demographic trend suggests that most countries in ASEAN will age at a relatively low income level, except for Thailand and Brunei. The aged population will become double in most countries within such a short time.

In most economies there will be marginal improvements in labour force participation rates in both economic active age groups and those above age 65. The data suggest that there might be different scaling up challenges for each country as the ageing progress differs by country. For instance, Singapore and Malaysia will have additional 1 to 3 million entering retirement, the Philippines, Thailand and Vietnam will have 5 to 10 million, and Indonesia will have 20 million during the next decades.

That is not only a matter of financing social protection and services for the ageing era, but also implementation capacity. Institutions are not ready yet in terms of labour market, public finance management, infrastructure, and social services for the elderly.

The study also points out a potential blind spot. As the table shows, there is universal legal healthcare coverage in all economies except Indonesia and Vietnam. But the thing is, when it comes to ‘coverage’, it literally means legal coverage but not actual. The figure implies that social security systems do not provide sufficient benefits to individuals as most of health care spending is financed out of pocket.

The paper provides overview of ASEAN’s ageing and surrounding challenges. Having discussed the current and projected trends, it provides some policy implications on pensions and other social services mainly from both socio-economic and political economic perspectives.

Reference

Asher and Zen (2015) Social Protection in ASEAN: Challenges and Initiatives for Post-2015 Vision

Author: Ippei Tsuruga is the Editor-in-Chief and the founder of The Povertist. He has extensive experience and knowledge in poverty and social protection in Asia and Africa.

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