DEVELOPMENT

Inclusive social protection for

the missing middle of Asia
Stephen Kidd
Manila: 2nd August 2016
DISCLAIMER: This presentation does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government
cannot be held liable for its contents.

Are the poor a fictional construct?

Middle class?
Insecurity

Poverty

Extreme poverty

All figures in PPP terms

Income dynamics in Indonesia over one year

Vietnam: poverty and vulnerability higher

among specific categories of the population

The missing middle in Asia:

Example of Indonesia
Many countries offer:

Middle
class

Social insurance for those in the

formal sector
Social assistance for the poor

Insecurity

Missing
middle

However:
Those in the middle are
excluded from social protection
Yet, many live in poverty and
insecurity
And, are more powerful
politically

Social
insurance

Poverty

Extreme
poverty

Social
assistance
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Yet, not even the poor are included in

social protection schemes

In Indonesia, the
two main cash
transfer
schemes for the
poor PKH
and PIP do not
reach the
majority of the
poor

Percentage of households in decile

100%

90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

The big debate on the shape of national

social protection systems
Inclusive

Targeted

Right to social
security

Social
assistance

Larger state and

schemes

Small state and

schemes

Higher taxes

Low taxes

Tackle inequality

Tackle poverty
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Impacts of schemes depend on level of

investment

0.3% of GDP

6% of GDP

Is high investment in social

protection good or bad?
Poverty reduction
Human development

Effective social
security leads
to a range of
impacts

Income generation

Greater dignity
Social cohesion
Economic stimulus
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Inclusive social protection results in much

larger impacts: example of Indonesia
Current SP schemes:
0.14% of GDP

Inclusive lifecycle:
1% of GDP

5.0

PKH CCT

5.0%

Child benefit

Disability benefit

4.5

BSM school stipend

4.5%

Old age pension

Child disability benefit

4.0%

3.5

3.5%
PERCENTAGE - POVERTY GAP

PERCENTAGE - POVERTY GAP

4.0

3.0
2.5

2.0
1.5
1.0

3.0%
2.5%

2.0%
1.5%
1.0%

0.5

0.5%

0.0

0.0%
AGE GROUP

AGE GROUP

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Basic rule of social security

Countries will only have an effective social protection
system, if they are willing to invest in it
Rolls Royce
Inclusive Social
Protection

Lada targeted
social
assistance
or

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Conclusion

So where will Asia

Investment in social security across a range of countries

go?

Developed countries
invest 14% of GDP
on average

Will Asia move to

effective SP
systems?

Or will it continue
with poor quality
schemes for the
poor?

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