1963-2013 - 50 years of Research for Social Change

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Political Economy of Social Pensions in Asia

  • Project from: 2010 to 2011


This research was commissioned by the Asian Development Bank to look into the politics of social pension reform in Asia, including the origins and drivers of policy choices, the stages and strategies of implementation, and the impact and consolidation of the reforms. The analysis of political institutions and processes that transform ideas and concepts into budgets, programmes and eventually social outcomes is crucial for understanding the potential and constraints associated with social pensions in developing countries.

The Research Issue in Context
Social protection of the elderly is an urgent necessity in many developing countries, and particularly in Asia, where coverage rates of contributory pension insurance are low, and where informal family or community support is weakening for a range of reasons. One instrument for tackling old-age poverty is social pensions. In contrast to contributory pension schemes or tax-financed schemes for relatively privileged groups such as civil servants, both of which are earnings-related, social pensions are flat-rate benefits financed out of general revenues, which aim to reduce poverty and secure a minimum income for the elderly. Social pensions are thus one among many instruments of social protection designed both to protect individuals against adverse shocks, and to contribute to economic and social development more broadly.

Across Asia, the financial crisis of 1997-1998 served as a catalyst for reforms toward more comprehensive social policies, after a long period of reliance on residual or safety-net approaches. In this context, protection for the elderly has been expanding in a variety of ways. Examples exist of ambitious initiatives to combat poverty and extend social rights despite limited financial resources, such as Nepal’s universal pension scheme. Others include age as a criterion in general social assistance programmes (for example, Thailand), while others (Bangladesh, India and Viet Nam) have means-tested social pensions for particular groups. It is thus apparent from the range of initiatives, from local-level subsidies to national schemes, that protection of the vulnerable and the identification of the elderly (and specific sub-groups such as widows) as particularly at risk of poverty have become issues of concern for governments across the region.

Research Objectives and Questions
The purpose of this paper is to explore the reasons why countries in Asia have adopted social pension programmes and which factors have influenced their specific design. It aims to provide a better understanding of the politics of social pension reform in Asia and to identify policy lessons for informing the design and implementation of social protection schemes for older people in the region.

Given the lack of substantive studies and empirical data on the political dimensions or policy processes of pension reform or social protection for most Asian countries that have recently reformed or are in the process of expanding such schemes, this paper aims to provide a framework for analysing such dimensions and processes. The proposed framework is grounded in an extensive review of the literature on the political economy of welfare and policy reform in both developed and developing countries. It draws extensively on the better researched social pension programmes in Latin America and sub-Saharan Africa for comparison, and is illustrated where possible with country examples from the Asia region. A starting point for the analysis is the hypothesis (which will need to be further tested in empirical research) that social pensions tend to emerge from two distinct processes: either through the reform of established pension schemes, often as part of a process of retrenchment, economic restructuring or a demand for increased coverage; or through the expansion of anti-poverty or social protection provisions particularly in lower income economies or those hit by crisis.

Methodology/Approach
This study has used qualitative research methods, including an extensive literature review on the political economy of policy reform and welfare state development, analyses of country experiences in social pension reform in Latin America, sub-Saharan Africa and Asia based on available literature, country studies commissioned by the project and selected interviews. A conceptual framework has been developed for analysing social pension reform processes in developing countries, and two working hypotheses have been tested on the basis of available country studies.

Outputs and Activities
Activities
These included participation and presentation of the paper by Sarah Cook in a workshop in Manila in February 2011 and by Katja Hujo at the International Sociological Association (ISA) Forum in Buenos Aires in 2012.

Outputs
The paper is published as a chapter in an edited volume: Katja Hujo and Sarah Cook: The Political Economy of Social Pension Reform in Asia, in Social Protection for Older People in Asia (Sri Wening Handayani and Babken Babajanian, eds.), Asian Development Bank, Manila, 2012.

The edited volume can be downloaded free of charge from the Asian Development Bank website.

A one-page brief based on the chapter and jointly published by UNRISD, the International Policy Centre for Inclusive Growth and the Asian Development Bank, is available to download.

A related activity was the organization of an Applied Research Seminar on the project topic in collaboration with the Graduate Institute in Geneva, with four students participating and drafting a background paper.

This research was commissioned by the Asian Development Bank (ADB) as part of a broader study on "Social Pensions for Older People in Asia".