Public social expenditure
In 2018/2019, public social expenditure-to-GDP ratios varied considerably across the Asia/Pacific region. However, they were generally well below the OECD average (Figure 4.10). Average public spending on social protection in the Asia/Pacific region was about one-third of the average in the OECD as a whole. Public social spending in Japan was about 22% of GDP, close to 20% in New Zealand while it was around 10% of GDP in China and Mongolia. By contrast, public spending on social protection is around 2% of GDP in Bangladesh, Lao PDR and Papua New Guinea.
The distribution of public social spending also varies across countries (Figure 4.11). On average, public spending on social insurance accounts for almost half of social spending; health expenditure accounts for more than one-third; and, social assistance for less than one fifth. However, there are large variations across countries. Many Asia/Pacific economies have relatively young populations compared to OECD countries (see Figure 2.13), which helps to explain relatively low public spending on pension benefits (Pensions: Coverage and replacement rates).
In many Asia/Pacific countries, social insurance supports cover the relatively small public and formal sectors, and does not cover the large group of informal workers and/or self-employed workers and the elderly population who had little opportunity to contribute to pension schemes in the past. In all, social insurance benefits in many Asia/Pacific countries do not benefit the poor. Social insurance (including pensions) accounts for about 65% of reported social protection expenditure in Azerbaijan and Malaysia, whereas it is less than 5% in Georgia and the Maldives. Social assistance (including assistance for the elderly, child welfare, disability, welfare assistance) usually accounts for a relatively small share of reported social protection expenditure. Health accounts for more than two-third of social expenditure in Bhutan, Lao PDR and the Maldives whereas in Armenia and Azerbaijan only less than one fifth is dedicated to health-related risks. Active labour market programmes play a relatively small role, except in Bangladesh where ALMPs account for about 13% of reported social protection expenditure (Figure 4.11).
Considering absolute poverty rates in low- and middle-income countries, it appears that countries with higher public social expenditure tend to be those with lower absolute poverty rates (Figure 4.12). This suggests that public social spending helps to alleviate disadvantage and enhances equity.
Public social expenditure concerns the provision of cash, in-kind and fiscal support to households and individuals. To be included in social spending, programmes have to involve compulsion in participation or interpersonal redistribution of resources, and address one or more contingencies, such as low income, old age, unemployment or disability. Social spending is public when general government controls the relevant financial flows.
Data on social protection for OECD countries were taken from the OECD Social Expenditure Database (SOCX). Data on public social spending for non-OECD Asia/Pacific countries as in Figure 4.10, were taken from the Asian Development Bank’s Social Protection Indicator, as cleaned for partial health data, and include general government expenditure on health as taken from the WHO (World Health Organization) Global Health Expenditure Database. Otherwise, data were taken from the ILO World Social Protection Report 2020-22.
Public spending on education is not regarded as within the social domain, and such spending is generally not included here. Measurement issues affect the recording of data on public social protection expenditure; in particular regional/local social spending programmes are not always reflected in the available statistics for a country, e.g. as for India, and the data here may therefore underestimate the public social effort. For data on poverty, see the indicator Poverty.
Note: Public social spending for Asia/Pacific countries non-OECD countries concerns social protection spending data from the Asian Development Bank’s Social Protection Indicator, as cleaned for partial health data and also include general government expenditure on health (Government schemes and compulsory contributory health care financing schemes) as taken from the WHO (World Health Organization) Global Health Expenditure Database. Data for OECD countries refer to the OECD Social Expenditure Database (SOCX). For Brunei Darussalam, Fiji, Papua New Guinea, Samoa, Timor-Leste, and Tonga data refer to ILO World Social Protection Report 2020-22.
Source: OECD estimates based on Asian Development Bank estimates based on 2018 SPI consultants’ country reports.
Source: OECD estimates based on Asian Development Bank estimates based on 2018 SPI consultants’ country reports.
Source: OECD estimates based on Asian Development Bank estimates based on 2018 SPI consultants’ country reports.