THE welfare states pioneered in Europe and America are not universally admired in Asia. In 2001 Singapore’s then prime minister argued that handouts would result in a “crutch mentality, which will lead to indolence, dependence and abuse”.
To ward off social ills, the region has tended to rely instead on youthful populations, bountiful growth and dutiful families. Yet as Asian countries have grown richer, older and less autocratic, their governments have responded to a rising demand from citizens for welfare, including pensions, health insurance and anti-poverty schemes, such as subsidised food, public works and even cash handouts. The Asian Development Bank has tried to summarise their efforts in a single indicator, the social-protection index, published this week. The index shows both the breadth of coverage (the percentage of potential beneficiaries actually covered) and the depth (the amount of spending per beneficiary, expressed as a percentage of the country’s GDP per person).
True to their tradition of self-reliance, many Asian countries lean heavily towards social insurance, which ties benefits to contributions, rather than social assistance, which ties benefits to circumstances. In South Korea, for example, the mix is about 80% insurance to 20% assistance, according to the index. In Singapore, nine-tenths of the government’s efforts consist of contributions to the country’s Central Provident Fund, a compulsory saving scheme from which Singaporeans can draw for housing, health care and retirement.
But a number of countries are also experimenting with cash transfers. In 2009 Thailand’s Chek Chuay Chaat scheme handed out 2,000 baht ($65) to registered workers earning less than 15,000 baht a month, to help them weather the global financial crisis. And in South Asia, social insurance is far less dominant. That may reflect the limited reach and credibility of South Asian states, which find it difficult to collect and track contributions, especially if people doubt the state’s capacity to provide promised benefits. Many governments find it easier just to hand out cheap grain, or to pay the poor to dig ditches or lay roads. India is a case in point.
Prosperous Japan is the only country that protects its people both well and widely, according to the index. In Singapore, now richer than Japan, social protection is spread broadly but thinly, the index shows. The same is true of most of South-East Asia’s poorer countries, where the welfare state is still embryonic. Malaysia, however, has achieved depth (spending 27% of per-person GDP on each beneficiary) without breadth (its efforts reached only 14% of potential beneficiaries for the year the index was calculated). Pakistan, where social-protection spending helps the non-poor more than the poor, has also prized depth over breadth. India, on the other hand, has achieved neither.