Social Protection and Financial Security

Social protection remains extremely limited in ASEAN and may be exacerbated by future demographic shifts, and population growth. Social programs such as unemployment insurance, affordable health care and pensions are needed to ensure vulnerable populations, migrants and the elderly, are not left behind.

Only a few countries have implemented successful social programs and those are the places where inequality has typically fallen the most, suggesting that these policies have played an important role in fighting inequality. Thailand, Malaysia, and the Philippines have all made policy efforts to expand basic services and a social safety net. Thailand, for example spends over 7% of GDP on health (2%) and social protection (5%) compared to only 2-3% on average in the rest of ASEAN. They provide a universal coverage scheme through a tax-financed national health care system with low out of pocket expenses (13%). In only two countries—Thailand and Vietnam—are workers covered by unemployment insurance schemes and coverage in case of employment injury remains limited (42% in ASEAN).

In addition to lacking basic social services, the lack of adequate financial services constrains the ability of people, particularly low-income individuals, to save, borrow for investment purposes (health, education, small business development) and build assets over time. It can thereby leave individuals more vulnerable to poverty and perpetuate income inequality. 264 million (50%) of adults in ASEAN are unbanked and there are large disparities in financial access across the income distribution: only 32% of individuals from the bottom 40% have access to finance on average (ranging from as low as 2% in Cambodia to 60% in Thailand).