The Fiji Times » State of play – Social protection in the Pacific and Timor-Leste

Social protection measures have played a central role in the Pacific response to the impacts of COVID-19.

More than 80 schemes have been set up, using cash and in-kind benefits, subsidies and adjustments to contributory schemes.

There is a common perception that formal social protection is limited across the Pacific and that once temporary COVID-19 measures end, communities will be left without government support.

However, our analysis, undertaken as part of the Social Protection Partnerships Program (P4SP), shows that most Pacific Island Countries (PICs) have made significant investments in social protection systems over the past 15-20 years. last years.

These systems are likely to remain in the future, as they are an essential part of government service delivery and an important contributor to economic stability and social cohesion.

P4SP analysis shows that six Pacific countries (Fiji, Kiribati, Nauru, Samoa, Tuvalu and Tonga) and Timor-Leste spend between 0.4% and 2.6% of their gross national income (GNI) on tax-financed social protection schemes (Figure 1).

Figure 1. Benefits funded by QTax by function, as a percentage of GNI 2018-2020

While these spending levels are relatively modest compared to high-income countries, they are higher than many other low- and middle-income countries in Asia and the Pacific.

Three countries (Papua New Guinea, Solomon Islands and Vanuatu) have no social protection expenditure, but PNG is considering introducing a new Child and Maternity Benefit, supported by the World Bank and the Australian Department of Business Foreign Affairs and Trade (DFAT).

CIPs have also gradually improved coverage of population groups.

Where the sector was previously limited to contributory schemes, in particular compulsory savings schemes via national provident funds, there have been increasing attempts to introduce tax-funded schemes (social assistance) to protect people against risks throughout the life cycle.

These include old-age, invalidity and family allowance schemes.

Another important trend is that most countries have opted for universal benefits (provided to a category of the population regardless of their poverty status), in particular for the elderly and the disabled.

Factors such as administrative simplicity and the political appeal of universal schemes seem to have played a role.

By contrast, poverty-targeted programs are relatively rare and – where they have been introduced – have been more strongly linked to the initiatives of development partners.

Countries that had invested in their social protection systems before the COVID-19 pandemic were in a better position to respond to the pandemic.

For example, the Cook Islands, Fiji, Kiribati, Samoa and Tonga have relied on their existing programs and economic infrastructure to provide rapid responses through temporary supplements to the elderly, disabled and children who are already receiving benefits.

The Cook Islands, Federated States of Micronesia, Fiji and Tonga provided new cash benefits to those deeply affected by the crisis, while Samoa, Timor-Leste and Tuvalu provided short-term benefits to all (or to the vast majority of) citizens. Countries have gradually increased investment, mainly by gradually changing eligibility conditions – such as reducing the age of old-age pensions – and benefit levels.

For example, in Fiji, spending on tax-financed schemes nearly tripled, from 0.4% of GDP in 2016 to 1.1% of GDP in 2021, thanks to small annual increases in spending.

Given the current constraints in the fiscal environment, exacerbated by the potential instability of debt financing, PIPs may have fewer resources to strengthen their social protection systems. Going forward, funding from development partners will continue to play an important role.

Our analysis also shows that investment can be done gradually. Continued investments in social protection in the Pacific will play a key role in inclusive economic recovery and in responding to future shocks.

Note: The analysis uses a social protection classification method based on the IMF’s Government Finance Statistics Manual.

Provident fund expenditure is not considered a component of government expenditure and is therefore not included in these statistics.

This article first appeared on Devpolicy Blog (devpolicy.org), from the Development Policy Center at the Australian National University.

• CHARLES KNOX-VYDMANOV is an independent consultant with 15 years of experience in the field of social protection. He is currently a team leader for an activity under P4SP focused on identifying strategic pathways to sustainable investments in the Pacific and Timor-Leste.

• SINTA SATRIANA is Social Protection Specialist for the Pacific Social Protection Partnership Programme. She has 15 years of experience in the Pacific, Asia and Africa. The opinions expressed by the authors are not necessarily shared by this journal.

Joel C. Hicks