Govts need to broaden their commitment, strengthen public sector institutions and ensure that all pay their fair share, says ESCAP
by AZALEA AZUAR / pic by TMR FILE
ON AVERAGE, only 46% of the people in the Asia Pacific have some form of social protection coverage, according to the United Nations (UN) Economic and Social Commission for Asia and the Pacific (ESCAP).
“The social protection coverage rate remains insufficient across countries in the Asia Pacific, on average, only 46% of the people in the region have some form of social protection,” said ESCAP Macroeconomic Policy and Financing for Development Division chief Sweta Saxena (picture).
“We must work towards broadening the tax base, formalising business activities, bringing informal workforce into the labour force and also expanding taxation to include the digital economy,” she said during the launch of the Economic and Social Survey of Asia and the Pacific 2022 yesterday.
Saxena explained that governments need to broaden their commitment, strengthen public sector institutions and ensure that all pay their fair share so both individuals and companies comply with existing regulations. This will also prevent illegal financial flows and close loopholes.
“Governments can also play an important role in addressing the root cause of inequality through structural policies, and redistribution, through progressive taxes and transfers alone may not be adequate to solve the problem,” she added.
The report also highlighted the regional economies suffer downside risks that are related to supply constraints, rising inflationary pressures, prospects of increases in interest rates, shrinking fiscal space as well as the emerging global economic fallout from the ongoing Russian-Ukrainian conflict.
It expects economic growth in Asia Pacific developing countries to grow from 4.5% in 2022 and 5% in 2023 compared to 7.1% in 2021 while the Covid-19 cumulative output loss between 2020 and 2022 is estimated to be nearly US$2 trillion (RM8.46 trillion).
The survey has also warned of cuts in fiscal expenditures on healthcare, education and social protection to protect the development gains of past decades and prevent further escalating inequalities with dwindling fiscal space in many developing countries in the region.
More than 820 million informal workers and over 70 million children from low-income households in Asia Pacific have suffered due to the pandemic which prevented them from schooling and earning a living. These would have an effect on their future earnings potential and overall productivity growth.
Furthermore, an additional 85 million people had to suffer from extreme poverty in 2021. ESCAP advised that developing countries need to spend more on basic universal health coverage, push further towards universal primary and secondary education, and expand social protection coverage.
“Smart” fiscal policies can also improve the overall efficiency and impact of public spending and revenue collection while new sources of revenue such as taxing the digital economy and removing tax collection among underserved groups should be looked at.
Secondly, the survey also suggests that central banks play an important role in tackling inequality where they need to tilt their traditional monetary policy towards promoting inclusive development.
A central bank’s digital currency can enhance financial access, and encourage more innovative financial instruments for social purposes.
Moreover, governments can also proactively guide, shape and manage the structural economic transformation process, which is increasingly driven by the digital-robotics-artificial intelligence revolution, for more inclusive outcomes.
This includes supporting the development of labour-intensive technologies, inclusive access to good-quality education, reskilling, strengthening labour negotiation capacities and social protection floors.
The Economic and Social Survey of Asia and the Pacific was first produced in 1947 and was the UN’s oldest and most comprehensive annual socioeconomic study informing policymaking in the region.
In this year’s edition, the study observed the importance of effective government actions and the role of fiscal, monetary and structural policies in enhancing inclusiveness, keeping in view the considerable adverse impacts of Covid-19 pandemic on poverty and inequality.