Woman and child in a rural area of Laos

Social protection

Social protection systems can influence a population’s well-being and life expectancy. Conversely, each phase of the demographic transition poses new challenges for the mechanisms and systems that provide social protection. Adjustments are needed above all due to changes in age structure and emigration or immigration. 

Numerous children and an extensive family network are still the only social protection in many countries, for instance in the face of illness or old age. However, as these traditional family structures weaken or disintegrate due, among other things, to increasing mobility, many people, particularly the elderly, have a higher risk of falling into poverty. The establishment of social protection systems prevents this and can guarantee basic financial security, providing an alternative to informal, family-based ‘safety nets’.

Social protection influences demographic and socio-economic development

Social protection systems also influence the population’s life expectancy, particularly the span of healthy life expectancy. In case of illness, having health insurance reduces the financial barriers to healthcare access. By improving medical prevention and care, health insurance can help reduce illness-related absences from work and contribute to a longer working life, promoting healthy ageing. This can have a positive macro-economic impact, because healthy individuals can work more years of their life, save more of their earnings and eventually generate a so-called second demographic dividend with their private financial reserves.

Social protection systems can also reduce inequities in society. They help ensure that access to social services such as health, education and nutrition can be guaranteed for all, especially for disadvantaged population groups. Conversely, an inadequate or nonexistent social protection system can encourage migration and displacement.

Establishing social protection systems should go hand in hand with demographic change

For many developing countries, the demographic transition – which paves the way for a demographic dividend – is still in the future. The demographic dividend is a window of accelerated economic growth in which the age structure has changed, with the proportion of the working-age population significantly outweighing that of dependent children and the elderly. It is important that developing countries take advantage of this transition period to establish and expand social protection systems, particularly pension systems, to prepare in advance for the approaching ageing of their societies.

Social protection systems need to be continuously adapted to the population’s age structure, with its associated challenges and changing needs. If the ratio of the working population to the non-working recipients of social benefits is reduced, tax revenue declines while expenditure on social benefits increases. With an increasingly ageing population, in order to safeguard the sustainability of pension schemes, it may be necessary, for instance, to reduce benefits or to increase the retirement age or the amount of the pension premiums.

Social protection systems need to adjust to changing age and employment structures

However, in many partner countries of German development cooperation, a large number of people work in informal settings where no social contributions are paid. In these countries the social protection systems need to be aligned with employment relations as well as with population trends. As the elderly population increases, so does the recourse to health insurance and nursing care schemes, reflecting the growing need for medical services, treatment and long-term care. 
With the help of reliable, up-to-date and comprehensive population data, disaggregated by age, gender, and place of residence, local and national authorities can better take the needs of different population groups into account in planning social protection systems.

For more information on the interlinkages of social protection and population dynamics, please refer to Chapter 4.5 of the handbook.

How can social protection systems factor in population dynamics?

To address these challenges and opportunities, stakeholders can:

  • Expand access to government-supported social protection systems so that family-based structures are not the only option.
  • Use the favourable age structure during the demographic transition to establish and expand social protection systems.
  • Provide social protection for the working-age population in order to promote healthy ageing and ensure that people are engaged in productive work for longer and can save more.
  • Use population data to plan social protection systems and prepare in advance for changing challenges and needs.

Resource

  • Cambodia’s Identification of Poor Households Programme (IDPoor) aims to promote the country’s socio-economic development. With support from German development cooperation, the programme routinely collects and publishes up-to-date data on households living in poverty. The government and NGOs use these data to implement their development activities.
© GIZ Laos

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