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Social Policy toward Population Change . Chompoonuh K. Permpoonwiwat, Ph.D. School of Economics and Public Policy Srinakharinwirot University Bangkok, THAILAND. Topics . Population Change : A Case of Thailand Ageing Population: Celebration/Challenge? Social Policy/Programs?.

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social policy toward population change

Social Policy toward Population Change

Chompoonuh K. Permpoonwiwat, Ph.D.

School of Economics and Public Policy

Srinakharinwirot University

Bangkok, THAILAND

topics
Topics
  • Population Change : A Case of Thailand
  • Ageing Population: Celebration/Challenge?
  • Social Policy/Programs?
population change in thailand
Population Change in Thailand

Key Factors affecting population composition and population structure

  • Fertility (birth)
  • Mortality (death)
  • Migration
population change in thailand1
Population Change in Thailand

1. Thailand Population and the Rate of Increasing (Growth)

  • 1st half of 20th Century (1901-1940s): Thailand population has a slow rate population growth (1+%)
  • In the 1950s and 1960s: Rapid growth in population (about 3%)

* HH survey  from 1947-1959, 3.2%

(17.4 Million- 26.4 Million)

population change in thailand2
Population Change in Thailand
  • Concerned Policy
    • Obstacles for country development
      • scarcity of resources
      • Income/earnings couldn’t catch up with development
    • Research for controlling numbers of population
population change in thailand3
Population Change in Thailand
  • Main Reasons for population growth in the 50s and 60s
      • Reduction in death rate due to a success in public health policy and medical advancement
      • Stimulating Policy for Pronatality toward East Asia leading country, e.g. choosing to invest in the form of children
population change in thailand4
Population Change in Thailand

Policy Toward decreasing in birth rate and Fertility

  • 1969 began the Birth Control Campaign
  • 1977 had successful in evident of slower number birth rate
  • Now: very low increasing rate of population
population change in thailand5
Population Change in Thailand

2. Demographic Transition

2.1

population change in thailand6
Population Change in Thailand

2.2 Early Expanding Period

  • 1947-1977
    • Dramatically decline in death rate
    • High rate of birth expectancy
    • Resulting to the present population (35-65 years old)
    • The group going to be in their retirement soon (some are)
    • The next group/ generation has a decreasing in numbers continuously
population change in thailand7
Population Change in Thailand

2.3 No Returning to the High Stationary

  • Complete Transition!
  • Affect labor market, welfare, and other infrastructures
population change in thailand8
Population Change in Thailand

3. Age Structure

  • demographic transition is dynamic
  • 1947  the beginning of transition

1980  the middle of transition where birth rate has decline significantly

2000  the end of the high stationary period

What’s next???

population change in thailand9
Population Change in Thailand
  • Summary
    • Youth group has declined both in number and growth rate
    • The peak age group around 25-65 has increased both in number and growth rate
    • Thai people tend to live longer (decreasing of death rate)
    • We are now facing “Ageing Population,” or “Aging Society!”
population change in thailand11
Population Change in Thailand

3. Urbanization and Urban Growth

  • Weak Explanation in terms of urbanization index
  • In Thailand, urban means “within municipality”
  • Reports show increasing number of people moving in to municipalities every year
slide18

Back Effect to Country’s Economy

Productivity

Business/Industry

Regional Economy

Public Policy toward Aging Society

Population Change

Community

Household

Government Spending

Consumption & Savings

Investment

International Trade

population ageing a celebration and a challenge
Population Ageing: A Celebration and a Challenge
  • Ageing is a triumph of development. People are living longer because of better nutrition, sanitation, medical advances, health care, education and economic well-being.
  • Although population ageing poses social and economic challenges to individuals, families and societies, with the right policies in place, societies can prepare for an ageing world, address the challenges and take advantage of the opportunities.
slide26

Ageing society

Source: UN Population Division (2012)

did you know
Did you know ???

UNFPA (2012)

did you know1
Did you know ???

UNFPA (2012)

income supporting program
Income Supporting Program
  • Developed Nation has some forms of universal income support for their elderly population
  • The differences in the structure of income support programs among countries for example:

- Canada 3 programs : Universal Demo grant at age 65, Earning related pension at age 60, and mean-tested transfer at age 60

- Italy = 35 years of Labor market Experience ( Started work 20 , Retries 55 get full Benefit)

health insurance
Health Insurance
  • Health care is a universal entitlement. ( The elderly do not receive particularly special care)
  • Only Japan , Separate system of health care for elderly
  • Developed countries use a variety of mechanisms to attempt to control medical cost
non health in kind transfer program
Non-Health In Kind Transfer Program
  • Residential Care
  • Home-help services
  • Rehabilitation service.
  • Housing Benefit
  • Food
  • Subsidized public transport
government social security
Government & Social Security

"If men were angels,

no government would be necessary.”

James Madison

Federalist Paper No. 51

1788

slide36

Transitional Analysis of Social Security-related Expenditure and National Burden Ratio in Major Advanced Countries

In advanced countries,

- Especially in Japan, social security expenditure is increasing due to aging.

- As a consequence, burden is generally rising in these economies, though it has declined in Japan.

※National Burden Ratio = Total Taxes as a percentage of National Income (NI) + Social Security Contribution as a percentage of NI

(Unit: %)

Government Social Security-related Expenditures to GDP

France

Germany

United Kingdom

National Burden to GDP

(Source) Social Security-related Expenditures: IMF “Government Finance Statistics Yearbook 2002”, OECD “Economic Outlook 76” , “Stat Extracts” and “National Accounts 2011 vol.II”

National Burden Ratio: OECD “National Account 2011 vol.II” and “ Revenue Statistics”, CAO “National Accounts” etc.

(Note )Figures represent the general government-based data (including the central/local governments and the social security funds).

37

slide37

Basic Concept of Social Security in Japan

In Japan, social security is realized through burden sharing by “self-help”, “mutual help” and “public help”. Actually, “self-help” is a foundation of burden sharing, complemented by “mutual help” to share risks of life mutually, and then, “public help” is positioned to provide the necessary security for life against situations which are not to be covered by “self-help” and “mutual help”.

自助

Self-help

The concept that people sustain their lives by working on their own and keep their good health on their own.

Health insurance (1961 – )

The systems based on social insurance: insurance payment would be provided in case of disease, old-age, need in long-term care , or unemployment. Subscribers would make premium payment, while public expenses which secured by tax revenues would cover a part of resources of insurance payment.

Pension insurance (1961 – )

共助

Mutual help

Long-term care insurance (2000 – )

Employment insurance (1974 – )

Worker’s accident compensation insurance (1974 – )

公助

Public help

The systems such as public assistance to ensure the healthy and cultured living of necessitous persons, as well as social welfare to provide a certain amount of goods and human services to the socially vulnerable.

Public assistance (1950 – )

Measures for the disabled, etc.

38

slide38

Current Fiscal Situation (Contd.)

Aging Population

● Japanese Life Expectancy

● Ratio of People Older than 65 years to the Total Population

Japan

Germany

France

U.K.

U.S.

(CY)

(Source) “Abridged Life Tables 2010” (Ministry of Health, Labour and

Welfare) (July, 2011)

(Source) Japan 1950-2010: “National Census” (Ministry of Internal Affairs and Communications)

2011-2050: “Japanese Future Demographic Projections” (National Institute of Population and

Social Security Research) (January, 2012)

Other countries: “World Population Prospects: the 2010 Revision” (United Nations)

39

slide39
Japanese Population Pyramid in 1950 Source: National Institute of Social Security and Population Problems

ชาย

หญิง

slide40
Population Pyramid in 1970–1990-2010Source: National Institute of Social Security and Population Problems
slide42

Population aging will progress furthermore in the future, and then, our country will face the severe society where one elderly person is supported by only one young person.

<2050>

<1965>

<2012>

Making an environment to enable the elderly to work longer period.

^^

^^

^^

^^

^^

> <

- - ;

- - ;

- - ;

^^

^^

^^

^^

^^

^^

1.2 people will support 1 person aged 65 or over (estimates)

2.4 people support

1 person aged 65 or over

Efforts are needed to increase in people on the support side as much as possible through the social security reform.

9.1 people supported

1 person aged 65 or over

^ ^

0

^ ^

0

Population (thousand) / Component ratio

Assistance to child and child-raising

Age 65 and over

Age 20-64

Age 19 and under

(Source) Ministry of Internal Affairs “National Census”, “Population Estimates”

National Institute of Population and Social Security Research “Population Projection for Japan (middle fertility and mortality projection)”

43

slide43

Comparison of General Account Budget between FY1990 and FY2013

Non-tax revenues

Construction bonds

・ Most of expenditure increase is due to the growth of social security-related expenditure.

・ Increase of government bond issuance is due to the growth of social security-related expenditure as well as falling tax revenues.

2.6

Tax revenues

58.0

5.6

(Unit: trillion yen)

Local allocation

tax grants

15.3

Social security

11.6

(17.5%)

Others

25.1

National debt

Service

14.3

National debt service

22.2

Local allocation

tax grants

16.4

Others

24.9

Social security

29.1

(31.4%)

2.6

Tax revenues

43.1

5.8

4.1

Special deficit-financing bonds

37.1

Construction bonds

Non-tax revenues

Pension related Special deficit-financing bonds

44

(Note) Data is based on Initial budget

pension system in japan
Pension System in Japan

Minimum: $670/month

long term care insurance system
Long Term Care Insurance System
  • Mandatory for people at the age of 40
  • Minimum payment is around $ 41 (Depend on residents and individual economic status)
social security benefits expenditure
Social Security Benefits Expenditure

Source: Japan Statistical Yearbook 2009

slide47

Ageing society in Thailand

Challenge!

:This issue leads to big concern for Thai government about “the financial stability” of public finance to “provide social security services”.

social security system
Social security system

In Thailand, the social security system can be regarded as the mixed model

  • social service
  • social insurance
thailand social security system
Thailand Social Security System
  • (1) social serviceis provided to improve human capital for eligible person by free of charge, e.g. national health insurance and free compulsory education
  • (2) social insurance is provided to guarantee income security by requiring a certain amount of financial contribution from eligible person, e.g. social security fund and government pension fund.
growth of expenditure revenue and gdp
Growth of expenditure, Revenue and GDP

Source: Bank of Thailand (2012)

slide54

Public finance situation

Government revenue

  • 90% come from taxes, mainly VAT, CIT, PIT.
  • Relies more on indirect taxes, especially VAT (7% of sales); CIT is greater than PIT.
  • High tax rates compared to other Asian countries but effective rates are low.
  • One-fourthof labor force actually file PIT.

Potential PIT payers= 27 mil.

Pay PIT =9 mil.

Tax base

Laborforce = 38 mil.

Unemployed = 0.7 mil.

PIT

CIT

slide55

Public finance situation

Government expenditure

  • More than 70% of total expenditure is current expenditure, i.e. salaries, transfer payments.
      • Education is the largest share about 25%; health care & social security is significantly increasing in recent years.

Fiscal sustainability

General services

Internal security

Defense

Social security

Economic services

Heath care

Education

  • Public debt to GDP reduced from 55.82% in 2002 to 41.71% in 2011.
  • Unbalanced revenue and expenditure, i.e. average growth of revenue was about 2 times lower than expenditure growth.

Public debt to GDP

2006

2010

2011

2003

2004

2008

2002

2005

2007

2009

percentage of ageing popultion total population
Percentage of Ageing Popultion/Total Population

*** The critical issue is that Thailand is expected to reach a certain level of aging at the much lower levels of per capita GDP compared to Japan, South Korea and Singapore (UNFPA, 2010)

challenges thailand aging society
Challenges : Thailand Aging Society

Pension system

  • The current pension system in Thailand can be categorized into three pillars (ILO, 2012b)
  • The formal workers can be included in multi-pillar income security for old-age
  • The informal workers can only access the universal 500 baht scheme which is an old-age allowance.
the structure of pension system
The Structure of pension system

Source: adapted from ILO (2012b)

the pension system challenges
The pension system : Challenges
  • The challenge of existing system is improvement of coverage, adequacy of benefits and management. In particular, on the coverage side, Thai pension system for income security after retirement can cover only the employed in formal sector but a large number of the informal workers have not been covered. ILO (2012b)
  • The consumption of Thai elderly relies on labor income*, asset-based income** and transfer income from their child(ren)*** but income from public transfer is negligible. Hence, graying of population is likely to cause the Thai elderly more vulnerable, particularly those who do not have secured sources of income. Paitoonpong et al. (2010)
  • *37.8, **31.7%, *** 82.7%
slide60

Who’s taking care of the elderly?0.76 million from 7.02 millions elderly population have (main) caregivers. 40.5 % are daughter, 28.0 % are spouse. To employ caregivers (as servant/employees) is 3.3%. (Source: การสำรวจผู้สูงอายุในประเทศไทย พ.ศ. 2550)

Persons

Family

Relatives

Market

the pension system challenges1
The pension system : Challenges
  • However, currently, Thai government has been preparing to extend the coverage of current pension system to all citizens, including the informal workers, by introducing the National Saving Fund which will be contributed by government and member.
policy recommendation
Policy Recommendation
  • Extend the retirement age
    • Increase Thailand Productivity
    • Reduce Fiscal Burden/Budget
  • Supporting National Saving Fund for Long Term Care

64

health care system challenges
Health Care System : Challenges

Health care system

The Thai health care systems are publicly managed

  • Civil Servant Medical Benefit Scheme (CSMBS)
  • Universal Coverage Scheme (UCS)
  • Social Security Scheme (SSS)

**These systems provide universal coverage for all citizens but their financing are relied heavily on tax revenue **

the health system challenges
The health system : Challenges
  • The key challenges are that they have relied heavily on public finance through general tax and channels for financial contribution from beneficiaries, e.g. copayment and premiums, are limited.
  • The government subsidies are unequally distributed among schemes in terms of coverage and per capita expense, e.g. CSMBS is the most subsidized scheme but its coverage is only 7 percent of total population.
future challenges
Future Challenges
  • The Cost of health care will continue to increase
  • The increase inequality among schemes needed to be solved
  • Fiscal Burden and Risk!
slide71

Policy Recommendation

  • Distributed the risk: Cost Sharing (Fair/Equity/Equality/Efficiency?)
  • Covered both Formal and Nonformal Sectors
  • Reform theCSMBS System

72

slide72

UC

CSMBS

SSS

Independent Organization to Control and Manage

(Negotiate with Health Care Center and taking care of financial Situation)

CSMBS

SSS

UC

การ Distribution of Risk

High Income Vs. Low Income

Healthy VS. Non Healthy

Working Gr. VsAging

73

slide73

Increasing the Base of Social Security Coverage

3,800 Baht/Capita

3,000 Baht/Capita

UC 20 Million

UC (with families) 30 Million

CSMBS

4.5 Million

SSS

10Million

SSS (with families)30 Million

2,150 Baht/Capita

74

thank you for your kind attention
Thank you for your kind attention

Contact: ckosalakorn@yahoo.com

ckosalakorn@hotmail.com