World Bank: Quality Education, Social Protection Critical to Stemming Inequality in Asia and the Pacific

September 11, 2015

CEBU, Philippines, September 11, 2015 – Investing in quality education and providing social protection for the poor stand out among the key policies to address rising inequality in the Asia-Pacific region that includes the Philippines.

This is one of the messages delivered today by Axel van Trotsenburg, World Bank Vice President for East Asia and the Pacific, during the APEC finance ministers’ meeting in this city.  Van Trotsenburg spoke at the session, “Global Economic and Financial Outlook, Growing Inequality and Regional Connectivity.”

According to van Trotsenburg, most poor households rely on labor as their only asset. Making labor more productive through ways such as quality education and skills training is crucial for achieving inclusive growth.

“Primary and secondary education systems should increasingly focus on quality teaching and better learning outcomes, by strengthening the autonomy and accountability of educational institutions,”
said van Trotsenburg. “In addition, there remains significant scope to promote wider and more equal access to higher education among the poor.”

Van Trotsenburg also advocated for the expansion of social protection among APEC economies, noting that the coverage of such schemes as health insurance, unemployment insurance, and pension systems remain limited across much of middle-income East Asia.  

Countries, he said, may consider introducing or expanding well-targeted conditional income transfer programs, which provide direct support to those left behind.

Citing the experience of the Philippines, Mexico, Peru, and Chile, he said that conditional cash transfer (CCT) programs can help boost school attendance, preventive health care, and nutrition among the poor and vulnerable, significantly improving their lives.
He said he visited the town of Borbon here in Cebu the other day and personally saw how CCT, coupled with community-driven development programs, can make a difference in the lives of poor families.

Key features of successful social safety net programs, he said, include a rigorous selection of recipients based on geographical and socioeconomic factors, a system of constant monitoring and evaluation to ensure effectiveness, and making cash payments directly to families to decrease overhead and corruption.

“In middle-income East Asia, rapid, inclusive growth enabled hundreds of millions to lift themselves out of poverty,” said van Trotsenburg. “Yet, there are still challenges. The bottom 40 percent of the region’s population – almost 800 million people – still live on less than $3 a day in terms of purchasing power parity. These people might fall right back into poverty if the global economy takes a turn for the worse, or if they face health, food-price and other shocks.”

He urged members of the APEC to continue or accelerate economic reforms to sustain growth which is critical to improving living standards especially of those at the lower end of income distribution.

In particular, he singled out the need for governments in the region to boost investments in physical infrastructure that can help reduce production and transport costs.

“Developing East Asia’s infrastructure investment needs are huge,”
he said. “In this region, 142 million households still have no access to electricity while 600 million people lack access to adequate sanitation. It will be very important for greater investment to be accompanied by increases in efficiency of such expenditure. And this points in turn to the importance of strengthening institutions, including through public financial management reforms.” 

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