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Inequality and Social Security in the Asia-Pacific Region

High income inequality can engender a wide range of negative impacts. It can harm child development, increase ill-health and mortality, limit the status of women, generate distrust in government, exacerbate levels of violence and social unrest, slow the pace of poverty reduction and hinder economic growth. The Asia-Pacific region is characterized by high levels of income inequality, which have been exacerbated by the COVID-19 crisis. Therefore, it is imperative that countries in the region take action to tackle high inequality and create fairer and more decent societies.

Investments in social security are one of the most effective means of tackling inequality. This includes schemes such as child, unemployment, sickness, maternity, disability and old age benefits, funded from general government revenues as well as by social insurance. Currently, across most countries in the Asia-Pacific region, investments in tax-financed social security are minimal. Nonetheless, the report demonstrates that, both globally and in the Asia-Pacific region, universal social security systems are much more effective than poverty-targeted systems in reducing inequality. If countries in the region make the move to modern, universal lifecycle systems, the impacts on inequality would be impressive. And, the more that countries invest, the higher will be the impacts on family well-being, employment, social cohesion and economic growth.

Nonetheless, countries need to do more than rely only on social security to tackle inequality. They should take forward other policy measures that are effective in reducing inequality, such as investments in other public services and labour market interventions to deliver decent work and fair wages.