1. Social Protection Expenditure and Performance Review (SPER) & Social Budgeting Jean-Claude Hennicot Consulting Actuary in Cambodia

2. OUTLINE 1.Introduction 2.Social Protection in Cambodia 3.SP Expenditure & Performance Review 4.The Social Budget Concept 5.Social Budgeting 6.The ILO Social Budget Model 7.Challenges in Cambodia 8.Next Steps

3. Introduction Social Protection (ILO): 1.Access to affordable Heath Care for all 2.Income Security for all, in case of unemployment, sickness, maternity, old age, disability, or death 3.Family Allowances  Benefits for families with children 4.Social Assistance/Welfare  Transfers to the poor and vulnerable See: World Labour Report, ILO (2000)

4. Social Protection in Cambodia Rectangular Strategy, phase II NSDP, update 2009 – 2013 Social Security Law, 2002 Law for Disabled Persons, 2010 NSPS, 2011 - 2015

5. Social Protection in Cambodia Obstacles for the extension of SP coverage: High poverty rate High share of informal employment Limited fiscal space Legal and regulatory framework incomplete Administrative capacity of new institutions Infrastructure (e.g., hospitals)

6. Social Protection Expenditure and Performance Review (SPER) What is it?  SP Diagnostic Tool developed by ILO  Comprehensive overview and assessment of a country’s Social Protection system  Helps to identify coverage gaps  Informational tool for policy makers and development partners

7. SPER Comprises the following parts:  Review of country setting Demography, economy, and labour market Social indicators (e.g., poverty, fertility)  Overview of SP system: schemes, benefits, benefit levels, and governance  Assessment of SP Financing: Compilation of Expenditure & Income (  Social Budget)  Assessment of Coverage and gaps  ‘Performance’ of system

8. The Social Budget Concept a) Annual Rec. Expenditure: Health Care Pensions Short-term Benefits Employment Injury Family Benefits Social Assistance/Welfare b) Annual change in Reserves Annual SP ‘Income’: Funding from National Budget Contributions (EE & ER) Funding from ODA & NGOs Return on Investment TOTAL EXPENDITURE TOTAL INCOME =

9. The Social Budget of Cambodia Health Care – National Budget (Recurrent Operation cost) – ODA-funded benefits (e.g., HEF) – Contributory schemes (CBHI, HIP) Pensions – NSSFC (old age, disability, survivor pensions) – NFV (old age, disability, survivor) Short-term Benefits (sickness, maternity, death) – NSSFC maternity & funeral grants – NFV funeral grants

10. The Social Budget of Cambodia Employment Injury – NSSF: medical care, cash benefits, pensions – NSSFC: cash benefits, pensions – NFV: disability and survivor pensions Social Assistance – MOSVY benefits (e.g., Food aid) – Cash transfer schemes (e.g., CCT) – In-kind Benefits (e.g., school feeding) Other schemes/provisions See NSPS: PWP, VT, Child Labour Prevention, etc.

11. The Social Budget Main Institutions and development partners: Council for Agricultural and Rural Development Ministry of Social Affairs, Veterans, and Youth (NSSFC, NFV, Social Assistance) Ministry of Labour and Vocational Training (NSSF, TVET) Ministry of Health (PH, and CBHI) Ministry of Education, Youth, and Sports Development Partners: USAID, ADB, GIZ, WFP, UNICEF, World Bank, GF, ILO, GRET, etc.

12. Social Budgeting ‘Picturing the Future’ Projecting the Social Budgets of the future a)Based on current schemes and provisions  Future cost of existing provisions (Status Quo Scenario) b)By including alternative policy options  Cost and viability of new policy provisions (Alternative Scenarios)

13. The ILO Social Budget Model

14. Demography Source: NIS, Population Census 2008

15. Population Projection  ILO generic Population Projection Model  Uses Single-age cohorts M/F (age 0 – age 99)  Mortality profile from UN model life tables  Age-specific fertility rates: use regional patterns (UN DESA) or country data if available  Adjust for int. Migration (if data available)  Main Assumptions (preliminary):  TFR to decrease to 2.1 by 2025  LEB to increase to 67.4 (71.7) for M(F) by 2025  Sex ratio at birth: 1.05 (M/F)

16. Population Projection Source: ILO projection (preliminary)

17. Labour Force projection

18. Employment

20. Projecting Employment actual projected Source: ILO projection (preliminary)

21. Employment Projections  Paid Employees (‘formal economy workers’)  Workers covered under statutory schemes: - Government Employees (NNSFC) - Private Sector Workers (NSSF)  Dependents (if covered)  Residual (‘informal economy workers’)  Self-Employed and unpaid family workers  Unemployed and inactive population  Poor versus Non-Poor

22. Economic Module  Projection of:  GDP (from labour supply)  Prices (  Indexation of benefits)  Wages (  Contributions)  Interest rates (  Income from Reserves)  Use both real and nominal values  Objective: model consistency  Relationship between variables realistic

23. Government Module Projection of:  Government Revenues From national output (GDP)  Sectoral Allocation of National Budget  Allocation to social sectors:  Health  Social Protection  Fiscal Space

24. Social Protection Module  Develop Model for each scheme as required  Projection of scheme-specific variables - Population Coverage by age/sex - Beneficiaries by age/sex - Benefits and expenditure - Financial indicators  Use actuarial model toolkit (e.g., ILO pension model)

25. Social Budget Projections A.Status Quo Scenario: Assuming no new SP schemes or provisions To be included: a)All SP programs & provisions already in force b)All enacted programmes awaiting implementation: - Contributory SHI for private sector (NSSF) - Contributory Pensions for private sector (NSSF) - SHI for Government Employees ? - Disability pensions (  Disability Law) - Other programmes outlined in NSPS Objective: Costing of SP system (NSPS +)

26. Status Quo Scenario Projection of Income & Expenditure based on: Existing benefit provisions and entitlements Expected development of macro framework (labour market, wages, fiscal revenues, etc.)  Use realistic, ‘most-likely’ approach Main challenges: Future scope of ODA-funded programmes Implementation plans for enacted policies: e.g., NSPS, NSSF (SHI and pension branches)

27. Projection Scenarios B.Alternative Scenarios  ‘Costing’ of: Policy Options under consideration Other Policy Options for illustration Still to be defined, e.g. SP Floor Components of the: a)Universal Health Protection b)Cash transfers for all Children c)Universal pensions for elderly & disabled d)Income security for working age population: (e.g., Cash Transfers to the poor?)

28. Alternative Scenarios Costing of Policy Options helps to: Assess feasibility and timeframes Illustrate Trade-offs between policies (  fiscal space) Setting of Priorities and long-term SP development agenda in Cambodia  Tool for long-term policy making

29. Challenges  Availability of data  Many actors (line ministries, DP)  No centralized database  No standardized financial reporting  Scarce data for off-budget programmes (mainly ODA and NGO-funded schemes)  New Schemes / Provisions  Design process still ongoing  Timeframes for Implementation?

30. Next Steps Complete & Update Database Revise draft SPER for comments (Dec 11) Define policy options for costing (  national policy priorities) Support CARD in costing NSPS (Jan 12) Finalize Social Budget projection (?)

31. Thank you Questions & comments are welcome