1. Social protection Assessment based national dialogue in Myanmar September 3 rd -5 th, 2014 Nay Pyi Taw Workshop on evaluating the cost of social protection policy options

2. Session 2: Calculating the cost of benefits using the ‘Rapid Assessment Protocol’ (ILO, 2012)

3. Key questions What is the role of the RAP model? What is the structure of the RAP model? What are the different steps in using the RAP model? What are the possible sources of data? What are the advantages and limitations of the RAP model?

4. ABND FACTSHEET Step 1 – Building the assessment matrix including the identification of priority recommendations Step 2 – Rapid Assessment Protocol to estimate the cost of implementing the social protection provisions Step 3 – Finalisation of the assessment report for endorsement and further action by the higher levels of government Steps of ABND

5. ABND FACTSHEET Step 1 – Building the assessment matrix including the identification of priority recommendations Step 2 – Rapid Assessment Protocol to estimate the cost of implementing the social protection provisions Step 3 – Finalisation of the assessment report for endorsement and further action by the higher levels of government Second step of ABND

6. Why do we cost and project social protection benefits? It allows a discussion on concrete design feature of schemes. It helps setting priorities. It is a basis for advocacy.

7. Labour market (EAP) Demographic data (POP) Macroeconomic data (ECO) General government operations (GGO) Costing of benefits Summary and results 1. Input data 2. Estimated cost of benefits in absolute terms, as % of GDP, and as % of government expenditure 3. Projected cost of combined benefit packages Structure of RAP

8. Macroeconomic data (ECO) General government operations (GGO) Costing of benefits Summary and results 1. Input data 2. Estimated cost of benefits in absolute terms, as % of GDP, and as % of government expenditure 3. Projected cost of combined benefit packages Structure of RAP – Myanmar Demographic data (POP) Additional demographic data (POP2)

9. POP POP2 ECO GGO (SQ) Health BS 2 BS 4 BS 5 3. Summary of benefit costs SUM 1. Input worksheets 2. Benefit worksheets to estimate the cost of scenarios Structure of RAP Children Active Age Old Age

10. Input data for the RAP in Myanmar POP Source of population data for Myanmar: UN DESA population projections, 2014, medium hypothesis.

11. Input data for the RAP in Myanmar POP2 Regional population – Total population for each region: Ministry of Labour, Employment and Social Security, 2010. Rural population – Rural population (as % of total population) : World Bank Staff estimates based on United Nations, World Urbanization Prospects, 2012 Informal economy population – Total population minus civil servants and private sector workers registered to the Social Security Board. Fertility – Fertility rate: WB and WHO, 2012.

13. Input data for the RAP in Myanmar ECO GDP: IMF projections, 2014. Poverty: IHLCS, 2010. Inflation: IMF, 2014.

14. Input data for the RAP in Myanmar GGO Government expenditure (status quo): IMF, 2014.

15. Using the RAP

16. ParameterWhat we haveWhat we need to know Benefit amountCurrent benefit level according to the programme design Future benefit level based on inflation, wage increase, etc. Target population Current number of people in the target group Future number of people in the target group based on general population growth, growth projections for specific groups Coverage of the target group Current coverage of potential beneficiaries Extension of beneficiary coverage depending on take-up rate Cost of extending benefits Current cost calculated using the parameters above Estimated future cost in absolute numbers, as % of GDP, as % of government expenditure based on GDP growth rate, forecasted government expenditure Using the RAP

17. Affordability of the proposed scenarios and their impact on the fiscal space can be assessed. Preliminary fiscal space analysis is conducted by comparing the cost of the scenarios with GDP and adding the cost to government expenditures - in the GGO(Benefits) worksheet. Fiscal space can be created by raising or introducing taxes, borrowing from international institutions or markets, cutting down on low-priority expenses, etc. Using the RAP

18. RAP can illustrate different policy options and provide a tangible basis to initiate and facilitate national dialogue. Long-term sustainability of the programme can be checked by comparing the cost of implementation with economic indicators like GDP and government expenditure. It is not a dynamic model. i.e. the potential positive impacts of the benefits on GPD (through strengthened consumption, graduation from poverty etc.) are not accounted for in the projections. Results are simplistic and indicative. Further detailed and actuarial studies are needed before designing a scheme Advantages and limitations of RAP

19. Old Age scenario 1: Universal social pension of 25,000 kyats per month for people 70 years old and over. 2015 Benefit cost = (25,000 x 12) x (1,760,000x20%) = 112,836 million kyats Admin cost = 20% x 112,836 million = 22, 567 million kyats Total cost = 135,403 million kyats Benefits Target group Take up rate Admin cost 25,000 Kyats/month 1,760,000 20% 2016 US$31.5/month 1,800,000 40% 20% Inflation: 6.85% Pop growth: 2.2% Additional take-up rate: 20% Admin cost same Benefit cost = (25,000x12) x (1,800,000 x 40%) = 245,781 million kyats Admin cost = 20% x 245,781 million = 49,156 million kyats Total cost = 294,937 million kyats Using the RAP in Myanmar

20. Old Age scenario 1: Universal social pension of 25,000 kyats per month for people 70 years old and over. RAP calculation Projection Total cost as % of GDP = 135,403/72,074,640 = 0.19% Total cost as % of govt. exp. = 135,403/20,742,620 = 0.65% Total cost of benefit GDP Government expenditure 135,403 million kyats 72,074,640 million kyats 20,742,620 million kyats 294,937 million kyats 82,740,180 million kyats 23,130,720 million kyats Total cost as % of GDP = 294,937 / 82,740,180 = 0.36% Total cost as % of govt. exp. = 294,937 / 23,130,720 = 1.28% Using the RAP in Myanmar 20162015

21. Using the RAP in Myanmar Assumptions for administrative costs: – Universal schemes: 20% – Means-tested schemes: additional 10%. – Additional certification (i.e. for disability): additional 10%. – Conditional: additional 10% Justification: – Average administrative costs in existing schemes are between 20 and 40 %; – Cumbersomeness of means-testing and certifications considering Myanmar’s lack of infrastructure / existing delivery channels at the moment.

22. Group exercise Costing scenarios You have 40 minutes In groups (health, children, active age, old age), review the costed scenarios. Discuss: – Assumptions for each scenario (do you want to modify some of them? In terms of benefit level, target population, progressivity of implementation, administrative costs)? – Overlapping scenarios. Reformulate some of them if necessary.

23. Formulate packages In order to design what a social protection floor for Myanmar would look like, the various scenarios need to be combined so as to: – Cover the major contingencies faced by people throughout their life cycle. – Progressively offer coverage to the entire target groups. – Offer a coordinated social protection response at household level.

24. Presenting the results of RAP Examples Cost (as a percentage of GDP) of low and high scenarios in Indonesia

25. Presenting the results of RAP Examples Cost (as a percentage of GDP) of low and high scenarios in Thailand

26. Group exercise Formulating packages You have 40 minutes Form three groups. Each group will work on a coherent social protection floor package for Myanmar on the basis of the costed scenarios: – One low package – One medium package – One high package Each group is responsible for one package. Please consider in your discussion: levels of benefit and population covered.