1. Celine Peyron Bista ILO 5 December 2013
Estimating the cost of a social protection floor for Mongolia: the ILO Rapid Assessment Protocol
Celine Peyron Bista
ILO
5 December 2013

2. Content Converting recommendations into scenarios
Costing the SPF : the ILO Rapid Assessment Protocol

3. Part 1
Converting broad recommendations into specific scenarios

4. From Step 1 to Step 2 There are 2 types of recommendations
Qualitative recommendations on administrative structures and processes, targeting and registration mechanisms, introduction of a social insurance scheme, tax reform, improvement in quality of services
We need to conduct further studies
We can estimate the cost
Recommendations to introduce new SPF benefits, increase benefit levels, extend target group coverage

5. From recommendations to scenarios
Selecting those recommendations that can be converted to scenarios:
What is the government’s priority?
Is data available for the cost estimation exercise?
Can assumptions be made where data is not available or are further studies needed?

6. Which recommendations to choose?
Recommendations for “elderly”:
Increase coverage of the voluntary SI scheme by
Subsidizing the contribution
Developing an adapted and effective awareness raising campaign on the benefits of social insurance
Adjusting the periodicity of contribution collection to the herders’ cash flows √

7. Which recommendations to choose?
Recommendations for “working age”:
Estimate the cost of introducing an integrated support programme that will combine cash transfers, vocational training and entrepreneurship counselling for herders
Develop skill development programmes targeting at young people
Create a sound database of working age people to facilitate targeting
Strengthen employment promotion services, especially services targeting at the young people √ √

8. Designing scenarios Scenarios for “elderly”: Recommendation Scenario
Recommendation 1: Increase coverage of the voluntary SI scheme among
Scenario 1.1: Introduce a subsidized contribution by the government, 25% of contribution paid by the target insured person (all herders, self-employed and informal economy workers, irrespectively of their level of income)
Scenario 1.2: Introduce a subsidized contribution by the government, 50% of the contribution paid by the target insured person (idem)

9. Low and high scenarios Scenarios for “elderly”: Low = 1
Low scenario: combination of scenarios to provide minimum benefits
Scenario
Scenario 1.1: Introduce a subsidized contribution by the government, 25% of contribution paid by the target insured person (all herders, self-employed and informal economy workers, irrespectively of their level of income)
Scenario 1.2: Introduce a subsidized contribution by the government, 50% of the contribution paid by the target insured person (idem)
High scenario: combination of scenarios to provide maximum benefits
High = 3

10. Designing scenarios Scenarios for “working age”: Recommendation
Recommendation 2: Provide combined package of skills development, cash benefits and entrepreneurship support for young people
Scenario 2.1: Provide vocational training to young workers (15-29 years old), for 20 days every 1 year 1
Scenario 2.2: Provide vocational training and entrepreneurship counselling to young herders (15-34 years old), for 30 days every 2 years, along with a subsistence allowance of US$3 per day
Scenario 2.2: Provide entrepreneurship counselling and loans (monthly interest rate at 0.2%) to young herders ( years old)

11. Low and high scenarios Low = 1 Scenarios for “working age”:
Scenario 2.1: Provide vocational training to young workers (15-29 years old), for 20 days every 1 year 1
Scenario 2.2: Provide entrepreneurship counselling and loans (monthly interest rate at 0.2%) to young herders (15-34 years old)
Scenario 2.3: Provide vocational training and entrepreneurship counselling to young herders (15-34 years old), for 30 days every 2 years, along with a subsistence allowance of US$3 per day
Low scenario: combination of scenarios to provide minimum benefits
High scenario: combination of scenarios to provide maximum benefits
High = 3

12. Part 1
Rapid Assessment Protocol

13. Some background information
ILO/FACTS Financial, Actuarial, and Statistical Branch - Actuarial valuations of individual social security scheme
ILO Social Budget Model (1990’s) - Comprehensive modeling of social expenditure (contributory and non-contributory schemes) - Includes modules for projecting population, labour force, economy, Government revenues/expenditure, and Social Protection schemes costs - Requires comprehensive set of data – not always available.
The Rapid Assessment Protocol (RAP) - Was developed to allow for “rapid” costing of SPF benefits scenarios - Compact and flexible format (1 Excel file)
ILO has a long history assisting member countries on actuarial valuations of social security schemes. The Financial, Actuarial, and Statistical branch at ILO HQ comprises several actuaries and has accumulated a lot of expertise in this field, and is in charge of developing the models used for costing.
Initially the models were focused on individual schemes, but there was a push during the 1990’s to develop a more comprehensive national models, this mainly to support social policy reform in transition countries where trade-offs between different schemes or programmes were often required. This led to the development of the Social Budget Model, which aims at a comprehensive modeling of social expenditure including all contributory and non-contributory schemes.
However, the model is quite tedious to complete and requires a lot of data that is often not available. In Cambodia for instance we were not able to complete the social budget due to missing data.
The Rapid Assessment protocol was developed after the launch of the Social Protection Floor Initiative. It is more compact but allows for a relatively quick costing of SPF policy scenarios.

14. The ILO Rapid Assessment Protocol (RAP)
RAP Model Structure
MACROECONOMIC MODEL
DEMOGRAPHIC FRAMEWORK
GENERAL GOVERNMENT OPERATIONS MODEL
LABOUR MARKET MODEL
BENEFIT COSTING EXERCISE
SUMMARY AND RESULTS

15. What data are needed? Data requirements
Population projection by age, sex
Labour force by age, sex (base year)
Labour force by economic sector
National average wage (base year)
National poverty line
Consumer price inflation rate (base year)
Real GDP by economic sector (base year)
GDP deflator by economic sector (base year)
Government revenues and expenditure
Other (depending on scenarios):
Poverty headcount rates
Age-specific fertility rates
Per capita cost of in-kind benefits, etc.

16. NATIONAL PROJECTIONS 2012-2022
DEMOGRAPHIC FRAMEWORK
NATIONAL PROJECTIONS
HISTORICAL DATA

17. NATIONAL PROJECTIONS 2012-2022
LABOUR MARKET MODEL
Male/Female participation rates * Population per age group  Economically active population
NATIONAL PROJECTIONS
HISTORICAL DATA

18. Poverty line, minimum wage
MACROECONOMIC MODEL
NATIONAL PROJECTIONS
HISTORICAL DATA
Poverty line, minimum wage
GDP at current price
Inflation
GDP: The value of a country's overall output of goods and services (typically during one fiscal year) at market prices, excluding net income from abroad.

19. GENERAL GOVERNMENT OPERATIONS MODEL
GENERAL GOVERNMENT OPERATIONS MODEL
WE NEED THE DATA!!!

20. By 2020, the first scenario would cost 0.07 % of GDP
BENEFIT COSTING SHEET
By 2020, the first scenario would cost 0.07 % of GDP

21. SUMMARY AND RESULTS
Low scenario
High
scenario

22. Take away message
The RAP gives a first idea of “how much it would cost” to complete the SPF
It tells us whether this is affordable or not
It helps the social dialogue to decide on key priorities
It can/should be completed by:
- a fiscal space analysis
- a poverty impact analysis,
- a employment impact analysis for some of the measures for working age population,
a comprehensive feasibility studies and,
and actuarial assessment.

23. Thank you!