1. Module 11: Costing policy options using the Rapid Assessment Protocol ILO, 2013

2. Key questions What are the different cost projection tools used by the ILO? 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?

3. ILO’s costing tools ILO/FACTS: ILO’s Financial, Actuarial and Statistical branch Actuarial valuations of social security schemes In-house actuarial expertise and model development ILO Social Budget Model (1990’s) Comprehensive modelling of social expenditure Several modules for projecting data Tedious to use and requires experienced user Rapid Assessment Protocol (RAP) Built on the Social Budget Model Compact (1 Excel file), flexible and easy-to-use Allows for ‘rapid’ costing of SPF benefits

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. 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

7. POP AR EAP ECO GGO (SQ) BS 1 BS 2BS 3 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

8. Coresia RAP: ‘Population’

9. Coresia RAP: ‘Economically Active Population’

10. Coresia RAP: ‘Economic’

11. Coresia RAP: ‘General Government Operations’

12. Using the RAP

14. Affordability of the proposed scenarios and their impact on the fiscal space can be assessed The additional expenditures may be financed by workers’ and employers’ contributions, government budget 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 Using the RAP

15. Scenario 1: Non-contributory pension for disabled in Indonesia 2012 Benefit cost = (30 x 12) x 200,000 x 20% = US$14,400,000 Admin cost = 15% x 14,400,000 = US$2,160,000 Total cost = US$16,560,000 Benefits Target group Coverage Admin cost US$30/month 200,000 20% 15% 2013 US$31.5/month 202,400 30% 15% Inflation: 5% Pop growth: 1.2% Take-up rate: 10% Admin cost same Benefit cost = (31.5x12) x 202,400 x 30% = US$22,952,160 Admin cost = 15% x 22,952,160 = US$3,442,824 Total cost = US$26,394,984 Using the RAP

16. Scenario 1: Non-contributory pension for disabled in Indonesia Total cost as % of GDP = US$16,560,000/641 billion = 0.003% Total cost as % of govt. exp. = US$16,560,000/113 billion = 0.015% Total cost GDP Government expenditure US$16,560,000 US$641 billion US$113 billion US$26,394,984 US$721 billion US$138 billion RAP calculation Projection Total cost as % of GDP = US$26,394,984/721 billion = 0.004% Total cost as % of govt. exp. = US$26,394,984/138 billion = 0.019% Using the RAP 2013 2012

17. Presenting the results of RAP Cost (as a percentage of GDP) of low and high scenarios in Cambodia

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

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

20. Presenting the results of RAP Cost (as a percentage of GDP) of low and high scenarios in Viet Nam

21. national statistical offices census and surveys social security institutions and line ministries  ministry of planning: GDP and population projections  ministry of interior: registration for social benefits  ministry of commerce: inflation  ministry of finance: budget, economic indicators central banks research institutes, universities UN/ILO population models, IMF’s World Economic Outlook (alternative data sources) Sources of data

22. 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 Results are simplistic and indicative Further detailed and actuarial studies are needed before designing a scheme Advantages and limitations of RAP