AS Cambodia’s major growth industries face a prolonged slowdown sparked by the global financial crisis, the government must develop a better social safety net to lessen the effects of increased joblessness and poverty on human development, according to a new UN report.
Titled “Global economic downturn: opportunity or crisis?”, the report examines the impact of the financial crisis on Cambodia and recommends mitigating policies – including the creation of a system that ensures a basic standard of living, improves income and food security, and provides vocational training.
Speaking at the launch of the report on Monday, Chan Sophal, president of the Cambodian Economic Association and the report’s research team leader, said: “Right now, we have many activities to assist the poor, but these are scattered over hundreds of NGOs and programmes from donor governments. They are not developing as an integrated social protection system.”
Douglas Broderick, UN resident coordinator, said Cambodia’s social spending was low for a developing country. “On average, safety net expenditure in developing countries is in the range of 1 to 2 percent of GDP, but Cambodia’s estimated expenditure is currently lower than 1 percent,” he said.
Thun Sophorn, national coordinator at the International Labour Organisation, said part of the difficulty in extending social protection to more Cambodians was the sheer size of the informal sector. “Out of an overall working population of 6 million, 85 percent are in the informal economy and usually fall outside of legal protection,” he said. “These people are self-employed, and it is hard to provide them with social services.”
Thun Sophorn described a number of viable social protection plans with which the ILO had been recently involved, including a community health-
insurance scheme developed with GRED, a French NGO, that gave villagers access to provincial hospitals for only US$2 or $3 a year.
He estimated, however, that including relatively well-protected civil servants, private-insurance buyers and participants in special programmes for the poor, the total number of Cambodians with some level of social protection was about 10 percent of the population.
The cost of inaction
According to the UN report, in the absence of this support, “the coping strategies being adopted by families are cause for concern. The squeezing out of health and education expenditures can have long-lasting consequences on child growth and human potential”.
The report says that “the most common strategies tend to be food related”, including eating less and lower quality food. Other harmful consequences detailed in the report were “selling productive assets, pulling children out of school, taking on debt and being more vulnerable to trafficking”.
Reluctance to spend money on adequate medical care is itself a major health risk for the poor and socially unprotected. The evolution of drug-resistant malaria on the Thai-Cambodia border is believed to have been caused in part by the prevalence of cheap counterfeit and substandard treatments.
“As far as the cost of social safety nets, we’re not talking about a lot of money here,” Broderick said, adding that some protections “are based on policy, with no cost demand”.
Of the 12 active social protection projects inventoried in the report – including scholarships, school meal programmes, social security and job training – each reaches tens of thousands of beneficiaries, and nine of them cost less than $10 million per year.
By comparison, the international community pledged more than $950 million in official development assistance to Cambodia for 2009.
At a forum in June, the government agreed to incorporate social protection into the National Strategic Development Plan update for 2009-13. The strategy is due to be completed by the end of this year.