Together We Stand: Onwards to Inclusive Social Protection
The Covid-19 pandemic and the recent floods has highlighted longstanding issues in Malaysia’s social protection system. After two years into the pandemic, the current system remains unable to provide adequate security to a significant segment of the population. This is illustrated by relief measures favouring formal sector workers compared to their informal counterpart despite the disproportionate impact of the pandemic on vulnerable groups and marginalised communities.
As an act of social solidarity, many Malaysians, individuals and civil societies alike, stepped up to deliver aid—including cash and voucher assistance—to those in need. The crisis highlights the altruistic and helpful nature of Malaysian society and underscores the fact that many of us care for society’s wellbeing, regardless of religion, race or social class.
While such efforts should be recognised and appreciated, they should not be seen as indicative of an ideal model of a sustainable welfare state (or social protection system). Instead, it is an indicator of a system in need of reforms as establishing foundational support ensures no one would fall through the cracks rather than having to rely on the act of voluntary kindness alone.
Thus, now is an opportune time to promote a more inclusive system that guarantees everyone’s protection in the event of a crisis, and against other risks we may face throughout our lifetimes.
This article discusses the need to revamp and strengthen Malaysia’s social protection system to ensure it is inclusive for all (see Box 1 for the definition of social protection). In the march towards inclusive social protection, we propose that the federal government installs and maintains a “social protection floor” that guarantees everyone has access to at least a basic level of support during childhood, old age, sickness and unemployment. Once this “floor” is in place, other entities such as authorities at the state and local levels, as well as the third sector can leverage on this system to supplement the support over and above the basic level. The strengths of working on the ground also give opportunities for these groups to help ensure those excluded from the mainstream system are included and integrated.
Box 1: What is social protection?
Social protection can generally be understood as a set of public policy measures that intend to achieve three key objectives:
(1) ensuring basic income security for all;
(2) ensuring universal access to basic needs; and
(3) enhancing people’s capability to be productive and resilient to vulnerabilities.
Social protection can be grouped further into social security and social services. Social security emphasises on income security through the delivery of social assistance (i.e. distribution of transfers by the state often funded by public resources) or social insurance (i.e. contributory forms of social provisioning). Social services are the provision of essential services and basic amenities such as health and education.
Three elements of social protection
There are three main elements of social protection interventions, namely protective, preventive and promotive (3Ps). As society progresses, social protection evolves beyond serving “protective” functions of poverty relief and provision of basic needs, and advance towards “preventive” and “promotive” measures to mitigate risks and build resilience.
Protective
Protective measures are intended to provide relief for individuals who have fallen below what is considered a socially-acceptable minimum standard of living. Reliefs are often provided through welfare assistance in the form of income and consumption transfers as well as free access to basic amenities and social services. Examples: BR1M/BSH/BPR unconditional cash transfers by MOF, welfare benefits by JKM.
Promotive
Preventive
Preventive measures represent the forward-looking approach that serves to avert the risk of falling below the floor due to contingencies and livelihood shocks. Preventive measures, often provided in the form of insurance, is grounded by the solidarity value in which society as a whole pool resources in coping with contingencies. Example: the disability, survivorship and unemployment insurance provided by SOCSO.
Promotive measures focus on investment for an individual’s human development. The measures are designed to enhance productivity and build resilience of the population to safeguard against potential vulnerabilities. Examples: skills development programmes and early childhood education.
We are in the same storm, not in the same boat
There is a phrase going around that “we are all in the same boat” during the pandemic, but in reality, we are in the same storm, not in the same boat. Some people are equipped with steady lifeboats, some barely surviving with lifebuoys, while the rest have to rely on their swimming abilities to weather the storm.
To curb the spread of the virus, the government imposed the Movement Control Order (MCO) which limited economic activities, allowing only key essential services to operate. Due to the persisting resurgence in infections, the country had reinstated different MCOs at various phases that was meant to curb the spread of the disease, but which also had unintended consequences on the economy and the rakyat.
It is evident that the pandemic has impacted people differently, and those in the vulnerable group such as the self-employed and informal workers face the brunt of the storm. Those working in the informal sector are often characterised as having low or irregular incomes, long working hours, experiencing unsafe and unhealthy working conditions, among others.
While the government has attempted to lessen the pressure on households and firms by introducing multiple relief assistance and stimulus packages, the existing structure inhibits aid to be effectively channeled to those in need. KRI’s latest report, Building Resilience: Towards Inclusive Social Protection in Malaysia showed how targeted, means-tested social assistance programmes and social insurance schemes limited to those in standard employment have resulted in the issue of the “missing middle”.
This “missing middle” is a phenomenon where a segment of the population is left out of the existing social protection schemes because their income (or other eligibility criteria) does not qualify them to get social assistance, but at the same time they are not earning high enough to pay income and benefit from tax-relief initiatives. Those that work in the informal sector may also be left out as they may not be contributing to the social insurance schemes themselves and do not have any employers to contribute on their behalf. Many social assistance programmes in Malaysia adopt a targeting approach, which seeks to aid those with low income (by identifying them using the poverty or B40 threshold) or other groups deemed vulnerable (such as agricultural workers and the indigenous population). Although the argument for this approach is to prioritise those most in need given limited fiscal space, such an approach can be costly to administer, exacerbates programme fragmentation, is limited in terms of coverage, and usually results in exclusion errors, where those that are eligible for the benefit are excluded from the programme. Another criticism of targeting is that the threshold set can be subjective, arbitrary and does not fully reflect the households’ predicament.
The current social protection system also favours formal sector workers and individuals with higher and consistent incomes. For instance, the existing social insurance schemes which require regular contributions from the working population leave out many informal workers and those outside the labour force, such as unpaid homemakers. This means that in the event of unforeseen circumstances—be it major events like a pandemic or natural disasters, or individual risks such as unemployment and injury—some people are less equipped to handle those risks.
Malaysians Stepping Up to the Plate
The unpredictable and inadequate assistance by the government during the lockdown period has led to many individuals, communities, and non-governmental organizations stepping up to provide aid to those negatively impacted by the pandemic. Some of these initiatives come from longestablished organisations that are familiar with humanitarian and charity efforts such as Mercy Malaysia, but many have come out from smaller, local communities. Malaysia has also seen the #benderaputih (white flag) movement gaining prominence, where those in need are encouraged to hang a white flag or cloth in front of their homes so that they can be identified and rendered immediate assistance.
However, these efforts are not without setbacks. While the community groups can be more agile and faster in delivering aid due to less bureaucracy, they may be constrained by a lack of information and resources to do so effectively. For instance, there may be overlaps in aid delivery due to a lack of transparency or data sharing on the assistance programmes. In the event of unprecedented disasters such as the recent floods, those delivering aid also struggle with the delicate balance between assessing the needs of those affected versus the needs of affected communities to move quickly to avoid worse outcomes. The diversity in aid design can also lead to disproportionate effects on the impacted communities, with some aid presented in the form of a healthy and well-balanced food package, while others provided more basic (and sometimes less nutritious) options such as instant noodles. Another concern that arises from the mushrooming community efforts is that these groups can unintentionally contribute to the spread of the virus due to increased movement and sometimes lack of adequate protective procedures (e.g. not wearing proper PPEs when delivering aid).
Towards an Inclusive Social Protection System
The pandemic has highlighted the altruistic and helpful nature of Malaysians. It is an illustration of empathy as well as the solidarity within our society, going beyond religion, race, and social classes. Now, we must institutionalise the same spirit in revamping our social protection system, where we must design it to be more inclusive, equitable and sustainable. The country can no longer afford to keep doing reactionary and band-aid policies, but be more forward-thinking and deliberate in our policymaking.
Start with creating a Social Protection Floor
To create an inclusive social protection system, the government must start with creating a social protection floor that ‘prevents’ and ‘protects’ everyone. How this floor looks like may differ between countries, but the idea is that all individuals should have access to basic income security as they face major risks throughout their lifecycle—from childhood to working adulthood and then retirement. KRI’s social protection report has discussed in detail what the floor can look like for Malaysia, and proposes that the country invest in universal basic income for children, expand social security to all working-age individuals, and establish social insurance pension for old age.
The government must be in charge of providing the floor, given that they have the authority, resources, and scale to do a more broad-based execution. It is difficult for other entities, such as the third sector, to replace this function, given their more narrow focus and fewer resources compared to the government. The third sector also does not have the same financial stability and sustainability as the government, as they rely on grants from the government and the private sector, as well as public donations. For instance, a survey by Yayasan Hasanah on the impact of Covid-19 on civil society organisations (CSOs) last year found four out of five respondent organisations (83%) were currently facing or are expected to face financial difficulty.
By having a social protection floor system in place, other agencies such as state governments, corporations, philanthropists, and civil society organisations can play a more strategic role in providing deeper, more specialised, and promotive forms of assistance. Given their closer ties to the communities, they can also help to identify people that are overlooked and excluded in the current system and to participate in the new social protection system.
Aside from the major risks highlighted, other risks may be faced by key vulnerable groups who may require greater assistance. This assistance can be in the form of deeper income aid, or provision of other social services and basic amenities such as shelter, health, education, water, and sanitation. By not having to focus on providing minimum income security, other agencies and entities can better utilise their resources and focus on these critical areas.
Set up a National Social Protection Registry
To do this, Malaysia must set up a National Social Protection Registry that covers all individuals and gives them access to different forms of social security benefits corresponding to the risks faced throughout their life course. Having a single integrated system can be very useful in delivering assistance in the event of shocks. Currently, there are multiple sets of administrative social protection data that exist across many ministries and institutions in Malaysia. The existence of multiple data registries that are sparsely located and stored within various agencies impedes social policy planning due to the difficulty of utilising the data. As seen today, this has resulted in duplications and the marginalisation of some underprivileged subgroups not currently recognised by the system.
Once the National Registry is in place, it can be leveraged and adapted to strengthen social protection efforts and even go beyond income security.
Concluding Remarks
The government’s recently announced aspiration of Keluarga Malaysia (Malaysia Family) focuses on the collaboration among Malaysians to work in tandem regardless of religion and race to recover the country from the negative impacts of Covid-19 and build back better. To realise this, the current social protection system needs to be revamped to ensure it is truly inclusive for all. While the journey is long, we can start by establishing the social protection floor and ensuring everyone is covered via a national social protection registry.
An inclusive social protection system can enhance social solidarity, promotes trust, and strengthen the social contract. This is because the investment in a formal social protection arrangement requires participation from all parties—individuals, employers and the private sector, and the government.
Throughout this pandemic, leaders echo the statement no one is safe until everyone is safe when reiterating the need for a united global response in handling the health crisis. This sentiment is also applicable when discussing social protection. As long as social protection coverage is unequal and inadequate, it leaves room for exclusion, marginalisation, hate, conflict, and violence, creating threats to national recovery and prosperity.
