Gov­ern­ment pen­sions dis­tort so­cial spend­ing

Mizzima Business Weekly - - NEWS - (Jaiden Coo­nan)

The World Bank’s Oc­to­ber 2015 Myan­mar Eco­nomic Mon­i­tor is out and boasts the growth of so­cial spend­ing over defence, but be­tween the lines the pos­i­tive news is some­what mis­con­strued.

In a func­tional breakdown for % of GDP spend­ing, so­cial ser­vices reach an es­ti­mated 3.9% of GDP in the 15/16-bud­get es­ti­mate while defence dips to 3.77% of spend­ing.

But the so­cial ser­vices breakdown de­picts a dif­fer­ent re­al­ity.

Health at 1.03% of spend­ing is drop­ping as well as ed­u­ca­tion, 1.91% of spend­ing. The bump for so­cial spend­ing is thanks to the .27% in­crease to pen­sions and in Myan­mar those who re­ceive pen­sions are ex-civil ser­vants and ex-state en­ter­prise work­ers.

Myan­mar eco­nom­ics spe­cial­ist Sean Tur­nell told (Mizzima) News that the pen­sions are in­creas­ing with the rise in state-sec­tor em­ployee salaries.

He later posted on so­cial me­dia, “Cu­ri­ously, the World Bank dis­guises the above by lump­ing in with health and ed­u­ca­tion spend­ing the out­lays for gov­ern­ment em­ployee pen­sions – all into a cat­e­gory it calls ‘so­cial spend­ing’.”

Adding, “Ag­gre­gated this way they re­port so­cial spend­ing as ex­ceed­ing mil­i­tary spend­ing for the first time. This new met­ric is with­out util­ity in my view, and only serves to blind us to the re­al­i­ties in Burma.”

Ac­cord­ing to a July 2015 re­port by the World Bank, “The cur­rent pen­sion scheme is a non-con­trib­u­tory and un­funded de­fined ben­e­fit (DB) plan based on a for­mula that pro­vides a pen­sion worth 50 per­cent of the fi­nal salary for a worker who spends 35 years in the civil ser­vice.”

The gen­eral pub­lic must rely on cul­tural tra­di­tions in their older ages as there is es­sen­tially no money ded­i­cated for pen­sions, in the WB re­port it noted that so­cial wel­fare spend­ing is at 0.01% drop­ping by .01%.

The num­ber of pen­sions is set to grow ac­cord­ing to the same July 2015 WB re­port the pen­sion scheme cov­ers 3%, “In 2014/15, there were 668,538 civil, po­lit­i­cal, and defence pen­sion­ers sup­ported by the state bud­get and 174,022 pen­sion­ers sup­ported by SEEs (State Eco­nomic En­ter­prises).”

As of 2012, agri­cul­ture still em­ployed over half of Myan­mar’s work­force, when ex­clud­ing agri­cul­ture, in­for­mal em­ploy­ment ac­counted for 60% of work in Myan­mar, ac­cord­ing to the In­ter­na­tional Labour Or­gan­i­sa­tion.

Myan­mar’s GDP growth will drop down to 6.5% from an es­ti­mated 8.5% and in­fla­tion is set to in­crease as it is cur­rently at 11% as gov­ern­ment laws to se­cure in­vestor con­fi­dence are set to pass in the post-elec­tion pe­riod.

The drop in es­ti­mated GDP is thanks to the nat­u­ral dis­as­ters that have wreaked havoc across the coun­try mostly af­fect­ing poorer ar­eas that rely on agri­cul­ture, dis­plac­ing and de­stroy­ing farm­lands as NGO’s and the gov­ern­ment scram­ble to lock in a long-term re­cov­ery plan.

The re­port de­picts a some­what sta­ble short-term view for the coun­try’s econ­omy, amongst a slump­ing China and a surg­ing US dol­lar.

East Asia is also set to grow by 4.6% in 2015, throw­ing off ideas that China will dis­rupt trad­ing and other SE Asian de­vel­op­ing economies.

“Coun­tries within the re­gion would be China’s last en­trench­ment as it with­draws, so it is un­likely that coun­tries like Cam­bo­dia and Myan­mar will suf­fer,” said The World Bank Chief Econ­o­mist for East Asia and Pa­cific Re­gion, Sud­hir Shetty, via video stream from Sin­ga­pore. “De­vel­op­ing Asia’s growth is ex­pected to slow be­cause of China’s eco­nomic re­bal­anc­ing and the pace of the ex­pected nor­mal­i­sa­tion of US pol­icy in­ter­est rates.”

While China is slow­ing it will not slow the wave of Chi­nese tourists that ven­ture to South East Asia, roughly 1.5 mil­lion (ex­clud­ing Thai­land) in the first three months of 2015, it is a drop though from 1.9 mil­lion a year ear­lier, ac­cord­ing to the Cen­tre of Avi­a­tion.

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