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KARACHI: Governments in Asia are underfunding public services that can help reduce inequality, forcing households to pay nearly 38 per cent of health costs out of pocket, almost twice the average in countries belonging to the Organisation for Economic Co-operation and Development (OECD), according to a report by Oxfam.
The report, titled Rigged from Birth: How Inequality Steals Futures in Asia & Five Public Services, examines spending on healthcare, education, social protection, care services and digital access across the region.
Asian governments spend an average of 9.4 per cent of gross domestic product on social protection, less than half the global average of 19.3 per cent, while public education spending stands at 2.9 per cent of GDP, below the international benchmark of 4-6 per cent, the report found.
In the region’s most debt-distressed economies, governments spend between seven and 25 times more on debt servicing than on social protection.“Public services are among the most powerful tools governments have to close the gap between rich and poor,” said Amitabh Behar, executive director of Oxfam International. However, budgets in many Asian countries were being directed towards debt repayments instead of healthcare, education and care services, forcing families to bear more costs, he added.
The report found that Bangladesh spends less than 1.0 per cent of GDP on public healthcare, while households pay nearly 80 per cent of total health expenditure. In eight of the 22 countries studied, the share of healthcare costs paid by households increased between 2016 and 2023.
Education costs also weigh heavily on poorer families. In China, the poorest households spend 56.8 per cent of their income on their children’s education, compared with 10.6 per cent among the richest. In Nepal, fees at some secondary schools account for about 28 per cent of consumption among the poorest fifth of households, against 8.3 per cent for the richest fifth.
Social protection coverage ranges from 86 per cent of the population in East Asia to 30 per cent in South Asia. Around seven in 10 new mothers in South and Southeast Asia receive no maternity protection, the report said.
Women and girls perform 80 per cent of unpaid care work in Asia. In Laos, only nine per cent of children from the poorest households attend early childhood education, compared with 67 per cent of those from the richest households.
South Asia also has the world’s widest gender gap in mobile internet use, at 25 per cent, leaving about 330 million women without access to mobile internet as governments increasingly move public services online.
The report said increased public spending could help narrow income disparities. Across Asia-Pacific, every one-percentage-point increase in social protection spending reduces income inequality by 0.2 per cent, as measured by the Gini coefficient. It cited Vietnam, Thailand and India as examples of how public services can reduce inequality.
In Vietnam, health and education account for more than 90 per cent of the reduction in inequality achieved through taxation and public spending, lowering the Gini coefficient by just over three points. Education alone accounts for about two-thirds of the reduction.
Thailand’s Universal Coverage Scheme has virtually eliminated income-related gaps in infant mortality between provinces, the report said. Following the reform, healthcare spending accounted for about 0.9 per cent of income among the poorest fifth of households, compared with 1.5 per cent among the richest fifth.
In India, Kerala’s decentralised, community-led public health model has helped the state achieve a life expectancy of 75.1 years and an infant mortality rate of five deaths per 1,000 live births, well ahead of national averages, according to the report.
Oxfam urged governments to adopt time-bound national plans to reduce inequality, expand free and universal public services, and allocate at least 15 per cent of their budgets to health and education.
It also called for the abolition of user fees for essential services, higher taxes on wealth, high incomes and corporate profits, and universal social protection. The organisation urged governments to recognise care as a public responsibility and treat digital connectivity as a public service, with basic free internet access and offline alternatives for essential services.
Governments should avoid cutting public services during periods of price shocks, inflation and job losses, Behar said, adding that progressive taxation and national inequality reduction plans were needed to ensure that economic growth benefited everyone.
