A testimony to the region’s economic growth, almost three quarters of countries in Asia and the Pacific now claim middle-income status. Nevertheless, despite significant economic development in the region, Middle-Income Countries (MICs) still face significant hurdles to eradicate poverty and reduce inequality. 

Beyond income poverty, limited access to education, healthcare, and basic services remains widespread. The Multidimensional Poverty Index (MPI) shows that nearly 500 million people in the region are multidimensionally poor, and inequality is deepening. Entrenched inequality continues to obstruct sustainable development, with disparities in income, wealth, and opportunities hindering social cohesion and economic mobility.

The vulnerabilities of MICs are exacerbated by the intersecting forces of climate change, demographic shifts, and uneven digitalization. Rural women, informal workers, older persons and persons with disabilities remain among the most excluded, often lacking access to adequate services and employment opportunities.

Solutions are being found and countries have made progress. Social protection is a critical instrument to build resilience of people, particularly as the region faces increasingly frequent and severe climate-related risks. For MICs countries, social protection is integral to stem the rising tide of inequality.

Social protection as a catalyst for just transitions

Robust, universal and inclusive social protection systems are essential for enabling just transition pathways. Countries such as Mongolia and the Philippines have expanded both contributory and non-contributory schemes, especially for children, older persons and informal workers. Mongolia’s Child Money Programme (CMP) successfully reduced child poverty from 43.5 per cent to 38.5 per cent in 2016, even before benefit levels increased significantly during the pandemic. ESCAP simulations suggest that raising the CMP five-fold could cut overall poverty by more than half. 

The Philippines’ expansion of social pensions, increased healthcare coverage under PhilHealth, and leadership in advocating for a new international legal instrument on the rights of older persons reflected a rights-based and inclusive approach to ageing with positive effects on the wellbeing of people in old-age.

Climate-responsive social protection

Climate vulnerability and social exclusion are interlinked. With over 85 per cent of the Asia-Pacific population facing multi-hazard climate risks, and with social protection coverage still below 50 per cent in many countries, the consequences of inaction are stark.

There is increasing recognition of the need to mainstream social protection into climate policy frameworks. Fiji’s integration of traditional resilience strategies into its National Adaptation Plan and the Climate Relocation of Communities Trust Fund is a strong example of community-led strategies against climate shocks.

Leveraging digitalization while bridging divides

Digital technology has the potential to revolutionize social protection by streamlining registration, administration and delivery mechanisms. Mongolia enabled citizens in remote rural areas to access social protection services and benefits online and digital infrastructure facilitated rapid and inclusive outreach, which has proven particularly vital during crisis, such as the COVID-19 pandemic. 

Promoting inclusive development through integrated approaches

Integration of employment and social policies has the potential to enhance impact and help foster developmental outcomes. Indonesia’s Kartu Prakerja program is a flagship initiative for promoting inclusive economic development, particularly among young people and those affected by job disruptions. This initiative combines cash transfers with online upskilling for unemployed youth and informal workers, reaching over 16 million beneficiaries and promoting economic empowerment. The program also stands out for its use of digital platforms to ensure broad and equitable access. 

Financing the future of inclusion

One of the biggest barriers to universal social protection in MICs is financing. ESCAP recent Social Outlook 2024 report shows that the cost of inaction—up to 8.7 per cent of GDP in the pessimistic scenarios—far outweighs the average 3.3–4.3 per cent of GDP needed to fund universal schemes. The Manila conference emphasized innovative funding pathways, including reallocation of subsidies, progressive taxation, and climate finance.

For example, the Philippines increased healthcare funding through tobacco and alcohol tax reforms, while Indonesia redirected fuel subsidies to social sectors. ESCAP and partners urged countries to align social protection spending with broader fiscal and climate strategies to maximize co-benefits.

A strategic agenda for MICs

The message from the recent 2025 High-Level Conference on Middle-Income Countries in Manila was clear: social protection is not a cost; it is a critical investment in long-term resilience and inclusive growth for MICs. The Makati Declaration adopted at the conference heralded the commitment of MICs to accelerate inclusive and resilient development in the face of growing inequalities, ageing population, climate risks and digital transformations. These outcomes will inform the development of the Strategic Plan of Action for MICs. Social protection will be a central pillar of this plan, alongside financing for development, productive capacity development, climate resilience and inclusive digital transformation.

Through its Action Plan to Strengthen Regional Cooperation on Social Protection, ESCAP facilitates South-South exchanges, policy simulations and the development of monitoring indicators beyond GDP. ESCAP stands ready to support MICs in designing inclusive, life cycle and multi-pillar social protection systems that are grounded in human rights and responsive to evolving risks.