AI plays a key role in improving social protection in Malaysia
AI has immense potential to drive economic growth and innovation.
As Malaysia makes rapid strides towards an AI-driven future, it has recognised a crucial and often overlooked element — a social protection system that is not only robust but also deeply integrated with, and adaptive to, the Age of AI.
A strong social protection system provides people with the ability to take care of themselves and their families and weather shocks, be they disasters or economic crises.
They also level the playing field, even if only a little, ensuring that progress benefits more people by increasing pathways to opportunity and prosperity.
A good example is Malaysia. The existing social protection framework has served millions of people for decades, through social services, social insurance and labour market interventions.
Yet, this system now faces unprecedented pressures from demographic shifts, the changing nature of work and structural limitations.
What are these constraints? Malaysia's ageing population is growing steadily, putting greater demands on healthcare and pension systems.
Then there is the rise of the informal sector, encompassing nearly 20 per cent of the workforce (excluding agriculture) in 2023. This means 2.84 million individuals have very limited coverage.
An AI-enhanced social protection system ensures that the benefits of the technological revolution reach those who would otherwise be left behind.
In several countries, UNDP is working with governments to leverage multiple sources of data — including social, economic and environmental — to improve models for social protection.
This precision minimises misallocations and reduces system redundancies and inefficiencies. It also reduces efforts to misuse or corrupt the system.
AI can enhance service delivery. Predictive analytics help governments anticipate demographic shifts and adjust policy settings. AI-driven microfinance platforms and blockchain-based systems extend the reach of social security to the informal economy.
AI-powered chatbots and virtual assistants improve accessibility by providing instant guidance on benefits and eligibility. Automated eligibility checks and fraud detection systems reduce administrative costs, freeing up resources for those who need them most.
Crucially, AI improves the effectiveness of social protection, particularly in times of crisis.
Targeted and rapid assistance, facilitated by AI-driven data analysis, mitigates the impact of climate disasters and economic shocks.
AI also facilitates the integration of different forms of social protection, such as combining cash transfers with insurance, potentially extending insurance access to vulnerable populations traditionally excluded from the market.
The power of digitalisation, amplified by AI, is key to bridging the gap between service providers and beneficiaries.
While AI promises significant economic gains, social protection programmes such as enhanced unemployment insurance and retraining initiatives will be vital in softening these transitions and facilitating the reskilling and upskilling of the workforce.
This aligns with UNDP's core mission of ensuring that AI serves human development, including during disruption.
However, at the end of the day, this is technology. The impact of AI solutions is intrinsically linked to the quality of governance, including in the management of data, resources and staying the course on positive policy choices.
Building the future skills and institutional capacities to harness AI and technology as a public good will underpin Malaysia's journey to becoming a successful regional and global AI hub.
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