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[from the author]

  • Risk-sharing networks among households in rural Ethiopia

    Posted:16 Oct 2003 11:00:00 GMT
    This paper tests the role of informal risk-sharing networks by setting up a limited commitment model and using panel data on informal credit transactions from Ethiopia.


    • enforcement problems limit the direct role of credit transactions in risk sharing arrangements between rural households, whether the villages are ethnically homogenous or not
    • households with more land have better access to the informal credit markets and access is significantly improved through their participation in small group networks
    • informal credit market and the networks under consideration serve little purpose to the land poor households

    The paper concludes that full risk-sharing does not appear to materialise at the village level. It recommends that policy action is needed to improve access to credit and insurance options for the poor on the basis of equity and efficiency grounds. Further research is also needed to have a better understanding of rural households in Ethiopia and the role of small networks in consumption smoothing.

  • Safety nets in transition economies: a primer

    Posted:05 Oct 2003 11:00:00 GMT
    This paper focuses on the experience of the transition countries of Central and Eastern Europe and Central Asia in providing adequate safety nets for the poor during the last 10 years.

    The paper discusses the problem of poverty and vulnerability: who were the poor? How did the answer to this question change over the decade? It looks at the typical types of interventions offered by governments, and how this package changed over the period. It surveys the evidence on effectiveness of these programs in reaching the poor, in reducing their income poverty, or reducing other aspects of poverty (e.g. social exclusion).


    • as in all countries, classic targeted safety net policies played a small role in reducing poverty. In part, this was because of the uniqueness of the period, conventional good practice was not always applicable
    • several countries in the region recently have improved the coverage and targeting of their programs, offering good models for other countries
    • if all middle income countries in the region adopted these models, including insuring adequate financing, effective poverty reduction at low cost is possible. Financing for this benefit could come from reducing expenditures on untargeted categorical benefits and energy subsidies
    • low income countries may find that implementing a full means-tested cash benefit system is too costly and administratively complex, although it should be noted that Armenia and Albania have both implemented programs successfully. These countries may wish to try less complex solutions such as distributing food rations through schools or school feeding programs. Fee waivers or subsidies to improve access to social services for the poor could also be helpful
  • Targeted transfers in poor countries: revisiting the trade-offs and policy options

    Posted:05 Oct 2003 11:00:00 GMT
    This paper revisits the role of targeted transfers in poor countries in light of theories on the social costs of uninsured risks and unmitigated inequalities. It offers a perspective on social protection policies in poor countries, suggesting that there is scope for using these policies to compensate for the market failures that help perpetuate poverty, particularly in high-inequality settings. While acknowledging caveats to policy implementation, the paper suggests that it is time for a pragmatic and open-minded approach to this class of interventions, recognising the potentially important role they can play, but using careful design and evaluation to assure that the potential is realised.

    The paper concludes with a confident rejection of the generally negative stereotype of this class of interventions that has been around in mainstream development policy discussions for some time. It suggests that the trade-off against efficiency has probably been exaggerated, and the record on performance is better than some (seemingly widely held) perceptions would suggest.

  • Assisting the poor with cash: design and implementation of social transfer programs

    Posted:05 Oct 2003 11:00:00 GMT
    This paper explores the role of cash transfers in a social safety net. It explores key factors that affect the choice between a cash-based program and an in-kind transfer program, and presents a number of design considerations that influence the efficiency and effectiveness of cash transfers as a social safety net. The paper discusses strategies for building institutional capacity to manage cash transfer programs effectively.

    Why are cash transfers not used more in developing countries?:

    • there is no way to self-target or create an inferior form of cash, except perhaps with considerable stigma, so cash-based programs are always information-intensive
    • lack of administrative capacity
    • insurance-type cash transfer programs will have a limited impact in low-income countries
    • in social insurance schemes, it can be difficult to collect premiums and tailor products to meet the needs of those households who derive their income from a host of informal sector activities
    • politicians may prefer to be associated with in-kind assistance programs

    Economic advantage to cash transfers:

    • they do not directly distort prices, which has important economic efficiency implications
    • they can help to stabilise the macroeconomy
    • once the administrative infrastructure is in place, the cost of operating cash transfer programs is often far less than the cost of providing assistance in kind
    • there is less of a stigma attached to the receipt and use of cash than to the use of in-kind benefits by program beneficiaries

    Design considerations influencing the efficiency of cash transfers:

    • involving organisations with knowledge of local communities to extend the reach of social insurance products
    • low-information cost approaches, such as categorical, geographic, and community-based screening, to select program beneficiaries
    • cash transfers that are made conditional on meeting basic needs, such as utility offsets or education grants
    • family allowance and social pension programs tend to be less complex than other forms of social assistance
    • a full-replacement income may not be needed when the poverty gap is a small fraction of the minimum income level
    • private transfers and informal sector employment may be the first line of defence against economic shocks for most households
  • Child poverty, child socio-economic rights and Budget 2003 - The ‘right thing’ or a small step in the ‘right direction’?

    Posted:29 Sep 2003 11:00:00 GMT
    This budget brief assesses the extent to which the 2003 South African Budget addresses widespread child poverty and the delivery of children's socio-economic rights. It looks at both indirect channels (tax and spend proposals that are conducive to economic growth and employment creation for parents) and direct channels (funds to programmes providing basic and social services that give effect to child socio-economic rights). The brief concludes that while Budget 2003 may have moved a small step in the 'right' direction, the national treasury, along with other government departments, could have done and should have done more for poor children.

    The author argues that the South African Government must be commended for attending to both indirect and direct channels in the 2003 Budget. However, the prospects are limited for economic growth over the Budget period to translate into many employment opportunities for the poor. Taken together with the inadequate coverage of the social assistance system and the extent and depth of the poverty crisis, Budget 2003 will have little impact on child poverty.

    On the ‘indirect measure’ front, the treasury cannot have been expected to do much more in Budget 2003 for the poor. The key structural problem of raising the unskilled labour capacity of economic growth has largely to be addressed by other government departments.

    On the ‘direct measure’ front, the treasury could perhaps have offered even more to poor children. More funds should have been allocated to the Child Support Grant (CSG) programme, through the new conditional grant introduced in the Budget, to finance a more rapid rollout of the CSG to children age 7-14. According to treasury, this was not a feasible option. Administrative constraints mean that it will presently only be possible to add two new age cohorts of children onto the system (new 0-1 year olds and 7-8 year olds).

    More money could also have been allocated to provinces for the CSG programme to finance the implementation of a new means test for CSG grant eligibility. The existing means test discriminates against poor children whose care-givers do not live in households in the bottom 30% of South Africa’s income distribution and this has not been adjusted for inflation since 1998/99. Due to the administrative difficulties associated with trying to extend more income support to children through the CSG, treasury could have raised the value or the state old age pension by more than R60. This grant works as an effective mechanism for transferring money quickly to poor households.

    The authors also insist that for the Treasury measures to have more impact on child poverty and rights, there is a need to focus more robust attention on what government can do to improve service delivery capacity and alleviate structural unemployment. A particularly urgent task in this regard is to ensure that the required computer hardware and other infrastructure can swiftly be put in place so that the CSG and children’s entitlement to social assistance can be rolled out more rapidly.

  • Food aid and informal insurance

    Posted:28 Sep 2003 11:00:00 GMT
    This paper looks into the extent to which food aid helps to smooth consumption by reducing the impact of negative shocks, taking into account informal risk-sharing arrangements.

    The paper asks two questions:

    • what determines the allocation rule of food aid in Ethiopia? The paper demonstrates that by studying the allocation rule, it is possible to address the issue of whether food aid is indeed used as a form of insurance and so, is responsive to negative shocks
    • what is the impact on consumption of food aid transfers? The paper explicitly tackles the issue of how food aid might interact with informal sharing arrangements within the village

    The paper further analyses food aid distribution in Ethiopia and the village-level and within village allocation rule for food aid. It presents a theoretical framework to test the impact of a safety net on households faced with income risk. An empirical model is developed and used.

    The paper finds that despite relatively poor targeting of the food aid, the programs contribute to better consumption outcomes, largely via intra-village risk sharing.

  • Famine in Ethiopia: is food aid the answer?

    Posted:27 Sep 2003 11:00:00 GMT
    As the world geared up to provide fourteen million Ethiopians with the food aid needed to guarantee their survival, the question remains – why is there still such widespread hunger in Ethiopia? Have donors and the Ethiopian Government failed to address the root causes of the country’s perennial food insecurity?
  • There is more to a decent income in lengthening old age than individual savings: a discussion of income security for old age in Singapore and Malaysia

    Posted:19 Aug 2003 11:00:00 GMT
    This paper compares the approaches to income provision for old age taken by both Singapore and Malaysia.


    • individual savings alone do not represent the best option for income security into old age
    • increased access to savings prior to retirement, through dedicated accounts and specified schemes, lessens the ability of provident funds to meet their primary objective, namely securing a reliable and adequate source of income for members
    • current arrangements are inadequate in meeting the needs of an increasingly elderly population and thus leaves them vulnerable to the socially exclusive aspects of poverty in old age

    The paper concludes that both countries' schemes share common faults, which include low final balances, early access to savings linked to a relatively low retirement age, lack of guaranteed income into old age (despite the minimum sum schemes), mixed messages on individual savings, nor in the case of Malaysia continuing to develop the EPF along similar lines to that of the CPF, which as this paper clearly demonstrates, does not meet basic requirements of old age income equitably for all members.

    In terms of the future, the paper argues that Malaysia is in the somewhat enviable position of having time on its side. The rate at which the Malaysian population is ageing, allows for the implementation of social policy reforms, such as the introduction of a social insurance based pension, which would offer a minimum guaranteed income to those on low incomes, alongside the undoubted benefits which are available under the EPF, but would also include the sizeable proportion of the labour force who are not covered at present by any scheme. The current arrangements in Singapore and Malaysia, under the auspices of the CPF and EPF respectively, can both be described as a form of social security umbrella. However as we have seen, neither scheme is able to protect all sections of society, nor indeed all current members, from future inclement weather.

  • Non-contributory pension schemes: a new model for social security in the South?

    Posted:19 Aug 2003 11:00:00 GMT
    This paper considers existing non-contributory pension programmes, or more accurately cash transfers for the old, in Africa and Latin America. It evaluates their impact on poverty and vulnerability of the old, on aggregate poverty, and on household investment in physical and human capital. The paper argues that these programmes have a significant impact on poverty and social investment in developing countries.

    Overall, the discussion in the paper supports the conclusion that cash transfer programmes for the old do indeed have the potential to make a significant contribution to reducing poverty and vulnerability, as well as reducing the intergenerational transmission of poverty. Cash transfer programmes to the old also provide an important stimulus to economic activity, and can act as valuable insurance against risks to household consumption and investment. These programmes have the potential to make an important contribution to the development process. The experience of the countries reviewed confirms that these programmes are able to deliver in all three dimensions, and with the right design and financing features, they could constitute the embryo for more embracing social protection systems in the developing world.

  • The inequality of social capital: agency, association and the reproduction of chronic poverty.

    Posted:18 Aug 2003 11:00:00 GMT
    This paper draws on research in Tanzania to question ideas that building social capital through getting institutions right in development can overcome poverty . It uses cases studies of the poorest families in the study area to dispute the concept of social capital as an asset that can be readily created, used or substituted for other missing ‘capitals’ (human, natural, financial and physical).

    It details the clusters of interlocking disadvantage of the chronically poor which make it highly unlikely that they can draw on social capital to ameliorate their poverty, or that the creation of social capital at community level has any significant effect on their wellbeing. Factors highlighted include small family size and weak family networks, lack of assets (including labour power) which constrains their ability to engage in reciprocal collective activities, poor health, inability to articulate in public fora and the derogatory perceptions of other community members towards them. The paper illustrates how some social relationships, collective action and local institutions may reproduce the exclusion of the poorest. The paper concludes by suggesting that processes of institutional formation do not necessarily result in inclusive forms of social, that the poorest people are severely limited in their scope for exercising agency and that we should be cautious about claims that it is possible to get institutions wholly right for poverty alleviation and social inclusion. [author's abstract]

  • Risk and vulnerability in Ethiopia: learning from the past, responding to the present, preparing for the future

    Posted:13 Aug 2003 11:00:00 GMT
    This paper aims to learn from the household survival strategies in Ethiopia that have evolved to manage diverse disaster hazards with a view that such strategies can inform more effective disaster preparedness, relief, recovery and prevention, policies and interventions.

    This report describes the systems that are in place that are designed for the early detection of crisis, the nature of humanitarian responses these systems have induced, and the outlook for the coming year.

    Recommendations arising from the research include:

    • early warning/monitoring information systems need to operate independently of systems for identifying responses
    • investments in systems to assess non-food aid needs are needed in both government and non-governmental institutions
    • the current domination of the Food Availability Decline Model of crisis needs to be augmented by other important and context-specific models, including models of entitlement decline, livelihoods crisis, and health crisis
    • Nutrition recommendations focus on three broad areas:
      • Systems for prioritizing needs for disaster response
      • The need for a broader and more balanced range of strategies to protect nutrition and address all types of nutritional risk especially in priority one areas
      • Ensure the entire range of nutritional concerns in emergencies, are adequately addressed at all levels, including national policy, and within specific Task Forces and sectors
    • Overall, a stronger commitment by government to addressing emergency public health crisis is important so that in future disasters the health response to emergencies can match the robustness that currently only characterizes the food aid response processes
    • Build an effective health and nutrition early warning system
    • Develop a minimum level of public health outreach and prevention at the population level
    • Expand clinical capacity in the countryside to manage serious malnutrition and associated medical conditions
    • Enhance the managerial authority and competence of regional health officials
    • The saving of livelihoods needs to be recognized as being as important as saving human lives in emergencies. Livelihood intervention strategies need to be oriented towards supporting the range of household assets as well as to the diverse policies, institutions and processes that impact disaster affected populations

    The author also makes recommendations for marketing, the environment and livestock.

  • Climbing out of chronic poverty: Success in Bangladesh

    Posted:06 Aug 2003 11:00:00 GMT
    As they do not own small income-generating businesses, the chronically poor are excluded from most microfinance programmes. However, services that do target the chronically poor, such as food subsidies, do not offer them any long-term opportunities to improve their household incomes and welfare. Is there another way?
  • Participation: rhetoric or reality in Ethiopia?

    Posted:06 Aug 2003 11:00:00 GMT
    Are participatory partnerships a way to keep development effective and equitable? Or are they unrealistic and difficult to achieve? Is the ideal of equal rights for all at risk of becoming a mask for power relations?
  • Supporting the poor: sustainable safety nets for the new millennium

    Posted:06 Aug 2003 11:00:00 GMT
    Policymakers have moved away from offering universal benefits to developing ways of protecting the poor against income fluctuations and livelihood shocks. What have we learned about the design, targeting and impact of social protection programmes? Should resource transfers be in cash or in- kind? Can we be sure assistance is sustainable?
  • The impact of economic reforms in rural households in Ethiopia

    Posted:04 Aug 2003 11:00:00 GMT
    This study examines the poverty, and growth experience of six villages in rural Ethiopia, from 1989 to 1995.

    The time period was one of relative peace politically, which promoted considerable change in economic policies pertaining to the rural sector. As a result, local growth out-performed the average growth rate in gross domestic product. The focus of the study is the link between economic reforms, growth, and changes in poverty. The author poses the question: Can the observed reduction in poverty be explained by reform-induced higher returns to physical, and human capital, or simply by better weather?

    The study uses a profit function framework to explain growth using prices, and endowments of land, labour, human capital, and location characteristics, with controls for shocks (for example, ill health and drought).


    • on average, the poor has benefited more from the reforms than have the non-poor
    • the experience of the poor is mixed, with some out-performing all other households, and others persisting in poverty
    • although economic reforms do not deliver similar benefits to all the poor, there are high costs for withholding reforms

    The study also highlights the effects of shocks on households, and the need for social protection measures, in a poverty reduction strategy.

  • Supporting workers in the informal economy: a policy framework

    Posted:17 Jun 2003 11:00:00 GMT
    This paper argues that the informal economy is here to stay and requires appropriate regulations, laws and policies to correct biases in the existing regulatory, legal, and policy environment that favour formal enterprises and workers to the disadvantage of informal workers and enterprises. It argues that policy makers should redirect their efforts away from an (almost) exclusive focus on micro- level interventions to a wider structural or systemic perspective.

    This paper describes:

    • key aspects of the informal economy - its size and composition, its linkages with both poverty and growth,
    • its legal status, risks and opportunities associated with the informal economy
    • a debate over whether governments and other stakeholders should intervene in the support for and regulation of the informal economy.
    • a conceptual and normative framework for policy and discusses how four different functional areas of policy relate to the informal economy: macro economic policies, urban policies & regulations, labour policies and standards and social protection policies.

    It offers two case studies on inclusive policy- making processes relating to the informal sector

    • the National Labour Commission in India
    • the Informal Economy Policy Review in Durban, South Africa.

    It concludes with some principles and guidelines for facing the challenge of undertaking inclusive policy processes to develop appropriate policies for the informal economy in different contexts.

  • Children first in the poverty battle!

    Posted:01 May 2003 11:00:00 GMT
    This document argues that a more prominent role should be given to child poverty issues in the southern African PRSP process.

    The PRSP’s contribution to reducing child poverty depends on:

    • Location of children and child poverty within the demographic and poverty profiles that frame national PRSPs
    • Economic policy choices that prioritise sustainable pro-poor growth and development
    • Priority towards child-focused social service and support programmes that promote the right to development of all children;
    • Recognition of, and support for particularly vulnerable and discriminated groups of children, including girl children, poor children, HIV/ Aids orphans, working children, children in need of protection, children of ethnic minority groups, children with disabilities, and other groups of girls and boys whose rights are not ensured.
    • Prudent public expenditure management and appropriate reprioritisation of resources towards child focused social service and development interventions.

    The review points to a significant role for child poverty research and advocacy in the implementation, monitoring and review of the Southern African PRSP processes. Child advocacy organisations and child rights actors may play a valuable role in a variety of ways. These could include partnering with local child advocacy organisations to

    • Build local capacity on economic and development literacy to raise awareness and participation, particularly child participation, in PRSP processes
    • Undertake research and analysis on the implementation, monitoring and review of PRSP processes
    • Undertake research on the prioritisation of child policies and resource allocation to child-focused interventions in the PRSP processes. This may evolve into a Child-focused Shadow or Alternative PRSP – that is, a civil society version of a national PRSP prioritises policies, interventions and budget resources to reduce child poverty
    • Increase advocacy efforts, and their impact, regarding the importance of PRSP processes to reducing child poverty and enhancing Child Rights in the region.
  • Public expenditure for development results and poverty reduction

    Posted:18 Mar 2003 12:00:00 GMT
    Review and case studies of "Results-oriented (or ‘performance’ or ‘output’) budgeting": the planning of public expenditures for the purpose of achieving explicit and defined results. These policies have often been first implemented through sector-wide approaches (SWAps), particularly in health and education. Concerns have been raised that results-focused management of public expenditure gives rise to unnecessary bureaucracy, causes distortions in the implementation of policies, and ignores the subtleties and complexities of public service provision.

    These papers look at 7 low income countries with PRSPs to establish how far performance budgeting and management are used in practice, and to relate these findings to features of macroeconomic and budget management, accountability structures, and administrative structures and practices. The countries focused on are Bolivia, Burkina Faso, Cambodia, Ghana, Mali, Tanzania and Uganda. This experience is compared with that of the OECD countries, which generally adopted performance budgeting in the 80's and 90s

    The findings of the studies include:

    • significant elements of performance budgeting and management can take root and be at least locally effective in countries where there are significant shortcomings in sound public administration and public finance controls. However these problems can have demonstrably negative effect on the generalisation of good practice outside ‘islands of excellence’, and can lead to a cynical disregard of disciplines involved.
    • conditions that favour the implantation of a results culture and results-oriented practices include political leadership, and unified central direction of performance budgeting and management initiatives. The dispersion of responsibility between various central authorities leads to loss of direction and momentum and failures in lesson learning and in the application of performance assessment information to allocation decisions
    • a clear results framework is important in overcoming principal-agent problems in implementing political and administrative decentralisation in ways which are consistent with the pursuit of a nation-wide pro-poor agenda
    • there are usable performance information on key indicators in the case study countries. Performance information is available, and is often compiled. The weakest link in the performance management chain lies in the comparative evaluation of the information produced and its re-presentation for the benefit of decision makers. In general the process is one of measurement without management follow-up. The weakness of performance management is mostly a consequence of weak domestic pressure for results accountability – from service users, auditors, parliament and civil society, and even from ministers.

    Benefits in the planning and management of service delivery are already perceptible in the countries that have adopted performance budgeting and management most successfully. Benefits include:

    • greater policy focus and prioritisation in resource allocation, programme planning and management, because bids for resources and their allocations have to be justified in terms of national and sectoral strategies
    • better coherence between achievement aspirations and resources available, and greater realism in target setting, achieved, over time, through experience of difficulties and the obligation to render account of performance
    • stronger motivation on the part of line managers and service providers, thanks to consultation about target setting, clearer communication of objectives and targets to be met, and the obligation on service providers to report results
    • more effective diagnosis and treatment of cases of underperformance due to more systematic monitoring and evaluation of results

    The overall conclusion of the research programme is that low income countries are practicing performance budgeting and management, in some cases to useful, if unspectacular, effect. They have, with modest external support, been finding their own solutions to the problem of how to translate public expenditure into pro-poor development results. They face many challenges, and in some cases their experiments have not wholly succeeded. Nevertheless, in this highly empirical field of activity, they have been willing to learn from their own experiences and from those of others. Their initiatives will play a vital role in the successful implementation of their poverty reduction strategies. They accordingly deserve strong external interest and encouragement.

    Based on this, donors should:

    • acknowledge, encourage and support countries’ own initiatives, recognising that they will take time to bed down before yielding tangible performance improvements, and giving credit for process reforms as well as to improvements in indicators of poverty reduction
    • offer support in the form of expertise in performance management, especially in diagnosis and performance assessment
    • avoid initiatives of their own which engender competing systems and institutions with overlapping mandates, or which undermine the unity of purpose and direction of countries’ performance budgeting and management systems
    • encourage the demand for results accountability by parliament and civil society

    The reports are available as a main, synthesis report and 8 separate country studies [adapted from author]

  • Modernization of the Bulgarian retirement policy: analytical review of the recent changes and prospects

    Posted:04 Mar 2003 12:00:00 GMT
    Why and how has the pension system been modernised in Bulgaria? This paper considers how economic, social and political needs for modernising pension policy and for reforming the pension system in Bulgaria was pronounced at the beginning of the 1990s. After long public debates and painful, even sometimes contradictory changes in the years after 1989, the reform of the Bulgarian social-insurance system started at the beginning of 2000 after the enforcement of the Mandatory Social Insurance Code (MSIC).

    The paper attempts to:

    • present the main weaknesses of the Bulgarian pension policy and the reformed pension system at the end of the 1990s
    • analyse the new Bulgarian pension model
    • analyse initial effects and evaluations of the pension reform for two of the main stakeholders, the population and the pension insurance experts

    Findings include the following:

    • major disadvantages of the pay-as-you-go mandatory social insurance model, which comprised the major element of social insurance at the end of the 1990s, included financial instability, incomplete coverage, limited choice, and unequal distribution of financial burden and low pensions
    • a three-pillar model was chosen as a replacement, based on combining pay-as-you-go and capital-funded principles and supplementary voluntary pension insurance
    • one of the first outcomes since the reforms has been an increase of the nominal pension amount, however the increase cannot compensate for the extremely low pensions received.

    The paper concludes that:

    • there was practically little alternative to reform of social insurance in Bulgaria at the end of the 1990s, leading the government to evaluate the need for reform of both social insurance and of the entire social protection system
    • a three pillar model was chosen as none other was proposed and international institutions and donors supported decisions directed to adoption of the three pillar model
    • the pension reform did not initially enjoy broad public support, though it gained support from pension experts
    • in terms of structure optimisation and pension increase, the financial situation of the pension system remains presently unstable, a financial deficit will continue and aggravate in the coming years though in the mid-term a gradual stabilisation is expected
    • the new model aims to combine the advantages and neutralise the shortcomings of pay-as-go, capital-funded principles, state and private insurance and provide greater opportunities for choice of insurance behaviour
  • Poverty Reduction Strategy Papers (PRSPs): an assessment of the ILO’s experience

    Posted:07 Jan 2003 12:00:00 GMT
    The ILO has undertaken PRSP-related activities in a number of countries including five special focus countries (Cambodia, Honduras, Mali, Nepal and the United Republic of Tanzania), especially in Africa where the policy environment is so closely aligned to the development of PRSPs.

    This paper looks at the value-added of the ILO and its social partners in contributing to PRSPs and helping low-income countries to design and implement them. It focuses on the practical steps taken by the ILO to integrate "decent work" into the PRS. It focuses on the experience over the past two years in the five ILO special focus PRSP countries (Cambodia, Honduras, Mali, Nepal and Tanzania)

    Employers’ and workers’ organizations have expressed concern and frustration that their views and potential support appear undervalued, due to perceived donor priorities (primary education and the health sector as well as broader public sector reform and improved macroeconomic management) and the local perception of the nature of trade unions and employers organisations. Key lessaons are that:

    • PRSPs need to include a more thorough analysis of employment and other aspects of decent work. This should then give rise to a more explicit role for decent work, including fundamental principles and rights at work and social protection, in poverty reduction strategies.
    • Employers’ organizations, workers’ organizations and labour ministries need to be more systematically integrated into the participatory process underpinning the design and implementation of PRSPs. Without social dialogue, the participation and national ownership principles of the PRSP are seriously undermined and decent work strategies are unlikely to receive adequate consideration.
    • More attention is needed in PRSPs on maximizing the impact of growth on poverty. More coverage of the policy implications related to, for example, reform of land rights, development of a fair, efficient and effective fiscal policy, promotion of principles and rights at work and other equity issues is needed.
  • Devising social security interventions for maximum poverty impact

    Posted:06 Jan 2003 12:00:00 GMT
    Is social security, designed to provide protection against various contingencies, well suited to the elimination or redress of large-scale, endemic poverty? This article attempts to contribute to the debate surrounding social security systems in South Africa, as the basic income grant system is now considered not viable.

    The paper analyses

    • the 1995 income distribution data to identify where social security interventions are most likely to have a significant poverty alleviating effect
    • the nature of the social security system, and an overview of gaps in certain components of the system is given
    • poverty from the perspective of social security to identify vulnerable groups

    The authors argue that given a somewhat improved fiscal position, the time might be ripe for expanding some existing social security programmes or for introducing some new ones as a way of improving the reach and impact of the social security system. Three options are suggested:

    • Expanding coverage of the social insurance system. To do this in the two areas of agriculture and domestic service which are still largely uncovered may pose a similar threat to jobs in these low wage sectors as minimum wage legislation. An alternative would be to provide some tax concessions encouraging more employers in these fields to provide social insurance.
    • Expanding social assistance: a promising area for expanding social assistance lies in the direction already taken with the child support grants. The means test should perhaps be reconsidered and the means-tested CSG could perhaps make way for a child grant, which over time could be expanded to higher age groups.
    • Low-wage public employment schemes. Whilst these target the poor through self-selection, as only the poorest are willing to work for such low wages, unfortunately the administrative costs can be large.

    The paper concludes that sustained economic growth remains the necessary condition for substantial poverty reduction. However, the social security system in South Africa nevertheless provides, and should continue to provide, income security to many of the poor. For this reason, realistic but serious efforts at incrementally expanding the social security system are essential.

  • Do microfinance programs help families insure consumption against illness?

    Posted:04 Nov 2002 12:00:00 GMT
    Families in developing countries face enormous financial risks from major illness both in terms of the cost of medical care and the loss in income associated with reduced labour supply and productivity.

    The authors test whether access to microfinancial savings and lending institutions helps Indonesian families smooth consumption after declines in adult health. In general, the authors find that:

    • access to financial institutions helps families deal with adverse health shocks
    • families that live far from a financial institution will suffer greater losses in consumption than will families living nearer the institutions

    The paper concludes that governments should promote microfinance and microsavings programmes in addition to traditional tools such as subsidies, mandates, or direct government provision of health insurance and disability insurance.

  • A generation in transition: older people’s situation and civil society’s response in East and Central Europe

    Posted:07 Oct 2002 11:00:00 GMT
    Document drawing on HelpAge International’s experience of engagement with the East and Central European Network (ECEN) of civil society organisations working with and for older people.

    It aims to provide decision-makers within government, local and national civil society organisations, regional agencies and older people themselves with the following:

    • a snapshot of the real issues, as identified by older people themselves
    • a brief description of the response to these issues by civil society organisations and older people themselves
    • practical advice for service providers on starting to put older people at the centre of services
    • views of older people’s groups on how the state can complement - or take into account - their work
    • insight into the reality of life for older people, told in their own words
    • details of activities in which older people and those working with them in civil society are involved
    Document concludes with the points of the Prague Declaration made by members of the East and Central European Network to governments, calling for
    • economic security - including increasing pensions and better social security systems
    • health policies - implementation of a comprehensive health system according to the needs of older people,affordable or free healthcare services and medicines
    • social integration - promoting open discussions in the mass media with older people and civil society organisations about the problems of older people, promoting the participation of older people in social activities and incorporating teaching about ageing into educational programmes in educational institutions and promoting life-long learning
  • Household and individual decision-making over the life cycle: a first look at the evidence from Peruvian cohorts

    Posted:22 Sep 2002 11:00:00 GMT
    Peruvian society has achieved significant improvements in terms of lower fertility and mortality over the last forty years, which has brought down population growth rates to less than 1.2% a year. These improvements have led, on average, to a demographic transition with lower dependency ratios. In general, this transition increases the ability of the society to take proper care of its non-working population groups, children and the elderly, which may be reflected in changes in household structure.

    This paper identifies some of the implications of these changes at the micro level:

    • There is some evidence to suggest differences by educational level in the Peruvian demographic transition
    • Household size is smaller for the younger cohorts in all households except those with less educated heads. These different profiles are explained by the fact that reductions in fertility have not reached the less educated
    • Family living arrangements change throughout the life cycle, in the sense that extended families are more common for households with very young (under 25) and elderly (over 60) heads. These changes in family arrangements over the life cycle add confusion to the meaning of headship, since in some cases the household reports as its head the older member and in other cases the main income earner
    • Younger cohorts are more educated, are larger than older ones, and show lower returns to education. This is consistent with an increase in relative supply of educated workers that outpaces the increase in relative demand induced by economic growth, under the assumption of imperfect substitutability between equally educated workers of different cohorts
    • Peruvian households, especially the less educated, smooth consumption over the life cycle, not only through the typical saving-dissaving mechanism, but also by smoothing income. Net cash transfers, or living arrangements between parents and their offspring, play an important role in this income smoothing.
  • Research review on social security reform and the basic income grant for South Africa

    Posted:27 Aug 2002 11:00:00 GMT
    This paper reviews several research papers that address social security reform in South Africa, with an emphasis on the proposal for the basic income grant. It argues that there are three mechanisms through which the basic income grant supports economic growth and job creation, namely:
    • through accumulation of human and social capital,
    • influencing both the supply and demand sides of the labour market, and
    • bolstering the overall level of aggregate demand in the economy as well as shifting the composition of spending towards the labour absorbing sectors of the economy.

    In addition, it raises the issue that social security reform affects the fiscal impact of the basic income grant by raising the overall national income and by concentrating growth on lower income individuals, it moves them to levels where their net transfer is reduced. South Africa’s social security grants are said to reduce the average poverty gap by approximately 23%, with pensioners receiving the largest proportion of the reduction in poverty (94%)

    In summary, the main conclusions that emerge from this review are that:

    • the basic income grant is feasible, affordable and supportive of poverty reduction, economic growth and job creation.
    • the medium-to-long term impact of the basic income grant would reduce the cost pressure on several social sectors, hence reducing the net fiscal impact of the grant.
    • the basic income grant represents a substantial commitment of fiscal resources – which, if well managed, would be affordable and consistent with fiscal responsibility.
    • a universal basic income grant has the potential to fortify the ability of the poor to directly manage risk while improving their livelihoods.