Social Protection in Developing Countries

Reforming Systems

Katja Bender, Markus Kaltenborn, Christian Pfleiderer, Katja Bender, Markus Kaltenborn, Christian Pfleiderer

• Publisher: Routledge
• Year: 2013
• eBook ISBN: 9781136178504
• Edition: 1
• Topic: Economics
• Subtopic: Development Economics
• Index: Economics

Providing universal access to social protection and health systems for all members of society, including the poor and vulnerable, is increasingly considered crucial to international development debates. This is the first book to explore from an interdisciplinary and global perspective the reforms of social protection systems introduced in recent years by many governments of low and middle-income countries.

Although a growing body of literature has been concerned with the design and impact of social protection, less attention has been directed towards analyzing and explaining these reform processes themselves. Through case studies of African, Asian, and Latin American countries, this book examines the 'global phenomenon' of recent social protection reforms in low and middle-income areas, and how it differs across countries both in terms of scope and speed of institutional change. Exploring the major domestic and international factors affecting the political feasibility of social protection reform, the book outlines the successes and failures of recent reform initiatives.

This invaluable book combines contributions from both academics and practitioner experts to give students, researchers and practitioners in the fields of social security, economics, law and political science an in-depth understanding of political reform processes in developing countries.

Part I

Objectives and political economy of social protection reforms

1 Rescuing social protection from the poverty trap

New programmes and historical lessons

Sarah Cook¹

Introduction

Social protection has risen to prominence in the lexicon of development concepts and approaches over the past decade. Emerging out of contexts of economic crisis, structural adjustment and deepening global integration, the new social protection agenda is in large measure a response to the failure of development policies during the previous decades. Innovations coming from the south are now making a real difference to the lives of millions of poor people, leading to claims and counter-claims being made over the new developmental ‘magic bullet’ of cash transfers and other social protection schemes.

This chapter draws on findings from historical and comparative analysis of social policies in development context (Mkandawire 2004a; UNRISD 2010) to reflect on more recent innovations in historical context. Beyond the forms of new programmes, the concern is with how well these programmes fulfil a range of core functions of social policy – not just in protecting the poor against extreme adversity, but in contributing more broadly to development objectives. Recognising that the future of social policy in the south does not lie in the past of northern welfare states, the past nonetheless offers insights into current practices – suggesting reasons for why they may work in some circumstances but not others, and their potentials and limits as a component of development policy. Given the current focus on reducing poverty within a paradigm emphasising market efficiency and growth, we see that at least key parts of the donor community are inevitably selective in their choice of ‘models’ for support and replication. By contrast, many developing countries are themselves pushing towards more expansive versions of social policy. Without denying the importance of a poverty focus, it is time to revisit our understandings of how poverty is reduced, and the role of social policy in this, so that social protection initiatives themselves do not also get caught in a poverty trap.

Social protection and the development agenda

The neo-liberal policy agenda of stabilisation, structural adjustment and public sector retrenchment – with cutbacks in ‘consumption’ or social spending – reversed earlier progress in reducing poverty and enhancing human capabilities across Africa, Latin America and parts of Asia. Market-led reforms, it was argued, would contribute to both growth and well-being, ‘by creating more efficient social systems, fewer market distortions and lower costs for the state’ (UNRISD 2010: 137).² In reality, already fragile social provisions and weak protective measures were dismantled leaving populations exposed to increasing risks associated with market liberalisation and globalisation. A long-term growth penalty persists via lost investment in human development. Even in wealthier states, or those less exposed to crisis, the ideological push towards market liberalisation and global competition created pressures for dismantling welfare provisions and reducing the ‘burden’ on public budgets, leading to privatisation of systems such as pensions and health care.

Once the human costs of these policies became undeniable, short-term safety nets were introduced as palliative measures. In contexts of weak state administrative and fiscal capacity, such measures inevitably proved grossly insufficient to deal with the nature and frequency of crises in a more risky global environment. The Asian crisis of 1997–8 provided clear evidence that even countries experiencing rapid growth were unable to cope: the inability to protect populations against extreme adversity created an imperative to find alternative mechanisms for social protection (Cook and Kabeer 2010).

In the decade leading to the global financial crisis, both states and the development community took on this challenge (Cook and Kabeer 2009).³ The World Bank expanded interventions within its risk-management framework – prioritising market solutions but admitting the need to address pervasive market failures (Holzmann and Jørgensen 2000). Rights-based approaches were given stronger voice among United Nations agencies (particularly UNICEF and the ILO), many NGOs and some bilateral agencies, but ultimately a more cautious needs-based agenda for addressing poverty underpinned agreement around the MDGs (Munro 2008; UNRISD 2010; ILO-STEP 2006).⁴ While social issues and policies were finding new space on the international development agenda, the approaches adopted did not fundamentally challenge the place of social policies as residual to economic policies (Tendler 2004).⁵

Social protection in some form now features centrally in the agendas of most international development agencies. It is a core element in national and donor strategies to reduce poverty and achieve the MDGs, and has received added impetus from global crises. Generally accepted definitions involve a set of measures including non-contributory social assistance programmes (usually cash transfers) as well as contributory programmes (social insurance) and labour market policies. However, the prioritisation of poverty reduction on the international agenda directs most discussions of social protection towards a narrower focus on assistance targeted to the poor – through a range of (conditional or non-conditional) cash or in-kind transfers, non-contributory benefits to children or the elderly, and public works or employment guarantee schemes. It is in these areas – and particularly the spread of conditional cash transfers – that major innovations have taken place in recent years.

Significantly, these innovations have emerged largely from developing economies themselves – and in many cases were initially received cautiously by dominant international actors.⁶ Less widely discussed among those now heralding CCTs as the new magic bullet of poverty reduction are a range of accompanying social policy reforms: these include for example the re-nationalisation of pension schemes taking place in Latin America (Hujo and Cook 2012), the expansion of universal health coverage in Latin America and Asia, but also in some countries in Africa; and a strong expansion of social insurance across parts of Asia (Cook and Kwon 2008). Those developing nations with greater policy space appear to be giving higher priority to social protection as part of their development agenda; development agencies have followed with support for selected parts of this agenda – particularly those elements that are most focused directly on the poor. Insights from the role played by social policies in countries that have joined the ranks of ‘developed’ economies since the mid-twentieth century may indicate the limits of such selectivity.

Lessons from history for contemporary social protection

Social protection – whether as an idea or a practice of the state – has a long history. In his 1944 classic The Great Transformation, Polanyi describes each phase of the extension of markets giving rise to a counter movement to resist ‘the pernicious effects of a market-controlled economy’ (Polanyi 2001: 78). Societies protected themselves ‘against the perils inherent in a self-regulating market system’ (ibid.), through measures that included both the protection of labour and the poor through social programmes and legislation, and measures such as tariffs to reduce dislocations in relation to foreign trade or exchange. Earlier classical political economists had also concerned themselves with the links between social welfare and economic development,⁷ lending support to arguments that social security, far from being inimical to economic development, was in fact a necessary complement (for managing the inevitable disruption associated with processes of structural change) and an important means to economic development (Rothschild 1996: 135–6; Mkandawire 2004b). Provisions of protection likewise existed historically in non-European contexts – from the grain distribution and disaster relief systems of Qing Dynasty China (Wong 2011) to zakat across the Muslim world, among others.⁸

Specific forms of social protection have arisen in different contexts to fulfil what appear to be a broadly comparable set of functions combining protection and other developmental goals. In Europe, mechanisms from the Poor Laws and public works to social insurance and labour regulations evolved to meet the needs of industrialising and urbanising societies. They aimed to deal not just with ‘want’ or deprivation, but to address what were deemed to be unacceptable levels of inequality and exclusion. In certain contexts they sought to build solidarity, social cohesion and citizenship, or to contribute to political projects of nation building. Public health, water and sanitation, and housing were seen for what they are – public goods, necessary for the health not only of individuals, but of society. Education was formative of the labour force and thus productivity-enhancing, but also necessary for participation in public life as a citizen. Society and social well-being were the purpose of public policy – the market an instrument to be managed and regulated to achieve these ends.

While the resulting welfare states have often provided a vision to which less developed countries might aspire, they do not provide models or blueprints for policy. Nonetheless, they may offer important insights concerning the core functions that social policies have played in different contexts. These functions include protection and distribution, as well as a developmental or transformative role which is particularly important for lower income economies (Mkandawire 2004b: 1). As argued elsewhere,

for social policy to serve as a developmental instrument against poverty, it must deal with four major concerns: distribution, protection, production and reproduction. It must be concerned with the redistributive effects of economic policy, protecting people from the vagaries of the market and the changing circumstances of age, enhancing the productive potential of members of society, and reconciling the burden of reproduction with that of other social tasks, as well as sharing the burden of reproduction.

(UNRISD 2006: 1–2)

The remarkable success of several economies in northern Europe and East Asia during the second half of the twentieth century offers insights into these processes. In both regions, progress was achieved through state-led development strategies in which social policies played a critical role. These late industrialisers adopted social policies at earlier stages in their development (in terms of income per capita) than did the industrial leaders, challenging the notion that more expansive social policies are a luxury of richer economies. Instead, their experience demonstrates the intrinsic role of such policies in development processes.

The development model that helped to raise poor countries of northern Europe out of poverty involved some form of solidarity-based redistributive social programmes: these arose out of political alliances and class compromises according to particular conditions.⁹ In Finland, for example, a compromise was reached that ‘the state would use a large part of the economic surplus to undertake direct productive investment and provide welfare services as soon as the economic wealth of the country would permit’ (Vartiainen 2004: 212). Under the very different political conditions of East Asia – often interpreted as a ‘social policy free zone’ (Chang 2004: 241) – developmental state policies were supportive of both production and welfare. While states in East Asia appeared to take minimal responsibility for welfare, with welfare subordinated to economic efficiency and direct social expenditures kept to a minimum (White and Goodman 1998: 17), there were in fact a range of implicit or hidden social policies that served protective and distributive, as well as developmental, purposes. Korea provides strong evidence of the extent to which investments in and policies towards agriculture and the rural economy, and particularly in education, created conditions for more inclusive and equitable development (Kwon and Yi 2009).

The experiences of these now developed economies have been extensively analysed. However, their implications for the social policies of countries in earlier stages of development or structural transformation have often been misinterpreted or ignored in the formulation of development policies. The social policies underpinning the advantage of rich countries have rarely been part of the policy packages recommended to poor countries. On the contrary, such policies were (and for the most part still are) considered a luxury of wealthier economies, with instead a remedial form of social policy offered against the adverse effects of policies aimed at growth. History, political and institutional arrangements, and social and power relations are often left out of, or badly specified within, the formulations that link welfare policies to growth and wider development outcomes, including poverty reduction. The importance of productivism within welfare policies, and distribution and protection through economic policies – in other words the essential inseparability and complementarity between economic and social policies – has largely been absent. The divorce of social policies from production in approaches to safety nets and targeted social protection remains an important reason for the widespread exclusion of the poor from the benefits of growth processes.

The new social protection agenda: drawing the right lessons?

What relevance do these insights offer in assessing contemporary social protection initiatives? Are new forms emerging that can fulfil the range of functions needed for transformation and development, or are they also caught in a poverty trap?

As noted earlier, a range of innovations and a dramatic expansion of social programmes have been driven largely by governments in a number of developing econo...

Table of contents

• Cover
• Title Information
• Routledge Explorations in Development Studies
• Title Page
• Copyright Page
• Table of Contents
• List of Figures
• List of Tables
• List of Contributors
• Foreword
• List of Abbreviations and Acronyms
• Introduction
• Part I Objectives and Political Economy of Social Protection Reforms
• Part II The Legal Framework of Social Protection Reforms
• Part III Political Feasibility of Basic Social Protection
• Part IV Social Protection Systems: Between Fragmentation and Integration
• Part V Social Protection Reforms: International Contexts
• Index