Weaving Social Safety Nets

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• Publisher: Asian Development Bank
• Year: 2010
• Print ISBN: 9789290920663
• eBook ISBN: 9789290921486
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The recent economic slowdown, the preceding period episode of high food and oil prices, and the ever-present risk of natural disasters have highlighted that Pacific island countries and their people are very vulnerable to economic and natural forces beyond their control. Informal support provided by extended families and communities to those in need have been coming under increasing strain and no longer offer sufficient protection to those facing temporary hardship. This policy brief provides an overview of the role of social safety nets in protecting vulnerable groups during times of stress, and outlines key factors that should be considered in the design of such programs. The key response should be to plan ahead and have appropriate policies and programs in place to protect the vulnerable before a crisis hits.

Appendix 1: Types of Social Safety Nets

Type of Intervention	Definition	Characteristics
Cash transfers	Regular cash payments (or transfers) to eligible recipients
(a) Universal cash transfers	Transfers that aim to increase the real incomes of the poor (e.g., needs-based social assistance, noncontributory pensions and disability transfers, family/child allowances)	Advantages: (i) operation costs tend to be low; (ii) recipients prefer cash, which provides greater freedom of choice in how to use the benefit to enhance their welfare. Disadvantages: (i) Cash transfers are attractive to local elites and unintended beneficiaries, so are more difficult to target effectively. Good control mechanisms are needed; (ii) in times of high inflation rates, a rapid increase of benefits is required.
(b) Means-tested cash transfers	Payments are conditional on human capital investments for children (school attendance, health checks, prenatal care), with the dual goals of reducing current and future poverty.	Advantages: (i) impacts on consumption and poverty, child labor, school enrollment and attendance, nutrition, and health; (ii) recipients are held responsible and accountable, which can be politically popular; (iii) empowerment effect where benefits are paid to mothers. Disadvantages: (i) complex to design and administer, requiring the interaction of multiple ministries and monitoring compliance; (ii) services of sufficient quality have to be available (health, education); (iii) excludes families without children.
Both universal and means-tested cash transfers can be unconditional or conditional
(a) Unconditional	Every eligible person in a particular category receives the benefit.	Advantage: Get the same beneficial impacts on health, education, etc., without the added problem of complicated administration. Disadvantage: This may not be politically acceptable, particularly in societies where there is a strong belief that handouts should not be free. This is the reason many countries require beneficiaries to work on public infrastructure projects in exchange for food or cash.
(b) Conditional	Eligible recipients must fulfill some conditions—such as ensuring their child attends school—to continue receiving the benefit.	Advantages: The state can require recipients to comply with other social development policies, such as infant immunization or regular school attendance for children. Disadvantages: (i) the need to monitor compliance, (ii) removal of the benefit can compound the problems of some disadvantaged families.
Food-based programs	Food transfers and other food-based programs aimed at chronic and transient poor (e.g., rations, supplemental feeding and nutrition, school feeding, emergency food distribution)	Advantages: (i) effectively alleviates hunger by increasing food consumption, (ii) can address malnutrition and micronutrient deficiencies through fortified foods, (iii) can increase school attendance, (iv) potential for self-targeting. Disadvantages: (i) organizing efficient transport, storage, and distribution of food is challenging and adds to administrative costs; (ii) on-site feeding (e.g., at schools and health centers) increases administrative costs for programs and transaction costs for participants; (iii) risk of damaging local markets; (iv) reduces people’s choices in their diets and food purchases.
Public works programs (workfare)	Labor-intensive infrastructure development under cash or food-for-work programs	Advantages: (i) addresses shortage of infrastructure (rural roads, irrigation) while raising and smoothing incomes of the poor; (ii) low benefit level, self-targeting, lower administrative costs; (iii) politically popular, as beneficiaries are required to work. Challenges: (i) trade-off between objectives of infrastructure vs. poverty reduction; (ii) trade-off between setting the benefit level lower (ensures self-targeting and sustainability) or higher (helps participants out of poverty trap but targeting becomes weaker, and rationing may be required); (iii) doesn’t reach the poor who cannot work, such as the elderly, ill, or disabled; (iv) tends not to help people with less labor capacity.
Free education or health services, or fee waivers	Exemption from payment for essential services so the poor can obtain free health care and education even where fees are charged	Advantages: (i) provide support on both supply side and demand side through resources for institutions (to provide services) and for poor people (to access those services), (ii) promote human capital development. Disadvantages: (i) administratively complex; (ii) large errors of exclusion are common, such as the poor not being aware of the waiver system and therefore not seeking out the services; (iii) impact on school attendance is questionable if beneficiaries are not compelled to attend classes.

Sources: Bloom, D., A. Mahal, L. Rosenberg, and J. Sevilla. 2009. Social Protection and Conditional Cash Transfers. ADB Regional Workshop on Social Assistance and Cash Transfers. Manila: ADB. 23–24 July 2009; Grosh, M., C. del Ninno, E. Tesliuc, and A. Ouerghi. 2008. For Protection & Promotion: The Design and Implementation of Effective Safety Nets. Washington, DC: The World Bank; Kidd, S. 2009. Equal Pensions, Equal Rights: Achieving Universal Pension Coverage for Older Women and Men in Developing Countries. Gender & Development, 17 (3). November.

Appendix 2: Country Experiences with Social Safety Nets

A. The Cook Islands’ Experience

The Cook Islands¹ has one of the most extensive social protection systems in all of Asia and the Pacific. It is modeled on New Zealand’s system, but with less comprehensive coverage and smaller payments. Benefits for children and the aged are universal and welfare payments contribute to the incomes of most households. The categories of infirm and destitute beneficiaries—the only true “welfare beneficiaries”—are small and eligibility is determined on a case-by-case basis, most being single women with children and no other source of livelihood.² One-off grants equivalent to 1 month’s benefit are made to the families of deceased beneficiaries to help pay funeral costs, as well as to mothers of newborn children. Other special assistance is given for improving the residences of disabled people. Power subsidies are also provided to destitute and infirm pensioners. Unlike New Zealand’s system, however, there is no unemployment benefit, one of the more urgent forms of short-term need. People who become unemployed can go to New Zealand and get benefits, which many evidently do, including people ill-prepared for employment opportunities there.

As a result, almost three-quarters of all payments are to people who are not poor.³ However, these payments are viewed by policy makers as an essential element of many peoples’ livelihoods which help them to stay out of hardship.

In the mid-1990s, the government cut back on public sector jobs, a policy that hit the outer island communities particularly hard. The loss of people, skills, and paid jobs pushed many of them almost below the point where they could sustain themselves. As the outer island communities have shrunk and the population has aged, support systems have attenuated within them. The elderly increasingly find themselves on the remote edge of family networks now centered in Rarotonga or New Zealand. On some islands, the outflow of young adults has been almost replaced by an inflow of young children, sent to their grandparents along with their child benefit payments.

The population of Mitiaro, for example, shrank almost 29% between 1996 and 2001 and had declined another 10% by mid-2006, when there were 204 residents.⁴ Most households consist of older adults who live with their grandchildren or great-grandchildren, whose parents live elsewhere.

Allowances for children and the elderly have become a critical source of cash income in outer island communities, where other income-generating opportunities are scarce. Combined, these payments enable the older people to stay on the island, have some comfort in their lifestyle and meaning in their lives, and support the children well. The inflow of children helps maintain the school rolls and other services and, indeed, keeps the community viable. The children benefit from experiencing an island lifestyle that is increasingly a nostalgic memory for many Cook Islanders, as well as the close attention of their grandparents, which strengthens their language skills and Cook Islands identity and possibly provides them a richer childhood than they might have in Auckland or Sydney with busy working parents. Most ch...

Table of contents

• Front Cover
• Title Page
• Copyright Page
• Contents
• Abbreviations
• Foreword
• Summary
• Introduction
• What Does a Social Safety Net Look Like?
• Why the Interest in Social Safety Nets Now?
• How Pertinent Is This to the Pacific?
• Do People Really Need This Kind of Help?
• Can Pacific Island Countries Afford Social Safety Nets?
• Designing Social Safety Nets for Pacific Island Countries
• Conclusion: Helping Those Most in Need
• References
• Appendix 1: Types of Social Safety Nets
• Appendix 2: Country Experiences with Social Safety Nets
• Back Cover