Social Protection

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Social Protection

  1. 1. Social Protection and Social Risk Management: Poverty as the Inability to Manage Risks Amartya Sen and the Evolution of the Concept of Poverty Leland Joseph R. de la Cruz Director, Development Studies Program
  2. 2. Triggers for a new approach <ul><li>World Bank and IMF structural adjustments led to safety nets. </li></ul><ul><li>Social welfare adjustments in transition countries. </li></ul><ul><li>Increased globalization </li></ul><ul><li>East Asian crisis </li></ul>
  3. 3. Globalization <ul><li>Generates benefits but the benefits are not shared by all. </li></ul><ul><li>Increased inequality. </li></ul><ul><li>Increased vulnerability. </li></ul><ul><li>Reduced ability by the government to respond. </li></ul>
  4. 4. East Asian Crisis <ul><li>Recognition that non-poor can become poor. </li></ul><ul><li>Shocks can have long term consequences. </li></ul>
  5. 5. “ Sound macroeconomic policies, while of great importance, are not sufficient for sustained poverty reduction”.
  6. 6. Vulnerability to economic risks <ul><li>Economic crisis or transition </li></ul><ul><li>Change in prices of basic needs </li></ul><ul><li>Unemployment </li></ul><ul><li>End of source of livelihood </li></ul><ul><li>Low income </li></ul>
  7. 7. Other sources of vulnerability <ul><li>Environmental risks </li></ul><ul><li>Social/ Governance risks </li></ul><ul><li>Lifecycle risks </li></ul>
  8. 8. Environmental risks <ul><li>Flood, rains </li></ul><ul><li>Earthquake </li></ul><ul><li>Landslides </li></ul><ul><li>Drought </li></ul>
  9. 9. Social/ Governance <ul><li>Political instability </li></ul><ul><li>Exclusion/ losing social status/capital </li></ul><ul><li>Crime or domestic violence </li></ul>
  10. 10. The poor are especially vulnerable <ul><li>The poor are most exposed to diverse risks. </li></ul><ul><li>The poor are affected most by various shocks. </li></ul><ul><li>The poor have the fewest instruments to deal with risks. They thus resort to coping strategies which are counterproductive. </li></ul><ul><li>The poor have the least capacity to take risks. </li></ul><ul><li>Government cuts back on programs for the poor during crises. </li></ul>
  11. 11. Poor women are even more vulnerable. <ul><li>Less education </li></ul><ul><li>Less property rights </li></ul>
  12. 12. Other highly vulnerable groups Child Labor Disabled Unemployed Youth Orphans Poverty Inability to manage risks
  13. 13. Why the poor are vulnerable <ul><li>Lack of human capital </li></ul><ul><ul><li>Education, health </li></ul></ul><ul><li>Lack of savings </li></ul><ul><li>Lack of access to social assistance </li></ul><ul><li>Voicelessness </li></ul><ul><li>Informal labor </li></ul><ul><li>Informal business </li></ul><ul><li>Insecure property rights </li></ul>
  14. 14. Coping strategies of the poor <ul><li>Reduce consumption of goods and services. </li></ul><ul><ul><li>Reduce consumption of food or alter the menu. </li></ul></ul><ul><ul><li>Withdraw children from school. </li></ul></ul><ul><li>Make children and women work. </li></ul><ul><li>Sell (productive) assets. </li></ul>DS
  15. 15. Risk Management Mechanisms <ul><li>After the event ( ex post ) </li></ul><ul><li>Coping strategies: </li></ul><ul><ul><li>relieve the impact of risk once it has occurred. </li></ul></ul><ul><li>Before the event ( ex ante ) </li></ul><ul><li>Prevention strategies </li></ul><ul><ul><li>Prevent or reduce the probability of risk occurring. </li></ul></ul><ul><li>Mitigation strategies </li></ul><ul><ul><li>Reduce the impact of the risk event. </li></ul></ul>
  16. 16. Risk Management Arrangements <ul><li>Informal </li></ul><ul><li>Market-based </li></ul><ul><li>Public </li></ul><ul><li>Informal and market based arrangements are not effective in handling macro-risks. (War and conflict, widespread AIDS, price volatility, drought, macro-economic shocks) </li></ul>
  17. 17. Strategies and Arrangements for Social Risk Management Public Mitigation Strategies Public Prevention Strategies Public Coping Strategies Public Market-based Mitigation Strategies Informal Mitigation Strategies Risk Mitigation Market-based Prevention Strategies Informal Prevention Strategies Risk Prevention Market-based Coping Strategies Informal Coping Strategies Risk Coping Market-based Informal
  18. 18. Informal Coping Strategies <ul><li>Transfers </li></ul><ul><li>Child Labor </li></ul><ul><li>Dissaving in Human Capital </li></ul><ul><li>Sale of Assets </li></ul><ul><li>Migration </li></ul><ul><li>Borrowing from neighbors/ relatives/ friends. </li></ul>
  19. 19. Public Coping Strategies/ Social Assistance Strategies <ul><li>Transfers </li></ul><ul><ul><li>Cash, in-kind benefits, food stamps, shelter provision, community-based social services, mobile health and education services </li></ul></ul><ul><li>Subsidies </li></ul><ul><ul><li>Food subsidies, health subsidies </li></ul></ul><ul><li>Public Works </li></ul>
  20. 20. Market-based Coping Strategies <ul><li>Sale of financial assets </li></ul><ul><li>Borrowing from banks </li></ul>
  21. 21. Informal Prevention Strategies <ul><li>Multiple jobs </li></ul><ul><li>Migration </li></ul><ul><li>Hygiene and disease prevention </li></ul><ul><li>Proper feeding </li></ul><ul><li>Less risky production </li></ul>
  22. 22. Public Prevention Strategies <ul><li>Labor market policies </li></ul><ul><li>Infrastructural improvements </li></ul><ul><li>Macroeconomic policies </li></ul><ul><li>Disease prevention </li></ul><ul><li>Conflict prevention and resolution </li></ul><ul><li>Pre-service training </li></ul><ul><li>Child labor interventions </li></ul><ul><li>Public labor standards </li></ul>
  23. 23. Market-based Prevention Strategies <ul><li>In-service training </li></ul><ul><li>Market-based labor standards </li></ul>
  24. 24. Informal Mitigation Strategies <ul><li>Multiple jobs </li></ul><ul><li>Investment in human, physical and real assets </li></ul><ul><li>Investments in social capital </li></ul><ul><li>Share tenancy </li></ul>
  25. 25. Public Mitigation Strategies <ul><li>Pension systems </li></ul><ul><li>Asset transfers </li></ul><ul><li>Support for financial services to the poor </li></ul><ul><li>Mandated insurance </li></ul>
  26. 26. Market-based Mitigation Strategies <ul><li>Investment in multiple financial assets </li></ul><ul><li>Microfinance </li></ul><ul><li>Insurance </li></ul>
  27. 27. Social Protection and Social Risk Management <ul><li>Social protection has been associated with particular policies such as social assistance, labor market policies and pension provision. </li></ul>
  28. 28. Social Protection and Social Risk Management <ul><li>Lenses through which we can understand and deal with poverty. </li></ul><ul><li>Identifies many forms of risks and vulnerabilities. </li></ul><ul><li>Identification of strategies involving public, market, or informal arrangements that prevent risks or help affected sectors mitigate or cope with the effects of risks. </li></ul>
  29. 29. Sources <ul><li>World Bank (2001), Social Protection Sector Strategy: From Safety Net to Springboard. </li></ul><ul><li>Holzman, Sherburne-Benz and Tesliuc (2003), Social Risk Management: The World Bank’s Approach to Social Protection in a Globalizing World . </li></ul><ul><li>Ortiz (2001), Social Protection in Asia and the Pacific. </li></ul>
  30. 30. Social Protection and Social Risk Management: Poverty as the Inability to Manage Risks Amartya Sen and the Evolution of the Concept of Poverty Leland Joseph R. de la Cruz Director, Development Studies Program

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