Opportunities to Improve Social Protection Sector Performance

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized In the Pacific region, social protection has historically been an area of low government involvement. Strong traditional practices have held families and communities responsible for the most vulnerable members of society and for those affected by personal and natural disasters. These traditions continue, but some issues have emerged that are beyond the capacity of the traditional family and community safety nets. Pacific island countries are especially concerned to provide young people with opportunities for safe and fulfilling lives and to support the disabled and chronically impoverished. Some countries have experienced a rise in social issues, such as crime and alcohol abuse, and other issues have emerged into view, such as domestic violence and teen pregnancy. Macroeconomic volatility and weather shocks are also significant in the Pacific. Yet because social protection is a relatively new field of government activity, and existing programs (with some notable exceptions) are scarce, the central question is whether governments should intervene, and, if so, where, when, and how? In a recent study, the World Bank and regional partners 1 looked at human development across the Pacific region. This is a summary from that study of key issues in the social protection sector and some strategic approaches for addressing them. 2 Where the Pacific Island Countries Stand All households in the Pacific island countries are subject to the macroeconomic risks of the natural disasters and trade shocks that are characteristic of the region. Individual families, on the other hand, need protection from idiosyncratic household risks, such as those associated with joblessness or disability. Macroeconomic Volatility Opportunities to Improve Social Protection Sector Performance Trade shocks, especially with regard to copra prices, are not uncommon in the Pacific. Natural shocks and climatic volatility, including rainfall volatility twice as high as in other developing countries and small economies, are characteristic of the region (see figure 1). FSM Tonga RMI Kiribati Palau Solomon I. Figure 1. Relative Vulnerability to Natural Shocks and Climatic Volatility Fiji Samoa Disaster Index (0 50) Rainfall Volatility Index (0 50) Vanuatu This high volatility in GDP and vulnerability to natural disasters may be cushioned by the relatively high level of transfer income received by Pacific countries. 3 These external income flows may help to smooth incomes through such informal Source: Brown, R., Headey, D., & Leeves, G. (2004). Macroeconomic volatility in the Pacific: A cross-country comparison of magnitude, sources, and consequences. Washington, DC: World Bank.

2 > > H u m a n D e v e l o p m e n t i n t h e P a c i f i c I s l a n d s safety net mechanisms as high levels of public employment and salaries and various government-funded transfer mechanisms. However, those linkages are difficult to demonstrate empirically. Civil conflict is also a source of risk in the Pacific region. For example, ethnic tension in Fiji has twice led to political instability and economic setbacks, while a recent conflict in the Solomon Islands plunged the economy into recession and has required a long-term peacekeeping intervention by the country s Pacific partners. Household Risks Statistics on various categories of household risks are relatively scarce, however, school dropouts, the emergence of a large population of unemployed young people, increasing urban problems, and the deprivation of chronically poor sub-groups are apparent across the region. School Dropouts Some countries still experience a serious enrollment gap at the primary level (the Republic of the Marshall Islands, Vanuatu, and the Federated States of Micronesia have the highest out-ofschool rates). This has many long-term implications for societies because non-completion of primary school is universally known to be a predictor of adult poverty. Jobless Young People Higher levels of youth unemployment can be expected in almost any labor market, but in most countries in this report Samoa, Tonga, the Solomon Islands, the RMI, Palau, and the FSM it is more than double the total unemployment rate. Even in Kiribati where the work ethic is especially strong, joblessness among young males is nearly five times higher than the total unemployment rate. As high as the formal unemployment rates are in the Pacific, they do not fully capture the extent of joblessness and idleness among young people. Figure 2 shows male (not strictly youth) inactivity as well as unemployment in the region. Because high rates of joblessness among young people tend to be related to increased involvement in risky and socially destructive behavior, the importance of preparing young people to enter the job market and to take advantage of external opportunities through migration and temporary employment overseas is well recognized by governments in the Pacific. 4 Social Problems and People at Risk The Pacific island countries have experienced a range of social problems in recent years, particularly, but not exclusively, in urban areas. These problems include crime (including prostitution), substance abuse (mainly alcohol and kava), domestic violence and sexual assault (often alcohol-related), suicide, health risks such as sexually transmitted diseases and HIV, and growing numbers of accidents (also often alcohol-related). Data from the Fiji police show that cases of domestic violence increased by 68 percent between 1997 and 2001, 5 but this indicator is highly sensitive to the willingness of women to report the abuse. In the RMI, the Women United Together Marshall Islands recently attempted to get a more in-depth picture of domestic violence. They carried out a survey during 2003 and 2004 that revealed many more cases of domestic violence than those reported to the police. Among the 117 women interviewed who had experienced abuse in the home, only 14 percent had contacted the police. Disability and Pockets of Severe Poverty Analysis of disability is just beginning in the Pacific. Figure 3 presents a preliminary picture from census data and household wealth index values. Caution in interpretation is important. Census data may understate the true dimensions of this important social risk factor, which available data show as affecting from 1 to 3 percent of the population. Disabled people tend to be poor, and this is likely to be a lifelong correlation. Figure 2. Male Joblessness in the Pacific Region Samoa Male 2001 Unemployed Tonga Male 1996 Inactive Fiji 1996 Solomon I. FSM 2000 Kiribati 2000 Palau 2000 RMI Source: Census data.

3 O p p o r t u n i t i e s t o I m p r o v e S o c i a l P r o t e c t i o n S e c t o r P e r f o r m a n c e : S u m m a r y R e p o r t Other groups that endure severe and prolonged poverty are difficult to identify. Some islands in Vanuatu, for example, show sharply lower family wealth than most. Similarly, the Solomon Islands may contain some highly disadvantaged rural groups. It is not yet possible to quantify the dimensions of these at-risk groups nor the causes of their relative deprivation. In Kiribati, highly vulnerable rural islands are protected from severe poverty through generous copra price subsidies. In Fiji, government analysis of a recent survey of income and expenditure shows 28 percent of the population as living below an absolute poverty line but no sharp patterns by ethnicity or by rural/urban residence. 6 Government Systems and Options for Managing Macroeconomic Risks Some Pacific countries have already developed systems for dealing with natural disasters. For example, the United Statesfinanced Federal Emergency Management Agency (FEMA) provides disaster relief funds and services to the former U.S. territories the RMI, the FSM, and Palau. Vanuatu has established its own National Disaster Management Office, and Fiji also has an office. In addition, regional arrangements such as FRANZ are mobilized to help coordinate assistance and assess damage. Despite the severe impacts on poor families of weather shocks and economic volatility in the Pacific, none of these countries has developed public works programs to help affected families. Such Figure 3. Disability in the Pacific programs, which have been successfully implemented in other regions of the world, provide short-term work to low-income individuals to rebuild social and economic infrastructure, and thus accomplish two objectives simultaneously infrastructure rehabilitation and temporary incomes for vulnerable families (and temporary employment and training for youth). Disaster response in the Pacific could build some long-term capacity to use public works employment as a disaster management tool. Government Programs and Options to Help Manage Household Risks Although few social programs are in place to help manage household risks in the Pacific, examples exist that suggest possible approaches that other countries might consider. However, what is appropriate varies country by country according to each distinctive profile of social risk, fiscal space for new programs, and the adequacy of private, family-based systems. School Dropouts Primary school non-attendance is variable in the Pacific, but it is elevated in some countries. Targeted demand-side interventions, such as cash transfers to poor parents on the condition that they keep their children in school, can be effective where economic considerations such as the cost of schooling and transport are salient. 7 This kind of incentive program might be highly attractive in Vanuatu, the RMI, and other Pacific countries with large numbers of out-of-school children Solomon I. Fiji 1996 Source: Census data. Tonga 1996 Vanuatu RMI % of Population % in Bottom Income Quintile % in Highest Income Quintile Samoa 2001 Kiribati 2000 Youth Unemployment Education beyond the primary level is a core element in any strategy to help young people find fulfilling and productive lives, but the relationship of educational attainment to employment is a complex one in the region, as shown in multivariate analyses of survey and census data for Kiribati, Tonga, Fiji, and the RMI. 8 In Kiribati, where youth unemployment is barely 2 percent, 9 educational attainment is correlated with declining youth unemployment, as might be expected. In Tonga and Fiji, there is a strong relationship between educational attainment and overseas migrants, but the link between educational level and unemployment (across all ages) is modest. In the RMI, youth unemployment links only to the variable of household remittances as a percentage of

4 > > H u m a n D e v e l o p m e n t i n t h e P a c i f i c I s l a n d s income, suggesting that unemployed youth in the RMI might be reluctant to enter the labor market at existing wages. These results indicate that improving education opportunities alone will not be sufficient. Countries will also need to focus on economic policies that help create job opportunities or reduce barriers to employment. For example, there is room for improving the match between labor market demand and vocational training. The region has a few examples of highly relevant vocational training institutions. The Maritime and Fisheries Training Centers in Kiribiati (and similar centers in Tuvalu) have long produced seafarers who gain immediate commercial employment after leaving the centers, and a new school is being developed in Fiji to prepare young people to enter the growing tourism industry. Otherwise, however, vocational training has not prepared students for immediate employment. Youth and working-age adults in the Pacific have embraced overseas job opportunities when they have been available. The fact is, however, that other countries immigration and labor policies have more influence on Pacific labor markets than any steps that the governments of Pacific island countries may take unilaterally (see table 1). 10 For countries with liberal migration Countries RMI FSM Palau Samoa Tonga Fiji Table 1. Labor Force Mobility Immigration Access Migrants as % of Country Population 2001 Open to USA RMI 10% FSM 10% Palau 30% Fluctuating access to NZ and Australia, and USA Fluctuating access to NZ and Australia Restricted to all destinations; fewer restrictions for skilled Indo-Fijians, soldiers serving abroad Remittance Flows Yes* Yes Yes 72% Yes 76% Yes 10% Yes Vanuatu Restricted to all destinations < 1% Negligible Solomon I. Restricted to all destinations <1% Negligible Kiribati Restricted to all destinations < 1% From sea-farers only *RMI shows more remittances flowing out than in, an unusual pattern in the Pacific. Improving education opportunities alone will not be sufficient. Countries will also need to focus on economic policies that help create job opportunities or reduce barriers to employment. options, the impacts have in some cases been dramatic. 11 In Tonga, Samoa, and the RMI, for example, migration has alleviated some of the pressure on the local labor market. Remittances as a share of GDP in Samoa and Tonga have been as high as 24 and 48 percent, respectively. In Fiji and Tonga, there is strong evidence of the benefits of remittances (and net internal transfers) in reducing poverty. 12 In RMI and parts of the FSM, remittances instead flow out of the Pacific to overseas migrants, who may be working or studying abroad, but apparently at lower incomes than their relatives back home. Other Pacific island countries (such as the Solomon Islands and Vanuatu) have very low levels of remittances mainly because, for complex historical and political reasons, citizens of these countries have almost no access to OECD labor markets. For Tonga and Fiji, even though migration takes the more highly educated workers out of the country, the benefits to home country families are so substantial, as they are in Kiribati and in several other small island countries in the Pacific, that the interest in labor force mobility is likely to remain quite high in the region, especially for those countries with weak job creation prospects and high population growth rates. Employment services, which allow youth and others who are unemployed to gain access to information about job opportunities nationally and overseas, are almost non-existent in the region. Pacific governments can make an important contribution to their young people by establishing such services. Second-chance schools for those who did not pass into secondary school might be a way to attract jobless young people back into the education system to develop skills required by the labor market. These schools could perhaps

5 O p p o r t u n i t i e s t o I m p r o v e S o c i a l P r o t e c t i o n S e c t o r P e r f o r m a n c e : S u m m a r y R e p o r t be integrated with other non-formal education schemes and with employment services. The most promising government intervention is likely to be in providing public workfare schemes to employ jobless young people. However, each country in the region will have different responses. In the RMI, for example, workfare would probably be unworkable given the high reservation wage. Social Problems and Programs Designing effective interventions to address social problems is challenging, but an example from the RMI shows how effective public leadership can be. In the late 1990s, the authorities in the RMI were faced with a surge in illegal adoptions of children destined for the United States. They took decisive legal action, passing the necessary legislation to outlaw the activities and then enforcing it strictly. Those steps quickly ended the practice. Such exemplary results are less easily obtained, of course, when dealing with behavioral issues such as domestic violence and alcohol abuse. One apparent option for dealing with complex behavioral issues is for governments to support NGOs with prior experience in these areas. A first step for each government would be to make a systematic assessment of the country s social problems and the adequacy of current public and private efforts to deal with them. Findings from the World Bank s recent regional study 13 strongly suggest that Pacific governments have not given sufficient attention or funding to their most serious social problems. Promising options for initial government action include the establishment of temporary employment programs for young people (and to introduce them to the labor force) and the provision of safe haven and legal protection for victims of domestic violence. Social Assistance and Targeting the Poor In the Pacific region as elsewhere, there are chronically disadvantaged people who require continuing support and protection to survive. These people include many of the disabled, destitute elderly, families of incarcerated people, and the vulnerable residents of outer islands dependent on copra or other volatile commodities. Most countries continue to rely on traditional support systems for these people. However, a sprinkling of social A first step is for each government to make a systematic assessment of the country s social problems and the adequacy of current public and private efforts to deal with them. assistance programs exists, with Fiji and Kiribati having the most extensive programs. Eligibility for these social assistance programs is determined through a variety of different mechanisms, including characteristic targeting, means-tested targeting, and self-targeting. The Kiribati Social Affairs Department s School Fee Scheme and the much larger Fiji Department of Social Welfare s Family Assistance Program (FAP) 14 provide cash transfers to certain categories of people, determining eligibility according to applicants self-reports on proxy means tests. As a result, inclusion errors mean that some non-poor receive assistance. Long waiting lists in Fiji for the FAP program suggest that it also has errors of exclusion eligible families who are not yet benefiting from the program and chronically poor families that do not conform to the required categories. Even though targeting by proxy means tests is imperfect, it might be a reasonable option for large social assistance programs such as Fiji s. For very small-scale programs, targeting on the basis of information provided by communities or NGOs is appropriate because it makes use of local knowledge. Outer Island Copra Farmers Copra price subsidies are a form of self-targeting used by the governments of the RMI and Kiribati to provide support to low-income copra farmers living in the outer islands and to discourage migration to overcrowded urban centers. (Vanuatu also subsidized producer prices until the agricultural reforms of 2002.) The program in the RMI links subsidies closely to global price levels and at an aggregate budget ceiling of roughly

6 > > H u m a n D e v e l o p m e n t i n t h e P a c i f i c I s l a n d s US$1 million annually. This has kept copra prices low in the RMI in recent years, effectively selecting only the poorest families in the outer islands to benefit. The copra subsidy policy in Kiribati is a more explicit safety net program. It involves a highly subsidized price above global market levels, and it cost the government A$12 million in In the past when prices were set lower, the program was more effective in targeting poorer farmers. Recent price increases have stimulated sharp increases in annual production, signaling the entry of new producers and probably an erosion of targeting efficiency. The fiscal burden of the program has expanded accordingly. Self-targeted copra price subsidy programs can be effective in reaching the poor if price subsidies are managed well and in slowing rural-urban migration, both important objectives in Kiribati and the RMI. However, no public assets are created by producer subsidies, and they give farmers an incentive not to diversify and adopt more sustainable livelihood opportunities. Other countries have used public works programs that temporarily employ the rural poor, and the governments of both countries should consider this and other options in reviewing their rural safety net policies, as should governments of any other countries in the region that need to combat chronic rural poverty. The Elderly In Kiribati, all people age 70 and above are entitled to receive a stipend of A$40 per month from the government. The program has no income criteria and, in fact, before it was launched, only 23 percent of those over 70 had incomes in the lowest quintile. Inclusion of the non-poor is a common problem with characteristic targeting such as this. Characteristic targeting is also used for the more common program for the elderly the savings-based provident fund found widely in the Pacific (except in the Compact countries of Micronesia). The provident funds, all publicly chartered, are mandatory savings schemes for employees and employers in the formal sector, and members accumulate savings and returns in individual accounts. Several of the provident funds have been overcome by governance problems affecting the management of member savings, as in Vanuatu, and thus returns to members have been undermined. The Kiribati provident fund is a notable exception, thanks to an early decision to invest in offshore equities, and it has delivered steady market returns to members. 15 In the region, only the social security programs in the former U.S. territories qualify as risk-sharing mechanisms, as they are defined-benefit schemes financed on a pay-as-you-go basis modeled on the U.S. Social Security System. Even though the savings programs are open to informal sector workers and the self-employed (provident funds, it should be noted, have difficulty enrolling the self-employed), in practice any outer island residents who might want to take advantage of the programs are unable to access banking facilities. Thus, as currently constituted, the formal sector retirement schemes in the Pacific region, both social security and provident funds, do not have pro-poor targeting capacities and will need to be fundamentally reformed before they will be able to serve the low-income, the self-employed, and farmers. This might entail some government contributions. To better assure financial performance, Pacific provident funds would do well to follow the Kiribati example, through insulating fund resources from political interference and delegating investment to offshore intermediaries with clear performance benchmarks. Disabled People The main policy challenge is whether to introduce or expand programs run by the public sector, given the sector s limited involvement in social protection at the moment. Outside of Fiji, there are few public programs to assist disabled people, and, typically, NGOs have taken responsibility for providing education, training, counseling, and financial support to disabled people and their families. Samoa conducted a national survey in 2001 to identify all children 0 14 years of age with special needs and then provided teacher inservice training, established special needs units in village schools, and added a special needs education coordinator in the Department

7 O p p o r t u n i t i e s t o I m p r o v e S o c i a l P r o t e c t i o n S e c t o r P e r f o r m a n c e : S u m m a r y R e p o r t of Education. In Vanuatu, the Ministry of Education is assessing the special needs of its students, although funding to act on the findings has yet to be allocated, Pacific governments might all consider interventions to identify the disabled among their school-aged population and to design a phased program of support for them so that they can participate in the education system despite their disabilities. Another useful move would be to support disabled adults so that they can become more independent and self-supporting. NGOs in some Pacific island countries provide such services and would certainly welcome regular support from governments to supplement the funds provided by donors and private charities for this work. Strategic Choices Pacific governments are fortunate in that they can learn from the social protection efforts of a vibrant community of NGOs and churches. The main policy challenge and strategic choice in the social assistance area is whether to introduce or expand programs run by the public sector, given the sector s limited involvement in social protection at the moment. A secondary challenge flowing from the first is how to target public resources efficiently and equitably. Some social problems, despite their severity, may be difficult for government-managed programs to address due to inaccessibility of the target group (some youth groups), fiscal constraints in dealing with large-scale issues (rural poor, for example), or lack of expertise to deal with a problem (such as domestic violence). There are, however, promising opportunities for well-crafted interventions that could lower social risks and help restore productive lives. Some basic principles have been developed globally to help guide policy makers facing such choices: 1. Ensure that social protection mechanisms exist and focus on risk prevention and reduction. 2. Coordinate existing initiatives within a common financing and policy framework. 3. Identify areas that require new policies, more capacity to implement programs, and the public resources to finance them. 4. Build partnerships with the private sector and NGOs for the delivery of some services. 5. Regularly monitor and evaluate social protection programs so that their effectiveness can be measured and demonstrated. Collaboration Regionally and with Donors As the area of the world most prone to natural disasters, collaboration on a region-wide insurance or disaster fund would be an opportunity for Pacific island countries to pool risks. The establishment of such a fund appears to be worth investigating. Regional collaboration might also work as a lever to improve access to neighboring labor markets, easing unemployment in countries where labor mobility has been extremely limited. Pacific governments are fortunate in that they can learn from the social protection efforts of a vibrant community of NGOs and churches. At the same time, making the current division of responsibility for providing social protection more efficient could yield substantial rewards in the region. Governments, acting as the central point for sharing information and for coordinating activities, might contract out the provision of specific services to non-government entities, holding these entities accountable for an agreed set of outcome targets. Such systematic governmental collaboration with NGOs is an immediate opportunity for Pacific countries to increase the protection available to their most vulnerable citizens.

8 > > H u m a n D e v e l o p m e n t i n t h e P a c i f i c I s l a n d s Endnotes 1 World Bank member countries in the region are Fiji, Samoa, Solomon Islands, Federated States of Micronesia, Republic of the Marshall Islands, Vanuatu, Tonga, Kiribati, and Palau. 2 World Bank. (2006). Opportunities to improve social services: Human development in the Pacific islands. Washington, DC: World Bank Human Development Sector Unit, East Asia and Pacific Region. 3 In this report, transfer income refers to those components of disposable income that are not included in the usual measures of GDP. These are net factor income (NFI), which is recorded in the current account of the balance of payments and when added to GDP yields the gross national income (GNI) measure; aid transfers in the form of grants; and private remittance transfers. 4 Pacific leaders meeting in Papua New Guinea in October 2005 presented to the Forum a request that temporary work arrangements be considered for Pacific island country workers in Australia and New Zealand. 5 Fiji Police. (2002). Suva, Crime Statistics Report, 2001, p percent of Fijians live in poverty. (2005, November 27). Pacific Islands Report. 7 The use of conditional cash grants is increasing in several Latin American countries. See Rawlings, L., & Rubio, G. (2003). Evaluating the impact of conditional cash transfer programs: Lessons from Latin America. Washington, DC: World Bank. See also Barrientos, A., & DeJong, J. (2004) Child poverty and cash transfer, Report 4. London: Child Poverty Research and Policy Center. 8 Kiribati data reported in Chamberlin, C., Brovnik, M., & Suliman, E. (2004). Social protection sector report: Kiribati. Washington, DC: World Bank. Tonga data from World Bank staff calculations using 1996 census data. Fiji data from Fares, J., & Subbarao, K. (2004). Social protection sector report: Fiji. Washington, DC: World Bank. RMI data from Chamberlin, C., Brovnik, M., & Graham, B. (2004). Social protection and risk minimization in Republic of the Marshall Islands. Washington, DC: World Bank. 9 Labor market demand and, in particular, demand for family workers in the rural sector, may help explain lower unemployment in countries such as Vanuatu and Kiribati. 10 A World Bank report on migration and the brain drain argues that smaller and poorer economies suffer the highest proportion of educated migrants. The Pacific may not conform universally to this finding. See Schiff, M., & Ozden, C. (Eds.) (2005). Migration, remittances and the brain drain. Washington, DC: World Bank. 11 For a useful review of the Pacific remittance literature, see Connell, J., & Brown, R. (2005, March). Remittances in the Pacific: An overview. Manila: Asian Development Bank. 12 The data is from household surveys conducted in in Tonga and Fiji with support from AusAID and the World Bank. Other results show broadly positive household impacts from remittances in Fiji and Tonga, including on education levels of children, on managing health shocks, and on investment and savings of the household. 13 World Bank FAP expended US$12 million in Provident fund analysis for the Pacific countries is scarce, but problems with governance and returns are widely noted. See Turner, J. A. (2002). Social Security development and reform in Asia and the Pacific (Discussion Paper PI-0203): Pension Institute, University of London; and World Bank. (1994). Averting the old age crisis, chapter 6, for reviews of Pacific, Asian, and Caribbean provident funds. Also see Holzmann, R., et al. (2000). Pension systems in East Asia and the Pacific: Challenges and opportunities. (Social Protection Discussion Paper No. 0014): Washington, DC: World Bank. The Pacific Human Development Review was conducted by the World Bank in conjunction with the governments of the Pacific member countries. The report was prepared by a team led by Rekha Menon and comprising Christopher Chamberlin, Ian Collingwood, Sue Dawson, Jean Fares, Rapti Goonesekere, and Naoko Ohno. The team would like to thank the governments of the Pacific and the development partners for their support and collaboration during the preparation of the study. The development of this summary was managed by Rekha Menon with editorial and design support provided by WestEd, 730 Harrison Street, San Francisco, CA USA. Copyright 2006 by The World Bank. The World Bank Human Development Sector Unit East Asia and Pacific Region 1818 H Street, NW Washington, DC USA