Labor Based Public Works Can it be an instrument for Safety Net Strategies? THE GHANA PERSPECTIVE B. M. Oppong Arusha June 14, 2010 1
INTRODUCTION Safety net Strategies have been adopted by many Countries. The aim is to protect the poorest and vulnerable segments of societies. However, the role of Labor Based Public Works in these safety net Program is now being recognized and appreciated in Ghana. 2
BRIEF SOCO-ECONOMIC HISTORY OF GHANA Before independence one of the biggest reserves holders in the sterling Area System, due to in cocoa, gold and timber Post-Independence 20 year social and economic infrastructure transportation which was associated with explosive population boom and a classic rural-urban drift of the youth. The resultant social costs paid from the long cyclical boom in the three export commodities 3
BRIEF SOCIO-ECONOMIC HISTORY OF GHANA, Cont d The collapse of this mono-crop economy in the mid-sixties exposed the vulnerability of the economy: instability ensued and decline began mid-70s Started benefiting from donor supported programs - Economic Recovery Program (ERP) - Structural Adjustment Program (SAP) - Poverty Reduction Strategy (GPRS 1 & 2) All meant to improve economic performance and reduce poverty. 4
GHANA S SOCIAL PROTECTION CONTEXT The ensuing sluggish growth in production and employment ment and lack of effective e programs rams for the vulnerable and excluded were among the key issues constraining socio-economic development. 5
GHANA S SOCIAL PROTECTION CONTEXT As a consequence Labor Based Technology for rural roads construction (Rehabilitation was introduced to the Department of Feeder Roads under the Ministry of Roads and Highways in 1986 by the ILO with support from the World Bank and UNDP. Earlier experiences in the use of labor based methods in African countries had proved that the method produced gravel roads of quality to those produced using equipment-based methods and generate rural employment in a cost-effective manner 6
GHANA S SOCIAL PROTECTION CONTEXT, cont d Its feasibility was therefore not in doubt. However Ghana chose to use small local contractors instead of Force Account, to use the technology in rehabilitating feeder roads This being the first country to adopt that After about 15 years of LBT practice 5,400 km of very poor rural roads had been rehabilitated. Injected Thirty Million (US$30 m) US Dollars into the rural economy and generated 13 million person-days of employment through productive work. 7
GHANA S SOCIAL PROTECTION CONTEXT, cont d With each contractor employing up to 120 under- employed and unemployed youth per day in the rural areas, documented impact assessment of the pilot phase showed tremendous change in live for the better Inherent self-targeting mechanism of LBT showed a consistent 30% - 70% female to male ratio in the works There was no differentiation i i in piecework rates by gender. Piecework rates were based on unit rates developed from job studies to determine output rates, Civil Engineering and Building Contractors Associations minimum wage rates, etc 8
GHANA S SOCIAL PROTECTION CONTEXT, cont d Alongside the LBT programme a number of independent Social Protection Instruments were initiated with the view to reducing poverty. By 2006 Ghana s Living Standards Survey (GLSS) had shown a significant decline in poverty headcount from 51% in 1992 to 39% in 2006. However the growth had not been iniform if in geographical terms the three northern regions regressed with a rising incidence of poverty from 33% in 1992 to 50% in 2006 The poverty reduction was achieved due to redistributive policies and general economic growth 9
TheNational Social Protection Strategy The nascent elements of a Comprehensive social protection system were taken to the next level in 2007 with the establishment of Ghana s Social Protection Strategy (SPS). To address these Ghana has instituted a National Social Protection Strategy (NSPS) It is a multi-dimensional lidi i l and rights based approach a vision of an all inclusive and socially empowered society. 10
Current Instruments of the SPS 1. Programs to provide ex-ante protection from shocks a. National Health Insurance Scheme (NHIS) and b. free maternal care c. Livelihood Empowerment Against Poverty (LEAP) d. School Feeding Program and child nutrition e. Capitation Grant (Primary Education) 2. Program that provides ex-post protection from shocks a. includes temporary employment 3. Anti-poverty creation programs a. National Youth Employment b. Micro-Credit Facilities 11
RELEVANCE OF PW IN THE NSPS There are types of Public Works which targets unskilled labor which in most cases is the segment of society needing social protection: Relief Programs during emergencies caused by natural disaster. Objective is to provide incomes. Assets is of secondary importance Self-Help Programs Regressive taxation, no payments Employment Generation Programs to assuage political unrest: objective is to keep people busy, productivity not the issue. Assets Generation programs supplement usual incomes by improving infrastructure facilities at lowest possible costs. 12
RELEVANCE OF PW IN THE NSPS, Cont d These PW programs and the 15yr experience of LBT practise in Ghana indicate the potential of PW as a major SP instrument. 13
Country Circumstances Ghana is expected to be first in sub Sahara Africa to achieve MDG Goals by halving poverty and hunger before 2015 target year poverty levels diverge significantly across different parts of the country Though overall poverty rate fell from 61% in 1991 to 39% in 2006 in the rural areas (strong agric. Growth). Northern Savanna zone declined by 18%. The zone has 40% share of the poor Similar situations exist in the other parts of the country 14
Country circumstances, Cont d Much of these poor areas are landlocked, less rainfall, greater land and soil degradation, predisposed to drought and floods, forces agricultural households to adopt low risk/low input strategy, engage in seasonal migration and have lower skill level which relegates them to lowest wage segments of the labor markets kt 15
The Labor Market It is estimated that Ghanaians ( ages 15 35 yrs) constitute 26% of the population (> 22 million) The LEAP Instrument is targeting 164370 eligible ibl households h for cash Grants by 2012. In Ghana a household is an average of 5, indicating the level of potential labor availability for PWs. Are largely l unemployed or under employed. Labor availability depends on several factors: a) In the rural areas, labor can be a problem during farming seasons, but piecework approach addressed this. b) In the urban areas, LBT competes with a variety of employment ventures. c) Conflict areas Need for effective conflict prevention and resolution strategies. d) Ghana has minimum wage law and does not differentiate between genders. The market determines wages of skilled labor 16
INFRASTRUCTURE NEEDS Over 40% of classified rural roads are poor to fair conditions creating bottlenecks to market assets by the rural poor Substantial numbers of basic schools, which needs to be provided with decent buildings Small water harvesting systems for irrigation and animal watering are not adequate-existing ones are poorly maintained Degraded lands need to be restored by terracing, bunding, channelling and replanting to facilitate regeneration. Most of these infrastructures facilities can be provided using labor-based technology to create employment, e.g. a laborbased contractor employs 120 workers per day for feeder roads works. 17
Fiscal space and scope There is rekindled interest in Ghana for LIPW at both governmental and donor levels; Government is reforming policy framework with regards to LIPW; There is institutional capacity to provide technical support for LBT. 18
Fiscal space and scope, Cont d Some construction equipment and tools for LIPW are now available on the local market; There exists a corps of trained small contracting firms, and capacity to train more is available. ILO is collaborating with some tertiary institutions in Ghana to include Technology choice in their Civil Engineering g curricula. 19
Estimating the number of participants Define the number and type of projects by districts For each project need to estimate the number of man days needed to carry out the projects For roads (the predominant type of projects) for example : Total number of man days desired: 5,000,000 over 5 years If we assume 60 days per worker per year and between 100 and 120 workers per project, there will be approximately 3-4 projects in each of the 40 districts and a total of about 15,000 workers per year. The same exercise needs to be done for the other activities like rehabilitation of dams, contraction of dugouts, terracing bunding, tree planting, etc. The budget should be allocated to the different activities based on the estimates of their cost (labor and inputs) 20
Institutions and capacity assessment Governments intends to upgrade the existing LBT training facility into a center of excellence for labor based works; Registration and classification system of the road sector, includes a class for LIPW. Cross-cutting issues like HIV/AIDS, gender, environment and governance are increasingly brought to the fore in tender documents. 21
SCALING UP Ghana government has applied for World Bank Credit support for a Social Opportunities Project (GSOP). Objectives of the project are: Improve targeting in social protection spending Increase access to conditional cash transfers nationwide Increase access to employment and cash-earning opportunities for the rural poor during agricultural l offf-seasons, and Improve economic and social infrastructure in target districts It is expected to generate an estimated 1.5 million person days of employment. 22
SCALING UP, cont d The project is designed to help Ghana move in the direction of a vision that enables a graduation of ultra poor households out of poverty, exploitiing synergies between programs and strengthening their complementarities. It is to help government implement a LPW program that offers income-earning earning opportunities to poor rural households and improves productive rural infrastructure. Several categories of poor and vulnerable households are in principle eligible for LEAP support but not likely to lift them out of poverty. 23
SCALING UP, cont d There are fit working age persons underemployed and eligible for LEAP who could take part in the income- earning opportunity offered by LIPW. The combination of LEAP and LIPW support is more likely to result in households moving out of ultra poverty. Scaling up beyond project life of 5 years envisaged to become a national safety net to replace many programs The two streams supported by project i.e. Cash transfers and access to employment on local labor based works that promote local development can provide a combination of a SAFETY NET with a SAFETY LADDER allowing poor households to move out of poverty 24
To use PWs or Not to use PWs It is hoped that this overview of the Ghana situation leaves no doubt about its feasibility in the country. 25
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