Reducing Risks and Vulnerabilities: the role and impact of Social Protection

Reducing Risks and Vulnerabilities: the role and impact of Social Protection

Nuno CunhaSenior Social Protection SpecialistILO DWT for East and South East Asia and the PacificFAO Training of Trainers Workshop to enhance Pro-poor Policy Formulation and Implementation at Country Level21st September 2015

Structure of the presentation• Introduction to Social Protection• Constraints in Smallholder Agriculture• The role and impact of Social protection: mitigating risks, reducing

vulnerabilities and investing in Agricultural Productivity• SP linkages with economic growth • The impact of Social Protection on Agriculture

The Child Grant in Zambia

• The extension of social insurance to farmersCooperatives and rural pensions in Brazil, Costa Rica and Ecuador

• The integration of social protection and employment for herdersIntegrating social protection, entrepreneurship development and skills development for young herders in Mongolia

Why is Social Protection important to me?

[Mongolia]

What is Social Protection?

Life-cycle

Work injury

Maternity

UnemploymentInvalidit

yFamilies with

children

Sickness

Medical careOld ageDeath of the

breadwinner

• People face contingencies during their life-cycle, which have financial consequences

Social protection is provided to members of a society against the economic and social distress caused by such contingencies

To compensate for the loss of income and cover

health care expenditures

To facilitate access to social services and fulfill

basic needs

Financial support

Access to services

Protection provided by society

Social transfers

What is Social Protection?

National social protection floors:At least four nationally-defined guarantees

access to a set of goods and services

constituting essential health care including

maternity care

basic income security for

children

basic income security for persons in active age unable

to earn sufficient income

basic income security for persons

in old age

The social protection floors should comprise at least the following basic social security guarantees: (para. 5)

Guarantees should be provided to at least all residents and children, as defined in national laws and regulations, subject to Members’ existing international obligations. (para. 6)

national definition of minimum levels

social assistance

social insurance

universal schemes others

national choice

Most effective and efficient combination of benefits and schemes in national context

(para. 9(1))

nationally guaranteed outcomes

Benefits may include child and family benefits, sickness and health-care benefits, maternity benefits, disability benefits, old-age benefits, survivors’ benefits, unemployment benefits and employment guarantees, and employment injury benefits as well as any other social benefits in cash or in kind. (para. 9(2))

National social protection floors:Pluralism of approaches

• Social Protection Floors guarantees do not prescribe a specific architecture of social protection systems, programmes, and benefits.

• Not all countries will be able to put all the components in place for their whole populations immediately → progressive establishment of Social Protection Floors

• Social Protection Floors are defined nationally, depending on the context

• No ‘one size fits all’ approach in designing and implementing SPFs

National Social Protection Floors

Constraints in Smallholder Agriculture

Poor households mostly relying on agriculture for their livelihoods face constraints:• limited access to resources• low agricultural productivity• poorly functioning markets• exposure to covariate and idiosyncratic risks,

e.g. economic shocks, life-cycle contingencies, environmental risks

These constraints can affect:• Income security, livelihoods and resilience• Food security and food consumption• Access to healthcare, social insurance and social protection services

HOW TO COPE WITH SHOCKS?

The Impact of Social Protection: mitigating risks and reducing vulnerabilities, and investing in Agricultural Productivity

Alleviating constraints in credit, savings and liquidity

Increase in disposable

Income

Better managing risks, Engaging

in more profitable

livelihood and agricultural activities,

Smoothing consumptionallowing farmers to

plan, adapt their investments and spending pattern to their agricultural cycle and seasonal food shortages

Preventing individuals from engaging in ‘negative coping strategies’• selling their productive assets

(land, livestock, ploughs or fishing equipment) during crises or shocks,

• taking their children out of school,

• avoiding seeking health treatments and visits in case of sickness

Boosting the local economy

Cash transfers and public works interventions found to generate significant income multipliers in the local economy

Increasing resilience and

flexibility

Generating employment

Through regular and predictable

transfers

Increasing off-farm investments in microenterprises

Linkages with economic growth

Social protection

Household consumption

Poverty and inequality

Education and training

Health

Child well being

Livelihoods and productive investments

Labour

Human capital

Physical capital

Labour productivity

Economic performance

Demand for goods and services

Increased wages, income

Increased financing

1.

2.

2.

3.

3.

4.

4.

3.

• Started in 2010• Households with a child under five• Unconditional• USD12 per month (60 Kwacha) ≈ 28% of monthly per capita

consumption of beneficiary households • No differentiation by household size ( fixed amount) • Impact evaluation using Randomized Controlled Trials (RCTs) [by American

Institutes for Research (AIR), Palm Associates Limited (PAL), University of North Carolina (UNC), From Protection to Production - PtoP project (FAO; UC Davis)]

The impact of Social Protection on AgricultureThe impact of the Child Grant in Zambia

The impact of Social Protection on Agriculture The impact of the child grant in Zambia

Impacts on severe poverty

Percent declinesP0: 5.4 P1: 24 P2: 36

Elena Camilletti

La togliamo o la lasciamo?

Large impacts on total expenditure


Impacts on ProductivityImpact = 0.23 has operated


More Beneficiary Households own chickensImpact = 22% points


• Land Operated – 18% increase

• Value of Harvest – 146 kwacha increase

• Maize Produced – 8% increase

• Rice Produced – 4% increase

• Ownership of Livestock – 21% increase


Impacts on Production

Impacts on non-farm enterprisesImpact = 14 pp more beneficiary

HHs.


• Reduction in waged work

• Credit: 7.3% point reduction in the likelihood of having an outstanding loan

• Fewer beneficiaries with long term debt impact

Productive Impacts on Household

Study 1Study 2

Human Capital Impacts on Household

From AIR

Economic Impact on the community

Study 3From AIR

CGP Improves the Local Economy

•Income multiplier effect of 1.79

•Means that for every kwacha given to beneficiaries:

•Beneficiaries benefit by 1.17 kwacha increase to income

•Non-beneficiaries in same community benefit by 0.62 kwacha increase to income

• Low or null contributory capacity• Irregularity of incomes / seasonal patterns• Lack of organization / administration challenges• Competitive vulnerability• Challenges to enforce regulations• Challenges to measure income

Challenges to cover small scale farmers with social insurance

Background:• 1988: Federal Constitution

Article 194: Right to Social Security• Key principles: universality of coverage, uniformity and equivalence (urban

and rural populations)• Classification of the population according to three categories under

the National Social Insurance Institute: 1. Employees 2. Individual contributors 3. Special insured: workers performing their activities in rural areas and family

companies, and with no permanent employees (e.g. small farmers, artisanal fishermen, miners and indigenous people)

Extending social insurance to farmersRural pension in Brazil

Extension of social insurance to farmersRural pension in Brazil

Pension for the Special Insured

Coverage Special Insured: workers performing their activities in rural areas and family companies, and with no permanent employees (e.g. small farmers, artisanal fishermen, miners and indigenous people).

Establishment 2008

Contributions Based on the value of production sales

Key advantages Allowing workers to equate their contributory obligations to their income (generally irregular)

Contribution rates 2.3 per cent of the gross sales of their production.

Benefits levels Receiving the same benefits granted to contributors in other categories (employees, individual contributors) through the General Social Welfare Scheme

Additional benefits Access to such benefits in times of low productivity or in case of crop or production loss for any reason

Retirement age • 60 years old in the case of men• 55 years old in the case of women• Amount equivalent to the national minimum salary

Conditions attached to the registration 15 years of rural activity.

Flexibility of contributions

Security of benefits

Solidarity

Extension of social insurance to farmersCollective Insurance Agreements in Costa Rica

Collective Insurance Agreements in Costa Rica

Type of social protection scheme Collective registration mechanism

Management Costa Rica’ Social Insurance, in charge of managing Collective Insurance Agreements with farmers

Contribution rates Established:• according to the specific productive activities performed by the workers registered in

an organization, and • according to the contributory capacity of the registered group. • The difference between the contribution paid by the insured and the total contribution

percentage falls upon the stateEstablished:• through specific and regular reference incomes for certain organization members,

rather than according to income categories [Hence, different contribution scales may therefore be established within the same organization]

Double-check registration process

• The organization (cooperatives, producers’ association) is in charge of entering each of its registrants

• Registration according to the scale considered to be the most adequate to the registrant’s income

• The registration (and the income scale) is subsequently confirmed by social insurance inspectors

Other measures Inspectors to combat tax evasion and improve the collection of contributions by independent workers and employees, in both urban and rural areas

What is a collective registration mechanism?

• It enables independent workers that are grouped into independent organizations (e.g. producers' associations or cooperatives) to have the opportunity to enter into collective or group insurance agreements with a social insurance scheme

Facilitating the registration of workers by tapping on their organizations (cooperatives, producers’ associations)


Extension of social insurance to farmersEcuador’s Peasants Social Insurance (SSC)

Ecuador's Peasants’ Social Insurance (SSC)

Coverage • Agricultural independent workers • Artisanal fishermen

Benefits • Sickness and maternity for the whole family • Old age and death for the directly insured

Benefits level 75% of the minimum contribution salary(of the old age and the total permanent invalidity pensions)

Registration mechanism • Individually• collectively (usually is done collectively)

Collection of contributions and transfer to the Social Insurance Management

If collectively, done by the rural organization

Additional financing • System involving registrants and employers of the national social security system• State's subsidiary revenues

Contribution rates Lower than the rates of the General Mandatory Insurance

Conditions attached to the registration • Having continuous or occasional own-account work in the farming sector• Living in a rural area

Solidarity!

IMPACT: SSC has enabled the Ecuadorian rural population to benefit from a solidary social insurance mechanism

Testing new models: integrating social protection and employment services for herders

The case of Mongolia

As part of the ILO/Japan project Promoting and Building Social Projection and Employment Services for Vulnerable Groups in Mongolia, Learning From ASEAN (MAPS), the local government of two provinces (aimags Uvurhangai and Bayankhongor) are receiving support to enhance integration between Social Protection, skills development and entrepreneurship development tapping on the existing one stop-shop network, and designing social protection and employment promotion measures for young herders

Elena Camilletti

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BackgroundConstraints and challenges for herders: • Challenges in the administration and delivery of social protection and

employment services across a sparsely populated country ( more than 80% of herders, self-employed and informal economy workers with insufficient income security)

• Lack of awareness of the social security system • Limited livestock• Limited access to markets• Mostly seasonal products• Restrictive mechanisms and schedules for paying contributions• Low availability of cash/savings (at the time of selling their products, herders are

expected to pay their loan repayment at the bank and then their social insurance contributions, which is challenging)

ILO/Japan project interventions: • actions at the aimag level (≈ province): collaboration between

Employment, Social Insurance, Social Welfare Divisions, TVET Centers, among others

• and soum level (≈ district): building cooperatives’ capacity, SME, Social Insurance, Social Welfare officers, life-long education officers and herders

• expected to have a multiplier effect at the national level• short and longer-term interventions in the technical areas of Social

Protection, Employment, Skills Development and Entrepreneurship Development


The case of Mongolia coordination among different line counterparts, with different technical expertises

What is the One Stop-Shop Service (OSS)?•Implemented in 2007 •Today, a total of 194 one stop shops at all levels: province (aimags), counties (soums), districts (duuregs) and sub district (Khoroos).•Gathering together government ministries and offices in one venue•Offering services, e.g. social welfare, social insurance, employment and civil registration, land registration, banking and notary

Accessing existing services more quickly and efficiently



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• Flexibility for the collection of contributions to social insurance• Partnerships with cooperatives for the collection of contributions• Raising awareness on the Social Security System• Strengthening and integrating employment and social protection services at

the local level through the existing one stop-shop network

Improving access to Social Protection

• Matching the livestock products quality with the requirements of the processing industry

• Improving herders’ vocational training and business skills

Enhancing technical skills to diversify and increase quality of

livestock products

• Training for better business management• Increasing bargaining power on the market• Strengthening cooperatives

Fostering business skills for more productive livestock activities and

better integration in the value chain

• Employment and career counsellingImproving access to off-

farm employment opportunities



Social Protection has the potential to •Alleviate constraints in savings, credit and liquidity•Increase incomes, enhance livelihoods and promote

resilience•Promote investments in agricultural productivity through

increases in expenditures for agricultural inputs •Boost the local economy through increases in domestic

demand, and•Generate employment in both farming and on-farm sector

• But could do even more • THERE IS A NEED TO REINFORCE LINKAGES

CONCLUSIONS

Elena Camilletti

I leave this to you if you want to keep it or not

Thank you

Nuno [email protected]

mailto:[email protected]

ReferencesDurán Valverde, Fabio. Innovations in extending social insurance coverage to independent workers: experiences from Brazil, Cape Verde, Colombia, Costa Rica, Ecuador, Philippines, France and Uruguay / Fabio Durán Valverde; International Labour Office. - Geneva: ILO, 2013

Maffioli, A. et al. 2011. Extension services, product quality and yields: the case of grapes in Argentina. Agricultural Economics 42 (2011) 727-734

International Labour Organization, 2003. Decent work in agriculture. Background paper, International Workers’ Symposium on Decent Work in Agriculture. Geneva, 15-18 September 2003

Agricultural workers and their contribution to sustainable agriculture and rural development / FAO-ILO-IUF. - Geneva: ILO, 2007

Food and Agriculture Organization 2015, Qualitative research and analyses of the economic impacts of cash transfer programmes in Sub-Saharan Africa. Synthesis Report. Valentina Barca, Simon Brook, Jeremy Holland and Mosope Otulana, Pamela Pozarny. Rome: FAO, 2015

Food and Agriculture Organization, 2013. The interaction between social protection and agriculture: A review of evidence. Nyasha Tirivayi, Marco Knowles and Benjamin Davis. Rome: FAO, 2013

Food and Agriculture Organization, 2013. A methodology for local economy-wide impact evaluation (LEWIE) of cash transfers: Methodological guidelines for the From Protection to Production (PtoP) project. J. Edward Taylor. Rome: FAO, 2013.

Food and Agriculture Organization, 2014. Local Economy-wide Impact Evaluation (EWIE) of Zambia’s Child Grant Programme. Thome, K., Taylor,. J. E., Davis B. , Handa, S., Seidenfeld, D., Tembo, G.. Rome: FAO, 2014

Reducing Risks and Vulnerabilities: the role and impact of Social Protection

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