The World Bank’s Work Program in the Region

SOCIAL PROTECTION IN THE CARIBBEAN

POVERTY AND VULNERABILITY IN THE CARIBBEAN

The importance of Social Protection

POVERTY

Where data is available, poverty rates exceed 17%.• Poverty reached as high as 41.3% in Belize in 2009; 37.7% in Grenada in 2008; and 30.2% in SVG in 2008.

The brunt of poverty is faced by children and female-headed households. • 53% of Grenada’s poor are children; 35.7% of Dominica’s poor were under age 15; 1 in 3 children in St Kitts

was poor; while over 50% of the poor in St Lucia were under age 20. 52.8% of Antigua and Barbuda’s poor were women. In Barbados, 62.2% of poor households were headed by women

The poor are characterized by limited educational outcomes. • The poor had higher illiteracy rates in Grenada, Dominica, St Kitts and Nevis, St Lucia, and St Vincent and

the Grenadines; and poor children were more likely to miss school.

The poor tends to be employed in the Caribbean. • In St Lucia, 80% of the poor had jobs; 74.1% of the poor in Dominica; and in St Kitts, 77% of poor men and

85% of poor women were employed.

Economic crisis has exacerbated poverty rates• However recent the extent of that impact is not known for several countries.

UNFORESEEN SHOCKS AND VOLATILITY

Significant vulnerability to environmental shocks:

• Earthquake, Haiti, 2009: over 200,000 lives lost and significant infrastructural damage.• Hurricane Ivan, Grenada, 2004: damaged 90 percent of the country’s buildings and left

half of the population homeless.• Hurricane Omar, St Kitts and Nevis, 2008: led to the two year closure of the Four Seasons

Resort on Nevis, one of the country’s main employers.

Susceptible to exogenous economic shocks:

Effects of the 2008 crisis on SIDS include:• Collapse of the Stanford Group of Companies in Antigua and Barbuda in 2009, leaving

over 1,200 workers without work.• Increased commodity prices in most countries.• Limited growth performance in Caribbean countries, particularly following the crisis.

Vulnerability due to food price volatility.

• Export earnings derived from primary commodities that no longer benefit from economies of scale and competitive pricing

• Caribbean countries average between 45% and 65% of GDP on imports.• Haiti imports 52% of its food, including over 80% of its rice.

Economies are still heavily dependent on the tourism sector, which is in turn highly vulnerable to external factors.• Tourism accounted for 77% of Antigua’s GDP in 2010 and over 30% for Bahamas, Barbados, Belize, Dominica and St

Lucia.

Small labor markets, characterized by limited skilled labor, and high unemployment.

• Education systems are not adequately preparing persons for the workforce. Only 35% of students received passing grades in Mathematics, while 67% passed English A in June 2011 CSEC examinations.

• Unemployment as high as 25% in Grenada, 20% in Guyana, and 19% in St. Vincent and the Grenadines.• Unemployment affects the poor, youth and women disproportionately• Labor costs remain high• Emigration rates exceed 40% for several countries, and emigration rates of skilled labor among the highest globally.• Limited labor market information readily available.

LABOR MARKET AND ECONOMIC CHALLENGES

IMPENDING DEMOGRAPHIC CHANGES

Guyana

Jamaica

Suriname

Dominican Republic

Belize

Haiti

TTO

Barbados

Bahamas

St Lucia

Grenada

St Vincent & Grenadines

Latin America and the Caribbean

Europe

World

-15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0%

Population 65+Population 15-64

Percent Change(2010-2050)

Projected Change in Working-Aged and Elderly Populations (2010-2050)

SOCIAL PROTECTION IN THE CARIBBEAN: A DIAGNOSIS

CHALLENGES, NEEDS, AND PRIORITIES

SOCIAL SAFETY NETS - PROFILE

• A range of cash and in-kind transfers provided. • Cash transfers include a general cash transfer to the poor; CCTs; transportation allowance;

burial assistance; and emergency cash transfers.• In-kind transfers include school meals; school textbooks; school transportation; day-care;

provision of food to the poor; medical care assistance and utility subsidies.

A Comprehensive Portfolio

• Funding for SSNs in most OECS countries come from local revenue (75%). • Haiti is an exception, with most of the SSN externally-funded. • SSN spending close to global average

Government-funded SSN

• SIFs are present in Belize, Jamaica, St Vincent and the Grenadines, while Basic Needs Trust Funds, which have similar objectives, are provided by St Lucia and Grenada.

Social Investment Funds continue to Play a Role

SOCIAL SAFETY NETSMULTIPLE PROGRAMS, LIMITED IMPACT

Unobjective and inadequate targeting mechanisms, but concerted efforts to improve targeting underway

• Methods for determining eligibility for many countries are ad hoc, subjective and discretionary.• Multiple targeting mechanisms are used by different agencies to identify similar target groups.. • Jamaica, Belize and the DR utilize objective targeting mechanisms. Reforms are underway in A&B, Grenada, SKN and St Lucia to establish objective targeting mechanisms.

Exclusion and inclusion errors affect coverage performance

• Many pro-poor programs provide little coverage to the poor. • Compounding this is leakage to non-poor for various SSN programs.

Fragmentation and Duplication

• Several examples of programs supporting the same target groups and implemented by multiple agencies, resulting in receipt of multiple benefits and higher administrative costs. • Efforts to rectify these challenges underway in A&B, Grenada etc.

Inadequate Monitoring and Evaluation

• Inadequate information systems and an absence of a institutional culture for M&E has compounded these problems. • Countries with good models and systems include the DR, Belize and Jamaica. • Systems being developed or planned for A&B, Grenada, SKN, St Lucia, among others.

LABOR MARKET INTERVENTIONS MULTIPLE PROGRAMS, LIMITED IMPACT

A Comprehensive Portfolio, yet Spending is Low.

• Vocational training; job search assistance; small business development; youth training programs; temporary employment programs etc.• Spending is between 0.01% and 0.4% of GDP in OECS countries

Limited Coverage

• Many programs are very small in terms of beneficiaries covered.

Multiple Agency Responsibility

• Interventions are implemented by various agencies, usually Ministries of Education, Labor and Social Development, with little coordination.

Limited Information on Labor Market Needs and Program Effectiveness

• Inadequate information systems to manage labor market data and monitor performance.• Programs are implemented with little/no knowledge of labor market demand. • Programs are often scaled up, with little knowledge of their impact on participants’ employability.

SOCIAL INSURANCE – PROFILE

Social Insurance spending is the largest share of SP spending for most Caribbean SIDS.

• SI averages 2% of GDP in the OECS sub-region

Worker and employee contribution rates generally do not differ beyond one percentage point for most countries.

• Contribution rates range from 5% in Jamaica to 13.5% in Barbados.

A similar range of benefits is provided in most Caribbean countries.

• Benefits principally include a contributory pension, along with maternity, employment injury, survivors, invalidity, and funeral benefits, among others.

Some countries provide non-contributory pensions (NCPs) as part of the SI scheme.

• Barbados, St. Kitts and Nevis, St. Vincent and the Grenadines, Trinidad and Tobago Belize, Suriname. (Antigua and Barbuda and Jamaica for public servants)• Grenada, St Lucia and Jamaica provide an NCP as part of the social safety net.

SOCIAL INSURANCEREASONABLE COVERAGE, YET UNSUSTAINABLE

Reasonable Coverage • Coverage generally exceeds 60% for most countries, reaching 85% and 90% for Trinidad and Tobago and Grenada respectively. (For Jamaica,

coverage is 37%). • Coverage is mostly limited to those in the formal sector who meet required minimum contributions. • Non-contributory Pensions (NCPs) in Trinidad and Tobago and St Vincent and the Grenadines improve coverage outcomes.

Efforts to Address Portability

• High labor mobility addressed through the 1996 CARICOM Agreement on Social Security, OECS Convention on Social Security.• Bilateral agreements with Canada, the United Kingdom, and Quebec in place. • Further agreement on the extension of pension rights is needed in the CARICOM agreement.

Duplication

• Duplication of benefits; overlap between SI schemes and social safety net schemes; and parallel systems are challenges to efficient SI systems.

Unsustainable Schemes • Most SI schemes are not financially sustainable under current parameters. • Reserves could be depleted by 2039 for SVG; and by 2041 for Grenada. • Impending ageing threatens to result in cash flow deficits for Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Guyana, Jamaica and

SVG by 2025.

EMERGENCY RESPONSE MORE RESPONSIVE SP SYSTEMS NEEDED

CCRIF - An Excellent Model at the Macro-Level

• The Caribbean Catastrophe Risk Insurance Facility (CCRIF), which pools risk to mitigate the financial impact of environmental hazards, provides quickly disbursing liquidity to 16 CARICOM member states.

Limited protection at the individual and household levels

• Insurance coverage generally limited to tourism-related properties, and medium and large commercial businesses. • The poor are unable to afford insurance, and their dwellings are usually more prone to damage.

Emergency cash transfers provided in some countries, but programs are small

• This is provided as part of the SSN in Belize, Grenada, Jamaica, St. Kitts and Nevis, St Lucia, SVG, and T&T.• Small coverage and in some cases, low levels of benefits.

SSNs not flexible enough to respond in time of shocks

• The absence of beneficiary registries and information systems limit responsiveness.

RESPONDING TO THE CHALLENGES

THE WORLD BANK’S WORK PROGRAM ON SOCIAL PROTECTION AND LABOR IN THE

CARIBBEAN

SOCIAL INSURANCE

•Supporting improved efficiency in public pension schemes, improved government capacity , and integrated pension systems.

•Jamaica, Social Protection Project (2007-2013); First Programmatic DPL (under preparation)

•Trinidad and Tobago, Pension System Enhancement (2011-2014)

LABOR MARKET PROGRAMS

•Supporting activation, graduation agendas, labor market monitoring, and flexible labor market response.

•Antigua and Barbuda, Public and Social Sector Transformation Project (2013-2018)

•Jamaica, Social Protection Project; Jamaica Social and Economic Inclusion of People with Disabilities (2012-2017), Jamaica Conditional Cash Transfer Program (now closed); Just-in-time Skills Promotion and Protection (NLTA) (closed)

•Dominican Republic, Flexible Employment System Project (under preparation), Youth Development Project (2005-2013)

•Regional: Strengthening Labor Market Monitoring and Performance in the Caribbean (2013-2016); Caribbean Growth Forum (ongoing)

SOCIAL SAFETY NETS

•Supporting improved targeting, human capital development, improved efficiency in service delivery.

•Antigua and Barbuda, Public and Social Sector Transformation Project (2013-2018)

•Belize, Conditional Cash Transfers and Human Development NLTA (2012-2013)

•Grenada, Safety Net Advancement Project (2011-2015)

•Haiti: Improving Maternal and Child Health through Integrated Social Services (2013-2018)

•Jamaica, Social Protection Project; Jamaica Conditional Cash Transfer Program (now closed);

•Dominican Republic, Social Sectors NLTA (2009-2013); Performance and Accountability of Social Sectors DPL (2011-2012), Social Sectors Investment Program (2005-2013)

•Regional, OECS NLTA, South-South Exchange Facility (closed)

SUPPORTING SP SYSTEMS(IMPROVING M&E AND CAPACITY FOR

EMERGENCY RESPONSE)

•Supporting improved information systems, data collection, coordination, monitoring and evaluation.

•Antigua and Barbuda, Public and Social Sector Transformation Project (2013-2018)

•Belize, Conditional Cash Transfers and Human Development NLTA (2012-2013)

•Dominican Republic: Social Sectors NLTA (2009-2013); Performance and Accountability of Social Sectors DPL (2011-2012), Social Sectors Investment Program (2005-2013)

•Grenada, Safety Net Advancement Project (2011-2015

•Jamaica, Social Protection Project; •Regional, OECS NLTA, South-South Exchange Facility (closed)

•Dominica: Growth and Social Protection Technical Assistance Credit. (2006-2010 - closed)

THE WAY FORWARD

AREAS FOR IMPROVED COLLABORATION TO ADDRESS SOCIAL PROTECTION CHALLENGES

IN THE CARIBBEAN

SYSTEM-WIDE ACTIONS

Harmonize SP policies to respond to

regional mobility

Ensure portable benefits across

countries – beyond pensions

Consolidate SP programs within

countriesEliminate duplication Reduce fragmentation

in service delivery

Improve communication and

coordination between SI, SSN, and labor market programs.

Prioritize human capital

development among the poor

Condition unemployment

benefits and social assistance to ALMPs

Promote income generation capacity of

poor households

Condition support to key improvements in

healthy lifestyles.

Improve Monitoring and

EvaluationDevelop adequate

information systems

Improve data collection capacity

and collect data more frequently

Harmonize systems and cooperation on

data collection at the regional level

Increase partnerships with civil society and

the private sector

Cooperate at the design and planning

stages (data collection, needs assessments etc.)

Partner at the implementation stage

for service delivery (e.g. demand-driven

training)

AREA-SPECIFIC ACTIONS

Improve responsiveness to

shocks.

Flexible targeting, open application, beneficiary

registries, and fast scale-up.

Quickly scale-up temporary employment

programs during economic downturn.

Improve insurance coverage – particularly

unemployment and emergency coverage.

Improve efficiency and effectiveness

of social safety net programs

Improve targeting efficiency

Reduce duplication and fragmentation

Tie transfers to human capital improvements

Tailor labor market interventions to respond to the

regional context

Promote employability in a demand-driven way,

particularly among vulnerable groups

Capitalize on the mobile nature of the labor force

Complement passive programs with active labor market policies

Reform social insurance

Improve coverage of self-employed, informal

workers, and the poor.

Improve long term sustainability. (increased

contribution rates, increased retirement age,

eliminate duplication)

Strengthen the portability of social security

benefits under regional and bilateral

arrangements.

THANK YOU!

Social Protection Discussion PaperTailoring Social Protection to Small Island Developing States

Lessons Learned from the Caribbean

Weblink: http://documents.worldbank.org/curated/en/2013/08/18086868/

www.worldbank.org – Topics – Labor and Social Protection – Publications – Discussion Papers – General Social Protection

Contact: awilliams5@worldbank.org