Transcript Document

Cash transfers, social pensions
and HIV and AIDS
HIV/AIDS and the World of Work
Turin, Italy
11 September 2009
Charles Knox
HelpAge International
Agenda
• Part 1: Cash transfers and their impact
•
•
•
•
•
Social protection and cash transfers: an introduction
Focus on social pensions
•
Impacts on people affected by HIV and AIDS
VIDEO
GROUP WORK: Cash transfers for people affected by
HIV and AIDS
Part 2: How do we do it: affordability and
implementation
•
•
•
GROUP WORK: Targeting
Targeting
Affordability
Social protection: definition
• Many different definitions
•
But… consensus on the importance of social
protection as a means of reducing vulnerability
and poverty
•
Helps people respond to shocks and manage
risk.
Social Protection Instruments
Social Assistance (or general
taxation)
Non-contributory cash transfers such
as pensions; free healthcare;
conditional cash transfers; school
feeding, employment guarantee
schemes.
Social Insurance (pooling
mechanisms; pay-roll taxes)
Contributory pensions;
unemployment insurance; social
health insurance; funeral societies.
Rights legislation
Minimum wage; standards in the
workplace (eg. health and safety).
Anti-discrimination legislation
Livelihoods programmes
Micro-credit; free fertilizer and
seeds; asset transfers (eg. for
production).
Social services
Orphanages; crèches; old people’s
homes; child protection.
Focus today
Social Assistance (or general
taxation)
Non-contributory cash transfers such
as pensions; free healthcare;
conditional cash transfers; school
feeding, employment guarantee
schemes.
Why social assistance?
Shouldn’t people just work to avoid poverty?
•
•
•
•
Some people cannot work
•
Some older people, people living with disability
Some people should not work
•
Children
Some work is not remunerated
•
Caring roles
Some people work but do not earn enough
•
Low pay, low skills, disability and old age can make
it hard to earn enough.
Why cash transfers?
•
•
•
Choice
•
poor people know how to spend their money.
Cost
•
cheaper to run and administer.
Can boost local economies
Cash transfers and their impacts
•
•
•
•
•
•
•
Reduce poverty
Improve nutrition
Improve access to healthcare
Investment in human capital
Reduce inequality
Empowerment
State building – social contract
Not a new concept
OECD countries spend significant amounts on
social security
25
% of GDP
20
15
10
5
0
US
Japan
Germany
France
UK
Italy
OECD
Cash transfers in developing
countries
• Social pensions
•
•
•
•
South Africa, Namibia, Botswana, Lesotho,
Swaziland, Nepal, Mauritius.
Child grants
•
Mongolia, South Africa
Conditional Cash Transfers
•
Brazil, Mexico, Ecuador, Peru and many more.
Poverty-targeted programmes
•
Ethiopia, Ghana, pilots in Malawi, Zambia, Kenya
A social security ‘floor’
•
ILO model:
•
Child benefit
•
Disability benefit
•
Support for unemployed
•
Social pension
Social pensions: their role
and impact
What is a ‘social’ pension?
state provided, non-contributory, regular
cash transfers to older citizens.
•
The specific age, the amount, the regularity
and the methods of payment are different in
different countries.
•
Can be means tested
•
•
•
Affluence testing
Pension testing
Means testing
Why are they needed?
Old age brings additional risks and vulnerability
•
•
Decreased ability to work and lower earnings
•
•
Increased chances of disability
While most older people in developing countries are
working, old age means that incomes are often lower
Increase costs
•
•
Medicine
Transport
Case Example:
Malawi – Old Age Poverty
•
•
•
•
People over 60 = 5.4% of the population.
•
51% of households with older people live in poverty
•
compared to 45% for the general population
22% live in ultra-poverty
•
compared to a national ultra-poverty rate of 15%.
Households with only older people and children
particularly poor.
•
•
BUT 20% of all households contain someone over 60.
A poverty rate of 82%, Kakwani and Subbarao (2005)
Less than 10% older people covered by pension
schemes.
Old age poverty across Africa
Contributory pensions not
enough to tackle old age poverty
•
Lifetimes in poverty mean people cannot
contribute
•
Historically weak contributory systems
•
High levels of informality in developing
countries
•
Unremunerated work
•
Especially women and their caring role.
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Ve U n a
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(R
B)
La
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Am
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a
% receiving pension
Pension coverage is low in
developing countries
In Latin America, only 2 in 5 people over 70 receive a pension
100%
90%
80%
70%
60%
50%
42%
40%
30%
20%
10%
0%
Source: ECLAC, 2006
Lack of income security in old age
Only 1 in 5 older people in the world have access to a pension.
Source: World Bank, 2009
VS.
“the right to security in the event of unemployment, sickness,
disability, widowhood, old age or other lack of livelihood in
circumstances beyond his control.“
Universal Declaration of Human Rights
Social pensions around the world
% in poverty
Impacts on poverty:
Mauritius
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Single older people
Older couples
1 older person and a 1 older person and
younger couple
multiple younger
people
Poverty rate without pension
Poverty rate with pension
Impacts on poverty:
South Africa
All households
Households
including older
people
Destituion gap reduction
Poverty gap reduction
Households with
only older
people
0%
20%
40%
60%
% in poverty
80%
100%
Impact on poverty rates of older
people: Brazil rural pension
Reaches 92% of those over-65
60
Poverty rate (%)
50
40
30
20
10
0
Without rural pension
With rural pension
…and in OECD countries
Impact of pensions. Significant reductions in old-age
poverty
90
80
60
Pre Tax/Transfer
Post Tax/Transfer
50
40
30
20
10
y
er
m
an
G
Ita
ly
Au
st
ra
lia
re
at
Br
ita
in
N
et
he
rla
nd
s
N
ew
Ze
al
an
d
G
SA
0
U
% in poverty
70
Secondary beneficiaries of
pension income in Namibia
Parents
Others 5%
6%
Spouse
9%
Children
25%
Grandchildren
55%
Grandchildren
Children
Spouse
Others
Parents
Similar findings in Lesotho
(60% spent on grandchildren)
Investment in children
• Nutrition:
•
•
Education:
•
•
•
Pensions associated with a 5 cm increase in height
among children in South Africa
South Africa pension led to 8% increase in enrolment
among poorest 20%
Similar impact in Brazil among girls aged 12-14
Health:
•
•
In Lesotho, 8% spent on health of both older person
and family members, especially children
Better nutrition will lead to better health
Empowerment and dignity
• Strong evidence in Mexico of women’s voice
•
•
•
being strengthened in both household and
community as a result of cash
Reduction in begging, in particular among
older people; pensions mean that older people
more likely to live with families
In Brazil, pensions have restored older people
to positions of leadership in communities
Guaranteed cash transfers mean that
uncertainty in lives of poor families is replaced
by predictability:
•
Can begin to plan for the future
Economic activity: Katete, Zambia
• 38% of income spent on investment
Health
2%
Social Obligations
4%
Other
9%
Education
6%
Food
27%
House (incl. rent)
14%
Agricultural
Investment
18%
Small business
and
savings
20%
Economic Activity:
Managing risk: Reducing harmful coping strategies
“It was hard to find food, and I
used to sell my livestock in order
support my family. It was very
difficult and painful for me, as it
was not my intention to sell the
livestock, but because of the
problems that I had, I was
forced to.”
Nyanyiwe Phiri, a widow looking after three
grandchildren
Economic Activity
• South Africa
•
•
Household participation in labour force and
employment increased after receiving OAP
Those receiving OAP more likely to save and invest,
send more remittances, borrow less
•
•
No evidence of households becoming dependent or
stopping work.
Cash is an important economic stimulus,
promoting consumption
•
•
Namibia: many shops opened in rural areas because
of increased consumption
Malawi: cash transfer into rural communities
associated with doubling of cash in communities
Economic Activity: Katete
“The pension is helping the ‘tuntemba’ [small shops], this is because the
aged they can’t go long distances like to Katete town to purchase soap
and salt, so they go these nearby small businesses and buy what they
need. People are hired to go and do piecework for aged people,
sometimes they even go and hire oxen to plough their fields.”
Community member
“Before the social pension, business was going
slow because I had to give things on credit
more than getting cash, in that case I used to
go get bulk of goods twice a month, but now I
go three times a week.”
Eziah Ndulu, 33, owner of a small shop in Mtalalika Village
Pensions as an economic
stimulus
• Most OECD countries
•
•
•
Eg. UK - 4.8% increase in real amount of Pension Credit's minimum
income guarantee
Thailand
•
Pension extended to all people without other pensions. Nearly 3
million older people registered in April 2009
Russia
•
•
19% increase in real terms, labour and social pension.
“We are raising pensions because we are aware of our moral duty
to the older generation. But I would like to draw your attention to
the economic aspect of that measure. It spells growing demand,
more money in people's pockets to spend on basic
necessities. That will create more jobs in the real sector, in
retailing, and in the services. So much for the state of affairs in
Russia.” – June 2009
Social protection as an economic
stimulus
•
•
Wider SP
•
•
China
Sierra Leone – least developed country on HDI. But
recent study suggests economic stimulus
UN Social Protection Floor
•
Agreed at Chief Executive Board meeting, April
2009.
Social pensions and HIV/AIDS
•
11 million children orphaned by HIV and AIDS
in sub-Saharan Africa
•
9 out of 10 are cared for by their extended
family
•
In most cases, the responsibility falls on
grandparents, especially grandmothers
Social pensions and HIV/AIDS
• Older people play a key role in caring for OVCs
% of double orphans and single orphans (not living with
surviving parents) in older-headed households
70%
60%
50%
40%
30%
20%
10%
e
ba
bw
Zi
m
ga
nd
a
U
Ta
nz
an
ia
Af
ric
a
So
ut
h
ig
er
ia
N
N
am
ib
ia
i
al
aw
M
Ke
ny
a
0%
Source: Monasch and Boerma, 2004
Social pensions and HIV/AIDS
• Older people also play a role in caring for PLWHA
% cared for by older people
100%
90%
80%
70%
60%
50%
% of OVC
% of PLWHA
40%
30%
20%
10%
Et
hi
op
ia
Ke
ny
a
Ke (1)
ny
a
Ke (2)
ny
a
So
(3
ut
)
h
Af
ric
a
Su
Ta
da
nz
n
an
Ta i a
nz (1)
an
Ta i a
nz (2)
an
Ta i a
nz (3)
an
ia
(4
)
U
ga
nd
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m
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bw
e
0%
Baseline data from HelpAge project sites as part of project, “Older People and HIV/AIDS in Africa”, 2006
Lule Madina, 60, Kampala
I am a widow and I look after 15 orphans on my
own. Some are my grandchildren as two of my
children died from AIDS and the others are my
husband’s grandchildren by his second wife.
Every morning is the same – I start work at 7 am,
preparing breakfast for the children before they go
to school, and then I clean the house. Then I go
outside and start tending to my cow. I spend the
rest of the day doing housework, washing clothes
and cooking. In the evenings if we have enough
money to buy food then we have something to eat.
If we don’t, we have tea and go to bed.
I sell milk from the cow to neighbours, and that
helps to feed and pay the fees to send the children
to school. Even so I can’t always pay the school fees
and then I have to beg the school to let me pay the
following term. I am always behind with these
payments. A pension would make our lives much
better because I would have a regular income.
Impact of pensions and CTs
‘HIV and AIDS is taking away the able body people. The
older people look after the grandchildren, but they had
no resources before the pension. Now they are able to
support even sending these children to school, which is
having a very big impact.’
Chairman of District Welfare Assistance Committee.
The situation in Asia
•
Prevalence rates far lower than SSA
•
…but role of older people is a similar scale,
especially in care of PLWHA
•
Cambodia
•
•
Older person main carer in 80% of cases where an
adult child had died from AIDS (HelpAge, 2007)
Thailand
•
Figures are around 60%.
Video:
Universal Pension in Lesotho
Exercise:
Cash transfers and people
affected by HIV and AIDS
Part 2:
Designing Cash Transfers
Agenda
•
Targeting
•
Affordability
GROUP WORK:
Targeting in Practice
Why target?
• A given budget will have five times more
impact on poverty if it is disbursed to the
poorest 20% than if it is thinly spread over an
entire population
•
But:
•
•
Does it really reach the poorest 20% if targeted at
them?
Is there such as thing as a “given budget”?
Different methods of targeting
• Means-testing
• Proxy means-testing
• Community targeting
• Self-targeting
Exclusion error:
proxy means testing
Malawi: community targeting
Proportion in each quintile receiving cash benefit
35
30
25
20
% receiving benefit
15
10
5
0
Quintile 1
Quintile 2
Quintile 3
Quintile 4
Quintile 5
Inclusion error:
Bangadesh pension
Targeting through community committee
Exclusion errors
Examples from around the world
90
80
70
60
50
Proportion of poorest
20% excluded from
programme
40
30
20
10
0
Armenia
Brazil
Mexico
UK
Costa Rica
Causes of poor poverty targeting
• Challenges in obtaining information
• Difficult for poor people to manoeuvre within
bureaucracy
•
•
•
Made more difficult by lower levels of literacy
Women more likely to find it difficult
Mauritius 1958: “We know that if an unfortunate
person applies for the old age pension and does not
have any support, it would take months to obtain
the old age pension”
• When targeting selection is in hands of local
elites then can use it to their own advantage,
promoting clientelism and patronage
So, perfect targeting not
possible
•
Poverty targeting is not as efficient as hoped
•
•
It will not reach all of the poor.
But.. more than a technical question.
•
Social costs
•
Economic costs
•
Administrative costs
•
Political costs
Social costs of targeting
Social costs of targeting
Social costs of targeting:
Leapfrogging
Social costs of targeting
• Poverty targeting can create divisions in communities and
loss of social cohesion
•
•
Universal programmes are popular in communities, often
because criteria – eg. age – are clear and easily understood
•
•
•
Namalomba in Malawi cash transfer: “I was lucky that I was
identified to benefit from the scheme. All my neighbours are poor and
they need similar help. They despise me now and I can’t do anything
about it’’
In reality, much of so-called corruption is really communities trying
to share poverty targeted benefits around everyone
40% corruption reported by World Bank in Indonesia cash transfer
programme
Stigmatisation of beneficiaries of poverty targeting
•
John Rawls (1971) argued that self-respect is “perhaps the most
important primary good”
Economic costs
Behavioral Responses to Poverty Targeting
•
•
Buy livestock and you lose the benefit.
•
Best to stay poor
Rewarding dishonesty
•
•
Lie about assets = you get the transfer
Tell the truth = you miss out
Administrative costs
• Poverty targeted programmes are complicated and
•
•
•
•
•
expensive to administer
Differentiate between “search” and “attract” targeting
•
•
Search: finding those who are eligible - is more expensive
Attract: those eligible are pulled to the registration (eg. with age)
Greater accuracy demands higher targeting costs
•
Mozambique Food Subsidy Programme: targeting costs almost as
high as benefits
Community targeting places much of costs onto the
community
Need to continually put people on and off the benefit which
increases administration
Need a good quality – and expensive – appeals system for
poverty targeted programme
Political costs of targeting
• Poverty targeted programmes could be used to
•
benefit one group in society over another
Corruption is much easier with a targeted
programme than with a universal one
•
•
Corruption stories often denounced in media and
programmes become unpopular
Universal programmes are more politically
popular and therefore have increased
resources allocated (ie. there is no given
resource envelope)
•
Strong argument for including the rich as
beneficiaries if this increases public support for
programmes
Spending on pensions:
Universal vs. means-tested
Main benefit of targeting
•
Reduces overall costs to the state
•
Main disadvantage of a universal approach is
the cost.
•
So how costly is a universal approach?
Costing social pensions
• Two Key variables
•
•
•
Age of eligibility: The age at which people become
entitled to the pension; the higher the age, the less
people are eligible, and the lower the overall cost of
the scheme.
Size of grant: The cash amount provided to
beneficiaries; the lower the size of the grant, the
lower the overall cost of the scheme.
Administration of Scheme: For universal around 5%
in addition, for means tested ranges between around
10% for a simple test and 25% for intensive
targeting
Existing universal pensions
Coverage
Age
Benefit level per
month (US$)
New Zealand
93%
65+
$737
South Africa
85%
65+
$75
Mauritius
100%
60+
$84
Kosovo
100%
65+
$50
Namibia
93%
60+
$26
Botswana
96%
65+
$30
100%
65+
$33
Lesotho
95%
70+
$25
Nepal
77%
75+
$2
Country
Samoa
Costs of a minimum package
Cost of a pension
Cost of a child benefit
Sustainability
Change in relative cost of a package – 2009 - 2040
Financing
• Increase taxes?
• Decrease spending elsewhere?
• Donor support?
Ultimately a political question – will vary from
country to country
However, many countries (even very poor
countries) have decided to start moving
towards a social protection floor.
Spending on universal social
protection
Examples from around the world
FINAL QUESTION:
“There are strong arguments for focusing not on people
with HIV/AIDS per se but on vulnerability, which may or
may not be HIV/AIDS-induced.” (ODI, 2004)
Is it best to see HIV and AIDS as an
issue of special focus for social
protection, or see it as one of a wider set
of risks to be addressed?