Desempeño laboral

Social protection initiatives are generally of three types: (i) noncontributory social assistance, (ii) contributory insurance programs, and (iii) labor market programs. Each of these types of initiatives comprises a broad array of instruments that can be used to mitigate risk and reduce the impact of negative shocks faced by informal sector workers (Figure 1.4).

Figure 1.4: Instruments Comprising the Three Types of Social Protection Initiatives

Source: T. McKinley and S. W. Handayani. 2013. The Social Protection Index: Assessing Results for Asia and the Pacific. Manila: Asian Development Bank, p. 5.

Social Assistance _MechanismsInsurance Labor Market _Programs

• Social transfers • Cash • In-kind • Child grants • Social pensions • Disaster relief • Social services • Pensions • Health • Unemployment • Disability • Microinsurance • Public works programs • Loan-based employment generation • Unemployment benefits • Skills development training Social Assistance

Because few countries operate social protection programs that directly target informal sector workers, coverage is mostly extended through social assistance (Cook and Pincus 2014). Social assistance is generally delivered to informal sector workers through social transfers and social services.

Social assistance helps manage risk by (i) reducing poverty that results from shocks; (ii) directly reducing vulnerabilities; and (iii) strengthening the coping mechanisms used by individuals, communities, and countries to address such shocks. Social assistance can also promote productive risk taking, such as enterprise development or investment in human capital. Both stimulate the economy at the local and national levels. Because of this, several countries in Asia have incorporated social assistance programs into their overall social protection systems (Table 1.2). This helps ensure that resources and infrastructure that decrease poverty and increase resilience to shocks are available to all members of the population, including informal sector workers.

Poverty-targeted transfers. Many social transfers are poverty targeted. Such transfers provide cash or productive assets to individuals or households whose income falls below a certain threshold. However, rather than outright “gifts,” social transfers should, in fact, be used as a poverty alleviation tool. By ensuring at least a minimum standard of living for beneficiaries, they are able to take on productive risks and to mitigate the negative effects of shocks to the livelihood of a beneficiary household. Because informal sector workers living in poverty are exposed to greater risks and vulnerabilities than their formal sector counterparts, the risk management function of social assistance is of particular importance to this population. Further, the incidence of relative poverty is greater in the informal sector than in the formal sector. This is particularly true of informal sector agriculture workers, who face the highest risk of poverty (Heintz and Vanek 2007). Table 1.3 lists examples of conditional and unconditional poverty-targeted transfer mechanisms that meet the needs of informal sector workers.

Grants for children and families. These grants are provided to both individuals and households with children to reduce poverty and vulnerability and to improve children’s access to basic services. Such transfers take the form of unconditional family allowances and child grants, or cash transfers dependent on fulfilling stated conditions that deepen the development impact of social transfers. For informal sector workers, parents are afforded a minimum level of income to provide for their children, even when the household faces income instability. By focusing on children, these grants encourage expansion of the stock of human capital and allow recipient children to be more productive workers later in life.

Table 1.2: Examples of National Social Protection Systems Incorporating Comprehensive Social Assistance Programs

Country Strategy Social Assistance Component Instrument

India National Social Assistance Program

• Indira Gandhi National Old Age Pension Scheme • Indira Gandhi National Widow Pension Scheme • Indira Gandhi National Disability Pension

Scheme

• National Family Benefit Scheme Bangladesh National Social

Protection Strategy

• Old Age Allowance Programme • Vulnerable Group Feeding

• Allowance for Financially Insolvent Persons with Disabilities

• Widow and Distressed Women Allowance Programme

Sources: Planning Commission, Government of Bangladesh. 2014. National Social Protection Strategy (NSPS) of Bangladesh. http://www.plancomm.gov.bd//upload/2014/NSPS.pdf; Indian National Social Assistance Programme. http://nsap.nic.in/

These grants thus produce a positive economic impact at the national level. Investing in early childhood development through these grants is particularly beneficial for countries with populations of young average age, as they stand to benefit when the cohort that has received such grants enters the labor force. Such grants would thus be particularly beneficial to South Asian countries in which the average age of the population has not yet begun to rise at a significant rate (ADB 2011). Table 1.4 lists examples of grants for children and families that are either already in operation, or are proposed.

Table 1.3: Examples of Poverty-Targeted Transfer Schemes

Country Program Description

People’s Republic of China Minimum Living Standard Guarantee Program

This program is the centerpiece of the country’s social welfare system. It provides income transfers to households with incomes below a stated threshold. Both the thresholds and the amount of the transfers are determined locally to ensure that the program remains context sensitive. In 2014, the program provided income transfers to more than 76 million people.

Indonesia Program Keluarga Harapan (Family Hope Program)

Under this scheme, cash is provided to households that include pregnant women or children on the condition that the household access specific health and education services. As of 2016, the program benefited about 3.5 million families. Impact evaluations of the program have found that it increased the level of educational achievement of poor families, encouraged self-investment, improved the health status of household members, and reduced the incidence of nutritional deficiencies.

Philippines Conditional Cash Transfer Program (4Ps)

Under this cash transfer scheme, cash is given to poor families on the condition that they invest in the health and education of their children, as well as in maternal health services. The 2012 impact evaluation of this program demonstrated that the scheme helped increase both the uptake of health services and school enrollment.

4Ps = Pantawid Pamilyang Pilipino Program.

Sources: N. Chaudhury, J. Friedman, and J. Onishi. 2013. Philippines Conditional Cash Transfer Program: Impact Evaluation 2012. http://pantawid.dswd.gov.ph/images/philippines_conditional_cash_transfer_ program_impact_evaluation_2012.pdf; S. Nazara and S. K. Rahayu. 2013. Program Keluarga Harapan (PKH): Indonesian Conditional Cash Transfer Programme. International Policy Centre for Inclusive Growth Research Briefs. No. 42. http://www.ipc-undp.org/pub/IPCPolicyResearchBrief42.pdf; J. Golan, T. Sicular, and N. Umapathi. 2014. Any Guarantees? China’s Rural Minimum Living Standard Guarantee Program. Social Protection and Labor Discussion Paper Series. No. 1423. https://openknowledge.worldbank.org/bitstream/han dle/10986/19976/900300NWP0P132085299B00PUBLIC001423.pdf?sequence=1

Social pensions. Social pensions are noncontributory transfers provided to individuals of old age that guarantee a minimum income. Social pensions are particularly important for informal sector workers, as they are typically denied access to contributory pensions, and often continue to be employed in old age. In many developing countries in Asia, older workers are typically employed in the informal sector in less-attractive jobs that pay wages less than those received by individuals still of working age (Kidd and Whitehouse 2009). Social pension programs bridge the gap in old age between those with access to contributory pension schemes and the means to participate in them, and those that lack both. Such schemes restore dignity to older persons by ensuring that they are not left in deep poverty and regarded as a burden by their families (Kidd and Whitehouse 2009). Social pensions have also been shown to offer benefits within the household itself. Older persons often share their pension with the rest of the household, thus reducing the financial burden associated

Table 1.4: Examples of Grants for Children and Families

Country Program Description

Mongolia Child Money

Program A conditional cash transfer program for families with children, eligibility for the program was originally determined by the official poverty threshold and the number of children in the household. Since July 2006, benefits have been provided universally to all families with children under 18 years of age who live with their families and attend school or nonformal education. Nepal Child Grant Introduced in 2009–2010 with the objective of

improving childhood nutrition, the program is designed to reach all children under 5 years of age, but is currently limited to children in five Karnali districts and poor Dalit children. Thailand Child Support

Grant The government intends to introduce a child grant of B400.00 (over $11.00) per month to parents and caregivers of children under 6 years of age to support the education and development of children.

Sources: T. Okubo. 2014. Nutritional Impact of the Child Grant: An Evidence from Karnali Zone, Nepal. UNICEF Nepal Working Paper Series. No. 3. http://www.un.org.np/sites/default/files/Nutritional_Impact_ paper.pdf; A. Hodges et al. 2007. Child Benefits and Poverty Reduction: Evidence from Mongolia’s Child Money Programme. Maastricht University Graduate School of Governance Working Papers. No. 002. http:// papers.ssrn.com/sol3/papers.cfm?abstract_id=1095717; United Nations Children’s Fund (UNICEF). 2014. UNICEF Welcomes Child Support Grant as Four Million Children under Six in Thailand Still Lack Adequate Social Protection. http://www.unicef.org/thailand/media_23401.html

Table 1.5: Examples of Noncontributory Social Pensions

Country Program Description

Nepal Senior Citizens’

Allowance Both universal and noncontributory, this program has proven to be affordable for beneficiaries, as it cost only about 0.3% of national income in 2007–2008. It is provided to all individuals over the age of 70 years. In the case of Dalits and residents of the Karnali Zone, eligibility begins at 60 years of age, a feature of the program that recognizes the heightened vulnerability of older individuals in these groups.

Thailand Old-Age

Allowance This offers a universal, noncontributory social pension to individuals aged 60 years or over who are not covered by a contributory government pension. As of 2013, the program covered 5.69 million beneficiaries.

Viet Nam Social pension

scheme In addition to Viet Nam’s social pension, two contributory pension schemes are also offered. The social pension scheme is tiered, allowing it to provide benefits commensurate with need. The scheme is also targeted with respect to age, health status, and income.

Sources: W. Suwandra and D. Wesumperuma. 2012. Development of the Old-Age Allowance System in Thailand: Challenges and Poverty Implications. In S. W. Handayani and B. Babajanian, eds. Social Protection for Older Persons: Social Pensions in Asia. Manila: ADB; M. Samson. 2012. Nepal’s Senior Citizens’ Allowance: A Model of Universalism in a Low-Income Country Context. In S. W. Handayani and B. Babajanian, eds. Social Protection for Older Persons: Social Pensions in Asia. Manila: ADB; G. T. Long and D. Wesumperuma. 2013. Some Notes on Social Pensions in Viet Nam. International Policy Centre for Inclusive Growth One Pager. No. 210. http://www.ipc-undp.org/pub/IPCOnePager210.pdf

with their care. The security of a minimum income later in life is also likely to lead to more productive spending of income during working age (Willmore and Kidd 2008). Such implications are particularly important for informal sector workers. By reducing the need to provide for elderly relatives or to save intensively for their own future, social pensions allow working-age individuals to invest in productive assets or skills.

Many higher-income countries in Asia are experiencing rapid aging of their populations due to falling fertility rates and increased longevity (ADB 2011). Under such conditions, social protection should increasingly focus on providing for individuals in old age. This is already occurring in these countries where pensions are an increasingly important component of the national social protection system. Table 1.5 lists a number of examples of noncontributory social pensions currently operating in developing countries in Asia.

Noncontributory health care. Access to health care is often the first security that poor and vulnerable people seek. Further, universal health care is recognized as a human right, and a key factor in stimulating labor productivity and overall economic growth. Such findings make universal health care a cost-effective endeavor (Rys 2013).

Extending access to basic health care to informal sector workers in a way that guarantees their security and livelihood is an important feature of social protection for the informal sector, given that work environments in the informal sector often pose a threat to workers’ health. However, the scale of the assistance provided must be sufficient to ensure that informal sector workers can afford basic health care services, and that the resulting improved level of general health of the informal sector workforce is sufficient to achieve a development impact commensurate with the cost of such a program.

Thailand’s provision of noncontributory health care is an example of a program that specifically targets informal sector workers. The UCS provides health care to every citizen not covered under any other publicly funded scheme— approximately 80.0% of the country’s population. This scheme, which provides basic preventive services as well as emergency medical care, is estimated to have prevented 88,000 households from falling below the poverty line in 2008 (Sakunphanit and Suwandra 2012).

While the scope of services provided must cover the basic needs of informal sector workers, unnecessary health care measures should be excluded from the program. The coverage of Thailand’s UCS includes both preventive services and emergency services but excludes certain services such as treatment for infertility or cosmetic surgery (Sakunphanit and Suwandra 2012). By providing protection against adverse health shocks but excluding elective treatments, the UCS ensures health care coverage while at the same time containing program costs.

Public services. Informal sector workers and their households are often excluded from accessing public services for two reasons. First, they fall outside of the formal institutional framework of the country concerned. Second, the government lacks the capacity to serve the needs of vulnerable populations. Public services may include universal education through publicly funded schools, public housing, food aid, access to clean water, and adequate sanitation facilities. Of these, universal education is particularly important, as it produces a broad array of economic benefits. Examples include higher wages, greater agriculture productivity, and more rapid economic growth than would otherwise be possible. It likewise confers large-scale health benefits to the countries that provide it and it also empowers women (Sperling 2005).

Table 1.6: Examples of Public Services Currently Extended to Informal Sector Workers

Country Program Description

India Total sanitation

services In 1999, the government implemented a sanitation services program to address poor sanitation and public health. The government provides financial support, as well as policy and institutional guidance, to the program, but delegates its design and administrative aspects to state and local governments, thus allowing it to respond to the specific needs of each geographic area.

Thailand Universal

education Thailand provides universal education as a constitutional right, stating that it is the duty of every person to receive free, quality education. This free education policy applies to all children, including children of refugees, migrants, and ethnic minorities. This program covers the cost of tuition and associated fees, textbooks, learning materials, and school uniforms.

Viet Nam Compulsory

education Viet Nam provides free, compulsory education to children from the age of 3 years and upward. The government also provides free child care for children under 3 years of age.

Sources: United Nations and Government of Thailand Joint Team on Social Protection. 2013. Social Protection Assessment Based National Dialogue: Towards a Nationally Defined Social Protection Floor in Thailand. Bangkok: ILO Regional Office Asia Pacific; F. Lund and J. Nicholson. 2006. Tools for Advocacy: Social Protection for Informal Workers. http://wiego.org/sites/wiego.org/files/resources/files/Tools-For- Advocacy-Social-Protection-for-Informal-Workers.pdf; B. Briceno and J. Eisenbraun. 2014. A Randomized, Controlled Study of a Rural Sanitation Behavior Change Program in Madhya Pradesh, India.

Ultimately, informal sector workers often live or work on vacant public or private land, although this is illegal (GDRC). Providing public housing or land for work could remove the risk of eviction and provide workers with more secure means of maintaining their livelihoods. Ensuring access to clean water and sanitation improves public health and reduces the burden on the health care system of the country concerned. Table 1.6 lists a number of examples of public services currently extended to informal sector workers in developing countries in Asia.

Fee waivers and subsidies. In situations in which social services cannot be 100.0% subsidized, fee waivers and subsidies are used to allow poor individuals to access basic services. Examples include education vouchers, scholarship programs, and financial support for basic foodstuffs. Table 1.7 lists examples of fee waivers and subsidies currently in operation in developing countries in Asia.

Table 1.7: Examples of Fee-Waiver and Subsidy Programs

Country Program Description

Bangladesh Secondary school stipend, primary school stipend

Bangladesh offers stipends for payment of school fees at both the primary and secondary levels. Indonesia Subsidy for poor

students Subsidies are offered directly to poor children and students from primary school through high school. The number of beneficiaries assisted each year depends on the extent of program funding offered through the provincial authorities of the Ministry of Education and Culture.

Sources: S. Satriana and V. Schmitt. 2012. Social Protection Assessment Based National Dialogue: Towards a Nationally Defined Social Protection Floor in Indonesia. http://ilo.org/wcmsp5/groups/public/---asia/---ro- bangkok/---ilo-jakarta/documents/publication/wcms_195572.pdf; Planning Commission, Government of Bangladesh. 2014. National Social Protection Strategy (NSPS) of Bangladesh. http://www.plancomm.gov. bd//upload/2014/NSPS.pdf

Social Insurance Schemes

Insurance manages risk by protecting insured individuals against the negative impacts of economic shocks. This is achieved by pooling the risk of all insured individuals (i.e., all of the insured individuals pay into a single fund). This fund is then used to financially compensate any member of the pool who is affected by a shock.

For insurance schemes to be sustainable, two conditions must be fulfilled. First, the pooled fund must be large enough to compensate all members who experience an economic shock in any given time period. Second, the risks faced by the members of the pool must be uncorrelated. That is, all members of the pool should not experience economic shocks at the same time. Thus, for insurance schemes to be sustainable, the risks faced by the members of the pool must be uncorrelated.

The conditions on which insurance schemes depend are violated in the case of natural disasters, since these events negatively impact all members of the pool at the same time. This makes such risks difficult to insure against, unless the pool is very large and its members live in geographic areas remote from one another. However, in the case of contingencies that affect individuals across the life cycle, the risks that members of the pool face are highly uncorrelated. This allows pooling of such risks, even at the community level.

This uncorrelated nature of life cycle risks allows relatively small pools of individuals to use insurance schemes to finance their own protection against shocks. This has beneficial economic impacts over the long term, as it allows

individuals to engage in productive risk taking, such as using a portion of current income to establish a business rather than saving it to provide individual— rather than pooled—protection against an economic shock. However, in the short term, insurance schemes do not produce the same immediate beneficial impacts on poverty that other social protection instruments do.

Because social insurance schemes are financed through a combination of contributions and tax financing, they can be offered to target groups with