Public Works and Social Protection

in sub-Saharan Africa Do public works work for the poor?

Anna McCord

Research Associate - ODI

06 March 2013

Two questions

To what extent do PWP function as social protection instruments/safety nets addressing poverty in LICs?

What is the role of PWPs in the context of the 21st century labour market?

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Background

• Two decades of experience, starting with Maharashtra Employment Guarantee Scheme (MEGS) India

• Focus on PWP as social protection since 2001

• Research in SALDRU, University of Cape Town, and Social Protection Programme ODI

• Reviews of 100+ programmes (Africa & Asia)

• Evaluations

• Review 10 years WB PWP for IEG

• Puzzling pattern emerging, design of dominant model not match chronic poverty intending to address

• Issue explored in my book

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What poverty do PWPs seek to address?

By

Region By Income Level

Programme objectives

Model

SHORT-TERM

SAFETY NET (e.g., Ghana) Primary objective

LONGER-TERM

SAFETY NET (e.g., Ethiopia, India)

PUBLIC WORKS PLUS

(e.g., Argentina,

Djibouti)

MITIGATION OF COVARIATE SHOCKS

MITIGATION OF IDIOSYNCRATIC SHOCKS

POVERTY RELIEF AND FOOD SECURITY

BRIDGE TO MORE PERMANENT EMPLOYMENT

WB typology in terms of objectives

• Short term safety net – idiosyncratic and covariate risks

• Longer term safety net – idiosyncratic risk, poverty relief, food security, and bridge to permanent employment

• PWP plus – poverty relief, food security and bridge to permanent employment

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Why is it important to consider

PWPs?

• Popular Instrument

– Key instrument in set of social protection interventions

– Dominant global role in SP thinking

– Main instrument for working age poor

– Complement to CTs

• Lack of Research

– Significant unknowns regarding impact and effectiveness

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McCord typology

Consumption smoothing

a single short-term episode of employment with a social protection objective

Income insurance

repeated or ongoing employment

Increase overall employment

promote the labour intensification of infrastructure spending

Improve labour quality

promote skills and future employability

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Different types of PWP

• Typology to promote critical thinking about different types of PWP and differing objectives

• Previously no differentiation in terminology

• Confusion which programmes are appropriate in which situations

• Part of wider failure to engage critically with PWP design

• Contrast with enormous literature and (furious) debate relating to design of other forms of social protection, eg cash transfers

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What is the reality of most PWPs in

LIC?

• 95% of PWP in LICs are short term

• 4 months employment

• Most are donor funded (WB loans, DFID, USAID, AusAid grants)

• Donors allocating significant resources to provide short term employment with social protection objectives

• Few offer longer term employment – MGNREGS and PSNP exceptional

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How do they work?

• PWP Transmission Channels

– Wage

– Assets

– Training

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Wage

• Set at or below lowest prevailing wage

• Objective of ‘self targeting’

• Low wage potential tension with social protection objective

• High opportunity cost for poorest, typically labour constrained (reallocation from domestic and productive activities)

• Poorest drop out, wage loss of BMI

• Question: Appropriate to provide work for poor, at below market wage rate as form of ‘social protection’?

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Assets

• Premium if social protection provided through PWPs, due to technical, material and capital costs of asset creation

• PWP asset quality is perceived as major challenge

– Ceilings on budget for capital inputs

– Limited technical capacity for selection/design/oversight in many LICs

• Much anecdotal evidence

• Limited robust evaluation evidence – M&E not review functioning of assets in medium term (process focus)

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The social protection value of PWPs

• Characteristics of Social Protection;

– regular, predictable, ongoing

• Characteristics of and Social Safety Nets;

– available at time of need

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Characteristics of PWP-based SP

• Selective geographical distribution – not available nationally

• Small scale provision vs population of working age poor – heavily rationed

• Not implemented ongoing basis – one off implementation at community level

• Duration of employment <4 months – temporary benefits

• Supply driven, low coverage, rationed, short term, one off

• Not conform to basic characteristics of SP or SSN • Not alternative/substitute for CT for working age poor

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PWP impacts?

• Very limited M&E

• Focus on process indicators (IEG, 2011)

• Open questions regarding effectiveness and impact as SP and SSN (WB)

• Dominant PWP model not subject to critical scrutiny

• Is it the right model to deliver SP or SSN to address chronic poverty in LICs?

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Are there PWP models which can

provide SP/SSN?

• Yes, but different;

• Demand driven

• Large scale

• Ongoing employment, seasonal/‘on demand’

• Few examples;

MEGS, NREGA, MGNREGS (India) 55m workers/

annum, PSNP (Ethiopia) 7m households, Zibambele (South Africa), experiments in South Asia, New Deal employment USA (‘30s)

• Ideas and innovation in policy community

• Opportunity to develop new models for future

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Second question

• What is the role of PWPs in the 21st century labour market?

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PWP and labour markets

• PWP primarily framed in relation to

– Social protection

– Social risk management

• Not take labour market context into account;

– nature of labour markets, do they exist, how function, what opportunities do they offer?

• Extensive literature on labour markets in LICs, not applied to design and conceptualisation of PWPs

• Potential to inform rethinking of role and design of PW interventions

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Reframing the debate

• Massive global employment crisis

• Unemployment (‘transformational’)

• Underemployment (the working poor)

– insufficient work

– ‘vulnerable’ employment/self employment (ILO)

• Experience of growing share of the poor, increasing absolute numbers despite growth

• Significant market failure

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Implications

• Decent employment not available for growing share of poor

• Not temporary problem but chronic

• Despite significant growth, market not provide solution

• Acknowledgement of scale of challenge

• Short term PWP model is response to unemployment which is fundamentally temporary (structural/ frictional), not chronic

• Implications for PWP design

– scale, coverage, duration, project based or systemic, rural/urban, supply/demand driven etc

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Rethinking PWP Model

• Major social protection needs among working age poor

• Develop PWP design learning from experiences

• PWP in relation to market failure ‘sponsored employment’

– design, scale, duration, socially useful employment (rubbish collection, social services, ECCD, HBC etc)

• Fiscal challenge – MGNREGS 1% of GDP

• Administrative challenge - mass ongoing provision

• Not easy task – but necessary

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Conclusion

To what extent do PWP address poverty through SP in LICs?

Most PWPs in LICs have only temporary impact on poverty for rationed subset of the poor in a limited number of geographical locations and hence have limited value as social protection & safety net instruments

What is the role of PWPs in the 21st century labour market?

If PWP to play a major role in SP there is a need to reconsider programme conceptualisation and design in the context of mass market failure in LICs

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Thank you

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