How can international agencies contribute to improving the coverage and effectiveness of social protection as a component of poverty reduction strategies? This paper from the Overseas Development Institute reviews conceptual developments of the meaning and importance of social protection and looks at experience of different policy instruments. Improving co-ordination of social policy is a major priority, as is tackling growing insecurity and inequality and taking account of institutions outside the state that provide social protection.
The rationale behind social protection is to promote dynamic, cohesive and stable societies through increased equity and security. Recent increased attention to social protection is due to the following factors: Globalisation is seen as increasing insecurity on a global scale; there is rising inequality; a liberalised international economic environment restricts governments’ revenue flows; and the global demographic transition is changing dependency ratios.
Social protection relates to a large literature on the definition, explanation and identification of the poor, and to theoretical and empirical work on what contributes to sustainable poverty reduction. This literature yields a number of lessons:
- Identification of policy options should start from an understanding of the realities of the vulnerabilities of the poor, and of their assets.
- The range of social policy instruments should be integrated, and designed to provide for material needs whilst fostering the inclusion of recipients in mainstream society.
- Institutional capacity, good governance and accountability are necessary for equitable and efficient revenue collection and effective pro-poor services.
- Changes which enhance the political ‘voice’ of the poor are of great value when they can be achieved.
- Policy options should also be: Affordable; financially and politically sustainable; mainstreamed institutionally; built on the capabilities of individuals and communities; and flexible and responsive.
The second half of the paper reviews experience and different policy approaches:
- Evidence shows that the poorest households tend to rely on transfers from non-state sources, operating on principles of reciprocity. These tend to become eroded where economies become monetised, and they may exclude the poorest.
- State social protection instruments can be put in three categories: (i) Insurance based programmes: These should be extended from their current small base in a number of ways (ii) Social assistance: This is usually of minor importance in low-income countries, and often has a problematic record (iii) Other instruments: These include labour market policies, price support, microfinance and employment support.
- Improving co-ordination of social policy is a major priority: An integrated perspective on social protection must come from political leadership in consultation with civil society; an effective information base is very important; other units of government than specialist welfare units should be involved.
- The need for an integrated approach to poverty reduction strategies means that donors will need to understand areas of public policy they have previously not specialised in. Donors need to agree which agencies will take the lead on this.
- The international community should tackle growing insecurity and inequality by: Reversing the decline in aid flows; mobilising civil and political pressure for poverty reduction; establishing mechanisms to assist countries in temporary crises; reducing the harmful effects of globalisation; and strengthening mechanisms of global social governance through the United Nations.
- Policy development should take account of institutions outside the state that provide social protection. Policy should also strike a balance between preventing shocks, reducing the impact of shocks, and helping people cope with shocks. Measures to strengthen the capacity of public policy to help the poorest are a priority in many developing countries.
