What is the potential for social protection programmes to address poverty and vulnerability in developing countries? This report provides an overview of social protection and an assessment of its impact in Latin America, South and East Asia, and Sub Saharan Africa. Countries with stronger social protection show lower levels of poverty and vulnerability and are more resilient in the face of social and economic change or shock. However, financial sustainability and capacity limitations are challenges that must be addressed. It is helpful to view social protection finance as a remix of public expenditure rather than a ‘new’ expense.
Social protection is rapidly becoming a key component of development policy. There are three main approaches. Social insurance addresses risk, providing protection against life-course contingencies such as old age and maternity, or work-related contingencies like unemployment or sickness. Social assistance addresses need, supporting those in poverty. Finally, labour market regulation is based on rights, ensuring basic standards at work with rights of voice and organisation. Social assistance is the component of social protection that has the strongest focus on reducing current poverty. It has emerged as the dominant approach in the global South – although the limited available data suggests that most social protection expenditure by developing-country governments is allocated to social insurance.
In developing countries, social assistance programmes have a primary role and are large-scale: they are not residual safety nets protecting a minority. In South Africa, one in four people receives social assistance, in Mexico one in five, and schemes in China, Brazil and India target millions of households nationally. They can be categorised into four main types:
- Pure income transfer programmes: These include transfers targeted to poor households, and categorical transfers such as child and family allowances, and social pensions that target specific groups thought to be especially vulnerable.
- Income transfer programmes conditional on work: These require that beneficiaries supply labour for specific periods of time, and are tied to the improvement of infrastructure or community services.
- Income transfer programmes conditional on human capital investment: These include conditional cash transfers. They focus largely on education, health and nutrition, and aim to break the persistence of poverty across generations.
- Integrated poverty reduction programmes: An important new innovation in social assistance, these combine a range of interventions focused on the poorest.
The extension of social assistance (the component of social protection with the strongest focus on current poverty reduction) follows different pathways in Latin America, South and East Asia, and Africa. These pathways depend on the nature of existing institutions, the level of economic development, and the features of economic transformation. Which pathway is better at reducing poverty and vulnerability is an open question needing more research.
Investment in social protection and social assistance can be extremely effective in reducing current poverty and vulnerability, as well as poverty persistence across time and generations. However, common issues in programme design are:
- Financial sustainability: In the medium and long term, domestic financing is essential. However, developing countries cannot finance social protection through payroll taxes as developed nations have done, and must find other means of mobilising revenue.
- Capacity limitations: It is important to build capacity in measurement and analysis, policy design and implementation, and programme delivery and evaluation. On the ground, integrated networks of many different experts are needed. In many low-income countries, however, government restrictions on recruitment and salaries, as well as ‘departmentalism’, make it unlikely that government agencies could develop such networks. Intergovernmental knowledge transfers and donor support for skills development may help.
- The challenge of combined attention to: a) the costs of selection; b) the influence of programme design on social protection expansion; and c) strengthening solidarity and supporting shared values of social justice.
NB: A shorter version of this paper, with the same title, is forthcoming in the International Journal of Social Welfare (2011).
