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Sri Lanka: Strengthening Social Protection Coping with Risk: Social Safety Nets Dileni Gunawardena Senior Lecturer Department of Economics & Statistics Overview Risks Vulnerable groups Existing social safety net/programmes Key issues Policy directions Risks Individual (Idiosyncratic) Community (Aggregate/ Covariate) Risks Individual (Idiosyncratic) Community (Aggregate/ Covariate) Sickness, disability or death of family member. Poor are susceptible to • Communicable diseases: respiratory infections, mosquito-borne illnesses Water-borne diseases • Non-communicable diseases Cardiovascular, diabetes, tuberculosis Unemployment • Labour market constraints • Aggregate shocks: droughts, disasters, conflict Risks Individual (Idiosyncratic) Community (Aggregate/ Covariate) Drought, crop failure, other natural disasters • Drought most significant (people affected/needed relief). 27 major episodes in 1948-1992 period • 24 floods, 17 landslides (Badulla, Ratnapura, Matale, Kegalle, Nuwara Eliya, Kandy, Kalutara), 10 cyclones Conflict-related risks: several hundred thousand displaced Ageing: Over next 25 years, share of popn > 60 will double from 1 in 10 to 1 in 5 Vulnerable groups/individuals Children Working age adults Elderly In large families Disabled Out of school (2%) Street children Soldiers (1,284 btwn 9-17 yrs) Malnourished In informal sector, remote/riskprone/infrastructure-poor areas Unemployed low income Displaced Disabled (only 16% work, poor?) Most rely on family support (only 2/3 are happy with this), LFP of >60 fallen, only 16% had planned for old age Existing social safety nets Area/Programme Beneficiary group Expenditure Samurdhi programme (income The poor transfers, micro credit, small scale infrastructure, infant milk subsidy) 12,449 mn. (0.62% of GDP) Civil conflict related programmes (payments to disabled soldiers, rehabilitation and reconstruction) Conflict affected population 6,392 mn. (0.32% of GDP) Flood and drought relief Population affected by natural disasters 1,466 mn. (0.07% of GDP) Other (Triposha, MCH/N, disability Specific allowance, assistance for indigent population and disabled) 456 mn. (0.02% of GDP) Issues Targeting, benefit and work incentives of Samurdhi programme could be improved Disability programme does not reach all poor disabled Social welfare and care services exist but provide limited coverage Relief programmes could be strengthened in their ability to support affected populations. Cost of delivery of safety nets likely increased by involvement of many ministries Issues with Samurdhi: Targeting Evidence of mis-targeting. • Outcome similar to untargeted programmes such as Primary Health Care or Education 41% of population received the benefit in 2002 44% of HHS in top 3 quintiles of population received Sin 1999/2000 Only 60 percent of households in bottom quintile rcvd in 1999/2000 Only 23% of poorest quintile and 27% of next quintile of elderly Targeting errors systematic • ethnicity, party affiliation, NIC holding related to probability of Samurdhi receipt. Mistargeting at local level, not in central level allocations to districts • Lack of rigorous criteria to establish eligibility Issues with Samurdhi: Adequacy Level of benefit low • 5-7 days of food per month, at best increased food consumption of 4 lowest deciles by 7 percent Benefit payments smaller than stipulated grant • because of compulsory savings and social insurance scheme and ¼ amount of average shortfall Value eroded with time Worker disincentives possible, though unlikely Issues with income support for disabled Only 41% of disabled (surveyed) receive any sort of income transfer Main group (92% of transfers, 85% of total budget) is disabled soldiers, others are undercovered Expenditure rising, possibility of collusion and moral hazard increasing Integration of disabled into society (education and employment) needed Issues with Relief Relief (dry rations) for displaced persons (IDPs) insufficient to meet their nutritional needs Fiscal restraints limit coverage of provision to permanent resettlers Tsunami-related cash transfers—no errors of exclusion reported, but significant errors of inclusion Wage rates in workfare were above market Knowledge gaps In understanding/designing of exit conditions (Microfinance/workfare) On effect of current interventions on child malnutrition No evidence on impact of provincial council programmes Little understanding of impact of macro/aggregate shocks on vulnerability Policy Directions 4 key areas: Address chronic poverty Help the poor escape poverty Address individual vulnerability Address aggregate vulnerability Target assistance better and reduce work disincentives Safety “ropes”— educn. & empl. Strengthening social welfare and care services Scale up response to aggregated vulnerability Policy Directions Address chronic poverty Help the poor escape poverty Address individual vulnerability Address aggregate vulnerability Improve targeting of programme with PMT, introduce exit/incentive policies Increase benefit level (without compromising work incentives and fiscal sustainability Improve fiscal, administrative and targeting efficiency by consolidation of disability and other cash payments under the Samurdhi programme Policy Directions Address chronic poverty Help the poor escape poverty Address individual vulnerability Address aggregate vulnerability Consider conditional cash transfers to reduce school nonattendance and child malnutrition Promote access of poor through skill development and access to microfinance Policy Directions Address chronic poverty Help the poor escape poverty Address individual vulnerability Address aggregate vulnerability Strengthen delivery of social welfare and care services through public-private partnerships Implement national disability policy focusing on raising awareness/reducing stigma, preventing disability, and including disabled people in socioeconomic activity Policy Directions Address chronic poverty Help the poor escape poverty Address individual vulnerability Address aggregate vulnerability Develop a package of interventions: cash/livelihood grants, workfare and social welfare and care services, to be scaled up in case of disasters Strengthen relief for conflict affected groups • Reintegration of demobilised soldiers • Attend to special needs of children and youth • Rehabilitation of schools, roads, essential infrastructure (public works) Samurdhi Reform and the Welfare Benefits Act No. 24 of 2002 Main thrust of the act is to • Limit programme to bottom 25-27 percent of population (900,000 hhs) • Better accuracy in identifying poor • Making transfer more progressive Eligibility • PMTF, eligibility checked every 1-3 yrs • All homeless hhs (1.3% of applicants) included • Exit mechanism to be devised Benefit • Variable component for children and aged • Rs. 830 per hh, up from Rs. 320 per hh • De-linked from saving and insurance Safety Ropes: suggestions Conditional cash transfers • Targeted to 5-6 year olds and 11-14 year olds Microfinance for the poor • Strengthen regulatory framework to ensure security of deposits and probity of microfinance organisations • Knowledge gap: impact of microfinance on poverty (poorest)? What works best? • Combine with workfare?