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Insecurity and Social Protection - Has the World Bank got it right?

Date
Time (GMT +01) 11:00 13:30

Speaker:
Caroline Moser
, ODI
Discussant:
Andy Norton
, ODI
Chair:
David Booth,
ODI

Caroline Moser started by looking at the political economy of the World Development Report, and found that the importance and power of the WDR is implicit in the fact that until the World Bank takes on an issue it is not considered mainstream development practice.

The inclusion of security is one of the most important contributions of the new WDR. In the last decade, the World Bank has moved from two and a half legs - labour intensive growth, human capital and safety nets (the half leg) - to the three legs of opportunity (growth), empowerment and security.

The WDR uses specifically the concepts of risk and vulnerability, though not exclusion or social protection. It distinguishes between poverty as a static concept and vulnerability as a dynamic one; and defines insecurity as exposure to risk, and vulnerability as the possibility of a decline in well being.

The WDR uses two interesting frameworks: a typology of risk and a risk management framework.
The risk typology distinguishes between:
- idiosyncratic risks affecting individuals or households (micro level) and
- covariant risks affecting groups of households/communities (meso level) and regions /nations (macro level). This typology represents a far more comprehensive approach to poverty than previously and also opens up opportunities for practical adoption in country contexts. However, the risk typology is not entirely consistent and the location of risk is also somewhat arbitrary. The empirical examples used are mostly from rural Africa and Asia, leaving out the urban poor as well as Latin America and Eastern Europe. This is mainly due to a focus on absolute poverty, not on relative poverty and inequality.

The risk management framework encompasses both formal and informal strategies. Formal strategies include market-based activities and publicly provided mechanisms, whereas informal strategies include arrangements that involve individuals, households and even communities.
Risk management strategies are classified in terms of:
i) Reducing risks actions that aim to reduce the probability of risk/shock mainly at macro level (e.g. sound macro-economic policy)
ii) Mitigating risk actions in anticipation of, or to reduce the impact of, shocks (includes diversification and insurance strategies)
iii) Coping with shocks actions in response to shocks after they occur (e.g. reducing food consumption, increasing child labour or drawing on savings)
The inclusion of these three strategies represents in itself recognition of the importance of the diverse strategies employed by the poor according to Moser. However, the distinction between mitigating and coping is in reality an artificial one; the two form more of a continuum rather than distinct categories. And again the bias is towards rural Africa and Asia; this limits the usefulness of these strategies taking into account the global urbanisation trends. Another weakness is the inconsistencies between the risk typology and risk management frameworks, where e.g. no mention is made of strategies to deal with intra-household violence. The focus on economic insecurity also leaves out its interrelation to social or political vulnerability such as fear, terror or exclusion.

The term 'social protection' is, interestingly enough, not used at all in the WDR's policy recommendations. Based on the three risk management strategies, the main message is that most countries only implement coping strategies after shocks (i.e. an approach addressing the failure of risk reduction/mitigation). This suggests the need to shift to risk reduction / mitigation policies.

The WDR argues that social safety nets (e.g. welfare programmes, human development programmes and social funds) should be permanently in place and can be scaled up when disasters occur. The report also identifies seven instruments (e.g. health insurance, social funds and cash transfers) relevant for poor people, emphasising the differences between the different risk management strategies. These tools raise a number of questions, such as how are priorities decided and how can empowerment be integrated into the approach? The WDR's answer to risk management is through an ideal modular approach comprising a number of critical elements:
- Establishing the country context / constraints / challenges;
- Identifying sources of risk, vulnerable groups and potential interventions;
-Identifying the optimal mix of programmes;
-Including partnerships in the solutions (is this empowerment?)

Concluding questions:
- Can risk management instruments be designed at global level? We need to recognise that the WDR provides informative guidelines but not specific instruments.
- Is the definition of security too wide? In comparing the World Bank's and DFID's definitions of 'social protection', one finds that it is seen as interventions to assist people to better manage the risk that leave people vulnerable, and public actions taken in response to levels of vulnerability, risk and deprivation respectively.

Concluding recommendations:
- It is important to clarify the definitions and range of safety nets and social protection in order to ensure that the focus on vulnerability and risk reduction/mitigation does not reduce the prioritisation of the real poor; those permanently not coping.
- The introduction of a rights-based approach is crucial in order to implement interventions, as these require political will.
- Informal strategies need to be incorporated into interventions; however, this can not be designed at global level
- However, the WDR is making an important contribution to the social protection area by recognising that growth plus welfare safety nets are not sufficient, as well as by its introduction of a risk management framework and other analytical concepts.

Andy Norton started his discussion by asking where it all fits in within the World Bank's broader framework. WB lending on social protection issues has increased massively over the last few years, although this is an area where other institutions have usually taken the lead (especially ILO). The Bank has produced a large amount of work on social protection the last 3 years, and a chapter about the issue has been included in the PRSP handbook. A consequence of all this work is that it makes it difficult to generalise.

Compared to the 1990 WDR, there is much more emphasis on social security and indeed the new WDR represents a major instrument in driving this process forward. However, the Bank's focus on risks tends to steer the discussion towards risks in terms of shocks (e.g. natural disasters, illness etc) and not towards chronic vulnerability (e.g. seasonality not discussed). Neither the politics of risks (for example how people get drawn into disadvantageous relationships with patrons to overcome periods of hardship), nor the issue of social assistance transfers is much discussed. In sharp contrast to the ILO approach, standards, entitlements and rights are also excluded. The emphasis in the Bank's work is firstly on ways of coping with risks drawing on individual / household / market / community action; secondly on targeted social assistance; whereas there is a low level of emphasis on universal benefits.

Other issues missing from the report, in Norton's opinion, is any discussion of trade integration, private sector roles and the supply chain, and the possible use for strengthening practice in social protection. Policy responses at regional or global level are not treated to a great extent, nor are gender implications / issues.

Concluding, Norton did recognise that the new WDR is a much more nuanced treatment of public policy to support livelihood security than the WDR 1990, and a lot of very useful work has been done on issues surrounding social protection. However, the overall approach is largely technocratic, and a further discussion on citizenship, governance and rights is needed.

The first issue raised in the discussion that followed was that risks are seen more in terms of short term shocks rather than chronic problems; how are chronic problems dealt with, if at all? Moser replied that implicit in the risk management strategies is the fact that if risk reduction/ mitigation strategies work, there will be less need for coping. However, although one chapter of WDR treats shocks (war, natural and economic shocks), it is not integrated into the general discussion on social protection. This is rather ironic given the state of the world today.

It was mentioned that social impact assessment looks at structures/macroeconomic policies. Do we think of social protection in terms of picking up the pieces after policies have failed? According to Norton, the way they are presented, conventional macro-policies will reduce risk. This brought Moser back to the political economy question. E.g. in the case of structural adjustment programmes, there was fierce resistance within the WB to acknowledge their social costs. Of course there is a methodological problem: no counter factual exists, i.e. no one can tell what would have happened without SAPs. But at least we know that people suffer - and there has been a lot of unrest linked to SAPs. Impact assessment, putting social analysis around macro-policies, would be a very useful approach in this case.

It was furthermore asked whether there is any interplay between insurance policies and the traditional ways of coping with risk (extended family, tribe etc.)? According to Moser, there is a lot about this in the WDR's typology and analysis. However, it is important to realise that many people cope themselves, without having access to formal institutions. For example in urban areas, informal support structures are often no more than a myth; one needs to ask under what conditions do these structures break down and what can be done to strengthen them?

Andy Norton brought up the issue on social capital. A point missing in the WDR is that using patronage institutions can cost people their independence. Revisiting work on vulnerability, priorities and expenditures, an issue that came up is what to do in countries that lack regulatory capacity and have a low quality of governance. There is a need for a strong government to provide social protection. But it is also important to look at how we can best use the informal strategies available - a question to which there are no general answers.

Moser drew attention to a section in the WDR talking about displacement, i.e. how formal institutions are in some cases taking over the role of informal ones. WB work from the Philippines showed a 90% shift; thus a lot of informal strategies are no longer employed. This is an interesting and important area, but one that can easily become politicised to support a general view one wishes to promote. The issue of governance is an important issue. In Bolivia, the social fund was created for use in crisis situations; later it developed into a risk prevention strategy. Research on this topic in Central/Latin America has proven it to strengthen local governance (decentralisation being an important issue).

Lastly, it was asked how the report recommends setting the balance between the 3 legs. Norton replied that rather than putting emphasis on any one of the 3 legs, the crucial issue is to follow through policy to country-level implementation. In WB work, there is often a mismatch between the scale of a problem and the answer provided. 5-6 years back, the Bank was not a major player in terms of social protection; it came out of the work on the social costs of SAPs. Now the Bank is more influential, and this representing a growing area of activity for the Bank. It would represent a very useful contribution to the debate if the International Labour Organisation updated and revised its standards for social protection.

Caroline Moser concluded the meeting by stating that the new WDR is interesting work, and does represent a serious attempt to work with the poor. However, getting more of a grip on the regional level, and asking how can we strengthen the informal institutions so they work better would be an important next step. Getting the particular out of the text boxes, and into the main text (the general discussion) would also be a great improvement. Social protection is an area where it is crucial to take on board what the social scientists/social development specialists have to say.

Description

During this event, Caroline Moser started by looking at the political economy of the World Development Report, and found that the importance and power of the WDR is implicit in the fact that until the World Bank takes on an issue it is not considered mainstream development practice.