Sri Lanka: Strengthening Sri Lanka: Strengthening Social ProtectionSocial Protection

Coping with Risk: Social Safety NetsCoping with Risk: Social Safety Nets

Dileni GunawardenaDileni GunawardenaSenior LecturerSenior Lecturer

Department of Economics & StatisticsDepartment of Economics & Statistics

OverviewOverview

RisksRisks Vulnerable groupsVulnerable groups Existing social safety Existing social safety

net/programmesnet/programmes Key issuesKey issues Policy directionsPolicy directions

RisksRisks

Individual Individual (Idiosyncratic)(Idiosyncratic)

Community Community (Aggregate/(Aggregate/

Covariate)Covariate)

RisksRisks

Individual Individual (Idiosyncratic)(Idiosyncratic)

Community Community (Aggregate/(Aggregate/

Covariate)Covariate)

Sickness, disability or Sickness, disability or death of family member. death of family member. Poor are susceptible toPoor are susceptible to• Communicable diseases: Communicable diseases:

respiratory infections, respiratory infections, mosquito-borne illnessesmosquito-borne illnesses Water-borne diseasesWater-borne diseases

• Non-communicable Non-communicable diseasesdiseases

Cardiovascular, diabetes, Cardiovascular, diabetes, tuberculosistuberculosis

UnemploymentUnemployment• Labour market constraintsLabour market constraints• Aggregate shocks: Aggregate shocks:

droughts, disasters, droughts, disasters, conflictconflict

RisksRisks

Individual Individual (Idiosyncratic)(Idiosyncratic)

Community Community (Aggregate/(Aggregate/

Covariate)Covariate)

Drought, crop failure, other Drought, crop failure, other natural disastersnatural disasters• Drought most significant Drought most significant

(people affected/needed (people affected/needed relief). 27 major episodes relief). 27 major episodes in 1948-1992 periodin 1948-1992 period

• 24 floods, 17 landslides 24 floods, 17 landslides (Badulla, Ratnapura, (Badulla, Ratnapura, Matale, Kegalle, Nuwara Matale, Kegalle, Nuwara Eliya, Kandy, Kalutara), 10 Eliya, Kandy, Kalutara), 10 cyclonescyclones

Conflict-related risks: Conflict-related risks: several hundred thousand several hundred thousand displaceddisplaced

Ageing: Over next 25 Ageing: Over next 25 years, share of popn > 60 years, share of popn > 60 will double from 1 in 10 to will double from 1 in 10 to 1 in 51 in 5

Vulnerable groups/individualsVulnerable groups/individuals ChildrenChildren

Working age adultsWorking age adults

ElderlyElderly

In large familiesIn large families DisabledDisabled Out of school (2%)Out of school (2%) Street childrenStreet children Soldiers (1,284 btwn 9-17 yrs)Soldiers (1,284 btwn 9-17 yrs) MalnourishedMalnourished

In informal sector, In informal sector, remote/risk-prone/infrastructure-poor remote/risk-prone/infrastructure-poor areasareas

Unemployed low incomeUnemployed low income DisplacedDisplaced Disabled (only 16% work, poor?)Disabled (only 16% work, poor?)

Most rely on family support (only 2/3 Most rely on family support (only 2/3 are happy with this), LFP of >60 fallen, are happy with this), LFP of >60 fallen, only 16% had planned for old ageonly 16% had planned for old age

Existing social safety netsExisting social safety netsArea/ProgrammeArea/Programme Beneficiary Beneficiary

groupgroupExpenditureExpenditure

Samurdhi programme (income Samurdhi programme (income transfers, micro credit, small scale transfers, micro credit, small scale infrastructure, infant milk subsidy)infrastructure, infant milk subsidy)

The poorThe poor 12,449 mn. 12,449 mn. (0.62% of (0.62% of GDP)GDP)

Civil conflict related programmes Civil conflict related programmes (payments to disabled soldiers, (payments to disabled soldiers, rehabilitation and reconstruction)rehabilitation and reconstruction)

Conflict Conflict affected affected populationpopulation

6,392 mn. 6,392 mn. (0.32% of (0.32% of GDP)GDP)

Flood and drought reliefFlood and drought relief Population Population affected by affected by natural natural disastersdisasters

1,466 mn. 1,466 mn. (0.07% of (0.07% of GDP)GDP)

Other (Triposha, MCH/N, disability Other (Triposha, MCH/N, disability allowance, assistance for indigent allowance, assistance for indigent population and disabled)population and disabled)

SpecificSpecific 456 mn. 456 mn. (0.02% of (0.02% of GDP)GDP)

IssuesIssues Targeting, benefit and work incentives of Targeting, benefit and work incentives of

Samurdhi programme could be improvedSamurdhi programme could be improved Disability programme does not reach all Disability programme does not reach all

poor disabledpoor disabled Social welfare and care services exist but Social welfare and care services exist but

provide limited coverageprovide limited coverage Relief programmes could be strengthened Relief programmes could be strengthened

in their ability to support affected in their ability to support affected populations.populations.

Cost of delivery of safety nets likely Cost of delivery of safety nets likely increased by involvement of many increased by involvement of many ministriesministries

Issues with Samurdhi: TargetingIssues with Samurdhi: Targeting Evidence of mis-targeting. Evidence of mis-targeting.

• Outcome similar to untargeted programmes such as Outcome similar to untargeted programmes such as Primary Health Care or EducationPrimary Health Care or Education

41% of population received the benefit in 200241% of population received the benefit in 2002 44% of HHS in top 3 quintiles of population received Sin 44% of HHS in top 3 quintiles of population received Sin

1999/2000 1999/2000 Only 60 percent of households in bottom quintile rcvd in Only 60 percent of households in bottom quintile rcvd in

1999/20001999/2000 Only 23% of poorest quintile and 27% of next quintile of Only 23% of poorest quintile and 27% of next quintile of

elderlyelderly Targeting errors systematicTargeting errors systematic

• ethnicity, party affiliation, NIC holding related to ethnicity, party affiliation, NIC holding related to probability of Samurdhi receipt.probability of Samurdhi receipt.

Mistargeting at local level, not in central level Mistargeting at local level, not in central level allocations to districtsallocations to districts• Lack of rigorous criteria to establish eligibilityLack of rigorous criteria to establish eligibility

Issues with Samurdhi: AdequacyIssues with Samurdhi: Adequacy

Level of benefit lowLevel of benefit low• 5-7 days of food per month, at best increased 5-7 days of food per month, at best increased

food consumption of 4 lowest deciles by 7 food consumption of 4 lowest deciles by 7 percentpercent

Benefit payments smaller than stipulated Benefit payments smaller than stipulated grant grant • because of compulsory savings and social because of compulsory savings and social

insurance scheme and ¼ amount of average insurance scheme and ¼ amount of average shortfallshortfall

Value eroded with timeValue eroded with time Worker disincentives possible, though Worker disincentives possible, though

unlikelyunlikely

Issues with income support for Issues with income support for disableddisabled

Only 41% of disabled (surveyed) receive Only 41% of disabled (surveyed) receive any sort of income transferany sort of income transfer

Main group (92% of transfers, 85% of total Main group (92% of transfers, 85% of total budget) is disabled soldiers, others are budget) is disabled soldiers, others are undercoveredundercovered

Expenditure rising, possibility of collusion Expenditure rising, possibility of collusion and moral hazard increasingand moral hazard increasing

Integration of disabled into society Integration of disabled into society (education and employment) needed(education and employment) needed

Issues with ReliefIssues with Relief

Relief (dry rations) for displaced persons Relief (dry rations) for displaced persons (IDPs) insufficient to meet their nutritional (IDPs) insufficient to meet their nutritional needsneeds

Fiscal restraints limit coverage of provision Fiscal restraints limit coverage of provision to permanent resettlersto permanent resettlers

Tsunami-related cash transfers—no errors Tsunami-related cash transfers—no errors of exclusion reported, but significant of exclusion reported, but significant errors of inclusionerrors of inclusion

Wage rates in workfare were above Wage rates in workfare were above marketmarket

Knowledge gapsKnowledge gaps

In understanding/designing of exit In understanding/designing of exit conditions (Microfinance/workfare)conditions (Microfinance/workfare)

On effect of current interventions on child On effect of current interventions on child malnutritionmalnutrition

No evidence on impact of provincial No evidence on impact of provincial council programmescouncil programmes

Little understanding of impact of Little understanding of impact of macro/aggregate shocks on vulnerabilitymacro/aggregate shocks on vulnerability

Policy DirectionsPolicy Directions

4 key areas:4 key areas: Address chronic Address chronic

povertypoverty Help the poor escape Help the poor escape

povertypoverty Address individual Address individual

vulnerabilityvulnerability Address aggregate Address aggregate

vulnerabilityvulnerability

Target assistance Target assistance better and reduce better and reduce work disincentiveswork disincentives

Safety “ropes”—Safety “ropes”—educn. & empl.educn. & empl.

Strengthening social Strengthening social welfare and care welfare and care servicesservices

Scale up response to Scale up response to aggregated aggregated vulnerabilityvulnerability

Policy DirectionsPolicy Directions

Address chronic Address chronic povertypoverty

Help the poor Help the poor escape povertyescape poverty

Address individual Address individual vulnerabilityvulnerability

Address aggregate Address aggregate vulnerabilityvulnerability

Improve targeting of Improve targeting of programme with PMT, programme with PMT, introduce exit/incentive introduce exit/incentive policiespolicies

Increase benefit level Increase benefit level (without compromising (without compromising work incentives and fiscal work incentives and fiscal sustainabilitysustainability

Improve fiscal, Improve fiscal, administrative and administrative and targeting efficiency by targeting efficiency by consolidation of disability consolidation of disability and other cash payments and other cash payments under the Samurdhi under the Samurdhi programmeprogramme

Policy DirectionsPolicy Directions

Address chronic Address chronic povertypoverty

Help the poor Help the poor escape povertyescape poverty

Address individual Address individual vulnerabilityvulnerability

Address aggregate Address aggregate vulnerabilityvulnerability

Consider Consider conditional cash conditional cash transfers to reduce transfers to reduce school non-school non-attendance and attendance and child malnutritionchild malnutrition

Promote access of Promote access of poor through skill poor through skill development and development and access to micro-access to micro-financefinance

Policy DirectionsPolicy Directions Address chronic Address chronic

povertypoverty Help the poor Help the poor

escape povertyescape poverty Address individual Address individual

vulnerabilityvulnerability Address aggregate Address aggregate

vulnerabilityvulnerability

Strengthen delivery of Strengthen delivery of social welfare and social welfare and care services through care services through public-private public-private partnershipspartnerships

Implement national Implement national disability policy disability policy focusing on raising focusing on raising awareness/reducing awareness/reducing stigma, preventing stigma, preventing disability, and disability, and including disabled including disabled people in socio-people in socio-economic activityeconomic activity

Policy DirectionsPolicy Directions Address chronic Address chronic

povertypoverty Help the poor Help the poor

escape povertyescape poverty Address individual Address individual

vulnerabilityvulnerability Address aggregate Address aggregate

vulnerabilityvulnerability

Develop a package of Develop a package of interventions: interventions: cash/livelihood grants, cash/livelihood grants, workfare and social welfare workfare and social welfare and care services, to be and care services, to be scaled up in case of scaled up in case of disastersdisasters

Strengthen relief for Strengthen relief for conflict affected groupsconflict affected groups• Reintegration of Reintegration of

demobilised soldiersdemobilised soldiers• Attend to special needs of Attend to special needs of

children and youthchildren and youth• Rehabilitation of schools, Rehabilitation of schools,

roads, essential roads, essential infrastructure (public infrastructure (public works)works)

Samurdhi Reform and the Welfare Samurdhi Reform and the Welfare Benefits Act No. 24 of 2002Benefits Act No. 24 of 2002

Main thrust of the act is toMain thrust of the act is to• Limit programme to bottom 25-27 percent of population Limit programme to bottom 25-27 percent of population

(900,000 hhs)(900,000 hhs)• Better accuracy in identifying poorBetter accuracy in identifying poor• Making transfer more progressiveMaking transfer more progressive

EligibilityEligibility• PMTF, eligibility checked every 1-3 yrsPMTF, eligibility checked every 1-3 yrs• All homeless hhs (1.3% of applicants) includedAll homeless hhs (1.3% of applicants) included• Exit mechanism to be devisedExit mechanism to be devised

BenefitBenefit• Variable component for children and agedVariable component for children and aged• Rs. 830 per hh, up from Rs. 320 per hhRs. 830 per hh, up from Rs. 320 per hh• De-linked from saving and insuranceDe-linked from saving and insurance

Safety Ropes: suggestionsSafety Ropes: suggestions

Conditional cash transfersConditional cash transfers• Targeted to 5-6 year olds and 11-14 Targeted to 5-6 year olds and 11-14

year olds year olds Microfinance for the poorMicrofinance for the poor

• Strengthen regulatory framework to Strengthen regulatory framework to ensure security of deposits and probity ensure security of deposits and probity of microfinance organisationsof microfinance organisations

• Knowledge gap: impact of microfinance Knowledge gap: impact of microfinance on poverty (poorest)? What works best?on poverty (poorest)? What works best?

• Combine with workfare?Combine with workfare?