Dr. Anurag Priyadarshee
Context
Social protection (sometimes
also referred to as social security, more so in India) has become a buzzword
among policymakers, particularly in low-income countries, engaged in designing
measures to reduce poverty. Justification of social protection is often
premised on the argument that it may not be possible to address the structural
causes of poverty within the prevalent political and economic environment of
many low-income countries. Most important structural causes of poverty are
associated with unequal distribution of factors of production, mainly, land and
capital. Such unequal distribution results in poor facing a limited supply of
the factors of production making it very difficult for them to participate in
the process of economic growth. Poor are also unable to adequately access the
health and educational infrastructure due to their assetlessness, and thus most
often fail to build up their capabilities. The situation is compounded due to
continued social exclusion and discrimination. Although a section of advocates
of social protection acknowledge the structural causes of poverty they also
argue that absence of social protection measures and safety nets for the poor
and vulnerable perpetuates poverty among them. As the policymakers find it
infeasible to correct the distributional aspects of poverty in the given
politico-economic environment, they are increasingly realizing that
availability of social protection measures may help in reducing the severity of
the poverty situation to a large extent.
What Is Social Protection?
Social
protection is generally described to include public actions taken in response
to levels of vulnerability, risk, and deprivation, which are deemed socially
unacceptable within a given society. Such actions also include interventions
and initiatives that enhance the social status and rights of the marginalised. Basic
idea of social protection is to use social means to prevent deprivation, and
vulnerability to deprivation. Social Protection thus has a strong poverty focus.
Social protection evolved in the late 1980s and early 1990s as a comprehensive
set of programmes to respond to multidimensionality of poverty. Such a response
also reflected an increasing recognition of the perceived inadequacy of social
safety nets, which were criticised as ‘residualist and paternalistic’
(Sabates-Wheeler and Devereux, 2008: 64).
Various
social protection measures are possible and need to be taken to reduce and
mitigate such risks and vulnerabilities at the levels of individuals, households,
and communities. Dreze and Sen (1991)
argue that there may be two aspects of such measures; protection aspects that
concern protecting the living standards and assume paramount importance at the
times of social and economic shocks such as famines, and promotional aspects
that aim to improve the general living standards and address deprivation and
vulnerabilities. The objectives of one aspect may be very different from those
of the other but the implementation strategies involving them may not be completely
independent of each other. Moreover, the achievements in respect of one may
feed into the other of the other. For example, success with the promotional
aspects may ease the implementation of protection aspects (for example, higher
incomes may make individual insurance less painful). Sabates-Wheeler and
Devereux (2008: 69) extend such classification to include the social protection
measures in four categories, namely, provision, preventive, promotive and
transformative measures. According to them, the provision measures aim to
reduce and mitigate deprivation, while the preventive measures attempt to
prevent the incidence of deprivation and include various poverty alleviation
measures. Promotive measures focus on improving incomes and capabilities ‘through
a range of livelihood-enhancing programmes targeted at both households and
individuals’. The transformative measures target social injustice and various
kinds of exclusion.
Social protection programmes can be categorised in three broad groups of
programmes: social insurance, social assistance and labour market regulations.
Social insurance consists of programmes that aim to protect against
contingencies such as maternity, old age, sickness, or unemployment. Social
assistance programmes aim to support those in poverty, while labour market
regulations ensure basic work standards and minimum wages for work etc.
(Barientos and Hulme, 2008).
According to Munro (2008), justification of social protection policies
derives traditionally from three different discourses. The risks and market
failures discourse provides reasons of failures in insurance markets often due
to informational issues, along with the failures in credit, human capital and
labour markets to justify provision of social protection. The rights-based
discourse advocates for social protection to fulfill the obligations to grant
legally enforceable social and economic rights to its citizens on the part of
the State. Needs-based discourse on the other hand invokes practical and moral
arguments in favour of reducing and alleviating chronic poverty, and promotes
employing social protection measures in achieving that. The constraints that the poor
face may have different explanations resulting in different approaches towards
social protection as means of addressing such constraints. Thus the overarching
role and purpose of social protection may be to reduce social risk and market
failures, satisfaction of basic needs, or contribute to human development
through rights-based approach depending upon the strategies the policy makers
adopt while addressing the aforementioned constraints. For example,
market failure discourse was largely responsible for enhanced social and
economic roles of the State and thus the growth of the modern welfare state.
Social
protection as a major attribute of the welfare state has existed in the
industrially developed countries in the form of social welfare assistance,
insurance, and employment generation and protection. Fallouts of structural
adjustment programmes, various economic crises, and effects of globalisation
have motivated the low- income countries too to incorporate social protection
programmes within their policy frameworks since the early 1990s. Social
protection in such countries is therefore largely focussed on poverty reduction
and relies increasingly on transfer of incomes in conjunction with employment
generation, creation of assets and provision of basic services.
Formal sector
employment declined in most low-income countries as a result of structural
adjustment policies. Such policies also resulted in decrease of wages in both
public and private sectors. Thus, the contributory base was eroded for the statutory
social insurance schemes. Structural adjustment policies further resulted in
the massive cuts in social budgets thus adversely affecting the government
contributions towards social insurance. Such schemes were therefore not as
successful in low-income countries as in industrialised countries, particularly
in case of a large majority of workers who worked outside the formal sectors.
They could not afford to contribute to such schemes. In many cases, they were
also not inclined to contribute towards the schemes that were not designed to
meet their specific needs. These schemes were therefore largely limited to
formal sector workers. Due to this reason, the social insurance schemes in
low-income countries further skewed the income distribution in favour of formal
sector workers especially because of the government subsidies on such schemes,
as corresponding subsidies were not available to informal sector workers. This,
in effect, results in transfer of resources from the informal sector workers to
formal sector workers that strengthened the privileges of especially the elite
in defence and civil services. A section of scholars thus advocates for
limiting the social protection privileges and expanding the social protection
benefits. Structural adjustment programmes and influence of neo-liberal
discourse also limited the state’s role in providing health education services
that adversely affected the informal sector workers and the poor. Recurrent
global economic crises and effects of increasing globalisation in trade and
services further deteriorated the economic condition and bargaining power of
the poor in low-income countries (for example, Stiglitz,
2002; Basu, 2006).
Social protection in its current form evolved as a
political and economic response to this situation in low-income countries. This
explains why although the social insurance models in low-income countries
generally follow the basic structures of such programmes in industrialised
countries, the scope of social assistance programmes is much wider in
low-income countries. In addition to protecting the poor from deprivation by
helping them maintain a certain level of consumption as in industrialised
countries, they aim to enhance their productive capacity by investing in their
human capital development and in their physical asset formation. They further
aim to help the poor to reduce their social exclusion by providing them with
access to basic services and enhancing their participation in various social
and other institutions. Social assistance is also sometimes employed to address
the inequality issues in view of the widespread poverty in low-income countries
(Barrientos and Hulme, 2008). Other aspects
of social protection include empowering the poor and strengthening their agency
to reduce and alleviate their poverty (Sabates-Wheeler and Devereux, 2008).
It is now being increasingly acknowledged that poverty
reduction policies based on strategies of economic growth alone lead to skewed
outcomes across geographical and social spaces (for example, Chen and
Ravaillon, 2004). As Dreze and Sen (1991: 10) argue, the issues of ‘widespread,
persistent deprivation’ and the ‘fragility of individual security’ in
low-income countries cannot be adequately dealt with the ‘standard channels of
economic growth and social progress’ alone, as is generally believed to have
been the case with the high-income countries. They contend that such a belief
is misplaced as the general improvements in the conditions of living in
high-income countries have been achieved through various social policies and
public expenditures in the areas of education, health, employment and food
security; rather than through economic growth alone. Moreover, the Gross
National Product (GNP) per head measurements of the prosperity of a nation may
not be a true indicator of the capabilities enjoyed by its population at large.
Such measurements do not take into account the inequalities prevailing in the
distribution of incomes and variations of incomes over time in individual
cases.
It
has been observed that the personal needs are higher at the time of reduced
incomes, such as when an earning member of a household is suffering from ill
health. Such income fluctuations could be more efficiently dealt with if
insurance and capital markets were well functional but that is usually not the
case in respect of low-income countries. Even otherwise, high individual
incomes may not necessarily imply enhanced capabilities especially in absence
of other social provisions such as in the areas of health and education. This
analysis thus indicates that ‘economic growth alone cannot be relied upon to
deal either with the promotion or with the protection of living standards’ (Dreze and Sen,
1991: 14).
‘Limitations of private markets in generating good living conditions’ may also
render such strategies of social protection based on economic growth alone
infeasible (Dreze and Sen, 1991: 31).
Moreover, as Platteau (1991: 163) points out that, ‘[w]hile market forces and
institutions may help in reducing the risk of hunger, particularly in so far as
they increase self-reliance by diversifying sources of income and supply as
well as market outlays, they also open the way for new sources of
vulnerability’.
Dreze and Sen (1991: 32) further cite the experience of China, Costa
Rica, Cuba, Chile, Jamaica and Sri Lanka to argue that it is not necessary to
wait for high economic growth to achieve substantial improvements in the
general living conditions for a large section of the population through
appropriate public action.
Social
Protection In India
Various
aspects of social protection constituted an important part of the agenda of the
Indian Freedom movement and the government of newly-independent India initiated
several social protection programmes. Such programmes were considerably scaled
up and new programmes were initiated in the late 1960s and early 1970s in
response to various natural calamities, droughts and food shortages during that
period. Next phase of spurt in social protection was witnessed in the later
half of 1990s, when it was realised that the gains from economic reforms and
increased globalisation of Indian economy were largely bypassing a large
section of the society. Various social protection programmes were therefore scaled
up and new programmes such as those guaranteed under National Rural Employment
Guarantee Act and later Right to Food Act were launched.
Panagariya
(2008) strongly correlates the increase in the rate of growth of Indian economy
to the process of reform and liberalisation and claims that it has also led to
substantial reduction in poverty. Reports of the National Commission for
Enterprises in the Unorganised Sector (NCEUS)[1] however
clearly show that the people engaged in informal employment, constituting 93%
of India’s total workforce, are steeped in poverty and that their deprivation
has not been reduced substantially during the period from 1993-94 to 2004-05
associated with large-scale reforms in Indian economy. According to such
reports, the employment growth rate plummeted during this period to 1.85% on an
average from over two percent on an average in the immediately preceding ten
years. More importantly, such growth in employment was almost entirely limited
to the informal sectors of economy. This did not help the people, additionally
employed during this period, to come out of poverty. Real wage growth rate also
fell during this period. NCEUS thus concludes that the substantial jump in the
economic growth was not translated into employment generation and enhancement of
incomes for a large number of Indians.
Quality of employment was also found to
be adversely affected in general during the period of high economic growth due
to a process of informalisation of a section of formal sector workers, and
job-cuts in government and public sectors. Increased tendency to outsource
various types of work to contractors in the formal, including the government
and public, sectors also contributed to this phenomenon (e.g., Breman 2010) Such
informalisation, associated with low wages, longer working hours, and general
lack of employment and social security further contributed to poverty among the
informalised workers and deteriorated their living conditions.
Breman (2010)
argues that the claims of poverty reduction due to economic growth caused by
liberalisation of economy are largely based on the assessment of benefits
accrued to the section of population possessing some means of production such
as land, equipments or other forms of petty capital. Poor, however, lack
resources and thus means of production, and sell their low-skilled or unskilled
labour to earn livelihoods. They do not gain from increased growth rates in the
economy. According to him, high levels of growth in Indian economy have greatly
benefited the upper and middle classes, having means of production and/or
formal sector employment, while a large section of population engaged in
informal employment has not been able to participate in the Indian economic
growth process. Increase in productivity with stagnating employment, during
1993-94 to 2004-05, as pointed out in the NCEUS reports, may also mean that the
labour has been exploited even more during the period of high economic growth
than before (Breman 2010). Topalova (2008) also demonstrated that the rate of
reduction of poverty decreased substantially after introduction of the economic
reforms.
Social
Protection And Poverty
Social protection is being increasingly recognised as an
important instrument to promote social and economic development (ILO, 2005). A
large and varied body of evidence suggests that social protection programmes
effectively contribute towards reduction of poverty and vulnerability. Poverty
reduction policies based on strategies of economic growth alone lead to skewed
outcomes across geographical and social spaces. Social protection measures are
therefore needed to deepen and widen the poverty impacts of economic growth. They
help the households come out of poverty traps caused due to low incomes and
limited opportunities. Social transfers, especially the conditional transfer
programmes, promote enhancement of human capital.
There
is now a general consensus on poverty being multidimensional and caused mainly
due to the constraints the poor face while attempting to participate in, and
benefit from the economic activities and opportunities. Increased emphasis on
social protection in low-income countries during recent times may be seen as a
response to such understanding of poverty. The constraints that the poor face
may have different explanations resulting in different approaches towards
social protection as means of addressing such constraints. Thus the overarching
role and purpose of social protection may be to reduce social risk,
satisfaction of basic needs, or contribute to human development through rights-based
approach depending upon the strategies the policy makers adopt while addressing
the aforementioned constraints. It is however observed that over the last
decade the focus of social protection programmes has moved from social risk and
basic needs perspectives towards enhancement of human capabilities. They also
mention that social protection has now become one of the three main elements of
national development strategies along with economic growth and human
development. The speed with which social protection programmes have been scaled
up in the low-income countries over the last decade is unprecedented. Barrientos and
Hulme (2008) estimate that the programmes in force may have a combined capacity
to reach half a billion people in poverty. They also feel that such a scale of
the programmes have the potential to significantly reduce global poverty. What
makes them different from the earlier poverty alleviation and development
programmes is that they are focussed
on the poor and the poorest.
The evidence suggests that social protection
programmes have the potential to alleviate suffering of a large population in
poorer countries in the shorter run, while also contributing to overall human
development in the longer run. Moreover, as Barrientos and Hulme (2008: 315)
point out, ‘social protection has managed to avoid the ‘silver bullet’ syndrome
and naïve replications that characterised social funds and much microfinance in
the 1990s’. The current challenge, according to them is to integrate a variety
of programmes to address different issues associated with poverty at different
levels simultaneously.
References
Barrientos, A. and Hulme, D., 2008. Embedding social protection in the
developing world. In: A. Barrientos and D. Hulme, eds. Social protection for
the poor and the poorest: Concepts, policies and politics. Hampshire:
Palgrave Macmillan, 315- 330.
Basu, K., 2006. Globalization, poverty, and inequality: What is the relationship? What
can be done? World Development, 34 (8), 1361-1373.
Breman, J., 2010. India’s social question in a state of denial. Economic and Political Weekly, XLV (23),
June 5, 42-46.
Chen,
S. and Ravallion, M., 2004. How have the world's poorest fared since the early
1980s? World Bank Research Observer, 19 (Autumn), 141-169.
Dreze,
J. and Sen, A., 1991. Public action for social security: Foundations and
strategy. In: E. Ahmed,
J. Dreze, J. Hills, and A. Sen, eds. Social
Security in developing countries. New Delhi: Oxford University Press, 3-40.
ILO
(International Labour Organisation), 2005. Social protection as a productive
factor (GB.294/ESP/4). Geneva, Switzerland: ILO.
Munro, L. T., 2008. Risks, needs and rights: Compatible or contradictory
bases for social protection. In: A. Barrientos, and D. Hulme, eds. Social protection for the poor and the
poorest: Concepts, policies and politics. Hampshire: Palgrave Macmillan. 27-46.
Panagariya, A., 2008. India: The emerging giant. Oxford: Oxford
University Press.
Platteau,
J. P., 1991. Traditional systems of social security and hunger insurance. In:
E. Ahmed, J. Dreze, J. Hills, and A. Sen, eds. Social Security in developing
countries. New Delhi: Oxford University Press, 112-170.
Sabates-Wheeler,
R. and Devereux, S., 2008. Transformative social protection: The currency of
social justice. In: A.
Barrientos, and D. Hulme, eds. Social protection for the poor and the
poorest: Concepts, policies and politics. Hampshire: Palgrave Macmillan,
64-84.
Stiglitz,
J., 2002. Globalization and its discontents. New York: Norton
& Company.
Topalova,
P., 2008. India: Is the rising tide
lifting all boats? IMF Working Paper, WP/08/54 [online].
Available at: http://www.imf.org/external/pubs/ft/wp/2008/wp0854.pdf [Accessed 7 February 2009].
About the Author: An ex-Indian Civil Servant,
Anurag Priyadarshee obtained his PhD from the University of Manchester,
UK. He is currently working as Chief Operating officer at International
Development Enterprises- India (IDEI). Views expressed in this article are
personal.
He
can be contacted at: anuragpriyadarshee@yahoo.com, or at following postal
address:
Dr.
Anurag Priyadarshee
Chief
Operating Officer
International
Development Enterprises- India
Plot
10, Local Shopping Centre,
Sector
12, Dwarka,
New
Delhi- 110078 
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