Development and Poverty Reduction: What Role for Social Policy

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Development and Poverty Reduction What Role for
Social Policy?

• Civil Society Development Forum 2007,
• 28-30 June, Geneva
• Katja Hujo
• Research Coordinator Social Policy and
  Development Programme, UNRISD

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Roadmap of Workshop presentations

• Social Policy and Development
• By Katja Hujo, Unrisd
• Social Policy and Gender
• By Shahra Razavi, Unrisd
• Social Policy in Latin America
• By Manuel Riesco, Cenda (Chile)

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What is Social Policy?

• Social policy is state intervention that
  directly affects social welfare, social
  institutions and social relations
• It involves overarching concerns with
  redistribution, production, reproduction and
  protection
• and works in tandem with economic policy in
  pursuit of national, social and economic goals

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What Is Development?

• Growth and Structural Change
• Economists use income indicators like GDP per
  capita to measure development
• Early development theorists emphasized
  industrialization and urbanization
• Contemporary debates focus on institutions,
  governance, employment, development of monetary
  economy (currency, stability, debt)
• Human Development
• longevity, knowledge, decent standard of living,
  participation Capabilities enable people to
  strive for their own life goals

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Policy goals

• Decent Work
• Security, sustainable livelihoods (or lifestyle
  for all?)
• Poverty Reduction/ Eradication
• Equity and (Gender-) Equality
• Democratization
• Social inclusion, social mobility

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Integrating the Economic and the Social Two
Opposing Views

• SP and the Keynesian Welfare State
• Beneficial mutual relationship social
  development macroeconomic stabilization
• SP and the Liberal Market-Paradigm
• Old Conflicting relationship
• avoid fiscal crises, inflation and market
  distortions
• New Beneficial relationship
• human capital and risk management approach

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Revisiting the Social Agenda

• Growing criticism with social costs of adjustment
  and stabilization programmes
• Copenhagen Summit 1995
• Millennium Development Goals
• Debt Relief (HIPC) and Poverty Reduction Strategy
  Papers (PRSPs)
• Post-Washington Consensus and beyond

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Post-Washington Consensus What Is New?

• Learning from Keynes coherence between welfare
  and accumulation regime revisited
• SP can be beneficial for growth and development
• Example Pension Privatization?Savings Fund
  Financial Sector Development
• Example Education and Health Reforms ?Human
  Capital Productivity

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Social Policy and Development an Integrated View
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• Social Policy Has Multiple Roles
• Production 
• Enhancing productive potential of people through
  investment in health and education, decent work
  conditions and labour standard
• Smoothing business cycles through automatic
  stabilisers
• Stabilising consumption and demand of low-income
  groups

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• Social Policy Has Multiple Roles
• Reproduction
• Sharing the burden of social reproduction and
  care among members of society
• Creating gender-sensitive institutions and
  programmes supporting reproductive and
  care-related tasks

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• Social Policy Has Multiple Roles
• Protection
• Protecting people from unstable and inequitable
  effects of markets
• Protecting people from changes in circumstances
  of life (maternity disability, sickness,
  survivorship, ageing)

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• Social Policy Has Multiple Roles
• Redistribution
• Enhancing equity and equality
• Broadening domestic markets and strengthening
  demand
• Increasing stability and legitimation of the
  political system

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Social Policy Fosters

• Equity, Inclusion, Cohesion and Rights
• Fostering equitable and inclusive societies
• Strengthening social cohesion, a notion of
  citizenship and democratisation
• Enhancing human and socio-economic rights

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Balanced Approach Needed

• Different welfare regimes give different weights
  to each of these roles
• Possible problems Excessive weight
• to distributive aspects can be economically
  unsustainable (populist macroeconomics)
• To productivist aspects of social policy can be
  socially and politically unsustainable

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Social Policy and Poverty

• Social policy goes beyond social safety nets and
  poverty reduction
• Successful countries that have eradicated poverty
  in a short time period have usually not focused
  on poverty reduction or targeted the poor

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Globalization and Social Policy Reform Targeting

• PROS
• Critique of existing universal social programmes
• Labour market flexibilisation Dismantling
  privileges of formal sector workers
• Concentrate scarce resources on the most needy
• Donor-friendly (project approach, PRSPs)

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Targeting

• CONS
• Costly in administrative terms (on average 15 of
  total programme costs)
• Difficult to administer Type I and Type II
  errors
• Fosters segmentation of social services
• Political vulnerability of targeted programmes
• Political sustainability threatened if middle
  classes are not brought in
• Informality, poverty and low governance
  capacities are the rule in the periphery

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Globalisation and Social Policy Reform
Privatisation

• Market-based approaches have a poor record
  regarding
• Coverage, poverty reduction, social inclusion
• Systemic crises
• Stabilisation Function of SP
• Gender equality
• Example Pension privatization (Latin America,
  Eastern Europe)

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Example Chile reforms its privatized pension
system

• The State assumes universal basic pensions for
  60 of affiliates that have no chance of saving
  enough even for minimum private pensions.
• The rest will receive pension of uncertain
  amounts (depending on economic cycles), and on
  the average 40 less than the PAYG public system
  that still covers 75 of the elderly. Women worse
  still.
• The industry (AFP and insurance companies) has
  grabbed one out of every three pesos controbuted
  to the system since 1982.
• The pension fund is invested mainly in private
  conglomerates (12 of them have half of the fund)

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Example Chile reforms its privatized education
system

• The national public system was severely
  dismantled through budget and teachers wage
  reduction, dispersing of schools and the voucher
  system.
• In 1974, the public system enrolled 30 of the
  chilean population of all ages. At the end of the
  dictatorship, public AND private schools enrolled
  25, and today just 27. Country lags behind in
  tertiatry level.
• Half of pupils and expenditure depend on private
  schools and funding, versus 81 and 92
  respectively in OECD countries.
• Results one million secondary students in the
  streets demanding reform.

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Social Policy and Democratization

• Democratization can improve well-being of the
  poor by making political leaders become more
  accountable and responsive to citizens
• Social policy can consolidate democratization and
  improve its quality by
• Improving security of citizens
• Undermining revolutionary of violent alternatives
• Improving social solidarity (cornerstone of
  citizenship)
• Weakening clientelistic social relations
• Enhancing citizens capacity to participate in
  public life in an autonomous way

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Social Policy and Democratization

• But democratization in countries where the poor
  are majority are no guarantee for substantive
  income redistribution or pro-poor social
  provisioning
• Electoral competitiveness and leaders
  responsiveness can be undermined by inadequate
  information, lack of credibility of leaders and
  programmes, ethnic diversity

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Social Policy and Democratization

• Performance of parliaments depends on nature of
  party system and distribution of power
• Technocratic governance weakens traditional
  policy makers and shield policy institutions from
  supervision and bargaining processes
• Impact of interest group pressure of low-income
  groups changed (weakening of trade unions and
  peasant organizations, rise of unorganised
  informal sector and NGOs)
• Corporatist arrangements and social pacts
  combining universalist approaches with elite
  interests (labour peace) have broken down

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Social Policy and Democratization

• Some new democracies combine orthodox economic
  policies with progressive social policies
  ( political economy of the possible ?)
• Social policies depend also on electoral cycle
  (social expenditure increases during election
  times)
• Impact of external actors like IFIs, donors,
  international financial markets, investors
• Influence of technocrats in key institutions

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Conclusions (the wish-list.)

• Social policy has intrinsic and instrumental
  values, the latter are important but not at the
  expense of the former
• Economic development counts
• if more resources are available, if
  distributional patterns are more equal, policy
  space increases
• Economic development model with emphasis on
  employment creation and investment needed
• Possible trade-off between credibility towards
  external investors and towards citizens?
• Discretionary economic policy plus rules-based
  social policy

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Conclusions continued

• Fostering of democracy and social inclusion
• Relationship between social policy and political
  regime
• What (political) actors are involved
• Role of strategic alliances, social pacts and
  social dialogue build national consensus
• Cope with/reduce conditionality
• Improve national capacities and global governance

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Thank you!

• Selected References
• UNRISD RPB No. 5, Transformative Social Policy.
• Utting, Peter 2006 Social Policy in a
  Developmental and Political Context, unpublished
  conference presentation.
• Mkandawire, Thandika (ed) 2004 Social Policy in
  a Development Context, Unrisd, Palgrave.
• Bangura, Yusuf (ed) 2007 Democracy and Social
  Policy, Unrisd, Palgrave (forthcoming).
• Hujo, Katja. 2006. Financing Social Policy.
  Unpublished background paper.