Chronic poverty, with reflections on labour and social

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Chronic poverty, with reflections on labour and
social protection
Presentation to ILO Staff Seminar, Turin, 25-27
October, 2004 Global Goals and National
Challenges

• Andrew Shepherd
• Overseas Development Institute, London

www.chronicpoverty.org
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What is chronic poverty?

• Distinguished by extended duration the
  chronically poor are those living below a given
  poverty line for a long time
• Poor for all or much of their lives,
• Pass on poverty to subsequent generations, and/or
  
• Die a preventable, poverty-related death.
• Chronically poor are commonly multi-dimensionally
  deprived. Combinations of capability deprivation,
  low levels of material assets, and
  socio-political marginality keeps them poor over
  long periods.
• Relationship between poverty severity and poverty
  chronicity, at both the country and household
  level, is complex and only partly understood.

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What is chronic poverty?
Chronic poverty is that poverty that is ever
present and never ceases. It is like the rains of
the grasshopper season that beat you consistently
and for a very long time. You become completely
soaked because you have no way out. Some
poverty passes from one generation to another, as
if the offspring sucks it from the mothers
breast. They in turn pass it on to their
children. - Group of disabled women in
Nkokonjeru Providence Home, Mukono, Uganda
(source Lwanga-Ntale 2003).
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Poverty dynamics
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Poverty dynamics vs. poverty trends

• Uganda has experienced significant reduction in
  poverty from 1992 to 1999, aggregate national
  poverty rate fell by about 20. But this
  aggregate poverty trend tells us nothing about
  what happened to individual households.
• Poverty trends can mask important poverty
  dynamics
• about 19 of households were poor in both 1992
  and 1999 (the chronically poor),
• and while almost 30 of households moved out of
  poverty, another 10 moved in (the transitory
  poor).
• This more nuanced understanding of poverty
  requires the collection of panel data and life
  histories alongside the standard household
  surveys.

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Global extent of chronic poverty
APPROX. 300-420 MILLION CHRONICALLY POOR
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Desperately deprived countries
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Relatively non-deprived countries
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Global extent (size) and prevalence (colour) of
multi-dimensional deprivation
Deprivation severe stunting, U5MR, female
illiteracy, probability of not surviving until
40, 1/day poverty headcount
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Who are the chronically poor?
If you did not inherit land, and you are not a
political leader, and you did not go to school,
and your relations do not feel proud of you, then
poverty will bite you very hard forever and
ever amen. Now remember that a disabled person
cannot inherit land. A brothers child even may
be preferred in inheritance if he is not
disabled. Similarly disabled people do not get to
leadership positions, and most are not even
educated. Where else can you find this dire
poverty? - Group of disabled women in
Nkokonjeru Providence Home, Mukono, Uganda
(source Lwanga-Ntale 2003).
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Who are the chronically poor?

• Working poor with unsustainable livelihoods
• Discrimination and deprivation
• Marginalised ethnic, religious, caste groups,
  incl. indigenous, nomadic peoples
• Migrant, stigmatised, bonded labourers
• Refugees, IDPs
• Disabled people
• People with ill-health, esp. HIV/AIDS
• To different extents, poor women and girls.
• Household composition, life-cycle position
• children
• older people
• widows
• households headed by older people, disabled
  people, children, and, in certain cases, women

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Assets

• Land and water among the key assets in many
  contexts livestock too
• In the absence of financial markets these provide
  insurance, savings and safety nets
• Social protection reduces asset depletion
• For all, capabilities are key
• Better nutrition (stunting almost impossible to
  reverse)
• Education enabling access to better jobs, keeping
  accounts, credit, social networks, respect
• Assets permit bounce back without assets the
  risk of non-recovery is high
• Low assets to start with, or loss of assets
  frequently mentioned as the most significant
  cause of poverty (PPAs)
• Gender inequalities and intra-household land
  grabbing
• Assets permit resource use intensification
• With property rights to guarantee capture of
  returns
• With collective action to manage natural
  resources

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Who are the chronically poor in India?

• Around half of surveyed households remain in
  poverty between survey points
• Casual agricultural labourers are the largest
  group
• Landless/near-landless
• Illiterate
• High dependency burden
• Critically dependent on wages high drudgery
  low wage
• Both scheduled tribe and scheduled caste status
  determined where a household started in 1970/1
• But only scheduled tribe status was associated
  with failure to escape through to 1981/2

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Perceived drivers and interrupters

• Shocks
• crop failure
• high health care costs
• adverse market conditions
• loss of assets
• high interest from private money lenders
• social expenses on deaths and marriages.
• Entry into poverty can be prevented by policies
  that reduce health care related shocks or costs,
  crop insurance, and high interest debt.

• Interrupters
• growth in size of village
• proximity to urban areas,
• improved infrastructure
• initial literacy status of the household head
• ownership of or access to income from physical
  assets cropland, livestock, house
• Note Caste and tribal status are important
  determinants of poverty but not of exit from
  poverty

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Ratnapandi

• Ratnapandi is a labourer who climbs date palm
  trees every day to tap them for juice.
• He works 16 hours a day
• climbs date palm trees he does not own
• risks his neck
• shins up using his hands and legs and
• earns less than the minimum wage a day

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Casual Labour in India (1)

• 130 million casual labourers predominate among
  the chronic poor
• 41 of all households in India depend on casual
  labour for their main source of income 33 on
  agricultural casual labour
• Nearly half the population has an insecure
  livelihood
• There is a poorer group still non-workers
  (casual workers by subsidiary occupation)
• A growing share of the labour force especially in
  agriculture
• The poorest casual labourers is the fastest
  growing group
• Agricultural labourers most likely to be poor
• A strong persistent caste-class connection
• STs especially hit by disasters (eg drought) and
  loss of regular jobs in 90s
• Women progressively concentrated in agriculture
  and lost non-agricultural jobs, but
• The male-female ratio has increased over time

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Casual Labour in India (2)

• Real casual wage rate growth declined, and
  landlessness increased dramatically in the 1990s
  among casual labourers
• Basic education makes little difference to
  poverty, though poverty incidence is higher among
  less educated. Makes more of a difference for
  non-agricultural casual labourers
• Rural infrastructure accounts for much of the
  regional differences in wage levels and poverty
  among casual labourers
• Helps the shift to more productive non-farm
  labour
• Where there is a high share of non-agricultural
  casual labour, there is less poverty
• Infrastructure endowment associated with
  education levels (Bhalla, forthcoming)

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Policy implications

• Social protection
• Protection against shocks
• Increased landlessness means increased
  vulnerability
• Land policy
• But land lt 1 hectare does not help much
• Education
• But we need to know how much makes a difference?
• Plays a role in diversification (movement from
  agricultural to non-agricultural labour)
• Infrastructure investment
• Helps diversification
• Equalises wages

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Landlessness

• Even in SSA dependence on casual labour is
  growing as a result of household asset decline
• In Uganda this happens because of
• Large families, fragmentation and over-use
• Land grabbing and gender inequalities
• AIDS, drink and other disasters
• Conflict
• Eviction by development
• Policy implications
• make access easier via renting (Ugandas good
  land laws have been slow to be implemented)
• Family spacing
• Mitigating the effects of AIDS
• Wider social policy

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Where are the poorest? Understanding spatial
poverty traps
Chronic poverty is harshest where spatial and
social deprivation overlap.
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Why are people chronically poor?

• Context matters
• Causes of chronic poverty sometimes same as
  causes of poverty, only more intense, widespread,
  long-lasting. In other cases, there is a
  qualitative difference between the causes of
  transitory and chronic poverty, requiring
  different policies.
• Rarely a single cause most chronic poverty due
  to multiple, overlapping, interacting factors
  operating at levels from intra-household to
  global.
• Maintainers factors that keep people in poverty
• Drivers factors that cause people to slide into
  poverty traps

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Why are people chronically poor? The maintainers
and drivers of chronic poverty

• Quantity and quality of economic growth
• No, low, and narrowly-based growth situations
  raise the probability of people being trapped in
  poverty. But growth is not almost enough.
• For the working chronically poor, sectoral
  composition of growth really matters, esp.
  whether it includes broad-based agricultural
  growth and is in sectors with high demand for
  unskilled labour
• The non-working chronically poor are most
  vulnerable to economic shocks, because of their
  dependence on any benefits from economic growth
  derived from a mix of private and public social
  protection.
• Geography and agro-ecology
• Geography and agro-ecology combine with social,
  economic, political and institutional factors to
  create spatial poverty traps

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Economic growth and incomes of the chronic poor

• Generally we would expect that chronic poverty
  reduces along with poverty
• Evidence suggests this may not always be the case
• There may be resistance
• Due to the nature of the deprivations faced eg
  where growth fails to deliver the human
  development which is closely associated with
  chronic poverty reduction, due to public policy
  choices
• Growth may not benefit those unable or less able
  to work without public or private transfers
• We know little about the relationship as yet,
  except that initial levels of inequality are
  important to distributional outcomes

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Remote Regions policy implications

• High risk and vulnerability levels
• Social protection is key
• Agriculture can deliver part of this
  insurance, technologies which reduce
  vulnerability
• Environmental degradation can be managed/reversed
  with resource intensification, underpinned with
  asset building
• Poor connectivity
• Infrastructure is critical
• But poor institutions and low voice make it
  doubly difficult
• Agriculture as an exit route, compared to others?

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Why are people chronically poor? The maintainers
and drivers of chronic poverty

• Social exclusion and adverse incorporation
• Structures of social exclusion (discrimination,
  stigma, invisibility) are the basis for processes
  of adverse incorporation (declining assets, low
  wages, job insecurity, minimal access to social
  protection, dependency on a patron).
• Risk and vulnerability shape social relations
  chronically poor people often aim to manage
  vulnerability by developing patron-client ties
  that produce desirable, immediate outcomes by
  trading-off longer term needs and rights.
• Cultures of poverty?
• Does how people cope with poverty (economically,
  socially, psychologically) make poverty more
  difficult to escape?
• High capability deprivation
• Not investing in PHC, nutrition, primary
  education can diminish opportunities that cant
  be regained in later life (or by children)

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Why are people chronically poor? The maintainers
and drivers of chronic poverty

• Weak and failed/ing states
• Desperate deprivation and increased inequality
  due to
• State failure social protection and services
  (e.g. education, health) do not operate
  undermining human capital.
• Violence, weak rule of law destroys assets and
  discourages domestic/foreign investment (except
  for illegal and extractive activities) so that
  growth is low/ negative and not pro-poor.
• Low levels of civil and political rights
• Poor economic policies
• Weak and failing international system

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What can we do about chronic and extreme poverty?

• Much chronic poverty reduction is about good
  poverty reduction
• Peace-building and conflict prevention
• HIV/AIDS prevention (especially in India, China
  and the CIS) and greater access to retroviral
  treatment (in Africa)
• Pro-poor, broad-based economic growth
• Strengthening national and international
  governance
• Making trade fair (especially removing northern
  agricultural protectionism)
• Effectively managing national indebtedness
• Slowing down global warming
• Improving the effectiveness of basic service
  delivery
• but it also requires new priorities

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The specific policy response

• Prioritise livelihood security
• Increase the poorest peoples resistance and
  resilience to adverse shocks and trends.
• Social protection policies are crucial in order
  to interrupt downward trajectories and allow
  recovery and opportunities to be pursued. Risk
  prevention and mitigation as important as coping
  with shocks but so is recovery
• Focus on preventing and interrupting childhood
  poverty (e.g. interventions in nutrition/health,
  education, household security)
• Focus on preventing ill-health, and descents into
  chronic or extreme poverty caused by ill-health
  (e.g. curative services for breadwinners and
  carers)

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Social Protection the implications

• The evidence justifies seeing social protection
  as an investment, not just a dole
• Can we detect any general preferences from the
  point of view of the poorest?
• conditional transfers, pensions and linked
  protection and promotion
• Donors can become more flexible in terms of what
  they will support, and over what time period
  PRSs offer a flexible framework
• Global responsibility to prevent state collapse,
  large scale violent conflict now being recognised

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What else can be done?

• Enhance opportunity Expand and diversify
  economic opportunities for chronically poor
  people by
• use PRSs to identify and stimulate pro-poor
  growth (e.g. rural raised demand for unskilled
  labour enhances human capital easier if there
  is less inequality which sectors?)
• MDG 1 includes inequality indicator
• making markets work for poor people (esp.
  savings, insurance, labour and food markets), and
  
• redistributing material and human assets (e.g.
  land reform progressive taxation)

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What else can we do?

• Foster empowerment and make rights real
• Enhance the capacity of those trapped in poverty
  to influence state institutions that affect their
  lives.
• Remove the political, legal, social barriers that
  work against them.
• Move beyond rhetoric of participation,
  decentralisation and rights.
• The poor risk losing from decentralisation
  through elite capture
• Good administration and strong civil society may
  be just as important
• Prioritise what can be relatively easily achieved
  for the poorest
• Address the difficult political question of how
  social solidarity can be fostered across
  households, communities and nations (e.g.
  monitoring of MDG 8).

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Addressing oppressive socio-economic
relationships

• How much do policies and politics address the
  hard questions (social exclusion, adverse
  incorporation, behaviour patterns associated with
  intergenerational transmission of poverty,
  cultures of poverty)? Politics of middleness?
  
• Is there a case for broadening social policy?
• Focus on identifying and addressing poverty
  traps?
• Find out how to interrupt cultures of poverty
  around eg alcoholism.
• Service quality, but also demand for services
• Infrastructure to give access to better/more
  labour market opportunities but it may be that
  it will be necessary to help some people back
  into work too
• Vocational education and continuing education
• An enhanced role for NGOs?
• Donors can ask awkward questions in policy fora

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Influencing the PEAPUganda

• CPRC Uganda engaged in synthesising its work to
  date
• Issues fed into the PEAP revision process
• The proportion of chronically poor is substantial
• Chronically poor people need assets to benefit
  from growth targeting is an issue
• Improved service delivery, legal reforms, and
  social protection are priorities
• Location-based targeting to overcome regional
  imbalances
• Fill the social policy vacuum

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What can donors do internationally ?

• Using MDGs to include the poorest
• Drawing public and policy-makers attention to
  indicators 2 and 3 of the poverty target (Goal 1,
  Target 1) of the MDGs
• Some revision and new targets needed
• Greater attention to peace-building and conflict
  prevention
• More funding for recovery
• Focus on the poor/est in addressing the problems
  of poorly performing countries
• Financing chronic poverty reduction
• increase aid volume and commit to sustained aid
  (and underlying social solidarity)
• direct aid to poorest countries
• prioritise social protection and basic services

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and nationally

• Focus on the maintainers as much as the
  drivers support peoples own attempts to
  escape poverty.
• Work with second generation PRS processes to
  support disaggregated poverty analysis, the
  identification of country specific policies which
  will reduce different poverties, in addition to
  the universal support for the social sector and
  macro-economic stability.
• Strengthen the analysis of vulnerability in PRSs
  to take into account the difficult socio-economic
  relationships which underpin it, and actions to
  address these.
• Further action research, scaling-up and policy
  development in activities which challenge social
  exclusion and adverse incorporation.
• Support to political institutions and activists
  to open spaces for the interests of the poorest.
• Andask those awkward questions.