DIMENSIONS OF THE SOCIAL PROTECTION CHALLENGE IN ZIMBABWE: REVITALISING LABOUR MARKETS

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• DIMENSIONS OF THE SOCIAL PROTECTION CHALLENGE IN
  ZIMBABWE REVITALISING LABOUR MARKETS

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Outline of Presentation

• 1. The link between economic growth, employment
  and social protection / poverty reduction
• 2. Overview The Zimbabwean Experience
• 3. Developments in Human Capital Formation
  1980-2009
• 4. Sustainable Recovery Pathways

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The Link Between Growth, Employment and Poverty
Reduction/Social Protection

• Social protection is defined as a set of public
  and private, formal and informal measures that
  assist people to manage risks and minimize the
  incidence and impact of welfare losses that might
  lead to unacceptable living standards.
• Such welfare losses may arise as a result of
  internal or external economic shocks, natural
  disasters, loss of employment, personal and
  family tragedies.
• Since the impact of such shocks varies in
  duration, scope intensity, so do the measures
  to deal with them.

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• These fall into three main categories, namely
• coping (social safety nets including the health
  and education fee waiver schemes, food hand-outs
  etc),
• mitigating (income security interventions such as
  public works programmes, price subsidies, seed
  packs etc) and
• preventive (social security aspects including
  public and private pension and insurance
  schemes).

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The Dual Economic Structure

• Three important features that distinguish
  developing countries from developed ones are
• The first is dualism the existence of two
  radically distinct parts a formal segment
  employing a small proportion of the labour force,
  and a non-formal segment (the rest of the
  economy) employing the bulk of the labour force.
• Production in the formal sector involves the use
  of reproducible capital as well as skilled and
  unskilled labour, while that in the non-formal
  segment involves use of unskilled labour, natural
  resources and simple tools and implements huge
  gaps in labour incomes and productivity.
• In the formal segment, production is for profit,
  while in the non-formal sector it is for
  subsistence.
• In the formal sector, workers are engaged as
  regular, full-time wage employees, while in the
  non-formal segment they are either self-employed
  or engaged as casual irregular wage workers.

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• Government regulations and institutions of
  collective bargaining exist in the formal
  segment, while absent in the non-formal sector.
• The second feature is surplus labour a
  substantial portion of workers in the non-formal
  sector are under-employed (work and income
  sharing).
• The third feature is the near-total absence of
  institutionalized social security only a few
  people from well-off households can survive
  without working most people must work to
  survive.

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The Dual and Enclave Zimbabwean Economy
DEVELOPMENT POLICIES Monetary fiscal
policies Wage employment policies Sectoral
policies Savings investment
FORMAL SECTOR Male-dominated sector. Its the
focus of all economic development policies.
INFORMAL ECONOMY This is a female- dominated
sector. In addition, this sector is marginalised
COMMUNAL ECONOMY Women also dominate this sector.
In addition, this sector is marginalised
Formal sector lt20 percent of labour force
Non-formal sectors gt80 percent of labour force
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• At independence in 1980, Zimbabwe inherited a
  dual economy a relatively developed formal
  sector existing alongside a relatively
  underdeveloped non-formal, predominantly communal
  sector.
• The formal sector employed about 20 of the
  labour force (1 million people) it now employs
  13 of the labour force (2007).
• The preventive aspect of social protection mainly
  targets the formal sector, and even in the formal
  sector not all sectors are covered.

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Current Situation of Social Protection vis-à-vis
Economic Development in Zimbabwe
A
B
C
SOCIAL PROTECTION
DEVELOPMENT PROCESS
COPING
Few people are currently contributing to their
own social protection
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Situation of Social Protection vis-à-vis Pro-Poor
Growth and Development
DEVELOPMENT PROCESS
SOCIAL PROTECTION
More people contributing to their own social
protection
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• Overtime, with equitable growth, the strategy is
  to gradually scale down coping and mitigatory
  social protection mechanisms while increasingly
  expanding long-term preventive ones a shift from
  passive measures towards more active ones.
• Pro-poor growth allows the National Social
  Protection Strategy to gradually scale down on
  coping and mitigatory measures, while increasing
  the long-term preventive ones.
• Thus, the success of the social protection
  strategy will depend on the level of inclusive
  (equitable) growth and development achieved.

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The Labour Market and Poverty Reduction

• Robust growth is a necessary condition for
  sustained poverty reduction.
• However, the link between growth and poverty
  reduction is not automatic.
• The labour market, and decent employment in
  particular, play an intermediating role (the
  nexus) between growth and poverty reduction.

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• Decent work entails productive work where rights
  are protected, generating adequate income, with
  adequate social protection.
• It also implies adequate work where all have
  full access to income-generating opportunities.
• This means employment, income and social
  protection are achieved without undermining
  workers rights and social standards.
• Decent work has 6 dimensions, namely
• Opportunity to work.
• Productive work.
• Freedom at work.
• Equality at work.
• Security at work.
• Dignity at work.

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• For sustained poverty reduction, 3 factors are
  critical sustained growth, employment elasticity
  of output and integrability of the poor.
• The employment response is greater where growth
  is concentrated in the more labour-intensive
  sectors.
• The capabilities of the poor determine the extent
  to which they can participate in, and benefit
  from growth.
• Social policies (education, health, income
  grants) and policies that promote equity create a
  virtuous cycle of links between growth,
  employment poverty reduction.

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Overview The Zimbabwean Experience
Formal employment declined from 14 of the
population in 1980 to 10 by 2004 and 6 by 2006
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Average real earnings have collapsed from an
index of 120 in 1982 to 10 by 2004.
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• High levels of unemployment and decent work
  deficits by 2003, 72 of the population was
  below the poverty line, up from 55 in 1995
• Female-headed households had a higher incidence
  of poverty at 68 compared to male-headed
  households at 60 - poverty has a rural face and
  a womans face.
• The percentage of the population employed in the
  formal sector declined from 14 in 1980 to 10 by
  2004 around 6 by 2007.
• Growing informalization and deepening dualism in
  the economy 4 out of 5 jobs were informalized by
  2004.
• The disappearance of a middle class the missing
  middle
• Inequality worsened the gini-coefficient
  increased from 0.53 in 1995 to 0.61 in 2003
  fewer gains from growth accrue to the poor.
• With partial dollarization, 65 of Zimbabwes
  population is unbanked.

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• The Brain drain
• An estimated 2-4 million Zimbabweans lived
  outside the country by the end of 2007.
• South Africa had over 1 million Zimbabwean
  migrants.
• The UK had the second-largest population of
  Zimbabweans, with an estimated 200,000500,000.
• In third place is Botswana, at 100,000-300,000.
• Zimbabweans living abroad now constitute a
  Diaspora, i.e. a homogeneous people with a common
  sense of displacement, both voluntary and
  involuntary, with a hope of returning home one
  day.

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The Flow of Remittances to Zimbabwe

• IFAD estimates remittance inflows to Zimbabwe at
  US1.3 billion in 2004 and at US361 million in
  2007.
• According to the RBZ, officially recorded foreign
  currency receipts through the Homelink system
  were estimated at US 5.7 million in 2006 and
  US47.5 million in 2007.
• If IFAD estimations for 2007 are correct, this
  implies only a small part of remittances are
  transferred through official channels.
• A recent study suggests that as much as 81.7
  percent of Zimbabwean diasporas living in
  Northern England remit.
• The study estimated that US0.94 billion was sent
  from the UK to Zimbabwe in 2007.
• Such remittances became an important source of
  social protection for many Zimbabweans.

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• Impact of HIV and AIDS
• The adult prevalence rate declined from 24.6 in
  2003 to15.9 by 2007 to 14.9 by 2009.
• Life expectancy declined from 57 years in 1982 to
  35.5 years by 2007.
• Intercensal population growth fell from 3.9
  (1982-92) to 1.2 (1992-2002).
• Losses of human capital higher in the productive
  age group 15-49 years, the most affected.
• Impact disproportionately higher among skilled,
  professional and managerial workers.

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Developments in Human Capital Formation
19802009

• Investment in human capital is mainly through
  education and training it enhances
  integrability.
• Net enrolment at primary school level declined
  from 98.5 in 2002 to 96.7 by 2006.
• Net enrolment at secondary education level
  declined from 50.2 in 2001 to 46.3 by 2006.
• The rapid expansion of the education and training
  system undermined its quality.

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• The pupil-teacher ratio at primary level was
  almost constant during 2000-2006, averaging 38 1
  (optimal ratio is 281).
• Severe shortages of resources (financial, human
  and material).
• Pass rates at O level declined from 25 in 2000
  to 14 in 2006, while at A level from 83 in
  2003 to 74. by 2006.
• Little teaching and learning in 2008 due to
  elections and industrial action by teachers.
• Education system lacks a pathways approach.

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Sustainable recovery pathways

• Strategic Objectives
• Enhance the opportunities for more people to
  participate in gainful employment and activities
  that will improve their capabilities to
  contribute towards social security programmes,
  invest in income security programmes, thereby
  reducing their dependency on coping mechanisms.
• Promote full, productive and decent employment.
• Mainstream employment creation in all policy
  frameworks to achieve employment-intensive
  recovery
• Reorganize TVET to make it more demand-driven and
  responsive to the needs of the economy.
• Promote sustainable and inclusive recovery
  pathways in the labour market, and in education
  and training.

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Recovery Pathways

• Pursue an employment-intensive recovery programme
  by amongst other things
• Mainstreaming employment creation in all policy
  frameworks macroeconomic, fiscal, monetary,
  industrial, financial, agricultural
• employment-intensive rehabilitation and
  development of infrastructure
• Integrate the non-formal sectors through
  empowerment measures including maximally
  utilising land
• Strengthen backward and forward linkages through
  the exploitation of value chains and channels
  among firms and sectors to create employment
  multiplier effects

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• Promote business linkage programmes, (including
  franchising, contracting, toll manufacturing and
  outsourcing), mentorship and internship
  programmes to achieve more inclusive outcomes
  than is the case in individual firm or sector
  approaches.
• Reorganise TVET to make it more demand-driven and
  responsive to the needs of the economy by
• Establishing a National Training Authority based
  on ZIMDEF funding.
• Implementing the two-pathways policy at the
  secondary level of education.
• Redesigning the curricula to meet the specific
  demands of the non-formal sectors.

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• Promote Active Labour Market Policy Measures
• i) Employability (Labour Supply)
• Innovative, gender-sensitive training and skills
  development programmes, such as apprenticeship
  programmes, mentorship, business incubators,
  promoting a culture of entrepreneurship, etc
• Vocational training programmes designed and
  implemented in partnership with the private
  sector.
• ii) Employment creation (Labour Demand)
• SME and cooperatives promotion and development
• Labour-based public works
• Business linkages
• Self-employment programmes.

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• More people participate in gainful employment and
  activities that will improve their capabilities
  to contribute towards social security programmes,
  invest in income security programmes, thereby
  reducing their dependency on coping mechanisms.

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• Develop and implement a policy framework for
  return migration and utilization of Diaspora
  skills (including dormant skills).
• Design programmes of voluntary assisted return.
• Engage in co-development programmes with
  countries that have a high concentration of
  Zimbabweans.
• Put in place immigration policies that make it
  easier to attract skills.
• Allow dual citizenship to foster national
  attachment.