Extending Social Protection As A Recovery Strategy : Dr. Lok Nath Bhusal

Both natural and non-natural calamities bring sufferings to human lives. They reduce welfare, happiness and satisfaction. However, the extent of social protection coverage determines the extent of such sufferings. Better social protection coverage makes households resilient to disasters, meaning that households restore their livelihoods immediately.

Such coverage can exist as both contributory and non-contributory. Contributory social protection is a social insurance mechanism which provides some defined benefits to those who contribute. Housing insurance and contributory-pension scheme are some examples of the contributory social protection system.

Pension schemes

Both developed and developing countries around that world have been extending social protection coverage by instituting contributory pension schemes as per ILO’s Social Security (Minimum) Convention 1952 (No.102) and Social Protection Floor Recommendations 2012 (No.202). In Nepal, expenditure on the public sector tax-financed pension accounts for the largest social protection spending.

Another form of social protection coverage is to provide non-contributory or tax-financed benefits to some targeted population groups. Such benefits are known as social assistance or cash transfers. In Nepal, cash transfer schemes have become very popular after 1995. Children, youths, elderly, women and citizens in engendered communities who meet the eligibility criteria get cash transfers. Such transfers cost about one per cent of our Gross Domestic Product (GDP).

Employment Guarantee Schemes or Food for Work or Cash for Work scheme are another form of social protection coverage. This is a financially viable and sustainable scheme for a country with a huge unemployment problem. Nepal has been launching such a scheme in Karnali for the past few years and in other food deficit districts to help the poor and vulnerable households. However, they are not as massive as the Mahatma Gandhi National Rural Employment Guarantee Scheme in India.

Despite the existence of these social protection schemes, households in the earthquake affected districts have been found to be unable to meet their basic needs. The ILO and other development partners involved in forms of social protection supported the government to conduct the Post Disaster Needs Assessment (PDNA) exercise for the social protection cluster. As a member of this cluster, in this article I have made an effort to critically summarise the findings of the exercise.

Despite developments in social protection in the last 20 years, Nepal’s social protection system still inadequately covers a range of risks and vulnerabilities throughout people's life cycle. Many of the social protection schemes are not pro-poor. Following the April 25 earthquake, many households have faced negative income and consumption shocks.

Using the welfare analysis, the PDNA exercise has estimated that the earthquake has reduced household consumption in most affected districts on average by 20 per cent. This means that our social protection benefits are not able to cover even 20 per cent of our consumption.

The PDNA exercise for the social protection sector revealed that about Rs. 23.5 billion is needed to restore the consumption of vulnerable groups (households with person with disability – PWD - single women, children and elderly) in the most affected 14 districts to its pre-earthquake levels. This estimate increases to about Rs. 32.7 billion if vulnerable households in the 31 affected districts are covered.

The estimated welfare loss further increases to Rs. 47.5 billion if all households in the most affected 14 districts are covered. If all households in the affected 31 districts are covered the estimated welfare loss further escalates to Rs. 63 billion. This welfare loss has created additional demand for social protection either through cash transfer, social insurance or labour market interventions, as discussed above. The total need arising from these welfare losses is estimated to be about US$ 64 million.

The recovery strategy suggested by the PDNA team seeks to promote social protection where it is absent or where coverage and levels of benefits are low. This reflects the ILO's Social Security (Minimum) Convention 1952 (No. 102) and Social Protection Floor Recommendations 2012 (No. 202). The suggestions also reflect Article 18 of the Interim Constitution of Nepal 2007, which has recognised employment and social security as a human right as enshrined in the United Nations' Universal Declaration of Human Rights 1948 and other similar accords.

The PDNA team has recommended time-bound strategies for extending social protection to the affected households and all other households so that they become resilient during and after the natural calamity. For the short-term, the strategy has recommended additional cash injections through existing cash transfer programmes to all the existing cash transfer beneficiaries, providing assistance to vulnerable groups in the affected districts and improving the social protection service delivery. It has also recommended introducing mid-day school meals, child-friendly local governance, Management Information System (MIS) and capacity development of the service providers.

For the medium-term, it has recommended approving the properly-costed National Framework for Social Protection, further strengthening the existing social protection administration, enactment of the Unified Social Security Act and providing basic social protection to the poor and vulnerable households, as identified by the survey conducted by the Poor Household Support Board under the Ministry of Cooperative and Poverty Alleviation, in the 14 most affected districts.

The survey data are expected to be very instrumental in ensuring our social protection system to be more and more pro-poor. Many of the existing inclusion and exclusion errors in our social protection system will be overcome with such data.

Integrated system

For the long-term, the PDNA team has recommended extending social protection coverage to all the poor and vulnerable households and developing an integrated system for all social protection programmes, addressing different kinds of contingencies and risks through both contributory and tax-financed schemes, as suggested in the ILO's Social Protection Floors Recommendation, 2012 (No. 202). Such an integrated system and contributory system will eliminate/reduce both administrative inefficiencies and fiscal burden to the treasury while ensuring adequate social protection for all.

(Dr. Bhusal, a doctorate in Political Economy of Social Protection and Poverty in Developing Countries, is a National Project Coordinator (Employment Policy and Social Protection) at the ILO-Kathmandu. Views here are his personal.)

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