Social protection in Central Asia
How to improve social protection in Central Asia
By Alessandra Bravi (UNDP)
In preparation for the April 2011 conference devoted to the United Nations Central Asia Regional Risk Assessment in Almaty, UNICEF sponsored a background paper to provide an overview of the social and economic vulnerabilities of households and assess social protection systems in the region.
The results are alarming. While poverty rates have declined and living standards have improved due to growth in income and consumption, the global financial crisis showed how easily and quickly improvements can be eradicated. The surge in food prices during the first half of 2011 alone created significant stresses on poorest households in the region.
What can be done to prevent this from happening again? UNICEF’s policy brief on social protection in Central Asia suggests better targeting existing assistance programmes, and creating new ones where needed. It also provides detailed recommendations that could turn the past crisis into an opportunity to overcome structural vulnerabilities and reduce poverty.
Targeting those most in need
UNICEF’s findings show that social transfer schemes in Central Asia are not designed, funded, or administered so as to effectively protect and improve the living standards of poor and vulnerable households. And even if their design and implementation were improved, funding levels under these programmes would be inadequate to reduce poverty. Budgets for social assistance in the region are below 1.5 percent of GDP.
*Data up to Q2 2011 - **Data up to Q3 2011 - ^^Data up to Oct 2012. Sources: Remittance figures are taken from central bank balance-of-payments data, reflecting entries for “workers’ remittances” and “compensation of employees”. The data for Ukraine can be found in National Bank of Ukraine webpage under “total remittances.” - Tajikistan remittance data are taken from the UNDP senior economist office’s vulnerability indicators’ database. The figures for Uzbekistan are taken from Russian Central Bank data on remittance outflows from money transfer agencies from Russia to Uzbekistan.
The continuing growth of remittances into the region shows that many vulnerable households are trying to escape poverty by sending one family member abroad. But while remittances can raise household incomes and living standards in the short and medium term, they may not be a sustainable income source in the long run.
Lack of social assistance programmes is harmful in good times - and can be fatal in bad times
In Tajikistan, due to the absence of effective and reliable social assistance programmes, donors have been unable to find methods to transfer funds to the most vulnerable households using existing transfer schemes. Instead, food deliveries provided by the World Food Programme remain the most important crisis response for many vulnerable households.
As this demonstrates, improved and more effective social protection mechanisms can not only help combat structural vulnerabilities and poverty: they can also be scaled up and used as vehicles to temporarily channel more resources to the vulnerable households in periods of crisis or heightened vulnerability.
In Kyrgyzstan and Tajikistan, where income poverty often correlates with inadequate access to reliable energy supplies, many citizens in rural areas live on, or just above, the poverty line. An abnormally cold winter or a drought can push vulnerable households below the poverty line. Social protection should target these people in need and be flexible so programmes can be used to alleviate the impact of economic downturns, shocks or crisis.
A crisis is a terrible thing to wasteThe economic crisis of 2008-2009 creates opportunities to improve existing or introduce new social protection programmes. Such programmes cannot be poorly designed or hastily implemented otherwise governments may not be able to withdraw them later, and they may fail to respond to future crises.
Opportunities for such reforms are more restricted in the region’s poorest countries, Kyrgyzstan and Tajikistan. They are more feasible for energy-exporting economies.
Improved design and implementation of social assistance schemes are vital in a region that is routinely exposed to natural hazards and economic shocks. UNICEF’s policy brief presents clear and detailed recommendations on how to design better social policy programmes.