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Beyond Poverty Reduction

Beyond Poverty Reduction

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Published by mestrum
Analysis of global proposals for a new kind of social protection
Analysis of global proposals for a new kind of social protection

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Published by: mestrum on Jul 05, 2009
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After Poverty Reduction. The new international thinking on social protectionFrancine Mestrum, PhDProfessor at the University of Ghent, lecturer Université Libre de BruxellesFor T.H. Marshall the twentieth century was the century of social rights. Afterthe emergence of civil rights in the 18th century and the more or lessgeneralisation of political rights in the nineteenth century, the consciousnesswas slowly growing that equal rights were not really helpful if economicinequality led to unbridgeable differences and the impossibility to exercise theserights. Marshall’s theory was strongly criticized, amongst others by feministswho noted that women got social rights before they got political rights.Nevertheless, the theory still stands as a basis for the development of welfarestates.At the end of the twentieth century however, a new social paradigm was put intoplace. Everywhere, welfare states were under pressure. After fifteen years of‘structural adjustments’ in most third world countries, imposed by the IMF(International Monetary Fund) and the WB (World Bank), a new policy of ‘povertyreduction’ was being proposed. This clearly was not seen as added-on the existingsocial protection, but rather as a substitute for it. The focus was put onextreme poverty and it rarely was put in relation with the social and economicrights that are enshrined in an international treaty. Even if all UN (UnitedNations) documents refer to the universal and indivisible human rights, neitherthe Millennium Development Goals nor the ‘Poverty Reduction Strategies’ refer tothese rights.These developments lead to four considerations.First of all, according to WB statistics, global extreme poverty is declining. In1981 40,14 % of the population in developing countries lived in extreme poverty.In 2004 it is only 18,09 %. Poverty declined from 66,96 % in 1981 to 47,55 % ofthe population in poor countries in 2004. However, the number of poor people hasrisen from 2452,47 million in 1981 to 2547,94 in 2004. This positive result needsto be handled cautiously, since most numbers are merely estimates. Many poorcountries have no data or no trend data . All statistics are based on acontroversial ‘PPP conversion rate’ . In 2007 the WB stated that it had beenoverestimating the Chinese economy with about 40 % and the Indian economy withabout 25 %. According to the WB, this means China has at least 65 million morepoor people. Others think it may be 200 to 400 million more.In the meantime, global income inequality is rising. These statistics are alsocontroversial and are very often ideologically influenced. Absolute inequalitybetween countries certainly has risen, whereas relative inequality seems todecline . The weighted inequality between countries has been declining the pasttwenty years, though without taking into account China and India, it has also beenrising. Declining poverty, then, is not incompatible with rising inequality.Thirdly, the poverty reduction strategies of the WB and the IMF did not mean thatother macro-economic policies were being introduced. The poverty strategies of theBretton Wood institutions are compatible with the policies they have now beenimposing on poor countries for almost thirty years. A growing consensus admits theimportance of budgetary discipline and the fight against inflation, butprivatizations, deregulations and free trade remain controversial and are stillamong the conditions that poor countries must accept in order to get developmentfinancing. Some of the evaluation reports of the IMF also state that itsdiscourse has changed more than its practice.
Finally, the Millennium Development Goals should halve extreme poverty by 2015.There are doubts on the feasibility of these goals, for some because of a lack ofpolitical will, for others because of a lack of resources or the incoherence ofpolicies. Whatever the reasons, another interpretation of the goals is now beingproposed as well as a broader definition of development assistance. Richcountries have repeatedly promised to give 0,7 % of GDP to development, ‘as soonas possible’. Today, the gap is still very large and this may explain the need fornew elements to be counted as ‘development aid’, such as migrants’ remittances.Growing discontentAfter the turn of the century a growing discontent about the lack of tangibleresults of the policies in and towards poor countries began to emerge. Since 2005,there surely is considerable growth in Africa, though mainly in commodityexporting countries. In 20 African countries growth was not higher than 2 % forthe past ten years. More and more questions are raised concerning free tradepolicies, notably with the proposed ‘Economic Partnership Agreements’ of theEuropean Union. In 1986, Unicef was the first international organization tocriticize the ‘structural adjustment’ policies and to ask ‘adjustment with a humanface’. Twenty years later, one has to admit that the human face of povertyreduction only exists on paper. The nineties were characterized by differentfinancial crises (Mexico, Russia, South-East Asia, Argentine) and at this momentof time industrialized countries anxiously await the consequences of the bankingcrisis in the United States.At the international level, ECLAC (UN Economic Commission for Latin America) wasthe first organization to publish alternative policy proposals. UNCTAD (UNConference on Trade and Development) notes the ‘poverty trap’ of the global tradesystem for the poorest countries. The UNDP worryingly took note of the result ofa continent wide opinion poll in Latin America: a majority of the people said tobe disappointed in the democratization processes because they lacked social andeconomic improvements. The election of several leftwing governments explains thisgrowing dissatisfaction. UNRISD (UN Research Institute for Social Development)started a research program about ‘social policy for development’. Under thechairmanship of James Wolfensohn the WB created the impression of also wanting tochange its policies, but apparently the links with the IMF are too strong. Onlyat the level of discourse is there a –superficial – change, practice remainsunchanged. The WB explains the lack of successes with the lack of ‘goodgovernance’ in poor countries. However, by changing the agenda for economic andsocial development into a programme for free trade and poverty reduction, one hasto fear that the ambitions of rich countries’ development policies have beenreceding.The problems of rich countriesIt has repeatedly been stated that rich countries with a high level of socialprotection are also the countries with the highest competitiveness in globalmarkets. Nevertheless, welfare states are under pressure. Benefits are now said tocreate an unacceptable degree of dependence and jobless people are being‘activated’. The democratic ex-president of the United States, B. Clinton, isproud of having ended the welfare state in the US. In the United Kingdom Thatcherharshly attacked the trade unions. In the European Union, policies formallychanged with the Maastricht Treaty of 1992 aimed at completing the internal marketwith a European currency and a European Central Bank.The European welfare states have always been criticized. In the 1960s a ‘newpoverty’ was being discovered and one had to admit that social security was farless universal than it had been claimed. A first serious charge against social
security was brought by Titmuss, who focused on the role of public authorities.Neoliberal criticism was based on the philosophical thinking of von Hayek andlater on the popular book of Murray, ‘Losing Ground’ that strongly influencedopinions in the United States. The only social responsibility of states istowards extremely poor people, so it was said. Redistribution of incomesinevitably is arbitrary and gives the wrong incentives.The austerity programmes of the member States of the European Union were a directconsequence of the ‘convergence criteria’ they had to respect in order to adhereto the European currency. In the same way as with structural adjustmentprogrammes, they ask for fiscal discipline, fighting inflation and reducing debt.With the Lisbon agenda of 2000 the ‘activation’ policies of jobless workers wereformally introduced. Public services are now being liberalized and sometimesprivatized. The European Union has no explicit competences for social securitypolicies for which the national states remain responsible. However, ministers offinance do adopt guiding principles on pensions, health care and education from apurely fiscal point of view. In the same way as for poverty reduction policiesmember states engage – with more or less enthusiasm – in an open method ofcoordination in order to learn from each other and exchange ‘good practices’.According to the Lisbon agenda, the European Commission makes proposals for themodernization of labor law and ‘flexicurity’.It would clearly be wrong to assess these changes from a purely ideological pointof view. The economic and societal changes of the past fifty years do cause realproblems for social security systems: the ageing population, the massive arrivalof women on the labor market, high unemployment, the greater mobility of workers,globalization.In Western Europe the existing social protection has been rather resilient,thanks, inter alia, to the presence of strong trade unions. The falling purchasingpower of the recent period – real or virtual – does create problems however,especially in the light of the growing wealth of some. The privatization of publicservices meets strong resistance. It is now clear that in all Western Europeancountries social protection has become a hot topic and alternatives for thepolicies of the past twenty years are slowly getting on the political agendas. Therejection of the draft constitutional treaty of the European Union in France andHolland, and the ‘no’ vote in Ireland against the Lisbon treaty show that there isa lot of fear and mistrust.This is the background against which all new proposals for a modernized socialprotection have to be assessed. In this contribution I propose to look at theinternational alternatives, mainly addressed at third world countries. Thisanalysis is not based on research into the ongoing changes, since in mostcountries dismantling of social policies is still going on. It does look at theemerging discourse on the necessary changes that are now being discussed. Thisdiscourse analysis is important in order to understand the underlying philosophyof the proposals and to grasp the direction of proposed reforms. Identical factualchanges can indeed be related to incompatible philosophies and do not always shedlight on the global context of reforms. Changes are introduced as a kind ofpiecemeal engineering which makes it difficult to see the wood for the trees.Knowing the underlying philosophy of a reform makes it easier to assess itsseparate elements. Secondly, a discourse analysis also allows for revealing thepotential of possible resistance to each proposal. Each reform will have tocontain some promises in order to make it acceptable. These promises are theelements that can possibly be used in order to demand adjustments. Discourses arenot only sites of power, but also sites of resistance. Reforms that are neededbecause of economic and societal changes can be based on divergent ideologicalstances.

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