UNRISD ADB Feb 2011 - S. Cook Feb 23

UNITED NATIONS RESEARCH INSTITUTE
FOR SOCIAL DEVELOPMENT
COMBATING
POVERTY AND
INEQUALITY
Structural Change,
Social Policy and Politics
Combating Poverty and Inequality
Structural Change, Social Policy and Politics
Sarah Cook
UNRISD
23 February 2011 ▪ Asian Development Bank ▪ Manila

Disclaimer: The views expressed in this paper/presentation are the views of the author and do not necessarily reflect the views or policies of the Asian
UNITED NATIONS RESEARCH INSTITUTE Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this paper
FOR SOCIAL DEVELOPMENT and accepts no responsibility for any consequence of their use. Terminology used may not necessarily be consistent with ADB official terms.
About UNRISD
• An autonomous United Nations agency

founded in 1963.
• A research institute that engages in
multidisciplinary, policy-relevant research
on the social dimensions of contemporary
development issues;
• Stimulates dialogue and contributes to
policy debates within and outside the
United Nations system;
• Works with networks of scholars based in
academic and research organizations in
the North and South
United Nations Research Institute for Social Development (UNRISD) 2

Combating poverty and
inequality: Key Questions
• What accounts for the persistence
of poverty when concern for its reduction
has been high on the policy agenda?
• Why have some countries been more
successful than others in reducing poverty
and inequality?
• What can be done to reduce poverty and
inequality, especially in low-income
countries?

Outline of the Report
• The report is structured around
three interconnected issues.
– The Economic: growth and
structural change
– The Social: universal social
protection and social services
– The Political: civic rights, activism
and political arrangements

The Report …
• Explains variations in poverty outcomes by
focusing on countries’ development
trajectories and policy regimes
• Engages with current policy debates on
poverty reduction from a developmental and
social policy perspective.
• Argues that a fall in poverty generally results
not from policies aimed at poverty, but those
with wider social objectives

Table of Contents
Overview
SECTION ONE: SOCIALLY INCLUSIVE STRUCTURAL CHANGE

Chapter 1: Towards Employment-Centred Structural Change
Chapter 2: Income Inequality and Structural Change
Chapter 3: Tackling Ethnic and Regional Inequalities
Chapter 4: Gender Inequalities at Home and in the Market
SECTION TWO: TRANSFORMATIVE SOCIAL POLICY AND POVERTY

REDUCTION
Chapter 5: Towards Universal Social Protection
Chapter 6: Universal Provision of Social Services
Chapter 7: Care and Well-Being in a Development Context
Chapter 8: Financing Social Policy
SECTION THREE: THE POLITICS OF POVERTY REDUCTION

Chapter 9: Business, Power and Poverty Reduction
Chapter 10: Building State Capacity for Poverty Reduction
Chapter 11: Democracy and the Politics of Poverty Reduction
Concluding Remarks

Five Key Messages
1. Poverty reduction requires growth and
structural change that generate
productive employment
2. High levels of inequality are an
obstacle to poverty reduction
3. Comprehensive social policies are
essential for successful poverty
reduction
4. Effective state capacity and politics
matter for poverty reduction
5. Poverty is reduced when economic and
social policies, institutions and political
arrangements are mutually supportive

1. Growth and Structural Change
Poverty reduction requires a pattern
of growth and structural change that
generates productive employment.
Industrial countries’ path of structural
change remains elusive.
Lack of employment-centred structural
change in poor countries is linked to
problems associated with globalization,
dependence of productivity growth on
external firms, and neoliberal policies.

Employment is key
 Governments can achieve employment-
centred structural change by pursuing
deliberate policies.
 Avoid procyclical policies during periods of

slow growth;
 Pursue industrial and agricultural policies;
 Stimulate and maintain an adequate level of
labour demand;
 Invest in infrastructure and skills; the
reproduction of labour
 Trade regimes that reduce vulnerability to
commodity price and interest rate shocks;
 Target employment as a policy goal

Widening global and national
inequalities…
Global and national inequalities are widening
Inequalities have risen within poor, agricultural
dependent countries
Productivity gains translate into weak gains for labour
Intersectoral terms of trade are a major driver of
inequality in poor countries
Weak links between agriculture and industry / rural
and urban sectors
 How labour markets are structured and types of jobs
created determines inequalities as does discrimination
in markets and public sphere

2. Inequalities are growing..
• Graph here…

… and are an obstacle to
poverty reduction
 Poverty is closely related to inequalities based on

class, gender, ethnicity, location
 Interlocking inequalities reinforce each other and may
be reinforced by market processes
 make it harder to incorporate the poor in the growth
process;
 May encourage the emergence of institutions that
lock the poor into poverty traps
 limit the size of the domestic market and prospects
for sustained growth;
 may contribute to crime, social unrest and conflict
and undermine social cohesion and stability

Gender inequalities
• Women’s labour force participation – growing
but unequal; growth may be premised on /
reinforce inequality
• State policies narrow the gap but inequalities
are persistent across diverse regimes
• Women’s unpaid work / domestic role is a
major barrier to their well-being and equity
• Public action is needed to share the costs of
social reproduction, and to recognise and
reward ‘care’ work which is highly feminised

Addressing inequalities
Countries can adopt a number of redistributive
policies to tackle the multiple dimensions of
inequality, for example:
 provide the poor with greater access to productive assets
and credit
 strengthen legal rights (eg tenure)
 pursue affirmative action policies within a universal
framework;
 invest in social infrastructure and basic services that
can reduce the drudgery of domestic work;
 stimulate investment in rural infrastructure and creating
public works programmes;
 improve tax administration, prevent tax evasion, and limit
opposition to progressive taxation;
 create a stable global economic environment that
responds to the needs of low-income countries.

3. Social policies
Comprehensive social policies are
essential for successful poverty
reduction.
 The most significant reductions in poverty have
occurred in countries with comprehensive
social policies that lean towards universal
coverage.
 Universal social policies are feasible and
affordable for countries at fairly low levels of
income.
 Such policies also reduce inequality, generate
social cohesion and contribute to productivity

Transformative Social Policy
 Is social policy grounded in universal
rights that aims to:
 enhance the productive capacities of individuals,

groups and communities;
 reinforce the progressive redistributive effects of
economic policies;
 reduce the burden of growth and reproduction of
society, including care-related work, and
 protect people from income loss and costs
associated with unemployment, pregnancy, ill-
health or disability, and old age.
Outcomes depend on social policies

The Case for Universalism
• Universal approach to social policy
– economically sustainable, socially
inclusive and democratically anchored
• Greater equality of opportunities and
outcomes
• Macro-impact of SP:
• economic stabilization and growth
• social cohesion
• political legitimation
– Definitions of universal vs targeted
Universal Social Protection and
Development
• Protection: secure income

– Social contingencies (sickness,
maternity, old-age, disability, care
responsibilities…)
– Market risks (unemployment, economic
crisis)
– Natural disasters
• Promotion: Lift people out of poverty
• Universal systems aim at inclusion

Fragmented social policies
 Public expenditures are increasingly pro-poor

with increased spending on services and social
assistance (eg cash transfers)
 But social protection interventions are largely
oriented towards targeting the poor.
 The emphasis remains on privatisation or
commercialization of services
 Social policies are therefore fragmented resulting
in gaps in coverage and high costs
 Comprehensive systems that lean towards
universalism are more socially inclusive and
contribute to security and social cohesion

Extension and Reform of Social
Insurance
• Privatization revisited: poor record in terms of
– Coverage, poverty reduction, redistribution
– Resilience in times of systemic crisis (economic, financial)
– Stabilization of macro economy
– Gender equality
• Labour markets are key:

– Contribution-financed schemes for “formal economy”
– Challenge in countries with high degree of informality
– Implement measures for difficult-to-cover groups
– Increase efficiency and equity in current systems

Cost of commercialization

Extension and Reform of Social
Assistance
• Main questions concern:
– Coverage/Principles: targeting or
universalism
– Type of programme
– Legal and institutional framework
– Financing
– Implications for Labour Markets and
Employment

Different Pathways
• Growth Path • Labour Markets
• Developmentalism and • From full employment to «
industralization mature » LMs
– Rep. of Korea, Taiwan PoC
• The ‘social democratic’ model • Informality lower than LA
– Costa Rica average
• Dualist economies • Dualist LMs: High

informality LA, high
– Argentina, Brazil, South
Africa
unemployment SA
• Agrarian-informal contexts • Majority of labour force in

informal economy; high
– India, Tanzania
percentage of working poor

Costa Rica: a social-democratic
welfare model in Latin America?
• Strong commitment to universal provision
of education and health
• Efforts to increase coverage of
contribution-financed social insurance:
– Mandatory affiliation for self-employed
– State subsidy for contribution payments of
difficult-to-cover groups (self-employed,
peasants, domestic workers)
• High expenditure on social assistance (5.6
% GDP in 2006), financed through
progressive payroll taxes

Coverage of health and maternity
insurance in Costa Rica, 1970–2008
(% of total population)

Brazil: towards more social
inclusion
• Parametric reforms of social
insurance programmes
– Reform of civil servant pension regime
frees up funds and increases equity
• Extension of Social Assistance
– Fome Zero/Bolsa Familia programme
– Social pensions (rural pension, not
means-tested, reaching more than 7
million people)
• Successful economic development
has created formal jobs
CCTs in Latin America

South Africa: The challenge of
unemployment

India and Tanzania: the
challenge of informality
• India:
– Multiplicity of programmes, innovative
approaches, fiscal space
– lack of coordination, fragmentation and low
coverage
– National Rural Employment Guarantee
Scheme
• Tanzania:
– Low coverage, multiple providers (NGOs,
donors, communities), fiscal constraints
 Bottom-up universalization?

Recommendations
• The state needs to assume key responsibilities in terms of
financing, administering and regulating social protection
programmes and institutions
• Social assistance programmes are most effective when
designed as an integral part of long-term comprehensive
social protection strategy that leans towards universalism
• Avoid complex mechanisms of targeting and
conditionality
• Universal programmes are more likely to get broad
support from groups with ability to pay and political
influence
• Strategic alliances, social pacts and social dialogue are
important for building a national consensus or social pact
• Social policies need to be part of sustainable and
employment-intensive growth paths which support more
equitable and cohesive societies

4. Politics of Poverty Reduction
Effective state capacity and political
arrangements matter for
reducing poverty and inequality
 Yet poverty reduction strategies often ignore
power relations and bargaining, focusing
instead on consultation, market-centred and
technocratic governance reforms.
 Importance of accountable states and
corporations, social mobilization, sustained
public engagement, coalitions, and social pacts
that are structured around issues of
employment, welfare and growth.
Democratic Politics
 Democracies deliver outcomes that are
beneficial to the poor when:
• Rights are institutionalized, allowing the poor to

exercise political choice, build alliances with others
and hold leaders to account.
• Social groups with strong ties to the poor demonstrate
capacity for organization and mobilization.
• When social groups create links with actors involved in
policy making (leading, at times, to social pacts).
 The poor suffer when interest groups and social

movements are weak and the electoral system
is not sufficiently competitive
Building State Capacity
 Key for
 Policy space
 Dealing with market failures
 Political legitimacy
 Mobilization & allocation of resources
 Enforcement of rules
 Requires: committed leadership, coalitions,

autonomous and competent bureaucracy, support
for citizen participation
 Limits of market-enhancing governance reforms
 Need to focus more directly on capacity building

Holding corporations to account
• Limited and contradictory impacts of
CSR and private regulation
• The key roles of:
– activism and civic engagement
– state regulatory capacity, monitoring &
grievance procedures
– international norms and law
– linking CSR with public policy and law
– broad-based business associations and
social pacts
5. Multiple paths to poverty
reduction
Poverty is reduced when economic and

social policies, institutions and
political arrangements are mutually
supportive.
Combating poverty and inequality
is not just about having the ‘right’
economic policies; it is also about
pursuing comprehensive social
policies and types of politics that
elevate the interests of the poor in
public policy.

Details of report
Combating Poverty and Inequality
Structural Change, Social Policy and Politics
The UNRISD Flagship Report 2010
Download - www.unrisd.org/publications/cpi

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UNITED NATIONS RESEARCH INSTITUTE

FOR SOCIAL DEVELOPMENT

23 February 2011 ▪ Asian Development Bank ▪ Manila

• An autonomous United Nations agency

United Nations Research Institute for Social Development (UNRISD) 2

United Nations Research Institute for Social Development (UNRISD) 3

United Nations Research Institute for Social Development (UNRISD) 4

United Nations Research Institute for Social Development (UNRISD) 5

SECTION ONE: SOCIALLY INCLUSIVE STRUCTURAL CHANGE

SECTION TWO: TRANSFORMATIVE SOCIAL POLICY AND POVERTY

SECTION THREE: THE POLITICS OF POVERTY REDUCTION

United Nations Research Institute for Social Development (UNRISD) 6

United Nations Research Institute for Social Development (UNRISD) 7

United Nations Research Institute for Social Development (UNRISD) 8

 Avoid procyclical policies during periods of

United Nations Research Institute for Social Development (UNRISD) 13

United Nations Research Institute for Social Development (UNRISD) 14

United Nations Research Institute for Social Development (UNRISD) 15

 Poverty is closely related to inequalities based on

United Nations Research Institute for Social Development (UNRISD) 19

United Nations Research Institute for Social Development (UNRISD) 20

United Nations Research Institute for Social Development (UNRISD) 21

United Nations Research Institute for Social Development (UNRISD) 22

 enhance the productive capacities of individuals,

United Nations Research Institute for Social Development (UNRISD) 24

• Protection: secure income

United Nations Research Institute for Social Development (UNRISD) 26

 Public expenditures are increasingly pro-poor

United Nations Research Institute for Social Development (UNRISD) 27

• Labour markets are key:

United Nations Research Institute for Social Development (UNRISD) 28

United Nations Research Institute for Social Development (UNRISD) 29

United Nations Research Institute for Social Development (UNRISD) 30

• Dualist economies • Dualist LMs: High

• Agrarian-informal contexts • Majority of labour force in

United Nations Research Institute for Social Development (UNRISD) 31

United Nations Research Institute for Social Development (UNRISD) 32

United Nations Research Institute for Social Development (UNRISD) 33

United Nations Research Institute for Social Development (UNRISD) 35

United Nations Research Institute for Social Development (UNRISD) 36

United Nations Research Institute for Social Development (UNRISD) 37

United Nations Research Institute for Social Development (UNRISD) 38

• Rights are institutionalized, allowing the poor to

 The poor suffer when interest groups and social

 Requires: committed leadership, coalitions,

 Limits of market-enhancing governance reforms

 Need to focus more directly on capacity building

Poverty is reduced when economic and

United Nations Research Institute for Social Development (UNRISD) 43

United Nations Research Institute for Social Development (UNRISD) 44

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