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
UNITED NATIONS RESEARCH INSTITUTE FOR SOCIAL DEVELOPMENT

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 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 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
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Combating poverty and inequality: ey 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?

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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

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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

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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

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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
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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.
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Employment is key 
Governments can achieve employmentcentred 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
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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

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2. Inequalities are growing..
‡ Graph here«

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« 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

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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 µcare¶ work which is highly feminised
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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.
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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
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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, illhealth or disability, and old age.
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Outcomes depend on social policies

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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
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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
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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
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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 ³formal economy´ Challenge in countries with high degree of informality Implement measures for difficult-to-cover groups Increase efficiency and equity in current systems

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Cost of commercialization

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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
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Different Pathways
‡ Growth Path ‡ Developmentalism and industralization
± Rep. of Korea, Taiwan PoC

‡ Labour Markets ‡ From full employment to « mature » LMs ‡ Informality lower than LA average ‡ Dualist LMs: High informality LA, high unemployment SA ‡ Majority of labour force in informal economy; high percentage of working poor

‡ The µsocial democratic¶ model
± Costa Rica

‡ Dualist economies
± Argentina, Brazil, South Africa

‡ Agrarian-informal contexts
± India, Tanzania

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

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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
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CCTs in Latin America

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South Africa: The challenge of unemployment

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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?
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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

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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.
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Democratic Politics 

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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
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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
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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
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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 µright¶ economic policies; it is also about pursuing comprehensive social policies and types of politics that elevate the interests of the poor in public policy.
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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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