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Box 10 The Maharashtra Employment Generation Scheme
The Maharashtra Employment Guarantee Scheme (EGS) has attracted particular attention for its scale
(providing some 148 million person-days of work to some 500,000 people in 1993), longevity (twenty-seven
years), and rights-based approach to social protection (since being placed on a statutory basis in 1977, the
EGS has provided a legally-based guarantee of employment to anyone aged over eighteen who applies). As
such, it provides an interesting model for other governments seeking a sustainable public works-based
approach to social protection.
It is important to see the EGS as one part of a package of social protection and poverty reduction
instruments. While it has not brought many of the poor over the poverty line, it has reduced the depth of
poverty, raising and stabilising incomes of households whose income falls below this line. Women have
benefited, as have low-caste groups. It also appears relatively cost-efficient: as with most public works
programmes, the wage rate is set low so that the scheme is self-targeting, attractive only to those without
other opportunities. This seems to work, with only 10% of beneficiaries classified as non-poor. However, as
an employment-based scheme the EGS is not able to provide social protection to some groups amongst the
poor. Other measures are needed to reach the elderly, the ill, the disabled and, an occasional peculiarity of
Indian society, the high-caste poor who are socially or culturally constrained in their ability to make use of
EGS employment opportunities.
Second-order effects are complex but seem to have had a net positive impact. The guarantee of EGS wages
has exerted an upward pressure on agricultural wage rates, although the size of this effect varies
considerably between localities. The assets created by the EGS seem to benefit both rich and poor (although
the sustainability of the infrastructure is an issue, as in many public works schemes). This construction of
rural roads improve the poor’s access to markets and services, while ‘drought-proofing’ irrigation and soil
conservation measures benefit land-owning farmers directly but also (through second-order impacts on
demand for labour and agricultural wage rates) indirectly benefit the landless poor.
One obvious question concerns how Maharashtra managed to build the political consensus in support of the
scheme, when half the costs of this rural programme are paid for by urban groups. The rural rich feel that
they benefit from the public assets created; it is argued that the urban rich and middle classes see
expenditure on the EGS as a reasonable price to pay for containing rural-urban migration and the urban
overcrowding that results (Dev 1996: 229– – 232). Once institutionalised, the scheme has become part of the
political landscape: representatives of all political parties and bureaucrats all wish to be associated with the
impact of the EGS in their constituencies.
In disaster prone areas, it is helpful to establish a capacity to fund employment schemes for
building infrastructure which can ‘simmer’, operating at a base level during normal times,
providing relief to the chronic poor, while building assets with reasonably high economic returns.
During difficult times, the scheme can be rapidly expanded, and the balance changes, with a less
demanding requirement for an economic return on the investment but increased emphasis on the
safety net role. The 1994 Zambia participatory poverty assessment reported favourably on the role
of the roads schemes which had been rapidly expanded to help cope with the 1992/3 drought.
3.4.7 Providing ownership of or security of access to key assets for secure
livelihoods
For the formal sector, livelihood is primarily determined by income secured through wage
employment, and social protection mechanisms accordingly focus upon ensuring employment and
providing wage-based mechanisms by which workers can insure themselves against future
interruptions to their wage income. For the majority of the population in most developing countries
53
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– engaged in small-scale agriculture and informal sector, family-based manufacturing and services
– the critical issue for livelihood security is reliable access to assets which provide for self-
employment and a store of wealth to buffer the household against a rise in expenditure.
Policy instruments which promote ownership or secure access to assets can therefore be seen as
part of social protection policy (although they would generally fall outside definitions of social
protection which establish it as a separate ‘sector’ of activities, bearing as they do on fundamental
aspects of policy in productive sectors such as agriculture and small-scale enterprise development).
Such policies include:
• Asset redistribution. In earlier decades land redistribution was considered an effective method
of assisting poor households to meet their basic needs in the long term.
55
The record has been
mixed, but arguably played a significant part in laying the foundations for broad-based,
poverty-reducing economic growth in some countries (e.g. Vietnam, South Korea, Taiwan). It
was probably easier to achieve when pursued by newly independent states (sometimes but not
always socialist) which enjoyed a high level of legitimacy and could depict such programmes as
a corrective to the social inequalities perpetuated under colonial regimes. It is clearly politically
difficult but is potentially high-impact where feasible. Conferring property rights plays an
important role in enabling the poor to access loans (using their property as collateral).
• Tenancy reform legislation, effectively enforced (e.g. Operation Barga in West Bengal) which
provides rights to registered tenant farmers. In an urban context, the strengthening of tenancy
rights and the removal of petty bureaucratic restrictions (e.g. on the right of tenants to use their
homes as places of business) may be a valuable benefit to the poor (Moser 1996).
• A legal or regulatory framework which ensures that the poor have access to common property
resources. As discussed above, in much of the world the rural poor depend upon the commons
(rivers, ponds and lakes, forests or scrub land) to meet many of their subsistence needs, or to
obtain materials for sale. When their rights to these resources are curtailed through privatisation
(de jure or de facto), this can have a seriously detrimental impact upon their well-being.
56
Enforceable laws which guarantee access to these resources can play an important social
protection function.
• Extension systems tailored to the needs of poor producers. The main function of extension
services is the transfer of knowledge and skills required for higher and more diversified (risk-
reducing and risk-mitigating) production. However, extension systems may also (as in the
Malawi Starter Pack Scheme) channel material resources – – seed, tools, livestock, farm
machinery, or irrigation pumps – to poor households. There is as yet relatively little systematic
evidence as to the effectiveness of such distributions, or the comparative advantages of the
distribution of one form of asset relative to another.
3.4.8 Summary
At present, well over half the world’s population is excluded from any form of statutory social
security. In most low-income countries, no more than 10– – 25% of the workforce and their
dependants are covered by formal social insurance.
57
The challenge then is to devise ways to
55
see Herring 1999 for a thorough discussion of the concept in a south Asian context.
56
There are historical parallels with the enclosure of the commons in England, or the denial of forest forraging rights
in Napoleonic France.
57
van Ginneken (1999: 1). There are however marked regional differences within the developing world. In low-
income sub-Saharan Africa and south Asia, the proportion of the workforce not covered by state social security
32
63
provide for poor people’s priority social protection needs, in a way that makes use of individual,
household, social and state resources.
The ILO differentiates the policies that are required for different groups of the population.
• Progressive extension and reform of the statutory social insurance system could incorporate the
remainder of the regular waged workers and some of the casual workers who are currently
unprotected.
• Other policies – tax-financed social assistance, improved access to better quality social services,
and the judicious use of price support or subsidies – – are needed to provide protection to the
non-working poor who have not been able to invest in insurance and do not have support from
kin or community.
• These measures, plus employment generation, access to microfinance (savings as well as loans)
and improved access to assets, are suitable for the informal sector working poor who cannot
afford to contribute to social insurance.
• There is left a final group, falling between the formal sector which will benefit from extended
statutory system and the informal sector poor who are best reached through non-insurance
mechanisms. This group often contains the bulk of the working population, which falls above
the poverty line but is not eligible for or interested in statutory social insurance. This group
does however have the capacity to contribute and an interest in doing so, if presented with
insurance programmes that meet their priorities and win their trust.
Not all of these ILO suggestions are uncontroversial, as previously discussed. The main message of
this paper is the need to undertake careful analysis of the many trade-offs and indirect effects of
social protection interventions. The extension of social protection to groups currently excluded can
only be achieved progressively. The role of policy advice is to identify gaps in the existing pattern
of social protection coverage, identify priorities and unmet potential, and evaluate where the
comparative advantage of the state lies. Social protection reform should aim to build partnerships
between statutory systems and private sector and household- or community-based insurance and
assistance mechanisms, paying as much attention to regulation and facilitation as to direct
provision. Finally, states and the donors that seek to assist them are advised to work where possible
to reform existing institutions in preference to creating new ones (Ortiz 2000).
varies from 90% to 95%. In Latin America, the figure ranges from 20% to 90%, but is generally stagnating, whilst
in south-east Asia it ranges from 0-90%, but is generally increasing.
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64
4. Conclusion: future directions and strategic priorities
Social protection is a field of challenging scope. This paper has tried as far as possible to do justice
to the huge relevant experience and literature. In policy terms there are many areas to address. We
will conclude by highlighting a few which we feel merit more consideration, either because of
evolving trends on a global scale or because they have to date been neglected in the theoretical and
practical literature.
4.1 Global redistribution, global governance and globalisation of social policy
The social policy principles debate which was initiated by the Development Committee of the
World Bank-IMF has focused on national-level guidelines of good practice in various fields,
including social protection (Norton 2000). The international community should continue to meet
the challenges posed by growing levels of insecurity and inequality in the following ways:
• Combat growing global inequality, by reversing the decline in development assistance flows to
poor countries observed over the 1990s – and through other policy instruments relating to issues
such as on trade and debt;
•
Continue to mobilise global civil and political pressure for sustainable poverty reduction,
establishing links with related movements (e.g. that for ethical standards in global business and
trade);
• Establish global and regional mechanisms which can come to the assistance of countries in
temporary crisis, helping to support basic livelihoods and ensure that long term investments in
the human and social capabilities of the countries concerned are not compromised;
• Continue to develop a global consensus on the needs, instruments and standards of social
protection policy;
• Analyse the risks associated with globalisation processes that are likely to continue to grow
(e.g. volatility of investment flows, diminishing revenue base for poorer countries); and take
action to reduce the harmful effects of globalisation and prevent further shocks and
deterioration;
•
Seek to strengthen mechanisms of global social governance within the United Nations system,
so that the sense of global entitlement for the poor embodied in commitments such as the
International Development Targets can be reinforced through enhanced accountability.
4.2 Governance and social protection
The literature on social protection has a largely technocratic character. Discussions focus on forms
of deprivation (described and elaborated in ever-growing detail), and the array of technical policy
instruments which can be deployed to achieve objectives. On the whole there is a lack of
consideration of the ways in which those objectives are set by the societies concerned. Yet it is
clear from developed countries that this objective-setting is a highly contested process, in which
great political skill is needed to facilitate consensus on the level to which the public at large is
willing to see tax-funded resources spent protecting the poor, older people, children or other
groups. While civil society groups (e.g. pressure groups and the media) play highly significant roles
in these debate, the literature on social protection generally analyses the role of civil society in
46
65
social protection merely as delivery mechanisms for policy goals determined by technocrats. It is
clear that these groups also function to demand accountability from providers, and press public
bodies to develop effective policy approaches and allocate resources. Technical assistance from
development agencies needs to be related to an improved capacity to analyse social protection
within a holistic treatment of issues of governance and public policy.
4.3 Social protection, the development process and poverty reduction
Figure 1 (p 17) represents the role of effective social protection policy in promoting development.
The primary linkages are between social protection policy and the strengthening of social
cohesion, human development and livelihoods. Through these channels social protection can help
to ensure broad based, equitable growth. This in turn strengthens effective, accountable governance
(through enhanced legitimacy, revenue and capacity), without which, in turn social protection
policy is not likely to be effective.
The following are a list of the strategic policy priorities which underlie the development of
effective social protection policy:
• Policy development should start from the needs, realities and priorities of the groups intended
to benefit from social protection. There are a range of factors which contribute to the creation of
policy and programme systems responsive to the needs of the poor. Critical to these are issues
of governance, transparency and information. Core priorities for government are:
−
establishing an information base on issues of poverty and deprivation, including qualitative
approaches which illustrate poor people’s realities and perspectives, and disseminating this
information to inform public debate;
− engaging in negotiation with different institutions and groups of citizens in order to
strengthen consensus about the rights and entitlements in the field of social protection
which citizens can expect, and the role of government in fulfilling them.
• Policy development in developing countries needs to take account of the rich variety of
institutions outside the public sector which are performing social protection functions, and
engage with informal, traditional and private systems to ensure that public policy makes best
use of their potential. Priorities for governments include:
− ensuring that policy-makers have an adequate understanding of the various non-state forms
of social protection operating to provide insurance and assistance to poor people;
−
support through appropriate regulation and programmes the development of local groups
which enhance the livelihood security of poor people, with particular attention to the
variations in needs by gender, social status and age. Such institutional arrangements may
include savings and credit groups, informal mutual aid and insurance groups, user groups
for managing common property resources etc.
• Public policy for social protection needs to include a balance between measures designed to
prevent shocks which will have a negative impact on the poor (through appropriate trade and
macro policy, protection against floods, primary health care to prevent epidemics etc.); those ex
ante measures which reduce the impact of such shocks when they happen (for example, by
promoting diversified income sources for the poor); and, finally, those
post facto
policies which
help those affected cope once shocks have happened. As argued by the World Bank, in many
17
66
cases public policy needs to strengthen the content of interventions for prevention and reduction
of shocks rather than merely rely upon policies to assist people to cope afterwards.
• Measures to strengthen the capacity of public policy to help the poorest (those who suffer from
persistent rather than transitory deprivation) are a priority in many developing countries. This is
a challenging area as it requires sophisticated institutional capacity to deal with both
identification of groups needing special assistance, and the development of complex and
differentiated policy responses. In order to help the poorest, the state must:
− improve the capacity of publicly-led assistance to effectively identify the poorest and most
vulnerable;
− improve the capacity of state structures to respond to the needs of those who are in the
weakest position to voice demands, needs, rights and concerns;
−
strengthen the capacity of civil society groups representing the poorest to hold providers of
social assistance accountable;
− greatly increase institutional capacity, and transparency in public service, to increase the
chances of transfers reaching the intended groups.
40
67
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