Social protection

Social protection

 

Social protection, poverty and economic growth

Past research on social protection often considered programmes to be costly interventions that did not bring about long-term poverty reduction and diverted resources away from growth-enhancing activities. Nowadays social protection systems are justified by growing evidence about the effects of both short- and long-term vulnerability on chronic poverty and economic growth, and how social protection mechanisms can mitigate these negative effects. This page offers perspectives on how and why social protection plays an instrumental role in development by a) assisting both the transitory and the chronically poor and b) promoting pro-poor growth.

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Social protection and  poverty

For many years social protection was regarded as a safety net for those who dipped temporarily below the poverty line. However, research in recent years has indicated that there are strong links between transitory and chronic poverty and that social protection can have a significant effect on the latter as well as the former. The Chronic Poverty Centre, for instance, understands social protection as a way of both managing risk and overcoming deprivation.

Many authorities argue that development policies have not reached the world’s chronically poor and that chronic poverty can best be tackled by social protection mechanisms. However, one of the most pertinent critiques of social protection is that rather than aiding chronically poor people to rise out of poverty it encourages dependency on the state.

Barrientos, A., 2010, 'Social Protection and Poverty', Social Policy and Development Programme Paper, no. 42, United Nations Research Institute for Social Development
What is the potential for social protection programmes to address poverty and vulnerability in developing countries? This comprehensive report provides an overview of social protection and an assessment of its impact in Latin America, South and East Asia, and Sub Saharan Africa. Countries with stronger social protection show lower levels of poverty and vulnerability and are more resilient in the face of social and economic change or shock. However, financial sustainability and capacity limitations are challenges that must be addressed. It is helpful to view social protection finance as a remix of public expenditure rather than a 'new' expense.       
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Chronic Poverty Research Centre, 2007, ‘Tackling Obstacles to Social Protection for Chronically Poor People’, Policy Brief No. 3, Chronic Poverty Research Centre, Manchester
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DFID, 2005, ‘Social Transfers and Chronic Poverty: Emerging Evidence and the Challenge Ahead’, Practice Paper, UK Department for International Development (DFID), London
Can social transfers play a role in tackling extreme poverty? This paper draws on evidence from existing schemes across the world to suggest that social transfers could have a direct impact on poverty and enhance pro-poor growth. When integrated within a wider national social protection system, social transfers could be an effective alternative to traditional humanitarian assistance.
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Social protection and economic growth

Social protection mechanisms were previously thought to draw state resources away from other growth-promoting activities and to have an adverse effect on beneficiaries’ incentives to work. However it is now argued that social protection can play a significant role in promoting both general and ‘pro-poor’ economic growth. Social protection measures are thought to potentially lead to long-term growth by encouraging capital accumulation and investment, increasing work capacity, and helping to manage risk, as well as offering potential advantages to non-beneficiaries (‘multiplier effects’). In general there are four social protection-related approaches to encouraging growth at both national and household levels: investments in human capital, managing risks, addressing market failures, and general attempts to reduce poverty (e.g. by reducing inequality).

DFID, 2006, ‘Social Protection and Economic Growth in Poor Countries’, Social Protection Briefing Note Series no. 4, UK Department for International Development, UK
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OECD-DAC Network on Poverty Reduction (POVNET), 2009, ‘Promoting Pro-Poor Growth: Employment and Social Protection’, Organisation for Economic Cooperation and Development, Paris
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Barrientos, A. and Scott, J., 2008, ‘Social Transfers and Growth: A Review’, BWPI Working Paper 51, Brooks World Poverty Institute, Manchester
What effects may social transfers be expected to have on household-level growth in developing countries? This analysis of the available evidence finds very little to support concerns that social transfers have a negative impact on growth. Instead, there is some evidence to indicate that well-designed and well-implemented social transfers can facilitate micro-level growth by increasing the ability of poor households to invest in their productive capacity. Policymakers need to incorporate growth objectives into social transfer programmes to help build packages of interventions that promote sustainable, long-term improvements in well-being.
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Barrientos, A., and Sabates-Wheeler, R., 2006, ‘Local Economy Effects of Social Transfers’, Final Report, Institute of Development Studies, Sussex
How and to what extent have social cash transfer programmes affected the local economy? This paper reports on a study examining the incidence and significance of local economy effects of social transfers in rural Mexico. The study focused on changes in household consumption and asset holdings among households ineligible to participate in the PROGRESA targeted cash transfer programme. Evidence supports the presence of local economy effects.
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Noble, R., Ntshongwana, P., and Surender, R., 2008, ‘Attitudes to Work and Social Security in South Africa’, Human Sciences Research Council, Johannesburg
In the media and the political arena, there is concern that social grants discourage the unemployed from seeking work and foster a culture of dependency. Is such concern justified in South Africa? This study examines people's views about paid work, social grants, and their relationship. Its findings refute theories of dependency among South Africans living in households that receive grants, and also suggest ways of helping the unemployed to find work.
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Dercon, S., 2011, 'Social Protection, Efficiency and Growth', WPS/2011-17, Centre for the Study of African Economies, University of Oxford
This paper considers the evidence on the cost of social protection to reduce poverty, and its contribution to efficiency and growth. It finds that social protection is one mechanism for making growth pro-poor. It offers a direct and simple means of redistributing some of the gains from growth, and ways to ensure that shocks do not reverse gains. While it is not a driver of growth, it may contribute to growth when well designed. In particular, social protection could potentially provide high growth impacts when it is tailored and focuses on: 1) children, especially under-fives; 2) facilitating internal migration and inclusive city development, possibly via urban workfare schemes that emphasise urban community asset building; and 3) making adolescents and young adults more employable, including through transfers conditional on training relevant to urban labour market transitions.
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Additional information

In 2005, the Institute for Development Policy and Management (IDPM), University of Manchester, held a conference on ‘Social Protection for Chronic Poverty’. Conference papers and proceedings can be downloaded from their website.

Please see the GSDRC’s Social Exclusion topic guide for an explanation of how exclusion can be used as a unit of analysis to describe the social inequalities which often necessitate social protection interventions.