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Safety Nets Change Lives

Margaret Grosh's picture

The stories of two families in a new video produced for the Spring Meetings illustrate how safety nets can change lives.

 

Hearing the words of Laila, a child in Brazil who benefits from the Bolsa Familia conditional cash transfer program, and Abeba, a girl in Ethiopia whose father works on a Productive Safety Nets labor-intensive public works program to put food on the table, reaffirms the objectives of safety net programs: to make societies more equitable and provide opportunities to poor people.

 

The equity part is pretty straightforward – transferring money makes people less poor and reduces inequality. It responds to value for fairness or abhorrence of destitution. The International Labor Organization’s Social Protection Floor Initiative, for example, and the rights-based approach in countries such as Brazil and India draw strong motivation from this effect of safety nets.  

 

Safety nets also provide opportunities to poor people.  There is very strong evidence that they help families nourish their children, get them preventive health care and keep them in school, all of which prepare the children to earn more once they start working and can break inter-generational cycles of poverty. 

 

A small but growing body of evidence shows that cash transfers help households [PDF] invest in their livelihoods, raising their earnings. Similarly, there is nascent evidence that benefits can affect whole communities via increased demand, positive spillovers from beneficiaries to non-beneficiaries, and in the case of public works program, from the infrastructure or services resulting from labor. 

 

At the level of the overall economy, safety nets can act as stabilizers [PDF] of aggregate demand, improve social cohesion and make growth-enhancing reforms politically feasible. These can entail reform of inefficient and inequitable subsidies – or labor market reforms that help move from the protection of jobs to more efficient and direct protection of workers. 

 

Beyond the Headlines

 

One message countries should take heed of is that safety net programs are needed both in times of crisis and prosperity.

 

There is a common understanding and plenty of evidence that in moments of big shocks – such as when food prices rose so fast in 2008, or when the global financial crisis threw economies into recession, or when natural disasters strike, the impact on households can be devastating. Family can lose the assets their livelihoods depend on, children’s health and education can suffer, and these losses may not be recoverable. These families need timely access to safety nets to help forestall such losses.

 

What gets less attention is the need for safety nets in times of prosperity, though the number of people suffering the daily deprivation of continuous poverty or from household-specific crises – such as the illness or death of a breadwinner, an accident or disability, or the loss of a job –is far greater than those who are affected by the type of crises that make news headlines.   

 

In Eastern Europe and Central Asia, the region worst hit by the financial crisis, 2.8 million people lost their jobs between December 2008 and December 2009; but there were already 9.4 million unemployed before the onset of the crisis. In Pakistan, the 2010 floods affected 20 million people; but there were already 35 million Pakistanis struggling in poverty. The 2008 food price spike increased the number of undernourished by 63 million; but there were already close to 1 billion undernourished people in the world.  

 

All these people who were poor or malnourished or out of work even without headlines and they need safety nets, too.

 

Many countries have made enormous progress in recent years in providing safety nets to their people, but there is still a long way to go—something we’re addressing in the Bank’s new Social Protection and Labor Strategy, to be launched this week.  

 

My Bank colleagues will take up the gaps and challenges of safety nets, and the way forward, tomorrow and the next day in their blogs here. Stay tuned.

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