Social assistance during the pandemic: Lessons from Paraguay

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A street vendor with a mask
More than a year after the start of the pandemic, it would be difficult to find a Paraguayan who does not know Pytyvõ.

Paraguay is in the process of recovering from what has been, up to now, the peak of the COVID-19 pandemic in the country, which occurred between May and June 2021. These months were marked by a substantial increase in cases and deaths from the disease. As dreaded as it was, however, this phase arrived at the slowest possible pace, given that with only one confirmed case of coronavirus in the country and the risk of an early collapse of its health system, in mid-March 2020 the Paraguayan government announced the suspension of all public and private activities and the beginning of a mandatory quarantine with very limited exceptions.

As expected, such measures posed an unusual socioeconomic challenge for the country. Not being able to work, hundreds of thousands of people were pushed into a situation of labor and financial vulnerability. Immediate and concrete government actions were necessary amid a surge of global uncertainty. But what kind of assistance initiatives should be implemented? Which population should be prioritized? How would the technical and logistical gaps of a massive social assistance initiative be bridged?

Today, more than a year after the outbreak of the pandemic, it would be difficult to find a Paraguayan who does not know of Pytyvõ, perhaps the most prominent economic initiative undertaken as part of the government’s National Emergency Plan to mitigate the crisis. In light of the results of this program, Paraguay’s experience in its implementation leaves us with some important lessons.

Social assistance transfers can prevent an increase in the poverty rate

The strengthening of existing permanent social programs to care for families in vulnerable situations, as well as the implementation of emergency programs, such as Pytyvõ, which were designed in response to the pandemic to support workers and their families, played a significant role in preventing an increase in poverty in 2020. According to the National Institute of Statistics (INE) of Paraguay, Pytyvõ, along with the programs Adulto Mayor and Tekoporã, prevented more than 230,000 people from falling into poverty.

 

 

Source: INE, Permanent Household Survey (EPH, 2020).

According to the World Bank’s High-Frequency Phone Survey (HFPS), as of May, 2020, 28% of Paraguayan households reported that at least one of their members had received some type of emergency social assistance during the pandemic. This percentage had risen to 54% by June 2021.

Source: High-Frequency Phone Survey – Paraguay (2020–2021).

Pytyvõ’s approach to allocating the subsidy benefits was one of the key reasons for the positive impact it had on the population. From the beginning, the main goal of the program was to assist informal workers affected by the loss of income. The HFPS indicates that eight out of ten respondents, whose households count as beneficiaries of social assistance initiatives during the pandemic, are informal workers. In line with this data, Pytyvõ’s results confirm that seven out of ten informal workers benefitted from the transfer program.

Administrative records are key data for public policy

Designing Pytyvõ in record time, being this the largest cash transfer program in the history of Paraguay, presented a tremendous challenge. The absence of a systematized registry of people and households who were already recipients of social assistance that could be used to identify potential beneficiaries emerged as one of the biggest obstacles. It became imperative to build a database from the ground up, with all the engineering and effort that this entails.

Thus, Pytyvõ revitalized interest in the responsible use of public administrative records as the primary source of the “filters” applied to the information provided by the subsidy applicants. Data such as police records, lists of government employees, and records of beneficiaries of other social programs, among others, made it possible to maximize the adequate targeting of benefits.

As a clear example of what was achieved, the HFPS shows that 85% of households benefiting from emergency programs (including Pytyvõ) were households where, as required, no member had previously received government assistance. However, these data also highlight the need for a national registry of beneficiaries, which would ease the process of designing and focalizing social assistance programs in the future.

Public-private synergy can generate high-impact results

In order to facilitate the process of transferring the Pytyvõ subsidy to beneficiaries throughout the country, the government forged a strategic alliance with local Electronic Payment Entities (EMPEs). Subsidies were delivered through electronic wallets, bank accounts, and even an innovative direct accreditation mechanism, Tarjeta Cedula, which allowed people to make purchases using only their national identity cards.

 

Source: Data from the first iteration of Pytyvõ, published in Marín, C., and Ozuna, E., 2020 (October), Protección Social en Tiempos de la COVID-19. Revista Jurídica Nº 4, pp.141–155.

In the first iteration of Pytyvõ, almost 90% of beneficiaries received the subsidy via electronic wallet, 10% used the Tarjeta Cédula system, and less than 1% had the subsidy deposited directly in their bank accounts. As can be inferred, the transfers by electronic means gave the government a high degree of control over the logistics of the subsidy allocation process. Likewise, it meant greater security for the beneficiaries when using the subsidy, since they did not have to withdraw the money in cash.

Comprehensive policies are necessary as follow-up to subsidy programs

The HFS’ results evidence that, with the COVID-19 pandemic still present and the challenges of social protection, the recipients of the emergency social assistance programs continue to be, in many ways, the most vulnerable population.

The invaluable tools and expertise gained through the creation and rollout of these emergency assistance programs should be used in the designing and implementing of public policies that aim to:

  • Create a national registry of beneficiaries in order to improve the targeting and impact of social programs.
  • Strengthen social safety nets through an increase in the proportion of formally employed workers as a key resource for access to opportunities and a cushion against the negative effects of crises.
  • Adjust the design of social protection for workers, taking into account the changes in the labor market, as well as the dynamics and volatility of labor income.
  • Adapt the design of social protection to the use of digital platforms and to demographic changes in the population.

Thus, a post-pandemic recovery plan must incorporate tools that promote a reduction in informality, poverty, and inequality and that are also sustainable in the long-term. For the implementation of these institutional changes, it is necessary to reach broad consensus among all the actors involved, in order to attain economic growth that can not only benefit the entire population but also reduce social gaps.

Authors

Gustavo Canavire-Bacarreza

Senior economist, Poverty and Equity Global Practice

Luis Recalde-Ramírez

Consultant, Poverty and Equity Global Practice

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