Imagine you are the head of a household of four in rural Cambodia. One day, as you walk in the local market and buy your regular groceries, you realize that the price of rice has doubled. The prices of meat and vegetables have also risen by 50 percent. The next day, your sister from Phnom Penh calls and weeps over the phone. She has been sacked by her employer, a garment factory, and cannot send money home. Gazing at the small plots of rice fields around your house, you begin to worry: what can you do to feed your children?
This story may resemble the experiences of a sizable number of rural households in the past year. The “double shock” of the food price crisis and the global economic crisis has especially dragged many poor and near poor families back into poverty. Absent of social protection measures, many resort to coping strategies such as reducing food consumption (especially of adult and women), selling productive assets, incurring high-interest loans, withdrawing children from school and putting school-age children and youth to work. These hardships have caught the attention of the Royal Government and development partners and hence stimulated discussions on formulating a National Social Protection Strategy.
However, among the broad array of social protection instruments, which one(s) would most likely uplift the rural poor?
Social protection is divided into two major categories, social insurance and social assistance. Social insurance schemes include pension funds and workers’ compensation funds which are contributions-based. Workers and employers (and sometimes also the government) would pay regularly a certain percentage of their earnings into the fund. In turn, employees who are retiring or have suffered from work injury may receive some financial support for their livelihoods. In Cambodia, the National Social Security Fund (NSSF) has been set up to provide work injury compensation for civil servants and private sector employees. However, these schemes appear to be most effective for the formal economy where employers and their businesses are clearly registered and workers earn stable incomes. In the vast rural areas where farmers engage in informal subsistence activities, a National Social Insurance Scheme administered by the central government may therefore be a difficult concept to practice.
Nonetheless, noting that limited access to capital and entrepreneurship training are the root causes of chronic poverty, some development partners have pioneered innovative projects, such as community-based insurance. The experiences of two ILO projects, the International Programme for the Elimination of Child Labour (IPEC) and the Women Entrepreneurship Development and Gender Equality (WEDGE) Project, especially highlight the efficacy of Self Help Groups (SHG).
SHGs are semi-formal savings associations, formed based on trust among families within target communities. Each group consists of 10 to 25 persons, normally close relatives or neighbours, and the members would elect a group leader and a bookkeeper. Thereafter, each member contributes 4,000 riel (equivalent of $1) each month. When the fund becomes sufficiently large, then members can make small loans for small business development and family emergencies. At the same time, the ILO and its NGO partners would provide training on financial management, income generation strategies and livelihood skills. Between 2004 and 2007, 166 SHGs were established in seven provinces and municipalities. Combined with access to small loans and improved skills in business operations, poor families have become more capable of generating supplemental income (which sufficiently replace income lost when child labourers stop working and return to schools). With proven success, this community-centred strategy is now being replicated and up-scaled.
The second category of social protection instruments is social assistance, now also referred to as “social safety nets” (World Bank-invented term). Social assistance schemes are non-contributions-based and are usually financed by government and donor groups. To become eligible for benefits, households or individuals must fulfil certain criteria. For instance, in Nordic countries, residents are automatically entitled to free health care. Therefore, those who wish to be beneficiaries must register with the local commune and obtain a resident card. Other schemes may deliver cash and in-kind benefits to target low-income households and maybe specific for certain vulnerable groups, such as children, elderly and the disabled.
In Cambodia, some social safety net measures have been piloted or implemented in various regions. For instance, the World Bank, under its Cambodia Education Sector Support Project (CESSP), has piloted a scholarship programme for poor lower secondary school students. The scheme delivered $45 and $60 lump sums to students identified to be vulnerable of dropping out. Also, the Asian Development Bank (ADB), the World Food Programme (WFP) and the International Labour Organization (ILO) have implemented food-for-work, cash-for-work and labour-based public works projects to provide employment to poor households. The successes of these projects may be up-scaled if stakeholders take action to improve and replicate such programme design to more areas in Cambodia. Furthermore, other relevant schemes, such as unconditional cash transfers (e.g. disability allowances, non-contributory pensions and needs-based assistance), may be piloted and included as part of the National Social Protection Strategy.
As discussions on social protection ensue, there is growing consensus that both social insurance and social assistance measures are needed alleviating poverty, mitigating economic shocks and expanding opportunities for poor households. Nonetheless, more coordination between government ministries and donors would be necessary to create a comprehensive framework specifying the policies, schemes and instruments to be utilized. More crucially, this process must proceed smoothly with cautious consideration of the resources and technical capacities available.
References
“Impact of High Food Prices in Cambodia,” Cambodia Development Resource Institute, October 2008, http://documents.wfp.org/stellent/groups/public/documents/ena/wfp189739.pdf
“Good Practices and Lessons Learned from the ILO IPEC Time Bound Programme Support Project in Cambodia,” International Labour Organization, November 2008
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