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January 8, 2002
EXCERPTS: Protecting the people
The Mahbubul Haq Development Centre’s latest report studies the impact of globalization on the social security programmes of South Asian countries
THE social protection that a country provides for its citizens through a series of measures against the economic and social distress resulting from sickness and death of an income-earner, unemployment and old age, etc., is the backbone of the modern welfare state. In this era of globalization, job and income insecurity are increasing, specially for women and other vulnerable groups who are dependent on informal and casual work without any provisions for social protection. In South Asia, where about 80-90 per cent of the labour force is in the informal sector, they are mostly outside the existing social protection schemes that cover only the formal sector.
Sri Lanka is the only South Asian country with a formal sector labour force of over 60 per cent, so the social security programmes in Sri Lanka such as pension, provident funds, and life insurance schemes cover the majority of the workforce. But in Bangladesh, India, Pakistan and Nepal where the majority of the workforce depends on the informal sector, the social security system covers only about 10 per cent of the population. The poverty alleviation programmes are designed to provide social assistance to the poor, but due to the rising budgetary cuts, inefficiency and high costs of service delivery even these programmes are not being effective in protecting the needy....
CONCLUSIONS
During the globalization period in the 1990s, demographic transition was faster with improved life expectancies and declining death rates of population. The structure of the population had a growing share of the aged population. The composition of the population indicated persistent gender disparities with females constituting less than 50 per cent of the total population. Such disparities were particularly sharp in low human development countries and persisted in terms of education, health, nutrition, and employment opportunities.
The already poor social attainments remained at lower levels during the globalization period. While in Sri Lanka mean years of schooling improved from seven years of schooling in early 1970 to eight years in the 1990s, the average in other South Asian countries were as low as less than primary level education in both periods. With globalization the demand for highly skilled and specialized labour force increased, however none of the countries mobilized or provided additional resources to the tertiary education sector.
The region has been facing dual challenges posed by infectious diseases as well as increasing burden of non-communicable diseases or lifestyle diseases. The countries are also subjected to increased cases of TB, malaria and HIV/AIDS. Over one-fifth of the population in the region did not have access to health care services. Overall health expenditures were reduced to levels that were lower than those in the pre-reform periods in most countries.
Inefficient provisioning coupled with leakages in expenditures led to deteriorating quality of services. Thus, there has been a trend of rising proportion of drop-out rates at the primary education level, declining provision of public health facilities, disproportionate population and health personnel ratio, and poor off-take of food grain provisions from the public distribution system. Improvements in human development indicators during this period were very slow, largely due to the social policies implemented in the pre-globalization period.
The bulk of the labour force in Bangladesh, India, Pakistan, and Nepal was characterized by high illiteracy and lower educational attainments. Such attainments restricted the entry of such labour into formal sector employment, and led to a rise in the movement towards informal sector activities that included casual employment, self-employment, own account enterprises and unpaid family work. The informal sector wage rates in these countries were lower than the formal sector wages. Hence, we observe the trend of rising underemployment rates in these countries rather than unemployment.
In Sri Lanka, on the other hand, better literacy levels maintained the formal sector employment opportunities. the proportionate share of public sector employment in total formal sector employment was far higher than private sector employment. The fiscal compression during the globalization period reduced employment opportunities in the sector. In the process, unemployment rates reached staggering heights of 14 per cent.
While the incidence of poverty declined both in terms of depth and severity, inter and intra regional disparities persisted. Income distribution was skewed towards higher income groups. While, on the one hand growing marginalization of landholdings led to rising agricultural labour, on the other hand, poor agricultural wage rates led to migration of labourers to urban areas in search of non-agricultural employment. But the freezing of formal sector employment opportunities led to a rise in unemployment rates, as in Sri Lanka, and resort to informal sector activities, as in other South Asian countries.
Rising investments from transnational corporations, as well as rising domestic competition, increased reliance on flexible production processes that changed employment patterns drastically. Rising sub-contracting and growing casualization of labour reduced the share of formal sector employment.
The resource crunch during this period led to cut-backs of expenditures of asset creation and wage employment programmes that were initiated as a direct poverty alleviation measure. However, better targeting in Sri Lanka and involvement of NGOs in Bangladesh provided safety-nets to the poor.
The social security provisions available to the working population also decreased with changing employment structure. Since bulk of the workforce in Bangladesh, India, Pakistan and Nepal are employed in the informal sector, formal sector social security measures did not reach this population. The coverage of these schemes was better in Sri Lanka because of sizable proportion of formal sector workforce. The income security in the country was also maintained due to the presence of traditional labour market institutions that regulate levels of wage rates. Thus, the majority of work force in Sri Lanka was covered by income, employment as well as social security. But Bangladesh, India, Nepal and Pakistan had fewer social protection provisions.
Social policy in the region prior to the globalisation process was pro-poor that aimed at raising growth levels through equitable distribution of assets and income. During the reform period the social policy largely driven by a growth-mediated process had led to inequitable distribution of assets and income. The role of government was transformed from a provider to a facilitator.
The Sri Lankan experience in this context is particularly relevant. In the pre-1977 period the government policy was inbuilt with egalitarian ethos that aimed at raising human capabilities through investment in basic education and public health. This enabled the country to achieve high human development levels. In the post liberalization period, human development outcomes in the country remained around the pre-reforms levels, pointing towards a lack of continued commitment for raising social development in the country.
Bangladesh and India on the other hand, had been implementing a plethora of programmes that were administered by several ministries, departments and agencies, thus, raising administrative costs of the programmes. In the reform period, fiscal cuts were directed towards reducing development expenditures rather than the administrative expenditure, by integrating the programmes to a unified scheme. Globalization was thus characterized by social policies that were not sensitive to people’s needs and concerns.
Excerpts from
Human development in South Asia, 2001: globalisation and human development
Mahbubul Haq Human Development Centre, Islamabad and Oxford University Press, 5 Bangalore Town, Sharae Faisal, Karachi-75350 Tel: 021-4529025
Email: ouppak@theoffice.net
ISBN 0-19-579764-7 180pp. Rs395
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