Ageing, Pandemic - New Poverty Drivers
By Paneetha Ameresekere
This article is the first in six series of articles which in turn are based on three articles published by two multilateral development agencies and released on their websites focused on the plight of the poor and the vulnerable in Sri Lanka in respect of two different circumstances.
ADB on 8 July 2021 highlighted the impact of ageing on the poor and the vulnerable and the other two by the World Bank (WB) released three and five days apart from the first and second publications respectively, ie on 11 July 2021 and 16 July 2021, emphasized the importance of preparing for future pandemics in the light of the present COVID-19 Pandemic as well as the plight of the aged and ageing in the context that Sri Lanka has an ageing population, with the welfare and uplift of the poor and the vulnerable belonging to both of these categories in mind.
The WB and ADB articles emphasised the importance of the Government of Sri Lanka (GoSL) having to be on the fore to tackle these issues. While the WB stressed the need for a budgetary allocation and insurance as a preparedness strategy to meet the needs of the poor and the vulnerable due to such unforeseen disasters, the ADB recommended the raising of taxes to meet such contingencies.
While the contents of this, the first article, may be self-explanatory, the second in these series of articles will ‘delve’ on the reality of ageing in Sri Lanka; the third that ageing in Sri Lanka is on par with OECD, sans the lack of benefits the latter however has; fourth, the importance of the GoSL taking the lead in providing effective long-term care (LTC); fifth, the current state of play of home care in Sri Lanka and finally the sixth and last article, that LTC is an investment and not an expense.
LTC implementation will be slow
ADB’s article titled ‘Country Diagnostic study on LTC in Sri Lanka,’ warned that LTC implementation will be slow until the GoSL increases taxes from the current low level.
‘European countries spend an average 1.4 per cent of GDP on their LTC systems,’ it said. Meanwhile the two WB articles titled ‘In Sri Lanka Cash Transfers Give Essential Support to People Hit Hardest by COVID-19’ and ‘Sri Lanka can benefit from the pandemic experience to craft a comprehensive social protection strategy’ dated 11 July 2021 and 16 July 2021 respectively, to quote excerpts, in the backdrop that both those WB articles more or less had a common thread, said, ‘The pandemic shows us that even people who are not poor can fall into a situation where they need GoSL support.
Governments should take stock of rising inequalities that have been exacerbated by the COVID-19 pandemic and bolster their social protection and welfare schemes.
Half of Sri Lankan households do not receive regular cash transfer support from the GoSL, though many of these have been severely affected by the COVID-19 pandemic. Further, several groups are less likely to receive regular GoSL support, such as single-headed households that may not have children, young children (under 10 years of age), adults aged 25-44 who are likely caring for children and single-headed households under 60 years of age that may well include people with disabilities.
Social assistance coverage is also low among informal workers who make up about 70 per cent of the workforce and were hit hard by the crisis. Many were shop workers, informal workers or street vendors who lost their incomes.
Therefore, collecting better data on the indigent population of the country and pre-registering those who might need temporary assistance in the future, in addition to those who regularly receive GoSL doles, ipso facto in preparation for future shocks, is sine qua non to better target the poor. However, to do this and reach all those who need help, GoSL needs to know in advance which households depend on precarious or low incomes and are most likely to be affected in a crisis.
Therefore, better identification and payment systems can speed relief payments; ensuring people get assistance when they most need it. Direct cash transfers are a useful and effective support mechanism during a crisis and this approach was chosen by many Governments around the world to respond to the COVID-19 pandemic. Cash-strapped Governments often struggle to scale up their direct cash transfers during a crisis, particularly when it has a significant impact on public revenues like the pandemic did. It is therefore imperative for Governments to prepare in advance, arrangements to scale up social protection programmes in response to shocks and that the financing of this scale-up is also preplanned.
In the Sri Lankan context, a mix of interventions – from temporary income support to active job placement assistance and long-term social assistance – is needed to help Sri Lanka’s citizens recover from the COVID-19 pandemic and build back better.’.
‘The pandemic shows us that even people who are not poor can fall into a situation where they need GoSL support. Many people around the world have received support during the COVID-19 pandemic because there is a universal understanding that these shocks were not anyone’s fault and the State has a responsibility to help households get through it,’ the WB quoting its Senior Economist for Sri Lanka Thomas Walker, said.
The WB also said, “While these workers will hopefully recover quickly as economic activity improves; families like Nayani’s with disabilities (see below) are likely to face more challenges and need ongoing financial support from the GoSL.
Woes worsened overnight
When the first lockdown was imposed in March 2020, Nayani’s financial woes worsened overnight. Struggling with partial loss of sight and chronic kidney disease (CKD) the 36-year-old’s meagre savings evaporated like smoke from the incense sticks she sells to make a living.
Nayani’s husband is blind and the couple struggled to make ends meet, especially given the cost of Nayani’s dialysis treatment. In response to these challenges posed by COVID-19, GoSL stepped in to provide a monthly allowance of Rs.5000 to struggling families. Nayani was among the more than 5.6 million families that received assistance in April and May last year as the first COVID-19 wave swept through Sri Lanka. In this initial round of support, GoSL responded to appeals from vulnerable families like Nayani’s who lost their livelihoods.
The elderly and differently abled as well as CKD patients were also included in payments given during these two months. The elderly allowance was also increased from Rs.2000 to Rs.5000. Many people who were eligible for monthly allowances but were earlier waitlisted, including differently abled people and CKD patients were also drawn into the beneficiary scheme for the first time in April/May 2020 as the GoSL worked to minimize the pandemic’s impact.
An additional round of Rs.5000 cash transfers were provided during the second COVID-19 wave. The WB funded ‘The Additional Financing of the COVID-19 Emergency Response and Health Systems Preparedness Project’s’ assistance improved the inclusivity of GoSL’s cash transfer measures to reach more vulnerable families, the differently abled and patients suffering from CKD,’ said WB’s Senior Social Protection Specialist Srinivas Varadan.
All these are well and good, but what about the plight of the hapless poor who have been further stricken by the current third wave of the COVID-19 Pandemic sweeping the country? That’s the very reason why the WB recommends a budgetary allocation and social insurance to meet such future disasters with an eye on the poor as well as those on the borderline. Meanwhile, in the case of the current COVID-19 third wave sweeping the country it may well be said that because the GoSL was illprepared to face such shocks, it has done ‘too little, too late’ for the indigent.
Nonetheless, the WB release of 16 July 2021, to quote excerpts also said, ‘The COVID-19 pandemic provides an opportunity for Sri Lanka to review and strengthen its social protection programmes to help citizens recover more quickly from future shocks. Social protection includes social assistance (welfare programs for the poorest), social insurance (for unemployment, disability, illness and old age), and programmes to enhance opportunities to help people find better jobs. The WB is supporting the GoSL to reform and improve its social protection policies and programmes. At the heart of these efforts is the development of a national social protection strategy.
Sri Lanka has never had a cohesive social protection strategy, which in many countries is used as a common guide and planning tool for Government welfare programmes. Sri Lanka’s social protection programmes have been introduced sporadically. This has limited their impact and prevented them from working in tandem with other Government programmes like education, health and disaster response. Because there is no overall framework for thinking about welfare, there are still big gaps in the safety net such as for informal workers. Therefore, there is a need for a clear strategy for social protection.
‘Social protection is fundamentally about managing risk. It’s about having a real safety net that prevents people from falling into poverty and helps those who lose their incomes recover. It goes beyond addressing chronic poverty or the long-term drivers of social exclusion to look at job and employment security and the help people can expect to receive if they get sick or lose their jobs,; said Walker.
The COVID-19 crisis is requiring policymakers to redefine their understanding of ‘poor and vulnerable.’ The pandemic has affected many people economically, with perhaps the majority experiencing significant falls in their standards of living. In the context of COVID-19, the simplistic dichotomy of the ‘poor and non-poor’ – which has often driven social protection policy – is not a useful tool for thinking about who really needs the Government’s help.
The pandemic has also proven that shocks can push even relatively financially secure people into a difficult situation. Countries around the world have begun to realise that a broader approach to safety nets, making use of advances in identification and information technology, is needed to ensure all households can get temporary assistance and recover quickly following a negative shock. This is particularly important in a context such as Sri Lanka’s, in which the majority of the population was living on relatively low incomes even prior to the crisis. Countries such as Pakistan and the Philippines pre-position financial resources to help respond to shocks.
This includes external insurance programmes for natural disasters such as the one adopted by Sri Lanka in 2016, or a mechanism for reallocating funds that can be efficiently used to provide support to households. Well-targeted policies also save precious public funds and can help vulnerable groups in the long term. Sri Lanka’s strained fiscal circumstances and large budget deficits create a compelling need for GoSL to revisit the targeting of its social protection programmes.
In Sri Lanka, social protection spending has not had a big impact on reducing poverty. This limited impact is due to weak targeting, which means the funds do not always go to those who need them most. In the case of Samurdhi, which is the Government’s largest social welfare programme, the funds are spread too thinly. Better targeting could help concentrate resources on the poorest 10 percent-15 percent of the population, helping them increase their incomes and move out of poverty. (Next Monday: 20% of Sri Lankans Over 60 By 2030)