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close this bookSuccesses in Anti-Poverty (ILO, 2000, 232 p.)
close this folder5. Public works to create employment for the poor
close this folder(v) Public works: Rules for success against poverty
View the document(introduction...)
View the document1. Designing employment for low opportunity cost
View the document2. Seek alternatives to direct targeting - but wage effects are complex
View the document3. Use scheme rules and conditions to discriminate for the poor
View the document4. Allow for poor workers' frequent physical difficulties
View the document5. Minimize poor participants' transactions costs
View the document6. Reduce covariate stresses on public works resources
View the document7. Use retailer, employer, and public works competition ''for the poor''
View the document8. Before starting, check that low demand for labour causes poverty
View the document9. Subsidize coverage, sustainability, graduation - but seldom above market wages
View the document10. Encourage grassroots pressure groups to improve the scheme
View the document11. In performance and outreach, employment schemes complement others
View the document12. Build up capacity of schemes and workers before works begin
View the document13. Use performance incentives for officials and participants

6. Reduce covariate stresses on public works resources

This recipe for success - or at least for avoiding disaster - is not nearly as well understood as is its analogue in anti-poverty credit programmes, viz. the need to diversify the lender's portfolio, with regard both to the known timing of stresses and to risks. In any one place, stabilization will usually be required at much the same time. If national, state or local authorities need to prepare cash-flow to meet that demand in many places with the same season of stress, then fiscal and monetary (and perhaps cross-border borrowing and repayment) policy must be adapted accordingly.

Often, however, it will be possible to include, in the portfolio of a state's public works activities, regions with different, or at least not perfectly coincident, peaks of need for public works employment. As in the case of credit, so with public works employment: if the provider is heavily or solely orientated to rural activities, and particularly to support of farmers and farmworkers, the "portfolio" is especially vulnerable to concentration of peaks, both in normal years and (especially) in bad years. Even more than in the case of credit programmes, this imposes not only a direct financial strain, but also a severely fluctuating demand on the agency's equipment and, above all, staff. That means higher costs, per unit of wages paid or works completed, than if a smoother flow of work could be achieved by appropriate risk management, i.e., for the most part, by obtaining a less covariant mix of activities, regions, or client incomes.