Successes in Anti-Poverty (ILO, 2000, 232 p.): 5. Public works to create employment for the poor: (v) Public works: Rules for success against poverty: 1. Designing employment for low opportunity cost

Successes in Anti-Poverty (ILO, 2000, 232 p.)

(introduction...)

The International Labour Organization

ILO Publications

Preface

Acknowledgements

1. The problem and the approach

2. Outline

3. Anti-poverty success: National-level performance

(i) Assessing performance: Poverty, damage, and the level of resources

(ii) Poverty, GNP, consumption: Links and positive deviants

(iii) Delinking poverty and resource scarcity from damage and misery?

(iv) Poverty and damage: An assessment

4. Credit: Rules for success in anti-poverty action32

(introduction...)

(i) Measuring success

(ii) Successful pro-poor credit: Towards synthesis - and some problems

(iii) Thirteen rules for successful pro-poor credit

(introduction...)

1. Respect fungibility of credit

2. Seek poverty focus, but by means other than direct targeting

3. Void anti-poor rules and actions

4. Find alternatives to physical collateral

5. Cat poor borrowers' transactions costs

6. Reduce covariance of repayment, e.g. by nesting peer-monitoring groups

7. Avoid lending monopolies

8. Ensure that extra credit can be productive before raising its supply

9. Subsidize transactions costs and administration, not interest

10. Avoid politicizing or softening repayment but anticipate emergencies

11. Infrastructure and education may complement credit

12. Savings requirements improve borrowers' performance

13. Create incentives to lenders and borrowers for repayment

5. Public works to create employment for the poor

(i) Introduction

(ii) Scale

(iii) Apparent impact on the poor

(iv) Targeting on the poor

(v) Public works: Rules for success against poverty

(introduction...)

1. Designing employment for low opportunity cost

2. Seek alternatives to direct targeting - but wage effects are complex

3. Use scheme rules and conditions to discriminate for the poor

4. Allow for poor workers' frequent physical difficulties

5. Minimize poor participants' transactions costs

6. Reduce covariate stresses on public works resources

7. Use retailer, employer, and public works competition ''for the poor''

8. Before starting, check that low demand for labour causes poverty

9. Subsidize coverage, sustainability, graduation - but seldom above market wages

10. Encourage grassroots pressure groups to improve the scheme

11. In performance and outreach, employment schemes complement others

12. Build up capacity of schemes and workers before works begin

13. Use performance incentives for officials and participants

6. Land, farming, social services, food, towns: Testing rules of anti-poverty success; implications for governments, NGOs

(i) Introduction

(ii) Land reform

(iii) Agricultural growth and technology

(iv) Health, education and poverty reduction

(v) Food distribution and subsidization51

(vi) Whatever happened to the towns?

7. Conclusion: The ''Rules of success against poverty'' reviewed

Appendices

Appendix A: Some issues in poverty measurement

Appendix B: Predicted poverty and the outliers

Appendix C: Analysis of positive deviants

Appendix D: Comparison of results with those of Anand and Ravallion

Appendix E: New international evidence on resources, poverty reduction and human development

Bibliography

Other ILO publications

Back cover

1. Designing employment for low opportunity cost

This implies ensuring that the scheme is available in the slack season (which is why agricultural labour seldom features in such schemes). However, it is not obvious that the poor are best served by making public works employment offers strictly seasonal, as in Botswana, where Labour Relief "jobs were temporary, stopping during the cropping season for two or three months" [Harvey and Lewis 1990: 302]. That certainly maximizes "stabilization benefits" to the poor, but may reduce their "transfer benefits"; for public works, if continued in the peak season, could tighten the market for private labour and thus bid up the wage rate. That effect is much less likely in the slack season, when labour is plentiful, and demand for it therefore wage-elastic [Ravallion 1990; Gaiha 1994: 114]. In the Kosi area of Bihar State in India, public works in the slack season only may have reduced the equilibrium private-sector wage rate in the peak season [Rodgers 1973] (though the reverse result is also possible if people substitute leisure for income as the latter rises [Robbins 1930]). Use of public works to raise peak demand for labour implies a political choice: to increase the bargaining power of the workers [Dev 1994: 8], at the possible cost of alienating big-farm employers from the scheme. Whether this renders the scheme more sustainable politically, or less so, is a context-specific political judgement; the point to note is that the choice needs to be explicit, when timing the provision of works (or guarantees of employment) in a scheme. Of course, if the works or the guarantees of employment become rationed (rule 2), this decision is constrained, tainted, or made altogether infeasible.

In most schemes, limited resources and high wage and other costs impose a need to ration, at least, the times and places where work will be made available. Usually, social safety nets are not plentiful enough to permit the designers of employment schemes the luxury of going for "transfer benefits" rather than "stabilization benefits" and, if the labour-market conditions so indicate, crowding much of the scheme work into the busy agricultural season. There is urgent need to provide employment income to those without reserves in a drought, or a slack season following a below-average harvest; providing maximum job chances to the poor at such times, when there are few job opportunities elsewhere, takes priority over transfer benefits. Only the physical feasibility of works - such as roadbuilding or irrigation maintenance in soggy land - constrains capacity to time employment into slack periods.

As indicated, substantial numbers of scheme employees are women, and it is desirable that this should be so. It is therefore important to ask whether the opportunity cost of women's participation is affected by the timing or other details of a scheme. Evidence from Kerala [Kumar 1977] indicates that, in some seasons but not others, reductions in child care when women do extra work can outweigh the benefits, for small children, of improved income and nutrition. The compulsory provision of cres in EGS is certainly one reason why high female participation has not been associated with any such opportunity cost there. Moreover, while over half the EGS participants are women, NREP - where there are no cres and no employment guarantee - attracts only 15 per cent [World Bank 1991].

Small and decentralized works, which can be located near each of many villages, reduce transport time and hence opportunity cost. This is especially important for the poor, who are likeliest to be compelled to use slow and time-consuming transport, and for women. The de facto rationing that took place after 1988 in EGS, when it was compelled to double its wage rates (see below), mostly took the form of much more distant job offers. That excluded not only those less desperate for the work, but those less mobile and further away.