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Poverty and Inequality
Poverty and Inequality
www.developmentandtransition.net
DECEMBER 2006
A l b a n i a A r m e n i a A z e r b a i j a n B e l a r u s B o s n i a a n d H e r z e g o v i n a B u l g a r i a C r o a t i a C y p r u s C z e c h R e p u b l i c F Y R M a c e d o n i a G e o r g i a H u n g a r y K a z a k h s t a n K o s o v o ( S e r b i a ) Ky r g y z s t a n L a t v i a L i t h u a n i a M a l t a M o l d o v a M o n t e n e g r o P o l a n d R o m a n i a R u s s i a n F e d e r a t i o n S e r b i a S l o v a k i a S l o v e n i a Ta j i k i s t a n Tu r k e y Tu r k m e n i s t a n U k r a i n e U z b e k i s t a n
Published by the United Nations Development Programme and the London School of Economics and Political Science
(MDGs) with poverty reduction strategies, and to assess the capital and financial needs of meeting the MDGs, are at the heart of development debates. The region also displays a variety of social policy models, ranging from the introduction of flat taxes (in Russia, Estonia, Slovakia, and elsewhere [page 2]) on the one hand to the consolidation of Soviet-era social policy frameworks (in Belarus [page 12]) on the other. The variation of needs across the region means that policy makers face difficulties in combining broad access to social services with prices that cover the costs of providing these services [page 3]. The credibility and accuracy of statistical methods associated with measuring poverty and inequality in transition economies pose additional challenges [page 18]. Moreover, the heterogeneity of the region has not prevented the emergence of some common and much lamentable features of poverty across the region, particularly relatively high poverty rates among children [page 21], and residents of rural areas [page 14]. Poverty is a salient issue for the region. Under closer examination, it is clear that poverty reduction strategies and the MDGs have a major role to play in the development of Central and Eastern Europe and the Commonwealth of Independent States.
Ben Slay and James Hughes
Interview: Mart Laar on flat taxes Utility tariffs and the political economy of social policy Polands very difficult labour market Serbian regional inequalities in access to jobs Inequality in poor households in Turkey: Does only gender matter? Poverty reduction In Belarus: Experience and lessons Central Asia: Spatial disparities in poverty Poverty and inequality in Uzbekistan Poverty and inequality in Armenia Fighting poverty in post-Soviet Tajikistan
Waltraud Schelkle Deborah Mabbett Janusz Czamarski, Ben Slay Mihail Arandarenko Leyla Sen Lyudmila Istomina Jacek Cukrowski Uktam Abdurakhmanov, Sheila Marnie Aghassi Mkrtchyan Cheickna Diawara
2 3 5 7 10 12 14 16 18 19 21 24
Putting the focus back on children during a time of economic growth Gordon Alexander, Petra Hoelscher Microfinance Jonathan Brooks
ence. It is easy to pay but hard to avoid. Therefore, it is very good for the budget. Do you consider flat rate tax systems to be the first-best fiscal institution at all stages of development or primarily for the catching-up process? A flat tax system was first proposed by Milton Friedman and Alan Rabuschka for the old capitalist countries to overhaul their traditional tax structures. They proposed it because it supports individual freedom, promotes economic activity, thus more jobs and growth. They also considered it to be fairer because flat rate taxes reduce bureaucracy and tax avoidance, although these latter aspects were not emphasized then. In the process of transition, these latter aspects of a flat rate tax system became much more important. Over time, the classic advantages of a flat tax become more important by fostering growth and activity. So I think that the flat taxes will work well at all stages of development, because they are fairer and support economic activity. Lump sum taxes (the same absolute amount instead of the same rate) would be economically more efficient why not go for that? Such taxes were often used in the ancient and medieval world and there are some scholars who are advocating them even today. In practice, such lump sum taxes have serious drawbacks. First of all, they tax poor people proportionally more. That is not a good way of collecting direct taxes from the poorest people: their tax share in revenue is small but the costs to collect them are high. This is the reason why in a flat rate tax system the poorer section of households is exempt from paying taxes, thanks to an income threshold that is too high for them. Secondly, even in the most stable countries there is at least some inflation. Therefore, governments will have to change the lump sum quite often which is not practical. I think the flat rate tax is a better solution. Progressive taxes are seen as being fairer to low income households why should governments of transition and developing countries ignore that? Progressive taxes are seen as being fairer to low income households, but when you study what actually happens to these households under a progressive tax system, you find that it is not fairer. Flat rate tax systems have two rates zero per cent for low income families and one fixed rate for all others with exemptions primarily for the number of children. In reality, most exemptions in existing progressive systems are not so much helping low income families but middle income
What especially commends flat rate taxes to transition and developing economies? Flat taxes work so well because they are simple, fair and support the motivation of people to work more and to plan for their own future. The issue of motivation was particularly important after the collapse of Soviet Union nations in Central and Eastern Europe. In December 1993, the ruling coalition in Estonia pushed through parliament a radical reform of personal income taxes, which became a flat 26 per cent level, against massive opposition from the economic experts. The effects were very positive. Budget revenues did not fall but instead increased significantly, personal income tax revenues doubled within two years. Black markets in Estonia disappeared and tax compliance improved. The introduction of the flat rate, proportional income tax helped to boost economic activity and create new jobs, helping Estonia to avoid massive unemployment. The success of the Estonian tax reform encouraged Estonian neighbours to follow its example. In 1995, Latvia introduced a flat rate personal income tax and in 1996, Lithuania followed with a flat rate tax of 32 per cent. Comparing the unweighted GDP growth rates of economies in Central Eastern Europe with flat rate personal income taxation to growth rates of economies in the same region with progressive income taxation, we can see that countries with flat rates grew significantly faster. The success of the Baltic tax reforms encouraged Russia, Slovakia and Romania to follow suit. The most radical tax reform was undertaken on 1 January 2004 in Slovakia where value added tax (VAT), the corporate income tax and the personal income tax were all fixed at a flat rate of 19 per cent. So flat rate taxes have improved growth and created new jobs. This form of taxation has been very effective in fighting the black economy and increasing tax obediAverage GDP Growth
YEAR 1996 1997 1998 FLAT RATE COUNTRIES : Estonia, Latvia, Lithuania 6.8 per cent 9.2 per cent 7.8 per cent PROGRESSIVE RATE COUNTRIES: Czech Rep. Hungary, Poland, Slovakia 4.75 per cent 2.7 per cent 3.9 per cent
In many developing and transition countries, the provision of utilities such as water, gas and electricity is restricted by low investment and marked by inefficiencies arising from network losses (leakages and theft), lack of metering and problems collecting payments. These sectors also often make losses which are borne by the government budget. Many economists advocate
unfavourable for women and young people. The longterm unemployed (those without work for at least 12
per cent Chart 1: Rates of registered unemployment, unemployment among young people, and long-term unemployment, 1991-2005 long term unemployment: unemployed for over 12 months
60 50 40 30 20 10 0
91 92
Poland is widely regarded as one of the most successful transition economies, with GDP per-capita in 2005 some 50 per cent above 1990 levels. On the other hand, according to the World Banks November 2005 regional poverty study, Poland is one of two countries in the Europe and CIS region in which absolute poverty rates have risen in recent years.1 Polands labour market trends may well have something to do with this: Polish unemployment rates have been among Europes highest since the mid-1990s. Improvements in the areas of poverty and social inclusion in Poland are unlikely if the unemployment situation is not addressed. What do the statistics show? As the data in Chart 1 show, Polands overall registered unemployment rate has been in the 18-20 per cent range ever since 2001. This is roughly twice the EU average. Moreover, hidden unemployment (mainly in rural areas) is estimated at approximately 1 million people, and informal employment is estimated at slightly less than a million. Labour market trends are particularly
months) are also quite numerous, accounting for more than 50 per cent of total unemployment. Polands employment rate is not surprisingly quite low: at only 51.5 per cent in 2003, it was well below the EU15s average employment rate of 64 per cent, and 71 per cent in the United States. According to Polands 2002 census, work was the main source of income for some 12.4 million Polish workers (out of 16 million individuals aged 15-64). Some 10.7 million people listed old-age and disability pensions, and other benefits as their main source of income; while 14.5 million people (9 million of whom were below 15 years of age) were supported by other workers. These
with high unemployment and low wages. Serbia is no exception to this general rule. We argue that Serbia should adopt differentiated approaches to regional labour markets, which would lead to regionally specific employment policies. Creating effective employment policies to combat persistent and rising unemployment has been a major challenge for Serbian economic policy makers for many years. However, until recently little attention has been paid to the fact that workers face very different risks of unemployment in different regions of the country. It was only in 2004 that regional labour market inequali-
Regional labour markets and transition in Serbia Regional labour market differences often deepen and persist during the process of economic transition. Typically the capital city and a few privileged regions experience fast growth and a tight labour market, while much of the rest of the country sinks into prolonged recession,
10 Niavski
Raki
umadijski Mavanski
current situation
-15 -10 Rasinski -5 0 5 10 15 20 25
Regions in the third quadrant have below average index values for both current and future criteria. These regions are obviously in the most unfavorable situation and probably need massive assistance in solving their The analysis of the 21 individual indicators problems. As they tend to be traditionally shows that such indicators as the share of underdeveloped, the recommended policy Slobodan Lalovi Employment Minister young population, or the ratio of job mix should consist of: investment in physical vacancies to unemployment, have the infrastructure; building of industrial parks; largest intervals of variation. On the other hand, the support to tourism development, crafts and healthy smallest variances are found in the differences in the food production; improvement in education coverage extreme values for the standardized indicators that and establishment of new programmes; training promeasure reforms, such as the share of employment in grammes; adult literacy programmes; public works prothe state sector. This means that indicators representing grammes; and workfare programmes. reforms and structural changes are much more alike throughout Serbia than indicators that measure actual Regions in the fourth quadrant show above-average indicators for the current situation, but negative indicaeconomic activity or inherited characteristics. tors of future potential. As these regions are obviously What does the model say? lagging in reforms, accelerated restructuring and transiA practical categorization of local labour markets can be tional changes would seem to be particularly important. created, so that typical groups of regions can be identi- Appropriate policy mixes here include: an emphasis on fied, based on the estimated partial assessments for the completing enterprise restructuring and privatization; groups of indicators. This taxonomy can help in identify- SME development and self-employment programmes; ing common characteristics, and in designing policies transformation of severance payments into re-employthat are best suited to overcome unfavourable situa- ment incentives; strengthening of public employment tions of a certain type. For instance, according to inher- services; training and retraining programmes; and ited conditions and current situation (1) and potential strengthening of educational networks, especially for positive changes (2), a classification of regions into increasing the number of university graduates. four characteristic subgroups can be made by Descartes' quadrants, as illustrated in the Chart 1. The first quad- While there is a clear and expected geographical divide rant is characterized by plus-plus signs for the current between (traditionally developed) predominantly situation and potential for change, the second by northern and central-north regions concentrated in the minus-plus signs, the third by minus-minus, and the first quadrant and (traditionally underdeveloped) mostly southern and eastern regions concentrated in the fourth by plus-minus signs. third quadrant, such a pattern cannot be established for This taxonomy facilitates a simple segmentation into the regions belonging to the second and fourth quadfour types of regions, suitable for regionally specific sug- rants. The former finding seems to confirm the domi-
Policies that promote greater social equality are expected to lower poverty; however, if such policies fail to take into account internal household dynamics and heterogeneity, they may actually reinforce inequalities within the same household. Although gender is a key determinant in the distribution of rights and resources within the household, it is not the only factor, as seen in the findings of various field studies. Interviews1 conducted with 150 women from poor families in five provinces in eastern and southeastern Turkey, namely, Kars, Sivas, Batman, Diyarbakir and Gaziantep, in the scope of various development projects and initiatives, highlight inequalities in resource distribution in all poor households, with women having less access to resources than men, regardless of the degree of household poverty. However, resource allocation also varies among women themselves, and is influenced by such factors as age, marital status, employment status and location (rural/urban). The data show that poor womens access to fundamental resources varies. For example, access to nutritional resources varies in households, but in all cases women are the last to eat. Equally, hunger is a differentiating factor between rural and urban women, as rural women possess more coping mechanisms for securing meals. Poor womens access to household monetary resources also varies. In villages in Sivas and Kars, where seasonal migration of male household members is a widespread
coping strategy, women take over the household responsibilities, including financial responsibilities, while the men are absent. However, while they may act as the household safety valve, women require permission from the men of the household before making actual expenditures, and young women require permission from older women. In terms of labour force participation, poor urban women are differentiated from poor rural women by their status as wage earners; however, poor working women in Gaziantep, Diyarbakir and Batman are not a homogeneous group. For example, whereas regular wage-earners feel they have a certain amount of control over how their earnings are spent, women who are casual employees have no such control, with their daily income, in some cases, paid directly to their husbands. Womens control over their own earnings also varies according to their marital status. Relying on the data, it is possible to conclude that married women have more space to enjoy control over their earnings. Half of the married women indicated that they can spend their earnings on the needs of their children without asking their husbands. Young working women, on the other hand, to a great extent are denied control over their earnings without much questioning. Many of the unmarried women respondents indicated that they do not want to enjoy control over their earnings while their families are suffering from poverty: We are aware of the fact that we are working because we are poor. Only a few asked for some of their earnings when they felt it necessary. In Diyarbakir and Batman, with few exceptions in the cases of married working women, male household members, either husbands, fathers or brothers, controlled female labour and female earnings and denied
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countries in the world: per capita GDP (at purchasing power parity, PPP) is $6644. What is the basis of the socio-economic model? The socio-economic policy of any state is based on the optimal combination of two components charity and efficiency. The Belarussian model of development emphasizes charitable traits. The emphasis on social policies is declared at a political level, it is demonstrated by budget allocations for social affairs and it is translated into state social programmes. During 1995-2005 expenditure on social affairs comprised 48-50 per cent of the state budget, amounting to 13-14 per cent of GDP. According to experts, state social security programmes account for 12-13 per cent of budget expenditure, which roughly corresponds to the share of poor in the population in the country. This is one of the highest rates among the transition economies. Social security programmes cover the majority of the population of the country (95 per cent of those working in the economy); and a number of programmes are implemented to protect socially vulnerable groups (one-parent or large families, handicapped people, veterans of war). Belarus has a system of state social benefits and privileges available for different groups of the population and they are granted based on more than 50 criteria. Owing to the Law on State Social Standards adopted in 1999, the government has worked out normative budget allocations for public healthcare services per person; also a number of local social security programmes are run to meet set social standards in public healthcare. In the future similar systems of social security standards will be developed for transport and utility services. It must be acknowledged that the centrally determined mandatory wage target levels and various social programmes contribute to the decrease in social project expenses and thus play a role in reducing poverty.
According to official statistics during the past few years Belarus has shown significant success in poverty reduction whilst maintaining a rather low level of income differentiation. The share of the population below the poverty line has fallen from 41.9 per cent (2000) to 12.7 per cent (2005), with a reduction of the absolute number by 2.9 million people. The ratio between the per capita income of the most well-off 10 per cent and the least well-off 10 per cent of the population is 5.4 (in Russia it is 14.8). Efforts to reduce extreme poverty1 were even more remarkable it fell from 3.2 per cent in 1995 to 0.9 per cent in 2005. Since 2000 the average wage of those working in the public sector has risen eightfold and, in real terms, doubled. During the past few years the fast pace of income growth among the least well-off groups of the population is one of the key factors in poverty reduction. Thus, if in 2004 the real income of the population increased by 14.4 per cent, in the poorest tenth it increased by 17.7 per cent. The data is by and large confirmed by the research of international organizations. In particular, the World Bank has recognized that the benefits of economic growth are shared by all groups of the population, including the poorest.2 The Human Development Index ranks Belarus at 67 out of 177 countries and places it in the group of medium-level developed countries, and thus ahead of all the other CIS countries except Russia. However, it must be pointed out that the aforementioned data reflect only trends. In terms of per capita income Belarus considerably lags behind the developed
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USSR (Table 1). Poverty rates, however, were much higher than in other Soviet republics. After the dissolution of the Soviet Union, the newly independent Central Asian countries became more distinct from one another as their governments followed different national development paths. All five suffered sharp drops in real output during the first half of the 1990s, the impact of which was exacerbated by the cessation of transfers from Moscow. Inequalities rose in most of the Central Asian states; today, poverty rates in these countries are among the highest in the Commonwealth of Independent States (Table 1). Increases in poverty did not affect all the countries and their constituent regions uniformly, however. The 15
The economies of the Central Asian republics were centrally planned during the Soviet era and followed development strategies determined in Moscow. Their economic structures were broadly similar, although natural resource endowments varied from country to country. Significant transfers from the central budget reduced differences across the region, so that Gini coefficients (measures of inequality) for all the Central Asian republics were close to the average value for the whole
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Recent data
Gini coefficient (2003) -Poverty, per cent of population*** (2003) --
* GNP per capita, Atlas method (current US dollars) ** Individuals in households with gross per capita monthly income of less than 75 roubles *** Percent of population with expenditures below $ 2.15 (PPP) per day Sources: Pomfret, Anderson (2001), World Bank (2005a and 2005b)
years of economic transition show that the most successful economic regions are those with or in the vicinity of large urban agglomerations, and especially capital cities. In fact, residence in a capital city is the most important positive determinant of high living standards in all Central Asian countries (Table 2), while poverty rates in rural regions are significantly higher.
Figure 1. Poverty rates in Kyrgyzstan
(according to a $2.15 PPP/day poverty line)
Bishkek (50-59 per cent) Talas Jalal-Abad Chuy Ysyk-Kol Naryn
turing. Their social responsibilities were often transferred to local governments that did not have the financial or human resources to discharge them. The rural poor often lack formal property rights (in terms of housing, land and other assets), without which they cannot easily borrow money or engage in entrepreneurial activities. Access to piped and running water, heat, healthcare and kindergartens in rural areas has therefore declined and the quality deteriorated (see Table 2). All of this reduced living standards in rural areas. More than 60 per cent of Central Asias poor live in rural areas. (In Kyrgyzstan, Tajikistan and Uzbekistan, the share is between 72 and 76 per cent). The highest poverty rates are observed in mountainous areas which are also prone to flooding, landslides and other natural disasters. In Kyrgyzstan, differences in poverty rates between the richest Chuy region (the province surrounding the capital, Bishkek) and the poorest region (mountainous Naryn) exceed 50 percentage points (Figure 1). In Uzbekistan, the regional disparity in poverty rates between Tashkent city and the Syrdarya region exceeds 65 percentage points. The spatial variation of poverty rates in Central Asia (Figure 2) shows lower levels of poverty in capital cities and central regions and much higher poverty levels in
40-49 per cent 70-79 per cent 80-89 per cent 90-100 per cent
The root causes of high rural poverty lie in the largescale collective and state farms that dominated socioeconomic life in rural Central Asia during the Soviet period. In addition to agriculture and food products, these farms provided such social services as schools, health services and housing. Following independence, many of these farms collapsed or underwent dramatic restruc-
Table 2. Differences within countries Poverty rate $PPP 2.15/ day (per cent, 2003) Household access to water (per cent, 2003)
Other urban
14% 68% 73% -43%
Rural
31% 77% 76% -55%
Capital
100% 87% 100% -100%
Other Urban
96% 97% 93% -90%
Rural
87% 77% 56% -60%
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KAZAKHSTAN
UZBEKISTAN TURKMENISTAN
remote border areas. This, together with regional clustering of ethnic minorities in Central Asia, suggests a strong link between spatial distribution of poverty and ethnicity. Capitals and large urban agglomerations are typically populated by large Russian (and other European) communities, as well as by the wealthier members of these countries titular nationalitiesgroups with relatively high levels of human capital. The poor rural and border areas, by contrast, are more likely to be home to non-Russian (or European) ethnic minorities. These patterns of ethnicity and poverty, combined with the presence of extra-territorial enclaves in most Central Asian republics, leave much scope for disruption and conflict.
Reductions in regional disparities in Central Asia could improve regional stability, human security and overall development prospects in Central Asia. Although responsibilities for equalizing regional disparities and ensuring balanced development within these countries must rest with their governments, reducing high poverty levels in border areas requires cooperation between neighbouring states. As indicated in UNDPs Central Asia Human Development Report,1 regional cooperation, open borders, and the free movement of goods and people are essential for poverty reduction and development in Central Asia. Jacek Cukrowski is regional adviser on the Millennium Development Goals, based in UNDPs Bratislava Regional Centre. (jacek.cukrowski@undp.org)
1. Bringing down barriers: Regional Cooperation for human development and human security. Central Asia Human Development Report. UNDP RBEC Bratislava Regional Centre, Bratislava, 2005. Pomfret, R., and Anderson K., (2001) Economic Development Strategies in Central Asia since 1991. Asian Studies Review, Vol 25, No.2, pp. 185-200. World Bank (2005a) Growth, Poverty and Inequality. Eastern and the Former Soviet Union. World Bank, Washington D.C., 2005. World Bank (2005b) World Development Indicators 2005, World Bank, Washington D.C., 2005.
The Millennium Development Goals (MDGs) and Poverty Reduction Strategy Papers (PRSPs) discussion processes have provided a new focus for opening up the poverty debate in Uzbekistan. In the 1990s, poverty was not officially discussed or recognized as a problem. Since then the government, with support from UNDP and other international development partners, has become more actively engaged in global efforts to reduce poverty. In 2006, the government produced its first national MDG Report. At present, UNDP is taking the lead in coordinating work with the government and other stakeholders in formulating the countrys first full PRSP, while also supporting macroeoconomic and sectoral studies, as well as projects aimed at focusing MDGs at the regional level, and using them as a basis for the formulation of both regional and, more recently, areabased development strategies. The profile of poverty in Uzbekistan It is estimated that 27.5 per cent of the population or 6.8 million people were living below the poverty line in
2001 and that 9 per cent were living in extreme poverty.1 Within the framework of the PRSP, the government has updated the poverty estimates for 2003 using the same methodology, and estimates that the overall level of poverty fell slightly to 26.2 per cent in 2003. The Household Budget Survey (HBS) results suggest that around 70 per cent of the poor population lives in rural areas. However, other surveys have also suggested that the poverty risk is high for residents of small towns, where employment opportunities have decreased (due to, for example, the non-functioning of large employers), and where the access to land is more limited.2 In 2001, households with an unemployed head of household were more likely to be poor, but over 50 per cent of the poor live in households where the head is actually employed. This suggests that poverty risk is not just linked to unemployment, but also to underemployment and low wages. Low salaries in the public sector (where wages are 60 per cent of the national average) and agriculture (50 per cent of the national average) contribute to poverty among the employed. Poorer households were larger than average, and had both more children (four or more) and adults. The Gini coefficient for Uzbekistan is estimated at 0.353 and has decreased since the mid 1990s. This indicates that, as in other countries in the region, there are aver-
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Recent trends in growth, poverty, and inequality Armenias overall economic performance in recent years has been outstanding, with real GDP growing on average at more than 10 per cent annually since 2000. Significant progress has been made in reducing absolute income poverty: poverty incidence vis--vis the national poverty line (which is nearly $ 4 per day per person in purchasing power parity terms) dropped from 55 per cent in 1999 to 35 per cent in 2004. Progress in terms of reducing food poverty is particularly impressive: the incidence of food poverty fell to around 6 per cent in 2004 from 22 per cent in 1999.
Poverty reduction in Armenia has resulted not only from rapid economic growth, but also from reductions in income inequality. In less than five years, Armenias Gini coefficient (for household incomes) is measured to have dropped from 0.6 to 0.4. This is an impressive trend, especially since very few developing countries have succeeded in reducing income inequality during periods of double-digit economic growth. Unfortunately, concerns about the quality of Armenias household survey data strongly suggest that the reported declines in inequality are exaggerated. Possible problems in income distribution statistics Estimates of income equality come from household survey data conducted by Armenias National Statistical service. A comparison of data from 1999 and 2004 household surveys with national account data for those
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Cheickna Diawara
Tajikistans transition from a centrally planned to a market economy coincided with the countrys 1992-1997 civil war, and the fierce political, social and economic shocks of the Soviet break-up. Industrial complexes,
roads, power plants, universities and research centres, water and sanitation systems had been maintained with technical and financial support from Moscow. The expensive and collapsing Soviet-made infrastructure subsequently proved difficult to maintain, and many of the skilled workers needed to service it emigrated. In rural areas, much basic social infrastructure and many income sources were linked to the collective farms or other Soviet-era institutions that did not survive the turbulence of the 1990s. By the late 1990s, Tajikistan (and
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Cheickna Diawara is the National Development Strategy /Poverty Reduction Strategy team leader at the UNDP office in Tajikistan. Cheickna.Diawara@undp.org
1. See http://www.undp.tj/home/MDG_NA_Full_Eng.pdf 2. PRSPs ideally align donor assistance and national macroeconomic and social policy frameworks with the imperatives of poverty reduction, during a 3-5 year time period. For more on Tajikistans PRSP, see www.imf.org/external/pubs/ft/scr/2006/cr0601.pdf.
Child poverty: have we learned from the 1990s? During the 1990s, the region saw a strong emphasis on radical market policies and moves to privatize public
goods and utilities. Social reforms tended to be neglected. The architects of transition, preoccupied with pressing problems on the economic and political fronts, viewed social costs as temporary or at least reversible. Children paid the price of that neglect, with sharp increases in poverty and unprecedented reversals in social indicators affecting children. Since 2000, and the return of economic growth, the situation of children in the region has improved and there is a sense that poverty among children is a thing of the past. There is a risk, however, that in the economic upswing, benefits for children will be assumed rather than identified, and that once again children will find themselves missing out.
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Overall popualtion and children living under PPP $2.15 / day 2002-2003 (per cent)
all persons children
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Bo sn ia
an d
There is no single policy action that alone will bring about reductions in poverty and deprivation among children. What is needed is a concerted mix of measures that address the adverse conditions that children experience, especially early in life. These include tackling low wages, and ensuring access to an agreed set of quality basic services. State support to the family ensuring family and maternity benefits are adequate to protect families from dire poverty need to be part of such a package. Interventions need to be linked to systemic reform of the social sectors. Data collection that can monitor different dimensions of deprivation among children needs to guide policy. The real battlefield is that of ideas. With economic recovery, there is a need for a fresh debate on policies for children, what the data is saying, and where investments for the future can be best made. Without such renewed discussion and dialogue, the risk of a further backsliding in social achievements in the region should not be discounted. The costs of inaction are high. Gordon Alexander (galexander@unicef.org) and Petra Hoelscher (phoelscher@unicef.org) work for the UNICEF Regional Office for CEE, CIS and the Baltics in Geneva.
1. Trends in International Maths and Science Study. Cornia, Giovanna Andrea ' The Case for a pro child/ pro youth growth and social policy in the European Economies in Transition' mimeo 2006. Ovcharova, L.N. and Popova, D.O. Child Poverty in the Russian Federation . Alarming Trends and Policy Options 2005 Independent Institute of Economic Policy, Moscow. Social Monitor 2006 Understanding Child Poverty in SEE and CIS Countries UNICEF Innocenti Research Centre, Florence, October 2006. Understanding the Dynamics of Poverty and Development Risks of Children in Romania 2005 Institute for Quality of Life, Department of Sociology, University of Bucharest. World Bank 2005 Growth, Poverty and Inequality in Eastern Europe and the Former Soviet Union. Hoelscher P 2006 I want us to be a family again Impact of migration on children in the CEE/CIS countries UNICEF Regional Office for CEE/CIS Social and Economic Policy for Children Discussion Paper #5, Geneva
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FORTHCOMING CONFERENCES
Sub-Regional Workshop on the Anti-Corruption Practitioners Network, Skopje, 21 22 November 2006 The workshop will gather anti-corruption practitioners in Eastern European and CIS countries and inform them about the newly created Anti-Corruption Practitioners Network (ACPN) and the related ACPN website. Members will be able to share information and practical experiences, look for solutions to similar problems in different countries and solicit advice on specific topics. Contact: francesco.checchi@undp.org Regional Workshop on Social Enterprises in CEE and the CIS, Brussels, December 11th and 12th, 2006.The UNDP Bratislava Regional Center (UNDP-BRC) together with the EMES European Research Network will convene this workshop on completion of an ambitious project entitled Study on Promoting the Role of Social Enterprises in CEE and the CIS. Focus is on the capacity of social enterprise to encounter an unmet demand through the production of a spectrum of social and community services. Attention is paid to their capacity to generate new employment in the sectors where they specifically operate, and through the integration of disadvantaged workers. The aim on the one hand is to share the findings of the studies and discuss the practices that promote the role of social enterprises in the target countries, and on the other hand, to identify follow-up activities and commitments. For more information, contact Geoff Prewitt geoff.prewitt@undp.org. Ensuring border security in the context of modern challenges and threats to the system of international security 28-30 November, Minsk. Part of the EU/UNDP joint programme Enhancing Border Management in the Republic of Belarus (BOMBEL). The conference examines the role of border security in international security and the tasks facing the border protection agencies in the changing world. Contact: Anna Chernyshova anna.chernyshova@undp.org. The next issue of Development and Transition will focus on Conflict and post-conflict societies. The editors welcome contributions. If you wish to submit an article please follow the guidelines at www.developmentandtransition.net
E d i t o r : James Hughes: j.hughes@lse.ac.uk E x e c u t i v e E d i t o r : Ben Slay D e p u t y E d i t o r Gwendolyn Sasse, Managing Editor Horatio Mortimer Advisory Board : Nick Barr, Willem Buiter (chair), Stanislaw Gomulka, Mary Kaldor, Dominic Lieven, Margot Light, Kate Mortimer
Development & Transition is published by the United Nations Development Programme and the London School of Economics and Political Science www.developmentandtransition.net
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