SOCIAL AIDS AND WILLINGNESS TO WORK: DEVELOPING A SOCIAL AID FRAMEWORK

WITHIN THE CONTEXT OF ISLAM

Omer Faruk Tekdogan and Mehmet Tarik Eraslan

Countries have designed and applied policies, primarily economic and social, in order
to achieve their targets in this field.
There are generally two key objectives for social assistance, that is, to prevent extreme
hardship among those with no other resources and to prevent social marginalization
and exclusion.

1 l Fitri Hastuti, SE, MS.i, PhD – Prodi Ekonomi Islam FEB Unpad
Social assistance or social aids are financial help for people in need that is paid through
government tax incomes.
To prevent extreme hardship, most OECD countries implement transfer programs and
apply a low-income criterion as a primary condition. With this financial support, an
acceptable standard of living for low-income families is ensured.

Types of social assistance programs

• Social services and welfare support: this assistance is given to highly vulnerable
groups such as the mentally or physically disabled, children without families, drug
addicts etc.

2 l Fitri Hastuti, SE, MS.i, PhD – Prodi Ekonomi Islam FEB Unpad
• Assistance based on income tests: this kind of assistance is given to all individuals
who are below a certain income level. Even if the individual has some kind of low-level
income, this type of assistance focuses on the determined threshold and is given to all
those below it.
• Cash or in-kind transfers: examples of this kind of assistance are food stamps and
family allowances. This type of aid is towards regular or extraordinary needs. It may
be giving out stamps which enables them to be used just for food or in some cases
housing benefits which supply the basic housing needs of a citizen.
• Temporary subsidies: lifeline support, food assistance in times of crises etc. are good
examples of this kind of assistance.
Unemployment benefits are typically received during an initial phase of
unemployment, such as unemployment insurance in most countries.
3 l Fitri Hastuti, SE, MS.i, PhD – Prodi Ekonomi Islam FEB Unpad
Lessons learned from past experiences
Developed countries have initiated new social assistance programs in order to
reconnect people to the labor market while obtaining social assistance.
The programs aim to decrease the dependencies towards social assistance and
direct them towards the labor market and the number of people who are enrolled
for these financial assistance tools would be decreased.
Lemieux and Milligan (2008) found that there was negative effect of social benefits on
employment, those transfers can affect behavioral influences, such as changing family
structure or living arrangements.
Therefore, some part of the unemployment rates of some countries can be
explained by such generous benefits which have work disincentives.
4 l Fitri Hastuti, SE, MS.i, PhD – Prodi Ekonomi Islam FEB Unpad
Baumberg (2014) found that people struggling with the cost of living were more likely
to support the benefits system, whereas, people in working households did not favor
benefit claimants, whose claims are unfair and undeserving.
54% of the British public agreed that “most unemployed people could find a job
if they really wanted one”;
57% thought that “unemployment benefits are too high” and discourage people
from finding paid work;
77% argued that “large numbers of people” falsely claim benefits.
This is the problem of the individual’s choice between income and leisure.

5 l Fitri Hastuti, SE, MS.i, PhD – Prodi Ekonomi Islam FEB Unpad
 Leisure gives satisfaction directly and income, as a source of purchasing power,
gives satisfaction indirectly.
Every individual has different utility functions with their own preference levels of
consumption and leisure.
When social benefits are added, leisure becomes preferable at low wage rates.
Schneider and Uhlendorff (2005) argue that the ratio between wages and social
benefits positively affects the probability of a transition to employment for households
with a higher wage income than their social benefits.
They suggest workfare programs as an alternative to reduction of the social
assistance levels.

6 l Fitri Hastuti, SE, MS.i, PhD – Prodi Ekonomi Islam FEB Unpad
 Without creating a connection between social aid and employment, this will harm
the motivation of those people in the labor market who work very hard each day
in an unfavorable situation.
If poor people are put back into the labor force, this will increase productivity in the
nation hence stimulating economic development.
Children in poverty should be assisted especially in the areas of education and health.
These kinds of policies which invest in human capital are also an equal opportunity
chance for the young at the beginning of their lives.
Separating employment, education and health policies from social assistance
programs and not giving these policies the relevant importance and just focusing on
financial help may be a simpler approach but it does not serve well for the honor of
7 l Fitri Hastuti, SE, MS.i, PhD – Prodi Ekonomi Islam FEB Unpad
people and it does not do much for the communities’ peace and the development of
the country.
Social assistance and motivation to work
Poverty is an important sign that shows a part of society that cannot integrate itself to
the community and labor market.
Social policies should aim at these week points and try to develop certain tools in order
to fix the related problems.
Arslan (2014) examines the motivation of social assistance beneficiaries towards
working and found that 23% of social aid beneficiaries openly state that they would
seek the existing assistance even if a regular paid job in the formal labor market is
available.
8 l Fitri Hastuti, SE, MS.i, PhD – Prodi Ekonomi Islam FEB Unpad
Some reasons for state dependence in unemployment for working-age individuals,
and for these reasons, they will be unemployed again:
• Being without a job makes a worker’s skills and experience (“human capital”) less
valuable and they may lose their labor market value, and in turn, increase the
likelihood of future unemployment.
• If employers decide to hire potential employees on the basis of their past
unemployment, state dependence may arise.
• Unemployed people may lower their wage expectation with the passage of time and
accept poorer quality jobs that are more likely to be liquidated.

9 l Fitri Hastuti, SE, MS.i, PhD – Prodi Ekonomi Islam FEB Unpad
Most of the OIC countries is near the OECD average in social policy spending, excluding
or including health care expenditures. The closest countries to the OECD average are
Egypt, Turkey and Iran.
The main causes behind this difference between Western countries and Muslim
countries other than income levels is the fact that Muslim countries have a social and
family structure which supplies a safety net and voluntary organizations, whom also
take on a very important role, whereas Western countries choose to institutionalize
social assistance system led by the various states.
An Islamic prospect of social aid Islam orders some obligatory actions or recommends
some voluntary actions, such as zakah, sadaqa, waqf, in order to sustain social justice
and social solidarity within the society.

10 l Fitri Hastuti, SE, MS.i, PhD – Prodi Ekonomi Islam FEB Unpad
Islam does not approve of the action of a person who is healthy or rich or strong and
willing to take a share from poor people.
Some hadiths reported from Sunan Abu-Dawud quoted here:
Narrated Ubaydullah ibn Adl ibn al-Khiyar: two men informed me that they went
to the Prophet (pbuh) when he was at the Farewell Pilgrimage while he was
distributing the sadaqa and asked him for some of it. He looked us up and down,
and seeing that we were robust, he said: If you wish, I shall give you something,
but there is nothing spare in it for a rich man or for one who is strong and able to
earn a living.
Narrated Abdullah ibn Amr ibn al-’As: the Prophet (pbuh) said:

11 l Fitri Hastuti, SE, MS.i, PhD – Prodi Ekonomi Islam FEB Unpad
 Sadaqa may not be given to a rich man or to one who has strength and is sound
in limbs.
Narrated Ata ibn Yasar:
The Prophet (pbuh) said: Sadaqa may not be given to rich man, with the exception
of five classes: one who fights in Allah’s path, or who collects it, or a debtor, or a
man who buys it with his money, or a man who has a poor neighbour who has
been given sadaqa and gives a present to the rich man. (Sunan Abu-Dawud, Kitab
Al-Zakat, Hadith No: 1629–1631)
Today, many people declare that they are poor and needy and look for help. It became
a serious matter for zakah and sadaqa givers and for charity institutions to distinguish
the real poor from healthy and workable aid dependents.
12 l Fitri Hastuti, SE, MS.i, PhD – Prodi Ekonomi Islam FEB Unpad
Origins of zakah, sadaqa and waqf
Results listed below are confirming our arguments:
• Those who prayed to Allah and made an effort had a higher mean income than who
only prayed Allah and those who neither prayed nor made an effort.
• Those who believed poorness is their destiny therefore spent no effort and had less
mean income than those who refused that idea.
• Those who believed that resources were not sufficient therefore they cannot find a
job or work had less mean income than those who refused this idea.
• Those who seek for zakah had less mean income than those who never or seldom
seek zakah.
13 l Fitri Hastuti, SE, MS.i, PhD – Prodi Ekonomi Islam FEB Unpad
• Those who never seek sadaqa had higher mean income than those who sometimes
seek it.
• People who generally borrow an interest-free loan had higher income than the
others who seldom or never did it.
• The poor who seek assistance in the form of zakah, sadaqa and an interest-free loan
in investments and savings had higher income than those who spent them all.

14 l Fitri Hastuti, SE, MS.i, PhD – Prodi Ekonomi Islam FEB Unpad
Conclusion and some policy implications
Some policies to lead us to the efficient and righteous utilization of sources available
for the poor and needy.
First of all, individuals have to be encouraged to work in order to get over their
laziness. Laziness is a significant factor contributing to poverty, so we need to define
its causes.
Excess of wastefulness leads to lack of contentment. And lack of contentment
destroys enthusiasm for work; it causes laziness, opens the door to complaining
about life, and makes the dissatisfied person complain continuously.
Too much spending may lead to, through illegal means of finding money, higher
consumption and lower production. Lending more money for consumption
15 l Fitri Hastuti, SE, MS.i, PhD – Prodi Ekonomi Islam FEB Unpad
 causes less money to be left in the treasury that would otherwise be used for
productivity in the economy.
Secondly, Islamic countries have an advantage as they have zakah and waqf
foundations, which have been developed and institutionalized throughout history
with great contributions to social welfare.
Family-based and community based cooperation and traditional methods are
significant means for fighting against poverty in these countries.
Therefore, Islamic countries do not need to mimic western countries and try to
implement more state-oriented social aid policies. What has to be done is to
make government responsible for monitoring and regulating zakah and waqf
activities in their country, to ensure social aids are going to the right place just in
time. The most crucial point is the coordination of these parties.
16 l Fitri Hastuti, SE, MS.i, PhD – Prodi Ekonomi Islam FEB Unpad
 Combined with other policy implications, this would be a huge first step for
productive utilization of both government’s social assistance and zakah and waqf
resources.

17 l Fitri Hastuti, SE, MS.i, PhD – Prodi Ekonomi Islam FEB Unpad