WORLD FAMILY SUMMIT +7

The impact of the crisis: How the international economic and financial crisis has impacted families at the local level

Wanda Engel December 6, 2011

Types of Crises

Idiosyncratic: within the family environment, the level of vulnerability increases due to:

• Diseases• Natural catastrophes• Unemployment of adults

Systemic: caused by economic shocks• 1930: Great Depression• 1994/95: Mexico• 1997/98: Asian crisis• 2008/9: Global Financial Crisis

The crisis as a multidimensional phenomenon

Economic DevelopmentEconomic Development

Areas Affected: Economic Development

• Poverty and extreme poverty• Informal economy (without Social Security coverage)• Youth unemployment• Infant labor• Increase in food and energy prices• Reduction in remittances

Affect the conditions needed for sustainable development

Source: Harper,C. and Jones, N. Impact of Economic Crises on Child Well-Being

Increase in underemployment and unemploymentDrop in the net creation of jobs - 2009

* Report “The Brazilian Economy in Perspective” - May/July 2011 edition

Increase in underemployment and unemploymentBehavior in the balance of jobs – 2007-2009

 Source: Global Financial Crisis: social impacts and impacts on the labor market, 2009.

The crisis as a multidimensional phenomenon

Human Development

Human Development

Economic DevelopmentEconomic Development

Areas Affected: Human Development

Health:• Hunger/malnutrition• Suicide• Heart diseases• Alcohol consumption and hepatic cirrhosis• Mental diseases

Education: •Movement from private schools to public schools•School Exodus: boys drop out to work and girls drop out to take care of brothers

Source: Harper, C. and Jones, N. Impact of Economic Crises on Child Well-Being

Human Development Impacts – a few signals(WB/IMF 2010)

Human indicators drop more rapidly during crises but improve in subsequent growth periods.

2008 – 2010 Period

The crisis as a multidimensional phenomenon

Human Development

Human Development

Social Development

Social Development

Economic DevelopmentEconomic Development

Society• Violence and crimes• Social fragmentation• Political instability• Xenophobia• Terrorism

Halt social progressReduce social cohesion

Areas Affected: Social Development

Family• Family stress• Divorces• Migration to work• Infant exploitation• Violence against women and children

Decline of Social CapitalStagnation of the GINI Index 2008–2009

* Report “The Brazilian Economy in Perspective” - May/July 2011 edition

The crisis as a multidimensional phenomenon

Social ProtectionSocial Protection

Human Development

Human Development

Social Development

Social Development

Economic DevelopmentEconomic Development

Social Protection

Concept

Public intervention with the objective of helping individuals, families and communities manage crisis situations (structural or idiosyncratic) and

offer basic conditions to those submitted to extreme poverty.

Social Protection

Poverty Line

Social Protection Networks: Objectives

Prevent the loss of:• Human capital• Social capital• Economic assets

Mitigate:• Social Security• Emergency aid

Overcome:•Subsidies•Transfers

Types of Intervention

Social Security Emergency Aid Subsidies Benefits

• Unemployment insurance

• Agriculture production insurance

• Housing aid

• Helthcare aid

• Transportation vouchers

• Meal vouchers

• Basic food basket

• Work front

• Subsidized products

• Subsidized services

• Benefits

• Conditional cash transfer programs

Key Challenges

The efficiency, efficacy and effectiveness and integration challenge: • Partnership: civil society (volunteering) • Social control against fraud, error and corruption

Dilemma: crisis vs. social investment

Double challenge: mitigate impacts and protect against future human and social capital losses

Lack of fiscal sustainability risk

Need for a universal and permanent Social Protection Network

Conditions

The crisis as a multidimensional phenomenon

Social Protection NetworkSocial Protection Network

Human Development

Human Development

Social Development

Social Development

Economic DevelopmentEconomic Development

Human Development

Documentation

HousingLand ownership regularization

CreditUrban and living improvements

EducationAccess to different levels of regular education

Adult literacySupplementary educationComplementary activities

CultureAccess to cultural assets

Support to different forms of expression

HealthcareSanitation / water

Family healthImprovement of environmental conditions

SportsAccess to sporting equipment

Sports schoolsSports for youngsters

ConditionsSocial Protection NetworkSocial Protection Network

Human Development

Human Development

Social Development

Social Development

Economic DevelopmentEconomic Development

The crisis as a multidimensional phenomenon

Capabilities

The main economic development proposals

• Subsidy and/or control over food prices

• Flexibilize the labor market

• Encourage the domestic (family and country) production of food and offer technical support for boosting productivity (EMBRAPA)

• Unemployment aid

• Public employment (workfare)

• Changes in the energy grid

• Support towards micro-businesses

ConditionsSocial ProtectionSocial Protection

Human Development

Human Development

Social Development

Social Development

Economic DevelopmentEconomic Development

The crisis as a multidimensional phenomenon

Capabilities

In order to manage a crisis (multidimensional), an intervention that utilizes an integral strategy is necessary.

Opportunities

A new proposal for facing crises:Cash Transfer Programs

Challenge:How to make them a more integral strategy?

Cash Transfer Programs(Fiszbein, Ringold and Srinivasan, 2011)

Impacts:Inject monetary funds in areas of extreme poverty, creating a consumer market and leveraging the economy.Help reduce the impacts of idiosyncratic and systemic shocks, including the potential effects on the human capital accumulation process in children.

Origin:Beneficiaries: families with childrenA long-term poverty reduction goal; not an answer to crises

Types: CCT and UTCDebates regarding the effectiveness of conditions.Monitoring of conditions could scare away the most vulnerable.

Summary of selected cash-transfers programmes and responses, 2008-09

Expanded coverageIncreased benefit amounts

Introduced new programmes

Philippines (4P) Mexico (Oportunidades) Indonesia (BLT)

Kenya (OVC-CT)Latvia (Guaranteed Minimum Income)

Pakistan (BISP)

Malawi (Mchinji)Kyrgyz Republic (Unified Monthly Benefit)

Senegal (Social Cash Transfer and Nutritional Security)

Brazil (Bolsa Família) Brazil (Bolsa Família)El Salvador (Comunidades Solidarias Rurales)

Mexico (Oportunidades) Guatemala (MIFAPRO)

Latvia (Guaranteed Minimum Income)

Kyrgyz Republic (Unified Monthly Benefit)

Familias en Acción (Colombia); Programa de Asignación Familiar - PRAF (Honduras); Programa de Avance hacia la Educación y la Salud (Jamaica); Plan Familias (Argentina); Chile Solidario (Chile)

Cash Transfer Programs(Fiszbein, Ringold and Srinivasan, 2011)

Limits:- These programs are an economic answer while the consequences of crisis are multidimensional- They should be one of the components within an integral human, social and economic development strategy

Prerequisites: - Administrative capacity - Information system (Census data, household data, indexes) - Mechanisms for payments

Focus Strategies: - Self- targeted: inexpensive and the easiest to expand (Brazil)- Geographic targeting- Target methodology: requires household visits, possesses quick-expansion difficulties in the crisis and removal of beneficiaries in the after crisis

Lessons Learned: - Countries that implemented CT programs as pilot projects had greater ease expanding them during the crisis

Four Generations of Cash Transfer Programs

 Type of TRCSocial

ProtectionHuman

DevelopmentEconomic

DevelopmentSocial

DevelopmentSpecific

Demands

Unconditioned Transfers

Minimum income

 Consumer

market 

Bank Branches (BB)

Conditioned Transfers

Minimum income

Healthcare and education as conditions

Consumer market

 

BBIntegrated Beneficiary Information

System (SIIB)

Conditioned transfer +

integral family development

programs

Minimum incomePriority

access to aid programs

Healthcare and education as

conditionsPriority access to education,

healthcare and housing programs

Priority access to training,

income generation, job market

inclusion and credit programs

Family strengthening

BBSIIB

Integrated Information System on

Programs and Services (SIIPS)

Promoter of families

Economic crises serve to remind

us that it is essential that people

be healthy, educated, have adequate

housing, be well fed and live in

a positive family and social environment

in order to be more productive and

qualified to contribute to society.