Models Of Social Protection In Africa

Published Date: 02 Nov 2017

5.1 Introduction

The term "labour market" in the sub-Saharan African (SSA) and developing world context, also for purposes of this project, is generally understood to include all kinds of non-formal, non-traditional and non-standard "workers" and work activities. Social Protection would also include policies and actions that enhance the capacity of all people, but notably the poor and vulnerable groups, to escape from poverty, or avoid falling into poverty, and better manage risks and shocks; and aim at providing a higher level of social security through access to health services and income security and facilitate access to essential services throughout active and inactive periods and periods of need throughout the lifecycle. [i] 

5.1.1 Models of Social Protection in Africa

Typified by a large agricultural sector and a high incidence of informality, sub-Saharan Africa shows a different evolution of social protection from other developing regions. The SSA context is dominated by mass poverty, limited reach of labour market regulations and the under-development of social insurance institutions. In this context, social protection programming in SSA in the last decade has tended to concentrate on mitigating the consequences of extreme poverty. Though social protection programming in Sub-Saharan Africa varies in structure and scope across countries, two models of social protection have been identified: the Southern Africa model; and the Middle Africa model. [ii] 

The Southern Africa model has evolved around category based grants for older people, and more recently children. The Southern Africa model is typically delivered by public agencies and is guided by legislation. Thus the connection between programme entitlements and citizenship rights is more apparent.

The Middle Africa model also has transfers at its core, but is more varied and aims to integrate the provision and utilisation of basic services. Even with pure transfer interventions, programme objectives tend to highlight health, schooling, and nutrition improvements. The programmes have a shorter time horizon, and are more likely to be designed as projects than government policies. Interventions are delivered through a variety of agencies including public organisations, NGOs, and private sector providers, the financing of programmes is largely by international donors, and the scale of programmes is significantly smaller. [iii] Domestic political support is less embedded and thus their sustainability is less certain.

Though there are signs of movement in Middle Africa towards the Southern African model (eg the significant national political commitment to the PSNP in Ethiopia; Ghana’s Livelihood Empowerment Against Poverty (LEAP) programme is being financed entirely via tax revenues), the above trends remain significant.

5.2 Labour market integration in SSA

5.2.1 Labour markets characteristics in SSA

Africa’s recent GDP growth has not created enough jobs to meet the needs of a fast-growing population. The private sector has been growing, but from too small a base and the public sector has reduced or cannot grow as fast as the population. The global economic crisis had a strong negative impact on employment in Africa. From 2008 to 2010, the number of ‘good jobs’ declined, while jobs in family agriculture and informal activities increased.

The structural problems that hinder the creation of good jobs vary. [iv] Employment creation is largely a problem of quality in low income countries (LICs) and of quantity in middle income countries (MICs). Many countries are still affected by macroeconomic policies and infrastructure weaknesses that create uncertainty or increase the cost of doing business, reducing incentives to start or expand businesses and thus create new jobs. Private sector development is further restricted by the lack of skilled workers, and inappropriate labour regulations and social insurance policies.

Policymakers in the low- and middle-income countries of SSA face a significant and pressing challenge to create more high-quality jobs. A large share of the labour force remains underemployed. The majority of the labour force in these countries is engaged in low-productivity activities in the urban/peri-urban informal sector, or in agriculture. Self-employment, or working within the extended family, often unpaid, is the working reality of many and earnings (cash or in kind) are too low to pull households out of poverty. Low labour participation rates, especially for women, and high underemployment [v] are issues of concern, while a growing number of youth are under/unemployed in many countries. Workers are vulnerable to abuse, poor working conditions, risk of exploitation, and lack of income protection, with the exception of a minority of formal sector workers. [vi] 

Despite economic growth in most SSA countries, lack of demand in the formal economy alongside increased subcontracting and the promotion of micro, small and medium enterprises has resulted in the continued engagement of the majority of working people in informal employment. [vii] Inadequate social protection, low average earnings, violations of labour rights, and unsafe working conditions is the reality for most of the working poor engaged in the informal economy, where women and young people are overrepresented. In sub-Saharan Africa, 80 per cent jobs in non-agricultural sectors are considered to be informal. Street hawking is often the most visible sign, but workers in small factories small-scale home production and casual agriculture and construction labourers can also be informal.

Wage employment in jobs without social protection and self-employment (own-account workers and employers of informal enterprises) are the two main categories of informal employment. Informal employment is often casual, irregular or seasonal implying frequent changes of workplaces and employers.

Informal employment is no longer considered a transitional phenomenon that economic growth itself would eliminate, and has even increased in some countries. The discourse on informality focuses now more on the situation vulnerability and poverty of informal workers than on the formalisation and taxation of informal enterprises. A better understanding of the opportunities and vulnerabilities of informal employment and the working poor is the starting point of addressing issues related to the informal economy. [viii] 

5.2.2 Labour market intervention options

Labour market interventions, consisting of both active and passive interventions, provide protection and support for those who are capable of gaining employment. (Passive) programmes such as unemployment insurance, income support and labour legislation changes, alleviate the financial needs of the unemployed but are not designed to improve their employability. Their implementation in SSA is limited to a small number of middle-income countries notably South Africa, Mauritius and Seychelles, due to the institutional context and to the dominance of informal employment, characterised by a lack of integration to social protection systems, low average earnings and productivity, violations of labour rights, and unsafe or difficult working conditions. [ix] 

Active labour market programmes (ALMPs) focus on increasing the access of unemployed workers to the labour market. ALMPs aim to enhance labour supply, increase labour demand and improve the functioning of the market. ALMPs are normally targeted at workers in poor families, particular groups experiencing labour disadvantages or social exclusion, and the long-term unemployed. Active labour market programmes activities to stimulate employment and productivity focus on:

Direct employment generation: includes the promotion of small and medium enterprises (more often informal), public works projects, and wage subsidies to increase labour demand;

Job Training: includes training or retraining for the unemployed to increase the quantity and quality of labour supply;

Employment services: include career counselling, placement assistance, job matching, labour exchanges.

Analysis by the World Bank and others of impact evaluations of ALMPs globally finds that in general they are more successful if the economy is growing and when interventions are well designed, properly targeted and linked to labour demand and real workplaces. Though ALMPs are becoming more popular in developing countries, there is caution that they are not a panacea for large-scale unemployment. [x] 

5.2.3 Labour market integration options for SSA countries

The interventions and strategies being implemented in SSA countries are characteristic of active labour market programmes (ALMPs). However, some of these interventions have been criticised for being standalone and not directly linked to achieving long-term involvement in the labour market or graduation out of welfare dependency. A small number of hybrid programmes (social assistance combined with labour market initiatives) do exist to promote graduation into employment and contributory social security.

ALMP support to the urban and rural working-age population in SSA tends to focus on strengthening the income-generating capacity of people who are actively engaged in pursuing a livelihood but who remain poor and vulnerable, through public works, micro/small enterprise, or livelihood strengthening assistance to smallholder farmers (see 5.3. Complementary social protection measures include social assistance to people who are chronically poor; and social grants to adults who are unable to work due to illness or disability. The following outcomes of ALMPs in SSA have been recorded, while noting that there is a need for greater data capture and analysis in this area.

Micro-enterprise programmes that provide a combination of mentoring, business counselling, and links to finance are more effective in assisting unemployed workers to start their own business than stand-alone (eg access to finance) interventions. Analysis by the World Bank reveals positive effects on intermediate outcomes such as business knowledge and practices, whereas final outcomes such as earnings and profits take more time to materialise and are often not realised by the end of the programme life. Programmes implemented in lower-income countries with a large agriculture sector, and low education levels appear to be more successful. Social assistance recipients, less educated, and female beneficiaries appear to benefit more from comprehensive programmes that combine training and financing. This is however a labour intensive package and often programme budgets and/or time frames do not allow for the implementation of a comprehensive approach. [xi] Labour market conditions, business environment, demographic structure, overall education level, and quality of service providers affect the effectiveness of the programmes. [xii] 

Attention must be paid to the real income and seasonality factors for income-generation interventions to improve the real income situation of especially micro and small entrepreneurs. An aggressive rainy season can wipe out an enterprise infrastructure and savings accrued in the dry season, for example. Further, the low education levels of many micro and small entrepreneurs (especially women) can expose them to vulnerabilities in managing expenditure fluctuation as against income which can result in negative real income from their business activity. [xiii] 

Informal entrepreneurs struggle with very high levels of risk and lack of credit and savings schemes. Governments can do more to remove obstacles to small firms in the informal economy, for example through business development services, access to finance, as well as transport and infrastructure improvements, helping them to grow and create decent jobs. Larger formal firms can be supported to grow and become more competitive through improved infrastructure and access to finance.

Standalone technical training programmes increase the possibility of business expansion for higher-skilled beneficiaries and existing micro entrepreneurs and have larger impacts in countries that are urbanizing. In lower-income economies, more young workers go through informal apprenticeships which need to be generally strengthened and better combined with formal education. [xiv] Technical training programmes for youth in low-income countries are almost always unsuccessful in improving labour market outcomes unless the economy is also growing and the training has aligned with that growth. Evaluations in Latin America find positive impacts for programmes for young people that integrate training with remedial education, job search assistance, social services and, increasingly, life skills. [xv] 

Programmes in middle-income countries work best with on-the-job training and active employer involvement. Even in this context, training tends to benefit in terms of higher employment rates but not necessarily in terms of immediate higher earnings. According to the African Economic Outlook 2012, lack of training is still secondary to lack of demand in terms of obstacles to youth employment in African labour markets, and training becomes more important only as countries grow richer. Technical training is resource heavy and requires closer cooperation with the private sector to ensure quality and relevance. [xvi] 

Africa has the highest share of social science university graduates of any world region and the lowest share of engineers. Although agriculture is Africa’s comparative advantage, only 2% of students are studying it. These mismatches at tertiary level have to be addressed. Basic education systems also have to become more linked to labour market needs. [xvii] 

Public works programmes have been implemented in SSA since the 1960s, originally as food-for-work and with cash-for-work and inputs-for-work being added more recently. Public works programmes offer low-wage, short-term employment in construction, rural development and community services. Positive impacts include creation of useful infrastructure assets (e.g. rural roads, irrigation); transfer of skills; promoting the dignity of work over the indignity of hand-outs; and access for women through gender quotas. Ethiopia has the only employment guarantee programme in sub-Saharan Africa and the second largest public works scheme and has been running such programmes since the early 1990’s. The current Public Safety Net Programme allows vulnerable households to participate in the programme for up to five years before they are graduated. Programme participation is officially based on impact related reduced need, but tends in practice to be time limited. [xviii] The works are focused on infrastructure for the agriculture sector, as part of a broader food security programme. The consistency of participation over the five years is seen to have contributed to strengthen social assets that take longer to build.

Increasingly, the notion of a rights based approach is being introduced to public works programming. The PSNP in Ethiopia has features that address rights at work, though not rights to work, since beneficiary selection is community facilitated and based on need as opposed to right. [xix] Though still with some limitations, a charter of rights and responsibilities has been introduced for PSNP participants, stipulating rights to income and timely payment. Importantly, the charter is accompanied by mechanisms and institutions to support the realisation of their rights to client cards that formally identify participants; formal appeals processes to which rights violations can be addressed; and a Community Food Security Task Force (CFSTF), through which complaints can be raised. The charter gives balance to the rights of the participants to a meaningful participation in the programme and the management to ensure efficient implementation. [xx] However it has been noted that gender dynamics in participant households can greatly affect the meaningful realisation of these rights for both women and men and more can be done to address this gender gap. [xxi] 

The Indian Government introduced a rights based approach to public works programming in 2005 when it enacted the National Rural Employment Guarantee Act (NREGA), consolidating pre-existing public works programmes. [xxii] The NREGA aims to provide 100 days of work per year to every poor household with adult members who volunteer to do unskilled manual work. [xxiii] Strengthening the livelihood resources base of the rural poor through the creation of durable assets is an important characteristic of the scheme. Women are targeted to make up at least one-third of the beneficiaries. [xxiv] Legislation provides for a wage rate fixed by the State Government under the Minimum Wages Act, 1948 for agricultural labourers [xxv] Beneficiaries have some medical cover for work injuries, [xxvi] death benefit entitlements and safe working conditions are expected. [xxvii] Some analysis has confirmed the income stabilizing role of the rights based public works programme, especially relating to the reduction of uncertainty associated with participation where shocks can otherwise result in short-term and longer-term impoverishment. [xxviii] 

However, some evaluations have found that the assets created in public works programmes are low quality; the ‘self-targeting’ is inefficient; the skills transferred are not adequate to facilitate labour market entry; and gender quotas can impose additional labour burdens on women. Access to public works employment in SSA is typically unpredictable, and short-term (with the exception of Ethiopia), and so is not a safety net that allows participants to plan for predictable streams of income. [xxix] In short, public works programmes are found to be effective as a short-term safety net but do not typically improve participants’ future labour market prospects.

The effectiveness of public works programmes can be enhanced through context- and target group-specific design linkages, including training, micro finance, provision of public goods, and consistency of availability (guarantee). Some public works programmes have an explicit training component to enable workers to acquire skills that will help them transition into more regular employment. [xxx] Youth employed as manual labourers on a labour-intensive roads project under the Expanded Public Works Programme (EPWP) in South Africa for example, are offered training in unrelated skills such as bricklaying, if there is identified demand in the labour market. However, the number of training days is only 10-30, which limits the usefulness of the training to sub-skills for youth who are already employable in that technical area.

Workers may also be encouraged to save some of their earnings, which is more effective if obligatory since the target groups are the lowest-income populations. Participants are supported to use the savings to establish an income-generating activity (IGA) through short business training and linkages to other micro-credit institutions. Such interventions have been carried out in Malawi and Sierra Leone, for example. However, longer-term studies have questioned whether participants continue with the IGA beyond the life of the programme. These training and savings initiatives can be more successful for the participants if designed as entry points to longer-term ALMPs in technical or business training and access to finance. [xxxi] 

The provision or maintenance of public goods that enhance income generation is a core feature of most public works programmes. In the employment guarantee programmes in India and Ethiopia, the emphasis is on activities that enhance agricultural productivity and generate long-term income gains. Activities in Ethiopia focus on water conservation and land rehabilitation activities that improve the productivity and income of poor agricultural communities. Participants are also linked to other social protection/human development opportunities through education and health facilities.

In middle-income countries the type of public goods includes the provision of social services. In South Africa, the EPWP targets four sectors identified as having the greatest impact on employment creation, namely: (i) infrastructure; (ii) environment; (iii) social, including home-based care workers and early childhood development workers; (iv) economic, such as developing small businesses and cooperatives, and providing work experience for small enterprise incubation programmes. [xxxii] 

Wage and employment subsidies do not appear to have a positive impact on the employment prospects or earning potential of participants in low- and middle-income countries. [xxxiii] Targeting and monitoring can improve impact but at the cost of reducing take-up rates. More common in SSA is the form of subsidised internship programmes for university graduates, for example in Mali and Nigeria. There is little information on the impact of these programmes on the long-term employability of the graduates, but some do report improved social capital in the short term.

Employment services are a cost-effective intervention for improving employment prospects and earnings potential. However, the services are of limited use in situations where structural unemployment is high, where there is a lack of demand for labour, or where most labour market transactions are informal, as is the case in most SSA countries.

Young workers, urban and rural, face specific constraints in gaining entry to the labour market. Young people lack experience, as well as social, financial and physical capital in comparison to older workers. [xxxiv] Young people in vulnerable employment and working poverty are the large majority in SSA countries. Informal enterprises and the rural farm and non-farm sectors continue to absorb the most significant numbers of young workers in low-income economies, where young people cannot ‘afford’ unemployment and will opt for a low-paying job. Many of these young workers are poor despite being employed. [xxxv] . Since the informal economy is characterised by a lack of adequate social protection, low average earnings and productivity, violations of labour rights, and unsafe or difficult working conditions, these young people are more exposed to these risks. [xxxvi] In upper middle-income countries, more youth are considered to be unemployed, discouraged or inactive than working, and the informal sector is constrained by lower demand and more government. Labour market integration often takes longer for educated youth in middle-income economies because of a lack of anticipated formal employment jobs and because of skills mismatches between what education provides and what employers need. More attention is required at all stages of the education system in these countries to guide young people on navigating labour markets. [xxxvii] 

Many African countries have implemented ALMPs targeting young people through vocational training, apprenticeships, micro business start-up, and employer subsidies. However, these interventions have typically achieved some limited success, either because they are poorly designed, under-funded, or they do not adequately address the gaps between employability of the youth and demands of the SSA labour market. [xxxviii] Youth employment interventions suffer from a general lack of knowledge on what works well and this is also linked to the lack of employment data available for Africa. A lack of intervention agency coordination often leads to a disjointed or duplicated approach. [xxxix] 

Despite these challenges, the long-term perspective is better. African youth are today better educated than any previous generation and the population growth rate is beginning to decline, opening space for the demographic dividend. Rapid urbanisation, often driven by youth, is producing higher work force densities that offer opportunities for the development of industrial clusters and is increasing demand for agricultural products and the informal economy is producing entrepreneurial talent that can foster job creation if adequately supported. Meanwhile, the African Economic Outlook 2012 suggests that greater hiring and firing flexibility could promote employment creation through greater labour market flexibility in the formal economy and the decoupling of social protection from (formal) employment status promoteprotection of vulnerable youth in the informal economy. [xl] 

Table 3 below outlines the essential conditions and their potential outcomes for active labour market programmes in sub-Saharan Africa.

Table 3: ALMP conditions and outcomes for SSA

ALMP intervention

Low-/Middle-Income SSA Economies

Conditions

Potential outcomes

Micro-enterprise

Availability of business development services and financial products;

Shock (eg seasonal) coping capacity of participants;

Design accounts for relationship of time to income-generating capacity improvements;

Donor willingness to commit to comprehensive model.

Combination of mentoring, business counselling, and links to finance are more effective in assisting unemployed workers to start their own business;

More successful in lower income countries with large agriculture sector and lower education levels;

Final outcomes (increased earnings and profit) take longer, improved business knowledge and practice possible in shorter term.

Training

Work best with on the-job training and active employer involvement;

Aligned to economic growth/increased labour demand;

Quality and duration of training match technical requirements.

Positive impacts for LIC programmes that integrate training with remedial education, job search assistance, life skills and social services;

Technical training in MICs can lead to higher employment rates but not immediately higher earnings.

Public works programmes

Excess low-skilled labour;

Quality of design linkages and of public outputs.

Effective as a short-term safety net;

Links to human development and social protection;

Public goods can improve income-generating potential;

Can contribute to employability and act as entry point to other ALMPs.

Wage and employment subsidies

Formal sector demand for labour and willingness to engage;

Targeting and monitoring can improve impact but at the cost of reducing take-up rates.

Subsidised internship programmes for university and vocational graduates provide entry level opportunities and can improve employability.

Employment services

Existing demand for labour;

Low structural unemployment; Formal labour market.

Cost-effective intervention for improving employment prospects and earnings potential for formal employment.

In summary, it has been observed that the larger informal labour markets and weaker capacity to implement ALMPs in low-income SSA countries (LIC) tends to limit what some programmes can achieve in creating formal employment or increasing income. [xli] In low-income countries, labour market intervention design cannot assume basic levels of education and have to be tailored accordingly. Public works and micro-enterprise programmes are more effective with lower education populations for example, while medium size enterprise development is more successful with more educated target groups. [xlii] Public works programmes can contribute to income generation beyond the short life of the intervention through the provision of strategically planned public assets, consistency of engagement, and some skill transfer. [xliii] 

Technical training is more effective in middle-income economies (MIC) where there is demand from formal sectors for certified qualifications. Mismatch of training to labour market demand is common however and training planning has to be updated on an ongoing basis to respond to developments in specific sectors. Employment services become increasingly important when the economy is growing and can contribute to, but also depend on, alignment of skill training and market demand. Support to enterprise development in MICs has greater potential to create jobs beyond income generation for the entrepreneurs themselves. [xliv] 

Most young people pass through the informal economy in both LICs and MICs in their early working lives, though young people in LICs are most likely to remain in the informal economy throughout their working lives, exposing them to associated social protection deficits. [xlv] 

More tracking of post-programme outcomes of ALMPs in SSA countries is required to determine if benefits for participants over the long-term; to identify whether these programmes are cost-effective; and to understand the specific context and design features that result in positive outcomes for specific groups. [xlvi] 

ALMP desired outcomes have to match intervention inputs, including, and most crucially, the time available for implementation. Governments are often constrained in the time available for labour market interventions either due to the shocks or emergency being responded to, or by donor conditions. Emergency response interventions will typically have a duration of 12-18 months, which is not enough time to fully train in a new skill area or to support a start-up business to stability. Thus outcomes of time limited/emergency response interventions are more likely to include increased employability, some start-up experience gained and asset/cash transfer, than achieving secure income generation. If ALMPs are going to be an economically useful policy, it is important that SSA governments introduce interventions on the basis of lessons learned on what works domestically and in similar countries, and that they incorporate results-based monitoring and evaluation.