Newsletter 6, February 2010
Theme: Informality and Work Based Social Protection

As part of a collaborative exercise with the Social Protection in Asia Network, a special plenary session - Labour Markets, Employment and Social Protection: Perspectives and Issues in South Asia was organized at the 51st Annual Conference of the Indian Society of Labour Economics (ISLE) at Punjabi University, Patiala, India on the 11-13 December 2009. In his presentation, Professor Rizwanul Islam pointed out that if one were to consider productive employment as the goal of development, it could be said that there has been a development failure in the countries of South Asia. This was explained using the dual economy model of Arthur Lewis, elaborating on the failure of South Asian countries in exhausting their surplus labour, and moreover by emphasizing the unemployment friendly nature of the manufacturing sector. Further, in the context of high proportion of workers in the informal economy, a large percentage of own account and self employed workers, was seen to prompt an evolution in the thinking on social protection, with a greater role being seen in the form of interventions such as labour market programmes of employment guarantee. Historically, public works programmes serve twin goals, creating employment directly, thereby serving as income transfers (safety nets), while simultaneously creating infrastructure, in both rural and possibly urban areas. However, in the formulation and implementation of such schemes the following were outlined as being necessary - a legal basis for the programme, universal coverage, sustainable funding deriving from the national budget and effectiveness and efficiency in delivery of benefits.

Other major observations emerging from the session included:

The Expert Group on the Estimation of Poverty (Tendulkar Committee), has reviewed the present methodology for measuring poverty in the country. The committee has recommended a new method where the present all-India urban poverty line is taken as the basis for estimating every other poverty line in the country. With the urban poverty line as the basis, the parity levels at the State-level for rural and urban areas are to be separately estimated using a typical purchasing power parity (PPP) method.

As a result of this, the new poverty lines for 2004-05 have given the new estimated head count ratios for 2004-05 as 41.8 per cent in rural areas (up from 28.3%) and 25.7 per cent in urban areas (unchanged). In turn, the total number of poor people in India has risen from about 403 million in 1993-94 to about 407 million in 2004-05. The overall estimate of poverty in India for 2004-05 has been revised to 37.2% (up from the earlier official estimate of 27.5%)

The major contribution of this new methodology has been to abandon the calorie-norm for estimating the poverty line, in particular citing its lack of correlation with nutritional outcomes, and instead being based on a larger basket of consumption. This has admittedly reduced underestimation in poverty estimates. However, it continues to remain unmindful of the discrete cut off dividing the poor and non poor, allowing space for inclusion and exclusion errors, and not accounting for the factors contributing towards the escape into and overcoming of poverty. This has important implications for the agenda of social protection, as beneficiaries for targeting and provisioning of benefits of major welfare schemes are identified on the basis of these poverty lines.

The SPA Programme is funded by The Ford Foundation www.fordfound.org and
the International Development Research Centre (IDRC) www.idrc.ca