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Catching People Before They Fall: Social Safety Nets Take Center Stage

June 29, 2010

  • Social safety net programs help protect those hardest hit by the food, fuel and financial crises.
  • In last five years, World Bank approved 123 social safety nets projects in 60 countries; funding reaches $2.58 billion FY10.
  • Traditionally used in middle- to high-income countries, social safety nets are increasingly popular in low-income countries.

June 29, 2010—The last 36 months of food, fuel, and financial crises have reaffirmed the importance of social safety nets, which have helped to better protect the social and economic welfare of people despite the grim world economy.

For its part, World Bank FY 2010 financing for social protection programs—including safety nets—will likely reach $4 billion in new commitments, following a comparable surge in financing in FY09. During the last five years (FY05-09), the Bank has approved 123 social safety nets projects in 60 countries, and allocations toward social safety nets totaled $3.13 billion in FY09 and $2.58 billion in FY10.

These funds provided support to 19 countries new to the safety nets portfolio: Afghanistan, Belarus, Benin, Bulgaria, Comoros, El Salvador, Ghana, Grenada, Guinea-Bissau, Kenya, Latvia, Liberia, Mongolia, Nigeria, Poland, Seychelles, Sierra Leone, Solomon Islands, and St. Lucia.

Safety nets have long been used in high- and middle-income countries—including flagship programs in Brazil, Chile, and Mexico, which have catalyzed work in other countries—to protect people during economic shocks. But now, in a significant shift, social safety nets programs are becoming more prevalent in a growing number of African countries, despite lower incomes.

A Global Need

To support the Bank’s dynamic safety nets portfolio, Bank experts have promoted technical excellence at high-profile gatherings across the globe.

This month in Arusha, Tanzania, the Bank joined the Tanzania Social Action Fund to host a social protection learning forum on “Making Public Works Work,” with the participation of more than 200 high-level country delegates, as well as partner agencies such as the International Labour Organization, World Food Programme, and U.K. Department for International Development.

Also this month, at the Second Rio de Janeiro Conference on Human Development, the World Bank launched “Achieving Effective Social Protection for All in Latin America and the Caribbean: From Right to Reality,” which states that, as economic recovery gathers momentum in Latin American and Caribbean, countries in the region face major challenges in expanding social security.

According to the report, well-targeted cash transfer programs protect the extreme poor in the region, but pensions, unemployment, and health insurance cover only a minority of workers.

The 2008–2009 financial crisis has shown that social services in Latin America and the Caribbean designed to protect the most vulnerable remain ill-equipped to provide most workers with adequate social protection, especially for those who work off the radar in the “unofficial” job market and have no access to formal workplace protection measures.

Preparing for the Next Crisis

As global headlines related to the financial crisis fade, the challenge is to continue working on safety nets for the 1.4 billion people—children, the elderly and disabled, women, or breadwinners—who were poor before the crisis, and help governments prepare to protect their citizens for the next crisis, said Margaret Grosh, a Bank safety nets expert.

The World Bank’s Rapid Social Response Program, which has helped countries manage the social impacts of the global economic crisis, facilitates the establishment of safety nets in low-income countries. Although affordability issues may have kept safety net programs away from poorer countries until now, they have been around for centuries in one form or another.

Safety nets continue to play an integral role today—just as they did in Ancient Egypt and the Roman Empire, Grosh said. “Our safety nets thinking today has been shaped by programs that go back to 1587 when the British passed the famous Poor Laws that form the philosophical background of social assistance in a great many countries,” she noted.

In the United States, Depression-era policies serve as a relevant precedent. “The U.S. started the food stamps programs, for example, and the Civilian Conservation Corps, a massive public works program, to confront unemployment in the Depression and to build infrastructure in use today,” Grosh said.