SOCIAL CHALLENGES AND INCOME SUPPORT SCHEMES IN THE PACIFIC

Transcription

1 ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC WORKING PAPER SOCIAL CHALLENGES AND INCOME SUPPORT SCHEMES IN THE PACIFIC * * This paper has drawn largely from inputs provided by Manoranjan Mohanty, Associate Professor, Faculty of Business and Economics, The University of the South Pacific, Suva, Fiji. The views and opinions expressed in this paper are the views and opinions of the authors and should not necessarily be considered as reflecting the views of carrying the endorsement of the United Nations. The designations employed and the presentation of the material in this working paper to not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries. This working paper has been issued without formal editing.

2 Table of Content Introduction Background Geographic overview Economic context in Pacific island countries International migration and remittances in Pacific island countries Poverty and inequality in Pacific island countries Population dynamics and social challenges in Pacific island countries Income support schemes in Pacific island countries in the social protection system of Pacific island countries Overall social protection in Pacific island countries Categories of income support schemes in the Pacific Support for older persons Support for persons with disabilities Support for children Support for the poor Other income support Governance and administration of income support schemes in the Pacific Conclusions...23 References...27 List of tables Table 1: Per capita income (in current $, Atlas method) in Pacific island countries... 5 Table 2: Obesity (BMI 30) in select Pacific island countries (percentage of total population, 2008)... 8 Table 3: Key poverty indicators in selected Pacific island countries, Table 4: Population of Pacific island countries by age group (percentage), 2013 and List of figures Figure 1: Net migration rates in select Pacific island countries, (per 1000 population)... 6 Figure 2: Social protection Index (SPI) in selected lower middle income countries in the Asia-Pacific region... 14

3 Introduction The food, fuel and financial crisis of 2008 has again illustrated the need for social protection, and particularly income support schemes. Income support schemes are often considered as an important tool not only as a response to crises, but particularly as a tool to build resilience in populations. Basic income security, especially for the most vulnerable groups, is an element of the United Nations social protection floor, combined with universal access to health and education. A stable, even if small, income helps people to invest in health and education and supports their self-sustainability. It can protect people from unsustainable coping strategies in times of crises, such as cutting expenditure on health and education. Some Pacific island countries, namely those that are still associated with a wealthier country, such as France, New Zealand or the United States of America, have inherited parts of those countries social protection system or have access to them. But in most other Pacific island countries, formal social protection systems are still relatively underdeveloped. Instead of formal social protection systems, societies in Pacific island countries still have strong informal social protection systems, such as a system of mutual exchange regulations within the kinship system. However, the recent increase in food prices has hit many Pacific societies and economies strongly. Access to land and subsistence farming, which serves as a traditional social protection mechanism, has become increasingly difficult especially for urban populations. The traditional system of exchange relations is increasingly under strain in many Pacific island countries. The absence of formal social protection systems in many Pacific island countries has become one of the biggest challenges as a result of the food, fuel and financial crisis. Effective delivery of social protection requires adequate policy infrastructures. Countries where adequate institutions are already in place are better prepared for crises, as they would have the policy infrastructure which is needed to be able to react to a crisis. Certain vulnerable groups, often inadequately covered by formal social protection, fall through the cracks of traditional social protection systems due to stigma and discrimination. These include persons with disabilities, persons living with HIV and AIDS, or victims of domestic violence. Formal income support should particularly ensure that socially excluded groups are reached. This paper seeks to discuss which formal income support schemes administered by the state exist in Pacific island countries, especially with regard to vulnerable groups such as persons with disabilities, older persons, children or the poor. The first part of the paper assesses vulnerabilities by discussing the socio-economic environment in Pacific island 1

4 countries. The second part lists and briefly discusses existing income support schemes and briefly assesses their adequacy in terms of coverage, access, benefits, and targeting compared to needs in society. It concludes with a summary and recommendations on the adequacy of existing income support schemes to build resilience in societies and recommendations on policy interventions to move towards universal coverage of social protection. 2

5 1. Background 1.1. Geographic overview The Pacific subregion consists of 22 countries and territories. These countries are grouped into three major cultural groups: Melanesia, Micronesia and Polynesia. Melanesian countries include larger countries such as Fiji, New Caledonia, Papua New Guinea, Solomon Islands and Vanuatu. Micronesian countries are: Guam, Kiribati, Marshall Islands, Federated States of Micronesia, Nauru, Northern Mariana Islands and Palau. Polynesian countries include: American Samoa, Cook Islands, French Polynesia, Niue, Samoa, Tokelau, Tonga, Tuvalu and Wallis and Futuna Islands. Some countries are politically associated with former colonial powers or other larger countries in the region. For example, American Samoa, Guam, and Palau have affiliation with the United States of America. Cook Islands, Niue and Tokelau have free association with New Zealand. Similarly, French Polynesia and New Caledonia have close affiliation with France. Due to this political affiliation with larger and wealthier countries, these Pacific island countries typically have higher standards of living and partly benefit from better social protection. The Pacific subregion exhibits wide socio-economic and cultural diversities and numerous social challenges. Smallness, geographic dispersion, limited human and natural resources, limited domestic markets, long distance from the global markets, and vulnerability to natural disasters and extreme climate change events are the main characteristics of the Pacific subregion. The Pacific island countries are at different stages of development and thus have wide variation in their per capita incomes. Rapid and varied urbanization in Pacific Island countries is posing social challenges and putting pressure on their environment. Several Pacific island countries have been hit badly by the current global economic crisis, with rising unemployment, loss of revenue from weakening terms of trade, decreasing demand, delayed investment, high prices and currency fluctuations affecting aid flows (Lowy Institute for International Policy, 2009 cited in Naidu and Mohanty, 2009). With economic and environmental (climate) changes and crises, globalization and urbanization, the social challenges are growing and the vulnerabilities are expected to rise in Pacific island countries in the future. 3

6 1.2. Economic context in Pacific island countries Pacific island countries are a heterogeneous group of countries with varying income levels, ranging from low income and least developed countries such as Solomon Islands with a per capita income of $ 1,130 in 2012 (see table 1) to high income countries such as New Caledonia ($ 38,690 in 2011), French Polynesia ($ 26,290 in 2011) or Cook Islands ($ 13,478). The region also hosts four countries classified as least development countries (LDCs), namely Kiribati, Solomon Islands, Tuvalu and Vanuatu, on the basis of their income, economic vulnerability and low human development. Samoa graduated from LDC status in Available data for American Samoa and Northern Mariana Islands displays a per capita income of $ 11,199 in 2004 in the Northern Mariana Islands and of $ 8,638 in American Samoa in the same year (Statemaster.com, no date). While about half of the Pacific island countries are middle or high income countries, all countries share the same vulnerabilities due to their small size, isolation from foreign markets, high transport costs, limited natural resources and high vulnerability to natural disasters. Limited scope for agriculture due to limited space and in some Pacific island countries due to soil availability, combined with their remoteness is also a cause for high food prices in some Pacific island countries. Due to limited economic opportunities, economic growth has been relatively limited in most Pacific island countries in recent years, with average annual growth not exceeding 3 per cent in most Pacific island countries over the past ten years. Exceptions are Papua New Guinea which, on average, grew at 4.9 per cent annually between 2001 and 2011 and Solomon Islands, which grew at 5.4 per cent annually over the same period (ESCAP, 2012a). 4

7 Table 1: Per capita income (in current $, Atlas method) in Pacific island countries, Country or territory American Samoa Cook Islands* Fiji French Polynesia* Guam** Kiribati Marshall Islands Micronesia, Federated States of Nauru* New Caledonia* Northern Mariana Islands Palau Papua New Guinea Samoa Solomon Islands Tonga Tuvalu Vanuatu Data Source: World Bank, World Development Indicators database, no date (unless otherwise indicated) * World Statistics Pocketbook, United Nations Statistics Division, last update 2013, online ** Government of Guam, Bureau of Labor Statistics. Household and per Capita Income 2010, available from International migration and remittances in Pacific island countries For many Pacific island countries, international migration and resulting remittances are part of a development strategy. In some Pacific island countries, such as Samoa or Tonga, out-migration keeps population growth under control in spite of high fertility rates. Through remittances, international migration can be considered as a specific way of harnessing the demographic dividend (Storey and Steinmayer, 2011). Net out-migration 5

8 rates in some Pacific island countries are particularly high, especially in Federated States of Micronesia (-15.7), Tonga (-15.4), and Samoa (-13.4) in the period between 2010 and 2015 (see figure 1), while they are low in Vanuatu and Papua New Guinea and positive in higher income countries or areas, such as French Polynesia and New Caledonia. Net migration rates are closely linked to opportunities to migrate, which are higher for countries and territories in Poly- and Micronesia, but relatively limited for Melanesian countries (Hayes, 2010). Pacific islanders from Kiribati, Tuvalu and Vanuatu often work as seafarers on foreign vessels, which are sometimes not recorded as out-migration in census data. Figure 1: Net migration rates in select Pacific island countries, (per 1000 population) Source: ESCAP (2013): Statistical Yearbook for Asia and the Pacific, Bangkok. Although data on remittances are not available for many Pacific island and territories, available data reflect the importance of remittances as a livelihood strategy in several Pacific island countries. In 2011, remittances made up 21.9 per cent of GDP in Samoa, 16.7 per cent in Tonga, 4.1 per cent in Fiji and 2.8 per cent in Vanuatu, but only 0.2 per cent in Solomon Islands and 0.09 per cent in Papua New Guinea (World Bank, no date). Large amounts of remittances are still transferred through informal channels and thus 6

9 remain unrecorded. Moreover, remittances sent as material goods are also important, but are not recorded in balance of payments statistics. Research has shown that in several countries, remittances are an important source of income for many households. According to a study undertaken in Tonga, about 75 per cent of all households in the study year received remittances in cash and/or material goods (Small and Dixon, 2004). In some villages in Samoa 80 to 90 per cent of village households receive remittances (Connell and Brown, 2005). In Kiribati, the 2000 census reported that remittances from seamen were the primary source of income for 30 per cent of households on South Tarawa. Remittances seem to be particularly important for outer islands, as 55 per cent of all households receiving remittances were located on outer islands. In Tuvalu, census data from 2002 revealed that 34.2 per cent of all households received remittances from abroad (Abbott and Pollard, 2004). Research has also shown that remittances serve as an informal social protection mechanism and are often used to pay medical bills, fees for education and to afford better nutrition (Brown, 2008). However, the majority of migrants from Pacific island countries residing in OECD countries (which are mainly Australia, New Zealand and the United States of America), are predominantly high-skilled migrants. For example in the year 2000, 75.6 per cent of Tongans and 73.4 per cent of Samoans living in OECD countries had a post-secondary degree (Docquier et al, 2008). It can be concluded that migrants to Australia and New Zealand primarily originate from families that already had better access to education and tend to be the generally better-off families. Although migration does contribute to reducing poverty, usually the poorest of the poor are not able to migrate abroad Poverty and vulnerabilities in Pacific island countries Poverty is relatively complex to analyze in Pacific island countries and some even hold the view that poverty is not very widespread in Pacific island countries. Indeed, several Pacific island countries are middle or even high income countries. Governments of some Pacific island countries also point at strong traditional values and traditional protection systems that address poverty and vulnerabilities within communities (AusAID 2012a). Yet, some authors also point out that poverty is relatively high in Pacific island countries compared to small island countries in other regions of the world, such as the Caribbean (Prasad, 2008). Food poverty appears to be negligible in Pacific island countries. In fact, in many Pacific island countries, obesity seems to be more of an issue than under-nutrition. For example in Nauru, 71 per cent of the population are obese (see table 2). Yet, obesity is also a form of malnutrition, as it is frequently found among the poorest population groups who often resort to lower-priced high-calorie foods with limited nutritious value. Moreover, 7

10 obesity can lead to a number of non-communicable diseases, such as coronary-vascular diseases, diabetes and finally result in disability, which increases healthcare costs for households and creates new vulnerabilities. Indeed, non-communicable diseases are increasing in Pacific island countries. Stunted growth and malnutrition is a concern among young children in some Pacific island countries. Table 2: Obesity (BMI 30) in select Pacific island countries (percentage of total population, 2008) Percentage Cook Islands 64.1 Federated States of Micronesia 42.0 Fiji 31.9 Kiribati 45.8 Marshall Islands 46.5 Nauru 71.1 Palau 50.7 Papua New Guinea 15.9 Samoa 55.5 Solomon Islands 32.1 Tonga 59.6 Vanuatu 29.8 Data Source: World Health Organization, Global Health Data Observatory Poverty data is not widely available in Pacific island countries and thus, comparability is limited. However, available data gives an indication on the numbers of vulnerable persons and needs for social protection. Poverty in Pacific island countries is often characterized by poor access to services and limited opportunities. Significant income and housing poverty also exists in the subregion (AusAID, 2012a). National surveys also show that a relatively high percentage of the population is under the basic needs poverty line. For example the percentage of the population under the basic needs poverty line was estimated at 50 per cent in Kiribati in 2004, 28 per cent, 25 per cent in Fiji, and around 20 per cent in Marshall Islands, Samoa and Tonga (World Bank 2006a). In Palau in 2006, the population under the basic needs poverty line was estimated to be at 25 per cent (Government of Palau, 2006), Some countries also use a national poverty line to measure poverty, which defines relative poverty. The percentage of the population under the national poverty line varies 8

11 from 12.7 per cent in Vanuatu to 31 per cent in Fiji, among those countries where data have been available (see table 3). Table 3: Key poverty indicators in selected Pacific island countries, 2011 Proportion of Proportion Proportion employed of of people population population living below national poverty below $ 1.25 (PPP) Poverty gap ratio at $ 1.25 below $ 1.25 (PPP) per line (2011) (2010) (PPP) day Cook Islands 28.4* Fiji * Kiribati 21.8* Marshall Islands 20.0* Federated States of Micronesia 29.9* 31.2* 16.3* Nauru Palau 24.9* Papua New Guinea ** * Samoa 26.9 Solomon Islands 22.7* 21.5* Tonga Tuvalu Vanuatu Source: ADB (2013). Basic Statistics. Available from *Refers to estimates/preliminary figures or refers to periods before In Fiji, the national poverty line is defined at a level which is significantly higher than the international definition of $1.15 per day. While only 5.9 per cent of the population fall under the international poverty line, 28.4 per cent fall under the national poverty line. The poverty gap is also relatively low in Fiji, and had improved over time (Narsey, 2010). 9

12 However, Fiji s income and expenditure survey estimates revealed that poverty reduction had been uneven. While urban areas saw a reduction in poverty from 28 per cent to 19 per cent between 2002 and 2008, poverty increased in rural areas from 40 per cent to 43 per cent (Narsey et al., 2010). In the Cook Islands in 2009, almost 15 per cent of the resident population received no income, and 21 per cent had an income of less than $ 5,000 per year. The proportion of the population without an income was much higher in the Southern (20 per cent) and Northern islands (27 per cent) than in Rarotonga (12 per cent), reflecting the disparity in income earning opportunities between Rarotonga and the outer islands (Government of the Cook Islands, 2010a). While income earning opportunities are already relatively limited in Pacific island countries, there is also a relatively high percentage of working poor, due to low wages. Available data show that 34 per cent in Papua New Guinea, 21.5 per cent in Solomon Islands and 18.5 per cent in Kiribati of those employed still live below $ 1.25 per day (see table 3). There are also certain social groups that are exposed to specific vulnerabilities in Pacific island societies, because they have only limited access to informal social protection mechanisms. For example access to land serves as an important social protection mechanism. Consequently, those who do not have access to any land are also those most at risk of poverty and will be unprotected in times of crises. Especially with increasing urbanization the percentage of population groups without access to land tends to increase. Consequently, in Kiribati, poverty and vulnerability has an urban face, largely due to the need for cash in urban areas, while rural areas tend to rely more on traditional systems of exchange (AusAID, 2012b). Vulnerability is also higher in remote areas of Pacific island countries. For example in Kiribati, the Southern Gilbert Islands are the poorest areas of the country. They are the most remote and also the smallest islands with limited resources for their own production, vulnerable to drought and they experience periodic problems with shipping and supplies. Due to limited income opportunities, people at working age typically migrate to other areas of Kiribati. Thus, these islands have the highest proportion of older persons and a higher dependency ratio. These islands also display the highest rates of child poverty, which is also attributed to the relatively high proportion of children living in households headed by older persons, namely 28 per cent in 2010 (AusAID, 2012b). 10

13 1.5. Population dynamics and social challenges in Pacific island countries Different Pacific island countries are at different stages of the demographic transition. In spite of decreasing fertility rates, fertility is still high in most Pacific island countries. This results in large percentages of child populations, ranging from 22.6 per cent out of the total population in French Polynesia to 40.2 per cent in Solomon Islands. It is expected that the relative proportion of the child population will decrease by 2030 in all Pacific island countries, then ranging from 20.1 per cent in French Polynesia to 33.7 per cent in Solomon Islands (see table 4). Table 4: Population of Pacific island countries by age group (percentage of total population), 2013 and Child population (0-14) population (15-64) Population 65+ Child population (0-14) Workingage Workingage population (15-64) Population Fiji French Polynesia Guam Kiribati Micronesia, Federated States of New Caledonia Papua New Guinea Samoa Solomon Islands Tonga Vanuatu Source: ESCAP (2013): Statistical Yearbook for Asia and the Pacific. 65+ Although the proportion of ageing populations is still small, ranging in 2013 from 2.9 per cent in Papua New Guinea to 9.9 per cent in New Caledonia, the number and percentage of older persons is increasing in all Pacific island countries and is expected to be at 14.6 per cent in Guam, 14.1 per cent in New Caledonia, 13.4 per cent in French Polynesia and 11

14 at 10 per cent in Fiji in With increasing numbers and percentages of older persons, healthcare costs for this population group are also expected to increase and so are their needs for social protection. Although pension schemes exist (which will be discussed in more detail below), few people actually have access to pensions. Thus, many older persons still have to work and are among those groups faced with the most hardships. Due to internal and international migration, many older persons also have to take care of grandchildren (Abbott and Pollard, 2004). In most Pacific island countries, the working-age population is still on the rise in absolute and relative terms. There are also some Pacific island countries where the relative size of the working-age population is expected to decrease within the next two decades, such as in French Polynesia, Guam and New Caledonia. However, this potential for a demographic dividend is not fully harnessed as labour force participation is relatively low in Pacific island countries, especially among women. Labour force participation is estimated at 42 per cent in Samoa and around 50 per cent in many other Pacific island countries. For example in Tonga in 2011, 57 per cent of the working-age population actively participated in the labour force. While 44 per cent of them were employed in government or the private sector, 29 per cent were unpaid family workers (Kingdom of Tonga, 2011). In contrast, labour force participation is relatively high in the Cook Islands, with around 75 per cent being reported as economically active in , among them 58 per cent in wage or salary employment (Government of the Cook Islands, 2007). Increasing working-age populations can also become a challenge as unemployment is already high in several Pacific island countries. Although data on unemployment are not widely available and of limited comparability, available data show that unemployment ranges from 1.9 per cent in Papua New Guinea - which is also be related to the high share of the agricultural sector in total employment (Central Intelligence Agency, 2013) to high unemployment of 36 per cent in 2006 in the Marshall Islands and 22 per cent in 2000 in the Federated States of Micronesia. Some also suggest that unemployment numbers in Pacific island countries would be significantly higher if all those of working age who are involved in subsistence activities would be included in the unemployment rate. For example studies on Kiribati have estimated unemployment to be at 64 per cent when persons in working-age who are involved in subsistence activities, but would prefer wage-labour, are counted as unemployed (AusAID, 2012b). The average household size in Pacific island countries varies considerably from 4.2 such as in Cook Islands (Government of Cook Islands, 2007) to 8.0 in Samoa (Government of Samoa, 2011). Multi-generation households are still the norm in Pacific island countries. However, poverty also seems to be highest in households with both children and older persons as a result of the high number of dependent persons. For example in Kiribati, 12

15 Solomon Islands and Vanuatu, more than 40 per cent of those in the bottom three income deciles are households that include older persons and children (AusAID, 2012a). Some countries also have a relatively high percentage of female-headed households, such as Vanuatu with 24 per cent of all households having a female head in 2009 (Vanuatu National Statistics Office, 2009). While a large number of households may be erroneously reported as female-headed as the male breadwinner works abroad, the number of truly female-headed households is increasing, as many women are either abandoned for fled from abusive husbands. Those households are often at high risk of poverty. For example in Solomon Islands, female-headed households in rural areas are over-represented in the lowest income quintiles (AusAID, 2012c). Support for persons with disabilities becomes an increasing concern in Pacific island countries. While data are not available for many Pacific island countries, disability prevalence ranges from 1.2 per cent in Samoa to 12 per cent in Vanuatu (ESCAP, 2012b). Taking up employment is especially difficult for persons with disability due to widespread discrimination. Opportunities for education are often limited. In Samoa, 53 per cent of persons with disability had no education. Children with disabilities receive only minimal schooling if at all (AusAID, 2012a). Thus, the risk of poverty is particularly high for persons with disabilities. In Kiribati, persons with disabilities are likely to live in poorer households and receive limited support from governments. Although the family usually provides support for them, there are signs that once their parents are no longer able to care for them, support from other family members may be limited (AusAID, 2012b). In Vanuatu, most persons with disabilities are unemployed and experience discrimination, in spite of civil society efforts to integrate persons with disabilities into society. Some are even despised by their own families (Ratuva, 2010). 13

16 2. Income support schemes in Pacific island countries in the social protection system of Pacific island countries 2.1. Overall social protection in Pacific island countries In spite of increasing social challenges in Pacific island countries as discussed above, formal social protection schemes are relatively underdeveloped in Pacific island countries (AusAID, 2012). In the Social Protection Index by the Asian Development Bank, many Pacific island countries are placed at the lower end with an index level of less than 0.1 (see figure 2) (ADB, 2013). Figure 2: Social Protection Index (SPI) in selected lower middle income countries in the Asia-Pacific region Source: ADB, 2013 Prevailing social protection systems in Pacific island countries are largely based on traditional and informal social protections mechanisms provided through family and kinship systems. Civil society, especially faith-based organizations such as churches also play an important role in social protection (Mohanty, 2011). There are also some concerns among governments in Pacific island countries that formal social protections 14

17 systems would crowd out traditional systems and support by civil society (AusAID, 2012). Yet, social spending for health and education is relatively high in Pacific island countries. For example in the Federated States of Micronesia, public health expenditure made up 19 per cent of government expenditure in 2011, in Marshall Islands and Tuvalu about 18 per cent. In the Solomon Islands, public expenditure on education made up 34 per cent of total government expenditure in 2008 and in Vanuatu in 2009, 23 per cent of total government expenditure (World Bank, no date). However, while there is relatively high spending on health and expenditure, the problem may be with the effectiveness of spending and quality of service delivery (World Bank, 2006). Although health services are often available free of charge, the quality tends to be limited. Moreover, access to education and health services is still very limited in remote and rural areas and many poor families are unable to pay school fees, even if they are relatively low (AusAID, 2012). Social insurance, in the form of contribution-based pensions, seems to be the most common form of social protection in Pacific island countries. National Provident Fund Schemes (NPFS) are the most common type of formal social insurance systems in Pacific island countries. Most Pacific island countries, with the exception of Samoa, perform highest in the component social insurance compared to other indicators in the social protection index by the Asian Development Bank (ADB, 2013). Social assistance, or income support schemes, seems to play a relatively minor role in the overall social protection system in Pacific island countries. With its Family Assistance Programme (FAP), a non-contributory cash transfer programme, Fiji has the most extensive income support scheme in the Pacific subregion. The FAP will be discussed in more detail below. The level of social protection in Pacific island countries can be classified in the following groups. Firstly, countries/ territories that have political affiliation and free association to larger and wealthier countries are more socially and economically protected them and partly covered under their social welfare programmes. These countries include for example, American Samoa, Federated States of Micronesia, Guam, Marshall Islands, Northern Mariana Islands, and Palau which are partly covered by Federal Social Welfare Systems of the United States of America. French Polynesia, New Caledonia and Wallis and Futuna have close association with and protected by France. Cook Islands, Niue and Tokelau have free association with New Zealand and are protected by New Zealand. 15

18 Secondly, countries with heavy dependence on their traditional social systems such as the wantok system providing community support, which is widely practiced in Melanesian countries such as Papua New Guinea, Solomon Islands and Vanuatu. Finally, the countries with large out-migration rates that receive family remittances which serve as social protection and safety net in several Pacific island countries such as for example, Fiji, Federated States of Micronesia, Marshall Islands, Palau, Samoa and Tonga Categories of income support schemes in the Pacific The following section examines how certain categories of vulnerable groups, namely older persons, children, and persons with disabilities, as well as life-cycle risks are covered by income support schemes. The discussion includes contributory and noncontributory schemes. Generally, non-contributory cash transfer schemes are not very common in the Pacific. An exception is universal social pensions that have been introduced in some Pacific island countries. Where social assistance programs exist in the Pacific region, the eligibility for such programs is determined through variety of mechanisms, including categorical targeting, means-tested targeting or self targeting (World Bank, 2006a). Means-tested social assistance schemes exist in Cook Islands, Fiji and Kiribati Support for older persons Several Pacific island countries have established contributory pension systems, such as Federated States of Micronesia, Marshall Islands, Nauru, New Caledonia, Palau, Solomon Islands, Tonga and Tuvalu. However, in many cases only public sector employees or sometimes also employees of the formal private sector are covered. For example in Papua New Guinea, only persons in firms with 15 or more employees are covered (ISSA, no date). In Tonga and Tuvalu, the pension scheme applies only to public sector employees. In many Pacific island countries, the proportions of population above legal retirement age in receipt of a pension are low, such as about 3 per cent in Vanuatu, 10 per cent in Tonga and 20 per cent in Tuvalu, whereas they are relatively high in Marshall Islands (63 per cent) and Nauru (65 per cent) (ILO, 2010:243). In the Federated States of Micronesia, all gainfully employed persons, including certain self-employed persons are covered by the contribution-based social insurance system. The insured person pays 7.5 per cent of his or her earnings and the employer contributes 7.5 per cent of twice the salary of the highest-paid employee per quarter. An earnings- 16

19 tested old-age pension is paid to insured above 65 in addition to a reduced benefit to persons between 60 and 64 who meet the qualifying conditions for an old-age pension. Those who do not meet the qualifying conditions for the old-age pension at retirement age may receive a lump-sum benefit, which covers 4 per cent of the insured persons cumulative earnings (ISSA, no date). Several Pacific Island countries have a National Provident Fund. However, rather than providing monthly income support on retirement, in several cases it can be rather considered as a savings scheme, where participants receive a lump sum at the end of the savings scheme. For example in Vanuatu, the Vanuatu National Provident Fund (VNP F), administered by a tripartite board representing workers unions, employers and the government, is one of the biggest providers of formal social protection. As of 2010, the fund had a membership of about 40,000 (Ratuva, 2010), covering nearly 30 per cent of Vanuatu s working-age population. The VNPF has provision for four types of benefits for members, namely permanent incapacitation at work; death of a member; and migration. Payment is on the basis of a lump sum balance at the time of retirement at age 55. The fund has a long-term provision but cannot react to immediate financial emergencies. Unlike for example in Fiji, in Vanuatu, there is no provision for emergency withdrawals for example due to sudden loss of employment. Thus, in cases of such emergencies, urban workers still rely on informal arrangements, including subsistence farming in small family gardens (Ratuva, 2010). The Kiribati Provident Fund also pays a lump summon reaching the official retirement age of 50 years with partial withdrawals permitted starting from 45 years of age. Research revealed that many beneficiaries use their lump sums to buy large consumer goods, such as vehicles to avoid losing cash to demands by the extended family. Attempts to change the Fund s scheme into a superannuation fund with a monthly pension scheme failed. Among the reasons for this failure were that members could not be convinced of the value of receiving an annual pension rather than a lump sum. Further, the official retirement of 50 years would make it difficult to build an actuarially sound and meaningful pension fund (AusAID, 2012b). An increasing number of countries and territories, namely Cook Islands, Fiji, Kiribati, Nauru, Niue, and Samoa have introduced universal pensions for older persons. In Samoa, the amount of the old-age benefit is US $ 94 in purchasing power parity (PPP), which is 247 per cent of the national poverty line. Around 65 per cent of the population above 60 are actually covered by the universal pension (Help Age International, no date). In Fiji, the Social Pension Scheme (SPS), introduced in January 2013, provides a monthly payment of $30 as pension (The Fiji Times 23 November, 2012). It is expected to cater for an estimated 9,000 people who do not have access to a superannuation fund. Senior citizens who are 70 years and older will be entitled to these pensions. The overall budget 17

20 for this program is $3.2million in 2013 (Government of Fiji, 2013). In the Cook Islands, all residents over the age of 60 years are covered under the old age pension scheme. The benefit has increased in 2008 from $240 to $ 400 a month until death (Government of Cook Islands, 2010b: 12) Established in 2004, Kiribati s Elderly Fund offers a pension to every citizen older than 67 years. According to the 2010 Census, 97 per cent of those eligible were actual beneficiaries of the social pension. The benefit comprises $ 50 monthly to those above 70 and $ 40 monthly to those between 67 and 69 years old. The benefit is paid to beneficiaries by the Island Council. Most beneficiaries travel to the Island Council to receive the benefit, but in those cases where beneficiaries are not able to travel there, Island councillors will travel to beneficiaries to deliver cash to their homes. The benefit covers 80 per cent of an adult s expenditure in the poorest income quintile. Thus, the universal pension seems to be an effective tool to provide income security and reduce poverty of older persons. Research has shown that many older persons use the funds to support other household members, including children and that the universal pension strengthens traditional forms of social protection. For example those migrating to other areas within Kiribati are more likely to invite their older parents to live with them when older persons receive income support (AusAID, 2012b) Support for persons with disabilities In most countries in the subregion, existing social insurance schemes also include a disability benefit. For example the Provident Funds of many countries also pay in case of disability. The Marshall Islands Social Security Administration (MISSA) pays disability benefits to those insured under the Social Security Act of The Federated States of Micronesia have a contributory disability pension with a minimum contribution of US $ 1,500 (US-SSA, 2010). However, as with support to older persons, its problem is its limited coverage, as only those in the formal sector are covered, which is a relatively small percentage of the working-age population. Moreover, while insurance schemes offer benefits in case those who had worked become disabled, but only few countries have income support schemes that entitle every person with a disability to a cash transfer, including children. In the Cook Islands, under the Disability Benefit Scheme, about 230 persons with disability receive a monthly benefit of NZ $ 100. There is also a non-contributory benefit of NZ $ 150 per months for those who care for a person with disability and are unable to work (ILO, no date). There is also special assistance for improving the residences of persons with disabilities (ADB, 2010a). 18

21 In the Yaren district of Nauru, persons with disabilities receive an allowance of $ 50 per fortnight. The programme is self-funded by the Yaren community (ADB, 2007). Some countries have no specific schemes targeting persons with disabilities, but when they are poor, they can access schemes targeted towards the poor. For example in Fiji, persons with disability under a certain income can receive funds through the Family Assistance Programme (FAP) Support for children The Cook Islands provides an allowance for caretakers for children under the age of 12, which is NZ$ 20 a fortnight (Government of Cook Islands, 2010b). This benefit also helps older persons to care for their grandchildren whose parents migrated abroad or from outer islands to Rarotonga. It has shown that the child allowance has proved an important tool to maintain communities in outer islands. Some studies indicate that the outflow of young adults has been almost replaced by an inflow of young children, sent to their grandparents along with their child benefit payments (ADB, 2010a). Some countries provide financial support for school children, whether as direct transfers or providing free services. For example in Fiji, the Free Bus Fare Programme (FBFP) was initiated in January 2011 by the Ministry of Education (MOE), providing free bus services to children attending schools and whose parents combined annual income is below F$15,000 (Barr, 2011). The budget allocation for that programme was F$11 million in The government also provides free transportation to some village school children who lack transportation facilities. Kiribati has a School Fee Scheme administered by the Social Affairs Department. The programme provides cash transfers to certain categories of persons such as incapacitated parents of secondary school students families with a breadwinner who is incarcerated or chronically-ill (World Bank, 2006a: 82) Support for the poor With its Family Assistance Programme (FAP), Fiji provides one of the more extensive income-support schemes in the Pacific subregion. It is a means-tested, non-contributory cash transfer programme, targeting certain categories of the poor, and administered by the Social Welfare Department. At F$ 20 million in 2009, it accounted for nearly half of the government s spending on poverty alleviation in that year. To be eligible for the programme, applicants must pass a rigorous means test, have no other means of financial support, and fall into one or more of the following categories: a deserted wife, widow, prisoner s dependent, over 60 years of age, physically handicapped, or 19

22 chronically ill (ADB, 2010a). According to the Social Welfare Department of Fiji, to determine eligibility, an assessment is made of each family s properties, land type, home condition, valuables in the house and livestock before assistance is granted (The Fiji Times, 2 May 2013). The programme has sometimes been criticized for targeting only the destitute and not offering enough even for those. Even those receiving the maximum possible benefit of F$ 100 remain far below the poverty line in spite of receiving this cash benefit. The distribution of the FAP allowance is not determined by the extent of need, but by the departmental budget. There is a long waiting list of applicants and the eligibility process is not always transparent. As a result, many people who would be eligible for the benefit do not receive it (ADB, 2010a). The Cook Islands provides a Destitute and Infirm Benefit, which is a monthly transfer of NZ$ 200, with a Christmas bonus of $ 50 for every recipient at Christmas. The allowance is strictly means-tested. According to the Welfare Act, the a person who is destitute or inform is defined as someone who is unable permanently to support himself by his own means or labour and includes persons with dependents where such dependents are unable through infirmity or age to support themselves by their own means and labour. Thus, recipients are mostly those who are not able to work themselves, but also many single mothers. The percentage of recipients out of the total population is higher on outer islands than in Rarotonga, which is also due to the larger number of older persons on outer islands. The Welfare Act does not prevent people to be recipients of several different benefits. Thus, older persons for example, can receive the Destitute and Infirm benefit in addition to the universal pension for older persons (Government of the Cook Islands, 2010b). In Nauru, the Government of Nauru pays power bills for households who cannot pay for their own power bills, with a self-contribution of $ 5 (ADB, 2007). The Cook Islands also provides a power subsidy of NZ $ 20 a month for infirm and destitute pensioners and the infirm and destitute in outer islands (Government of the Cook Islands, 2010b). Countries and territories in association with the United States of America such as American Samoa, Guam, and Northern Mariana Islands also have access to social transfers administered by the federal welfare system of the United States. For example in Guam, needy families can receive direct cash transfers from the Temporary Assistance for Needy Families (TANF). The programme is means-tested and intended to support families to become self-sufficient. Persons under a certain income level also have access to Medicaid programmes, which cover healthcare services for the categorically needy (Government of the United States of America, 2006). In addition to coverage gaps that often result from rigorous means-testing, such as in the case of the FAP in Fiji, certain groups remain underserved by existing income support 20

23 schemes. For example, although unemployment is an area of concern in several Pacific island countries, only few countries provide an unemployment benefit. While the welfare system of the Cook Islands is quite extensive, it does not include an unemployment benefit. However, Cook Islanders who become unemployed can move to New Zealand and have access to unemployment benefits there. This often results in people moving to New Zealand although being ill-prepared for actual employment (ADB, 2010a). Unemployment benefits exist in New Caledonia, but, only 20 per cent unemployed in New Caledonia actually receive unemployment benefits. The unemployed benefit schemes in New Caledonia are both contributory and noncontributory types. The unemployment benefit is generally funded by the Government of France (ILO, 2010: 243) Other income support In some cases, subsidies that are directly paid, for example to farmers, serve as a form of social protection. For example Kiribati s largest formal social protection mechanism is the copra fund subsidy. The subsidy was established in the mid-1990s and guarantees a minimum purchase price for copra from the Government of Kiribati. This price was $ 0.70 per kilo in February Copra producers receive the guaranteed price in cash when they bring copra in for weighing (ADB, 2012b). The purpose of the copra subsidy is to support copra farmers in general, but also to encourage people to remain on the outer islands, rather than migrate to the capital of Kiribati. It is also considered as a form of unemployment benefit, as it provides a cash income to those who cannot find other employment than copra-farming. However, as it supposed to fulfill several purposes, including encouraging copra farming, the volume of subsidies is not based on need, but on production volume. This can lead to inequities between islands with the subsidy value ranging between $ 4 per person and per year and $ 527 per person and per year. These differences can be partly explained by differences in the size of landholdings, their productivity and distance of households from plots. But household composition is another key factor: those with less labour capacity find it more difficult to harvest and prepare copra for sale. Thus, the copra subsidy is likely to discriminate against households with older persons, persons with disabilities and single parents (ADB, 2012b). Some also express the view that instead of maintaining copra production, the subsidy keeps the copra price artificially high and has discouraged investment in crop improvements, given that 46 per cent of the country s coconut trees are senile. A similar subsidy exists in the Marshall islands where it is also supposed to improve the incomes of poor farmers living in the outer islands (World Bank 2006a). 21

24 Some countries also provide one-time allowances for certain life-cycle events. For example the Cook Islands provides grants equivalent to one month s benefit to the families of deceased welfare beneficiaries, which are supposed to be the infirm and destitute to help pay funeral costs (ADB, 2010a). The Solomon Islands also has a funeral grant scheme under which the families of the deceased receive SI $ 30 (ILO, 2006d). In Nauru, families of the deceased receive $ 2,000 (ADB, 2007). The Cook Islands also pays a one-time allowance equivalent to $ 300 to mothers of newborn children (ADB, 2010a) Governance and administration of income support schemes in the Pacific The governance of income support schemes in Pacific island countries is diverse and often fragmented. In many cases, different programmes are implemented by different Ministries or agencies. In most of the countries in the Pacific subregion, income support schemes are administered by the central governments except in Nauru, where both central and local governments are involved. The Department of Social Welfare/ Affairs has the responsibility of a state-led social protection system in most of the Pacific island countries. In Fiji, the Family Assistance Programme is implemented by the Department of Social Welfare under the Ministry of Social Welfare, Women and Poverty Alleviation. However, several Pacific island countries do not have a separate central agency to promote welfare services. For example, Kiribati lacks a central agency to promote policy development and provision of social services (ILO, 2006b:67). In other cases, there is no Social Welfare Department, such as in Tonga. In some cases, the Social Welfare Department is attached to Ministry of Health as in Solomon Islands, Ministry of Justice in Vanuatu or Ministry of Internal and Social Affairs in Kiribati. In American Samoa, the Child Care Program (ASCCP) is implemented by the Department of Human and Social Services (DHSS). In Cook Islands, the universal benefit schemes are administered by the Ministry of Internal Affairs. In Guam, the Department of Public Health and Social Services implements the Temporary Assistance for Needy Families (TANF). In French Polynesia and New Caledonia, the Government of France is involved in special education allowance and unemployed benefits respectively. The federal social welfare system implements the social and support services, nutrition and child protection assistance in American Samoa, Guam, Northern Mariana Islands and the welfare payments relating to the period of nuclear testing in Marshall Islands. The Marshall Islands has a Medicaid program which is administered by the Department of Public Health and Environment Services. 22