Implementation Completion Report

Transcription

1 Implementation Completion Report ASEM Trust Fund (project ID: KR-TA-64186) Protecting the Poor in Prepared by Chorching Goh May Project Objectives and Component Activities The government recognized that adjustments to the 1997 crisis would impose new hardships on vulnerable groups and the poor, and was, thus, determined to strengthen measures to ease the social costs of adjustment on the poor. A program of specific policy commitments to protect the poor has been in place during the first structural adjustment loan, and would be reinforced by additional measured in the second structural adjustment loan. This ASEM grant was intended to finance technical assistance with the objective to strengthen government capacity to implement its policy commitments to protect the poor, as agreed by the structural adjustment loans, during and beyond the crisis. There are three specific components under the grant: Update official poverty lines to strengthen the information base for poverty monitoring and targeting through integrating multipurpose national household survey system. Provide advice on public expenditure for poverty reduction programs. Organize workshops to exchange lessons of international experience on poverty reduction and the social costs of adjustment. Achievement of Project Objectives The project has achieved all goals in a satisfactory manner. Through technical studies funded by the grant, information of the crisis and poverty was compiled and analyzed. The findings provided insights and guidance for n government and policymakers in relation to poverty situations during the crisis and implementation of various counter-poverty measures. Such information is an invaluable input for policy recommendations to improve existing programs to help the poor. Besides the various studies that inform policy-making decisions, two other activities have contributed to the knowledge base of the recipient country. First, the international conference, funded by the grant, brought together international experts from other Asian and OECD countries to exchanges lessons and experiences; it also provided the n policymakers and researchers with a broader perspective on their poverty and productive social welfare agenda. Second, the database of spending and outcome indicators of the social sector is an invaluable exercise that took the first step to compile and consolidate a core data set that allows researchers and policymakers to track outcomes 1

2 and public expenditure on selected programs in the social sector. Such a data set will permit systematic analysis of the cost-effectiveness of programs over time that will feed into policy recommendations regarding public expenditure issues. Main findings from the Project The grant has supported several studies with the goal to provide needed information and policy recommendations on crisis- and poverty-related issues. The following is a summary of major findings: An analysis of national household survey data and an updated poverty profile is completed. The report finds that the poor tend to concentrate among smaller households, which are more likely to consist of elderly living alone or singleparent households. Thus, a disproportionately large proportion of poor households are headed by the old, by women, and by the disabled. During the crisis, the hardest hit were households with unemployed heads or heads with irregular or part-time employment, who were residing in urban areas. A survey of minimum costs of living is completed. The report experiments with a number of poverty lines which will be used as baselines in establishing various poverty alleviation programs: The market basket approach where a typical household, usually consisting of a married couple and two children is identified, and the household s minimum bearable standard of living is measured, and finally, the poverty line that is generated for the typical household is then adjusted for other households those with no children, with just one adult, etc. using equivalence scales. A more subjective measure based on asking households how much income they would need to get by. Another subjective measure which asks how much households are consuming when they have enough income to spend it all on consumption. Using household data to estimate an equation of the form: consumption = a + b*income and interpreting the estimate of the parameter a as the poverty threshold. The grant also funded a study that examines anti-poverty policies, workfare programs, job-sharing methods, income support and welfare delivery systems of other OECD countries in order to develop policy options for in relation to President Kim s initiative on productive welfare. The study focuses on the income support systems and pensions systems. Its findings suggest that some basic good could be provided to the poor in the form of vouchers; and certain qualifying criteria for eligibility under the National Basic Livelihood Protection Program were too stringent. With respect to the pension system, the study suggests reducing benefits and raising contribution of the National Pension Scheme because of growing liabilities that may make the Scheme financially unsustainable. Other suggestions include raising the retirement age, and changing the pension benchmark from final salary to lifetime average salary. Two reports on impacts of the crisis on (i) the labor market and (ii) poverty and inequality, respectively, are completed. In the first paper on labor market, labor force surveys are used, which unfortunately do not include wage information. Summary findings are In response to the crisis, labor unions agreed to cut working hours to minimize dismissal of workers. Nevertheless, the unemployment rate increased sharply from 3.1 percent in Q1, 1997 to 5.6 percent in Q1, 1998 and reached 8.4 percent in Q1, Since, the rate has declined monotonically to 4 percent in Q2, Older workers (aged 50 years and over) have been most severely affected by the economic crisis (unemployment rate quadrupled). Firms dismissed older workers but continued to employ new entrants to the labor market; moreover, many older workers withdrew from the labor force during the crisis 2

3 period, as reflected in the significant decline in their labor force participation rates. Another group of discouraged workers who withdrew from the labor force during the crisis is female workers. Unemployment rates have risen for workers of all levels of education attainment, but the most adversely affected group was that with middle school or less. Empirical results showed that a significant labor disputes occurred only in Q3, 1998, and there was no wide spread labor disputes during the economic crisis. The second paper on poverty and inequality covers only urban households where single-person households were excluded. Summary findings are The average level (in thousand won per month) of per capita real household expenditures was 358 in the 4th quarter (1997). It fell to 286 in the second quarter (1998), before recovering in the 4th quarter (1999), and stood at 377 in the first quarter (2000). Pre-crisis Gini index was 28.2 in the 3rd quarter (1997), and 27.3 in the 4th quarter (1997). It then peaked in the 3rd quarter (1998) at 29.9, before easing down to 28.5 in the 4th quarter (1999) and 27.9 in the 1st quarter (2000). The percentage of poor was 9.5 in the 4th quarter (1997), but more than doubled to 23.9 in the 3rd quarter (1998). The percentage of poor then fell consistently during 1999 to 10.3 in the final quarter, and to 8.4 in 1st quarter (2000). Other poverty measures such as poverty gap ratio and severity of poverty index display similar patterns. A study of the crisis impacts on health that discusses health implications of the economic crisis in is completed. This study utilizes urban household income-expenditure survey, national health insurance claims, and national health interview surveys. This paper is an interesting review of data and several studies on health status, care and financing that span the crisis period in. It finds that health care consumption (as measured by proportion of health care spending to income) of n households, in general, has been adversely affected by the economic crisis, and that lower income groups and the unemployed households are most affected. Sick people were more adversely affected than the general population during the crisis. The average sick person used less outpatient and inpatient services in 1998 than in 1995, even after controlling for their socio-economic background and insurance type. The proportion of health budget to central government budget actually went up over 3% in 2000 for the first time. Medical service utilization (measured by insurance claims data) increased slightly in 1998 even though household health expenditure dropped sharply. A possible interpretation is that people cut back spending on many non-essential health care items, such as dietary supplements. Moreover, there was a shift from private hospitals clinics to public health centers. This study highlights the importance of public policy in addressing the issue of social equity in time of economic crisis, and suggests that service utilization levels of the middle and lower income class population need to be monitored and supported. has a policy to back up insurance coverage of the industrial unemployed, for a year after unemployment. However, there was a vacuum in the coverage of the non-industrial unemployed and of the marginally poor, who were unable to pay insurance premiums and were not subject to the Medicaid benefit. Another study examines crisis impacts on social outcomes: it finds that besides decreased income, and increased unemployment and poverty, n households also encountered higher crime and divorce rates in the initial period of the crisis. Urban households and those in the construction and manufacturing industries were most affected by the crisis. The paper finds that the government s anti-poverty programs need improvements in the following aspects. Some of the eligibility criteria are so unreasonable that the Minimum Living Standards Act has failed to protect many deserving poor. Despite the expanding coverage of social insurance plans, temporary and part-time workers are still ineligible. Rural poverty is a persistent problem, but current social welfare programs have limited coverage of rural poor. 3

4 A study on health and limited healthcare access, and their implications for poverty is completed. The paper, Poverty and Health in : An analysis from low income household surveys finds that poor health of a person is tightly linked to his probability of being poor. The study also points out that poor health is triggered, among other things, by limited access to proper health care. Health outcome is especially relevant among the poor. Some 26.4 % of poor households picked poor health as their main reason for being poor, compared to 16.1 % of poor households who said unemployment was the main cause. The vicious cycle of ill health leading to poverty and poverty breeds ill health needs to be broken with policy interventions. First, continuous monitoring of the poor, especially with respect to their health status and their accessibility to health care, can be a starting point. In the case of limited access to health care, health policy should come into play to remove such a barrier. Second, Medicaid Program for the poor should be monitored more closely. Moral hazard from the consumer side is a problem. But an equivalent problem comes from the provider side, in the form of excessive provision of services and false claims. Systematic assessment followed by correction of the problems should be in place. Third, health problems of the next poorest class need to be taken into policy consideration. Expansion of the Medicaid Program to cover these excluded vulnerable households and improved management of public hospitals may be part of the solution. An international symposium on Social Protection and Productive Welfare took place on September 6-7, 2001 in Seoul. The Symposium was well-received. More than 750 people (academics, policymakers, representatives from the broader civil society) from and abroad attended the Symposium. President Kim Dae-jung and James Wolfensohn delivered keynote speeches during the opening session. o The Symposium has provided an opportunity (i) to evaluate Productive Welfare philosophy and policy through the work of internationally renowned welfare experts, (ii) to absorb the experiences of advanced welfare states, and (iii) to devise its future direction. Moreover, this Symposium has successfully provided an opportunity to describe Productive Welfare philosophy to the world, elevating to the rank of nations with comprehensive welfare plans. Domestically, broad media coverage of the Symposium has raised people s awareness of their rights under the new welfare plan, and should raise opportunities for further dialogue among stakeholders in the welfare system, thereby raising the overall quality of welfare services. Papers presented at the symposium are published in a conference volume; the volume will be disseminated for the benefit of further study and future planning and implementation of social welfare plans in. The last component of the project is the setting-up of a database to monitor outcome indicators and expenditure in the social sector (e.g., health, education, social protection, labor and environment). This is undertaken by Inst of Public Finance (KIPF). The goal of an information system that collects and monitors social indicators and spending is to provide relevant, timely, and comparable data to policy-makers. Such a system will allow better understanding of the impact of social policies, and enhance national capacity in the social sector. o The database is publicly accessible at the site has a user-friendly interface. The database is also available to be installed on the hard-disk via a CD-Rom. The database has been set up to facilitate updating from time to time. Both web and CD versions of the database allow data search and selective extraction of data. The electronic database offers the user a choice of formats for the extracted data, as either text (.txt) or excel spreadsheet (.xls). o The database contains annual, aggregate statistics in the five fields: education, labor, healthcare, social security and environment. These are areas that are expected to see large increases in social expenditure during the coming years. One of the primary motivations underlying this database is to have it serve as an information source that can guide policymakers in determining the future course of government and public spending in these fields. Besides the five fields listed above, an additional category contains indices of overall welfare (social welfare index). o Besides basic statistics on social development, the database on social conditions includes information on inputs and outcomes. Inputs in this case refer primarily to government and public sector expenditures on specific areas and policies. Outcome measures have been designed, to the extent feasible, to capture the output or performance resulting from spending in specific areas or policy measures. Taken together, the emphasis on input and outcome measurement is designed to help orient research and policy focus on the effectiveness and efficiency of alternative programs in public policy. 4

5 o The data base provides spending of various levels (central, provincial, and lower) of government wherever possible as well as social status and outcome variables in education, health, labor market, pensions, social safety nets, and environment; it builds on published statistics from various sources (e.g., at statistical institutions, government agencies, ministries, and research centers in ) and integrate it into a core database. Some variables such as inequality measures were also estimated and stored in the database. Measures of overall welfare, such as tthe ISEW(Index of Sustainable Economic Welfare), and the UNHDI(United Nations Human Development Index) are also reported in the database. 5

6 Data Sheet Grant Amount: US$936,000 Cumulative Disbursement (US$) FY 2002 FY 2001 FY 2000 Grant Agreement Date: April $923,875 $506,900 $313,723 Closing Date: Feb Contract awarded, or consultant hired: Dalheue Coue: consultant Study tours/retreat/seminars (World Bank Seoul office) Institute for Health and Social Affairs (KIHASA): study Institute for Health and Social Affairs (KIHASA) : study Dr Na, Seong-Lin: study Institute for Health and Social Affairs (KIHASA) to organize conference Nanak Kakwani: study Bong Min Yang: study Kwang-Joon Park: study School of Public Health, Seoul University: study Jonathan Haughton: review studies Amount: (in US$) $3,080 $30,000 $98,000 $98,500 $48,000 $250,000 $10,000 $50,000 $50,000 $78,645 $5,400 Nationality: --- India USA Nanak Kakwani: review study Institute of Public Finance: to set up a database of spending (inputs) and outcome indicators in the social sector $2000 $200,000 India 6