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Overview of Poverty Reduction and Social Inclusion Policies in the Western Balkans. Will Bartlett European Institute – LSEE London School of Economics. Outline. Pre-crisis growth and poverty reduction Impact of economic crisis on poverty and social exclusion

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overview of poverty reduction and social inclusion policies in the western balkans

Overview of Poverty Reduction and Social Inclusion Policies in the Western Balkans

Will Bartlett

European Institute – LSEE

London School of Economics

outline
Outline
  • Pre-crisis growth and poverty reduction
  • Impact of economic crisis on poverty and social exclusion
  • Poverty reduction and social inclusion policies
  • Anti-crisis measures
  • What should be done in context of EU accession and regional cooperation?
poverty profiles
Poverty profiles
  • Rural poverty higher than urban
    • Bosnia LSMS 2007 rural 18%; urban 8%
    • Regional dimension within countries
  • Education and poverty
    • In BiH without degree 21%; with degree 1.1%
  • Employment does not protect against poverty
    • In Albania >50% of poor are employed in low skilled jobs
economic crisis
Economic crisis
  • Global economic crisis struck in late 2008 as external drivers of growth collapsed
    • Exports
    • FDI
    • Remittances
    • Credit growth
  • Variable impact in 2009,
    • IMF support for Bosnia and Serbia,
    • Continued growth in Albania and Kosovo
  • Slow recovery in 2010, except for Croatia
poverty and inequality in crisis
Poverty and inequality in crisis
  • Poverty increased as growth, main driver of poverty reduction, collapsed
  • Increase in poverty 2008-9 was higher in Macedonia (8.4%) than in Croatia (3.4%)
    • Possibly indicating lesser effectiveness of social safety net in mitigating poverty in Macedonia
  • Inequality increased
    • suggesting ability of elites to protect against income effects of crisis
social protection systems
Social protection systems
  • Social insurance systems
    • Pensions (plus second private pillar in HR, MK, XK)
    • Health insurance (tax financed system in XK)
    • Unemployment benefits (limited coverage)
  • Social assistance programmes
    • Means tested social assistance (weak targeting)
    • Rights based social transfers (veterans benefits)
    • Family and child benefits
pension systems
Pension systems
  • Pensions have a significant impact in reducing poverty
  • State-managed PAYG systems (AL, BA, SR, ME)
    • State managed pension schemes challenged by aging populations
  • Three pillar pension systems (HR, MK, XK)
  • Crisis impact on pension fund unit values
    • Despite vulnerability, three pillar reforms are proposed in BA, SR)
health insurance
Health insurance
  • Health system is based on social insurance principles
    • Kosovo is an exception – tax financed system
    • State system covers minimum health needs
  • Large gaps in coverage due to non-payment of contributions
  • Private sector fills gaps in provision ( in Albania and Kosovo especially)
social assistance programmes
Social assistance programmes
  • Means tested social assistance
    • Subjective assessments by social workers
    • In Albania, Ndhime Ekonomike, approved by local councils
  • Poor targeting and low coverage limits their effectiveness in reducing poverty
    • In BiH only 30% of assistance expenditure reaches poorest quintile
    • Roma and IDPs fall through the net
    • Kosovo, better targeting but low coverage reduces effectiveness
categorical benefits
Categorical benefits
  • Rights based social assistance
    • Veterans’ benefits
    • In FBiH, the government extended the rights of war veterans in 2008 and cash transfer expenditure increased sharply, up to 4% of GDP
    • Benefits to veterans are highly regressive, covering a larger proportion of the upper quintile of households than the poorest quintile in FBiH.
  • Family benefits including child allowance
policy measures responding to crisis
Policy measures responding to crisis
  • Public expenditure restraint –
    • IMF SBAs in Bosnia, Serbia, Kosovo and PCL in Macedonia (under negotiation Serbia)
  • Anti-crisis programmes
    • Reform / cut social assistance (BA, SR, HR, MK)
    • Reduced wages in public sector (BA, SR, HR, ME)
    • Public sector hiring restricted (BA, SR)
    • Public sector employment cut (SR)
    • Pension freeze (SR, HR)
    • Three pillar pension reform announced (BA, SR)
what should be done
What should be done?
  • Modernisation of public sector to increase effectiveness
    • Social enterprises? Diverse providers?
    • Bring elites back as consumers of public services
  • Regularise informal sector to raise tax revenues
    • Also to close gaps in eligibility
  • Active inclusion involving targeted actions for deprived and vulnerable groups
    • Especially in line with EU Roma Strategy (2011)
  • Scope for regional cooperation
    • Learning from best practice
    • Use of IPA under Lisbon Treaty ‘horizontal’ social clause
research at lsee
Research at LSEE
  • Work on various aspects of social inclusion
    • Social impact of crisis
    • Health system reforms
    • Decentralisation and regional policy
    • Roma inclusion
    • Skills gaps and vocational education
  • LSEE research network on social cohesion
    • collaboration with local researchers and policy makers
slide26

Thank you for your attention!

comments welcome at:

w.j.bartlett@lse.ac.uk

Will Bartlett LSE