The Right Tool for the Job? Labour Activation Policies and Poverty Reduction in Eastern Europe and Central Asia

This blog is published as part of The Transformation Conversation: Blogs on the UNRISD Flagship Report 2016 and Agenda 2030. The series explores what it takes to design and implement innovative eco-social policies that will lead to transformative change and fulfil the potential of the 2030 Agenda for Sustainable Development. Together with the evidence, analysis and case studies in the UNRISD 2016 Flagship Report they are part of the global conversation on implementing of the SDGs.

Despite progress made by countries in Eastern Europe and Central Asia in reducing poverty and unemployment during the 2000s thanks to economic growth and investments in social programmes, a recent economic downturn triggered by the fall in global oil prices in 2014 reduced growth prospects in the region and led to a reversal or slowdown in poverty and unemployment reduction trends. Several governments in the region have since introduced some innovations in policy and institutional arrangements in an attempt to keep poverty and unemployment down. This blog post looks at the nature of these recent innovations and examines their transformative potential for improving people’s livelihoods.

A new approach to social protection...

Social protection systems in the in the Commonwealth of Independent States (CIS) have traditionally consisted of social insurance (such as pensions and medical insurance), social assistance (for example, in-kind and cash benefits for vulnerable groups), and social services (such as health, education, and food provision). While the state in these countries provided certain job security guarantees from the early 1990s onwards, their scope was limited. It was not until the late 2000s—early 2010s that these countries started to adopt active labour market policies (ALMPs) in an effort to address poverty and unemployment more effectively and improve the living standards of the population.

In fact, governments’ emphasis on ALPMs can be argued to reflect a policy innovation that entails a new approach to social protection, moving from social assistance to activation of citizens’ labour potential. ALMPs in these contexts include (re-)training, skills development, paid public works, support for self-employment and entrepreneurship. To increase labour productivity among women with children, several governments, notably Belarus, Kazakhstan and Russia, have also expanded pre-school services and provided flexible forms of employment and training for women during childcare leave. With variation in scope, focus and outcomes across the region, these labour market measures have become a major social policy priority in these national settings.

Furthermore, this approach points to an institutional innovation in the region which promotes economic independence of citizens and partnership with the state rather than reliance on it. The principle of self-responsibilization that underpins the relationship between the state and society within a new social contract entails the move from a passive mode of ‘helping those in need’, to an active mode of ‘helping those in need if they help themselves’. In view of the state’s decreasing capacity to fulfil its social obligations to citizens, this partnership involves increased cooperation with non-state organizations, including civil society and the private sector, to provide social services. To incentivize these partnerships, the Russian government, for instance, introduced new regulations and changes to laws aimed at stimulating competition in social services, supporting private investors who are implementing projects in the social sphere, and providing subsidies to non-profit organizations engaged in the provision of basic social services.

...but little transformative effect

The findings of my studies show that while various labour activation programmes have contributed to the short-term improvement of living conditions, they have not had a transformative effect and have had little sustained impact on poverty. Poverty is still widespread in these countries, especially among large families with children and those living in rural areas. Furthermore, the new programmes have not managed to address the relevant underlying causes of persistent poverty. While unemployment is an important factor that contributes to poverty, it is not the most significant one. The majority of the population living below the poverty line in the region are in fact employed, but many of their jobs are characterized by low levels of pay, quality and productivity. Furthermore, despite measures to support socially-oriented non-governmental organizations (NGOs) in some of these countries, these NGOs mainly serve the interests of the state rather than demanding that it meet the needs and realize the rights of citizens, including those of women.

In view of the economic downturn since 2014 accompanied by growing poverty and unemployment, I argue that increasing productive potential alone is unlikely to raise people out of poverty, while stimulating labour demand without paying due attention to the nature of jobs will be insufficient to address the needs of vulnerable groups. Labour market policies should aim not only to protect existing jobs or generate new ones, but more importantly they should support incomes which would allow workers to maintain their earning ability and sustain adequate living standards.

Furthermore, although the governments in question have provided substantial support for women through public childcare and (re-)training programmes for mothers, these measures have not transformed patriarchal social norms and attitudes that govern work and care responsibilities in these societies. Women continue to be more disadvantaged and vulnerable to poverty than men, which can be attributed to lower participation in the labour market, lower wages and the continuous burden of unpaid domestic and care work, particularly in rural areas.

Addressing the root causes

In order realize truly transformative change and pave the path towards achieving the Sustainable Development Goals, it is important to address the root causes of poverty, unemployment and unequal relations by implementing comprehensive social protection, enhancing labour market policies and providing equal access to quality social services. In the context of the CIS countries, this includes: (i) improving the quality of jobs and raising the value of earnings, (ii) scaling up social support through better access and quality of social services such as health, education and childcare, (iii) developing better gender-sensitive policies such as paid paternity leave (in addition to existing paid maternity leave) and promoting shared responsibility within the family, and (iv) allocating more fiscal resources to the social protection system, which should be seen as an investment in human capital and the economy.

Public policy that purports to facilitate transformative change and generate more inclusive and sustainable outcomes should also be concerned with balanced multi-stakeholder participation that allows civil society, disadvantaged groups and local people to voice their opinions and influence decision-making processes that affect their lives.

ABOUT THE AUTHOR
Esuna Dugarova is a Policy Specialist at UNDP and was previously a Research Analyst at UNRISD.