What does tightening of social safety mean to poverty rate?

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The poverty rate in Seychelles has steadily improved over recent years, falling from 39.3 percent according to a 2013 study, to 25.3 percent in 2018, as per the latest study published by the National Bureau of Statistics and the World Bank.

The survey, which considers all members of a household to be classified as poor when the income per adult equivalent is below the poverty line of R4,376 per month, is carried out every five to seven years, in line with international best practice. As President Wavel Ramkalawan’s new administration hints at tightening up social assistance and social safety net programmes, what are the possible implications of such on the Seychellois population? Could such measures see an increase in the poverty rate, considering the current economic climate?

Seychelles NATION, had a chat with principal policy analyst of the Department of Poverty Alleviation, Ziggy Adam, who outlined the possible consequences of restructuring the welfare system, and other social programmes geared at more vulnerable groups of the population.

How is poverty measured in Seychelles?

The poverty rate in Seychelles usually follows one of two main approaches, the first of which is measured by a monetary indicator, using data from the Household Budget Survey (HBS), a nationally representative survey carried out by the National Bureau of Statistics (NBS).

In 2013, NBS and the World Bank conducted its seventh HBS survey, to capture household expenditure and consumption patterns in addition to incomes of individuals and their households.Using gross income per adult equivalent as the welfare measure, the resulting national “basic needs” poverty line in 2013 was R3,945 per adult equivalent per month and for the “ultra-poverty” line, R3,193 per adult equivalent per month, resulting in a national poverty headcount rate of 39.3 percent, or 36,100 persons of a population which was then estimated to be around 92,000. The latest study, published only last week, recorded a decline in poverty with about 25.3 percent of the population below the poverty line, based on the poverty line of R4,376 per month per adult. Secondly, poverty is considered in a multi-dimensional measure, developed by the Oxford Poverty and Human Development Initiative (OPHI) at the University of Oxford. This multidimensional poverty measure provides a more comprehensive picture of poverty. It complements the traditional economic monetary approach, by identifying the different dimensions of poverty in a particular setting. It identifies those who are deprived in several dimensions at the same time, meaning the Joint Distribution of Poverty.

The latest MPI survey, carried out by NBS and the Department of Poverty Alleviation in 2019, found that 12 percent of the population of Seychelles is multi-dimensionally poor and experiencing deprivation related to the standard of living, education, health and employment. “When the 2013 results were published and it was found that 40 percent of the population fall below the poverty line, government was quick to act to remedy that and through policies, reforms and other measures, acted quickly to increase the minimum wage, increase social security, and to reinforce social programmes. The social safety net was reinforced which has contributed towards the decline in poverty, of course coupled with the boost in the domestic economy, and economic activity over the years. “With the pandemic and the state of the economy now, it is possible that more and more people will fall into poverty. However, if a study is to be conducted now, the results are not necessarily comparable with the results of previous surveys, as the Covid-19 pandemic cannot be factored in as a trend,” Mr Adam noted, adding that NBS is expected to conduct a survey on the implications of the pandemic on the population in due time.

How crucial are entities such as the Department of Poverty Alleviation and the Agency for Social Protection (ASP) in alleviating poverty in Seychelles?
ASP is the entity mandated to ensure the provision of comprehensive social security services and socialrelief against vulnerability within the constitutional and legislative framework of Seychelles, while the Department of Poverty Alleviation support the elimination of poverty through sustainable grass root centred policies, strategies and interventions promoting growth, well-being and socio-economic inclusion of all Seychellois citizens. “ASP is somewhat limited in that it provides purely economic assistance to most vulnerable groups in society, and those in need. So it considers the economic situation of applicants, and then provides assistance, based on certain conditions, depending on the programme the applicant falls under. “At the department, we go beyond just considering the economic situation of a person to look into things such as housing and accommodations, whether they have access to basics such as clothing, whether their home is overcrowded, what is the hygiene situation, and such, and we can then make referrals either to ASP itself, to place someone on a particular programme or for a specific type of assistance, or other relevant departments such as Employment, the Ministry of Health and so on,” Mr Adam added. As the economic situation worsens and with announcements that certain categories of social and financial assistance to different groups of the population are to halt for economic reasons, it is important that a clear direction be set out, says Mr Adam, towards ensuring that no citizens are left behind. “I think it will become clearer with the budget address next week which direction we are taking as a country. Are we going to operate as a welfare state, a capitalist state or a communist state? A welfare state is not necessarily a negative thing, we have free healthcare, free education and that in itself is part of a welfare state. It is important that policies and strategies should take into account the short, medium and long-term repercussions of possible reforms or restructuring of the safety net, to ensure nobody is left behind,” he said. It would appear there has not been much consultation with the department ahead of the 2021 budget appropriation, and their guess is as good as anyone’s with regard to social assistance administered by ASP for the year. “There should have been more consultations with all groups within the population, be it the public sector represented by government themselves, the private sector and populations falling outside those categories. “Take for instance the Unemployment Relief Scheme (URS).

Persons who are on the scheme are either those who find it difficult to gain employment either because they lack the qualifications or experience, or others are on the programme by choice. And then of course, you have those who are on the methadone programme but placing them in employment provides them with a way to contribute towards the economy and be productive, instead of simply receiving welfare assistance while they are unproductive. “Not only is the scheme useful to those persons, but also for those government department and agencies, who are faced with human resource constraints, either because their budget does not allow them to recruit further, or because their strategic plan does not make provisions for recruitment, but the workload is nonetheless increasing, so by having the scheme, it is also a Human Resource Relief Scheme for these department, who may not be able to afford hiring, but can still do with the help. If the scheme is discontinued suddenly, what happens to all those who were on it? They will likely face difficulties in getting employment with the pandemic and slowdown in economic activity, and where do they end up after? Seeking for welfare assistance,” Mr Adam remarked, asserting the need for well-thought out policies in the interest of each citizen.

A joint press conference is to be held this week by the NBS and Department of Poverty Alleviation to provide more information on the poverty rate.

Laura Pillay