'Just give money' or 'just give work' to the poor?
A previous blogpost on Due South discussed the potential for cash transfers to contribute to climate change adaptation. But 'just giving money to the poor' is not the only social policy programmes being implemented in the developing world. In India, a different approach is being tried: rather than guarantee the poor an income, the government guarantees them paid work, via the National Rural Employment Guarantee Act (NREGA), which came into being in 2005.
Under the terms of NREGA, every rural Indian has the right to 100 days of paid work within 15 days of requesting it, and without having to travel more than three miles outside their village. In many ways, proponents' arguments for the NREGA mirror those of advocates of cash transfers in other countries: it acts as a safety net, contributes to nutrition and education, and puts resources in the hands of the poor.
But many supporters of the NREGA go further, arguing that it is superior to cash transfers. Firstly, it gets the poor working on projects which, in theory, will leave behind durable assets that contribute to further rural development. Secondly, the NREGA virtually guarantees that funds will be "targeted" at the poor, on the grounds that wealthier individuals have little incentive to do the kind of manual, minimum wage labour that is available. Thirdly, guaranteed employment can potentially cause rural wages to rise, giving workers more bargaining power to negotiate with their employers.
Transferring and creating assets
On the other hand, the NREGA appears to be partly based, implicitly or otherwise, on the common middle-class/elite assumption that "handouts" will just "make the poor lazy". This assumption is often taken as a given, although as Hanlon, Hulme and Barrientos point out in their book, Just give money to the poor, evidence often suggests otherwise. Unlike cash transfers, the NREGA requires the poor to temporarily leave whatever existing activity they are engaged in to take part in work. In some ways, this makes sense. In India, the rural poor often find themselves dependent on subsistence agriculture, in exploitatively low paid work, or "distress migration". When compared to these, work with the NREGA is clearly desirable. However, the fact that these activities are inadequate does not mean that they have no value at all, and giving them up in order to receive assistance means the net transfer of resources to the poor will be lower than if they were just given the money.
In fact, studies by the likes of Imai and Ravallion and Datt on a longstanding employment guarantee scheme in the state of Maharashtra have shown that simply distributing the budget of the schemes directly to the poor would have led to stronger poverty reductions than the guaranteed employment.
Arguably, this could be justified if the workfare projects themselves have further positive effects, such as contributing to rural development, or even climate change adaptation and mitigation projects, as suggested in one Climate and Development Knowledge Network paper (pdf). At the same time, the fact that the legal mandate of the NREGA is to supply work quickly to anyone who asks for it might encourage policymakers to sacrifice the quality of projects in favour of their ability to absorb demand for labour. Even supporters of the NREGA, such as Indira Hirway, recognise that many of the projects implemented under the workfare programme in Maharashtra were poorly planned, badly maintained and had limited positive impacts on rural development. And even if the projects are well implemented, who will benefit from them?
Social policy for what?
A policy could hardly be described as "pro-poor" if it just mobilises the poor to work in projects that only help wealthier farmers. In response, NREGA supporters like activist Aruna Roy argue that the scheme will only succeed in contributing to pro-poor rural development if the participants have a strong voice in the type of projects their labour is used for.
Ultimately, the different approaches to social policy derive from fundamentally different ideas (invariably developed by the non-poor) about "what the poor really need". Moreover, they stem from very different concepts of what social policies should try to achieve: should they just be a safety net, give the poor assets, encourage certain types of behaviour, or even promote rural development?
The NREGA appears far more attractive in that it promises to address multiple issues under one framework, but this level of ambition could also obscure its primary objectives and limit its positive impact. These debates are unlikely to be resolved anytime soon, and external commentators would be well advised to respect the diversity of approaches towards social policy that exist in the developing world.
In the meantime, the onus will be on civil society, researchers and policymakers to scrutinise social policies, challenging assumptions and ensuring that they really do achieve the gains they are supposed to.