1. 1 Activation Policies and Programs: A Social Assistance Perspective Kathy Lindert Sector Manager for Social Protection Europe and Central Asia October 2008

2. 2 Active Inclusion Active inclusion: – Income support plus – Link to labor market and better access to services Mutual Obligations principle – Society invests more in helping beneficiaries respond in effective ways – Beneficiaries expected to respond and “do their part” Objectives: – INCOME SUPPORT: Emphasis on supporting individuals to alleviate current situation (income support)…. and – JOB SUPPORT: On providing social and employment services to help them overcome obstacles to entering into paid work – WORK is at center of strategy to ensure that individuals in prime age are not excluded from mainstream society.

3. 3 Activation is linked to the “Graduation Agenda” debate in Social Assistance Concerns about: – Perverse incentives for adult labor – Beneficiary dependency on transfers – Need to empower beneficiaries as productive members of society Evidence of adverse incentives on adult labor: – Mixed – Depends a lot on program design Policy debate over promoting: – Graduation from poverty Links to human capital, work (activation), social services – VERSUS: – Graduation from program Time limits Work requirements (workfare)

4. 4 Activation/Graduation is Usually a “Second- Generation” Issue for Social Assistance Programs Source: Lindert and Vincensini (2008); Analysis of social policy in Brazil’s media

5. 5 Two key policy choice areas in nexus between Activation and Social Assistance Linking beneficiaries of social assistance to activation programs Using SA benefits to promote incentives for employment (More effective if have a good balance between these two)

6. 6 Linking SA beneficiaries to Activation Programs Some Challenges: – Inter-institutional, inter-governmental – Tailoring activation programs (e.g., training) to the meet the needs of the hard-core poor (hard-to- serve) – Changing “job” behaviors (life skills) – Ensuring sustainability in job placement, opportunities for this hard-to-serve population well beyond the intervention

7. 7 Using SA benefits to promote incentives for employment (tools to preserve work effort) Time limits for cash benefits Work requirements (or work activity participation) for able-bodied adult beneficiaries Avoiding excess “generosity” in benefits – Eg social assistance < unemployment insurance and the minimum pensions; Graduate benefits reductions (for increases in earned incomes) – Set exit thresholds higher than entrance thresholds, use sliding scales for withdrawals, provide lump sum graduation benefits or employment bonuses, provide transitional childcare or transportation allowances, fund subsidized social insurance Consider proxy means or asset tests rather than only income tests Earned income tax credits Link cash transfers to positive incentives: – Human capital linkages (CCTs) – Link transfers to elements that will improve earnings: education, job training or placement services, micro-finance, social support services

8. 8 Benefit level in practice Result of a trade-off 8 Given budget, determine benefit level and program coverage Benefit level should be:  neither too high to generate dependency,  nor too low to lack impact