Is living on government dole-outs the way out of poverty?
This is the underlying message behind the conditional cash transfer (CCT) programs initiated by the World Bank and the International Monetary Fund (IMF) in line with the United Nations Millennium Development Goals to reduce poverty by 2015. Mexico started the first CCT program in 1997 and it was copied by other countries. Brazil’s CCT program, called bolsa familia, became known worldwide and every other country is now attempting to replicate it.
The Arroyo government implemented its own CCT program, more popularly known as the 4Ps (Pantawid Pamilyang Pilipino Program). President Benigno Aquino III is extending 4Ps as his administration’s signature program to combat poverty with a much bigger budget of P21-billion and an additional loan of $400 million from the Asian Development Bank (ADB).
Social Welfare and Development Secretary Corazon Soliman presided over former President Arroyo’s 4Ps. She will continue to be at the helm of the CCT program under the Aquino government. Recall that Soliman resigned from her position during the Arroyo administration in the wake of the Hello Garci election cheating scandal. President Aquino picked Soliman as his social welfare secretary after winning the presidential election last June 2010.
Even the megarich city of New York under Mayor Michael Bloomberg has fallen under the spell of the CCT program. New York City established Opportunity NYC as the first conditional cash transfer initiative in the United States, but unlike other programs already running in other parts of the world, the New York program is totally funded by a number of private partners.
The underlying premise behind a conditional transfer program is that it helps the poor to develop their human capital by breaking the cycle of poverty through monetary incentives that meet certain conditionalities. In essence, cash benefits under the CCT program are supposedly linked to specific behaviour changes that help recipients free themselves from the clutches of poverty.
To qualify for cash grants under the Philippine government’s 4Ps, recipients must meet the following conditions: pregnant women must get pre-natal and post natal health care, attend responsible parenthood sessions, children must receive regular preventative health check-ups, children 3-5 years old must attend day care at least 85 per cent of the time, children 6-14 years old must enrol in elementary or high school and attend classes 85 per cent of the time, and children below 14 years old must avail of de-worming pills every five months.
According to the Department of Social Welfare and Development, the 4Ps has already provided, as of January 2009, cash grants to 341,374 poorest households from 27 poorest provinces, 12 cities, and 148 municipalities in the country. By the end of 2009, a total of 700,000 households were expected to benefit from the program.
One heavy criticism of the CCT program is the perception that it is meant to "buy" votes of poor people. No doubt, the CCT program will help any incumbent government to secure votes to win an election. Brazilian President Luis Ignacio Lula da Silva, after assuming office in January 2003, expanded the country’s CCT program to become a vigorous social safety net program. Lula was re-elected handily largely because of bolsa familia, his government’s flagship poverty alleviation program. Too bad, Gloria Arroyo could not run for re-election after implementing her own version of the CCT program because of term limits, otherwise she could have used the 4Ps as a vote-generating arm.
Political apprehensions aside, do conditional cash transfer programs really and effectively help the poor break away from the cycle of poverty?
Building social safety nets has become the international trend in government policy-making since the 1980s, after the IMF and World Bank started their programs of economic stabilization and structural adjustment. Aimed towards market deregulation and increased competition, these programs were supposed to lead to the dismantling of the State machinery and cutbacks in public spending, especially in the social sectors. But structural adjustments ushered in adverse consequences like massive poverty, rising unemployment, and a host of other social problems.
Anti-poverty solutions became highly unaffordable under conditions of economic austerity. To counter these adverse social and economic effects of structural adjustments, a strategy was developed by using specific instruments such as social funds implemented by a range of institutions including government, civil society, international donors and the poor communities themselves. Thus, selective cash transfer policies became the major response to the problem of large-scale poverty, although they fall way short of the idea of providing universal benefits as a basic right similar to the guaranteed rights of citizens in industrialized nations.
Stories of families in Brazil who have slid back to conditions where they were before receiving stipends from the government under its bolsa familia sound like a warning to those who think the conditional cash transfer program as a panacea.
Evidence shows that bolsa familia is not working as well in cities as in rural areas where rural poverty in Brazil is much greater. Policy experts have said it would be in the large metropolises of developing countries where the problems of poverty are expected to grow in the future.
Brazil’s bolsa família program is not without its critics. One recurrent criticism of the program is that it discourages the search for employment, encouraging laziness among people. Under this premise, many people would give up trying to find a job, content to live on the program, which many Brazilians called the cesta esmola (“alms-basket”). The National Conference of Bishops of Brazil, a powerful arm of the Catholic Church, maintains that “the program is addictive,” and leads its beneficiaries to an “accommodation.”
Transposed to a highly urbanized environment like New York City, the city’s ambitious privately-funded conditional cash transfer program that offered rewards to poor families for maintaining good habits—like $25 or $150 for things such as going to the dentist, staying on the job or opening a bank account—turned out to be a dud.
Opportunity NYC produced such mediocre results that Mayor Bloomberg conceded it is likely not the answer to eradicating poverty. The Associated Press headline called it “Money for good habits doesn’t change lives.”
According to the urban poor group Kalipunan ng Damayang Mahihirap (Kadamay), the 4Ps of the Philippine government is a “deceitful program.” The government even has to borrow $400 million from the ADB to fund the 4Ps. As the government is already burdened with servicing its current debt, incurring additional debts will prove even more harmful to the country in the long run.
Besides failing to address the real causes of poverty, the 4Ps as presently construed is sorely insufficient. Compared with Brazil and Mexico which have one-fourth and one-fifth of their households under their respective CCT programs, the 4Ps covers only a mere one million out of 18 million households. Even if the DSWD achieves its 2.3 million target by 2011, it still represents about 0ne-eight of total households. Its impact, therefore, is very minimal and will not make a dent in poverty.
A 2009 study of the impact of CCT programs in Mexico and El Salvador pointed out that the success of any CCT program will depend on the availability of good-quality and accessible health and education services, together with the existence of a governmental system that provides the beneficiaries with access to other social programs. At present, the Philippines does not have this kind of necessary social infrastructure to make the 4Ps meaningful.
For the 4Ps to help families break free from the cycle of poverty, it must seriously address the real roots of mass poverty.
A government dole-out program will not help eradicate poverty. What is needed is a re-orientation of the Philippine economy to respond to the needs of the majority of the Filipino people, and not those of big foreign and local corporations.
Poverty reduction can only be achieved through vigorous, job creating economic growth with redistributive policies and social investment rather than the simple construction of safety nets like the 4Ps. The government’s current conditional cash transfer program fails to address the real problems of the people. With millions to spend, the program could potentially be the next big venue for corruption.