Social protection

Ways out of old-age poverty

The global economic and financial crisis has reopened the debate about social protection in developing countries. In this context, the welfare of elderly people is particularly important. As populations are ageing in many developing countires, new challenges emerge.

[ By Matthias Meissner ]

It is six o’clock in the morning and the back, knees and wrists are still hurting from yesterday’s hard work. However, staying in bed won’t come to her mind: Muhindo gets up, looks after her husband and prepares a meal for the six children. After that, she heads off to the small farm where she grows bananas, pineapples and coffee. Muhindo has to stretch up high and climb the trees in order to reach the fruits. Pain shows in her face but it can’t be helped: the fruits are the family’s major source of income.

The story is set in Uganda. And it happens every day. What is so special about it? Well, Muhindo is 64 years of age. She has given birth to seven children, four of which have died of Malaria and AIDS. Now she takes care of her frail husband, but also of her six grandchildren.

In developing countries, many elderly people live the life of Muhindo. Around the world, more than half of the older population – more than 340 million – live without a secure income. Despite dwindling forces and age-related diseases or other handicaps, they often have to earn their own livelihoods. Therefore, in the poorest countries on earth – despite the low life expectancy – more than two thirds of men aged over 60 and more than a third of women above that age are still going to work. For the most part, they rely on badly paid, unattractive jobs in the informal sector. Nevertheless, they also have to take care of their children and grandchildren.

Family structures falling apart

In the developing countries, social health insurance or old-age security are exceptionally rare. Often, these kind of security systems exist only in the formal sector and embrace no more than ten per cent of the employees – i.e. government officials, military personnel and people in the banking sector.

The large informal sector remains without insurance. Roughly 80 % of the world’s population have no access to social security. At the same time, family structures are falling apart as a result of migration and HIV/AIDS. For this reason, especially older people are threatened by poverty. Generally, women and those sharing a household with children count among the poorest.

Old-age poverty that jeopardises people’s livelihoods can be foregone by:
– reforming and expanding the existing pension systems,
– providing insurance for employees from the informal sector,
– providing basic pensions (social pensions), as long as the first two points remain unfulfilled or (still) insufficient for securing people’s livelihoods.

Research by international actors of development cooperation such as Help Age International as well as practical examples from many countries prove that social pensions are possible and, most of all, financially viable in developing countries. In order to forego massive old-age poverty, expenses below one per cent of the gross domestic product are sufficient in most cases – as for example in Botswana, Namibia and Bolivia.

In the medium and long term, providing employees from the informal sector with insurances is the most complex task. In this case, alternative methods within the framework of micro-insurances as well as cooperative and community-based approaches play an important role.

Stabilising a country’s solidarity

The actual economic and financial crisis has reopened the discussion. OECD, the United Nations as well as the G8 and G20 committees have emphasised the importance of social protection in the fight against poverty, as it stabilises the economic and social solidarity of a nation.

Equally, the new Sector Strategy on Social Protection by the German Federal Ministry for Economic Cooperation and Development (Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung, BMZ, Strategies 190) highlights the role of social protection in the fight against poverty as well as its contribution to comprehensive growth and the realisation of human rights.

Now, it is the actors’ task to use this impetus. The particular lesson taught by the crisis and the previous strong years is that economic development does not automatically imply an extension of social protection. It has to be actively promoted and supported by each country.

The development and transformation of old-age security systems in developing countries offer manifold opportunities for technical and financial cooperation, as shown for instance in Indonesia.

Almost 20 % of the 230 million Indonesians live below the poverty line. Roughly two thirds of the population work in the informal sector and have inadequate social security. GTZ is helping to build a public pension system by promoting and supporting the following approaches:
– the foundation of an inter-ministerial National Social Security Council,
– the exchange with other ASEAN countries,
– training measures in all relevant ministries and institutions with the aim of strengthening local capacities.

Furthermore, GTZ provides counselling to actors supporting the political process.

The right to a dignified humane life

Supporting the developing countries on “their own” way is a big challenge. When it comes to social protection, copy and paste is not enough. Social protection can only be designed in a sustainable way if it fits the economic and social situation of a particular country. Moreover, the individual historical and legal context has to be taken into account.

In developing countries, society ages faster than in developed countries. This means people have even less time to grow accustomed to the changing conditions. The social dimension is immense, and the consequences for development cooperation are accordingly immense.

The fight against poverty will remain the primary aim of development policy. The specific demands of the older people are affecting almost all areas of development cooperation. It is about good governance and access to public buildings and services, including the health sector and access to water. But it is also about providing adequate living space, appropriate social protection and participation in social life. Ultimately, it is about the recognition of the right to a dignified, humane life for every human being – irrespective of age.

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