Arup Banerji, World Bank director. Reprodution: IstoÉ
A World Bank director says that income transfer programs are essential for ensuring that children are properly fed, thereby improving their future chances in life.
ISTOÉ- Independente
by Michel Alecrim
Banerji argues that Germany emerged best from the economic crisis because it adopted measures to protect workers
Indian economist Arup Banerji, 51, has built a solid career at the World Bank based on his direct experience of social protection and employment policies in different parts of the world. He lives in Washington DC. His many published works include books on economic issues in Eastern Europe, Africa and the Middle East. As the World Bank´s current global Director for Labor and Social Protection, he regards Brazil´s Bolsa Família program as an effective way to combat poverty and resolve the major ills of developing countries. The program, he says, has produced scientifically proven results and has benefited particularly from the federal government´s approach to ensure that women family members are responsible for managing the cash payments. Banerji came to Brazil for the “South-South Learning Forum 2014”, in Rio de Janeiro, attended by representatives from 70 countries. He kindly gave this exclusive interview to ISTOÉ.
IstoÉ: Is the Bolsa Família program efficient at combating poverty?
Arup Banerji:
The World Bank has spent many years evaluating income transfer policies in terms of what works and what does not work. The Bolsa Família program contains a number of key aspects which have made it the subject of broad discussion. Firstly, the program was a remarkable initiative because of the ambitious scale of coverage that it sought to achieve. Secondly, unlike similar programs in other countries, Brazil´s program was not designed as a “top-down” scheme, with the State simply transferring money to poor people, but rather the inverse: it employs an approach focused on recipients as individuals. Its good results have been scientifically proven. They are not just hearsay.
IstoÉ: Why do you emphasize the importance of focusing attention on individuals?
Arup Banerji:
Allow me to give an example. If you type Bolsa Família into ‘Google Images’, you will normally get a picture of a smiling person showing the Bolsa Família card. For many people this card is a way of confirming that they are linked to the State for the very first time. The fact is that poor people often feel that they do not truly belong to a country. They feel subjugated, treated as outsiders. The card provides a legal and formal link with the State. It is like saying “Your country values you and your family, and that is why we are giving you this money”. Recipients begin to feel they are true citizens and start appreciating the need for educating and feeding their children properly. On the other hand, sons and daughters respond by taking more care of their mothers, thereby creating mutually responsible relationships. This is one of the core aspects of the Bolsa Família.
IstoÉ: One of the main criticisms of this type of program is that such schemes apparently generate dependency rather than autonomy.
Arup Banerji:
I do not agree with that in Brazil´s case. Perhaps it is so elsewhere in the world. What does economic dependency really mean? Briefly, it means the following: the person receiving the benefit concludes that he/she is better off doing nothing all day because the pay that could be earned in a job is no more that the money received in benefits. The secret of success in a transfer program is that the benefit payment should not be so high as to discourage people from getting a job, or not so low that families cannot afford to feed themselves. It is therefore important that the benefit should be less than the minimum wage. Studies show that ‘dependency’ is not an issue after ten years of Bolsa Família operation.
IstoÉ: What income transfer programs exist today in other parts of the world?
Arup Banerji:
All kinds of income transfer programs have been implemented in more than 100 developing countries. Around 50 of these countries have schemes like the Bolsa Família, involving shared responsibilities. As in Brazil, the main focus is on education and health. As well as parents keeping their children in school, they should ensure they are vaccinated. And in certain circumstances pregnant women need to be tested.
IstoÉ: Can you give examples?
Arup Banerji:
One of the first schemes was in Turkey, introduced two years after Bolsa Família, but it was not a national program. It targeted only the eastern part of the country, which is more conservative and religious. The problem there was that before the program was introduced many girls used not to attend school. Payment of the benefit was however made conditional on both boys and girls attending school. The result in Turkey was that in a space of only three years, the percentage of girls in secondary school education increased from 38% to 50%. On the other hand, in Africa (where state structures are different from those in Brazil), there is less rigid control given the lack of public officials to check school attendance or to show people how to make card payments. To obtain the payments mothers have to attend a class on the importance of education and nutrition. This scheme also eventually turned out well. In other words, the same concept and the same idea as in Brazil, but adapted to the day-to-day reality of different countries.
IstoÉ: Why have African countries, despite their difficulties, achieved results while the New York scheme has failed to take off?
Arup Banerji:
The Opportunity scheme in New York has had good and bad results. What failed to work was something that was treated as a core element in the Bolsa Família: in Brazil the money went to the mothers, whereas the Opportunity cash went to the children. Mothers are often better at sorting family´s problems than fathers. Children may skip school not just for financial reasons but perhaps because the school is a long way away or they simply do not like school. It is the mother who has to deal with such problems in the family. We also have to look at the quality of the schools. Some schools in New York are very violent, with under-qualified teachers and located in difficult areas, with many temptations for children. The New York program is still being analyzed, but it is known that the outlook is not good. It is now known why: one of the main problems is that the cash goes to the children themselves.
IstoÉ: Do student performance targets help to enhance social programs?
Arup Banerji:
Mexico has done this. Their program started out by focusing only on school enrollment. The Progresa scheme was introduced before the Bolsa Família, but the Mexican authorities soon realized that families enrolled their children in school but that these did not always actually attend classes. Attendance at school thus became a basic condition for receiving benefits under the Progresa scheme. A key question now is whether these children are actually learning anything. Mexico is the first country to address this issue of learning. Learning involves a number of questions which go beyond simply checking students´ scores. Performance appraisals are one way forward. This is recommended, but care needs to be taken. The idea is to continue making benefit payments in the same way but to add on a bonus for better school performance by the child. Every society needs to be aware that it is not enough simply to get children into school. We need to know whether they are learning, and for this we need to insist on the schools being of good quality. Look at the many linked challenges faced by the New York scheme.
IstoÉ: Is spending on major events a waste of resources when you consider the urgent needs in the health and education areas?
Arup Banerji:
I would need to look at figures about the return on those investments, and it is not really my field.
IstoÉ: Does South Africa (host to the 2010 World Cup) still suffer high rates of unemployment?
Arup Banerji:
Unemployment in South Africa existed before the World Cup and continues to exist. The reasons have nothing to do with the lack of investment, but with historical issues arising from apartheid. I try to separate these one-off short events such as the World Cup and Rio+20 to focus more on long-term policies. South Africa itself has some policies to combat unemployment that have not changed because of the World Cup. The same goes for Brazil. The Bolsa Família has not been round long enough to give us an idea of what kind of adults the children will turn into, but in Mexico (with the oldest program of all) the first appraisals are now beginning to appear. Signs exist that the former beneficiaries of the scheme are indeed finding it easier to get jobs and better pay.
IstoÉ: Is it because they are better educated?
Arup Banerji:
Not just because of that. Good food is needed for children to thrive. Scientific findings show that most neurons in the brain are formed during the first two years of life. Malnourished children of this age lack neurological development. So when poorer children are well-fed they have brain functions as good as better-off children. You can see why long-term policies are so important.
IstoÉ: Can social programs help to combat crime and violence?
Arup Banerji:
Transfers of resources are of course important, but they are not sufficient to combat violent crime. What these programs do is to give hope, citizenship, and to show individuals that they are important for the State. Moreover, resource transfer has a psychological effect and can serve to reduce frustration, which can in turn lead to reductions in crime and violence. Obviously investments still have to be made in the justice system, policing mechanisms, combating drugs and so on, but studies do show that social programs can at least help reduce domestic violence. Women who receive benefits tend to gain authority and are less likely to be battered. This is a proven fact in many countries, such as in India where I come from.
IstoÉ: Which country has a good record of social protection?
Arup Banerji:
Germany, the European country that responded best to the economic crisis. It has emerged from the recession, and unemployment there is low even for young people. And what did Germany do in the aftermath of the crisis? Unlike other countries that took steps that caused layoffs, Germany adopted a system of part-time work-sharing, with the difference covered by unemployment insurance. It is interesting that in a fairly liberal economy such as Germany, the State chose to adopt what we could call a more ‘interventionist’ policy which even counted on the collaboration of the unions. It is a remarkable example.
IstoÉ: What is the difference between countries where the State controls the pensions regime and others where workers are responsible for their own pension arrangements?
Arup Banerji:
The World Bank advocates a system that merges different funding sources to achieve a sum of money that an older person needs in order to survive. Countries such as Brazil, which have a very large mass of young people, normally collect contributions from a large number of workers in order to pay for the retirement of a small percentage of older people. This system cannot last. Seniors will soon outnumber the younger members of the population. It follows that you need a private retirement insurance system involving workers saving today for their old age tomorrow.