Technical Assistance Consultant’s Report

This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design.

Project Number: 44152 Regional — Capacity Development Technical Assistance (R–CDTA) August 2012

Republic of Fiji: Updating and Improving the Social Protection Index (Cofinanced by the Republic of Korea e-Asia and Knowledge Partnership Fund)

Prepared by Priya Chattier

For Asian Development Bank

ABBREVIATIONS AND ACRONYMS

ADB – Asian Development Bank BNPL – Basic Needs Poverty Line C & P – Care & Protection Allowance DMC – Developing member countries DMA – Department of Multi-Ethnic Affairs DYS – Department of Youth & Sports FAP – Family Assistance Program FEA – Fiji Electricity Authority FNPF – Fiji National Provident Fund FVP – Food Voucher Program GDP – gross domestic product GNI – gross national income GOF – Government of Fiji HART – Housing Assistant Relief Trust HA – Housing Authority ILO – International Labour Organization IMF – International Monetary Fund LFS – Labour Force Survey LMP – Labour Market Programs Mi – Ministry of iTaukei MSWWPA – Ministry of Social Welfare, Women and Poverty Alleviation NGO – non government organization PEN – pension PRB – Public Rental Board PTR – poverty targeting rate SDB – special death benefit SP – Social Protection SPI – Social Protection Index TA – Technical Assistance TPAF – Training Productivity Authority of Fiji TOR – terms of reference VAT – value added tax WAF – Water Authority of Fiji WB – World Bank

CONTENTS

Page

I. INTRODUCTION 1

A. Background 1 B. Definition of Social Protection 1 C. Report Structure 3

II. COUNTRY OVERVIEW 4

A. Geography 4 B. Demographic Profile 4 C. Economy 4 D. Poverty and Inequality 5 E. Employment and Labor Force 7

III. CURRENT SOCIAL PROTECTION PROGRAMS AND ACTIVITIES 8

A. Data Collection 8 B. Social Assistance Programs 8 C. Social Insurance Programs 12 D. Labor Market Programs 14

IV. THE SOCIAL PROTECTION INDEX AND ITS DISAGGREGATION 17

A. Basic Statistics 17 B. Social Protection Expenditure and Beneficiaries 18

V. ANALYSIS OF COUNTRY RESULTS 21

A. Disaggregation by Social Protection Category 21 B. Disaggregation by ‘Depth’ and ‘Breadth’ 21 C. Disaggregation by Poverty Focus 22 D. Disaggregation by Gender 23

VI. CONCLUSION AND RECOMMENDATIONS 25

A. Structure of the SPI 29 B. SPI’s Major Disaggregation 29

I. INTRODUCTION

A. Background

1. Asian Development Bank’s (ADB) development of the social protection index contributed to the strengthening of social protection programs in developing member countries (DMCs). ADB will continue its work on updating and improving the Social Protection Index (SPI). The SPI’s update will address and incorporate lessons learned from two technical assistance projects1 that developed the SPI for 35 countries in Asia and the Pacific and introduce new components and institutional arrangements to sustain the effective use of social protection indicators in policy analysis and formulation in the DMCs. 2. These initiatives will be implemented under the ADB commissioned regional technical assistance project2 that seeks to (i) improve the methodology in defining social protection for each DMC in order to ensure comparability among DMCs; (ii) improve data gathering for statistical analysis on social protection; and (iii) develop capacity of DMCs in monitoring the SPI and allow comparisons between countries and over time on implementation performance. 3. This country study provides updated information and data on social protection arrangements, legislation, and institutions and calculates the SPI for Fiji in view of the revised SPI methodology. The SPI can be updated periodically to assess progress in social protection arrangements in the country and analyse deeper aspects of targeting, coverage and expenditures on various social protection programs; for example, on the breadth (coverage) of social insurance versus social assistance or labour market programs, or on the depth (size of benefit) of various categories of social protection. The revised SPI methodology also provides scope to measure the gender responsiveness of programs, and poverty targeting of programs.3

4. The primary objective of the Fiji Country Report is to present the results of the research on social protection programs and policies in Fiji from all related ministries; summarizing quantitative information on these activities to enable the formulation of a national Social Protection Index (SPI). B. Definition of Social Protection

5. Social protection is defined as the set of policies and programs designed to reduce poverty and vulnerability by promoting efficient labor markets, diminishing people’s exposure to risks, and enhancing their capacity to protect themselves against hazards and interruption/loss of income. 6. This definition categorizes all programs under the traditional components of social protection as social insurance, social assistance, and labor market programs. Microfinance as a form of social protection is excluded from the calculation of SPI since it does not involve a transfer in cash or kind and beneficiaries incur loans or debt instead of transfers. Thus, by eliminating microfinance from the coverage of social protection programs, three major programs are left: (i) social insurance (i.e., the categories of old-age insurance, programs for the disabled,

1 ADB. 2003. Technical Assistance for Social Protection Index for Committed Poverty Reduction. Manila (TA 6120-

REG); ADB. 2006. Technical Assistance for Scaling Up of the Social Protection Index for Committed Poverty Reduction. Manila (TA 6308-REG).

2 ADB. 2010. Technical Assistance for Updating and Improving the Social Protection Index. Manila (TA 7601-REG).

3 To be able to calculate with relative accuracy the poverty-targeting rate of programs, household surveys need to

contain a social protection data. However, the data of the survey was not available at the time of writing this report.

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and health expenditure on insurance and pensions; (ii) social assistance (i.e., the categories of non-contributory health insurance, conditional cash transfers, child protection, and unconditional cash transfers; and (iii) labor market programs as shown in Table 1.

Table 1: Social Protection Categories and Types of Programs

Social Protection Category Type of Program

Social Insurance Programs Pensions Unemployment Benefits Health Insurance - but not universal health insurance Other social insurance (maternity, disability benefits)

Social Assistance Assistance for the elderly (e.g., non-contributory basic allowances for

the elderly, old-age allowances) Health assistance (e.g., reduced medical fees for vulnerable groups) Child protection (school feeding, scholarships, fee waivers, allowances for orphans, street children initiatives) Family allowances (e.g., in-kind or cash transfers to assist families with young children to meet part of their basic needs) – excluding any transfers through the tax system Welfare and social services targeted at the sick, the poor, the disabled, and other vulnerable groups Disaster relief and assistance Cash/in-kind transfer (e.g., food stamps, food aid) Temporary subsidies for utilities and staple foods - only if imposed in times of crisis and if targeted at particular vulnerable groups. General subsidies are excluded even if their rationale is to assist the poor Land tax exemptions

Labor Market Programs Direct employment generation through public works programs –

including food for work programs Direct employment generation through loan-based programs – included if loans are subsidized and/or job creation is an explicit objective of the program Labor exchanges and other employment services – if distinct from social insurance and including retrenchment programs Unemployment benefits – if distinct from social insurance and including retrenchment programs Skills development and training – included if targeted at particular groups (e.g., the unemployed or disadvantaged children. General vocational training is excluded).

Source: ADB. 2011. The Revised Social Protection Index: Methodology and Handbook. Manila.

7. There is no formal definition of social protection in Fiji although the country recognizes the focus on the poor and vulnerable and cash or in-kind transfers as part of social protection. The role of safety nets in Fiji is diverse and as in many other countries, it includes both private and public mechanisms of support.

8. In terms of the private mechanisms, the reliance on community support in Fiji has been historically strong, especially in rural areas. The role of private transfers has been also significant. The analysis of the household survey data indicates that 20% of the population living in households receives remittances from abroad while 12% receive domestic remittances. The social insurance system is presented by pensions from the Fiji National Provident Fund (FNPF). However, its coverage is quite small. The system of social assistance is represented by a number of welfare programs with a small coverage for labor market programs.

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C. Report Structure

9. The Fiji Country Report is structured as follows:

Chapter II contains a brief overview of the social and economic development in Fiji.

Chapter III describes current social protection activities and programs in the country using ADB’s typology.

Chapter IV provides an overview of the derivation of SPI and its disaggregation.

Chapter V presents the analysis of the country results.

Chapter VI discusses the conclusion and recommendations.

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II. COUNTRY OVERVIEW

A. Geography

10. The Fiji comprises 320 islands, which are divided into four administrative areas. This South Pacific Island nation is located between Vanuatu and Tonga. B. Demographic Profile

11. More than two thirds of the population lives in the Central and Western Divisions on the island of Viti Levu. According to the Bureau of Statistics, the 2006 census recorded the citizen population of Fiji at 837,271 with indigenous Fijians constituting 57% of the population. Fiji Indians, whose ancestors migrated to Fiji in the late 19th and early 20th centuries, is 37% of the population. The remaining 6% consists of minority communities, including people of mixed ethnic origin and settlers from various Pacific Island countries (e.g., Australia, New Zealand, China and Europe). 12. The During 1996-2007, the Fijian population increased at an average rate of 1.7% per year while the Fiji Indian population continued to decline at an average rate of -0.7% per year. There is a major demographic shift in Fiji since 1987. In 1986, Fiji Indians is slightly more than 50% of the population. 13. Most of the population and employment are located on the main island of Viti Levu, which has 80% of the population in 2007 census; the other large island of Vanua Levu has 20% of the population. Fiji currently has over 80,000 squatters on land have no legal title or formal occupancy rights. Sometimes these squatters have informal arrangements with landowners and in other cases they are squatting on public lands. The squatters often have no connections for electricity or piped water supplies in their basic dwellings. Both indigenous Fijians and Indians displaced from the formerly leased farmlands have swelled the numbers of squatters in recent years. 14. According to the most recent census in 2006, the total female population is 410,095 and male population is 427,176 as shown in Table 2. Similarly, in the Fijian and Fiji Indian category, the male population is higher than the female. In comparison to previous population figures, total male population in both the 1986 and 1996 census is higher than the female population. Over the years, the trend for females has been rising.

Table 2: Population Size by Ethnicity and Gender, 2007

Total Chinese European Fijian Indian Part

European Rotuman

Other Pacific

Islanders

All Others

Total 837,271 4,704 2,953 475,739 313,798 10,771 10,335 15,311 3,660

Male 427,176 2,435 1,609 242,476 159,873 5,659 5,260 7,960 1,904

Female 410,095 2,269 1,344 233,263 153,925 5,112 5,075 7,351 1,756

Source: 2007 Census of Population, Fiji’s Bureau of Statistics

C. Economy

15. The Fiji, endowed with forest, mineral and fish resources, is one of the most developed of the Pacific Island economies, although there is still a large subsistence sector. Sugar exports,

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remittances from Fijians working abroad, and a growing tourist industry with 0.5 million tourists annually, are the major sources of foreign exchange. The well-developed services sector and manufacturing, especially garment production for export also provides significant employment, although it has suffered recent export market losses. In the services sector, the biggest share of employment is in community and personal services, and wholesale and retail trade. 16. GDP per capita is about F$5,760 and the share of the labor force employed in the formal economy is smaller than the employed population in the informal sector. Fiji is one of the most developed of the Pacific Island economies, though still largely a subsistence sector. 17. The country’s economy is significantly dependent on tourism with about 0.5 million visitors per year, and remittances from abroad. The sugar industry occupied a dominant role, but declined significantly in recent years. The overall economy has been rather stagnant over the last few years. 18. The volatile political situation has some adverse impact on the country's economy, particularly on tourism numbers and foreign investor confidence. Additionally, the EU suspended aid until the interim administration is able to hold a democratic election. These resulted in the population being less prosperous than expected given Fiji’s favorable resource endowment and a relatively long history of commercial development by southwest pacific standards. 19. Several political coups caused political instability, emigration of skilled workers and business people, and reduced investment levels in the private commercial sector. Many of these cane farmers had to leave their former farms and seek employment elsewhere. Fiji’s economy has been dependent on foreign exchange provided by remittances from Fijians working abroad. The remittances have increased significantly over the years. The current global financial crisis is also expected to have a significant impact on the local economy and the Fiji dollar has been devalued to cushion some of the effects. 20. Fiji has a military-led government since end of 2006. In 2009, the constitution was abrogated, and the Government is run by special Presidential decrees. There is a proposed amendment to the current constitution, with an emphasis on electoral reform. The new timeline for a newly elected government is in 2014. The diversity of Fiji’s population, history and culture is well recognized as an important characteristic of Fiji and made the basis of the present military government’s overall policy framework. This is reflected in the government statements on its national vision, mission and underlying philosophy.5 D. Poverty and Inequality

21. Poverty and unemployment increased since the 2006 coup, although the overall economy has grown, with tourism being the strongest growth sector. Fiji mostly has relative poverty, and also absolute poverty or financial hardship. People are generally adequately fed and clothed, although the housing standards of a significant minority of the population are quite poor. Almost 40% of the population does not have sufficient income to pay their regular bills, cover additional costs of education and utilities, or provide expected material contributions to the community and religious activities which are a large part of Fijian way of life.

5 Strategic Plan for the New Century: Policies and Strategies for the Sustainable Development of Fiji, 1999.

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22. The prevalence of poverty, based on the costs of basic needs poverty line, stands at about one third of the population. The most recent quantitative analyses of poverty in Fiji define poverty at the country level as the percentage of the population below the Basic Needs Poverty Line (BNPL)6. A population weighted BNPL for all of Fiji is estimated to be about F$700 per month in 2008-2009 for a household with 4 adult equivalents. 23. The incidence of poverty in urban areas declined from 28% to 19% in the five years from 2002-2003 to 2008-2009, a decline of 34%. In rural areas, the incidence of poverty increased from 40% to 43% over the same period. Also, more than a third of all households in rural areas are living in poverty, and the proportion of rural households living in poverty is increasing. In rural areas, the relationship between household size and poverty incidence is much greater. For example, in rural areas, households with at least 8 members have a poverty rate of 70% as opposed to 43% in urban areas. Using global poverty indicators such as the World Bank’s Purchasing Power Parity of USD$1.25 per day, the percentage of poor people in Fiji will be close to 60-70%. However, the prevalence of extreme food poverty is quite low, at about 7.5% of the population. The Government of Fiji considers further reduction in poverty as one of its key objectives. 24. In aggregate, for both major ethnic groups, the incidence of poverty declined from about 35% to 31%. Disaggregating by ethnicity, the proportion of indigenous Fijians who are poor decreased from 35% to 31%, while the proportion of Indians experiencing poverty decreased from 36% to 32%. In Fiji, households with more children and elderly are more likely to be poor. 25. For instance, in 2009, households with elderly and children are the poorest, having a poverty headcount of 52%; while households with no elderly and children have a poverty headcount of 22%. The high levels of poverty among the elderly are attributed to a large number of elderly not covered by the pension system. The Fiji National Provident Fund (FNPF) covers only formal sector workers with contributions, and there is no basic old age social pension. However, the country has a fairly high human development indicator, with life expectancy at birth at 71.3 years (i.e., 68.7 and 74 for males and females, respectively). The literacy rate stands at 93.7%, with average years of schooling at 13 years. 26. The social protection system in Fiji has the objective of providing a social safety net for the most vulnerable and poorest people. The Government of Fiji tries to achieve this objective under limited budget resources. In recent years, Fiji has been vulnerable to four main types of risk: (i) inability to meet basic needs; (ii) exclusion from opportunities, services, or participation in the community; (iii) abuse, neglect, and self-harm; and, (iv) unsafe, insecure, or unsanitary living conditions. 27. Over the years Fiji has been following policy reforms and structural adjustments with an aim to create more economic growth but these reforms have increased poverty and inequalities. For instance, in 1992 the Value Added Tax (VAT) was introduced on the advice of the World Bank and IMF. It started at 10%, which was then increased to 12.5%; and further increased to 15% in 2011.

6 The process is to first estimate the income needed to ensure a minimum living standard for a “standard household

or family” comprising 2 adults (i.e. assumed working) and 3 children, (i.e., equivalent of 2 adults); a total of 4 adult equivalents for the standard family. This process includes calculating the Food Poverty Line (which is the cost of the basket of foods necessary to provide the basic nutritional diet for the standard family) and a Non-Food Poverty Line, which is the cost of the basic non-food requirements such as housing, clothing, education etc.

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28. It is acknowledged by economists that VAT is regressive tax and causes more hardship for poor than others. Moreover, the corporatization of public enterprises such as water through the establishment of the Water Authority of Fiji (WAF) led to an increase in the cost of supply of water connections and sewerage, affecting the poor and increasing housing costs. There have also been rising electricity costs due to the privatization of Fiji Electricity Authority (FEA). 29. In addition, the Fiji dollar was devalued by 20% in 2009 and while the benefits led to an increase in foreign reserves, the effects of the devaluation has been absorbed heavily into the Fiji economy. According to the Fiji Bureau of Statistics in 2010, this led to increase in food prices by 38% and building costs by 29%. Hence, the negative effect on cost of living for many people, especially the poor and low-income earners, is high. 30. Currently, 65% of workers in full-time employment are earning wages below the poverty line in the last four years. The Government has twice deferred wage increases set by the Wages Council. Low wages impact the ability of the poor to feed their families, receive proper housing, and fund educational expenses. There have been continual increases in the price of food and fuel, and inflation in recent months. 31. Given the present socio-economic hardships faced by the people, the Ministry of Social Welfare and Poverty Alleviation recently introduced certain poverty alleviation programs such as the food voucher program that assist beneficiaries of the Family Assistance Scheme and about 10,000 others as part of the social assistance program. The new Food Voucher Program represents a significant commitment by the Government to support the underprivileged involving the issuance of monthly food vouchers valued at F$30, valid over a 60-day period. There is also the free bus fare scheme for school children whose parents combined income is below F$15,000. In addition, there are proposed provisions for free textbooks over the next few years and reduction of school fees for building, sports etc. E. Employment and Labor Force

32. The employed population is 298,974 while the unemployed and underemployed is about 74,744 in 2009. Informal economy employment is about 62% of the total employed population. This comprises a combination of self-employment in the cash economy, both urban and rural, and semi-subsistence rural production. Agriculture accounts for only 10% of the GDP versus 77% in the services sector, occupying 70% of the labor force. The high rate of unemployment continues to be a serious threat to the social and political stability of the country. 33. One important area in Fiji and the Pacific, which expanded in scope, is the development of cash remittances to extended family members by Fijian migrants who migrate to towns or abroad for cash employment. Migrant remittances from abroad are becoming a major force in the Fijian economy.

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III. CURRENT SOCIAL PROTECTION PROGRAMS AND ACTIVITIES

34. This chapter presents an overview of the data collection process, objectives, and current social protection activities in Fiji including challenges and difficulties encountered during the course of the study. The two-fold objective of this chapter is to present the main features of the social protection programs in the country and provide quantitative information that will serve as the basis for the formulation of the Social Protection Index (SPI). A. Data Collection

35. The data collection and information in this report is collected from the household survey data of the Fiji Bureau of Statistics, annual reports, databases and press releases of government ministries and departments. Also, there are discussions and interviews with responsible agencies for social protection programs. Table 3 lists the data sources for Fiji.

Table 3: Data Sources for Fiji Type of Social Protection Program Data Source

Disaster Relief and Assistance National Disaster Management Office

Educational Assistance for Children Department of Multi-Ethnic Affairs Fijian Affairs Board

Other Child Protection Programs Ministry of Social Welfare, Women and Poverty Alleviation

Other Social Assistance Ministry of Social Welfare, Women and Poverty Alleviation Public Rental Board The Fiji Housing Authority Housing Assistance & Relief Trust

Maternity Insurance Ministry of Labour, Industrial Relations and Employment

Pension Fiji National Provident Fund Employment Generation Training and Productivity Authority of Fiji

Department of Youth and Sports Employment Services Ministry of Finance

Ministry of Labor, Industrial Relations and Employment

Skills Development Programs Department of Youth and Sports

36. Some of the difficulties encountered in data collection include lack of information and data availability. The task of obtaining this information successfully required persistence and a painstaking approach involving numerous follow-ups for clarification and double-checking. There was also extensive delay in retrieval of data because certain officers in charge of the data acted as gatekeepers. Thus, some required information in terms of expenditure, beneficiary, and poverty and gender targeting, used professional judgment and estimates. B. Social Assistance Programs

37. The Government of Fiji has a range of programs which currently provides social assistance in the form of the cash payments, food vouchers, housing assistance and assistance for education to the primary group, including the poor, the elderly, sole parents and homeless families primarily administered by the Ministry of Women, Poverty, and Social Welfare. These programs are the (i) family assistance scheme, (ii) care and protection allowance; (iii) poverty alleviation scheme; (iv) food voucher program; (v) home ownership scheme; (vi) housing assistance and relief trust; (vii) public rental board housing assistance; and (viii) education assistance or scholarships. 38. The disadvantaged group receiving social assistance from the Government come from a wide range of categories such as land less people, disabled, ex-prisoners and other people in

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need. The key social assistance programs have historically been the Family Assistance Program (FAP) and Care and Protection (C&P) Allowance. In 2010, the Government started introducing the Food Voucher Program (FVP) and the free bus fare program.

1. Family Assistance Program

39. The Family Assistance Program (FAP) provides small amounts of financial assistance to families in destitute conditions through the Ministry of Women, Poverty and Social Welfare. The scheme is an affirmative action program legislated under the Social Justice Act of 2000. It is a form of assistance given temporarily to a family or household whose livelihood depends on an inadequate source of income. Allowance is provided temporarily to destitute families for supplementary income (i.e., F$60 – F$100 per month). 40. Those eligible for the scheme include the vulnerable population without support such as the elderly, chronically ill, and physically disabled. FAP is one of the largest funded programs under the category of social assistance. In 2008, 26,962 beneficiaries received about F$18 million under this assistance scheme and in 2009 about 27,000 people (or 3% of population) received a payout of F$20 million. However, although the expenditure in 2010 declined to F$15 million, the number of beneficiaries remained at 27,000. Almost 50% of the beneficiaries are females in 2009. 41. FAP remains the key social assistance program in support of vulnerable groups in Fiji. Despite being the key component of social assistance in Fiji, FAP has a rather limited coverage. Considering the shared resources within households and the average household size, it is estimated that about 13% of the population directly or indirectly benefit from the FAP program. 42. The limited coverage of FAP renders the program inadequate to support everyone under the poverty line, which is about 35% of the population as of 2008. The main constraint in expanding the coverage of the program is the lack of fiscal resources. Yet, the cost of the FAP as a percentage of GDP is currently rather modest, about 0.3%.

2. Care and Protection Allowance (CPA)

43. The Care and Protection Allowance (CPA) is much smaller than the FAP, and targets the needy families with children. Children under the age of 17 and deemed to be at risk including the neglected, abused, orphans, children in need of care, protection, and supervision qualify for State support. The allowance provides the child with adequate care when parents, or the responsible adult in charge of the child’s care are unable to execute their responsibility. 44. Best practice requires that a child continue to be supported by a caregiver or relative within his or her family. There are three main aspects that Welfare Officers must thoroughly assess before pursuing CPA from the Department of Social Welfare: (i) level of commitment to the children; (ii) support available from natural parents; and (iii) ability of the family or applicant to manage the child given the age, income, developmental stage of the child. 45. A cash grant of F$30 to F$60 per child per month is given to families of guardians supporting children in private homes and residential facilities such as St Christopher Home, Dilkusha, Veilomani Boys Home, and Treasure Home in Ba. The CPA has a fixed government grant of F$400,000 for 2008-2009, with increasing to F$4.4 million in 2010.

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46. The number of beneficiaries also increased annually from 320 in 2008 to 361 in 2009. In 2010, there are 541 beneficiaries. Based on Ministry of Social Welfare estimates, about 85% of the beneficiaries are females in 2009. Originally, the program is reserved for children in foster or institutional care, resulting in only about 500 cases. The recent reform of the FAP resulted in categories of households with children as single parents, deserted spouses, and death of breadwinner and prisoner dependents being transferred under the administration of CPA.

3. Poverty Alleviation Scheme

47. The program is designed by the Ministry of Women, Poverty and Social Welfare to improve the coping capabilities of Family Assistance recipients and other disadvantaged groups. Furthermore, the program’s objective is to meet the growing demand for low cost housing by improving the quality of life and living conditions of beneficiaries. The program provides assistance and access to decent housing. The target group is low-income earners with a total household income not exceeding F$6,500 per annum.

48. The program is a legislated affirmative action program under the Social Justice Act of 2000. The program provides housing to individuals and families living in poverty and inadequately housed with the construction of low cost and secure housing built on their behalf by NGOs. In addition, funds may be used to improve conditions of existing homes such as house renovations and extensions to cater to special needs groups (e.g., disabled and the elderly). 49. The people who receive housing assistance are usually the recipients of Family Assistance Allowance, recipients of Care and Protection Fund, recipients of ex-serviceman fund, ex-prisoners recommended by their respective Provisional Council officers, and prison services street kids recommended by the Child and Family Service Officers. The poverty alleviation fund also provides assistance for income-generating activities and fire victim grants. 50. The poverty alleviation scheme expenditure in 2008 is F$1.6million for about 5,874 beneficiaries although the expenditure declined to F$1.47 million in 2009, despite reaching the same number of people. In 2010, the expenditure on this scheme further declined to F$1.41 million with the number of beneficiaries slightly increasing to 5,877. About 60% of the beneficiaries in 2009 are females.

4. Food Voucher Program

51. The Food Voucher Program is an initiative of the Government through the Ministry of Women, Poverty and Social Welfare as part of the strategy to address poverty in Fiji beginning in 2010. The purpose is to cushion the impact of the Value Added Tax (VAT) increase on poor families. Recipients include the Family Assistance and Care and Protection program beneficiaries. The Food Voucher entails an issuance of a monthly food voucher valued at FJ$ 30 by the approved vendors for the program. 52. This program is targeted to elderly over 70 years of age without receiving any form of government assistance, those incapable of working due to disability, expectant mothers in rural areas, mothers of infants outside the eligibility criteria for receiving Family Assistance Allowance, and primary school children from disadvantaged families in remote rural schools with low family income. Eligibility for food voucher is expanded in 2011 to elderly aged 70 and above, pregnant mothers for the duration of 7 months, and families with children attending school in remote rural areas.

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53. In addition, based on the agreement between the Government of Fiji and the Fiji Bus Operators Association in 2011, the following categories are also be eligible for a concession on normal bus fares: (i) senior citizens aged 60 years and above receive half fare; (ii) free bus service to all disabled persons; and (iii) bus fare vouchers for disadvantaged and school children from poor family backgrounds. In 2010, this new program paid $7 million to 27,000 beneficiaries.

5. Home Ownership Scheme

54. This objective of this scheme is to meet the growing demand for low cost land and housing. Target group is people earning no more than F$6,500 per annum and the benefits are in the form of interest subsidy upon the condition of monthly payments to the Housing Authority. This housing scheme is a grant program with an expenditure of F$250,000 in 2008. The expenditure increased to F$500,000 in 2009 but decreased to F$300,000 in 2010. There are 35 recipients in 2008 and none during 2009-2010. Based on the assumptions for equal quota of men and women, 50% of beneficiaries in 2009 are female.

6. Housing Assistance and Relief Trust

55. The Housing Assistance Relief Trust (HART) homes accommodate the destitute and poor families in Fiji. The draft National Housing Policy stated that the demand for the houses kept increasing with a total of 772 HART homes nationwide. Destitute families paid between 50 cents to $5 a week, depending on their type of home. There is no increase in rentals in the past decade because the tenants were poor and the HART homes are fully financed by the State through grants from the Ministry of Housing. 56. Over the years, HART homes received an annual allocation of $1 million for capital grants. The weakness of HART includes the low proportion of tenants that graduated to Public Rental Board homes when their children secured employment. The HART homes scheme received a F$1 million annual grant from the government, benefiting 250 recipients in 2008, 230 in 2009, and 350 in 2010. For this assistance program, about 75% of the beneficiaries in 2009 are females.

7. Public Rental Board Housing Assistance

57. The Housing Authority (HA) began its operations in 1958, after the Government implemented the Housing Act in 1955 and HA’s portfolio included the sale of houses, land, and flat rentals. However, the rental properties did not begin until mid to late 1960s and the early 1970s. 58. In the late 1980s, the Housing Act of 1955, was amended to separate the sale of land and properties, and flat rentals for the creation of the Public Rental Board (PRB) in 1989. The initial plan was for the PRB to sell off the existing estates, pay off the $19 million debt passed from HA, and provide affordable rental flats to low-income earners in Fiji on a transitional basis without incurring a loss. 59. The PRB is owned by the Government but managed by a board. The PRB currently has a total of 1,345 units of 1 to 2 bedroom flats, which are located in the Central, Western, and Northern Divisions of Fiji, namely in the suburbs of Suva, Levuka, Korolevu, Nadi, Lautoka,

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Savusavu and Labasa which make up the 19 estates of the PRB. The number of flats is likely to increase with the construction of 208 units in Raiwai and another 208 units in Raiwaqa. 60. The PRB is based on the subsidy assistance from the Government started in 1993. It usually varies from F$400,000 to F$500,000 annually. Since 2003, the Government increased its subsidy to $1 million per annum. However, there are instances of government shortfall to the PRB on subsidy allocation due to deficits in government budget. 61. Similar to HART homes scheme, public rental board housing assistance program receives an annual grant of F$1 million, reaching 265 families in 2008, 239 families in 2009, and 459 families in 2010. About 55% of the recipients of this assistance are female in 2009.

8. Education Assistance or Scholarships

62. Fiji has already adopted a social assistance approach in relation to tuition fees remission to facilitate school attendance in primary and secondary schools for children of poor families. The present government has a free bus fare program for school children. It is also proposing the introduction of free textbook provision of certain categories in the population over the next few years and reduction in fees set by schools for building and sports, etc. 63. The government affirmative action programs also provide some extra grants to schools allowing tuition fees to be waived for some groups of children from low-income indigenous and rural families in the outer islands. In addition, there are two major scholarship schemes such as the iTaukei for Fijian students, and the Multi-Ethnic scholarships program that assists disadvantaged students attending tertiary institutions of higher education and vocational training in tuition and stipend fees. 64. For iTaukei scholarship program, the government funding increased from F$8 million in 2008 to F$9 million in 2009. In 2010, government funding further increased to F$10 million. Similarly, the number of beneficiaries increased from 2,500 in 2008 to 3,000 in 2009. The beneficiaries further reached 3,500 in 2010. For the Multi-Ethnic scholarship program, the funding is F$4 million in 2008, increasing to F$5 million in 2009 and remaining at F$5 million in 2010. The number of beneficiaries in 2008 is 1,066; it increased to 1,200 in 2009 and 2010. Based on the equal quota assumptions for male and female, about 50% of females received educational assistance in both scholarship programs for the 2009. C. Social Insurance Programs

65. The sole social insurance program is the pension scheme that includes disability, old age, and survivor benefits.

1. Pensions

66. The Fiji National Provident Fund (FNPF) provides the major retirement income for workers in the formal employment sector. Currently, compulsory contributions of 16% of payroll are made on behalf of employees. Lump sum retirement benefits are paid at the retirement age of 55 years and upon death, invalidity, and migration. A special death benefit is also payable. 67. The FNPF was established as a self-funded retirement savings scheme and collects money from member and employer contributions, and investment returns on these contributions. These sources of funding enable the FNPF to pay for housing, education, medical

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expenses, and lump sum pension payment of retirees. A contributory national provident fund provides lump sum retirement grants available from 55 years, with an option of taking the pension alternative. Only a small minority of claimants take the pension option. 68. The FNPF has mandatory membership for people in the formal economy. In 1975, FNPF introduced the Pension Scheme to enable members to convert their savings into forms of income such as retirement pension. The member is given a choice to place a portion of savings for pension and retrieved upon retirement. FNPF then pays this pension every month as a lifetime benefit. If the member opts for a joint pension, the spouse continues to receive the monthly payments until death. The member cannot change the pension terms once the pension option has been chosen and payments cease upon death.

69. The FNPF recently implemented some changes effective 2010 with an understanding that it is a saving scheme for retirement of members and not a cash outlet to fund pre-retirement expenses. The FNPF extended assistance to fund essential needs such as housing, education, and medical expenses, adamant that members need to change their mindset about continual withdrawals before retirement. Some of the changes in effect include (i) removal of a ceiling of F$2,000 for local education, achievement of quality higher education, and member assistance in courses above F$2,000; (ii) coverage extension for medical benefits to a member’s siblings which is currently reserved only for the member’s spouse, children and parents; (iii) reduction of processing fee on partial withdrawal grounds from F$20 to F$10; (iv) funeral assistance or the introduction of a F$2,000 deduction from the Special Death Benefit (SDB) to cover for members’ funeral expenses since currently relatives of deceased members withdraw their funds for funeral expenses; and (v) repayments that allow members to repay monies withdrawn under partial schemes which can help ensure that members increase their balances for retirement.

70. The FNPF’s pension scheme is the largest social insurance program in Fiji and one of the biggest in terms of the payouts annually. On average, the pension scheme paid about F$41 million in 2008 to 9,790 beneficiaries, F$43 million in 2009 to 10,351 beneficiaries, and F$46 million in 2010 to 10,836 beneficiaries. In 2009, about 25% of the beneficiaries are females receiving F$10 million.

2. Work Injury Insurance

71. Fiji currently has an older style employer liability scheme for workers compensation based on the compulsory insurance, with employers covering their workers in private insurance companies. Work injury insurance is covered by an Employer Liability scheme that provides temporary disability benefits at two tiers of covered earnings, lump sum permanent disability grants, and some medical costs. However, individual employers cover this scheme and there are no government grants. Also, casual and family labor is not covered by the scheme. Since individual employers privately fund the work insurance scheme and not the Government, there is no data available on the number of beneficiaries and payments made.

3. Unemployment Benefits/Insurance

72. There is currently no form of unemployment insurance available in Fiji. The existing labor legislation provides provisions for redundancy and severance pay for laid off and dismissed workers. According to the Ministry of Labour and Industrial Relations and the Employment Relations Bill, there are provisions for redundancy payments from employers to workers for job loss not of their own volition. However, due to changes in government and political upheavals in the recent decade, this unemployment benefit provision has not taken effect.

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73. There are also discussions that longer-term redundancy payments are a less effective means of meeting the needs of workers experiencing job loss than unemployment insurance. Since lump sum payments tend to be spent quickly, particularly in Pacific countries, there is no more money left to meet basic living necessities. Also, the amount of lump sum received is not a fixed amount but based on years of service with the employer. Thus, this may not necessarily correlate with the period of unemployment, which follows a redundancy. For these reasons, it is preferable for Fiji to consider developing an unemployment insurance scheme for wage and salary earners in the formal employment sector of the workforce. 74. The coverage of an unemployment insurance scheme for the formal economy would be essentially the same as the present coverage of compulsory contributions to the FNPF. The Government could discuss with the FNPF the possibility of becoming the collection agent for unemployment insurance premiums. The FNPF could also be the payment agent for paying out the benefits. Fiji is not yet at a stage where informal economy workers can be incorporated in an employment benefit payment scheme. For informal workers, a combination of community employment work and self-employment development grants seems to be the better strategy in the short-term.

4. Maternity Benefits

75. Maternity protection, in the form of maternity insurance, supports the employment of women in the formal economy and helps minimize some of the maternity discrimination of compulsory maternity leave. Many women appear to leave the workforce following childbirth, which denies them equal participation and workforce benefits. 76. Unfortunately, Fiji has no maternity benefits scheme but provides public sector employees with paid maternity leave for up to 12 weeks. Private sector employees are generally not provided with any maternity benefits except those on workforce agreements and in larger corporations. Most current maternity leave schemes provide for 12 or 14 weeks paid leave, usually 6 weeks prior to delivery of the baby, and 6 to 8 weeks thereafter. The costs may be borne by employers, the employees, other insured persons, or the Government. 77. There are no provisions for traditional and informal economy workers. This means that almost half of the Fiji workforce is not covered by any maternity benefits. Under the Employment Relations Promulgation (ERP) of 2007, women employees are entitled to maternity leave to protect a woman’s job during pregnancy, and before and after giving birth. This ensures that the employee can resume the same job or an equivalent job upon return from maternity leave. Maternity benefit is another social insurance program, which are not mandated and funded by the State Government of Fiji and hence, has data unavailability on the number of beneficiaries and the related expenditures. D. Labor Market Programs

78. The labor market programs in Republic of Fiji include the youth development programs, Youth Employment Options Centre programs, National Youth Service and Training for the Unemployed.

1. Youth Development Programs

79. The aim of the Youth Development Grant is to support youth development work and initiatives by civil society such as NGO’s and faith-based organizations. Some of the objectives

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of such programs are to (i) empower youths through formal and nonformal education and training; (ii) promote life skills, values and experience through training and volunteer work; and (iii) respond to the specific needs of ‘youths at risk’. 80. About 20 or more local youth groups are assisted each year through this grant program. The program receives an annual grant of F$100,000, targeted at about 800 youths on a yearly basis. Only 30% of the funds are allocated each year to female youths.

2. Youth Employment Options Centre

81. The National Youth Training Centre provides training to school dropouts and disadvantaged youth. The program aims to equip people with knowledge and skills that enable them to earn a source of living and improve their livelihood. These programs and services have been continuous since the establishment of the center. There has been tremendous development over the years, leading to more demand in resources and manpower. 82. The center provided training in the three areas of general carpentry, agriculture and multi-skills training. Trainees of general carpentry receive a Training and Productivity Authority of Fiji (TPAF) Level III Trade Certificate. The minimum requirement is the completion of form 4, a duration of 10 months. The age limit is between 18-35 years old. 83. Agriculture training confers a General Certificate in Agriculture with a minimum requirement of Attempted Class 8 and currently engaged in farming. The training duration is 10 months for trainees 18-35 years old. Course content include vegetable and root crop production, livestock production, piggery, poultry, aquaculture, pest and disease control, farm management, soil management, and agriculture and the environment. 84. Finally, the multi-skills training program is for females with the minimum requirement of primary school completion. The program duration is 6 months for trainees between 18-35 years of age. Course content include weaving, sewing, screen-printing, cooking, catering, jewelery making, tie and dye, embroidery, and small-scale farming.

85. Similar to the Youth Development program, the Youth Employment Options Centre also receives an annual grant of F$100,000 from the Government each year. In 2008, 206 youth received training, 210 in 2009, and only 200 in 2010. Almost half of the recipients are females.

3. National Youth Service

86. As part of the National Youth Service, 12 department of youth staff are trained in program delivery, which was presented from 1995 to 2007 to youth groups, civil servants, secondary and tertiary students, parents, and others. This program focuses on meeting the needs of youths. Approximately 6,000 youths leave school each year (i.e., school dropouts and graduates) unable to find jobs in the local economy. 87. This program, through National Youth Service, aims to continue being a valuable resource to parents, civil servants, and other adults. The National Youth Service scheme receives an annual grant of F$350,000 on an annual basis, with a slight increase to F$400,000 in 2010. Each year, about 200 youths are targeted; of which, 50% are females.

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4. Training for the Unemployed

88. The Fiji National University (FNU) in conjunction with the National Employment Centre implements this program targeting youths with basic education, but hold no formal qualifications or previous jobs. The Training Productivity Authority of Fiji (TPAF) departments at FNU, collaborates with the National Employment Centre to provide skill-based training to youths of Fiji such as carpentry, mechanics, engineering, electrical courses, etc. In 2010, this program received a F$1million grant from the Government with the aim of reaching 5,000 beneficiaries; of which, 50% are females.

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IV. THE SOCIAL PROTECTION INDEX AND ITS DISAGGREGATION

89. The revised Social Protection Index (SPI) has a unitary indicator that can be disaggregated for analytical purposes. The revised SPI is calculated by Total Social Protection Expenditures per Total Potential Beneficiaries by 25% of the GDP per capita (representing average poverty line expenditures). In other words, the total social-protection expenditures spread across all potential beneficiaries are compared to poverty-line expenditures in each country.

90. The revised SPI is calculated by Total Social Protection Expenditures per Total Potential Beneficiaries by 25% of the GDP per capita (representing average poverty line expenditures). In other words, the total social-protection expenditures spread across all potential beneficiaries are compared to poverty-line expenditures in each country.

91. The revised SPI index can be disaggregated into two components, one for the ‘depth’ of coverage and the other for the ‘breadth’ of coverage of social protection programs. The first indicator is the Total Social Protection Expenditures divided by the Total Actual Beneficiaries (i.e., the average size of benefits actually received or ‘depth’). The second indicator is the Total Actual Beneficiaries divided by the Total Potential Beneficiaries (i.e., the proportion of potential beneficiaries actually reached or ‘breadth’). 92. The revised SPI can also be disaggregated by the major categories of social protection programs: social insurance, social assistance and labor market programs. When the total expenditures per total potential beneficiaries for each major program are weighted in population terms, the program SPIs add up to the total SPI.

93. Furthermore, the revised SPI can also be disaggregated by expenditures per potential poor and non-poor beneficiaries. Finally, gender-wise data allows the disaggregation of expenditure by gender. 94. The derivation of SPI poor/non-poor and SPI women/men used poverty and gender targeting rates. The said rates are based on the results of household surveys, administrative reports of social protection implementing agencies and in some instances, on the professional judgment of the compilers. A. Basic Statistics

Table 4: Fiji Basic Statistics for 2009

Statistic Unit 2009 Value Source of Data Notes

GDP (current prices) millions 4,858 Fiji Bureau of Statistics- National Accounts

2009

GDP per capita (current prices)

FJD 5,760 Fiji Bureau of Statistics- National Accounts

2009

GNI (current prices) millions 5,614 Fiji Bureau of Statistics- National Accounts

2009

Total Population units 845,535 Fiji Bureau of Statistics- Census

2009

Number of unemployed/ under-employed

units 74,743.5 Fiji Bureau of Statistics- Census

2007

Population aged 60 years and over

units 62,940 Fiji Bureau of Statistics- Census

2007

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Employed Population units 298,974 Fiji Bureau of Statistics- Census

2007

Population living below national poverty line

units 262,115.9 Household Income & Expenditure Survey

2008/ 2009

Disabled population units 12,578 Fiji Bureau of Statistics- Census

2007

Children aged 0 to 14 years

units 243,121 Fiji Bureau of Statistics- Census

2007

Per capita poverty line income (annual)

units 175 Household Income & Expenditure Survey

2008/ 2009

Average household size FJD 5 Household Income & Expenditure Survey

2008/ 2009

Exchange rate persons FJD1.767 Reserve bank of Fiji 2011 Sources: Country Sources, 2011.

95. The analysis is based on government spending on social protection in Fiji during 2009. GDP in current prices for 2009 is approximately F$4.858 million with GDP per capita of F$5,760. Total population is estimated to have reached 845,535; 7.4% are above 60 years of age, and 28.8% are children less than 15 years of age in 2009. 96. With a per capita poverty line income of F$700 per month in 2007-2008 prices, it is estimated that about 31% people in Fiji live below the poverty line. According to the latest census surveys in Fiji, approximately 3.3% people are either unemployed or underemployed in 2009. It is estimated that about 1.5% Fijians are disabled.

B. Social Protection Expenditure and Beneficiaries

97. The Government of Fiji spent a total of F$82,368 million on social protection constituting 1.7% of GDP in 2009. The highest spending is on social insurance (53%) followed by social assistance (46%). Expenditure on labor market programs constitutes only 1% of total social protection spending in Fiji as shown in Table 5.

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Table 5: Social Protection Expenditure by Social Protection Category

2009 Annual Expenditure (million FJD)

%age

Pensions 43 53.0%

Health Insurance 0 0.0%

Unemployment Benefit 0 0.0%

Other Social Insurance (e.g. maternity, disability benefits) 0 0.0%

ALL Social Insurance 43 53.0%

Assistance for Elderly 0 0.0%

Health Assistance 0 0.0%

Child Protection 0 0.0%

Disaster Assistance and Relief 0 0.0%

Other Social Assistance 38 46.0%

ALL Social Assistance 38 46.0%

Labor Market Programs 1 1%

TOTAL SP EXPENDITURE 83 100.0%

GDP 4,858

SP Expenditure Indicator 1.7% Sources: Country Sources, 2011

98. A further breakdown reveals that F$43,448 million (53%) of total social protection spending is allocated to pension payments for about 10,351 formal sector workers from the civil service and the private sector. This constitutes the largest social protection spending by the Government of Fiji. There are no comprehensive health insurance schemes and unemployment benefits provided by the Government of Fiji. Even other social insurance schemes such as maternity and disability benefits are non-existent in Fiji.

Table 6: Expenditures and Beneficiaries of Social Protection Programs, 2009

Social Protection Program Implementing

Agency Detailed Category

Expenditure (Million FJ$)

Beneficiaries (000s)

Poverty Alleviation Scheme HA OSA 1.5 5.9

Family Assistance Program MSWWPA OSA 20.0 27.0

Care and Protection Program MSWWPA CP 0.4 0.4

Home Ownership Plan Scheme HA OSA 0.5 0.1

iTaukei Scholarships Scheme Mi OSA 9.0 3.0

Housing Assistance and Relief Trust

HART OSA 1.0 0.2

Multi-ethnic Affairs Scholarships DMA OSA 5.0 1.2

Public Rental Board Housing Assistance

PRB OSA 1.0 0.2

Pension scheme (disability, old age, and survivor benefits)

FNPF PEN 43.4 10.4

Youth Development Program DYS LMP 0.1 0.8

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Youth Employment Options Centre

DYS LMP 0.1 0.2

National Youth Service DYS LMP 0.4 0.2

Training for the Unemployed TPAF LMP 0.3 2.3

Total 83 51.8 Note: PEN-Pensions; OSA-Other Social Assistance; CP-Child Protection programs; PEN – Pensions; LMP- Labour Market Programs Source: Country Sources, 2011

99. The second highest spending after social insurance is for social assistance, which accounts to 46% of total social protection spending by the Government. In 2009, the Government spent about F$38,370 million on social assistance programs, benefiting 5.0% of the total population. Three government cash transfers (i.e., Poverty Alleviation Scheme, Family Assistance Program and Food Voucher program) constitute the largest share of expenditure under the social assistance category. 100. In addition, the expenditure also includes other social assistance for housing and scholarship assistance. Approximately F$400,000 is spent on child protection and care program. The size of the social assistance budget as a proportion of GDP is quite small. The budget for these key social assistance programs is managed by the Housing Authority and Housing Authority. The Department of Social Welfare increased the budget in nominal terms from F$22.4 million in 2009 to about F$39 million in 2010, it still represents only 0.6% of GDP. Only around 1% of total social protection spending currently goes to labor market programs in Fiji.

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V. ANALYSIS OF COUNTRY RESULTS

101. This chapter presents the results of the SPI calculation and its disaggregation into the three categories of social insurance, social assistance, and labor market programs. Further disaggregation by depth and breadth of coverage, by poor or non-poor, and by women or men are also discussed. A. Disaggregation by Social Protection Category

102. The total SPI for Fiji is 0.060. The SPI for social insurance is 0.032, 0.028 for social assistance, and 0.001 for labor market programs as shown in Table 7. These results suggest that Fiji spends about 6% of per capita poverty line expenditure on social protection (set at 25% GDP per capita). A disaggregation by social protection category reveals that expenditure on social insurance, social assistance, and labor market programs are about 3.2%, 2.8%, and 0.1%, respectively, of per capita poverty line expenditure. These results reveal that social protection expenditure is very low in Fiji, even by the standards of poverty-line expenditure.

Table 7: Social Protection Index, by Category, 2009

Units Social

Insurance Social

Assistance

Labor Market

Programs

All SP Programs

Total SP Expenditure Millions 43 38 1 83

Beneficiaries 000s 10 38 4 52

Reference Pop 000s 362 518 75 954

25% of GDP per capita units 1,440 1,440 1,440 1,440

SPI 0.032 0.028 0.001 0.060

Source: Consultant estimates, 2011

B. Disaggregation by ‘Depth’ and ‘Breadth’

103. The SPI is also disaggregated by depth and breadth of social protection in Fiji. This analysis reveals that in general, per capita social protection spending in Fiji is approximately 110% of per capita poverty line expenditure (Table 8). This is the depth of social protection in Fiji (1.107), which may be interpreted as the average expenditure per actual beneficiary as a percentage of poverty-line expenditure. 104. The average social protection payment is quite high in terms of per capita poverty line expenditure. One of the reasons for a high SPI depth is Fiji’s atypical pattern in which the proportion of expenditure accounted by social insurance is much higher than social assistance and labor market programs. Furthermore, although there are programs targeted at the poor such as family assistance allowance, housing assistance, etc., coverage is not high and the average benefits are low relative to the poverty line income. 105. On the other hand, the Government provides for free the majority of basic health care and primary education services. The informal safety net of family support is also relatively strong, although under considerable pressure.

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Table 8: Disaggregation by Depth and Breadth

Social

Insurance Social

Assistance

Labor Market

Programs All SP

Programs

Depth 2.915 0.702 0.158 1.107

Breadth 0.011 0.040 0.004 0.054

SPI 0.032 0.028 0.001 0.060 Source: Consultant estimates, 2011

106. The breadth of social protection in Fiji is 0.054, which means that only about 5.4% of all potential beneficiaries are currently actually receiving some kind of social protection benefit in Fiji. These results reveal that while the depth of social protection programs is quite high, the breadth of social protection is relatively low in Fiji. Indeed, the analysis suggests that while government spending on social protection is high, the impact at the national level is limited and driven by a limited coverage. Increasing or relaxing those parameters would require significant increase in the social protection budget and entail a fiscal policy decision. 107. A further disaggregation shows that the depth of social insurance is actually quite high (2.915). On average, payments on social insurance for formal sector employee pensions, is the highest expenditure (roughly 291% of per capita poverty line expenditure) as shown in Table 8. However, the breadth of social insurance is quite low at 0.011, which means that only 1.1% of potential beneficiaries of social insurance (i.e., employed population and elderly) currently benefit from social insurance schemes. 108. The pension scheme is only available to people in formal employment, obliged or entitled to participate in a variety of savings schemes such as retirement, health, and death. However, a large percentage of workers in Fiji are also employed in the informal sector and are not covered by any social insurance schemes. Currently, social insurance coverage is restricted to formal sector workers employed in the civil service, military and private sector only. Thus, the breadth of social insurance is very low. In addition, people employed in smaller enterprises, self-employed in the informal economy, the unemployed or aged, rely on private insurance or support from immediate and extended families and the local community. 109. In contrast, the depth of social assistance is 70.2% of per capita poverty line expenditure, while the depth of labor market programs is even lower at 15.8% (Table 8). Similarly, only about 4% of potential beneficiaries of social protection currently benefit from social assistance programs. About 0.4% or less of potential beneficiaries currently benefit from labor market programs.64. The breadth of social protection expenditure in Fiji is 0.108 while the depth is 0.431, indicating that about 11% of the targeted recipients were reached, receiving per capita benefits amounting to less than half (43.1%) of the country’s poverty line expenditure. Labor market programs received the largest per capita benefits receiving more than half (54.9%) of the poverty line expenditure. Social insurance programs reached only 0.4% of the targeted beneficiaries. C. Disaggregation by Poverty Focus

110. Similarly, the SPI is disaggregated by poverty (Table 9). However, in the absence of information on social protection expenditure in the household surveys of Fiji, the estimates on poverty targeting rates are rough estimates following these general assumptions: (i) if the program is exclusively targeted towards identifiable groups of poor, then 75-90% of the beneficiaries are assumed to be poor; and (ii) if the program is more general in nature in terms

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of poverty targeting, then the national poverty incidence rate of 42% is used as the proportion of beneficiaries assumed to be poor. 111. Table 9 reveals that the SPI for poor is 0.018 and 0.042 for non-poor, indicating that the expenditure for non-poor is more than twice the expenditure for poor. The amount of social protection expenditure reaching the non-poor group of people confirms the recent findings from World Bank in 2011 that 28% of people or approximately 6,720 people receiving welfare assistance through the poverty alleviation program in Fiji are non-deserving beneficiaries.7 The report also highlighted that many non-poor people committed fraud and deceit with the Ministry of Social Welfare and Poverty Alleviation to receive assistance. 112. The major social assistance program, FAP, is targeted quite well, with a high concentration of beneficiaries among the poor. The analysis of the 2008-2009 Household Income and Expenditure Survey indicates that 71% of the FAP beneficiaries are among the poorest 30% of the population. From an international perspective, the FAP program is well targeted, with about 60-70% of the beneficiaries of the poverty-targeted program from the bottom 35-30% of the population. 113. Furthermore, the analysis of the distribution of the FAP benefit also confirms that the program is concentrated among the poor. Hence, the FAP program by design targets a small group of the most vulnerable people. The resulting pool of beneficiaries is about 27,000, less than the estimated number of the extreme poor in Fiji, which is about 35,000 people. If we take the estimated number of total poor, about 275,000 people, the number of FAP beneficiaries would really represent the so-called ‘tip of the iceberg’.

Table 9: Disaggregation by Poverty Status

Poor Non-Poor

SP Expenditure (Million FJD) 24 58

Reference Population (000s) 954 954

25% of GDP per capita 1,440 1,440

SPI 0.018 0.042 Source: Consultant estimates, 2011

D. Disaggregation by Gender

114. The number of women who receive various social protection benefits are based on either (i) the records of relevant agencies wherein gender-disaggregated data is available, (ii) census data wherein the programs are more general in nature and reach out equally to men and women (e.g. scholarship program); or (iii) professional judgment wherein such information are not available. 115. If gender is about the cultural, social, economic, political, religious and traditional socializations of men and women which determine inter-alia the power balance, access, and use of and ownership of resources, then the gaps are obvious in the current set of Fiji’s social security system. The SPI for women is 0.022, while it is 0.038 for men.

7 World Bank report (2011) Fiji: Assessment of the Social Protection System in Fiji and Recommendations for Policy

Changes. August, Human Development Sector Unit, Pacific Islands Operations, East Asia and the Pacific region, Suva.

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116. The expenditures on men and women also reveal that about twice of the social protection spending is reaching men compared to women. The disproportionate number of men over women in the formal sector employment can explain these figures to a large extent but other programs reach men and women more equally, or benefit more women. For example, the Care and Protection program is generally targeted to single mothers solely responsible for their children and the housing assistance through HART homes generally favors women over men. Other programs such as the Youth Development, employment training programs, and scholarships, benefit both men and women equally (Table 10). In looking at improving social security coverage, there is a need to extend the coverage and benefits to the informal sector where most women are concentrated.

Table 10: Disaggregation by Gender

Women Men

SP Expenditure (Million FJD) 31 52

Reference Pop (000s) 954 954

25% of GDP per capita 1,440 1,440

SPI 0.022 0.038 Source: Consultant estimates, 2011

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VI. CONCLUSION AND RECOMMENDATIONS

117. The concluding chapter is important in providing some assessment of the extent and character of social protection programs in Fiji. This chapter highlights particular social protection programs, which are exemplary or highly problematic. It provides a summary of the results, and a few conclusion and recommendations. 118. Fiji’s SPI is relatively low, indicating a low level of formal social protection for the key target groups with partial exceptions for the government and formal sector employees covered by pension social insurance schemes. While the breadth of social protection may be high, the depth of social protection in Fiji is quite low despite having many of the basic social protection measures in place. Rather than expanding programs, Fiji needs to focus on expanding the coverage of its ongoing social protection programs in order to ensure that all or most of the poor and vulnerable are protected against economic shocks, old age, unemployment or other micro-shocks. 119. Furthermore, although there are programs targeted at the poor such as the family allowance assistance, coverage of these programs are not extensive and the average benefits are low relative to the poverty line income. The informal safety net of family support is also relatively strong. 120. The SPI by poverty status suggests that much of the current benefits are allotted to the non-poor. However, this result is skewed due to the high expenditure on public sector pensions, which currently account for 53% of total Government spending on social protection. Using rough estimates on the poverty targeting rates for various programs further limits the accuracy of the estimate of the poverty focus of Fiji’s social protection programs; thus, results should be read with caution. The poor gender focused SPI is also skewed by the low percentage of women receiving the public sector pension, which constitute 53% of total social protection spending. 121. All social insurance programs are limited in their effectiveness to provide social protection to those most in need. These programs reach only a small proportion of the workforce and provide very few people with old age pensions or disability benefits, considering that majority of recipients are among the relatively wealthy. This is revealed by the large depth but small breadth of social insurance. The FNPF, which provides pensions to about 15%-20% of the country’s elderly, is one of the most successful programs. However, the vast majority of the population engaged in the informal sector is not covered by the pension scheme. 122. On the other hand, a number of non-contributory cash transfer schemes such as social assistance programs currently reach only 12.96% of the reference population (e.g., poor, disabled and children) despite having basic social assistance programs in place (e.g., family assistance, poverty alleviation, scholarships, housing, child protection, disability allowance, etc.). 123. The largest non-contributory cash transfer program is Fiji’s Family Assistance Program, which provides a minimum cash benefit to some of the poorest households in Fiji. A recent World Bank report reveals that (i) the FAP in its current form does a good job of excluding non-poor individuals from benefitting from the program; (ii) the current coverage of the program is very limited nationwide, with only 3% of the population directly benefitting from the program and 13% of the population gaining indirect benefits; (iii) the FAP makes a positive impact on the lives of individual beneficiaries or households with the benefit contributing about 22% of the per capita income of the poorest beneficiary households. FAP’s low coverage and small benefit size

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(i.e., only person in the household can be a recipient) currently prevent the benefit from achieving an even larger poverty reduction impact. 124. The results of our analysis also show that the coverage of Fiji’s labor market programs and actual payments are low. This may be due to the general definition of the employed that includes people engaged in the formal sector. In the present formal social security system, only formal sector workers are covered. This excludes about 60% of Fiji’s labor force. 125. In terms of the social insurance, an important feature of the system is the lack of the basic old age social pension. The private voluntary pension savings scheme is not fully developed. As a result, people outside of the formal sector or with very small savings accumulated through FNPF, face income security challenges in old age. The low coverage of the pension system is one of the key factors behind the high risk of poverty among elderly people. About 70% of the elderly population aged 60 and above are not covered by either FNPF or FAP. Expanding coverage of social insurance to informal sector workers might be more cost-effective in the long-term and is an option worth considering in Fiji. The high SPI depth for social insurance confirms that high levels of poverty among the elderly are attributed to non-coverage by the pension scheme, since FNPF only covers formal sector workers with contributions.

126. The introduction of the disability benefit needs to include proper assessment of disability, serving as a “gate keeping” mechanism for eligibility. Experience from other countries shows that vague eligibility parameters may lead to an escalating number of applicants and rising fiscal costs. Also, not all severely disabled people live in poor households. Disability affects people irrespective of their wealth, although prevalence tends to be higher at the bottom of the distribution. Some extreme poor households may not be covered by the poverty benefit in the provision of the universal benefit to this group, due to the budget constraints. The analysis of the distribution of the FAP program also confirms that the program is concentrated among the poor.

127. Another policy option entailing changes in the design of the FAP benefit so it becomes a poverty benefit for extreme poor households. The key features of this option entail (1) eliminating the vulnerability categories such as elderly, disabled, and chronically ill as a filter of eligibility; (ii) making the FAP program open to all extreme poor individuals, subject to assessment of the welfare status; (iii) allowing every individual in the identified poor household (up to a certain maximum number per household) to be eligible for the benefit. There is also a potential to provide enhanced benefit for specific categories of people within the household (e.g., children, disabled and elderly). These features would make FAP a truly poverty benefit program since the benefit would be provided for an eligible household, and the benefit size would take into consideration household size, composition, and characteristics of the household members. Having a household-level benefit provides a poverty filter for determining eligibly. The poverty benefit with these features is expected to increase the concentration of the resources among the extreme poor. The key advantage of the targeted social assistance in the form of the poverty benefit is its direct contribution to poverty reduction by targeting the most vulnerable population. 128. Labour market programs should expand coverage to include the poor and unemployed. The impact of current labor market programs on employment generation and the unemployed at the national level is limited. Given the labor market programs’ overall low coverage, large under-coverage of the poorest and unemployed youths, limited per capita generosity, and design features limited to individuals, the effect of these programs on alleviating unemployment is minimal. This highlights a key issue for the Government to consider gradually increasing the

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fiscal allocations to accommodate a gradual increase in the labor market program coverage or benefit in accordance with poverty and unemployment alleviation policies. 129. Making targeted assistance operational requires development of assessment methodology, clear definition of the beneficiary groups per program, and establishment of the benefit limit benefit per household. In sum, Fiji’s level of social protection is well below the expected levels of human development and wealth. This implies that as the demand for social protection increases, Fiji will have greater potential to increase the scope of its level of provision than other poorer countries.

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26 Statistics on Social Protection in Four Pacific Countries: Fiji, Marshall Islands, Solomon Islands and Vanuatu. Manila (TA 6308-REG).

ADB. 2010. Technical Assistance for Updating and Improving the Social Protection Index.

Manila (TA 7601-REG) B. Baulch and T. McKinley. 2011. Handbook for Social Protection Index: SPI Handbook. ADB.

Manila. D. Abbott and S. Pollard. 2004. Hardship and Poverty in the Pacific. ADB. Manila.

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Delivery Mechanisms in the Pacific. Suva.

Appendix 1 29

FORMULATION OF THE SOCIAL PROTECTION INDEX AND ITS MAJOR DISAGGREGATION

A. Structure of the SPI

1. Based from the 2011 SPI Handbook by Baulch’ and McKinley, the SPI is described as a simple and unitary indicator rather than a composite index. It is not an abstract index and should provide a “normative” reference such as the magnitude of the impact on people.

2. The formulation of the revised SPI, under the present study, refers to the total SP expenditures divided by the total potential beneficiaries, and relative to a quarter of GDP per capita. This is mathematically expressed in the following equation:

where

represents the sum of all SP expenditures;

represents the sum of all potential beneficiaries; and Z represents poverty-line expenditures which is 25% of GDP per capita.

3. The term “Total Expenditures per Total Potential Beneficiaries” has two parts:

(i) Total expenditures per total actual beneficiaries – this represents the Depth of the SPI;

(ii) Total actual beneficiaries per total potential beneficiaries – this represents the Breadth.

4. It is noted that 25% of GDP per capita is roughly the average national poverty line across ADB’s sample of countries.

B. SPI’s Major Disaggregation

1. Disaggregation by Depth and Breadth

5. The SPI can be disaggregated into measuring the depth of coverage and also, the breadth of coverage. Depth represents the average expenditures that the government spends for every actual beneficiary as a percentage of poverty-line expenditures.

a. Depth

6. The index is measured as

(Total Expenditures divided by Total Actual Beneficiaries); Divide by Z or the poverty-line expenditure. 7. The index is represented by the following equation:

Appendix 1 30

where

D represents Depth represents the sum of all SP Expenditures, and

Z represents the poverty-line expenditures.

b. Breadth

8. The breadth of coverage index is simply the proportion of the total actual beneficiaries receiving government benefits over the total potential beneficiaries. This is computed as

Total Actual Beneficiaries divided by Total Potential Beneficiaries.

9. The index is represented by the equation

where

B denotes Breadth,

represents the sum of all actual SP beneficiaries represents the sum of all potential SP beneficiaries. 2. Disaggregation by Component

10. The second major disaggregation involves the three-way distinction between components.

11. Each of the three components for Expenditures per Potential Beneficiaries of SI, Potential Beneficiaries of SA, Potential Beneficiaries of LMP is multiplied by its weight. The mathematical relationship between the three components is based on weighted average.

(i) SPI for Social Insurance (includes pensions, health insurance, and unemployment benefit)

(ii) SPI for Social Assistance (includes assistance for the elderly, health assistance, poverty programs and child protection)

(iii) SPI for Labor Market Programs (include training and public works scheme)

12. The formula for the SPI of each of the three categories can be illustrated by the formula for SPIsi. Deriving the SPI for Social Insurance proceeds as

(SI Expenditures divided by SI Actual Beneficiaries) multiplied by

31 Appendix 1

(SI Actual Beneficiaries divided by SI Potential Beneficiaries) multiplied by (SI Potential Beneficiaries divided by All SPI Potential Beneficiaries) multiplied by 1/Poverty-Line Expenditures.

13. The SPI for SI is expressed in the equation

14. The last expression in the numerator represents the proportion of SI, which is the potential SI Beneficiaries divided by the Total SPI Potential Beneficiaries.

Z represents the poverty-line expenditures.

15. After each of the three components’ expenditures per potential beneficiaries (SI, SA, LMP) has been multiplied by its weight, all three are added together. The resulting total is the country’s SPI. This is shown as

SPI = SPI (SI) + SPI (SA) + SPI (LMP)

3. Disaggregation of Expenditures on Poor and Non-Poor Beneficiaries

16. The SPI can be disaggregated by expenditures on poor and non-poor beneficiaries.

a. SPI (Poor)

17. The index is derived at as follows:

SPIp represents the total expenditures per poor actual beneficiaries as a ratio to all potential beneficiaries both poor and non-poor. The index is computed as:

(Total Expenditures on the Poor divided by the Total Poor Actual Beneficiaries) multiplied by (Total Poor Actual Beneficiaries divided by Total Potential Beneficiaries).

18. The index is represented by the following equation:

b. SPI (Non-Poor)

19. SPInp represents the total expenditures per non-poor actual beneficiaries as a ratio to all potential beneficiaries, both poor and non-poor.

20. The index is derived as

Appendix 1 32

(Total Expenditures on the Non-poor divided by Total Non-poor Actual Beneficiaries) multiplied by (Total Non-poor Actual Beneficiaries divided by Total Potential beneficiaries).

21. The index is represented by the following equation:

22. When SPI (Poor) is multiplied to SPI (Non-Poor), the product represents the SPI of the country.