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.)

Technical Assistance Consultant’s Report

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

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

Prepared by Hina Shaihk

For Asian Development Bank

CURRENCY EQUIVALENT

US$ = 78.4983

ABBREVIATIONS

ADB Asian Development Bank AJK Azad Jammu & Kashmir BISP Benazir Income Support Program DMCs Developing Member Countries EOBI Employees Old-Age Benefits Institution ESSI Employees Social Security Institutions GDP Gross Domestic Product GNI Gross National Income FATA Federally Administered Tribal Areas FBS Federal Bureau of Statistics FSP Food Support Program HIES Household Integrated Economic Survey ICT Islamabad Capital Territory IFA Individual Financial Assistance IMF International Monetary Fund KP Khyber Pakhtunkhwa LFA Labor Force Survey LP Langer Program MDG Millennium Development Goal NFC National Finance Commission NGO Non-Government Organization NIP National Internship Program NIPO National Internship Program Office NSPS National Social Protection Strategy PBM Pakistan Bait-ul-Maal PH Pakistan Homes PPP Purchasing Power Parity PRSP Poverty Reduction Strategy Paper PSH Pakistan Sweet Homes PSLM Pakistan Standard of Living Measurement PWP Peoples’ Works Program R-CDTA Regional-Capacity Development Technical Assistance SP Social Protection SPI Social Protection Index TA Technical Assistance US United States USD United States Dollar VAT Value Added Tax WWF Workers Welfare Fund

CONTENTS

ABBREVIATIONS 2 

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.  The Economy 5 D.  Poverty Profile 7 E.  Employment and Labor Force 9 F.  Education 10 G.  Health 11 H.  Summary 11 

III. CURRENT SOCIAL PROTECTION PROGRAMS AND ACTIVITIES 12 A.  Data Collection 12 B.  Social Assistance 13 C.  Social Insurance 22 D.  Labor market programs 26 

IV. THE SOCIAL PROTECTION INDEX AND ITS DISGGREGATION 28 A.  Basic Statistics 28 B.  Social Protection Expenditure 30 C.  Social Protection Beneficiaries 31 

V. ANALYSIS OF THE COUNTRY RESULTS 32 A.  Disaggregation by Social Protection Category 32 B.  Disaggregation by Depth and Breadth 32 C.  Disaggregation by Poverty 33 D.  Disaggregation by Gender 34 

VI. CONCLUSIONS AND RECOMMENDATIONS 34 

 

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 36 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 are 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 programs and calculates the SPI for Pakistan in view of the revised SPI methodology. The SPI can be updated periodically to assess progress in social protection arrangements in the country and analyze 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 labor 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 Pakistan Country Report is to present the results of the research on social protection programs and policies in Pakistan from all related ministries, particularly the Ministry of Finance and the Ministry of Labour and Manpower; and, summarize 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 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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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, 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 poor4

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.

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7. While there is however no official definition of social protection in Pakistan that is as comprehensive as the ADB definition5, Article 38 of the Constitution6 of the Islamic Republic of Pakistan provides the foundation for the definition of social protection.

Article 38: Promotion of social and economic wellbeing of the people (a) “The State shall secure the well-being of the people, irrespective of sex, caste, creed or race, by raising their standard of living, by preventing the concentration of wealth and means of production and distribution in the hands of a few to the detriment of general interest and by ensuring equitable adjustment of rights between employers and employees, and landlords and tenants; (b) provide for all citizens, within the available resources of the country, facilities for work and adequate livelihood with reasonable rest and leisure; (c) provide for all persons employed in the service of Pakistan or otherwise, social security by compulsory social insurance or other means; (d) provide basic necessities of life, such as food, clothing, housing , education and medical relief, for all such citizens, irrespective of sex caste, creed or race, as are permanently or temporarily unable to earn their livelihood on account of infirmity, sickness or unemployment;

(e) reduce disparity in the income and earnings of individuals, including persons in the various classes of the service of Pakistan; and (f) eliminate riba20 as early as possible.”

8. Social protection has only recently been referred as a concept aimed towards poverty alleviation in Pakistan under the Poverty Reduction Strategy Paper (PRSP) and the State Bank of Pakistan. The National Social Protection Strategy (NSPS) of 2007 has been formally adopted by the Government of Pakistan, but with little or no progress towards its implementation. The NSPS is the first comprehensive official statement on social protection based on a detailed review of existing programs and interventions. 9. The NSPS defines social protection as a “set of policies and program interventions that address poverty and vulnerability by contributing to raising the incomes of poor households, controlling the variance of income of all households, and ensuring equitable access to basic services. Social safety nets, social insurance (including pensions), community programs (social funds), and labor market interventions form part of social protection’7 C. Report Structure

10. The Pakistan report is structured as follows:

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

• Chapter III describes the current SP activities and programs in the country using 5 ADB, Social Protection Index for Committed Poverty- Reduction - TA No. 6120 – REG – Pakistan Country Report 2005 7 Government of Pakistan (2008b) National Social Protection Strategy, Centre for Poverty Reduction and Income Distribution, Planning Commission

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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 policy assessment and implications.

II. COUNTRY OVERVIEW

11. This chapter presents a brief overview of the socio-economic characteristics of Pakistan, main features of the country’s current developmental situation and recent trends.

A. Geography

12. Pakistan borders the Arabian Sea in the south, with India in the east, China in the northeast, and Afghanistan in the northwest, and Iran in the west. This South Asian subcontinent is divided into four geographical areas: the Northern Highlands, the Pothwar Plateau, the Indus Plain, the Balochistan Plateau. B. Demographic Profile

13. Pakistan has a population of over 165 million in 20098. Pakistan remains the world’s 6th most populous country, with an estimated population of 173.5 million in 2011, and an annual growth rate of 2.05%9. The country is expected to become the 4th largest nation in population size by 2050. The annual addition of 3.5 million persons is a major challenge in addressing the issues of poverty reduction and economic development10. The yearly increase in population size against the backdrop of low socio-economic indicators counters the impact of development efforts and creates an unbearable level of demand on limited resources to meet the requirements of the additional population. Table 2.1 presents selected demographic indicators.

Table 2.1: Selected Demographic Indicators Indicator 2007 2008 2009 2010 Total Population (million) 163 166.4 169.9 173.5 Urban Population (million) 56.8 58.7 60.9 63.1 Rural Population (million) 106.1 107.7 109.1 110.5 Total Fertility Rate (TFR) 3.9 3.8 3.7 3.6 Crude birth rate (per thousand)

29.1 28.7 28.4 28.0

Crude death rate (per thousand)

7.9 7.7 7.6 7.4

Population growth rate (percent)

2.1 2.1 2.1 2.1

Life expectancy (years) 63.4 63.7 64.1 64.5 Male 62.7 63 63.3 63.6 Female 64.1 64.5 65.0 65.4

Source: Economic survey 2009-10 (Sub Group II on Population Projections for the 10th Five-Year People’s Plan 2010�11)

8 Ministry of Finance. 2010. Economic Survey 2009-10. Islamabad 9 Economic Survey - The Sub Group II on Population Projections for the 10th Five-Year Plan 2010-15 has revised

population estimates since 1999-2000 on the basis of various background studies. According to this estimate, Pakistan’s population in mid-2011 is estimated at 177.1 million.

10 Annual Development Plan 2010-11, Planning Commission, 2011

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14. Pakistan's urban population has expanded over seven�fold during 1950�2008, while the total population increased over four�fold11. Social changes such as rise in youth population, and urban-rural migration has led to rapid urbanization and the emergence of mega�cities. Pakistan is currently among the most urbanized nations in South Asia with city dwellers making up 36% of the population in 2008 and the urban population at 65.3 million in 2011. However, an increase of population in the urban areas by 3.6% per annum is contributing to the growth of slums, shanty towns, traffic congestion, and shortage of basic infrastructure and social services12. 15. Pakistan is a relatively young country with an estimated 104 million Pakistanis below the age of 30. The total working age population is about 121 million and the size of the employed labor force estimated at 52.71 million between 2008 to 200913. 16. There is a demographic transition underway with the proportion of working age population between 15 to 59 years of age, increasing from 54% in 1985 to 57% in 2005. The figures could reach 70% by 2030. This provides a unique opportunity to position human development at the centre of the national development strategy by forming a close relationship among skills development, employment opportunities, and labor force participation. There is also a need to address the future employment and training requirements of the emerging youth bulge. 17. Despite a gradual decline in Pakistan’s total fertility rate to about 4, the level of fertility in Pakistan remained consistent at about 7 children per woman from 1961 through 1987. The decade 2000�2009 has seen a slowdown of the fertility transition, decreasing from 4.8 to about 4.0. However, recent projections by the National Institute of Population Studies show a total fertility rate as low as 3.6 per woman from 2009 to 10. The crude birth rate (number of live births per 1,000 population in a year) has declined by 20.32%. 18. The socioeconomic data on persons with disabilities in Pakistan is scarce and conservative. According to the 1998 Census, approximately 2.4% of the population has some form of disability. It is estimated that 66% of persons with disabilities live in rural areas; with 28% literate; 14% working; and, 70% dependent on family members for financial support.

C. The Economy

19. Pakistan’s economic history has been turbulent, with repeated cycles of rapid growth followed by stagnation. The high level of fiscal deficit remains a potential threat to macroeconomic stability. While the fiscal and trade deficits increased sharply, economic growth slowed down from about 7% between 2006 to 2007 to only 4.1% between 2009 to 201014. The inflationary expectations are also high, particularly in the wake of high utility prices, combined with the sharp rise in international oil and food prices, and the forthcoming taxation reforms. A comprehensive solution of the country’s debt issue is still pending and delay in achieving a resolution lead to substantial infrastructure shortages. Domestic resource mobilization remains low and can hamper future public sector investment.

11 World Bank Country Strategy. 2007. 12 Planning Commission. 2011. Annual Development Plan 2010-2011. 13 Ministry of Finance. 2011. Economic Survey 2009-2010. 14 Ministry of Finance. 2010. Economic Survey 2009-2010.; WB Indicators. 2010.

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20. The floods in mid-2010, with an estimated damage of over US $10 billion, interrupted economic recovery and added to inflationary pressures15. About 20 million people have been displaced and flood-related reconstruction activities are expected to span several years imposing pressure on the already limited fiscal space. Moreover, the severe energy shortfall, particularly in the past 2 years, is estimated to have reduced overall GDP growth by approximately 2% in 2009�201016. Availability of water for agriculture has remained significantly lower in 2009-2010, continuing the declining trend over the past several years and making water one of Pakistan’s top intergenerational policy and development concerns. 21. Despite these challenges, the economy has shown resilience in recent years. Following a high growth rate of 6.8% in 2006 to 2007, Pakistan has experienced a declining rate of economic growth at 3.7% from 2007 to 2008, and 1.2% during 2008 to 2009. The country subsequently experienced an increase in economic growth at 4.1% in 2009 to 2010 after its modest growth from the previous 2 years, although eventually decreasing to 2.4% in 2010 to 201117.

Table 2.2: Key Economic Growth Indicators 2006-07 2007-08 2008-09 2009-10 GDP percent growth at constant factor cost

6.8 3.7 1.2 4.1

Per capita income (USD) 904 1015 990 1073 Overall fiscal deficit as a % of GDP 4.4 7.6 5.2 4.9 General Inflation 7.77 12.00 20.77 - Food Inflation 10.28 17.64 23.77 Sources: Federal Bureau of Statistics; Budget Wing, Finance Division, Islamabad 22. The fiscal deficit declined to 5.2% of GDP in 2008-2009, from 7.6% in 2007-2008 due to drastic cuts in development expenditures. The external current account deficit was contained at 5.6% of GDP ($9.3 billion) in 2008-2009, from a high of 8.3% ($13.9 billion). In 2007-2008 foreign exchange reserves were also rebuilt to nearly $15 billion, from a low of about $6 billion in October 2008, although this is mostly a result of releases from the International Monetary Fund. 23. Inflation subsided in 2009 to 2010 with an upward trend18. Food inflation, which has an immediate impact on poverty, increased to 23.7% in 2008 to 2009, but declined to 12% in 2009 to 2010. The economic recovery has been fragile in recent years. Growth stability is necessary to maintain gains from previous years. The improvement in the growth rate is restricted to the formal sector of the economy, given its relatively greater insulation from energy shortages. The small and microenterprise sectors, which employ the bulk of the non�agricultural labor force, are much less insulated, and therefore significantly more vulnerable to shocks such as widespread disruptions in energy supply. Given the rising spending, inflationary pressures and reduced fiscal space, it is a prudent policy course to mobilize domestic resources and improve efficiency of public sector spending.

15 Planning Commission of Pakistan. 2011. Annual Development Plan 2010-2011. 16 Ministry of Finance. 2011. Economic Survey 2010-2011. 17 Ministry of Finance. 2011. Economic Survey 2010-2011. 18 Planning Commission of Pakistan. 2011. Annual Development Plan 2010-2011.

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D. Poverty Profile

24. Pakistan has seen a significant decline in poverty between 2007-2008 as the share of the population living in poverty halved, from 34.5% to 17.2%19. This is partly a result of growth in real per adult consumption expenditures and declining inequality between 2005-2006 and 2007-200820, measured using the gini index21. The gini index declined to 30.6 in 2007-200822. 25. However, poverty increased since 2008 due to slow economic growth, high inflation rates, scarce energy resources and the war that resulted in diversion of public expenditure from development to security23. The massive social disruption of the earthquake in 2005, intensification of war on terror since 2007, devastating floods in 2010, and persistent hike in food prices24 coupled with slower pace of economic growth, had serious ramifications in poverty and income distribution. The monthly poverty line estimate for 2008-2009 is Rs 1522.97. Table 2.3 shows the poverty line estimates from 2005-2009. The poverty estimates are useful in public policy formulation as well as improving existing social safety nets programs.

Table 2.3: Poverty Line Estimates, 2005-2009

Year Poverty line (in Rs)

2006-07 1046.48

2007-08 1231.18

2008-09 1522.97

Source: Economic Survey, 2010 and authors calculations 26. In 2005-2006, the Poverty Reduction Strategy Program (PRSP) met its target of raising poverty-focused expenditure to above 4% of GDP. However, this increase occurred mostly in sectors where the poor or vulnerable people were not direct beneficiaries. The substantial rise in inflow of worker remittances, partly in response to a government policy initiative, combined with unprecedented transfers to the rural economy under the government’s crop procurement program in 2008 and 2009, are likely to have provided significant support to large segments of the population. Cash transfers under the Benazir Income Support Program (BISP), amounting to an estimated Rs. 35 billion in 2009�2010, also provided additional source of support to the poor population. 27. In Pakistan, poverty line is calorie�based. Expenditure on calorie intake of 2,350 calories per adult equivalent in a day, along with consumption expenditure on non�food items, is aggregated to construct a poverty line. This poverty line is adjusted at the time of poverty estimation after accounting for the inflationary impact in intervening years. In terms of poverty status in Pakistan, there is no observed uni�directional movement of head count ratio. According to latest estimation, the percentage of population living below the poverty line stands

19 WB indicators, 2010 20 WB indicators, 2010 21 This index measures the degree of inequality in the distribution of family income in a country 22 World Bank Indicators, 2010 23 Planning Commission. 2011. Annual Development Plan 2010-11, 24 Global food prices rose by more than 30% year-on-year between March 2010 and March 2011 [economic survey 2010-11]

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at 24%, from 2005-2006. Hence, recent estimates show that nearly a quarter of Pakistan’s population remains poor, with a significant proportion of the population clustered around the poverty line. 28. Poverty related expenditures have also been on the rise. Poverty-related expenditure by sector shows that expenditure as a percentage of GDP has increased from 4.9% in 2006-2007 to almost 7.6% in 2009-201025. Expenditure on safety net decreased from Rs. 203.5 billion in 2008�2009 to Rs. 166.3 billion in 2009�2010 while on social security and welfare expenditure increased from Rs. 17.3 billion in 2008�2009 to 27.1 billion in 2009�201026. Consistent decline in the outlays on subsidies reflect a shift in resources towards social welfare and security programs. The International Monetary Fund Stand-By Arrangement since November 2008 shows that the Government of Pakistan commitment to gradually replace subsidies with direct and targeted assistance to the poor and needy. 29. According to the Pakistan Social Protection report27 that reveals how specific shocks affect households and household risk coping strategies, nearly two-thirds of safety net applicants and recipients surveyed (about 80% of whom are poor), suffered from one or more major shocks in three years before the survey, comprising both idiosyncratic (health, unemployment) and aggregate shocks (economic and natural disasters). While income shocks impose major costs on all affected households, the poor remains the hardest hit. The cost of shocks as a share of annual household consumption for the poor is twice that of non-poor households. Furthermore, nearly 33% of these households lowered their food intake, 10% of the households placed their child to work, and 8% of the households had their child stop schooling in response to the shock28. These results reveal that socio-economic vulnerabilities and income shocks at the household level can both impoverish households and perpetuate poverty to the next generation without timely government assistance. 30. The National Social Protection Strategy (NSPS)29 drafted in 2007 by the Planning Commission before it was transferred to the Ministry of Social Welfare, seeks to complement already existing initiatives for vulnerable groups. Emphasis is placed in identifying and directly reaching the poor. Without targeted interventions, a large number of people from the most vulnerable and marginalized groups are likely to be left out of benefits from macro-level gains in poverty reduction. At the same time, inefficient targeting approaches in terms of poorly constructed mechanisms or lack of implementation also fail to capture the poorest segment of the population. This scenario reflects the current status of targeted poverty reduction programs in Pakistan. Empirical evidence suggests that the leakage of benefits to the non-poor is common under ongoing initiatives.

25 Ministry of Finance. 2011. Economic Survey 2010-11. 26 Planning Commission. 2011. Annual Development Plan 2010-11, 27 According to World Bank (2007), these results presented in the report are from a representative sample of safety

net recipients/applicants collected in 2005, and are therefore not nationally representative. The sample is predominantly poor. Over half of the sampled households (54 percent) are ultra poor (those with consumption below the food poverty line), about a quarter (23%) are poor (between the food and national poverty lines), while the remaining were non-poor.

28 World Bank. 2007. Social Protection in Pakistan: Managing Household Risks and Vulnerability. 29 International Monetary Fund. 2010. Pakistan: Poverty Reduction Strategy Paper. IMF Country Report No. 10/183.

Washington, DC.

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E. Employment and Labor Force

31. Pakistan is the 9th largest country in the world according to the size of the labor force in

201030. By 2050, over 236 million are projected to be in the working-age group; a huge increase from the 110 million in 201031. These growing numbers have to be provided employment opportunities. Based on the Labor Force Survey 2009-2010, Pakistan’s labor force is estimated at 54.92 million (1.2 million more than last year)32, with a participation rate of 33%. Of the total labor force, 50.79 million are employed while 2.93 million remain unemployed; resulting in an unemployment rate of 5.6%33. There has also been a decline in unemployment rate since 2003�2004. In 2008�2009, the estimated labor force grew by 3.7%. The growth in female labor force is greater than the male labor force; consequently, the increase in female employment is also greater34. Table 2.4 presents the labor force profile from 2007-2010.

Table 2.4: Labor Force Profile 2007-08 2008-09 2009-10 Labor Force (millions)

51.8 53.7 54.9

Employed (millions)

49.1 50.8 51.9

Unemployed (millions)

2.7 2.9 3.1

Source: Labor Force Survey 2009-2010 32. Unemployment rates have decreased with age and the largest participation in the labor force remains in the 20�50 age group. According to available labor statistics, youth population is estimated at 35 million. Youth labor force is estimated at 15.5 million. Of the total youth labor force, 14.2 million is employed while 1.3 million are unemployed. Youth unemployment rate is 8.3%, higher compared to the national average of 5.5%. If the current level of unemployment continues for the next 20 years, the number of unemployed youth in 2030 will be about 6 million35. 33. Of the total employed workforce, 45% is employed in the agriculture sector; 13% in manufacturing; 0.7% in electricity and gas distribution; 16.5% in trade; 6.6% in construction; 5.2% in transport; 1.6% in finance; and 11.2% in the community and social services sector36. In terms of employment status, 1.2% are employers; 33.3% are self employed; 29.7% are unpaid family helpers; and 35.8% are employees37. 34. During the past years, the informal sector in agriculture has been increasing. There is a trend of self�cultivation and a decline in share tenancy. This trend is not restricted simply to agriculture; it is also present in non�agriculture sectors. The share of formal sector employment has decreased from 35% to 27% in 2000-2008 for males, and from 33% to 27% for females. The overall formal sector employment stands at 26.7% in 2008-2009. Trade and services in urban small-scale manufacturing has attracted employment and further increased the informal workers in the urban labor market. 30 Ministry of Finance. 2011. Economic Survey 2010-11. Islamabad 31 Government of Pakistan. Planning Commission. 2011. 32 Ministry of Finance. 2010. Economic Survey 2010-11. 33 Planning Commission. 2011. Annual Development Plan 2010-11. 34 Footnote 47 35 Footnote 47 36 Ministry of Finance. 2010. Economic Survey 2009-10. 37 Ministry of Finance. 2010. Economic Survey 2009-10.,

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F. Education

35. According to official data, Pakistan allocated 2.5% of GDP to education in 2006�2007; 2.47% in 2007�2008; 2.1% in 2008�2009; and 2% in 2009�2010, which shows a persistent declining trend. According to UNESCO’s EFA Global Monitoring Report 2009, the public sector expenditure on education as percentage of GDP in other countries of the region was 2.6% in Bangladesh; 3.2% in Nepal; 3.3% in India; and 8.3% of GDP in Maldives. 36. In recent years, the net enrollment rate at primary level has increased, although still significantly below the standards of other South Asian countries. Gross enrolment rate at primary level has also increased from 93% in 2008-2009 to 95% in 2009-2010. The overall literacy rate of the population at 10 years old and above has increased from 58% in 2008-2009 to 60% in 2009-2010. Achieving a 62% rate in 2010-2011 against 60% the previous year would mean not only achieving higher coverage of school age children but also accelerating adult literacy programs. The gender gap in literacy rates also remains high.

37. Attaining gender and regional parity in terms of opportunities for education and employment remains a major challenge due to large regional variations. Low female enrolment and school retention need to be addressed. The Gender Parity Index (GPI) for Pakistan in 2008�2009 is 0.65 compared to 0.64 in 2007�2008. In the provinces, GPI is high in Punjab (0.72); followed by Sindh (0.63), Khyber Pakhtunkhwa (0.45) and Balochistan (0.37). The lower GPI with a decreasing tendency in Khyber Pakhtunkhwa deserves attention at both the federal and provincial levels38. According to the Pakistan Labor Force Survey 2009-2010, the overall literacy rate (age 10 years and above) is 57.7%, with 69.5% for males and 45.2% for females; compared to 57.4%, with 69.3% for males and 44.7% for females, for 2008-09. Table 2.5 shows the MDG Indicators for Universal Primary Education. Table 2.5: MDG Indicators for Goal 2: Universal Primary Education

Indicators (percentage)

2006-07 2007-08 2008-09 2009-10*

Net primary Enrolment ratio (%)

56 55 57 77

Completion or survival rate grades 1 to 5 (%)

54.7 52.3 54.6 80

Literacy rate (%) 55 56 57 77 * Target

Source: MDG report, Pakistan 2010, Planning Commission of Pakistan 38. In terms of achieving the MDGs, Pakistan is lagging behind on all key indicators for education. These include net primary enrolment, completion rate (grades 1-5), and literacy. Progress has been slow in achieving gender parity for primary and secondary education.

38 Federal Bureau of Statistics. Pakistan Standard of Living Measurement (PSLM) Survey 2008-09.

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G. Health

39. In Pakistan, the health status of the population has improved considerably over time. Recent cross�country studies of vital health indicators show a wide variation in epidemiological pattern between different Asian countries. Compared with Bangladesh, India and Sri Lanka, Pakistan’s infant mortality rate is higher. However, other indicators show that a lot of progress will have to be made to meaningfully improve the health status of the population. 40. Some key health indicators have however shown improvement as the child mortality rate decreased from 77 per 1,000 in 2008-2009, to 70 in 2009-2010. Maternal mortality rate has also decreased from 300 per 100,000 in 2008-2009, to 276 in 2009-201039. 41. Provision of better health facilities to the poor is important for poverty reduction. Sickness not only increases expenditure of the poor during treatment but also reduces their income as a result of unemployment during the period of illness. Despite a nearly three-fold increase in public sector expenditure since 2001, spending on health remains abysmally low and has declined as a percentage of GDP; from 0.72% in 2000-2001 to a low of 0.54% in 2009-201040. The total public sector expenditure on health for both the federal and provincial government in 2010-2011 has now decreased to 0.23% of GDP, among the lowest of countries at a similar income level. H. Summary

42. There is little evidence that the effects of high economic growth are trickling down to the lowest economic strata. On the contrary, new forms of vulnerabilities have been afflicting a large number of people in the region. Almost one third of the population still live in poverty and over half of the population are considered vulnerable. Pakistan faces immense challenges in terms of poverty reduction with the lack of basic human, physical, and productive assets and the limited or non-access to essential social services such as health, education, water supply and sanitation. The devastating impact of shocks by recent floods, earthquakes and droughts, reveal the vulnerability of Pakistani households to natural disasters, with the poor often the hardest hit. The recent commodity and financial crisis have also adversely affected many households.

43. Despite moderate to high rates of economic growth, Pakistan still experiences a slow rate of structural transformation in the country’s labor market. Continued predominance of the informal segment of the economy and persistence of surplus labor reinforce the need for improved social protection policies. Conventional measures of social protection such as pensions, provident funds, and unemployment benefits, only cover a small fraction of the labor force in South Asia.

44. The poorer sections of the country are vulnerable to a range of risks, which can have devastating effects on livelihood and well-being. They have higher exposure to a variety of risks, such as health shocks, harvest risks, life cycle risks and labor market risks, with a huge number of the population working in the informal sector, incurring high risk of unemployment and underemployment.

45. Social protection strategies must encompass promotional, protective as well as preventive policies. South Asian countries mostly relied on social assistance schemes. With

39 Ministry of Finance. 2011. Economic Survey 2010-11. 40 Ministry of Finance. 2011. Economic Survey 2010-11.

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increasing risks and vulnerabilities, there is a growing need for various types of social insurance programs. Different types of vulnerabilities require different kinds of protective strategies against risks.

46. Low coverage of social protection programs, against high rates of poverty, remains a key challenge. Furthermore, in the wake of national crises, such as natural disasters or internal conflicts, the continuation of fragmented and duplicative social safety programs could result in wastage of much needed resources. The Government should show greater willingness to experiment in program design and inform decisions based on systematic evaluations.

III. CURRENT SOCIAL PROTECTION PROGRAMS AND ACTIVITIES

47. This chapter presents an overview of the data collection process, objectives, and current social protection activities in Pakistan 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. A. Data Collection

48. There are 11 major existing social protection programs in Pakistan as shown in Appendix I. These programs are classified into 3 major social protection components: (i) social assistance; (ii) social insurance, and (iii) labor market programs. Only national level programs are included and the major initiatives described in this chapter are operated by government agencies. 49. The primary point of contact for most of the data collection is the Ministry of Finance, particularly the Strengthening Poverty Reduction Strategy Monitoring Project, under the Finance Division which is jointly initiated by the Ministry of Finance and the United Nations Development Program (UNDP). This project compiles data into the Poverty Reduction Strategy Paper Annual Progress and Budgetary Reports. 50. Other sources of data include the Labor Force Survey 2009-2010 from the Federal Bureau of Statistics, the Planning Commission’s Annual Plan 2010-2011, the Labor and Human Resource Statistics 2000-2010, the most recent Population Census (1998) and the Pakistan Social and Living Standards Measurement Survey 2008-2009, an annual survey using data in both provincial and district levels. 51. The key statistics and indicators were also derived from the most recent Pakistan Economic Survey (2009-2010) published annually by the Federal Ministry of Finance. Over the years, this Survey has become an important document covering all the major sectors of the economy including growth, investment, fiscal development, and inflation besides health, education, poverty, labor, and demographics. Almost all the data in the Pakistan Economic Survey is derived from data collected from local sources such as national level surveys, federal budgets and national accounts. 52. Some of the difficulties encountered during data collection were lack of availability of social protection data from published sources such as government pension schemes, which had to be obtained directly from responsible agencies; missing documentation on women

13

beneficiaries; and, lack of information on gender and poverty targeting rates for larger programs such as Zakat and Pakistan Bait-ul-Maal. B. Social Assistance

53. There are 5 major assistance programs in Pakistan. These include the Zakat, Bait-ul-Mal, Benazir Income Support Program, Punjab Sasti Roti, and Punjab Food Support Scheme. These programs target the chronically poor, especially those who are unable to work and earn their livelihood. They typically include targeted resource transfers that are financed publicly from the tax base, with donor or non-governmental organization support.

1. Zakat Program

54. The institution of Zakat is a well-established form of cash transfer in Pakistan. It used to be the largest anti-poverty program in Pakistan and currently ranks second to the Benazir Income Support Program. Introduced in 1980, the program is financed by imposing a 2.5% tax on every Muslim income earner.

55. Zakat is disbursed under different programs. One of the program’s strengths is its access to an earmarked source of revenue. Reliance on a specific source not only ensures sustainability, but the nature of the tax based on financial assets falls mostly on upper income households. Therefore, Zakat has the potential of playing a strong redistributive role. Table 3.1 shows the disbursement and beneficiaries of the Zakat program.

Table 3.1: Zakat Disbursement

Program Disbursementand

Beneficiaries

FY 2007-2008

FY 2008-2009

FY 2009-2010

Zakat Amount Disbursed (Rs million)

2,428 2,877 2,874

Total Beneficiaries

(000)

1,456,548 1,085,378 1,289,050

Source: PRSP Annual Report, Ministry of Finance, 2009 and 2010

56. The Ministry of Religious Affairs, under the guidance of the Zakat Council, which is headed by a Supreme Court judge, is responsible for the Zakat program. Under the Central Zakat Council, there are provincial councils and further councils at each level of government. The lowest level, which decides eligibility, is the Local Zakat Committee. About 25% of the Zakat budget is distributed through institutions, while the remaining 75% is disbursed to individuals through Local Zakat Committees. 57. The program is entirely based on voluntary contributions made by Muslim citizens of Pakistan and administered by the Government. The tax is levied on Muslims and the funds are intended for Muslims, which are over 90% of the population in Pakistan, making the scheme a nearly universal one. However, more recently Shia Muslims have been exempt from the tax, reducing the inclusiveness of the scheme.41 Zakat is deducted at source by companies on the par value of shares held; and by financial institutions on saving bank accounts, fixed deposit

41 N. Kabeer. 2008. Mainstreaming Gender in Social Protection for the Informal Economy. p. 269

14

saving certificates, national income tax units, mutual fund certificates, government securities, annuities, life insurance policies, and provident fund credit balances.

58. Zakat is disbursed under different programs, such as: financial assistance in the form of the Guzara allowance, educational stipends, healthcare, Eid42 grants, assistance to leprosy patients, national level health institutions, and marriage assistance. The Guzara allowance is a cash transfer to poor households, accounting for 60% of the fund. The rest is divided between education stipends (18%); stipends to religious seminaries (8%); health care (6%); social welfare (4%); and marriage assistance (4%). Table 3.2 shows the breakdown of expenditure in the Zakat program.

Table 3.2: Breakdown of Zakat Expenditure

Programs Number of Beneficiaries

(2007-08)

Disbursement (Rs Million) (2007-08)

Number of Beneficiaries

(2008-09)

Disbursement (Rs Million) (2008-09)

Number of Beneficiaries

(2009-10)

Disbursement (Rs Million) (2009-10)

Regular Zakat Programs Guzara Allowance

606,874 1141 241,011 882 266,390 925.76

Education Stipends

100,708 124 190,799 262 278,765 312.994

Stipends to students of Deeni Madrassahs

55,197 84 66,228 114 96,255 128.723

Health care 71,581 95 66,952 87 72,028 103.371 Social welfare and rehabilitation

9,439 44 19,219 56 - -

Marriage assistance to unmarried women

5,035 50 5,986 58 13,900 144.907

Sub total 848,834 1538 590,195 1459 727,33 1616 Other Zakat Programs

Eid grants 320,731 161 156,076 77 157,883 78.93 Leprosy patients

206 1 103 1 226 0.493

Permanent rehabilitation scheme of Zakat

- - - - -

Education stipend (technology)

29,351 381 75,237 868 101,898 586.1

Sub total 350,288 543 231,41 946 260,007 665.523 National Level Schemes

National level health institutions

256,519 390 262,920 461 299,051 577.85

Model deeni madrassahs

907 11 847 11 265 14.62

Sub total 257,426 401 263,76 472 301,70 592.47 Grand total 2,482 1,085,37 2877 1,289,050 2874

Source: Annual Progress Report PRSP, Ministry of Finance, 2008, 2009 & 2010 59. The Zakat program is disbursed under the following different programs:

• Guzara Allowance. This is an allowance of Rs 500 per month to persons identified by the local Zakat committee as having the most need in the locality. In general, there is

42 Religious festival celebrated twice a year by all Muslims

15

usually enough funds for 10 people out of a population of 10,000 to receive the allowance. The allowance is paid for six months and if a person is no longer eligible, another person can be nominated to take his/her place.

• Educational Stipends. These are paid to poor students in mainstream schools, colleges, polytechnics and universities. The stipends can be used only for fees, course books, stationery, and study materials that are usually provided directly to the institution for these purposes. Determining eligibility is a two-stage process — a student has to be eligible first and then a selection among those eligible will be made to determine the beneficiaries of available funds. Individual cases can be promoted by district Zakat chairmen but certain educational institutions are usually allocated a Zakat grant for educational stipends for a year. The recipient of the fund stipends are usually decided by a committee, consisting of the head of the school and the Zakat chairmen at the level of the tehsil or district institutions.

• Stipends for students of Deeni Madaris or religious schools. These are paid in a similar way to educational stipends. Institutions that provide boarding for poor students receive allowances for food, accommodation and clothing. Deeni Madaris that are “branded as promoting extremism, sectarian violence or militancy” are not eligible for assistance.

• Health Care. Poor patients can receive assistance with the cost of an operation or necessary medication. At local level on health facilities, the local Zakat Chairman can decide who receive assistance within the available funds. The system is similar to the allocation of stipends. Major tehsil and district level institutions will receive a yearly allocation from the District Zakat Fund. A committee, consisting of the District Health Officer, the District Zakat Chairman and the Chief Medical Officer at the district level, decides the fund beneficiaries. A number of national level institutions receive funding directly from the Central Zakat Council.

• Social Welfare. This consists mainly of grants to social welfare institutions, largely those managed by provincial welfare and labor departments to disburse fees to beneficiaries receiving vocational training.

• Marriage Assistance. This provides funds for dowry of eligible women beneficiaries.

60. These categories are called the “six permanent heads”; regarded as an integral part of Zakat and unlikely to change. At each level, Zakat committees are given the funding allocation to all these categories. The Central Zakat committee also specifies the percentage of the total funding that must be spent on each category. 61. Zakat has a nationwide coverage. The almost 40,000 local Zakat committees select recipients from the eligible population. The beneficiary’s income must be below the official poverty line. The Zakat program utilizes a combination of geographic and administrative targeting.

62. Target beneficiaries include widows, orphans, disabled, and people living in extreme poverty, although there is no operational definition for poverty or targeting mechanism43.

2. Pakistan Bait-ul-Mal

63. The Pakistan Bait-ul-Mal (PBM) is a tax-financed safety net program combining food subsidies and cash transfers to assist destitute widows, orphans, disabled, and poor persons. It

43 Targeting of SP in Pakistan: An Evaluation – Shanza N Khan 2008

16

was created in 1992 as a semi-autonomous organization within the Ministry of Social Welfare to assist those who were excluded by the Zakat program, including non-Muslims44. The responsible agency is currently the Ministry of Social Welfare and Special Education (MOSWSE).

64. PBM is made up of a number of programs. Disbursements are made under a wide variety of programs that encompass food support, child support, rehabilitation of child labor, vocational training, and support to medical centers, among others. The food support component of PBM has been merged into BISP; while new schemes have been initiated such as the Pakistan Sweet Homes (PSH) for orphanages, Pakistan Homes (PH) for senior citizens, and Langer Program (LP) for poor and vulnerable people. Table 3.3 shows the disbursement and beneficiaries of the PBM program.

Table 3.3: PBM – Disbursement and Beneficiaries

Program Disbursement/Beneficiaries

FY 2007/08

FY 2008/09

FY 2009/10

Pakistan Bait-ul-Mal (all programs)

Amount Disbursed (Rs million)

5,521 3,432 2,261

Total Beneficiaries (000)

2,129,277 1,158,922 2,110,355

Source: Ministry of Finance. PRSP Annual Report 2009-10.

65. Funds for Pakistan Bait-ul-Mal are in the form of non-lapsable grants from the federal Government. PBM also receives small grants from the central Zakat fund, provincial government, national organizations, NGOs, international agencies and voluntary private donations. The PBM disburses to the poor under a wide variety of programs as shown in Table 3.4.

Table 3.4: PMB Program breakdown

Programs No of Beneficiaries

(2008-09)

Disbursement (Rs Million) (2008-09)

No of Beneficiaries (2009-10)

Disbursement (Rs Million) (2009-10)

Food Support Program 754,332 2,263 - - Individual Financial Assistance

18,974

775.0 51,588 1,627.07

National Center for Rehabilitation of Child Labor

181,607 194.0 376,396 299.111

Vocational Training Center

52,462 87.0 188,260 113.212

Institutional Rehabilitation

125,406 87.0 25,399 54.162

Child Support Program 26,141 26.0 27,944 37.951 Pakistan Sweet Homes (Orphanages)

- - 1159 70.954

Pakistan Home (Senior Citizen homes)

- - 6 0.663

Langer Program - - 1,439,603 58.232 Total Disbursement 1,158,922 3,432 2,110,355 2,261

Source: PRSP Annual Report 2009-10, Ministry of Finance

44 Kabeer. 2009. A review of social protection in South Asia.

17

66. Special Funds of PBM are also used for orphans support, rehabilitation through vocational training, education stipends, outreach programs for poor patients, Dowry (Jahez) package for orphan girls and supply of wheel chairs, hearing aids, white canes, and artificial limbs to needy persons. 67. In 2003, poor households received Rs 2000 per year under the food support program; while support for small business was approximately Rs 40,000. The program employs categorical and proxy means testing. Three local people (including a local Zakat Committee member) must support the application, and processed both at the district and provincial levels. However, the Prime Minister and other high-level functionaries can approve individual financial assistance in open kutcheries or public gatherings.

68. The PBM coverage is nationwide. The program costs Rs 2.5 billion or 0.05% of GDP. This consists of 4.9% of the total federal social protection budget. Since its inception, the Food Support Program (FSP), which is the core program, has provided cash transfers to 1.25 - 1.46 million households. Food assistance is provided to approximately 30,000 households per year.

69. The Food Support Program was Pakistan’s largest cash transfer program launched in 2000, during the time of wheat crop harvesting when the country experienced an increase in storage capacity of wheat. PBM administers FSP in collaboration with Pakistan Post Office and Provincial Governments. In 2009-10, FSP has been merged into the Benazir Income Support Program. 70. FSP reached about 1.45 million households in the PBM database. The annual budget is close to $70 million per year. The aim of the Food Support Program is to support wheat purchasing capacity of the poorest population. The program involves an annual transfer of Rs.3000 a year in 2 six-month installments. Once included in the program, households receive assistance indefinitely. Beneficiaries include individuals with no support or source of income such as widows, disabled, elderly (above 65 years of age), and orphans, among others. 71. The Child Support Program of the PBM was established in early 1992; mainly to provide assistance to the poor, particularly minorities who were not covered by Zakat. The scheme pays quarterly benefits to chronically poor households with children aged 5-12 who are beneficiaries of the Food Support Program. The transfer is paid quarterly together with the Food Support Program transfer. Hence, it is an add-on-program of FSP.

72. The scheme aims at short-term poverty alleviation and raising primary school attendance. Payments are conditional on the student enrolment and school attendance. Families will stay in the CSP for maximum up to 5 years. The program was piloted in three districts, and has now been scaled up to 8 districts45. The Child Support Program expenditure is found in Table 3.5.

Table 3.5: Child Support Program Expenditure

CSP 2007-2008 2008-2009 2009-2010 Disbursed (million)

11 26 37.95

Beneficiaries 13,273 26,141 27,944 Source: PRSP Annual Report 2009-10, Ministry of Finance

45 Interview with PBM; Pakistan Bait ul Mal, Child Support Program, A Conditional Cash Transfer in Pakistan. Power point presentation [Islamabad May 2009]

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73. The Ministry of Social Welfare and Special Education is responsible for the Child Support Program. It covers 125,000 households in 5 districts of every province in the country. An amount of Rs. 57.29 million has been disbursed to about 12,000 household beneficiaries with 35,700 children. The beneficiaries receive Rs 300 per month for one child or Rs 600 for two or more children. Families who enroll their children in non-profitable community schools, children attending at least 80% of classes, children ages 5-12 enrolled in primary school are eligible for the program.

74. In Individual Financial Assistance (IFA), also a component of PBM, the poor, widows, destitute women, orphans and disabled persons are supported through general assistance, education, medical treatment and rehabilitation. Individuals can apply for general financial assistance one a year only. Any of the two services: (i) medical treatment; (ii) general financial assistance; (iii) education stipend or (iv) individual rehabilitation may be granted simultaneously within a period of one year to the same applicant. However, general financial assistance and rehabilitation cannot be combined.

75. IFA benefits include immediate assistance to the poor for a maximum of Rs 30,000, medical treatment of major ailments and disabilities for a maximum of Rs 300,000, education stipends up to Rs 60,000 for poor students in education and technical institutions and rehabilitation assistance for a maximum of Rs 40,000.

3. Benazir Income Support Program (BISP)

76. The Benazir Income Support Program (BISP)46 was launched in October 200847 as a family grant of Rs 1000 (USD 12) per month, primarily to address food price increases, disbursed to the woman in the family48 for 2.4 million beneficiaries, aiming to cover 15% of the population, and 40% of the population below the poverty line. The Program was initiated to help the poor mitigate the impact of inflation on their purchasing power. The monthly payment intends to increase the income of a family earning Rs. 6000 by 20%. 77. The BISP was initially set up as a special project under the annual development plan. Within a year, the BISP became a program under its own law with direct funding from the cabinet division. BISP was initiated with initial allocation of Rs 34 billion in 2008-2009; the third largest allocation in the total budget and composed 0.3% of GDP for that year. In 2009-2010 the allocation increased to Rs 70 billion. The Benazir Income Support Program was transferred from the Finance Division to the Cabinet Division and a Special Secretary was appointed along with a National Program Coordinator in 2008. 78. BISP is implemented in four provinces (Punjab, Sindh, Baluchistan and Khyber-Pakhtoonkhwa) including Federally Administered Tribal Areas (FATA), Azad Jammu and Kashmir (AJK) and Islamabad Capital Territory (ICT). BISP envisions a long-term engagement investing in human capital to enable its beneficiaries to escape extreme poverty. In the short to medium term, BISP shall serve as a platform for various social assistance programs. These include transition to a conditional cash transfer program, complementary poverty exit programs, health insurance programs, and workforce programs. The graduation strategy under BISP will provide employment, vocational training and credit facilities to beneficiaries as they leave the cash transfer program. Table 3.6 shows the BISP expenditure details. 46 See Benazir Income Support Program. http://www.bisp.gov.pk/benazir/; Briefing for UNICEF at BISP Office, Islamabad, 27 May 2009. 47 Although BISP was allocated funds starting in July 2008, the first disbursements did not begin until October. 48 Husband, wife and dependent children constitute a family

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Table 3.6: BISP Expenditure, 2008-2010

Program Disbursement/beneficiaries

FY 2008/09

FY 2009/10

Benazir Income Support Program

Amount Disbursed (Rs billion)

15.8 32

Total Beneficiaries (million)

1.8 2.3

Source: Ministry of Finance. PRSP Annual Report 2009-10. 79. Beneficiaries include families that are living below the poverty line, as well as internally displaced persons. Beneficiaries were originally identified through parliamentarians’ offices. This approach was changed in 2009 to systematic proxy means testing based on a scorecard. The proxy variables and the scorecard designed for this purpose were based on household survey data from 2005-06. The scorecard is being piloted in 16 districts49. The proposed scorecard questionnaire includes only 13 questions. Married women are identified as the primary beneficiaries, and married men could apply for inclusion in cases where no female family member was an ever married. This targeting mechanism utilizing a poverty scorecard will eliminate the need for parliamentarians to identify beneficiaries. Moreover, this database will serve as the national registry on social protection. 80. Female applicants in households with a family income less than Rs 6,000, widowed or divorced women without adult male members in the family, physically or mentally ill persons in the family, or any family member suffering from chronic diseases, are eligible for BISP benefits. The benefits are delivered in bi-monthly installments via the post offices. A monthly payment of Rs 1,000 per family could enhance the income of a family earning Rs.5,000 by 20%. 81. Under BISP, a poverty exit strategy known as Waseela-e-Haq was launched in 2009-2010 to promote self-employment among women or their nominees and improve their livelihood. Microfinance and soft loans up to Rs 300,000 for setting up small businesses are provided to beneficiary families. Every month a ceremony is held to select beneficiaries through a computerized random draw. As of March 2011, Rs 167 million has been disbursed to poor people for starting new productive enterprises. 82. BISP also plans to provide technical and vocational training to one member per beneficiary family to help them secure their livelihood. The initiative is already underway on pilot basis in Karak and Bannu and will soon be implemented in other provinces. Health insurance is also being provided to BISP beneficiaries. Life insurance with a coverage of Rs. 100,000 has been provided to heads of households of one million beneficiary families since 2011 while health insurance for all beneficiary families is being development will be launched on a pilot basis in four districts.

4. Punjab Sasti Roti

83. The Government of Punjab announced the Punjab Sasti Roti Program with a total outlay of Rs 7.5 billion to provide bread at prices that the poor could afford. It was launched in September 2008. In effect, the Sasti Roti scheme is similar to existing non-targeted consumer price subsidies provided by federal and provincial governments to urban consumers. The 49 The districts were selected based on poverty level, security issues and to cover the provinces and regions of the country. Briefing for UNICEF at BISP Office, Islamabad, 27 May 2009.

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government intends to help set up more than 30,000 subsidized bread-making sites. For years 2008-09, the expenditures for this program amounted to 1.9 billion and have been increased to about 8 billion in 2009-10 (PRSP Annual Report, 2009-2010).

84. Under the scheme, cheap bread, priced at two rupees a unit is provided across Punjab at over 14,226 enlisted tandoors (clay ovens). In 2008, flour was supplied to these bakeries at 250 rupees per 20kg bag, or at around half of the market price. The price of bread was estimated to be around half of the market price of a similar weight. The total daily flour consumption of these bakeries was estimated at around 70,000 40kg bags in 2008. The food market provides flour bags at subsidized rates to districts; and flour mills, are selected on the basis of their grinding capacity and quality of flour in order for target groups to receive hygienic and good quality roti at affordable prices. 85. The Punjab Sasti Roti scheme is targeted on the urban population of the Punjab province. The main targeting criterion is the location of the bakery in relatively poor communities. The cheap bread scheme is almost exclusively urban, based on the availability of wheat flour surpluses by the Punjab provincial government. Anyone can purchase the subsidized bread at a licensed bakery if it is available. 86. The program is monitored to the level of tehsils and mohallahs. District governments utilize the services of the Revenue, Cooperative, Health and Union Council staff in the monitoring process. The initiative was converted into Sasti Roti Authority in August 2009. A Chairman was appointed by a competent forum to look after the affairs of the Punjab Sasti Roti scheme.

5. The Punjab Food Support Scheme

87. The Punjab Food Support Scheme (PFSS) is a provincial program initiated in 2008. It progressed from a simple relief initiative to a flagship project of the Chief Minster’s vision to help in poverty alleviation. It was originally designed to provide food stamps to the poorest households, but has been converted to a cash grant of Rs 1,000 per household per month. It is similar to the BISP, except it is implemented in the Punjab province. PFSS targets the poorest segment of the population to provide relief from increased wheat prices since 2000. 88. The PFSS provides a cash grant of Rs 1,000 per poor household per month. Beneficiaries of the food scheme include households that do not have a breadwinner; widows, orphans, destitute, chronically sick and disabled persons; and the elderly who have been abandoned by their families. The scheme covers both rural and urban areas with total subsidy amounting to Rs 21.60 billion (at Rs 1.8 billion per month) for 1.8 families (at 6 persons per family). The first two phases of the scheme covered about 1 million beneficiaries.

89. The program is being monitored in three ways. First, a secure and efficient database is developed by the Government of Punjab to distinguish between various categories of beneficiaries included in the scheme. Second, the Pakistan Post Office has monitoring teams to ensure the transparency in the disbursement process. District monitoring teams are also deployed by the District Coordinating Officers to provide a further feedback on implementation. Finally, an audit is conducted in accordance with international standards.

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6. Workers Welfare Fund

90. The Fund was established in 1971 under an Ordinance with a capital of Rs 100 million provided by the federal government for workers of establishments registered with the Fund. The WWF is a federal body linked to the Ministry of Labor, Manpower and Overseas Pakistanis. It is managed by a Federal tripartite board, which makes decisions on fund allocations. The funding is distributed to the tripartite boards in each province. 91. A governing body comprising the Government, workers, and employers’ representatives supervises Workers Welfare Fund. It is financed through 2% levy from employers under the WWF Ordinance in 1971; and a surplus amount from the Workers' Participation Fund (equivalent to 5% of the profit of a company) under the Workers Participation Act of 1968. This Act applies to all companies, which have 50 or more workers or a paid-up capital of Rs 2 million or more with fixed assets valued at Rs 4 million or more. The collected revenue goes to the Federal Consolidated Fund that is transferred through budgetary allocation to the Workers' Welfare Fund under the Ministry of Labor. Table 3.7 shows the beneficiaries and expenditure of WWF.

Table 3.7: Workers Welfare Fund – Beneficiaries and Expenditure

Program Disbursement andBeneficiaries

FY 2007-2008

FY 2008-2009

FY 2009-2010

Workers Welfare Fund

Amount Disbursed (Rs million)

1,721 2,087 2,432

Total Beneficiaries

(000)

59,370 63,008 70,403

Source: Ministry of Finance. PRSP Annual Report 2009-10. 92. WWF provides funding for development programs that build new schools for workers’ children and houses for purchase by workers at concessional prices; development of medical facilities; and purchase of medical equipment for provincial social security organizations. Other WWF benefits include free education, text books, uniform and scholarships to other schools and tertiary institutions for workers’ children. A separate provincial Workers’ Children Education Board manages the schools. Other welfare services include grants of Rs 30,000 for marriage of daughters, tricycles for disabled workers and grants of Rs 150,000 to families of deceased workers and funding for skill development centers. Table 3.8 shows the breakdown of benefits and disbursement of WWF.

Table 3.8: Workers Welfare Fund Benefits and Disbursement

Programs No of Beneficiaries (2008-2009)

Disbursement (Rs Million) (2008-2009)

Number of Beneficiaries (2009-2010)

Disbursement (Rs Million) (2009-10)

Education schemes (schools)

36,314 945 52,746 1,228.7

Scholarship cases 15,721 345 7640 433.73 Marriage grant cases 9499 473 9074 495.80 Death grant cases 1135 307 943 273.35 Earthquake affected cases

339 17 - -

Total 63008 2087 70403 2432

22

Source: Ministry of Labor and Manpower. Workers Welfare Fund (WWF). Islamabad 93. In order to be eligible for the WWF, an industrial worker must meet the criteria in the Workers Welfare Fund Ordinance of 1971, the definition of a laborer under the Industrial Relations Act of 2009, must be registered with the Employees Old Age Benefits Institution (EOBI) or a social security organization and employed not less than 3 years. 94. Although WWF covered 70,403 beneficiaries in 2009-2010, Fund coverage remains low. Among the covered workers, most are not aware of the current benefits and procedural mechanisms. Many of the informal sector units also avoid registration of their workers to evade contribution to the Fund.

C. Social Insurance

95. There are four main social insurance schemes in Pakistan: (i) Worker Welfare Fund (WWF); (ii) Employee Old Age Benefits; (iii) Government Employees Pension Scheme; and (iv) Employees Social Security Institutions (ESSI). The ESSI provides health services and some cash benefits to registered employees. The EOAB is a compulsory pension scheme for employees of establishments employing 10 or more persons. In addition, the government also its own pension scheme for public sector employees, which is by far the most comprehensive social insurance scheme in Pakistan. These programs include formalized systems of pensions, health insurance, maternity and unemployment benefits, with tripartite financing between the employer, employee, and the State. It also includes informal mechanisms such as savings clubs.

1. Employees Old Age Benefits Institutions (EOBI)

96. This federal scheme was initiated in 1976, covering workers in formal sector establishments that employ 10 or more workers. It has registered 2.7 million workers from 56,632 industries and establishments. The scheme provides benefits of old age, invalidity and survivors pension as well as an old age grant. The EOBI is providing old age pension to 2,266,713 individuals; invalidity pension to 6,397 individuals; survivors’ pension to 117,828 beneficiaries based on the latest statistics50. 97. The Ministry of Labour, Manpower, and Overseas Pakistanis provides general supervision and EOBI administers the program. EOBI is an autonomous institution under the Ministry of Labor, Manpower and Overseas Pakistanis. The minimum wage is 6,000 rupees a month. The employers contribute 5% of the wage of insured workers with a matching contribution of 5% from the federal government. Employees also contribute Rs 20 per month. An insured person pays 1% of the minimum wage. Table 3.9 shows the number of establishments, registered employers and employees and the amount of contribution collected.

50 http://www.eobi.gov.pk/pice/database-stat.htm

23

Table 3.9: Establishments, Employers, Employees and Contributions Collected by EOBI

Year Total Number of Establishments

Employers Registered

Employees Registered

Contribution Collected

(Rs. Million) 2007-2008 58,310 2,032* 189,980 5,835

2008-2009 62,337 4,027* 247,062 7,030 2009-2010 * 1,1178 252836 7,510

Source: Ministry of Finance, PRSP Annual Report 2009-2010 Note: * Number of employers includes number of establishments

98. In order to be eligible for old-age pension, men must be 60 years of age and women 55 years of age with at least 15 years of contribution; miners must be 55 years of age with at least 10 years of service and 15 years of contribution. The minimum old-age pension is 2,000 rupees a month. Early pension is paid to men aged 55-59 and women aged 50-54. An old-age grant is also available for men (60 years old) and women (55 years old) although the insured will be ineligible for old-age pension. A lump sum of 1 month of earnings for each year of covered employment is paid. Disability pension provided to individuals with a 33% loss in earning capacity with at least 15 years of contribution. Survivors’ pension (100% of the deceased minimum pension) is given to spouse or orphaned children under 18, parents of the deceased and other dependents. The deceased should have at least 36 months of covered employment and a pensioner at the time of death. The minimum pension is 2,000 rupees. The EOBI benefits are found in Table 3.10.

Table 3.10: Benefits under EOBI

Programs Number of Beneficiaries (2008-2009)

Disbursement (Rs Million) (2008-2009)

Number of Beneficiaries (2009-2010)

Disbursement (Rs Million) (2009-10)

Old Age Pension 185,600 3,704 197,216 4,156 Invalidity Pension 4,600 174 4,893 96 Survivors Pension 97,900 1,851 106,369 2,149

Old-Age Grants 1,900 58 1,774 21 Total 290,000 5,787 310,352 6,442

Source: PRSP Annual Report 2009-10, Ministry of Finance

2. Government Employees Pension Scheme

99. Government Servants Pension Fund is for government employees only and provides provident fund and old age pension. The Government does not contribute any money to this fund. Instead, employees deposit a certain percentage of their salary in a General Provident Fund. This employee savings is repaid on retirement with a relatively higher interest rate paid by the Government. 100. Beneficiaries of this scheme are permanently employed public servants; employees of the armed forces; and the police. Contractual employees hired by the Government are not entitled to any social benefits. Hence, all employees of the federal government, provincial governments, armed forces, civilian employees of armed forces, civilian armed forces, and semi-autonomous organizations, most statutory bodies and Water and Power Development Authority (now divided into several companies) are entitled to pension and other benefits.

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Unfortunately the armed forces pensioners were excluded although they are part of the Federal Government pension expenditures. 101. Government servants are entitled to receive pension and other benefits such as provident fund on retirement, at the age of 60 or earlier after 25 years of pensionable service. An attempt was made in 2010 to estimate the liability of the Federal Government for the Pay and Pension Commission51. Pension is equal to 70% of the value of basic pay and certain other emoluments. 102. Gratuity is provided for an employee who has served less than 10 years, or whose job was abolished before his 25 years minimum eligibility period was completed. The employee receives one-month pay for every year served, or 1.5 months pay in the case of death or disability. This benefit is known as Gratuity. Table 3.11 shows the expenditure and beneficiaries of the government pensions scheme.

Table 3.11: Pensions Scheme Expenditure and Beneficiaries - Sindh

2007-08 2008-09 2009-10

Annual Pension Scheme Expenditures (PRS billions)

7.140 7.733 12.784

Estimated Number of Beneficiaries at end of Year

135,924 89,594 145,731

Source: Whaind (2010); Whaind (2009) and Whaind (2008)52 103. There were problems in identifying annual expenditures for Federal civil service pensioners since they are spread over a number of accounting systems. The expenditures are extracted from the Government of Sindh’s actual final annual expenditure statements. However, the number of pension recipients is currently not available in one central location and the development of a reliable database is ongoing. This accounts for the large fluctuation observed in the number of Sindh beneficiaries. The Punjab Pension Fund provided the data for the Punjab Pension Scheme shown in Table 3.12.

Table 3.32: Pension Scheme Expenditures and Beneficiaries - Punjab

2009-10 2008-09 2007-08

Annual Pension Scheme Expenditures (PRS billions)

18.726 18.048 16.407

Estimated Number of Beneficiaries at end of Year

344,315 360,822 381,389

Source: Punjab Pension Fund

51 Whaind, N. Government of Sindh Civil Servants Pension Scheme. 2010. 52 Whaind, N. 2010. Government of Sindh Civil Servants Pension Scheme: Actuarial Valuation Report as at 30.06.2010 under International Public Sector Accounting Standard 25. Pakistan; Whaind, N. 2009. Government of Sindh Civil Servants Pension Scheme: Actuarial Valuation Report as at 30.06.2009 under International Public Sector Accounting Standard 25. Pakistan; Whaind, N 2008. Government of Sindh Civil Servants Pension Scheme: Actuarial Valuation Report as at 30.06.2008 under International Public Sector Accounting Standard 25. Pakistan.

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3. Employees Social Security Institution (ESSI)

104. This scheme was introduced in March 1967 under the West Pakistan Employees' Social Security Ordinance No. X of 1965, with the assistance of the International Labor Organization. It was reorganized on a provincial basis in Sindh, Punjab and Khyber-Pakhtoonkhwa in July 1970. Initially, this scheme specifically covered workers in the textile industry to provide protection against contingencies in the event of sickness, maternity, work-related injury, invalidity and death. In 1969, the scheme included workers from commercial and other industrial establishments having five or more employees. A year after, it was reorganized on a provincial basis. 105. The ESSI is under the Provincial Employee Social Security Institutions linked to the provincial Department of Labor. Table 3.13 shows the number of registered establishments and expenditure of provincial social security institutions.

Table 3.43: Performance of Provincial Social Security Institutions

Year Number of

Registered Establishments

Number of Secured Workers Number of Dependents

Total Income of

Institutions

Total Expenditure

of Institutions Total Male Female (Rs. million) (Rs. million)

2007-2008 61,706 1,102,668 967,880 134,788 6,130,733 4,129.82 3,758.13 2008-2009 63,672 1,192,096 1,038,328 153,768 6,627,488 5,850.61 5,936.71 2009-2010 70,018 1,315,267 1,163,168 152,099 4,606,048 6,969.00 5,501.00

Source: Ministry of Labor and Manpower. Labor and Human Resource Statistics 2010. 106. The coverage of the Provincial Employees Social Security Institutions (PESSI) is similar to EOBI in the exclusion of government workers, the armed forces and other nominated industries. The PESSI was applied to industrial and commercial establishments employing 10 or more employees. In Balochistan, it applies to enterprises with 5 workers. The coverage was provided to the employees of these establishments drawing monthly wages up to Rs 5,000. Available data shows that the scheme covers about a million workers in the whole country employed in 41,498 establishments.

107. PESSI provides a range of health services and cash benefits. In terms of health services, PESSI provides facilities from first aid posts to hospitals where workers who are covered by the scheme receive free treatment and medicines. These schemes also provide some cash benefits. Table 3.14 shows the list of benefits offered under PESSI.

Table 3.14: Provincial Employees Social Security Institutions (PESSI) Benefits

Benefits Description 1 Sickness Benefits including

Tuberculosis and Cancer • 75% of the wages up to 121 days in a year. • Tuberculosis and cancer sickness benefits is paid at 100% of

wages for 365 days 2 Injury Benefits • 100% of wages up to 180-days in a year 3 Maternity Benefit • 100% of wages for 6 weeks pre natal and 6 weeks post natal 4 Disablement Gratuity • As determined by the Medical Board, 5% to 20% of disability

depending upon the wages and percentage of degree of disablement

• Amount is paid one time in lump sum as compensation against the sustained loss

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5 Partial Disablement Pension • For disability from 21% to 66%, depending upon wages and degree of disablement along with free medical care facilities for life

6 Total Disablement Pension • For disability exceeding 66% life pension, 100% of the wages along with free medical care for life

7 Survivor’s Pension • Upon the death of a secured worker due to employment injury, survivors are entitled to survivor pension at 100% of wages along with free medical care for life

8 Iddat Benefit • Upon the death of husband, women worker receives 100% of the wages during Iddat period

9 Death Grant • Upon the death of a secured worker during working hours, 100% of last drawn wages is paid as death grant to his dependent

• Upon natural death of secured worker other than an accident during working hours, 75% of last drawn wage is paid to dependent as a death grant

10 Diet Charges • Admitted patients are paid diet charges at Rs. 100 per day 11 Survivor Medical Care • In case of natural death other than an accident at the time of

employment, survivor is provided medical care for one year 12 Conveyance Charges • Upon referral of a hospital ambulance, conveyance charges are

paid 13 Hajj Facility • The PESSI sends 4 secured workers every year on Hajj that are

selected through balloting 14 Free Medical Education • The PESSI annually provides 6 workers’ children with free

Bachelor of Medicine/Bachelor of Surgery education in the medical colleges affiliated with the hospitals

Source: Punjab ESSI - http://pessi.gop.pk/ 108. The PESSI scheme was initially financed through monthly contribution of employers and employees53. The employee paid 2% of wages while the employer contributed 4% of the employee’s wage. Sweeping changes were introduced in 1972 under the Bhutto government, making the employer responsible for the whole contribution and raising the rate of contribution to 7% of the employee’s wage. The main source of income of the ESSIs is a contribution paid by employers at 7% of the wages of paid workers who earn up to Rs 5000 per month. D. Labor market programs

109. There are two major labor market programs in Pakistan implemented by the Ministry of Local Government and Rural Development and the Ministry of Youth Affairs. These are the People’s Works Program and the National Internship program.

1. People’s Works Program

110. Pakistan has a long history of public works programs that provide temporary employment to workers through labor-intensive construction projects in the public sector. The Khushal Pakistan Program (KPP) operating since 1999, was known as the People’s Works Program and the Tameer-e-Watan Program in the tenures of different governments. 111. Currently, there is only one major employment generation scheme being operated by the government. The People’s Works Program I and II cover small development schemes for the provision of electricity, gas, farm to market roads, telephone, education, health, water supply, 53 Mahmood, N. and Nasir, Z. N. 2008. Pension and Social Security Schemes in Pakistan: Some Policy Options. PIDE Working Paper.

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sanitation and bulldozers’ facilities to the rural poor. The program serves the dual purpose of providing employment and improving infrastructure. The PWP-II is a special program launched by the Prime Minister’s Secretariat for funding development schemes. The program supplements the government’s development efforts by executing small schemes in roads, electricity, education, health, water supply, sanitation, and other fields. Table 3.15 the funding and beneficiaries of the Peoples’ Works Program.

Table 3.15: Peoples’ Works Program Disbursement and Beneficiaries

Program Disbursement and Beneficiaries

FY 2007-2008

FY 2008-2009

FY 2009-2010

Peoples Works Program-I

Amount disbursed (Rs million)

1,950 3,329 8,417

Peoples Works Program-II

Amount disbursed (Rs million)

2,748 28,000 31,754

Source: Ministry of Finance. PRSP Annual Report 2009-10. 112. The Ministry of Local Government and Rural Development coordinates the implementation of the Peoples’ Works Program I. In 2002-2003, 0.3 million employment were generated. Local communities identify projects based on their needs. However, it is not clear whether targeting takes place on the basis of infrastructure priorities or poverty and unemployment priorities. Data on the duration of employment of the scheme is also not available. 113. The Public Sector Development Program provides financing for public works. For the year 2011-2012, an allocation of Rs.33 billion has been made54. According to the medium-term budgetary framework 2010-201355, in 2008-2009, a total of 132,207 jobs were created through a completion of 2,288 development schemes. At an estimated daily wage rate of Rs 200 (using the minimum wage rate of Rs 6,000 per month)56, and 40 days of work under each case of employment, the total expenditure for job creation totals Rs 1,057.8 million. Similar estimations were used for the year 2009-2010. The expected beneficiaries of the Peoples’ Works Program in 2009-2010 are about 96.0 thousands.

2. National Internship Program

114. The National Internship Program (NIP) is designed for the benefit of young unemployed postgraduates and graduates all over the country, who have completed sixteen years of education from recognized universities or degree awarding institutions including external candidates57. The scheme is intended to provide financial relief to fresh graduates. For the year 2008-09, there were about 21.4 thousand total internships provided with almost the same number for both male and female beneficiaries. For 2009-10, the total internships reached 22.8 thousand beneficiaries, which were also almost equally distributed among male and female. 115. The maximum age limit for program eligibility is 25 years of age and interns will receive a stipend of Rs 10,000 during the period of placement. After completing the internship, a completion certificate will be awarded by the government to the interns. The National Internship 54 Ministry of Finance. 2011. Federal Budget 2011-12, http://www.finance.gov.pk/budget/Press_Brief_2011_12.pdf 55 Government of Pakistan. Finance Division. Federal Medium Term Budgetary Estimates for Service Delivery 2010-2013. 56 Government of Pakistan. Ministry of Labor and Mapower. 2010. Labor and Human Resource Statistics 2000-2015. 57 Ministry of Finance, Updated Annual Progress Report, 2009-10. PRSP.

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Program office (NIPO) in Islamabad acts as program coordinator. Program information is available at all higher education recognized universities, including headquarters of provincial and district governments.

IV. THE SOCIAL PROTECTION INDEX AND ITS DISGGREGATION

116. The revised Social Protection Index (SPI) is a unitary indicator that can be disaggregated for analytical purposes. 117. 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. 118. 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’). 119. The revised SPI can also be disaggregated by the major categories of social protection programs: social insurance, social assistance and labour 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. 120. 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. 121. The derivation of the SPI for poor and non-poor and the SPI women and men used poverty and gender targeting rates. The 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 consultants. A. Basic Statistics

Table 4.1: Pakistan Basic Statistics for 2009

Statistic Unit 2009 Value Source of Data Notes

GDP (current prices) Millions 12,723,980

Economic Survey 2009-10, Federal Bureau of Statistics (FBS)

FY 2008-09 data

GDP per capita (current prices)

Units 75,675 Economic Survey 2009-10, FBS

own calculation (divide GDP by population)

GNI (current prices) Millions 13,070,268

Economic Survey 2009-10, FBS

FY 2008-09 data

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Statistic Unit 2009 Value Source of Data Notes

Total Population Millions 168.1 Economic Survey 2009-10, authors calculations

End-June estimate (Based on Sub‐Group II on Population Projections for the 10th Five Year Peoples Plan 2010‐15 - authors calculations using 2008 July 1st figures of 166.41 million, with growth rate 2.10% to calculate for Dec 2008

Number of unemployed/underemployed

Millions 19.7 Labour Force Survey 2009-10, Planning Commission AP 2010-11

unemployed labor force =2.93 million, unpaid labor = 29.7% of employed population, unpaid family helpers 2008-09 = 15.08 million

Population aged 60 years and over

Millions 8.9 Labor Force Survey 2008-09

1.99% of the population is between 60 and 64 and 3.28% is above 64

Employed Population Millions 56.6 Labor Force Survey 2008-09

FY 2008-09 data

Population living below national poverty line

Millions 39.2 Economic Survey 2009-10, Planning and development division

Last calculated proportion of population living below poverty line is 23.3% (figure from 2005) in all official documents

Disabled population Millions 4.2 0.025 Estimate from 1998 census

Children aged 0 to 14 years

Millions 58.9 Labor Force Survey 2008-09

Percentages for age brackets up till 14 were added and then multiplied by the total population. Approximately 41.43% is between 0 and 14.

Per capita poverty line income (annual)

Units 18,275.6 Economic Survey 2009-10, FBS

authors calculations using 2001-02 official poverty line at 723.40 Rs and inflating it by food

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Statistic Unit 2009 Value Source of Data Notes

inflation

Average household size persons 7 PSLM 2008-09 FY 2008-09 Exchange rate US$1= 78.4983 State Bank of

Pakistan (Economic Survey 2009-10)

FY 2008-09

Source: Country Sources, 2011 B. Social Protection Expenditure

122. Total social protection expenditure in Pakistan as a percentage of GDP is 1.3%. Total social protection expenditure in 2008-2009 is about Rs 167 billion. Table 4.2 shows the social protection expenditure by category.

Table 4.2: Social Protection Expenditure by Social Protection Category

2009 Annual Expenditure (million Rs)

Percent (%)

Pensions 129,183 77.4 ALL Social Insurance 129,183 77.4 Health Assistance 549 0.3 Child Protection 608 0.4 Other Social Assistance 31,997 19.2 ALL Social Assistance 33,154 19.9 Labor Market Programs 4,637 2.8 Total SP Expenditure 166,974 100

GDP (million Rs) 12,723,980 SP Expenditure Indicator 1.3%

Source: Country sources, 2011 123. Social protection expenditure in Pakistan is dominated social insurance spending which accounts for 77.4% of all social protection expenditure. Most of the expenditure is spent on insurance and health care for government and formal sector employees and army personnel. Subsequently, only 22.6% of social protection expenditure was allotted to the other components, with 19.9% for social assistance programs, and a minimal 2.8% for labor market programs. 124. Table 4.3 shows that 87% of the total expenditure on SP programs is incurred by the three programs – The Government Pension Scheme, the BISP program, and the Punjab Food Support Program.

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Table 4.3: Largest Social Protection programs in terms of expenditure

Rank Programs Annual

Expenditure (millions)

%age

1 Governments Pension Schemes 117,459 70.3%

2 Benazir Income Support Program

15,800 9.5%

3 Punjab Food Support Program 10,154 6.1%

Percentage to total SP expenditure 87% Source: Country Sources, 2011 125. The reliance of the elderly population on government-sponsored pension schemes is increasing. Pension expenditures restrict room for developmental work while government’s pension debt soared to a significant percentage of GDP, affecting long-term sustainability. However, given the large size of the military and public sector, it is not surprising that government pension schemes account for the largest proportion of social protection program expenditures in Pakistan. 126. Aiming to target 15% of the total population, the BISP has huge budgetary outlays. It is also the government’s flagship social safety net program. Although its coverage is lower than targeted, it still reaches under three million households. The number of beneficiaries is likely to increase once the nationwide poverty survey is complete. 127. Punjab Food Support Program also has a huge outreach, given its implementation in Punjab, the province with the highest population. It covers about 1.8 million families with cash grants. The Punjab Food Support Program operates as a targeted subsidy, and implementing subsidies always incur high costs. C. Social Protection Beneficiaries

128. The second proposed component of a Social Protection Index is the coverage of SP Programs. The total beneficiaries of SP programs in Pakistan in 2009 were 14,965,000. Among the total beneficiaries of SP programs in Pakistan, 35.1% are of the Social Assistance programs, 63% of Social Insurance programs and remaining 1.9% of labor market programs. 129. Amongst the individual programme beneficiaries, the maximum number of beneficiaries is of the Provincial Social Security Institutions, followed by that of Governments Civil Servants Pension Scheme and Benazir Income Support Program. Hence most of beneficiaries are recipients of civil service pensions. In all these three programs cater to 73% of the beneficiaries.

Table 4.4: Largest Social Protection programs in terms of beneficiaries

Rank Programs Annual Beneficiaries (000s) %age

1 Provincial Employees Social Security 6,627 44.3%

2 Government Pension Schemes 2,505 16.7%

3 Benazir Income Support Program 1,760 11.8%

Percentage to total beneficiaries 73% Source: Country Sources, 2011

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130. Coverage rates 2009 for the key target groups58 in Pakistan remains low, with none exceeding 16%. Not surprisingly the highest coverage rate (15.7%) is for the employed and the elderly, although the great majority of these beneficiaries are civil servants or army personnel. Coverage of the poor, disabled and children are very low at less than 5%, indicating the lack of any major programs targeted at these groups. However, we must note that the interpretation of these rates is complicated by the difficulty of defining the reference populations for these target groups (especially for labor market programs) and the unknown amount of leakages to those outside the target group.

V. ANALYSIS OF THE COUNTRY RESULTS

131. In this Chapter, we synthesize the information obtained from the review of current Social Protection activities in Pakistan in order to derive indicators that can be used in the formulation of a Social Protection Index. A. Disaggregation by Social Protection Category

Table 5.1: Disaggregation by Category

Social

Insurance Social

Assistance Labor Market

Programs All SP

Programs Total SP Expenditure (Million Rs) 129,183 33,154 4,637 166,974 Beneficiaries (000s) 9,422 5,242 300 14,965 Reference Population (000s) 65,413 102,213 19,726 187,352 25% of GDP per capita 18,919 18,919 18,919 18,919 SPI 0.036 0.009 0.001 0.047

Source: Consultant estimates, 2011

132. The derived SPI figure is 0.047. The SPI for social insurance is 0.036, followed by social assistance, 0.009, and labor market programs at 0.001. The results suggest that the average per capita expenditure on social protection is only 4.7% of the poverty line expenditure (set at 25% GDP per capita).

B. Disaggregation by Depth and Breadth

133. The ‘depth’ interpreted as the average expenditure per actual beneficiary as a percentage of poverty line expenditure for Pakistan stands at 0.59. Measure of ‘breadth’ is 0.08 (expressed as total beneficiaries divided by total reference population is a non-monetary unit, and can be expressed as a simple percentage) where the SPI is the multiplication of the two. In Pakistan the measure of depth is relatively high. The breadth on the other hand is very low, indicating that not a very high proportion of the beneficiaries are actually reached. The high depth in that case indicates that the average size of benefits actually received is high. This means that the coverage of the SP programs is low. While the average size of the benefit received is high, the proportion of those that need the assistance is very low.

58 Unemployed, underemployed, the poor, the disabled, children

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Table 5.2: Disaggregation by Depth and Breadth Social

Insurance Social

Assistance Labor Market

Programs All SP Programs

Depth 0.725 0.334 0.817 0.590 Breadth 0.050 0.028 0.002 0.080 SPI 0.036 0.009 0.001 0.047

Source: Consultant estimates, 2011 C. Disaggregation by Poverty

134. The revised SPI can be also be disaggregated by expenditure per potential poor and non-poor beneficiaries. This disaggregation brings focus to the on poor and non-poor beneficiaries. This component of the SPI will be assessed by estimating:

• the proportion of poor people/households benefiting from each type of SP program - poverty targeting, and

• the proportion of women benefiting from each type of SP program. 135. At the time of formulation of the previous SPI some of the information was available in the Pakistan Integrated Household Survey 2001-02. However, the recent household surveys do not contain any data on social protection schemes hence professional judgment was employed to determine targeting rates for all cases. For the programs the following59,

• if the program is only accessible to the non-poor, then 0% of the beneficiaries are assumed to be poor;

• if the program is exclusively targeted towards identifiable groups of poor then close to • 100% of the beneficiaries are assumed to be poor; • if the program is considered to be more general in nature in terms of poverty targeting,

then 23.9%(the national poverty level) of the beneficiaries are assumed to be poor • if there is a previous credible study to have estimated the poverty targeting of SP

programs, the derived value is used. 136. The disaggregated data shows that the SPI for the poor is much lower at 0.007, indicating the SP expenditure on the poor is much lower compared to expenditure on the non-poor. Based on the data collated for the SPI, 15% of all SP expenditure in 2009 went to the poor that currently form 23.9% of the total population. Hence the major contributor to the overall SPI is the non-poor SPI (0.040). This clearly implies that the SP programs are not very effective in reaching the poor. 137. The largest share of the SP expenditures especially for the poor was noted in Programs such the Child Support Program – PBM, National Centre for Rehabilitation of Child Labor – PBM, Pakistan Sweet Homes (Orphanages) – PBM, Langer Program – PBM etc. Of the top three SP programs, the first two (PESSI and government pension schemes) have no poverty focus. The low percentage clearly reflects the high proportion of SP expenditure on formal social insurance and health schemes that are not targeted at the poor. Given that over 20% of the population lives below the poverty line, this indicates a significant non-poor targeting of social protection expenditure. The main targeted programs Zakat and PBM, constitute just under one fourth of SP expenditure on the poor. Most of the expenditure on the poor is through the recently launched BISP and the Punjab Food Support Scheme.

59 For most programs, without any changes in poverty targeting, the methods employed in the previous country SPI report are being followed.

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Table 5.3: Disaggregation by Poverty Status

Poor Non-Poor SP Expenditure (Million Rs) 24,750 142,223 Reference Population (000s) 187,352 187,352 25% of GDP per capita 18,919 18,919 SPI 0.007 0.040

Source: Consultant estimates, 2011 D. Disaggregation by Gender

138. Disaggregating the gender focus of social protection expenditures is performed in a similar way to the disaggregation by poverty status. Although the availability of gender-disaggregated data was not always available, estimates have been made to capture the situation closest to reality. Hence, the actual delivery of the service could have more or fewer disparities. The SPI for men (0.039) is significantly higher than that for women (0.008). Almost 18% of the SP expenditure in the country is targeted at women. Hardly any program stresses on identifying women beneficiaries for availing the benefits of the same. The largest programs in terms of expenditures are highly gender imbalanced, as women employment in public sector is negligible (around 2%). Only the top third program, BISP, has a focus on both poverty and women.

Table 5.4: Disaggregation by Gender Women Men SP Expenditure (Million Rs) 29,889 137,085 Reference Pop (000s) 187,352 187,352 25% of GDP per capita 18,919 18,919 SPI 0.008 0.039

Source: Consultant estimates, 2011 139. While the Zakat Program and PBM do identify widows and poor women as beneficiary groups, they do not include women as a focus of their schemes. On the other hand, the BISP is a very significant exception in the country. The initiative claims to be the only cash transfer program in any developing country that targets women as its primary beneficiaries60. It has also been observed that as the program has been evolving in its design and implementation strategy, the current administration remains cognizant of challenges such as involving women as beneficiaries.

VI. CONCLUSIONS AND RECOMMENDATIONS

140. Government spending on social protection is inadequate relative to the scale of the problem. According to the SPI calculations, total spending as a percentage of GDP stands at 1.3%. The minimal spending on social security not only reflects low government interest in this important area, it also goes on to influence the quality of social security products, their outreach and the delivery capacity of the respective departments. Spending needs to be enhanced to be able to address issues of low coverage and inadequate levels of benefits. Additional resources must be made available by reprioritizing expenditure obligations, particularly following the 18th amendment where the provinces have more fiscal space to set priorities and expenditures. In addition, ensuring sustainable and predictable sources of funding for safety net programs also 60 The BISP and Zakat Program – A Political Economy Analysis of Gender – 2010 Shanza N Khan, Sara Qutab

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requires a clear commitment from the government to provide the necessary resources as and when required. Budgetary allocations for safety nets therefore should be built into the governments Medium Term Budgetary Framework, in order to gradually improve the availability of funds for such programs.

141. A disproportionate share of social protection expenditure appears to benefit the non-poor. As per the SPI calculations only 15% of all the SP expenditure goes to the poor. Given that a large share of total social protection expenditures comprises social security spending and the sizeable leakage of safety net benefits to the non-poor, a significant share of social protection spending in Pakistan likely accrues to the non-poor. A lack of targeting is hence a major concern in all SP programs. 142. Targeted programs have generally had weak targeting mechanisms and a poor governance context, the latter leading to lax implementation. At present, the main criterion used for identification of recipients is poverty, which excludes transient poverty and vulnerable shocks particularly to people with low human capital and access to productive assets. 143. Presently the federal government provides food subsidy through the utility stores network and the Punjab government administered the sasti roti scheme from 2008-10. For both programs, it is impossible to determine the number of beneficiaries and their socio-economic characteristics. The numbers can be large or small and beneficiaries can be rich or poor for the simple reason that the schemes are by and large untargeted. Without a beneficiary list and a system of verification, the non-poor also become beneficiaries of these schemes. 144. Likewise, the Zakat and PBM schemes do not have any transparent and accountable method of targeting. In fact, these programs are aimed to target the deserving and needy, but no objective targeting tool (e.g. proxy means testing) is used. According to World Bank (2007), ‘around 27% of guzara (monthly cash allowance) beneficiaries and 37% of those receiving rehabilitation grants are not poor, accounting for 32% and 45% of the resources distributed under each modality’. Furthermore, only 46% of total expenditures of PBM and 43% percent of total Zakat expenditures reach the poorest 40% percent of the population61. 145. There is also evidence of both corruption and patronage in the Zakat distribution system. Eligibility criteria or the process of selecting beneficiaries is not transparent and often, provision seems based on access to influential patrons or willingness to pay a bribe. Decisions regarding who receives benefits are mostly guided by local power relationships. There is no documented, institutionalized mechanism for the distribution of Zakat funds. Similarly, there are no specific criteria with regard to targeting of the PBM. 146. Regarding the social security schemes for formal sector employees, several practitioners and policy analysts have argued that the most important design failure is that funding responsibility has been placed entirely on the employer. Some have suggested that employees should contribute towards their own benefit to create a sense of ownership in these schemes. In addition, there is no provision for the preservation or transfer of pension rights on termination of employment. This weakness has been particularly exposed by the privatization process. Since workers do not contribute to these pension funds, there is no basis for the payment of a lump sum in lieu of pension rights. Further, pension rates are extremely low even in nominal terms. As the rates are fixed in nominal terms and are adjusted with a considerable time lag, often three to five years, their real value has been consistently declining.

61 World Bank (2007) Social Protection in Pakistan: Managing Household Risks and Vulnerability

36

147. The existing SP programs are highly exclusionary in terms of the beneficiaries covered. Large sections of the workforce remain unprotected. Low coverage is the main concern with respect to all labor welfare or social security programs. The two general and most comprehensive social security schemes, the PESSI and the EOBI, do not cover workers from the agriculture sector, the self-employed, and the informal economy, and those establishments that employ less than ten PESSI or five EOBI workers. It is estimated that less than 4% of the non-agriculture labor force actually benefits from the entitlement built into these programs (Bari et al, 2005) while two thirds of employees in the large and medium scale manufacturing and commercial sector work as unprotected contract labor62. As per the SPI calculations, together, the EOBI and the PESSI cover merely 13.5% of the total workforce of over 50 million. 148. The problem of bureaucratic red tape in social assistance programs further aggravates the issue of coverage. Delays in distribution of funds seem to be common. People also find the requirement to have an identity card and a bank account to be a significant hurdle in reaching the poor. While both could be addressed, it seems likely that these may still be barriers that deter some people, probably more often women, from applying for assistance 149. Pakistan lacks a dedicated SP agency or department that is mandated to coordinate between all SP schemes and programs. Each program has its own implementing agency such as the Ministry of Religious Affairs, the BISP Secretariat, and Ministry of Labor, EOBI etc. The absence of a social protection platform leads to many complexities and overlaps such as duplication of efforts, identical beneficiaries on recipient lists of multiple programs, jurisdictional concerns, etc. 150. Most programs are fragmented, duplicative and disjoint with no coordination mechanism. They are thinly spread and have poor coverage, and often exclude marginal and people in remote areas. Often similar programs are managed by different agencies with no clear division of responsibilities as to the type of program or target groups. As a result, they observed that there is a proliferation of programs run by each organization, which results in a loss of focus and also in scarce financial resources extended to their limits, with the capacity to administer them severely constrained. This thin spread implies that the grant assistance provided to recipient households is normally too small to achieve its intended purpose. 151. A recently enacted bill in Parliament on the BISP suggested that a council be set up for the administration of the program, but BISP planners are already considering the option of extending its portfolio to eventually encompass all other SP programs. The NSPS 2007 also advocates for the establishment of a separate social department, but no significant efforts have yet been made on this front. 152. There are no overt, distinct programs for girls and women, nor do they find special mention except for when women's status vis-à-vis male relation is deemed precarious. Only 10.5% of the total SP expenditure is on women. Women find low coverage in the generic worker clusters, and the broader support programs as these interventions are designed for the formal economy, where women are a small minority. Most women are engaged in informal sector (home-based work or agricultural labor) or unpaid employment. The informal economy must be documented and regularized, and extended worker rights protection. As an explicitly gendered program, the recent BISP has in this regard, been a radical change and must be carefully monitored to ensure its aims for gender equity and equality are not lost to a more generic approach to poverty reduction. 62 Haroon Jamal 2010

37

153. There is ample justification for mainstreaming SP within the country, even in the face of the recent poverty estimate, which has reportedly declined to 23.9%. SP is necessary to reduce poverty within broader macroeconomic growth policies, which alone take a long time to trickle down its benefits to the poor and disadvantaged. Special programs for poverty alleviation are thus necessary, especially Pakistan which has recently faced an economic crisis that has reversed poverty alleviation gains made in during the earlier part of the decade. Pakistan is also one of the few underdeveloped countries that outlines social security as an unequivocal citizenship right and defines a role for the state in establishing institutions to fulfill this constitutional guarantee63. Constitutional obligations, in which the relevant rights of individuals are spelt out, make a strong case for placing social protection high on the national development agenda 154. Yet Pakistan’s SP expenditure has traditionally been low and programs tend to be fragmented and inadequate in coverage and reach. Estimates from this report show that currently 1.3% of the GDP in spent on SP. However, if the State’s contribution to health is added to this, the figures would be higher; albeit still less than what is recommended internationally. Thus it follows that the existing SP apparatus has failed to benefit the deserving and needy due to its design flaws, inadequate provision and low budget allocation by the government restricting the proper development of these schemes. At best, Pakistan's SP programs work as an aggregate of disparate programs rather than a system of protection to the most vulnerable. Overall, impediments in the existing structure of social protection as reviewed above are a combination of issues with the policy process, design and delivery, and financing; all of which tend to perpetuate the already low coverage and inadequacy of assistance. 155. The SPI calculations show that coverage rates for the key target groups is low, with none exceeding 16%. For example, most of the social assistance programs under Zakat and Bait-ul-Mal cover less than 5% of the target group. Pension schemes benefit only a small portion of the population in the formal sector and cover less than 15% per cent of the total employed labor force. In addition, most SP schemes show a gender and rural-urban bias. Overall, around 14.965 million people are covered by some form of social protection (i.e. 8.3% of the total population much lower than the population living below the poverty line). 156. Significant proportions of the poor in general and thus poor children in particular do not receive social protection. The coverage level for the unemployed and underemployed population also remains limited. While Pakistan has managed to spend a significant proportion on Social Insurance in the form of pensions, there is a need for SP programs to now lay a greater emphasis on alleviating those who live below the poverty line by focusing on interventions under Social Assistance. 157. Expenditure as a percentage of GDP is also extremely low and hence SP schemes do not have a significant impact on the livelihood of the poor and vulnerable. Given that a large share of total SP expenditures comprise social security spending and the sizeable leakage of safety net benefits to the non-poor, a significant share of social protection spending in Pakistan likely accrues to the non-poor. 158. Both gender and poverty targeting of SP schemes in Pakistan are low. This is mainly because the SP landscape is dominated by social insurance and pension schemes that focus on employed labor force, which is neither poor nor female-oriented. 63 as enshrined in Article 38 of the Constitution

38

159. For too long, the government has provided SP initiatives, which are meant for the poor but because of their universal character or because of inappropriate targeting methods, the non-poor have disproportionately benefited. Untargeted programs mean that scarce resources go to subsidize the rich as well as the poor. SP has to be targeted to those who truly deserve to be protected. 160. In light of the key findings of this report, some of the recommendations that follow are discussed below. 161. Improve Targeting and Coverage: The key to ensuring the success of targeted programs is the use of a robust targeting approach to identify the poor (beneficiaries). For targeting to be effective, it has to fulfill the criteria of transparency and verifiability. Targeting mechanisms should also be dynamic. While the targeting mechanism for BISP remains weak at present, the commitment to move towards a robust means test in the form of the Poverty Score Card as the basis of targeting is a move in the right direction. This will not only help BISP in targeting the poor, it will provide other SP programs a tool to improve coverage and prevent leakages to the non-poor. Similarly, the National Database and Registration Authority (NADRA) data base is the appropriate vehicle through which geographical targeting can be done. 162. Livelihood Creation: Pakistan has been caught in the midst of several natural disasters at unprecedented levels in the past 6 years, starting from the Kashmir Earthquake of 2005 to the most recent 2010 Floods. Together with the ongoing internal conflicts and war on terror, these disasters have severely impacted livelihood provision. What is needed is a employment generation scheme that will also facilitate the construction of small infrastructure that has been damaged because of the disasters. An employment program that provides 100 days of employment in a year to unskilled workers should be initiated in a phased manner. In the first phase, the scheme should be introduced in FATA, Balochistan, and the flood affected districts across the country. 163. Health Insurance: One of the major triggers into poverty is health shocks for the poor and the vulnerable. Any effective poverty alleviation strategy will require targeted health cover for basic medical cover to the poorest. Pakistan has virtually no health insurance scheme for the masses. For this purpose, a health insurance scheme for the poorest population, chosen through the poverty scorecard should be initiated. 164. Food Provision: The rise in the food prices has affected the poor and middle class the most as they spend a major portion of their income on essentials of life. In case of Pakistan, the recent report by Oxfam states that due to food inflation the number of poor have increased from 60 to 77 million and people are being forced to cut their expenditure, even on food. According to another estimate, the poorest one-fifth of the population are spending 50% to 58% of its income on buying cereal64. In this regard, food support programs such under PBM, BISP and the Government of Punjab, need to improve their coverage and targeting mechanisms by redesigning the structure of these schemes. 165. SP for the Elderly: In Pakistan, like in many other developing countries, the process of ageing is well on its way due to declining trends in mortality and fertility levels and an increase in the average span of life in recent decades. The changing demographic and social trends in

64 Macroeconomic Frame-work and Social Protection; A case-study of Pakistan, Zafar Mueen Nasir, PIDE Islamabad, 2008

39

terms of shifts from extended to a more nuclear family system has also raised concerns about the rising old-age dependency ratio and the adequacy of future family support for the elderly. As such, new challenges of meeting the needs of the increasing population of the elderly have emerged that demand an assessment of the support base and social security system. With a large population base such as that of Pakistan, the absolute and the relative size of the elderly population and those living in poor socio-economic conditions is expected to be large enough to put substantial burden on the budgets for pensions and social security schemes.

166. Focus on Vulnerable Groups: The current debate on SP in Pakistan is focused on the poor and especially those who are very poor. It is definitely a priority to target the poor in any protection mechanism, as they need help immediately. However, SP mechanisms must also to look out for those people who might not be poor today but might be quite vulnerable to poverty or near poverty if certain shocks occur. A stark example of the shock was of course the 2005 quake where even the wealthy from affected areas were rendered quite needy. Loss of employment, loss of health and a number of other more person or market specific reasons can also lead to such outcomes. Pakistan must plan to make protection system more robust and responsive to include other than the poor in it too. ‘An efficient, comprehensive and egalitarian system will have these features’65.

65 http://nation.com.pk/pakistan-news-newspaper-daily-english-online/Opinions/Columns/09-Mar-2009/Unemployment-and-social-protection/1

40

REFERENCES

ADB. (2001). Social Protection in Asia and the Pacific. Manila: ADB. ADB. (2005). Social Protection Index for Committed Poverty Reduction. ADB. (2004). Social Protection Strategy Development Study. Islamabad: ADB. Arif, G. M. (2006). Targeting Efficiency of Poverty Reuction Programs in Pakistan. Islamabad:

Asian Development Bank. Federal Bureau of Statistics. (2009). Labor Force Survey 2008-09. Islamabad: Government of

Pakistan. Federal Bureau of Statistics. (2009). Pakistan Standard of Living Measurment Survey 2008-09.

Islamabad, Pakistan: Government of Pakistan. Gazdar, H. (2011). Social protection in Pakistan: in the midst of a paradigm shift? Center for

Social Protection . Government of Pakistan . (2007). National Social Protection Strategy. Islamabad, Pakistan:

Centre for Poverty Reduction and Income Distribution, Planning Commission. Government of Pakistan. (2009). Economic Survey 2008-09. Islamabad, Pakistan: Ministry of

Finance. Government of Pakistan. (2010). Economic Survey 2009-10. Islamabad, Pakistan: Ministry of

Finance. Government of Pakistan. (2010). Federal Medium Term Budgetary Estimates for Service

Delivery 2010-13. Islamabad: Finance Division. Government of Pakistan. (2011). Pakistan: Framework for Economic Growth. Planning

Commission . Government of Pakistan. (2009). PRSP-II. Finance Division . Jamal, H. (2010). A profile of social protection in Pakistan: An Appraisal of Empirical Literature.

SPDC. Kabeer, N. (2009). A review of social protection in South Asia. Kabeer, N. Mainstreaming Gender in Social Protection for the Informal Economy. 2008. Khan, S. N. (2008). Targeting of Social Protection in Pakistan: An Evaluation. Khan, S. N., & Qutab, S. (2010). The BISP and Zakat Program - A Political Economy Analysis of

Gender. Mahmood, N., & Nasir, S. N. (2008). Pension and Social Secuirty Schemes in Pakistan: Some

Policy Options. PIDE. McKinley, T., & Baulch, B. (2010). A Reformulation of the Social Protection Index. Asian

Development Bank. Ministry of Finance. (2010). Economic Survey 2009-10. Islamabad: Government of Pakistan. Ministry of Finance. (2011). Federal Budget in Brief (2011-12). Islamabad: Government of

Pakistan. Ministry of Labor and Manpower. (2010). Labor and Human Resource Statistics 2010.

Islamabad, Pakistan: Government of Pakistan. PILER. (2010). Labor Rights in Pakistan, Declining Decent Work and Emerging Struggles . Planning Commission. Pakistan MDG Report 2010. Islamabad, 2010: Government of Pakistan. Planning Commisssion. (2011). Annual Development Plan 2010-11. Islamabad: Government of

Pakistan . PRSP. (2009). Updated Annual Progress Report 2008-09. Islamabad, Pakistan: Ministry of

Finance. PRSP. (2010). Updated Annual Progress Report 2009-10. Islamabad, Pakistan: Ministry of

Finance. State Bank of Pakistan. (2008). The State of Pakistan's Economy: Special Section: An

Introduction to Social Protection. (T. Q. 2008, Trans.)

41

Whaind, N. Actuarial Valuation of Government of Sindh Civil Servants Pension Scheme. ADB, 2009.

Whaind, N. Actuarial Valuation of Government of Sindh Civil Servants Pension Scheme. Manila, 2010: ADB.

Whaind, N. (2008). Actuarial Valuation of Government of Sindh Civil Servants Pension Scheme. Manila: ADB.

World Bank. (2007). Social Protection in Pakistan: Managing Household Risks and Vulnerability

42 Appendix 1

SUMMARY OF KEY SP PROGRAMS IN PAKISTAN

Name of Program

Type of Program

Responsible Agency

Funding Source

Benefits Expenditure in Millions (2008-09)

Beneficiaries in

Millions (2008-09)

Coverage

Employees Old Age Benefits (EOB)

Social Insurance

Ministry of Labor, Manpower, and Overseas Pakistanis

Employees wages and government funds

• Cash benefits for insured workers

• Permanent disability benefits for insured workers

• Survivors benefits for dependents

5,787.0 290 Employees of firms with 5 or more workers excluding family labor and self-employed

Workers Welfare Fund

Social Insurance

Ministry of Labor, Manpower, and Overseas Pakistanis

2% levy from employers under WWF Ordinance and surplus from Workers Participation Fund

• Development funds for housing, medical facilities and schools of workers

• Education (free schooling, textbooks etc)

• Welfare services (grants for marriage & disabled workers, families of deceased workers, funds for skilled development centers

2.1 63 All companies with have 50 or more workers or a paid up capital of Rs 2 million or more, or have fixed assets valued at Rs 4 million

Government Employees Pension Scheme

Social Insurance

Government Provident Fund, Ministry of Finance

Employees contribution and budgetary expenditure funds the scheme

Pension is equal to 70% of the value of basic pay and some certain other emoluments. In addition they receive half or more of their pension in advance for ten or more years, according to a formula which takes into account the age and number of years in government service.

117,459

2505 Permanently employed public servants, and those in the armed forces, and the police excluding contract employees hired by the government are not entitled to any social benefit. Government servants are entitled to receive pension and other benefits such as provident fund on retirement, at the age of 60 or earlier after 25 years of pensionable service.

Appendix 1 43

Name of Program

Type of Program

Responsible Agency

Funding Source

Benefits Expenditure in Millions (2008-09)

Beneficiaries in

Millions (2008-09)

Coverage

Provincial Employees Social security Institutions

Social Insurance

Provincial Social Security Institutions, Ministry of Labor and Manpower

Contribution by employers of 7% of the wages of paid workers who earn up to Rs 5000 per month

A range of health services and cash benefits. The contingencies covered under the scheme, included sickness, maternity, work injury, invalidity and death benefits (full wages with leave for a specified period).

5936.7 6627 All industrial and commercial establishments employing 10 or more employees. In Balochistan, it applies to enterprises with 5 workers. The coverage provided to the employees drawing monthly wages up to Rs 5,000

Zakat Social Assistance

Ministry of Religious Affairs

Private voluntary contributions managed by government

• Guzara allowance – stipend to needy

• Educational stipends

• Stipends for students of deeni madaris

• Health care • Social welfare • Marriage

assistance

2877 1086 Nationwide coverage; committees select recipients from among eligible population; persons income must be below official poverty line

Bait-ul-Mal Social Assistance

Ministry of Social Welfare and Special Education

Non-lapsable grants from federal government plus funds from provincial government, donors and NGOs

• Food Support Program

• Individual Financial Assistance

• Child support through the National Centre for Rehabilitation of Child Labor

• Child Support Program

• Institutional Rehabilitation

• Pakistan Sweet Homes (PSH) for orphanages

• Pakistan Homes (PH) for senior citizens

• Langer Program (LP) for poor and vulnerable

3432 1159 Nationwide coverage; using categorical and proxy means testing

44 Appendix 1

Name of Program

Type of Program

Responsible Agency

Funding Source

Benefits Expenditure in Millions (2008-09)

Beneficiaries in

Millions (2008-09)

Coverage

free food

Benazir Income Support Program

Social Assistance

Benazir Income Support Program

Direct funding from cabinet division

• Cash transfers • Waseela-e-Haq

– promote self employment among women

• Waseela-e-Sehat: Health insurance

• Special Initiative providing relief to funds, earthquake and militancy hit victims

15,800.0 1,760 Beneficiaries include below-the-poverty-line families including internally displaced persons. Targeting done using scorecard methodology

Punjab Sasti Roti

Social Assistance

District governments

Provincial government

Under the scheme, cheap bread, priced at two rupees a unit is provided across Punjab at over 14,226 enlisted tandoors

1,900.0 Urban population of Punjab – in mainly poor communities

Punjab Food Support Program

Social Assistance

District government

Provincial government

The program provides cash grant of Rs 1,000 per poor household per month

10,154.4 1,321 Covers both rural and urban Punjab. Includes households without breadwinners, widows, orphans, destitute, chronically sick, disabled and elderly abandoned by families,

National Internship Program

Labor Market Program

Establishment Division

Federal Government

The program provides paid internship to fresh graduates

2568.0 21 The program is open to all unemployed postgraduates & graduates having completed 16 years of education from HEC recognized institutions, including the external candidates. The maximum age limit for consideration under the program is 25 years

Appendix 1 45

Name of Program

Type of Program

Responsible Agency

Funding Source

Benefits Expenditure in Millions (2008-09)

Beneficiaries in

Millions (2008-09)

Coverage

Peoples Work Program

Labor Market Program

The Ministry of Local Government and Rural Development

Public sector development program

Employment generation 28,000.0

Source: Various government documents

46 A

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50 Appendix 3

LIST OF PEOPLE CONSULTED

1. Noman Ghani – PRSP, Ministry of Finance 2. Hina Khar – Federal Minister Economic Affairs, & Foreign Affairs 3. Mushtaq Ahmad – Actuary office, Ministry of Finance 4. Nasir Whaind – Consultant, Clavis Actuarial Consulting 5. Shanza Khan – Consultant, Strategic and Economic Policy Research 6. Mr. Aquil Raza Khoja – GM, Punjab Pension Fund 7. Saleem Balouch - National Coordinator for RSPN/BISP Poverty Targeting Survey 8. Hasan Akhtar – PS to Federal Minister Economic Affairs & Foreign affairs 9. Baela Jamil – Director, ITA 10. Kate Vyborny– Candidate, D.Phil. Economics St. Antony’s College, University of Oxford 11. Ijaz Nabi – Director, International Growth Center-Pakistan 12. Naoman Saeed – Development Consultant 13. Aurangzeb Zia – M&E specialist, USAID 14. Yasir Taqi – SPDC-Karachi 15. Khawar Mumtaz – CEO- SG 16. Ali Karamat – Development Economist, PIDE 17. Ali Cheema – Lead Academic, IGC 18. Faisal Bari – Country Leader, OSI 19. Saba Shaikh – Child Rights Cell, AGHS 20. Hina Jilani – Children and Women’s lawyer, AGHS & Special Representative of the

United Nations Secretary General on Human Rights Defender 21. Najam-ud-Din – Researcher, AGHS 22. Khadija Haq – Director, Mahbub-ul-Haq Development Center 23. Abid Burki – Development Economists, LUMS 24. Fareeda Shaheed – Director, UN WEMC and Special Expert on Culture