Core diagnostic of the social protection system in Armenia May 25, 2021 Outline 1. Why a Core diagnostic? 2. CODI framework and methodology 3. Main results of the performance assessment Why a Core diagnostic of the social protection system? CODI (Core Diagnostic Instrument) provides a standardized framework: 1. Analyze overall social protection system performance in Armenia against national and international best practice, 2. Highlight strengths and weaknesses of the system and selected programs, 3. Summarize complex landscape of policies and institutions, 4. Serve as the common starting point for future dialogue between stakeholders. 5. Promote exchange and coordination between national and international partners. Definition of social protection In 2016, the Social Protection Inter-agency Cooperation Board (SPIAC-B) defined social protection as “a set of policies and programs aimed at preventing and protecting all people against poverty, vulnerability and social exclusion, throughout their life cycle placing a particular emphasis on vulnerable groups. This means ensuring adequate protection for all who need it, including children; people of working age in case of maternity [or paternity], sickness, work injury or for those without jobs; persons with disability and older persons. This protection can be provided through social insurance, tax-funded social benefits, social assistance services, public works programs and other schemes guaranteeing basic income security and access to essential services.” CODI framework: 18 key assessment areas Policy framework Program design Program Implementation 1.Legal and policy 8. Eligibility criteria and 12. Identification framework qualifying conditions 13. Eligibility verification 2. Alignment of policies 9. Benefit design 14. Enrollment with needs of population 10. Expenditures and 15. Benefit delivery 3. Policymaking process financing 16. Monitoring and 4. Policy implementation 11. Incentives evaluation and capacity 17. Complaint and appeals 5. Public expenditure and mechanism financing 18. Information 6. Information dissemination and raising Dissemination and awareness Raising Awareness 7.Monitoring and Evaluation Systems CODI framework: Ten system performance criteria assessed on a 4-point scale Average score Area Latent Advanced 1 2 3 4 1. Inclusiveness 2. Adequacy 3. Appropriateness 4. Respect for rights and dignity 5. Governance and institutional capacity 6. Financial and fiscal sustainability 7. Coherence and integration 8. Responsiveness 9. Cost-effectiveness 10. Incentive compatibility Methodology Desk research 2018-2019: Quantitative and qualitative information on system attributes and key social protection programs including inventory of 115 SP programs along the lifecycle Two-day participatory workshop to collectively assess the 15 selected programs (Yerevan, November 2019): • Ministry of Labor and Social Affairs • Ministry of Territorial Administration and Infrastructure; • Ministry of Health; • Ministry of Education, Science, Culture and Sport • Territorial Offices of Social Services • State Employment Agency • Social Security Service • Medical-Social Examination Commission • Yerevan municipality Selected programs for in-depth assessment (15) Non-contributory cash Labor market programs (5) Social care services (2) transfers (8) Family Living Standards 1.Internships for professional 1. Support with Enhancement Benefits: experience deinstitutionalization 1. Family Benefit, 2. Vocational training for the 2. Residential care services for 2. Social Benefit, unemployed elderly and persons with 3. Quarterly emergency 3. Nanny program (assistance disabilities assistance to job-seekers who are in 4. Old-age benefit childcare leave) 5. Disability benefit 4. Assistance for small business (entrepreneurship 6. Survivors’ benefit support) 7. Childcare benefit 5. Vocational training for 8. Maternity benefit for young mothers non-working mothers Main findings of the performance assessment Overview of social protection system in Armenia Social insurance Social assistance Social care services Labor market programs (contributory) (non-contributory) (non-contributory) Pensions Cash transfers Social care services for • Internships • Old age • Family Living Standards • children, • Vocational training for • Long-term service Enhancement Benefits (FLSEB) • youth, uncompetitive young • Appointed by the • Maternity benefit for non-working • persons with mothers law women disabilities, and • Lump sum compensation to • Other • Childbirth lump sum benefit • elderly employer for training • Survivors’ • Old-age social pension vulnerable jobseekers • Disability • Disability benefit • Unemployment assistance • Other special • Survivors’ benefits benefits (job search and schemes • Funeral grant relocation) • Mandatory • Financial support to schoolchildren • Childcare assistance to in orphanages promote re-entry before Other social insurance second year • Childcare benefit Food, in-kind, and near-cash transfers • Financial support to those • Sickness/injury • School feeding assisting persons with leave benefit • Subsidized baby food and related disabilities to gain a • Maternity benefit products foothold in the labor • Health insurance • Targeted health, education, and market for civil servants housing/utility subsidies • Business start-up assistance • Job fairs Institutional setup for social protection Legal and policy framework for social protection - Vision of Armenia Transformation Strategy - Draft Labour and Social Protection Sector Development Strategy being developed CODI framework: Ten system performance criteria assessed on a 4-point scale Average score Area Latent Advanced 1 2 3 4 1. Inclusiveness 3.0 2. Adequacy 2.4 3. Appropriateness 2.9 4. Respect for rights and dignity 3.3 3.9 5. Governance and institutional 3.8 capacity 6. Financial and fiscal sustainability 3.0 7. Coherence and integration 2.7 8. Responsiveness 1.8 9. Cost-effectiveness 2.8 10. Incentive compatibility 2.5 Key overall strength: Governance and institutional capacity (with caveats) Selected cash transfers and Active Labor Market Programs (ALMPs): ✓ Clear implementation guidelines and manuals defining reporting mechanisms, roles, and responsibilities in the administration, delivery, and monitoring of programs (though not always followed carefully). ✓ Strong, efficient enforcement of program rules; error and fraud are minimized ✓ Mechanisms for stakeholders to participate in design, implementation, and monitoring of the programs (though not consistently used). Caveat 1: Care services: ❖ Duplication and fragmentation: Multiple programs with the same or similar objectives, multiple needs assessments of the same beneficiaries, the same population groups are targeted by different programs, leading to high administrative and delivery costs. ❖ Lack of strong enforcement mechanisms Caveat 2: Capacity: ❖ Some service providers have a high workload, working conditions often not satisfactory, and administrative expenses per beneficiary are too small. Area for improvement 1: Coverage of the SP system across the life cycle 1. Limited coverage of programs targeting the most vulnerable, 2. Limited coverage of existing needs, and 3. Some groups, e.g., refugees, the homeless, and children ages 0-3, esp. ages 2-3 are hardly covered. Area for improvement 1: Coverage of the SP system (continued) ✓ On a positive note: Old-age benefit, Survivors’ benefits, and Childbirth benefit are provided to all eligible beneficiaries if they apply for them. However: ✓ Only one-third of the poor population covered by social assistance benefits. ✓ No unemployment benefit; only 3% of registered unemployed covered with active labor market programs. ✓ Coverage of most care programs and services is limited: e.g., daycare services only cover 0.2% of poor children; only 9% of elderly living alone receive care services. Consequence: ✓ Design objective to alleviate poverty or respond to certain risks not always addressed Area for improvement 2: Funding of SP programs and adequacy of benefit levels compared to social protection needs Spending on social protection is low compared to comparator countries (% of 18.0% GDP) 16.0% 14.0% 12.0% 10.0% 1.7% 8.0% 4.0% 1.5% 6.0% 4.0% 6.8% 2.0% 0.0% KGZ - 2017 TJK - 2014 ALB - 2017 AZE - 2014 HUN - 2016 Average KAZ - 2017 LVA - 2016 BLR - 2017 SRB - 2013 TUR - 2013 BIH - 2017 MDA - 2017 BGR - 2016 GEO - 2013 LTU - 2016 ROU - 2017 SVK - 2016 CZE - 2016 EST - 2016 UKR - 2017 MKD - 2017 ARM - 2017 UZB - 2017 SI - Social insurance SA - Social assistance LM - Labor market programs SC - Social care services Source: World Bank SPEED database. Area for improvement 2: Funding of SP programs and adequacy of benefit levels compared to social protection needs (continued) ✓ Budget programs are not always derived from strategic priorities. ✓ Only cash transfers use projections of demographic and socioeconomic trends for planning and budgeting. ✓ Legal framework only partially addresses long-term vision of social protection and related financial commitments ✓ Planned commitments in Medium-Term Expenditure Framework (MTEF) are not guaranteed: ✓ E.g., funding planned for 2017 and 2018 ALMPs not allocated → suspensions and partial implementation of such programs. ✓ No budget allocations for responding to shocks and risks, apart from the Reserve Fund/reallocations. ✓ On a positive note: ✓ some SP programs are cost-effective, in particular the ALMPs. ✓ Gradual shift to outsourcing delivery of services, bringing in more private and NGO resources into the system. Area for improvement 2: Funding of SP programs and adequacy of benefit levels compared to social protection needs (continued) ✓ In 2019, the minimum benefit size was set to equal the minimum food basket → not always enough to alleviate poverty ✓ Benefit levels defined with limited consultation ✓ No indexation rule; adjusted on an ad hoc basis. ✓ Heavily dependent on the available resources. ✓ No research conducted to ascertain population needs. ✓ Integrated Social Services reform -- introduce comprehensive needs assessment of families and beneficiaries. ✓ On a positive note, benefits usually paid at the beginning of each month, supporting vulnerable families in paying utility bills. Area for improvement 3: Adaptability and responsiveness to shocks ✓ Shock-responsiveness not embedded in the system, policies, and strategies. ✓ Almost no programs have budget or implementation mechanisms to respond to shocks, crises, socioeconomic changes, or demographic developments. ✓ COVID-19 pandemic: GoA able to mobilize resources to respond to the socioeconomic consequences. ✓ However: lack of mechanisms for identifying and addressing target groups: ✓ poor MIS and lack of interconnectivity of IT systems within MoLSA and among line ministries ✓ much of affected population is outside of existing data systems. Area for improvement 4: Incentive compatibility ✓ Design of social assistance programs pays little attention to behavioral incentives to be in formal employment and contribute to social insurance. ✓ Benefits such as FLSEB not linked to activation. ✓ FLSEB may disincentivize formal employment → risk losing benefits if accept low-wage jobs. ▪ Now under redesign to promote economic activity: Beneficiaries may secure benefit payments for up to 6 months if HH member finds a job / 12 months if engage in agricultural production. ✓ No incentives for administrators to enroll beneficiaries or provide quality services. THANK YOU! Ministers, Deputy Ministers and dedicated of staff of the Ministry of Labour and Social Affairs Representatives of line Ministries: MoESCS, MoTAI, MoJ, MoH Team of experts: Report available at: Hasmik Ghukasyan (expert team lead) https://uni.cf/3vpNei0 Susanna Karapetyan (social protection expert) David Tumasyan (social protection and legal expert) Armine Mkhitaryan (social protection expert) Anastas Aghazaryan (finance expert) UNICEF CO/RO/HQ World Bank CO/HQ Translators/editors: Susan Sachs, Arev Durgaryan, Vladimir Ter-Ghazaryan