Reimagining social protection systems in the Caribbean – World Bank Group

In my discussion with the Caribbean leaders, food security comes up often. The COVID-19 pandemic has undermined food security on a global scale, and with the additional challenges exacerbated by Russias invasion of Ukraine, the impacts on the Caribbean are dire.

This year, the World Food Programme (WFP) estimates that 40 % of the population or 2.8 million people - in the English-speaking Caribbean struggle to access adequate food and remain food insecure. Another WFP survey conducted in February found that 20 % of the respondents reported that they went without eating for at least a whole day in the previous month.

As staggering as these numbers are, the outlook might darken even further.

Ukraine and Russia account for almost 30 % of global wheat exports, almost 20 % of corn exports, and more than 50 % of the sunflower oil supply globally. As the exports stall, the food prices are on the rise. We are already seeing reports that wheat prices now are at a 14-year peak. Fuel prices have also reached their highest level since 2008, which are compounding the spike in prices of other goods and services.

The situation points to an urgent need to strengthen social protection systems in place to buffer economies and protect the most vulnerable in the Caribbean.

Social protection helps families, especially the poor and vulnerable, increase resilience, cope with crises and shocks, invest in the health and education of their children, find jobs, improve productivity, and find a way out of poverty.

During the COVID-19 pandemic, which hit the Caribbean hard, countries deployed a series of social protection measures including emergency cash transfers, unemployment benefits, expansion of existing safety nets and others. These measures have helped significantly.

At the same time, the protracted impacts of the crisis and the need to continue providing support measures put an additional fiscal strain on governments. In this context, governments need to be as efficient as possible, while continuing to offer protection to the poorest and most vulnerable households.

In the short run, targeted support can be provided to the families in most need. While some of them have received much needed assistance, there are still chronically poor families who were left behind even before the pandemic these vulnerable households require immediate support.

Support can also be provided even if only temporarily to additional families who are not receiving social protection programs and became poor and food insecure due to the ongoing crisis.The increases in prices of basic goods and services would also require adjustments to the targeted cash benefits provided to the families in most need to at least maintain their purchasing power.

Caribbean countries should avoid the temptation of providing universal price subsidies. These subsidies can distort markets, rapidly deteriorate public finances, and tend to have limited poverty-reducing impacts.

In the longer term, for the social protection system to work better and to increase its capacity to respond to future shocks, Caribbean countries could consider addressing the following four key challenges:

1.Update poverty data and targeting mechanisms

Data on the poor in most of the Caribbean countries has not been updated in years. In some cases, especially in countries that are part of the Organization of Eastern Caribbean States (OECS), data hasnt been collected in over ten years. The absence of new data makes it hard to quantify the number of people eligible for social assistance and limits targeting accuracy. As a result, even if governments want to invest in social protection measures, the expenditure might be inefficient, limiting its poverty-reducing impact. In this context, updating the data and making use of it to enhance targeting mechanisms can help strengthen the social protection systems.

2. Implement economic inclusion programs

While social protection measures, including cash transfers, have the power to boost human capital and resilience for the poorest people, they are not sufficient to address the potential multiple constraints that prevent the poorest and most vulnerable from climbing out of poverty. These other constraints could include lack of or limited skills, insufficient job opportunities, absence of assets, or inability to access markets and finance.To meet this challenge, governments can implement economic inclusion programs that include social protection, livelihoods support, and financial inclusion to really help the poor find long-term solutions.

3. Modernize the social protection system and increase its institutional capacity

Currently, most of the governments have outdated legal, policy, institutional, and operational frameworks, scarce human resources, and lack of social protection information systems. It is essential to modernize the social protection framework and continue building capacity to make systems more adaptive and responsive to future shocks. This includes upgrading social protection frameworks, improving inter-institutional coordination, enhancing human resources and capacities, modernizing procedures and information systems.

4.Strengthen social insurance and labor market programs

In the majority of the social protection systems of the Caribbean countries, some risks such as the risk of job loss are not covered, with Barbados and the Bahamas being the exception. Current mechanisms in place to protect labor income, such as severance payments, are ineffective to provide income protection in case of job loss, especially during a crisis. On the one hand, coverage of existing mechanisms must be expanded through formal employment, and on the other hand, additional social insurance schemes must be developed, including (Un)Employment Insurance, to improve workers protection mechanisms against shocks and to facilitate reemployment.

At the World Bank, we have supported emergency transfers and short-term social protection measures in several countries since the pandemic began, including in the Bahamas, Barbados, Dominica, Grenada, Jamaica, Saint. Lucia, and Saint. Vincent and the Grenadines.

We are also working closely with many Caribbean governments to address structural challenges. For instance, the World Bank is supporting OECS countries in data for decision making, including poverty data, and building institutional capacity. In Saint Lucia, we are working on updating the social protection policy and the development and implementation of an economic inclusion strategy. In Grenada, we are supporting the reform to establish an unemployment insurance scheme and the related employment services. In Jamaica, we are working to modernize the countrys social protection system and enhance its adaptive capacity.

The volatile context we are witnessing today signals that building strong social protection systems is more important than ever. If we come together as partners, we can reimagine and redesign social protection to increase resilience, opportunities, and equity in the region.

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Reimagining social protection systems in the Caribbean - World Bank Group