WORLD BANK DISCUSSION PAPER NO. 366 Workin progress WDP3SG( for public discussion Poverty Reduction and Human Development in the Caribbean . ) (8/r),\-G(,ouuXtr ) S /l/(/V 4~~~~~~~~1 J_d) L1 P a,zr . ; Jl . Ikib Recent World Bank Discussion Papers No. 298 Uganda's AIDS Crisis: Its Implicationsfor Development. Jill Armstrong No. 299 Towards a Payments System Lawvfor Developing and Transition Economies. Raj Bhala No. 300 Africa Can Compete! Export Opportnnities and Challengesfor Garments and Home Produicts in the European Market. Tyler Biggs, Margaret Miller, Caroline Otto, and Gerald Tyler No. 301 Review and Outlookfor the World Oil Market. Shane S. Streifel No. 302 The Broad Sector Approach to Investment Lending: Sector Investment Prograrms. Peter Harrold and Associates No. 303 Instititional Adjustment and Adijusting to Institutions. Robert Klitgaard No. 304 Puitting Instititional Economics to Work: From Participation to Governance. 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Copyright © 1997 The International Bank for Reconstruction and Development/THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing July 1997 Discussion Papers present results of country analysis or research that are circulated to encourage discussion and comment within the development cormmunity. To present these results with the least possible delay, the typescript of this paper has not been prepared in accordance with the procedures appropriate to formal printed texts, and the World Bank accepts no responsibility for errors. Some sources cited in this paper may be informal documents that are not readily available. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequence of their use. The boundaries, colors, denominations, and other information shown on any map in this volume do not imnply on the part of the World Bank Group any judgment on the legal status of any territory or the endorsement or acceptance of such boundaries. The material in this publication is copyrighted. Requests for permission to reproduce portions of it should be sent to the Office of the Publisher at the address shown in the copyright notice above. The World Bank encourages dissemination of its work and will normally give permission promptly and, when the reproduction is for noncommercial purposes, without asking a fee. Permission to copy portions for classroom use is granted through the Copyright Clearance Center, Inc., Suite 910, 222 Rosewood Drive, Danvers, Massachusetts 01923, U.S.A. ISSN: 0259-210X Judy L. Baker is a poverty economist in the World Bank's Latin America and the Caribbean Regional Of- fice, Country Department III. Cover photo: Joelle DeHasse/World Bank Library of Congress Cataloging-in-Publication Data Baker, Judy L., 1960- Poverty reduction and human development in the Caribbean: a cross-country study / Judy L. Baker p. cm. - (World Bank discussion papers ; 366) ISBN 0-8213-3970-2 1. Poverty-Caribbean area. 2. Economic assistance, Domestic- Caribbean area. I. Title. II. Series. HC151.Z9P613 1997 362.5'8'09729-dc21 97-17547 CIP Contents Foreword .....................................................v Abstract .................................................... vii Acknowledgments .................................................... ix List of acronyms and abbreviations .................................................... xi Executive summary .................................................... xiii 1 The characteristics and causes of poverty .....................................................1 Poverty and income distribution in the 1990s .....................................................1 Demographic and household characteristics of the poor ..................................................... 3 Gender and poverty ......................................................5 Employment and sources of income ....................................................7 Geographic characteristics of poverty ......................................................7 Crime and violence .....................................................9 The causes of poverty .................................................... 13 Low economic growth performance ..................................................... 13 Macroeconomic shocks, policy response, and impact on the poor .......................................... 14 Structural adjustment and the poor .................................................... 15 Sustaining growth beyond adjustment .................................................... 20 Labor markets and poverty ..................................................... 21 Human resource development .................................................... 27 2 Poverty alleviation efforts and coping mechanisms .................................................... 31 The formal safety net .................................................... 31 Social insurance ........................................ ...........32 Social assistance ....................... 35 Mficroenterprise development ....................... 37 The informal safety net .......................... 39 The role of the family . 39 The role of community participation .......................... 40 Migration .......................... 44 Annexes .............................. 47 I Measuring living standards ............................. 49 II Crime and violence: Analysis from the Caribbean ................................................ 55 III Macroeconomic adjustment policies and poverty in the Caribbean ..................................... 61 IV Social safety nets in the Caribbean ................................................ 105 V Equity issues in education ................................................ 135 VI Examples of successful community participation in the Caribbean .................................. 139 VII Poverty and the environment ................................................ 151 Statistical Appendix . 157 References ............. 199 Foreword The biggest challenge facing developing countries today is poverty reduction. To better understand the policies and programs which are effective in combating poverty, it is useful to look at specific country experiences and make cross-country comparisons. The small islands of the Caribbean provides an excellent opportunity for such analysis given the wide diversity among countries in terms of their economic and social development. This study analyzes the causes and characteristics of poverty in 15 Caribbean countries and reviews the experiences in poverty alleviation efforts that countries have pursued. The study was prepared for discussion at the 1996 meeting of the Caribbean Group for Cooperation in Economic Development and provides recommendations based on the analysis of how macroeconomic and social policies can be further oriented to reduce poverty and promote human resource development. Among the key findings, poverty is on the rise in several countries and is related to low economic growth, deficiencies in the labor market, and a deterioration in the quality of health and education services. The increase in crime and violence, retrenchment of workers, and drop in the real value of social safety nets have also contributed to declining living standards for some. The next few years will present a difficult challenge for the countries of the Region given the rapidly changing global economy. Therefore, particular emphasis will need to be placed on ensuring an enabling environment and prioritizing programs and policies aimed at poverty reduction and human resource development. Among these are facilitating new employment opportunities in the labor market, improving the quality, efficiency and equity in the delivery of social services, addressing the problems of crime and violence, ensuring good governance, and developing new partnerships among central government, local government, NGOs, community-based organizations, labor unions, the private sector, and the international community. Paul Isenman Director Country Department III Latin America and the Caribbean Region Abstract The small island economies of the Caribbean have made substantial advances in their economic and social development over the past two to three decades of independence. Yet problems of poverty are still pervasive in many countries where living standards have actually declined in recent years. The Region will also face an uncertain period of transition ahead as global competition increases, and donor flows decrease. This study analyzes the characteristics and causes of poverty in 15 Caribbean countries and reviews various poverty alleviation efforts, including the different coping mechanisms that many households have adopted. The diversity in country size, and level of social and economic development, provides an opportunity for drawing on the successes and failures in improving living conditions. Based on the analysis, several recommendations are presented on how policies and programs can be more effective in reducing poverty. Among the characteristics of the poor, more than one half live in rural areas and work in agriculture where the rural poor have limited access to quality health and education services, infrastructure, and in some cases farmable land. Urban poverty is also a major problem, particularly in the larger countries. The urban poor are more vulnerable to macroeconomic fluctuations, their living conditions are overcrowded, and they face the social problems of crime and violence which exist in many Caribbean cities. While the steady increase in crime and violence has degraded the quality of life for all socioeconomic groups, these problems particularly impact on the poor. The social problems have also had high economic costs. The causes of poverty in the Caribbean are linked to several complex, interrelated factors. These include low or negative economic growth, macroeconomic instability, deficiencies in the labor market resulting in limited job growth, low productivity and low wages in the informal sector, and a decline in the quality of social services. Accordingly, countries that have sustained high economic growth rates and invested heavily in the social sectors have experienced reductions in poverty levels. Every country in the Region has a mix of social safety net programs designed to provide assistance for the poorest. In addition family members and communities have found ways to cope during difficult times through community-based initiatives, migration, remittances from relatives abroad, and the search for new sources of income. Yet with the declining resources, increases in poverty, and an aging population in many countries, the safety net programs have become strained and informal safety nets of the extended family are also coming under pressure. Several recommendations for safety net reform are discussed in the study. vii Acknowledgments This study is based on country-specific poverty assessments, economic reports, background papers, and field work during several World Bank missions to the Caribbean. Background papers which contributed to the study include work by Neville Duncan (community participation), Jane Falkingham (social safety nets), Lucy Gabriel and Joan Bishop (crime), Ramon Lopez (labor markets and migration), and Stephen Younger and David Sahn (macroeconomic policies and the poor). Research was carried out by Jacinta Bronte-Tinkew (data, gender), and Desmond John (environment). The study benefited from the financial support of the British Development Division in the Caribbean, the Canadian International Development Agency, the United Nations Development Programme, and poverty studies carried out by the Caribbean Development Bank in St. Lucia and Belize. Valuable comments and insight were received by Jean- Pierre Amselle, Robert Ayres, Norman Hicks, Paul Isenman, Raj Nallari, Philippe Nouvel, Carmen Scoseria and Steven Webb. Special thanks are extended to the participants of the regional consultations held in March 1996 in Jamaica, Barbados, Trinidad and Tobago, and St. Lucia, and to the peer reviewers Christine Jones and Jacques van der Gaag. Their input greatly enhanced the findings and recommendations presented. Finally, Deborah Trent and Ximena Hernandez-Cata provided excellent assistance in the production of the study. ix List of acronyms and abbreviations AIDS Acquired Immune Deficiency Syndrome AIM Apprenticeship for Industrial Mobilization AWIE Average Weekly Insured Earnings BCSO Belize Central Statistical Office BNI Basic Needs Index CALGA Caribbean Local Government Association CANARI Caribbean Natural Resources Institute CARICOM Caribbean Community Secretariat CBA Community-based Activities CBO Community-based Organizations CDB Caribbean Development Bank CEDP Caribbean Export Development Project CEE Common Entrance Exam CEED Caribbean Enterprise, Education and Development Trust Fund CFC Caribbean Food Corporation CFSC Caribbean Financial Services Corporation CGCED Caribbean Group for Cooperation in Economic Development CIDA Canadian International Development Agency CNIRD Caribbean Network for Integrated Rural Development COLAs Cost-of-Living-Adjustments CPDC Caribbean Policy Development Center CSD Cost of Security Deposit CSO Central Statistical Office CZM Coastal Zone Management ECCB Eastern Caribbean Central Bank ECHO Each Community Helping Out ECODEF Eastern Caribbean Organization of Development Foundations FBP Free Book Programme FGT Foster, Greer & Thorbecke GDP Gross Domestic Product GNP Gross National Product HDI Human Development Index/Indicator HDR Human Development Report HES Household Income and Expenditure Survey HIV Human Imrnmunodeficiency Virus IDB Inter-American Development Bank ICA Inter-American Institute for Cooperation on Agriculture ILO International Labor Organization (ILO) IMF International Monetary Fund IMO International Maritime Organization INGOS International Non-govemmental Organizations IPI Integrated Poverty Index ISER Institute for Social and Economic Research xi iTU International Telecommunications Union LAC Latin America and the Caribbean LID) Labor Intensive Development LSMS Living Standard Measurement Study MLL Maternity Leave Law NAFTA North American Free Trade Agreement NDF National Development Foundation NEAPs National Environmental Action Plans NGOs Non-governmental Organizations NIS National Insurance Schemes OAP Old Age Pension OAS Organization of American States OECD Organization for Economic Cooperation and Development OECS Organization of Eastem Caribbean States PAHO Pan American Health Organization PAYG Pay-As-You-Go PIOJ Planning Institute of Jamaica RTITCSO Republic of Trinidad and Tobago Central Statistical Office SA Statistical Annex SBD Small Business Development SDF Social Development Fund SEDU Small Enterprise Development Unit SEF Survival Eco-Foods SERVOL Service Volunteered for All SESPs Social and Economic Support Programmes SFP School Feeding Programme SIMAP Social Impact Amelioration Program SIOJ Statistical Institute of Jamaica SLC Survey of Living Conditions SRP Social Rehabilitation Programme UN United Nations IJNDP United Nations Development Programnme UNECLAC United Nations Economic Commission for Latin America and the Caribbean UNESCO United Nations Educational, Scientific and Cultural Organization UNICEF United Nations Children's and Education Fund US United States USAID United States Agency for International Development UWI University of the West Indies VAT Value Added Tax WAND Women and Development WCJF Women's Center of Jamaica Foundation YESS Youth Employment Support System YTEPP Youth Training and Employment Partnership Programme xii Executive summary Despite the impressive successes in improving living conditions in many Caribbean countries, poverty still persists throughout the region.' In countries such as Guyana, Haiti, and Suriname, poverty levels are higher than 40 percent. Even in Trinidad and Tobago, which has benefited greatly from its oil reserves, poverty is on the rise. With few exceptions, general living standards have declined since the late 1970s and early 1980s due to low economic growth, macroeconomic shocks and inappropriate policy responses, deficiencies in the labor market, and a deterioration in the quality of social services. In addition, the increase in crime and violence, retrenchment of workers, drop in the real value of social insurance and social assistance and changes in family structures have contributed to the declining living conditions. Many countries will also face an uncertain period of transition ahead. The increases in competition stemming from global economic changes in trade and capital markets, the erosion of preferential market access, the vulnerability of the tourist industry and competition from other destinations, and decline in official capital flows from bilateral sources all present a particularly difficult challenge for the Caribbean. Given this environment, there is an urgent need for countries to pursue policies that will stimulate and sustain economic growth and prioritize investments aimed at reducing poverty and developing human resources. This study seeks to improve our understanding of poverty in the Caribbean and the current efforts to address it, with the aim of identifying how policies and programs can be more effective. Chapter 1 analyzes the characteristics and causes of poverty, and Chapter 2 reviews current efforts to alleviate poverty and various coping mechanisms. Recommended poverty reduction strategies are included in this summary. In reading this study, it should be highlighted that while many countries share similarities, the region as a whole is highly diverse, and thus conclusions may not apply to all. The characteristics of poverty in the Caribbean Poverty in the region averages roughly 38 percent of the total population, ranging from a high of 65 percent in Haiti to a low of 5 percent in the Bahamas. Excluding Haiti, approximately 25 percent of the total population is poor. These estimates place the Caribbean close to a world aggregate average of poverty in developing countries. Income distribution is skewed, though slightly less so than the average for Latin America. The poor include the elderly, children, the disabled, small-scale farmers, unskilled workers, ' For the purposes of this report, the region refers to members of the Caribbean Group for Cooperation in Economic Development (CGCED): Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Dominican Republic, Grenada, Guyana, Haiti, Jamaica, St. Lucia, St. Kitts and Nevis, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago. indigenous populations, and in some countries, female-headed households and the underemployed or unemployed, many of whom are school leavers who have few skills with which to enter the labor market. The linkage between gender and poverty shows that subgroups among both women and men are vulnerable. In particular for women in some countries there are problems of discrimination in the labor market, limited rights to land and property ownership and high rates of teenage pregnancy. The male youth is also considered vulnerable because boys in the Caribbean have often lagged in school, lack male role models, and are confronted with high unemployment rates. Common characteristics among poor households include large family size, low levels of education, overcrowded housing, and limited access to water and adequate sanitation facilities. In Haiti, issues related to food security are also of concern. Most of the poor in the region still live in rural areas, although with the rising rates of urbanization and high vulnerability of the urban poor to economic and social problems, urban poverty has become a major concem. The majority of the employed poor work in the informal sector-in rural areas as small-scale farmers or as agricultural laborers and in urban areas as wage employees. Small farmers, particularly banana farmers in the OECS, will face a particularly difficult period as preferential access to markets erodes. Although unemployment rates throughout the region are high and thus affect the poor, levels of unemployment are similar among the poor and nonpoor, with the exception of Trinidad and Tobago. The duration of unemployment is, however, longer for the poor. Another characteristic of poverty in some countries, particularly in urban areas, is crime and violence. Although many individual and social factors are linked to these problems, the poor appear to be highly vulnerable. Crime and violence in the region have lowered the overall quality of living standards and incurred high economic costs. More and more public resources, which are already limited, are required to strengthen police enforcement, support the growing prison population, finance the large demands placed on the judicial system, and provide health care for persons injured by violence. Other costs include the expensive security systems and guards now required by businesses and homes, the loss in potential revenues from foreign investors and tourists who have sought other destinations as a result of the threat of crime, and the migration of the urban middle class. Causes of poverty Several complex, interrelated factors have contributed to poverty in the Caribbean. These include low economic growth, macroeconomic instability, deficiencies in the labor market resulting in limited job growth, low productivity and low wages in the informal sector, and a decline in the quality social services. Accordingly, countries that have sustained high economic growth rates over time and invested heavily in the social sectors have achieved relatively low levels of poverty (for example, Antigua and Barbuda, the Bahamas, Barbados, and St. Kitts and Nevis). xiv Economic growth is fundamental to poverty reduction. Growth reduces poverty through rising employment, increased labor productivity and higher real wages. Countries in the Caribbean that have sustained positive growth rates and invested heavily in human development such as Antigua and Barbuda, the Bahamas, Barbados, and St. Kitts and Nevis have relatively low levels of poverty. Poverty has increased in countries that have had low or negative growth rates for protracted periods such as Guyana, Haiti, Jamaica, Suriname and Trinidad and Tobago. The low growth is attributed in part to external shocks, such as adverse changes in a country's terms of trade, changes in global demand for a country's exports, changes in the global interest rate on a country's external debt, and hurricanes, and in part to inadequate domestic policy responses, including sharp increases in external borrowing and expansionary monetary and fiscal policies. Although it is not possible to quantify its direct impact on poverty, low growth has resulted in overall declines in per capita gross domestic product (GDP), in real wages, and in social sector expenditures. These combined forces undoubtedly caused poverty to increase some during the 1980s. Some of the countries have responded to macro disequilibrium by adopting structural adjustment policies (Dominican Republic, Guyana, Jamaica, and Trinidad and Tobago). Although adjustment policies can have adverse consequences for the poor through exchange rate devaluation, tariff reform, and tight monetary and fiscal policy, they are not a root cause of poverty. They were implemented instead of other policy choices that may have had worse consequences for the poor. In fact, some of the policy responses, such as exchange rate devaluation, may not have been as adverse for the poor as is commonly perceived. A second group of countries has responded to balance of payments and public deficit problems with fiscal policy alone, choosing to maintain a fixed exchange rate despite important external imbalances. Antigua and Barbuda, Barbados, Dominica, and Grenada have had mixed experience with these policy choices, although no country has emerged from this period without incurring some social and economic costs. Several other countries including St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines have pursued adjustment in a gradual and continuous manner and thus have avoided a major economic imbalance. Reasonably sound fiscal policy combined with favorable external circumstances (including a boom in the tourist industry, generous donor support, and advantageous marketing arrangements for key agricultural exports) have allowed these countries to pass through the 1980s with high growth, stable macroeconomic indicators, and little policy reform. Poverty in the Caribbean also results from low wages in the informal sector, low labor returns to rural self-employment activities, underemployment, and, in some cases, protracted periods of unemployment. These elements are linked to segmentation in the labor market which in part is caused by specific government regulations, public sector employment policies and in some countries, labor union activity. The poor are affected through (i) limited job growth and absorption capacity in the formal sector, (ii) high labor costs in the formal sector that lead to overexpansion of a low-productivity informal sector, xv thus putting downward pressure on wages in the informal sector (where many of the poor work), and (iii) limited opportunities for unskilled youth to obtain on-the-job training and skills. A third factor affecting poverty is the overall low quality of education and health services. Although governments of the region have traditionally shown a strong commitment to the provision of these services-as evidenced by the overall high social indicators-real expenditures on health and education have fallen in many countries over the past decade. Physical structures have deteriorated, equipment is lacking, broken, or obsolete, curricula are outdated, teaching aids are nonexistent in most schools, and many health clinics have a shortage of medical supplies. The poor are particularly vulnerable, because they rely heavily on the public sector, have high rates of malnutrition, less education, poor access to preventive care, and limited access to potable water and sewage; and particularly in urban areas, often live in unsanitary, overcrowded conditions. Low quality education and health has adverse consequences for an individuals' life time job opportunities, for overall productivity levels, and can impede the growth prospects for the Region. Poverty alleviation efforts and coping mechanisms Every country in the region has some form of social safety net for those who may take a long time to benefit from growth or who may never be able to do so. The formal safety net generally consists of a national insurance scheme, social or public assistance providing cash and in-kind benefits, and a variety of other programs targeted toward specific groups such as school feeding programs, social funds, public works programs, training programs, and programs to promote nicroenterprise development. In addition, family members and communities have found ways to cope during difficult times through community-based initiatives, migration, remittances from relatives abroad, and the search for new sources of income. Yet with the declining resources, increases in poverty, and an aging population in many countries, the safety net programs have become strained. The informal safety net of the extended family is also coming under pressure. Overall, the formal safety net in many countries is inadequate in terms of coverage and benefit levels. Although social insurance plays a key role in poverty alleviation, particularly for the elderly, the real value of benefits has declined over time, and individuals employed in the informal sector are rarely covered. With the exception of Barbados, no provision is made for unemployment insurance, nor are the unemployed eligible for social assistance. Social assistance programs tend to have high administrative costs, yet benefits are low, and coverage in many cases is restricted to a relatively small proportion of the poor. In addition, very few programs have a rehabilitative component aimed at moving people off welfare. Some of the programs with alternative designs, such as the social fund and public works programs, are innovative and have benefited many, yet targeting could be more efficient. xvi Another set of programs is aimed at promoting income-generating activities. Currently several facilities in each country provide access to credit, technical assistance, and training for small business development for the poor including the national development foundations, Small Enterprise Development Units, nongovernmental organizations (NGOs), and youth enterprise initiatives. Many of these initiatives have had a positive impact on the poor and have attained an acceptable level of financial viability. The programs have, however, benefited from external assistance that is now on the decline, leaving their future somewhat uncertain. Informal safety nets provided through the family and community are also very important to poverty alleviation in the Caribbean. There has always been a strong tradition of self-help and mutual aid in the region. The extended family generally has provided a safety net both for elderly members as well as for younger members entering the labor market or starting their own family. At the community level, many successful projects have reduced and alleviated poverty. These efforts have the benefit of building strong consensus and commitment, which lead to greater sustainability, greater adoption of new practices, and better use of services. NGOs, community-based organizations, and local governments have all played a key role in initiating efforts at the community level. Moreover, national and regional network organizations have provided an effective mechanism for strengthening local NGOs and would benefit from more collaboration with government and other stakeholders. A final safety net for many has been migration. Migration rates in the Caribbean are among the highest in the world, with the majority of individuals leaving their countries in search of better opportunities and higher living standards. As movement both within and from the Caribbean has served as a safety valve for many, it has also likely kept the total numbers of the poor down. Migration has also been beneficial because the remittances from family members abroad bolster the economies in the region, both at the macro and household level, and provide social security for many of the elderly. An adverse consequence of migration has been a drain of skilled labor in certain sectors. Poverty reduction strategies Several areas for policy reform emerge from an examination of the causes and characteristics of poverty and efforts to address it. The agenda for poverty reduction in the Caribbean is long, and many countries face enormous challenges ahead. These challenges will be exacerbated by changes taking place in the global economy, the vulnerability of small island economies, and the already fragile social environment. Any poverty reduction strategy must balance the need to sustain economic growth and macroeconomic stability, facilitate job creation by improving the functioning of the labor market, and ensure the provision of high quality health and education services and some safety net so that the basic needs of the very poorest are met. These elements also reinforce each other. Good macroeconomic and structural policies are key to attracting or keeping capital and creating jobs at competitive wages. Investments in health, education and training create the human capital necessary for raising the productivity of labor and xvii the economic well-being of workers and their families. Given the long agenda, the successful implementation of poverty reduction efforts will require a strong commitment from and close partnership among all stakeholders-central government, local government, community groups, NGOs, the private sector, labor unions, and the international community. Although poverty reduction strategies will differ from country to country, the following elements are recommended for consideration: * Promote economic growth with equity and sustain macroeconomic stability. This will require prudent monetary and fiscal policies and greater emphasis on equity and improved efficiency in implementation. The creation of a macroeconomic environment which encourages investment, the establishment of growth enterprises, and an international environment of free trade and free flow of investment in conditions of fair competition are critical to growth. Policies which orient public spending toward basic social services and improved efficiency can have an important impact on poverty reduction and protect the poor from potential shocks. The engines of future growth are likely to be in the areas of tourism and other service industries such as business, financial and information services, repair, and medical activities. As countries make the transition to new sectors, some existing sectors will provide prospects for labor-intensive growth. These include agroprocessing, manufacturing, and agriculture with an emphasis on diversification-away from crops such as bananas and sugar towards specialized markets. Micro- and small-enterprises will likely play an important role in growth. Countries will also have to pursue efforts to create demand through product development and new approaches to marketing. X Facilitate new employment opportunities in the labor market. While growth will encourage job creation, conditions in the labor market must also be attractive for employers and workers. This will require a well-trained, productive labor force, a regulatory framework that protects workers rights but does not inflate the cost of labor, and effective, low cost mechanisms for resolving labor disputes. The current segmentation in the labor markets of many countries does not always achieve these objectives. Areas for reform include (i) revising certain restrictive regulations that affect job flexibility and increase the cost of labor, such as prohibiting part-time and temporary work, reducing or eliminating compensation for dismissals due to economic reasons, providing incentives for the hiring of apprentices and trainees, and replacing severance payments with a more efficient mechanism such as a deferred compensation fund; (ii) establishing more effective mechanisms for resolving labor disputes such as systems of mediation, compulsory arbitration and conciliation, and promoting labor management councils; (iii) reforming public wage policies (through decompression of the wage scale in some countries) so that the public sector can attract and retain qualified staff, (iv) promoting microenterprise development programs that are accessible to the poor and are linked to the needs of the labor market; and (v) providing incentives to firms and workers for skills training, and information about what skills are in demand. xviii * Improve the quality, efficiency, and equity in the delivery of social services. In particular, more emphasis should be placed on higher quality basic health and education that will have the largest benefit for the poor. Investments in education and health are essential to improving living standards, and raising skills levels and productivity which will be critical to the competitiveness of Caribbean countries. In education, the poor will benefit from (i) increased access to early childhood education, (ii) quality improvements at the primary and secondary level through teacher training, ensuring culturally relevant, low-cost education and resource materials in all schools, and increasing the extent and quality of student assessment, (iii) increasing access at the secondary level with curriculum reforms to eliminate some of the inequities that currently exist, and (iv) facilitating training or retraining opportunities in partnership with the private sector for those who do not have adequate skills for employment. Schools also have an expanded role to play in counseling students for entering the labor market, and in teaching coping and socialization skills which they may not receive at home. This may help to prevent some youth from becoming involved in gangs, crime, drugs or from early pregnancies. Because resources are litnited, it is particularly important to ensure that private and community resources continue to play a role in schools. Parents should be encouraged to contribute what they can, even if it is in the form of assisting in the classroomn, contributing services to the school feeding program, and helping to maintain school premises. In health, quality improvements will involve ensuring a basic package of quality services, a more equitable distribution of resources, reductions in wastage, and in countries where user fees are being introduced, targeted waivers for the poor. With further integration of services at the regional level, there may be savings in overall expenditures on tertiary services due to the economies of scale. In addition, increased competition from the private sector can provide incentives to curtail costs and enhance quality in competing for patient enrollment. As the wealthy continue to shift their consumption of health services to the private sector, there may be scope for improving equity as spending can increasingly be targeted towards the poor. * Ensure good governance and develop new partnerships between central government, local government, NGOs, community-based organizations, labor unions, the private sector, and the international community. Good governance requires accountability, transparency, and participation in managing economic resources. This can be achieved by establishing the appropriate legal and regulatory systems and by decentralizing processes to allow greater involvement at the local level. New partnerships between all stakeholders are necessary to achieve sustainable development and could serve to make more efficient use of existing resources. Governments have a role to play in moving away from activities competitive with the private sector towards complementary activities such as creating an enabling environment, developing human resources, providing safety nets for the poor, protecting personal and property rights, and ensuring sound economic management, a flexible labor market, adequate supply of infrastructure as important productive inputs to growth, and environmental sustainability. The private sector and NGOs can complement these activities through partnerships with government in the delivery of services, fostering employment opportunities for the poor, providing training opportunities for workers, and sponsorship of projects and educational xix opportunities for those in need. Labor unions have an important role to play in protecting the rights of workers, yet must work with government and the private sector in finding viable, low cost solutions to ensuring a flexible labor market which can adapt to changes in the global economy. The international community can help by mobilizing resources, improving collaborative efforts among agencies to avoid duplication, and encouraging local involvement in the design, preparation and supervision of projects. Finally, countries of the Region would also benefit from the successes of their neighbors through increases in horizontal cooperation. * Address the problens of crime and violence. This will require (i) strengthening enforcement and neighborhood crime prevention programs; (ii) targeting programs to the highest risk group-young men-such as programs that provide training in conflict resolution, improve self-esteem, and involve youth in the community; (iii) combating the drug problem, and (iii) improving educational and job opportunities. Many of these efforts will require new sources of financing. * Improve the social safety net. Reform of the safety net is needed to improve efficiency, support innovations in the administration and delivery of social assistance and national insurance schemes, and extend coverage, and adjust benefit levels. The savings realized by lowering administrative costs and minimizing duplication in service delivery could be used to adjust benefit levels and extend coverage. Increasing awareness of social insurance to those in the informal sector will prevent many from falling into poverty later in life. New efforts on rehabilitative or income generating programs will help to pull some out of poverty. Training programs and facilitating microenterprise development (at the individual and community level) will have a major role to play in finding ways for the working age poor to generate income. As countries face a transitional period, programs such as the social fund will also be important, particularly if they are rooted in community-based initiatives. * Promote community participation. This can be achieved through new initiatives that strengthen the capacity of NGOs and local government in the administration, management, and delivery of services and that encourage the participation of beneficiaries in the design of projects. Some countries also need to pass suitable legislation that provides the legal and constitutional framework to give local governments and NGOs the autonomy they need to participate in poverty reduction activities. Local governments could bridge community-level activity with central state functions and coordinate the activities of ministries at the local level. NGOs could collaborate with one another to identify sources of funding, such as the creation of national apex funds (designed as United Way), where an umbrella group could identify and generate resources so that NGOs and CBOs can spend more time delivering projects and less conducting fund-raising. * Establish poverty monitoring and evaluation tools. Such efforts will ensure that appropriate information is available for analyzing poverty problems, tracking them over time, and formulating and implementing strategies to address them. This can also help to reduce wastage, determine the beneficiaries of various programs, and the xx effectiveness of policy decisions. Generating appropriate information on a regular basis will require investing in efforts to ensure that a minimum package of high-quality data is produced on a regular basis. Given the small size of the countries in the Region, this can be achieved at a relatively low cost through strengthening national statistical offices, and emphasizing collaboration across line ministries. Government commitment will be essential for such initiatives. Regional collaboration would also be appropriate and cost-effective in areas such as training, and the analysis of household data. New sources of financing and technical assistance may be needed for some countries to establish such efforts. x,i The characteristics and causes ofpoverty Understanding poverty in the Caribbean is particularly important at this time, because living conditions in some countries, such as Guyana, Haiti, Jamaica, Suriname, and Trinidad and Tobago, have been deteriorating gradually since the late 1970s and early 1 980s. This chapter presents analysis to facilitate that understanding. It is divided in two main sections: the first considers the key demographic, geographic, economic, and social characteristics of the poor, and the second discusses some of the causes of poverty including low economic growth, macroeconomic shocks and policy responses, deficiencies in the labor market, and low-quality health arid education services. In addition, analysis is presented to show how structural adjustment policies may have affected the poor given the wide debate on the topic. It is difficult to generalize about poverty in a region as diverse as the Caribbean, which includes economies ranging from Haiti, the poorest country in the Western Hemisphere, to the Bahamas, with a per capita income of more than US$12,000. Nevertheless, there are similarities: all the countries of the Caribbean are small economies, have similar cultures, are vulnerable to natural disasters, and have a similar political and economic history. Table 1.1 presents several country groupings to provide a conceptual framework for the cross-country analysis in this report. Poverty and income distribution in the 1990s Until recent years, there have been few attempts to measure poverty due to the paucity of data. Given the growing recognition of the need to identify target groups and monitor changes in poverty over time, several countries have launched initiatives during the past five years. Surveys of living conditions have been carried out in Belize, Guyana, Jamaica (annually), St. Lucia, St. Vincent and the Grenadines, and Trinidad and Tobago (Annex I). Other efforts to measure living standards include the Human Development Indicator,2 the Integrated Poverty Index, the Basic Needs Index, and the Global Indicator 2 This methodology, calculated by the United Nations Development Programme, is a composite measure of human development containing indicators representing three equally weighted dimensions of human development: longevity (life expectancy at birth), knowledge (adult literacy and mean years of schooling), and income (purchasing power parity dollars per capita). Poverty reduction and human development in the Caribbean of Access to Cumulative Social Development.3 Finally, several qualitative, participatory studies have been carried out by researchers and NGOs to identify the needs of the poor and strategies to address poverty. Table 1.1 Grouping the countries of the Caribbean Indicator High Medium Low Relative population Dominican Republic, Haiti Guyana, Jamaica, Suriname, Antigua and Barbuda, size Trinidad and Tobago Bahamas, Barbados, Belize, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines Average real GDP Antigua and Barbuda, Bahamas, Barbados, Guyana, Haiti, Jamaica, growth rates, Belize, Grenada, St. Kitts Dominica, Dominican Suriname, Trinidad and 1980-90 and Nevis, St. Lucia, St. Republic Tobago Vincent and the Grenadines Average real GDP Antigua and Barbuda, Dominica, Dominican Bahamas, Barbados, growth rates, Belize, Guyana, St. Lucia, Republic, Grenada, Jamaica Suriname, Trinidad and 1990-94 St. Kitts and Nevis, St. Tobago Vincent and the Grenadines Estimated poverty Belize, Dominica, Guyana, Dominican Republic, Antigua, Bahamnas, levels Haiti, Jamaica, Suriname Grenada, St. Lucia, St. Barbados, St. Kitts and Vincent and the Grenadines, Nevis Trinidad and Tobago Share of agriculture Belize, Dominica, Guyana, Dominican Republic, Antigua and Barbuda, in GDP Haiti Grenada, St. Lucia, St. Bahamas, Barbados, Vincent and the Grenadines, Jamaica, St. Kitts and Nevis, Surinarne Trinidad and Tobago Notes: The following criteria were used for the various groupings. For population size, high is greater than 2.5 million, medium is between 400 thousand-2.5 million, low is less than 400,000; for growth rates in 1980-90, high is greater than 4.5 percent, medium is between 1.0-4.5 percent, and low is less than 1.0 percent; for growth rates in 1990-94, high is greater than 3.0 percent, medium is between 2.0-3.0 percent, and low is less than 2.0 percent; for poverty, high is greater than 30 percent, medium is between 15-30 percent, and low is less than 15 percent; for share of agriculture in GDP, high is greater than 20 percent, medium is between 10-19 percent, and low is less than 10 percent. An entire body of literature is devoted to the definition of poverty and the methodology used for measuring it (Annex I).4 Although a discussion of the advantages and disadvantages of the different methodologies is beyond the scope of this report, it is important to keep in mind that poverty lines and indicators are tools for identifying the nature, extent, and characteristics of poverty. Whatever the methodology chosen, 3 This index, calculated by the Pan American Health Organization, is derived from a twofold classification of countries: five income class groups based on gross national product (GNP) adjusted for purchasing power parity and degree of access by the population to five aspects of social development: health, education, nutrients, sanitation, and economic resources. 4 For the purposes of this report, poverty is broadly defined as the inability to attain a minimum standard of living and an acceptable quality of life. 2 I The characteristics and causes ofpoverty ensuring consistency will allow policy makers and researchers to measure changes over time and to make cross-country comparisons. Approximately 38 percent of the total population in the Caribbean or more than 7 million people can be classified as poor (or 25 percent excluding Haiti).' While it is difficult to make global comparisons in poverty given the differing methodologies in measuring it, this estimate would likely place the Caribbean below Africa and South East Asia, yet above East Asia and Eastern Europe in terms of poverty levels.6 The incidence of poverty is highest in Belize, Dominica, Guyana, Haiti, Jamaica, and Suriname, although rates are higher than 20 percent in the Dominican Republic, St. Lucia, and Trinidad and Tobago. Poverty levels are lowest in Antigua and Barbuda, the Bahamas, Barbados, and St. Kitts and Nevis. Income distribution appears to be quite uneven, particularly given the per capita income of the Caribbean. The average Gini coefficient for those countries where it is available is approximately 0.46 compared with 0.49 in Latin America.' This is of concern, given the evidence linking poverty and income inequality. The more unequal the distribution of income in a country, the more difficult it is to reduce poverty for a given increase in average income. High levels of income inequality can exacerbate political instability and reduce the incentives to invest. Income inequality has also been associated with delays in the execution of structural adjustment, which in turn adversely affect growth (Demery, Sen, and Vishwanath 1995). Demographic and household characteristics of the poor The poor are heterogeneous, and several common subgroups have emerged from the country-specific profiles (see Box 1.1). The chronic poor in the Caribbean have traditionally included groups who are not active in the labor market-the elderly, children, individuals with disabilities, and in some countries, female-headed households. In addition, small-scale farmers, unskilled workers, and indigenous populations (such as the Caribs in Dominica, Amerindians in Guyana, and Maroons and Amerindians in Suriname) have fallen into this group. The extended economic decline and concomitant contraction of employment opportunities have resulted in the emergence of a new group of poor that includes the unemployed or underemployed and many school leavers who have no skills with which to enter the labor market. 5 This figure is based on the poverty estimate for each country weighted by the population size (see Table 1.2 and Annex I for more details). 6 Regional averages calculated for 1990 use estimates for eighty-six countries and a poverty line of approximately $1 per day at U.S. 1985 purchasing power parity. Regional estimates are as follows: East Asia and the Pacific 11.3; Eastern Europe, 7.1; Latin America and the Caribbean, 25.2; Middle East and North Africa, 33.1; South Asia, 49; and Sub-Saharan Africa, 47.8. See Ravallion, Datt and Chen 1992. 7 This average is based on Gini coefficients for Belize (0.51, 1995), Dominican Republic (0.49, 1992), Guyana (0.42, 1993), Jamaica (0.43, 1993), St. Lucia (0.47, 1995), and Trinidad and Tobago (0.42, 1992) (Annex I explains source of data for calculations). Regional averages are as follows: Africa, 52.3; Asia, 41.0; Eastern Europe, 24.0; Latin America, 49.2; and OECD, 31.2. See Milanovic 1994. 3 Poverty reduction and human development in the Caribbean At the household level, poor families throughout the Caribbean tend to have more children and to have attained lower levels of education than nonpoor households. In some countries, such as Belize and Trinidad and Tobago, the existence of a non-nuclear family structure has also been closely associated with poverty. This includes households with a single parent (usually female-headed) or households with children headed by a grandparent. Table 1.2 Welfare measures in the Caribbean Head count Human Integrated Basic needs index development poverty index index (very Country (percentage index (severe poverty needy, <0.50) poor) > 0.40) Antigua and Barbuda 12 0.796 0.223 0.892 Bahamas 5 0.854 - - Barbados 8 0.894 0.057 0.926 Belize 35* 0.666 0.501 0.677 Dominica 33 0.749 0.501 0.782 Dominican Republic 21* 0.638 0.380 0.699 Grenada 20 0.707 0.192 0.862 Guyana 43* 0.580 0.591 0.773 Haiti 65 0.354 0.755 0.439 Jamaica 34* 0.749 0.688 0.831 St. Kitts andNevis 15 0.730 0.282 0.800 St. Lucia 25* 0.709 0.355 0.773 St. Vincent & Grenadines 17 0.732 0.396 0.776 Suriname 47 0.677 0.356 0.818 Trinidad and Tobago 21* 0.855 0.239 0.831 Caribbean average 27 0.710 0.394 0.777 LAC average 25 0.757 0.403 0.731 Developing countries - 0.541 0.467 0.600 average (median) (median) - Not available. a. Only those estimates with an asterisk were calculated using a similar methodology (Annex I), and thus caution should be used in making cross-country comparisons. Source: See the Statistical Annex for a full explanation of sources. Many poor households live in unsatisfactory, overcrowded conditions and lack proper housing, access to potable water, adequate sanitation facilities, and other basic services. These conditions pose a significant health risk to the poor, engendering waterborne diseases such as typhoid, cholera, and hepatitis. They also pose environmental hazards. The poor spend the largest proportion of their budget on food, with expenditures on other items such as housing, fuel and other household supplies, clothing, and transportation varying considerably from country to country. Even though malnutrition is not a major problem in the region, malnutrition rates among children in some poor households can be quite high (Statistical Annex (SA), Table 11). The causes of malnutrition have been linked to insufficient dietary intake and disease, which result from 4 1 The characteristics and causes ofpoverty low income, food shortages, lack of nutritional education, and lack of access to clean drinking water and satisfactory health care. Gender andpoverty The relationship between gender and poverty in the Caribbean presents a somewhat atypical pattern from other regions in the world where women are often over- represented among the poor in large part due to their limited access to education and low participation rates in the labor force. In the Caribbean, girls tend to outperform boys in school and stay in school longer. Of the English speaking Caribbean, all countries have higher levels of female enrollment in tertiary institutions. Female labor force participation is over 40 percent of the total labor force in half of all countries. Female headship is also high in the Region, although these households have the same or lower rates of poverty than the national averages (except in Trinidad and Tobago and Belize, SA, Table 6). The decision to raise a family alone is not always not related to abandonment in the Caribbean, but also to a woman's choice stemming from strong independent roles, as well as to the high emigration rates. Notwithstanding, there are several issues related to women which are linked to poverty. First, are some indications of discrimination in the labor market. While only one study in the Region has empirically established this linkage (World Bank 1995d), there are concems that wages among women are lower than male counterparts, and that employers in some countries may be reluctant to higher women of childbearing years (particularly pregnant women, Mondesire and Dunn, 1995). Unemployment rates in almost all countries are higher among women than men. Second are issues related to land and property ownership. In some countries antiquated legislation related to the inheritance of land prevents women from ownership. Third is violence against women which has increased in several countries. This has in part been attributed to higher levels of awareness by women, and in part to male frustration to economic hardships, unemployment, and feelings of hopelessness. Male perceptions of loss of power and control over women linked to women's increasing independence as they become better educated, and spend less time on childcare and other household responsibilities as they participate in the labor market, have also been cited as a contributor to acts of violence against women. A final concern is teenage pregnancy and in some countries, maternal mortality. Adolescent mothers have higher than average rates of maternal morbidity and mortality. Educational and work opportunities are often jeopardized as a result of pregnancy, with teens from poor households most affected. Men, in particular, the youth, have also been identified as a vulnerable group in many Caribbean countries. Boys have generally lagged in school, and often lack male role models. As they leave school with few skills, "men at risk" have a difficult time finding employment, and are faced with peer pressure to become involved in gangs, drugs, and criminal activity (Miller, 1991). This becomes a difficult cycle to break, perpetuating further poverty and social problems. 5 Poverty reduction and human development in the Caribbean Box 1.1 The characteristics of the poor in the Caribbean Poor households in the Caribbean tend to have large numbers of children, lower levels of education, a non-nuclear family structure, and generate income through the informal sector in urban areas and through small-scale farming or as wage earners in agriculture in rural areas. Among poor households there are several subgroups at the individual level which have been identified: * The elderly. With the erosion in the value of lifetime savings and pension benefits, the elderly are particularly vulnerable to macroeconomic changes. In addition, with the high levels of migration in the region, elderly parents are often left with no family support system or regular source of income. Many are also not eligible for social assistance. * Children. The youth living in poor households are highly vulnerable to poor nutrition, insufficient day care, low-quality education, and limited parental care. These impediments can have a lasting negative impact on a child's lifetime opportunities, making it impossible for him or her to break the poverty cycle. * Women. In some countries, such as Belize, St. Lucia and Trinidad and Tobago, the incidence of poverty among female-headed households is high, particularly in urban areas. This has been attributed to high unemployment, wage discrimination, and time constraints due to child-rearing activities. Poor women are also faced with domestic violence, and high fertility rates, teenage pregnancy, and, high maternal mortality rates. * Young males. Boys in the Caribbean have generally performed worse than girls in school and have higher dropout rates. With few skills, it is difficult for them to find jobs and they become vulnerable to gangs, drugs, and criminal activity. * Unemployed youth. With high unemployment rates throughout the region, unskilled youth, particularly school leavers, have little opportunity to enter the labor force. As many of these youth have dropped out of the school system, they are left with large amounts of free time. This has led many, particularly male youth, to become involved with drugs and criminal activity. Many teenage females become pregnant, with little or no resources to care for themselves and their infants. * Unskilled workers. Wages for unskilled workers are low, often inadequate for supporting a family. Many unskilled workers participate in the informal sector where the work is irregular, and there is no form of social insurance. * Small-scale farmers. Most of the poor in the region live in rural areas, with the majority working in agriculture. Many of these farmers have micro plots, face problems of inadequate legal land titling, inequitable distribution of land, limited access to markets, and in some countries unequal access to basic health and education services. * Indigenous groups. Among indigenous groups in the Caribbean (Dominica, Guyana, Suriname), the incidence of poverty is particularly high, as is the incidence of illness and malnutrition. This is in part due to the limited access that these individuals have to basic services such as education and health care. * The disabled. Although they constitute a relatively small proportion of the population, the disabled are particularly vulnerable, because they have limited access to education, jobs, and long-term medical care in many countries. Though they are eligible for assistance through the safety net, benefit levels are inadequate. 6 I The characteristics and causes ofpoverty Employment and sources of income The majority of the working-age poor participate in the labor market with the characteristics of employment and sources of income varying by geographic area. Although rural self-employment is highly and positively correlated with poverty in the Caribbean, this does not hold in urban areas. On the contrary, self-employment in urban areas is associated more with higher income households than with poor ones. The main source of income for the urban poor is wage employment in the informal sector. In most countries, the poor do not work in the public sector (see the section on labor markets). Unemployment rates are generally high in the Caribbean (SA, Table 3). Although the poor are affected by high unemployment, with the exception of Trinidad and Tobago, unemployment is not highly correlated with poverty in the region. The duration of unemployment, however, is longer for the poor than for the nonpoor, indicating problems of structural unemployment due to lack of skills or medical problems. Unemployment rates are highest in urban areas, although underemployment is substantial in rural areas, where most of the poor live. This is mainly due to the highly seasonal nature of agriculture. The underemployment of rural poor workers during the slow seasons is then a cause of low incomes. For example in Guyana, rural workers falling below the poverty line are employed, on average, less than fourteen days a month.8 Poor self-employed farmers work even fewer days, averaging about three days a month. Geographic characteristics of poverty On the whole, most of the poor in the Caribbean still live in rural areas. Yet the rising rates of urbanization and high vulnerability of the urban poor to economic and social conditions make urban poverty a particular concern in the Caribbean. Because the characteristics of urban and rural poverty are quite different, it is necessary to consider carefully the needs of each geographic area when designing country-specific poverty reduction strategies. In many cases, a program or policy suitable for rural areas may not be the best approach for addressing urban poverty. Rural poverty. Approximately half of the population in the region live in rural areas where the incidence of poverty is also highest, particularly in the Dominican Republic, Guyana, and Haiti.9 In general, a large proportion of the rural poor are employed in agriculture as wage earners or are self-employed as small-scale farmers (see Box 1.2).' In addition to having low incomes, the rural poor have limited access to quality 8 Guyana Bureau of Statistics, HIES/LSMS 1993. The individual was asked to refer to the last thirty days during the survey period, which was between February and June 1993. 9 The urban/rural breakdown for the Caribbean (50/50) is close to the world average, though substantially lower than the breakdown for Latin America and the Caribbean as a whole (71/29). 10 Trinidad and Tobago provides an exception. 7 Poverty reduction and human development in the Caribbean health and education services, infrastructure, and in some cases, farmable land. Although the quality of social services is often low overall, an urban bias in public funding toward expensive hospital-based medical care and the more elite secondary schools has channeled resources away from the facilities that provide basic services in rural areas. Frequently, health centers, health posts, and schools in rural areas lack basic supplies (medical supplies, textbooks), equipment, and trained staff. Although the extent of urban bias in public spending varies substantially from country to country, it is an important equity issue for many. Inadequate land titling for small farmers also affects the rural poor. Much of this relates to the historical land use patterns before independence where plantations predominated. Following independence, governments bought large estates which are still state owned (for example in the Dominican Republic, Jamaica, St. Kitts and Nevis and Guyana). The remaining agricultural land is generally privately operated under a dual system of customary use and a formal legal framework. The distribution of land is, however, somewhat inequitable with the majority of farmers only owning a small proportion of agricultural land. In Jamaica, Belize, and the OECS most of the land occupied by small farmers is in mountainous areas or hillside slopes and the parcels are relatively small. In Guyana, small rural farmers who own plots on former sugar and coffee estates are constrained by the deterioration of drainage and irrigation systems originally designed for management by one land owner. Policies that expand tenancy, provide clear land rights where traditional systems fail, and improve the management of common- property resources can create opportunities for the rural poor. Box 1.2 The rural poor in Jamaica More than two-thirds of the poor in Jamaica live in rural areas. The rural poor include small hillside farmers who derive their income primarily from farming (with the poorest cultivating less than 1 acre) or as agricultural laborers; households headed by women who conduct farming and on-farm activities; landless, unskilled laborers who work for other small farmers or on large estates or do petty trading; unemployed or underemployed youth; and retired micro plot farmers; and small fishermen. Many of the rural hillside communities are characterized by high population density and small average farm size. They use basic technology that only achieves low productivity, which makes it difficult to compete with the large farm sector, which uses modern technology and is generally efficient. The inunediate causes of poverty are attributed to the limited availability of land for individuals, land degradation, low agricultural productivity, low wage employment or lack of employment opportunities, poor physical infrastructure, and inadequate social infrastructure. Source: World Bank, 1995c, "Jamaica Strategy ror Combatting Rural Poverty and National Resource Degredation." Washington, DC. As the preferential markets for traditional crops such as bananas erodes, small farmers, particularly in the OECS countries will face a transitional period making their economic future even more uncertain. Small farmers already have been affected by a drop in banana prices and recent natural disasters. Specially designed programs to assist 8 I The characteristics and causes ofpoverty farmers move into other income-generating areas will be critical to preventing further economic hardship. Urban poverty. Several important factors that affect the living standards of the urban poor are not captured by standard poverty measures. These include the heavy reliance on the cash economy, overcrowded conditions, and the social problems of crime and violence now plaguing most Caribbean cities. The urban poor are more vulnerable than the rural poor to changes in the economic environment because they are more fully integrated in the monetized economy and often have fewer safety nets than the rural poor (such as home gardens). Resource ownership patterns and reliance on self-production for consumption give some security to the rural population in times of drastic changes or sudden shifts in domestic policies. Consequently, devaluation, inflation, and privatization are expected to have a larger impact on the urban poor than on the rural poor. For example in Jamaica, only 40 percent of the urban poor in Kingston own their housing and produce less than 4 percent of their annual food consumption, while 70 percent of the rural poor own their homes and produce 16 percent of their food consumption. Urban environmental hazards (such as air and water pollution) and overcrowding exacerbate the already low living standards of the poor. For example, even in Belize, which on the whole is sparsely populated, there is a large concentration of poverty in Belize City where the poor live in overcrowded, deteriorated wood structures with inadequate sanitation prone to both fire and floods (World Bank 1994a). Houses are located close together and in poor neighborhoods that have little public space (parks or playgrounds). In many countries urban squatting among the poor is also a major problem, because the sites are often in hazardous or ecologically unstable areas. Squatting is illegal, challenges attempts at good governance, and can incur huge costs related to the provision of basic services, the presence of health risks, and the loss of land for other uses. In addition to economic pressures and crowded conditions, many of the urban poor are faced with a breakdown of the traditional family characterized by a high proportion of absentee parents and single-parent households. Children in these households often lack sufficient supervision, stimulation, and nurturing. The combination of economic pressures, overcrowded living conditions, the breakdown of the family, and high unemployment has contributed to social problems in urban areas, including widespread incidences of street crime, gang violence, and drug use. Crime and violence A steady increase in crime and violence has degraded the quality of life to a varying extent throughout the Caribbean." Although individuals of all socioeconomic " The linkage between poverty, crime and violence varies as discussed below. 9 Poverty reduction and human development in the Caribbean groups are affected, the urban poor are particularly vulnerable to these social problems. In cities such as Belize City, Kingston, and Port of Spain, stories of shootings, gang killings, minor disputes that turn violent, sexual attacks, personal robberies, aggravated assaults, and domestic violence have degraded the population's sense of trust, eroded social capital, raised the level of fear and anxiety, compelled homes and businesses to acquire expensive security systems, and in some cases broken down communities. Although impossible to quantify, crime and violence have serious economic costs as well. An increasing proportion of public resources, which are already limited, is required to strengthen police enforcement, support the growing prison population, finance the demands placed on the judicial system, and provide health care for persons injured by violence. Other costs include the expensive security systems and guards now required by businesses and homes, the loss in potential revenues from foreign investors and tourists who have sought other destinations as a result of the threat of crime, and the migration of the urban middle class. For example in Trinidad and Tobago, back-of-the envelope calculations for the arrest, court appearances, and six-month incarceration of one person are TT$3 1,500 (US$5,700), a high financial cost for the state (Annex II). Although accurate crime statistics are generally lacking in the Caribbean, which makes it difficult to assess the scope of the problem and trends associated with it, it is possible to draw together some general characteristics.'2 Levels of crime are highest in urban areas, with the larger cities experiencing the greatest problems. The most prevalent type of criminal activity is crime against property (burglary, robbery), followed by violent crime (murder, rape, and assault), and drug-related crime. In addition, there is a problem of gang violence in the larger cities, usually related to a struggle for power within a gang, or between gangs, or to attacks on others that often serve the group's purposes. Much of the gang violence is politically motivated or drug related. The crime rate is highest in Jamaica, where approximately 40 percent of all crimes were violent and close to 800 murders occurred in 1995. Most of those murders resulted from domestic and family disputes, property crimes (robberies, burglaries), political and gang feuds, and drugs. The perpetrators of most criminal activity in the Caribbean are male youths sixteen to thirty-four years of age. Many of these individuals are from large, low-income households, are school dropouts, and use drugs."3 Many are unemployed or unskilled laborers. Of those convicted, many are repeat offenders. 12 Victimization surveys in the United States suggest that the two main reasons why crimes are not reported are public perceptions of police ineffectiveness and fear of further victimization from criminals. '3 Based on profiles of Grenada and Trinidad. 10 I The characteristics and causes ofpoverty The crime rates in the region, in particular the number of violent crimes, are relatively high, comparing in many ways to the patterns in the United States. For example, the number of murders per 100,000 individuals is 38 in Belize City and 58 in Kingston."4 Though it is difficult to compare such ratios due to the variation in population density, the equivalent rates are 27 in New York City, 30 in Los Angeles, 34 in Miami, and 78 in Washington, D.C. (U.S. Federal Bureau of Investigation 1993). In other countries, rates tend to be much lower-for example, 1.6 in Tokyo, 2.5 in London, and 2.7 in Budapest (UNDP 1995). Although there are many economic, cultural, and geographic differences between the United States and the Caribbean, it is not implausible to assume that there are some similarities in the causes and characteristics of their criminal activity given their close geographic proximity, continuous flow of migration, strong cultural influences of the United States throughout the region, and the return of criminal deportees from the United States."5 Causes of crime and violence. Evidence from several studies in the United States, a participatory urban appraisal in Jamaica, and focus group meetings in Trinidad and Tobago provide some insight on the causes of crime and violence (Annex II; see also Freedman 1991; Moser and Holland 1995). These include factors at both the individual level and the social or community level."6 At the individual level, there are psychosocial factors such as (i) aggressive temperament, (ii) learned responses to frustration, and (iii) the effect of childhood experiences such as abuse or neglect, lack of parental nurturing, low income in large families, criminal behavior by faniily members, early-grade school failure, peer rejection, poor housing, childhoods spent in high-crime neighborhoods, and abnormally frequent viewing of violence on television. The psychosocial development of an individual's potential for aggressive and violent behavior is also potentially influenced by biological factors such as genetic influences, neurobiological .characteristics, and consumption of alcohol and other drugs. At the social or community level, several factors have been linked to violence: (i) high concentrations of poverty in geographic areas and wide disparities in income distribution; (ii) circumstances associated with social organization such as population turnover, community transition, family disruption through divorce, desertion, or single- parent families, and high housing and population density (all of which affect a community's capacity to supervise young males); and (iii) opportunities associated with violence such as proximity to illegal markets for drugs and firearms. In addition, some individual-level risk factors for violent crimes are associated with community-level causes. 14 Based on 1993 statistics. 15 It is now U.S. policy to deport criminals to their countries of origin. For example, interviews in Belize City indicated that many gang members had been deported and were so closely linked to gangs in the United States that they retained the same gang names. 16 This section draws on the findings discussed in National Academy of Sciences 1993, which are based on in-depth, longitudinal studies. 11 Poverty reduction and human development in the Caribbean For example, ineffective parenting, drug use, school failure, and a poor employment history are more likely to occur in communities in which illegal markets are nearer at hand than are prenatal and pediatric care, good schools protected from violence, and employment opportunities. In focus group meetings, prisoners in Port of Spain perceived the two main causes of crime as (i) the failure of the school system to meet the needs of students who fail the common entrance exam, which leaves them with no skills and large blocks of unstructured time and (ii) high unemployment, which makes them vulnerable to the remunerative drug trade. Similarly, young males participating in the study in Jamaica identified causal links between increasing violence and the lack of capital, lack of education and skills, and lack of employment (Moser and Holland, 1995). Poverty, crime, and violence. Because of the heterogeneous nature of the poor, it is difficult to link poverty, crime, and violence directly. However, the social and individual factors discussed above (and their interaction) have been closely associated with poverty in the Caribbean. For example, we know that poor urban households tend to live in crowded conditions, are larger, have a high incidence of female headship, have high unemployment among male youth, have high dropout rates (particularly for boys), and have limited access to quality social services. In addition, the high rates of migration in the region result in transient communities. All of these characteristics contribute to the vulnerability of male youth in lower income urban households. Not surprisingly, micro- level studies from Grenada and Trinidad and Tobago of the prison population show that the perpetrators of criminal activity are largely from low-income households (Gabriel and Bishop 1995; Legal Aid and Counseling Clinic 1995). The link between poverty, crime, and violence was also drawn in the participatory urban appraisal in Jamaica (Moser and Holland, 1995). A lack of work and employment opportunities in all communities was identified as a direct cause of poverty, which in turn was perceived to raise the level of economic violence. Area stigma, which is largely an outcome of violence, was perceived among all communities as a major factor preventing individuals from finding employment. And finally, the economic hardships in recent years in the region may in part have caused the increase in robbery and burglary. Their high visibility and high turnover make tourists an attractive target. The lucrative drug trade is also enticing for some and has contributed to the increases in violence. For example, in St. Kitts and Nevis, much of the increase in murder and robbery rates since 1991 has been linked to drug-related violence. Addressing the problem. A variety of interventions have been used to approach the problems of crime and violence in the Caribbean. These include efforts to strengthen the police force through recruitment and extensive training, incarceration of criminals, community policing or neighborhood watch programs, police youth clubs, public education programs, sports clubs, drug control measures, drug abuse programs, family counseling, and halfway houses for ex-residents of detention centers and prisoners. In 12 I The characteristics and causes ofpoverty addition, NGOs have provided services such as youth training and counseling, support groups, and school visits. As with the provision of many services, only limited resources are available to provide protection for high-crime areas and prevention programs targeted toward persons at risk. In many countries, the police do not have sufficient resources, equipment and vehicles often malfunction, and salaries are inadequate, resulting in low staff morale. Rehabilitation programs are also limited due to a lack of adequate resources and trained staff (Annex II). Addressing these problems will require targeting additional efforts at high-risk groups. The causes of poverty There is no one cause of poverty in each of the countries studied. On the contrary, the combination of several complex factors has contributed to poverty: low or negative growth, inappropriate macroeconomic policies, deficiencies in the labor market resulting in limited job growth, low productivity and low wages in the informal sector, and a lag in human resource development. Other factors which have contributed to a decline in living standards for some yet are not structural causes of poverty include the increase in crime and violence, retrenchment of workers, drop in the real value of safety nets, and changes in family structures. The later two issues are discussed in Chapter 2. Low economic growth performance Although the econornic performance of countries in the region has been highly volatile since the early 1 980s, on the whole, growth rates have been low or negative, with overall declines in several countries for five or more years. This is due in part to external shocks such as adverse changes in a country's terms of trade, changes in global demand for a country's exports, changes in global interest rates on a country's external debt, and hurricanes. It is also due in part to inadequate domestic policy responses in the larger countries such as sharp increases in external borrowing and expansionary monetary and fiscal policies. Extensive evidence links the importance of economic growth to poverty reduction (see World Bank 1990). For example, in Indonesia and Thailand poverty was reduced 30-40 percent during a twenty-year period in which annual growth rates were approximately 3 percent (investments in the social sectors also contributed). Accordingly, of a sample of countries, those that reduced poverty the least (for example, India and Sri Lanka) had growth rates of less than 1 percent. Growth has reduced poverty through rising employment, increased labor productivity and higher real wages. These findings correspond closely to the situation in the Caribbean. Although it is not possible to quantify the direct impact that growth has had on poverty in the region due to the lack of data, countries which have experienced positive growth rates and invested heavily in human resource development such as Barbados, the Bahamas, Antigua and Barbuda and St. Kitts, are likely to have reduced poverty. Accordingly, in countries with 13 Poverty reduction and human development in the Caribbean low or negative growth there is evidence of overall declines in per capita GDP, in real wages, and in social sector expenditures. These combined forces undoubtedly caused poverty to increase during the 1980s. Countries that experienced dramatic declines in GDP and were likely to have suffered the most include the Dominican Republic, Guyana, Haiti, Jamaica, Suriname, and Trinidad and Tobago. The effect of growth on poverty can be demonstrated using a simulation carried out for Guyana based on several assumptions. " Results show that with the average annual decline in per capita GDP of 3 percent, poverty would have increased from approximately 26 percent in 1980 to 43 percent in 1990. Using the same assumptions, if per capita income instead increased by a plausible 2 percent per year, poverty would have reduced from 26 percent to 14 percent during that period. Macroeconomic shocks, policy response, and impact on the poor As many economies in the region faced macroeconomic disequilibrium, mostly in the balance of payments due to expansive aggregate demand policies, terms-of-trade shocks, and natural disasters, it became necessary to undertake major policy reforms. Several countries, including St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines, have adjusted in a continuous and gradual manner and thus avoided a major macroeconomic imbalance. A combination of reasonably sound fiscal policy and favorable external circumstances (including a boom in the tourist industry, generous donor support, and advantageous marketing arrangements for key agricultural exports) allowed these countries to pass through the 1980s with high growth and stable macroeconomic indicators.'8 Another set of countries has responded to balance of payments and public deficit problems with fiscal policy alone, choosing to maintain a fixed exchange rate despite important external imbalances. In the Organization of Eastern Caribbean States (OECS), devaluation is impossible because members share a currency. As a result, Antigua and Barbuda, which financed fiscal deficits with commercial credit during the early 1980s, and Dominica and Grenada, which did the same but have also suffered from waning donor support and adverse shocks to agricultural exports, have no option but to adopt contractionary fiscal policies to reestablish macroeconomic balance. Rather than 1 7The simulation assumes that the decline in per capita consumption is similar to the decline in GDP and that the distribution of welfare has remained the same. The 1993 poverty estimates were used for 1990 given that though real growth was positive during the 1990-93 period, prices increased dramatically during 1990-1992 which may have negated any resulting reduction in poverty. The increase in poverty may be underestimated given the fact that the fertility rate is higher for the poor and that inequality may have risen with economic recession. 18 For these countries, any discussion of adjustment policies must necessarily be speculative and should refer to the need for future policy changes. Such changes are particularly urgent in Belize, where fiscal policy has expanded recently, and the outer islands, where special trade arrangements for banana producers are turning less favorable. 14 1 The characteristics and causes of poverty devalue its exchange rate, Barbados chose the same "classical medicine" and has attained macroeconomic balance although at the cost of a recession.'9 The remaining countries have all engaged in much more wide-ranging adjustment programs, including devaluation, fiscal restraint, and a variety of market liberalization and privatization measures. For the Dominican Republic, Guyana, and Jamaica, these reforms came only after many years of resistance on the part of policymakers. In the years before, these governments adopted ad hoc measures, including significant rationing, unofficial or quasi-official parallel markets for foreign exchange, and controlled items whose prices were substantially higher than the official rate. These alternatives to devaluation failed. Once adjustment policies were implemented, the structural changes in these economies were the most significant and are expected to have the most dramatic, whether positive or negative, long-term impact on the poor. The other economy that has devalued, Trinidad and Tobago, did not run into serious balance of payments difficulties until after the other three and, based on their experience, adopted policy changes much more quickly in the wake of the 1986 decline in oil prices. Nevertheless, the size of that shock relative to the size of Trinidad and Tobago's economy meant that the welfare consequences were dramatic. Structural adjustment and the poor There has been substantial debate on the impact of structural adjustment policies on the poor. Much of the evidence used to support this debate is, however, based on deficient assumptions and methods.20 While the positive and negative views on adjustment are not discussed here, several points are important to understanding the issues. First, the governments that adjusted did so because they faced a balance of payments crisis that somehow had to be resolved. If they had not chosen adjustment, they would have chosen another policy response. Doing nothing was not a viable policy option. Second, actual policy changes must be compared with relevant counterfactuals that would respond to the same macroeconomic constraints, analyzed in the context of the local economic structure and based on empirical information from household surveys. And third, adjustment is different in every country, and for every crisis, and thus it is more useful to speak of the impact of specific policy changes than to speak of the impact of adjustment as a whole (Annex III). 19 In each of these economies, the costs of the adjustment policies for the poor are fairly straightforward: to what extent did the budget cuts fall on services or subsidies that the poor previously received? In addition, because the public sector wage bill is such a large component of public sector spending, the impact of reductions in public sector salaries and public sector layoffs is examined by asking how many public employees are poor. 20 For example, one fallacious assumption is that policy change is discretionary or arbitrary. This assumption leads to the adoption of deficient methods, including comparing living standards before and after adjustment or comparing the performance of arbitrary categories of countries, such as strong, weak, and nonadjusting. Although widely employed, such approaches ignore the need to address underlying disequilibria. 15 Poverty reduction and human development in the Caribbean Three broad classes of policies were examined: exchange rate devaluation, reductions in public expenditures, and reductions in public sector employment (see Table 1.3). Each of these policies either has been implemented or is being considered in several countries, often among heated debate over the policies' efficacy and their consequences for the poor. Country-specific and methodological discussions are included in Annex III. There is no doubt that some of the poor and nonpoor have suffered declines in incomes and living standards in the short term as countries in the Region deal with the macroeconomic disequilibria. This is due to the fact that (i) social expenditures do reach the poor, and thus any reduction in spending will affect them, and (ii) low-income workers are plentiful in the civil service and face difficult job transitions upon retrenchment. The results are more ambiguous with regard to devaluation-a large share of the poor's income is tradable, like their consumption. This implies that it is impossible to draw conclusions on the impact of devaluation on the poor, in absolute or relative terms, in the countries studied. Given the small and open nature of most of the Caribbean economies, it is also likely that long periods of resistance to reforms in Jamaica, the Dominican Republic, and Guyana worked to the detriment of the poor. Conversely, while the more immediate efforts by Trinidad and Tobago to respond to the collapse in oil prices inevitably involved some social welfare costs for society, including the poor, these costs were mitigated by the government's quick response, compared with its response to alternatives such as rationing and restrictive foreign exchange controls. Similarly, the Dominican Republic's reluctance to deal with the bottom-heavy bureaucracy implied a cost over and above the excessive wage bill: wage compression, demoralization, and corruption impeded the technical and managerial competency of the public sector and the overall performance of the economy. Indeed, Guyana, for example, chose to reduce the number of public sector workers, which, though painful, was undoubtedly less painful than it would have been in the presence of the same resistance to civil service reform displayed in the Dominican Republic. Exchange rate and trade policies. Exchange rate policy is often the most controversial aspect of an adjustment program, especially in its initial stages. The impact of a real depreciation on poverty depends on the poor's composition of production and consumption and on the macroeconomic effect of the change in exchange rate (see Annex Il for a fall discussion). Caribbean economies are atypical in many ways, the most obvious being that they are very small and very open. Exports of goods and nonfactor services average two-thirds of GDP, while imports average four-fifths (SA, Table 18), resulting in almost all goods and even many services being tradable goods.2' One consequence of such openness is that the possibility for changing the relative price of 21 Nontradables are probably limited to public services, quota-protected imports (if there are any), and perhaps construction activities, although their close link to the highly tradable tourist industry may make them more tradable than is typical in larger economies. 16 I The characteristics and causes of poverty tradables to nontradables via exchange rate policy (or any other policy) is very limited. A second is that public wage policy is probably a much closer substitute for exchange rate policy in the Caribbean than it is in other economies because the public sector is a large component of the nontradables sector, and wages are a large share of its cost. Table 1.3 Level of distortion and degree of reform in Caribbean countries, by policy area Exchange rate policy Fieal policy PubUc employment Country Distortios? Refonrb/period Distortion' Refornd/period Distortion' Reformt/perlod Antigua and Barbuda + 0 ++ * Mid-1980s - - Barbados + 0 ++ 1*990-91 ++ 1**991 Belize ++ 0 + 0 0 Dominica + 0 ++ *1986-87 + 0 Dominican Republic ++ *1985-86; 1990 + *1992 ++ 0 Grenada + 0 ++ * *1992 ++ *1992-94 Guyana ++ **1987-91 ++ *Mid-1980s ++ *1980-90 Jamaica ++ **1983-84, 1991 ++ **1986-88; ++ ** Mid-1980s 1993-94 St Kitts and Nevis + 0 + 0 - - St. Lucia + 0 + 0 St Vincent and the + 0 + 0 - Grenadines TrinidadandTobago ++ *1985, 1988 ++ **1987 ++ 0 Notes: Under distortion columns, 0 signifies no important distortion, + signifies small to moderate distortion, and ++ signifies large distortion. Under the reform columns, 0 signifies little or no meaningful reform, * signifies weak or partial reforms, and ** signifies strong refonm measures; - signifies no reliable information a. Difference between parallel and official exchange rate.; b. Nominal devaluation; closing of parallel rate premium.; c. Budget deficit; asrears.; d. Reduction in deficit.; e. Compression of wage structure; public wage preniium; excessive wage bill.; f Retrenchment of government workers; decline. Impact of exchange rate and trade policies on the poor. In most countries examined, there is little evidence that relative price changes associated with devaluation are distributionally regressive. Poorer households (except Trinidad and Tobago) tend to have larger shares of tradables in gross expenditure than wealthier ones.22 Therefore, a rise in the relative price of tradable goods falls more heavily on the poor than the rich. Yet in some of the countries (Jamaica, St. Lucia, and perhaps Belize, the Dominican Republic, and Guyana) the income of poorer households is also disproportionately from the production of tradable goods, so these households benefit from a real depreciation on this side of their budget. This implies that it is important to temper the results obtained from expenditure information with the opposing share of income. 22 This is principally due to the inelastic income demand for food: food constitutes a larger share of a poor household's budget than of a rich one's, and almost all food is a tradable good in these small, open economies. 17 Poverty reduction and human development in the Caribbean Fiscal policies. The public sector plays a dominant role in most Caribbean economies, and thus the incidence of fiscal policy has important implications for the poor. Fiscal policy and poverty are intertwined in the need to ensure that the incidence of public expenditures is progressive, particularly in the social sectors. Much of the justification for many public expenditures appropriately comes from equity considerations, over and above the efficiency considerations in the provision of public goods. Government expenditures. On the whole, government expenditures in the Caribbean are higher than in other parts of the world. Public expenditures averaged 34 percent of GDP in the late 1980s in the Caribbean (excluding Guyana) compared with an average in 1988 of 28 percent in Africa, 26 percent in Asia, and 24 percent in Latin America (SA, Table 29). Several special circumstances influence the high level of public spending. First, Caribbean economies are small, and there are probably some economies of scale to government services and activities. Second, the importance of the tourist industry in the Caribbean creates special demands for infrastructure spending for ports, harbors, and roads, which typically has been handled by the public sector and is reflected in the high share of capital spending in the overall budgets and GDP (SA, Table 30). And, finally, many Caribbean countries have a strong political commitment to providing basic social services, especially health and education, free of charge. This is reflected in the high shares of GDP dedicated to these sectors in most countries (SA, Table 31). In general, these patterns and levels of expenditure have been prudent. The tourist industry has grown, helping much of the Caribbean to avoid the "lost decade" suffered by other developing countries in the 1980s, and expenditures on social services are reflected in relatively high social indicators for most countries (SA, Table 32). Nevertheless, several issues associated with these high levels of public spending tend to become problematic during a stabilization effort. First, some of the spending has been financed by deficits, so it is unsustainable over the long term. Second, in virtually all Caribbean economies, the level of taxation is so high that any economic adjustment requiring tighter fiscal policy has to come from reduced expenditures; government expenditures thus have little cushion against negative shocks. As a result, adverse external circumstances have forced several Caribbean economnies to reduce public spending, often on items important to their economic and social development. Impact of government expenditure on the poor. To evaluate the incidence of public spending and implications for the poor, three main areas of government expenditures were reviewed: social services, infrastructure expenditures, and wages and salaries. The analysis shows that the poor benefit from many expenditures on social services in the Caribbean: attendance at public primary schools and use of public health centers and hospitals are progressive among the poor in most of the countries examined, and strict criteria are used for determining eligibility for social welfare. These results, however, must be interpreted with caution, because the available information does not account for differences in the quality of services offered by the primary schools that different children attend or the clinics that different households use. In many cases vast differences point to glaring inequities. Benefits from secondary and higher education and 18 1 The characteristics and causes of poverty from infrastructure services (water, sewerage, and electricity) are less evenly distributed than benefits from primary education and health, although they are still distributed better than in most developing countries outside the Caribbean. Public employment. Governments in the Region typically employ a large share of the working population, which makes any reductions in the size of the civil service politically difficult, even in the context of an adjustment program. Alternatively, governments are forced either to reduce capital or other more productive expenditures on operations and maintenance or to raise taxes to inefficiently high levels to support the excess of public employees. In the more severe cases, governments hold the wage bill in check by compressing the salary structure. Real wages of senior and technical staff are eroded by inflation, while those of other workers are not, so that it becomes increasingly unattractive for qualified personnel to stay in the public sector, although unskilled workers still prefer to do so. The civil service becomes bottom-heavy, with far too many unskilled workers and too few skilled ones. The share of public employment in total employment is high, relative both to the OECD countries and to a sample of developing countries (SA, Table 38). In the Caribbean, 9 percent of the population works in the public sector, while in a sample of fifteen developing countries only 3 percent do so. Of all the Caribbean countries, only Jamaica, St. Lucia,23 and, to a lesser extent, Belize and Dominica, appear to be within the international norms. This may reflect in part economies of scale to the civil service and in part the commitment to a form of social democracy in which the state plays a broader role in the economy than many policymakers now envision. The large number of public employees manifests itself in a large public sector wage bill in comparison with norms elsewhere (SA, Table 39) . This high share of spending on wages may reflect the lack of economies of scale in small countries, however, overstaffing and above-market salaries are problems in several countries. Given the large number of public sector workers and the weight of the public sector payroll, many Caribbean economies have begun to suffer the typical symptoms of overstaffing: salary compression due to budget pressures, the loss of skilled personnel, and a bottom-heavy structure of public employment that affects overall services. The high wages for unskilled workers in the public sector also has negative implications for the labor market. Five Caribbean countries have laid off at least some public employees in the course of their adjustment efforts: Barbados, Grenada, Guyana, Jamaica, and Trinidad and Tobago. In some of these cases the layoffs have been small and limited to temporary 23 The St. Lucia data do not seem entirely consistent with the information in Statistical Annex, Table 39, on the public sector wage bill, which is within the norm of other Caribbean economies. These employment data come from the 1994 household survey rather than a labor market survey as the other countries' information does. This may explain the difference. However, information from the Jamaica and Trinidad and Tobago household surveys is consistent with the labor force surveys in those countries. 19 Poverty reduction and human development in the Caribbean public employees, while in others, especially Guyana and Jamaica, the reductions have been quite large. A few other countries, including Dominica and the Dominican Republic, have significant problems with bottom-heavy civil services that clearly require restructuring. To date, they have done little to address this need. The remaining countries have yet to address the issue of public employment. Impact of public employment on the poor. Such reductions in public employment present a particularly difficult political and economic problem in Caribbean economies. Although the public sector in most Caribbean economies is large, staff reductions are difficult, often colliding with labor legislation and the considerable political power of civil servants and public enterprise employees. In the economies examined, with the exception of the Dominican Republic and Guyana, public employees are better off than the population on average, indicating that at least ex ante they are not a disadvantaged group. However, the poverty implications of public sector retrenchment may be of concern for two reasons. First, from the perspective of efficiency, the people who should be laid off are overwhelmingly in the lower echelons of the civil service and are thus the poorest civil servants. Even though the poorest quintile's share of public salaries is not large, its share of public workers is nontrivial in all countries except perhaps Belize and Jamaica (SA, Tables 41 and 42). And second, if these employees are indeed laid off, they may have difficulty finding another job, given the high unemployment rates in most of the Caribbean countries. Thus even a relatively well-off civil servant may become poor after a retrenchment. Reductions in public sector wages would likely affect poverty less in each of the economies examined, with the exception of Guyana, where the public sector still has a very large number of employees, most of whom are poorly paid because of budget constraints due to the high debt burden. However, cutting public salaries in some positions could lead to vacancies in important technical and administrative posts, yet the consequences for poverty would be limited. Sustaining growth beyond adjustment Adjustment has contributed to recent growth in most of the countries affected (the Dominican Republic, Guyana, Trinidad and Tobago), and thus there is every reason to think that it will help the poor, given the strong link between growth and poverty elsewhere in the world. The full benefits of growth will, however, take time to be realized and will need to be maintained for poverty reduction to be sustainable. For the near future the Caribbean economies will continue to be in a state of transition. Global economic changes in trade and capital markets are pressuring countries to become more competitive in export markets. Preferential market access is being eroded by implementation of the North American Free Trade Agreement (NAFTA), by the revised policies of the European Economic Community on bananas and sugar, and by the successful completion of the Uruguay Round. Tourism, a major economic activity in the region, is also subject to fluctuations in the global economy and competition from other 20 I The characteristics and causes ofpoverty destinations. At the same time, official capital flows from bilateral sources are being rapidly reduced. The economic challenges of the 1990s will lead to some economic displacement in the short term. The marginal banana producers of the OECS countries, for example, will be affected by the changes in preferential access of banana exports. The export displacement effects of NAFTA are also likely to be felt in the labor-intensive industries such as textiles and apparel. Given these circumstances, the future presents difficult challenges for the Caribbean. Economic growth of 3.5-4.0 percent is possible. This will require sound macroeconomic management, adequate regulatory measures, measures to protect the environment, labor market flexibility, and support for physical and human infrastructure, including closing the gap in technical and vocational education, in order to facilitate a competitive private sector. To achieve this growth, empirical analyses suggest that the Caribbean countries will also need to increase public, private, and social investment in physical infrastructure, increase the productivity of this investment, reduce government consumption, and emphasize human resource development. The engines of future growth are likely to be in the areas of tourism and other service industries. There has been an increase in world tradeshare of commercial services, as well as an increase in tourism receipts in the Region which indicate a favorable outlook for these sectors. Specific areas that offer potential for growth in the service sector include business, financial and information services, repair, and medical activities. As countries make the transition to new sectors, some existing sectors will provide prospects for labor-intensive growth. These include agroprocessing, manufacturing, and agriculture with an emphasis on diversification-away from crops such as bananas and sugar towards specialized markets. Micro- and small-enterprises will likely play an important role in growth. Countries will also have to pursue efforts to create demand through product development and new approaches to marketing. Labor markets and poverty Because the poor's most abundant resource is their labor, a vital labor market is important to reducing poverty and income inequality.24 In the Caribbean the majority of poor households participate in the labor market in one way or another, and thus poverty is a problem of low wages (in the informal sector), low labor returns to rural self- employment activities, underemployment, and, in some cases, protracted unemployment. These problems are affected in different ways by deficiencies in the labor market. 24Analysis on the link between labor markets and poverty shows that the countries that have succeeded in reducing poverty over the long term have encouraged broadly based rural development and urban employment, thereby increasing the returns to small farm production and wage labor. Successful rural development entails avoiding excessive taxation of agriculture, providing strong support for rural infrastructure, and making technical innovations accessible to small farmers. In urban areas, governments can foster urban job creation by avoiding severe distortions in product and factor markets and by providing suitable urban infrastructure. See World Bank 1990, 1995e. 21 Poverty reduction and human development in the Caribbean The majority of the labor force in the Caribbean work as paid employees in the private formal sector, followed by employees in the public sector. The size of the informal sector ranges from 8 percent of the labor force in Antigua to 36 percent in Jamaica (SA, Table 13). By sector of employment, agriculture still predominates in Belize, Dominica, Guyana, St. Lucia, and St. Vincent and the Grenadines. Other important sectors include trade, tourism, and, to a lesser extent, construction and manufacturing. Labor force participation averages around 60 percent. Female labor force participation varies from more than 40 percent in Antigua and Barbuda, the Bahamas, Barbados, Haiti, Jamaica and St. Lucia to less than 20 percent in the Dominican Republic. The poor work mainly in the informal sector, as wage employees in urban areas and in agricultural in rural areas. Although a full labor market study is beyond the scope of this report, it is important to highlight a few of the key issues that affect the functioning of labor markets in the Caribbean and the link between these issues and poverty. In particular, the poor are affected by (i) limited job growth and absorption capacity in the formal sector, (ii) relatively high labor costs in the formal sector that lead to overexpansion of a low- productivity informal sector, thus putting downward pressure on wages in the informal sector (where many of the poor work), and (iii) limited opportunities for unskilled youth to acquire job training and skills which can perpetuate the cycle of poverty. Labor markets in the Caribbean are segmented and complex, displaying many contradictions.25 While wages in the formal sector may not appear to be high, non-wage benefits inflate the cost of labor.26 Concomitantly, wages in the informal sector tend to be low with few, if any non-wage benefits available. Public sector salaries for low-skilled workers are higher than those of the private sector but salaries for high-skilled workers are lower. Unemployment is generally high, yet there are shortages of skilled workers in many countries due to emigration, particularly in areas such as management, finance, technology, and teaching. These shortages have been mentioned by many firms as one of the key factors affecting their productivity and growth. Relatively little is known about the informal sector, except that it is expanding rapidly, wages are fairly low, and it is generally unregulated in most countries. In some countries, certain government regulations, public sector employment policies and labor union activity have contributed in part to the labor market segmentation 25 This section draws heavily on World Bank 1994b, whose Chapter 4 addresses labor market issues. In some cases, the gap in information is filled by extrapolating from other parts of the world and by using (implicit) analytical models of segmented labor markets (Harberger 1971) and migration (Lopez and Schiff 1995). 26Wages are most competitive in the OECS countries (US$1.10/hr) and Belize (US$1.00/hr) and slightly higher in the larger islands (on average between US$1.50-2.00/hr). Non wage costs mean that fully-loaded labor costs are increased by 15-23percent. Productivity for trained workers is reputed to be good in Barbados and Trinidad and Tobago and moderate in Jamaica and the OECS (World Bank, 1996b). 22 I The characteristics and causes of poverty and high unemployment. That is not to say that there is no role for a regulatory framework, competitive wages in the public sector, and trade unions. These elements are extremely important to the functioning of labor markets. Government regulations are necessary to ensure workplace standards, eliminate injustices, protect vulnerable workers (such as women, rninorities and children), and provide income security. An efficient public sector requires competitive wages to attract and retain qualified staff. Unions provide their members with important services, negotiating on their behalf for better working conditions, protecting them from unfair treatment, assisting to reduce job layoffs, assisting to improve the educational and skills levels of their members through worker education courses, and dividing the cost of obtaining information among a large number of workers. Government regulations. Several government policies in Caribbean countries can affect the labor market by decreasing the ability of the formal sector to absorb more, particularly unskilled, workers. The first group are policies that increase the nonwage benefits of workers (such as paid vacations and minimum employers' social security contributions). These policies, which most countries in the region have, can translate into lower monetary wages and therefore have limited impact on total labor costs.2" Second are policies that regulate hiring and firing practices, such as restrictions affecting the dismissal of workers and restrictions on temporary hiring and overtime work. These regulations tend to have a much larger impact on labor costs because they cannot be traded for lower monetary wages and can ultimately have a negative effect on overall employment in the private formal sector. Antigua and Barbuda, Barbados, Jamaica, and Trinidad and Tobago are noted for such policies (SA, Table 48). Third are policies that regulate public sector wages, which also affect the cost of labor in the formal sector. In general, public sector wages for unskilled workers tend to be higher than those prevailing in the private fornal sector. The policy of paying high wages to unskilled workers in the public sector has exerted constant upward pressure on unskilled wages in the private sector. Unions frequently use public sector wages as a basis for negotiating wage increases for unskilled workers in the private sector. Labor unions. The role of labor unions in the Caribbean has gradually declined, with the proportion of unionized labor above 25 percent in most countries. Unions in the region have exercised the right to strike more often than unions in other parts of the world. The average number of days lost due to strikes suggests that in Guyana, Haiti, Janaica, and Trinidad and Tobago, between 200 and 1,000 days per year are lost for every 1,000 employees (World Bank 1994b). These are very high rates even when compared with other countries that have high union activity such as Portugal (84), the United Kingdom (136), and Italy (271). For 27 The degree of substitution between government-imposed costs and monetary wages is likely to be greater for high-wage (skilled) workers than for low-wage workers. The reason for this is that monetary wages for low- wage workers cannot be reduced as easily to compensate for greater governunent-inposed benefits, because the mniumum wage restnctions can quickly become binding. Also, low-wage workers are less likely to be able to subsist at lower monetary wages even if the total compensation (including monetary inoome and benefits) remains constant or even increases. Most of the government-iniposed regulations imply benefits to workers that do not accrue in the short runL 23 Poverty reduction and human development in the Caribbean example in Jamaica, average worker days lost due to labor disputes (mainly wage and employment) is reported to be 90,000 per year which translates to a loss of at least 3 percent of GDP per year. The high rate of work days lost and the permanent threat of strikes affecting the formal sector can considerably increase labor costs, reduce productivity, and can generate disincentives to expand employment in the formal sector. This tends to expand employment in the informal nonunionized sector, although their small size and low technological level mean that many informal sector firms provide very low wages for unskilled workers, little potential for promotion, and little on-the-job training, which is vital to increase the skills of the labor force. The high incidence of unions also appears to play a role in reducing the elasticity (or labor absorption capacity) of sectoral employment with respect to aggregate economic growth. The employment elasticity in highly unionized sectors is an estimated 1.2 compared with 3.0 in sectors where union membership is below average. Impact on employment and wages for the poor. Due to the segmentation in the labor market, compensation for identical sklls is much higher in the formal than in the informal sector. For example, in Trinidad and Tobago, workers in unionized manufacturing firms earn more than twice as much per hour for the same work as workers in small nonunionized firmns. The wage gap between the formal and informal sectors is deepest for unskilled workers. A relatively small proportion of the poor work as unskilled laborers in the formal sector and therefore are not benefiting from government and union protection. These labor market structures have a negative impact on the poor in that the formal sector is artificially restricted as a source of employment, particularly for unskilled workers, who are often poor. The reduced employment opportunities for unskilled workers in the formal sector imply that more unskilled workers have to look for jobs in the informal sector, thus putting downward pressure on the wages of unskilled workers in the informal sector. Labor market segmentation can have a substantial impact on employment in the formal sector. If, for exarnple, the net effect of regulations is to increase real labor costs artificially in the formal sector 50 percent, the employment potential of the formal sector is reduced 15 to 20 percent.' In many countries in the region, labor market regulations apply equally to skilled workers and apprentices. The regulations can reduce the incentive for employers to take on young unskilled workers who will need to be trained. This can lessen the level of training provided, lower the productivity of workers, and prevent many young workers from acquiring skills and eventually getting jobs in the formal sector (see Leighton and Mincer 1981). Some countries address this by providing exemptions to the minimum wage or tax incentives for employing unskilled youth. Antigua and Barbuda, Dominica, the Dominican Republic, Guyana, Haiti, and St. Kitts and Nevis have provisions for paying apprentices while the 28 To estimate this impact, demand elasticities from other countries (estimated between 0.3 to 0.4) were used. 24 I The characteristics and causes of poverty Barbados Industrial Corporation provides training grants covering up to 75 percent of employees' wages for up to 12 weeks. Migration and the labor market. Migration rates from the Caribbean are extremely high; the majority of individuals who migrate are skilled workers. In the Dominican Republic, Guyana, and Jamaica, about half of the skilled people graduating from local institutions emigrated between 1980 and 1986 (see World Bank 1994a). Of emigrants from St. Lucia and Guyana, 47 and 76 percent, respectively, had secondary education or higher. Although individuals who emigrate vacate jobs in labor markets with generally high unemployment rates, these positions are usually for highly skilled workers and are difficult to fill. This drain on skills has likely reduced the pace of economic growth and thus slowed the process of overall job creation and affected the long-run development potential in the region. Unemployment. On the whole, unemployment rates in the Caribbean, at an average of 15 percent, are much higher than in Latin America as well as other parts of the world.29 In some countries, such as Barbados, Grenada, and Trinidad and Tobago, more than 20 percent of the work force is unemployed, with much of the unemployment classified as structural.30 High unemployment particularly affects youth, women, urban dwellers, and those "queuing" for good jobs in the formal sector.3" In most countries, unemployment rates among the poor are similar to those among the general labor force (SA, Table 13). Trinidad and Tobago provides an exception, where rates among the poor are almost twice the national unemployment rate. 29 Unemployment rates are estimated to be in the 5-10 percent range in South America and 4 percent for middle-income economies as a whole (World Bank 1995e). 30 Caution should be used when comparing unemployment rates across countries. Some countries use the job seeking rate to measure unemployment, while other countries use the extended International Labour Organization classification, which includes persons above a specific age who during a reference period (for example the past week) are without work, and are currently available for work, whether or not they were seeking work. 31 In many countries such as Antigua, Jamaica, St. Vincent and the Grenadines, and Trinidad and Tobago youth (between fifleen and thirty years old) account for the largest proportion of the unemployed. Youth have fewer skills with which to enter the labor market and, in the absence of incentives to employers to hire apprentices, have difficulty attaining skills. As youth acquire more work experience, they become more attractive to employers, accounting for declines in unemployment as age increases. In some cases, youth may also be unwilling to accept a job because their aspirations lead them to wait for an ideal job. If they are part of a household that can support them during a period of job search, they may prolong it. Unemployment rates for women are generally higher than for men, with the differential most severe in Belize and Jamaica, "here unemployment rates for women are more than double those for men (Statistical Annex, Table 13). The higher rates of female unemployment are linked to additional rigidities that female workers encounter in the job market, including lack of mobility due to family ties, insufficient child care services, and job discrimination. They may also be due to the fact that women are more likely to have the support of working spouses. 25 Poverty reduction and human development in the Caribbean High rates of open unemployment in the Caribbean, particularly structural unemployment, are in part related to the labor market distortions.32 The effect of these distortions is demonstrated by the high correlation between real wages, unemployment, and economic growth, which is not consistent with a competitive labor market (World Bank 1994b). In addition, some of the unemployment is related to queuing, which is when individuals reject jobs and wait for better ones, such as jobs in the public sector. This is common among skilled workers in countries where public sector wages and benefits are higher than those in the private formal sector. Relatively little is understood about other factors contributing to the high unemployment rates in the Region, suggesting scope for further study. Unemployment, underemployment, and the poor. Although unemployment rates in the Caribbean are generally the same for the poor and the nonpoor, the duration of unemployment is longer for the poor. While the nonpoor generally suffer from transitional or involuntary unemployment, the poor are faced with problems of structural unemployment due to lack of skills or extremely low education levels, medical problems, geographical isolation (which affects some of the rural poor in general and the urban poor in Jamaica due to marginalization of persons living in high-crime neighborhoods), and in some countries, discrimination based on race or other attributes. Also, fewer adults participate in the labor market in poor than in nonpoor households; this suggests that more discouraged workers are found among the poor than among the nonpoor. Most likely this is due more to structural causes than to cyclical factors. All this suggests that structural problems have to be corrected if faster economic growth per se, and the faster creation of jobs that follows, is to have an important impact on the unemployed who are poor. These problems will require a longer time horizon to resolve. Other labor market imperfections causing structural unemployrnent and low wages among the poor in the informal sector are due more to geographical isolation and lack of adequate transportation than to rigid regulations and unions. In Dominica, for example, there are serious labor shortages in agriculture despite relatively high wages and a national unemployment rate of more than 15 percent. Part of the reason for this seems to be lack of access to adequate transportation, which affects the poor most seriously. Underemployment is also high in the region and is a bigger problem for the poor than the nonpoor.33 Underemployment occurs largely in the informal sectors and results in low incomes for an important segment of the labor force, particularly in rural areas. It is due more to low economic growth than to the direct effects of imperfections in the labor market, although regulations affecting the formal sector are likely to induce more underemployment in 32 Structural unemployment is usually of longer duration. In comparison, frictional unemployment is typically of short duration, resulting from workers looking for the right job and employers looking for the right workers. 33 For example, in Trinidad and Tobago, 15 percent of the employed work less than thirty-three hours a week, and 11 percent work less than twenty-four hours (World Bank 1995d). 26 I The characteristics and causes of poverty the informal sector. In poorer, rural areas, this mainly takes the form of seasonal unemployment. In urban areas, it takes the form of discouraged workers who have given up searching for work. Human resource development Governments in the Caribbean have shown a strong commnitment to human resource development, as evidenced by the high overall social indicators. With the exception of Guyana and Haiti, primary school enrollment rates are high, and the overall literacy rate is more than 95 percent. Infant mortality, life expectancy, and crude death rates in most countries are now equivalent to those in North America. Of developing countries, Barbados ranks number one in the Human Development Indicator, followed closely by Trinidad and Tobago, ranking number six. These achievements highlight the importance of the investments made in human resource development in the Caribbean. Average expenditures for a five year period range from a high in Barbados of 5.0 percent of GDP for education and 7.2 percent for health to a low of 1.1 percent and 0.8 percent in Suriname (SA, Table 12). Yet the quality of services is declining. Real expenditures on health and education have fallen in many countries over the past decade. Physical structures have deteriorated, equipment is lacking, broken, or obsolete, teaching aids are nonexistent in most schools, and there are shortages of medical supplies in many health clinics. The poor are particularly vulnerable to the declining quality in health and education, because they rely heavily on the public sector; have high rates of malnutrition, less education, less access to preventive care, and less access to potable water and sewage; and particularly in urban areas, often live in unsanitary, overcrowded conditions. Continued investment in the human capital of the region with improvements in efficiency is necessary to sustain reductions in poverty and to address changes in the labor market. In an increasingly competitive global economy and with the erosion of preferential market access, the economies in the Caribbean need to move away from some of the more traditional sectors such as agriculture toward new areas such as tourism and services. The jobs created in these sectors will require new skills and a healthy, productive work force. Investing in people can boost the living standards of households by expanding opportunities, raising productivity, attracting capital investment, and increasing earning power. In addition, providing additional educational opportunities for adolescents may prevent some youth from becoming involved with gangs, drugs, and violence, given the evidence linking the perpetrators of crime with school dropouts. Although overall improvements in the social sectors are needed, it is important to place high priority on programs targeted to the poor. Financing for these improvements will need to come from increased efficiency and from cost recovery mechanisms for some higher level services. Many of the critical issues for improvements in the education and health sectors have been discussed in detail in the World Bank Caribbean Education Report (1992) and the Inter-American Development Bank Caribbean Health Report (1996). Improvements in 27 Poverty reduction and human development in the Caribbean access and quality are needed throughout the region in both sectors; only the key issues facing the poor are addressed here. In addition, a brief discussion of training is included given that increasing the skills and capabilities of workers is key to economic success in an increasingly integrated and competitive global economy. Education. Despite the many educational achievements realized during the past decades, acadernic performance at the primary and secondary level is, on the whole, considerably below the performance required to integrate entrants to the labor force and to prepare a steady flow of students adequately for tertiary and university education and training. Productivity levels in the Region are generally low stemming in part from deficiencies in education. Those groups at the highest risk of low academic achievement include boys, who generally perform below girls, rural children, and the poor, who are vulnerable to the inequities in the structure of some education systems. The fact that the poor have low levels of education in all countries highlights the need to address educational issues. In many countries, inequities begin at an early age in the form of limited access to early childhood education. For example, in St. Lucia and Trinidad and Tobago, only half as many poor children between three and four years of age attend preschool as similar children from wealthy households. Many preschool programs are privately run, and the poor cannot afford the cost of tuition. The inequities continue throughout the system, with a wide variation in the quality of primary schools, a heavy emphasis on the selection process resulting from the common entrance exam, school tracking at the secondary level, and limited numbers of places at the secondary level (Annex V). In addition, the poor often cannot pay for out-of-pocket educational expenses such as textbooks, tutoring, and uniforms. Attendance in many countries is also low. The consequence of the current system is that a child's lifetime opportunities are often determined at a very early age, making it difficult to break the cycle of poverty. Most students from poor households leave school at the secondary level with few skills to enter the labor market. For example in Jamnaica, almost one half of students finishing the secondary level all-age schools (which are largely attended by the poor) are functionally illiterate. This is detrimental not only for the poor, but also for the longer- term growth prospects of the Region. Skills training. There are many different types of public and private training programs in the Region which aim to address problems of low skills levels, high youth unemployment, and displacement of workers. Training programs are important both to employers and workers, yet they are expensive. The nature and organization of these programs in the Caribbean varies considerably, with the adult education and private employee training most cost effective. A major weakness of many of the training schemes is that they are not closely linked to the needs of the labor market. This is due to limited labor market information systems and weak dialogue between public institutions and employers in many countries. 28 I The characteristics and causes ofpoverty Access to training programs by the poor is limited. The poor mainly work in the informal sector where businesses are small, and often unwilling or unable to invest in training. As programs are relatively expensive, most operate on a cost-recovery basis which may be prohibitive for the poor. There are, however, several programs linked to micro-enterprise development which have been beneficial for some. These programs are discussed in Chapter 2. Youth training is particularly relevant as unemployment rates among youth are high. Until recently, skills training for unemployed youth rested with government ministries. Government programs have found it difficult to respond to the changing needs of the labor market, and to provide up-to-date equipment because of bureaucratic and fiscal pressures. In some countries programs have shifted to the private sector and parastatals (for example HEART in Jamaica, SERVOL and YTEPP in Trinidad). In addition to vocational skills training, some of these programs offer basic literacy and numeracy training, entrepreneurship, career planning and attitudinal training. Such initiatives hold promise for enabling vulnerable youth to enter the labor market. A proposal for a Caribbean Youth Start Project which has recently been developed by OAS/CARICOM addresses many of the needs related to skills training for youth. Financing for this initiative has not been identified though national governments have supported its objectives. Health. Much progress has been made in the area of health status in the Caribbean. Most countries have emphasized the provision of health care for all citizens and have an extensive health care network that is provided free of charge or on a cost recovery basis with a waiver available for persons who cannot afford the fees. However, the decline and inefficient use of resources in many countries has resulted in low-quality services. Although the major causes of death are now chronic diseases,34 there has been a resurgence of communicable diseases in several countries. In Belize, the Dominican Republic, Guyana, Haiti, and Suriname, deaths from communicable diseases such as malaria, cholera, dengue fever, and respiratory tract infections have increased in recent years. There has also been a sharp rise in morbidity due to violence and sexually transmitted diseases (particularly HIV/AIDS) in several countries, which has put additional pressure on the health care system. On the whole, the health care structures throughout the Caribbean do not display gross inequities. Use of health services by the poor is generally high in the countries where it was possible to measure this. However, many of the services offered, particularly in the smaller clinics, are of low quality, which has the greatest impact on the poor, who cannot afford to seek private health care. There is substantial variation between the poor and nonpoor in the types of health facilities visited, with the poor more likely to attend primary health care facilities that are understaffed and only offer limited services. In fact, 34 Chronic diseases now account for approximately 40 percent of deaths in the region, with heart disease and malignant neoplasms the most common. 29 Poverty reduction and human development in the Caribbean less than 25 percent of resources are allocated to primary care in most countries (except Haiti), while a disproportionate amount of health budgets goes toward expensive, hospital-based care that tends to benefit better-off urban groups. In addition, the poor are less likely to seek preventive care, suffer from a greater number of days lost due to illness, injury, or impairment, and often cannot afford the cost of pharmaceuticals, which must be purchased in the private sector because they are rarely available in the public system. Finally, persons working in the informal sector and the unemployed, many of whom are poor, are not covered by any kind of national health insurance, which increases their vulnerability to the cost of illness. 30 Poverty alleviation efforts and coping mechanisms Every country in the Caribbean has some form of social safety net for those, who for various temporary or more permanent reasons, are not able to participate in the labor market. In addition, family members and communities have found ways to alleviate poverty during difficult times through community based initiatives, migration, remittances from relatives abroad, and seeking new sources of income. Yet with declining resources, rising poverty, and an aging population in many countries, public expenditures and the safety net system are being strained in most countries. The informal safety net of the extended family is also coming under pressure. Changes in the economic, political, social, legal, and demographic environment have all served to weaken family systems of support. Fertility rates have fallen, but medical progress has continued to extend life expectancy for the old; as a result, there are fewer young people to take care of their increasingly long-lived parents. Changes in the living arrangements of families and increased labor mobility and migration have further exacerbated this trend. At the same time, community groups, which have evolved as important players in developing and implementing local projects, are also receiving fewer resources from charitable organizations and other donors. To address the needs of the poor in this environment, it will become more and more necessary to form new partnerships between government, the private sector, NGOs, and other groups and to ensure efficiency in the delivery of services. This chapter reviews the coverage and effectiveness of the various aspects of the safety net and identifies key areas for strengthening these efforts. The first section covers the formal safety net-government programs such as social security, social assistance, and other programs with alternative designs (social funds, public works, training programs, and microenterprise development)-and the second section reviews the informal safety net-the role of the family, community participation, and migration. The formal safety net The social safety net systems in Caribbean countries typically combine three elements: (i) social insurance concerned with the provision of security and the spreading of income over the life cycle, (ii) means-tested social assistance (or public assistance) designed to alleviate poverty, and (iii) categorical transfers directed at redistribution between specific groups. Each country places a different weight on the types of social security offered, with benefits in the form of cash payments, in-kind transfers, and the provision of services. Table 2.1 shows the range of benefits for the various target groups: children, low-income families with children, the Poverty reduction and human development in the Caribbean elderly, the unemployed, and the disabled. Overall, expenditures on safety net programs average 1.6 percent of GDP (SA, Table 12). On the whole, the existing safety nets in the Caribbean offer inadequate coverage and level of benefits. Although social insurance plays a key role in poverty alleviation, particularly among the elderly, the real value of benefits has declined over time, and individuals employed in the informal sector are generally not covered by national insurance schemes. With the exception of Barbados, there is also no provision for unemployment insurance, nor are the unemployed eligible for social assistance. Social assistance programs tend to have high administrative costs, yet benefits are low and coverage in many cases is restricted to a relatively small proportion of the poor. Given that there are long waiting lists in many countries and that only the destitute are entitled to such benefits, these high costs are a major cause for concem. In addition, very few programs in the region have a rehabilitation component aimed at moving people off welfare. All of these issues merit some reform of safety nets to meet the needs and resource constraints facing most countries. Table 2.1 Range of safety net programs in the Caribbean Program Target groups National insurance schemes Elderly, disabled, ill, injured Non-contributory old-age pension Elderly Social or public assistance Low-income families, elderly, disabled In-kind assistance, food stamps Low-income families, elderly, disabled School feeding, school uniforms, transport School-age children Social find Poor communities, elderly, low-income families Public works Unemployed Youth training programs Unemployed youth Microenterprise development Working poor, unemployed Residential homes Elderly, disabled Note: See Annex IV for country-specific coverage. Social insurance The national insurance schemes (NIS) in the region are at various stages of maturity, with steady growth in both the coverage and range of benefits offered (Annex IV, Table 1). In addition, a few supplementary pension programs are limited to higher socioeconomic groups. In many countries the age structure of the population has changed, putting pressure on social insurance schemes. In 1960 the population aged sixty-five and older accounted for just 6 percent of the total population of Barbados. By 1990 this proportion had doubled to 12 percent. Nearly a third of the 31,000 persons aged sixty-five plus in 1990 were older than eighty, with two-thirds of all elderly persons being women. Similar trends have occurred elsewhere in the Caribbean. The elderly (persons older than sixty) comprise around 10 percent of the total population in Jamaica, St. Lucia, and Trinidad and Tobago, 12 percent in Dominica, and an astonishing 20 percent in St. Kitts and Nevis (mainly the result of emigration of the younger population). The rise in the dependency ratio and fall in the number of contributors relative to beneficiaries have implications for the level of income support available through social insurance later in life. For countries with a large informal sector, there may be 32 2 Poverty alleviation efforts and coping mechanisms added pressure on social assistance as the result of a rise in the number of elderly people retiring with litfle or no pension entitlement and without other means of support. However, the region as a whole is demographically diverse-in 1991 in Belize, 46 percent of the population was less than fifteen years old, and only 9 percent was fifty-five and older; in the Dominican Republic only 3 percent was older than sixty-five. Coverage. In principle, in all countries, membership in the national insurance scheme is compulsory for employees of working age. However, in practice this is rarely the case. By definition, workers in the informal sector are not covered. This is a particular problem in countries such as Belize and Guyana, where a large proportion of the labor force, particularly the poor, is active in the informal labor market. Groups outside the labor force, such as recent school leavers, female homemakers, and the handicapped, are not covered by the NIS. For example, in Belize, Dominica, and Grenada, less than 25 percent of the population of pensionable age receives a pension income. Alternatively in Barbados and Trinidad and Tobago, coverage is as high as 92 and 82 percent, respectively (Annex IV, Table 3). In addition, there are problems of noncompliance on the part of employers. Some fail to pay their contributions altogether, while others fail to submit the returns necessary to identify on whose behalf the monies are paid. The combination of these factors can result in unequal coverage, with the poor more likely to be excluded than the rich. Range of benefits. The type of benefits offered by the NIS are relatively analogous across countries, but the level of benefits varies considerably (Annex IV, Table 2). All schemes encompass both short-term benefits (sickness and maternity and, in some countries, employment injury) and long-term benefits (old-age pensions and invalidity and survivors benefits). Some schemes also include benefits for employment injury. Only Barbados covers the unemployed. In addition to the contributory pension, in some countries the NIS also provides social assistance by way of a noncontributory old-age pension. In these cases, contributions are used to provide for the income security of contributors, as well as to alleviate poverty among those who did not work in the formal sector or did not have the opportunity to contribute sufficiently to secure a pension to meet minimum needs. The proportion of the elderly population in receipt of pension income is greatest in countries where such a noncontributory pension exists (Annex IV, Table 5). The range is wide-in Barbados and Trinidad and Tobago, coverage of the elderly population is more than 80 percent-yet in Belize, coverage is less than 10 percent of persons over the age of sixty, leaving the majority of the elderly out of the social insurance system. Benefit levels. Benefit levels have not kept pace with inflation and are now quite low. Although replacement rates at retirement appear to be reasonable at 30-60 percent of average insurable earnings (usually calculated as the average over the last three to five years of employment), few of the systems have indexation of either contribution ceilings or benefit levels. Instead the NIS relies on ad hoc increases to keep pace with increases in the cost of living. For example, inflation has made contribution ceilings in the Trinidad and Tobago NIS irrelevant to the extent that even recipients with the maximum contributory pension are eligible 33 Poverty reduction and human development in the Caribbean for the noncontributory old-age pension (Annex IV, Table 8). In Belize, the basic level of benefits has been increased only once since the scheme was established in 1981, resulting in a significant fall in benefits in real terms (relative to the average weekly wage). Alternatively, in St. Lucia all pensions in payment must be increased 5 percent at least every other year. This is to compensate for the eroding effect of inflation and to provide an adequate level of protection to the recipients (Annex IW, Table 10). Financing of NIS. All of the national insurance schemes in the region operate on the basis of defined benefits (Annex IV, Table 2).3 In such schemes, the current work force bears the risk that the economy will not do as well as expected or that people will live longer than expected. Since most of the schemes are relatively young, with a high ratio of contributors to beneficiaries, ma,,y schemes are also building up funds (Annex IV, Table 5). Most of the schemes operate without, or with a relatively low level oft finance from general revenues, with the exception of the NIS in the Dominican Republic.36 Administrative costs can be quite high, varying between 15 and 30 percent of expenditures, where information is available. Inpact on poverty. Even though social insurance schemes are not specifically designed to redistribute resources across income groups, they do play a major role in alleviating poverty among the old, particularly in countries where coverage is high, such as Trinidad and Tobago. Dependent and survivor benefits help to reduce poverty among older women and young families whose breadwinner has died. However, national insurance schemes are not efficient at reducing poverty where coverage is low or where minimum benefit levels are inadequate. In general national insurance schemes incorporate features ensuring progressivity. However, in almost all countries the current ceiling on contributions is too low, which tends to reduce progressivity. Most of the Caribbean schemes use a progressive benefit formula with a minimum pension guarantee, which essentially redistributes contributions from higher to lower income groups. Full pensions are guaranteed with relatively few years of contributions, the most extreme example being Jamaica, where only three years are required in contrast to the twenty necessary in Haiti. Where they are used, earnings-related formula tend to be compressed, with the maximum and minimum fairly close together-again securing progressivity. For example in Barbados and Guyana, the range is 40-60 percent. In the Bahamas and St. Kitts and Nevis the range is less compressed, with a minimum of 15 and 16 percent, respectively. Average insurable earnings tend to be calculated based on the monthly average earnings over the last five to ten years. This favors groups whose earnings rise with age, most notably the professional classes and the civil service. However, application of an alternative 35 In defined benefit plans the pension formula is defined in advance, and benefits depend on years of employment and salary over a particular period. 36 Data were not available for Trinidad and Tobago, but it is expected that, given the importance of noncontributory pensions in poverty alleviation, general revenues are also of importance there. 34 2 Poverty alleviation efforts and coping mechanisms formula using lifetime average earnings would disfavor persons with interrupted earnings histories and periods of part-time work. A formula based on the best ten years rather than the last ten years (or the best in the last ten) would result in greater progressivity. There are, however, practical problems with this method, particularly with regard to uprating past earnings to present values. An interesting innovation has been made to the calculation of pensions in St. Lucia. Previously a basic pension was awarded, and 1 percent was added for each additional year of contribution over the minimum. The new formula has been changed so that 0.1 percent is added for every month, ensuring that even if a contributor does not have a complete year over the basic contribution, consideration will be given for the fraction of the year. This is particularly favorable for women who may have interrupted years of contribution. Social assistance Various programs, both cash and in-kind, provide assistance to the poorest and most vulnerable in society. The most common are the public assistance programs administered through the ministry of social welfare.3" In addition to cash transfers to low-income families, assistance in kind includes emergency relief in the event of fire, furniture allowances, elderly care homes, homeless shelters, and meals.38 Social welfare departments also usually have responsibility for a number of other social programs, particularly in matters of child welfare, such as child abuse, foster care, and adoption. The combination of responsibilities means that individual officers are well placed to know which are the most vulnerable families in their area. Yet in some of the bigger countries, this is poorly coordinated and results in some administrative duplication. Many other safety net programs are delivered through various ministries in the form of school feeding programs, grants for school uniforms, school transport waivers, low-income housing, and food packages. Because some of these programs are targeted to the same groups who receive public assistance, there may be duplication in benefits and in administrative costs. Lastly, there are programs with alternative designs such as the social funds, public works, mnicroenterprise development, and youth training. Most of these programs have been introduced in response to macroeconomic shocks and policy changes. Because they often 37 There is no system of social assistance in Guyana, but cash payments to low-income families are made from the social improvement fund. In Belize, cash payments from the social assistance program are supplemented by payments from the social fund. In Jamaica, there has been an explicit policy to reduce the scope of benefits available to the able-bodied. Poor relief and public assistance, providing cash grants, are now limited to persons of retirement age and to persons who are permanently incapacitated. In 1994, family assistance was granted to only thirty-eight cases. Assistance to groups other than the elderly is almost exclusively in kind, channeled through the food stamp program, which has recently been extended to include an explicit rehabilitation component. 38 House fires are frequent throughout the region and continue to result in considerable loss to many Caribbean families. Less than 25 percent of homes in Barbados are covered by insurance, and it is likely that the prevalence of home insurance is even lower on some of the other islands. 35 Poverty reduction and human development in the Caribbean operate through the traditional bureaucracy and are funded through international and bilateral agencies, they reach more beneficiaries than the traditional programs. Public assistance programs. The roots of public assistance in the English-speaking Caribbean are found in Britain's poor law. This legacy has affected the structure of systems, specifically by regarding most assistance as welfare of the last resort for individuals who are completely destitute. Few schemes provide for the able-bodied or groups excluded from the formal labor market. On the whole, the proportion of the population in receipt of public assistance is low, as is the level of benefits themselves. In countries with traditional public assistance, the proportion of the population in receipt of benefits does not exceed 3.5 percent (in Barbados) and is around 1.5 percent in Belize, Grenada, and St. Lucia (Annex IV, Table 7). Eligibility criteria are stringent and often highly subjective, excluding some poor groups from receiving benefits. Even where criteria are met, people may still be excluded by a lack of funds. For example, in Grenada there is a waiting list for the welfare allowance for the aged, leaving persons in need waiting for another recipient to die before they can receive the allowance. With regard to targeting, most public assistance programs appear to be fairly well targeted. Most countries have removed regressive, universal subsidies, and there are no universal cash transfers for family and child allowances. Although there are no data on the targeting of public assistance cash transfers, given the low level of coverage and the existence of waiting lists, it is likely that these transfers are well targeted despite the lack of a formal means test. The main errors are likely to be errors of exclusion because of stigma and subjectivity of the means test. Some of the other programs such as the school feeding programs are not as well targeted, and thus there is scope for making targeting more efficient (Annex IV). As with social insurance, the benefit levels offered under public assistance are often very low and fail to provide an adequate standard of living (Annex IV, Table 10). Rough calculations for the countries where data are available show that benefits are only equivalent to one-quarter of the required consumption level for a minimum food basket. Because most public assistance schemes are faced with limited budgets and staffed by persons with little or no training in social work, there are no rehabilitative programs to move individuals off public assistance. In addition, the eligibility criteria in some countries may provide the wrong kinds of incentives for families (for example single headship may induce family break-ups so that they can become eligible for benefits.) Other safety net programs. In addition to these traditional systems of social assistance, several countries have introduced altemative systems of support: food stamp programs, public works, social funds, youth training, and microenterprise development. These programs are innovative and have benefited many, although targeting could be improved. 36 2 Poverty alleviation efforts and coping mechanisms There is currently a social fund in Guyana, with similar efforts planned for Belize, Jamaica, and Trinidad and Tobago in 1996. In general, social funds are intended to implement a variety of subprojects based on the varying needs of different groups, areas, and communities. They have flexible resources and high visibility and have been used to increase community participation in the development of subprojects. The social fund in Guyana, SIMAP, has been successful in implementing projects, particularly in the country context. To facilitate implementation, the agency has been granted some exemption from standard bureaucratic processes and a slightly higher salary scale than the civil service to attract qualified staff. Projects have provided physical infrastructure for water and sewage systems, marketplaces, schools, and health clinics, nutrition supplements, skills training, and cash supplements for old- age pensioners. Although implementation has been slow, the fund has benefited many low- income households. The Caribbean has less experience with labor-based public works programs than other parts of the world (for example, South Asia). Several countries have such programs, but employment experience and poverty alleviation are not their primary objective. Rather public works are seen as a vehicle for infrastructure development. One important consequence of this is that the wage rates offered under public works are not fixed, but rather determined by the market. Wages in several infrastructure projects in St. Lucia are currently above those received in the agricultural sector, and as such they do not allow any scope for self-targeting by the poorest. The poor do benefit, directly from wages and indirectly from better roads, but the second-round benefits reach substantial segments of the nonpoor as well. Additionally because public works are geographically located in areas where infrastructural activity is concentrated, the regional dispersion of public works does not necessarily coincide with the regional dispersion of unemployment. In St. Lucia, nearly two- thirds of the unemployed are located in rural areas where the outreach of public works is sparse. More objective targeting of projects would increase transparency and allay concerns about political favoritism in the allocation of jobs. Public works could also be extended to go beyond infrastructure and into rural agricultural activities and the building and maintenance of infrastructure in the social sectors. Such a strategy could combine income generation with crop diversification and productivity enhancement in agriculture. Microenterprise development Several government and nongovernmental initiatives encourage small business development and can be seen as part of the wider social safety net. There is extensive evidence that access to savings, services, and micro loans can raise and stabilize the incomes of the poor. Low-income women particularly benefit from such loans, because many are involved in self-employment activities. In some cases, it is not only access to credit that is problematic, but also training in basic business skills such as accounting, financial management, and other skills. The formal financial services sector in the Caribbean has shown little interest in taking on what it considers to be high-risk loans for small projects with high administrative costs, usually operated by persons with little or no business experience. As a result, a 37 Poverty reduction and human development in the Caribbean number of nonbanking agencies have emerged to assist potential microentrepreneurs in the region (for example, national development foundations, Small Enterprise Development Units (SEDUs), and youth enterprise programs, see Annex IV). Several program designs have had positive impacts on the poor and have attained an acceptable level of financial Box 2.1 Facilitating microenterprise development: the hucksters association in dominica Hucksters (also known as higglers or traders) have always comprised an important part of the informal labor market in Dominica (and most other countries), mainly trading agricultural products (fruits, vegetables, and cut flowers) with surrounding islands (Guadeloupe and Martinique). A few send their goods to markets in the United Kingdom and the United States. Hucksters are primarily women (often wives of small farmers) from poor rural households. The weekly schedule can be quite rigorous- for example, a huckster would typically secure the paperwork and travel to Guadeloupe on Monday for the wholesale market that caters to cruise ships and hotels on Tuesday and Wednesday. They then travel back on Thursday or Friday. Some have begun importing goods and produce that are not easily accessible in Dominica (white potatoes, onions, yogurt, vehicle parts, clothing). They then sell these items in Dominica at the Saturday market and get the next shipment ready on Sunday to begin the routine again on Monday. Because many of the hucksters are women, they may also have child care responsibilities to attend to. Huckstering can be quite profitable. Some individuals make up to EC$200-EC$4,000 (US$74- US$1,480) per week or about 40 percent of the value of their produce. Those who have regular customers for their produce (such as the school feeding program in Martinique) do particularly well. The Hucksters Association was established in 1983, with a grant from the Inter-American Foundation to create a revolving loan program and assist hucksters in finding markets for their produce. To qualify for membership, individuals must be exporters of agricultural produce. The association has grown substantially to a maximum capacity of 400 members (limited by the number of visas for hucksters) and has become completely self-financing. The association now has a staff of six (with administrative costs of EC$10,000 per month) and offers the following services to meet the demands of its members (on a fee-for-service basis): * Loans (which are granted using the peer system, in which another huckster must co-sign and is responsible for repayment if the borrower does not honor the agreement) * Preparation and processing of shipping documents, visas, and relevant correspondence * Negotiation of rates with transportation companies and overseas officials . Sale of appropriate packaging materials * Market research on the demand in surrounding island markets * Free training in business management, postharvest techniques, licensing procedures, sensitization of the competition in the market or areas of comparative advantage, and skills for coping with overseas administrators * Free counseling. The success of the Hucksters Association has been attributed to several factors: (i) there has not been any staff turnover since 1984, which enables continuity in achieving program goals, (ii) the peer system of lending etcourages the repayment of loans, (iii) the small size of Dominica makes the association manageable, (iv) the association collaborates well with government, and (v) all members are involved in decisionmaking through voting power. Current problems facing the association include (i) the smuggling of drugs with the produce, (ii) the bringing in of unregulated crops (for example, mangoes) or failure to obey regulations on the preparation of produce, (iii) an excess supply of products, and (iv) harassment of women (financial and sexual) by officials in the other countries. Source: World Bank mission 1995. 38 2 Poverty alleviation efforts and coping mechanisms viability. For example, community lending programs may have components which reinvest resources into community-based projects, can build social capital, and strengthen local institutions. Although these programs are best operated outside the public sector because they offer financial services, governments also need to play a key role in stimulating the growth of microenterprises through more supportive policy and regulatory frameworks that simplify the process of business creation. Box 2.1 provides an example of how microenterprise development can benefit the poor. The informal safety net The family, the community, NGOs, and community-based organizations constitute an extensive informal safety net There has always been a strong tradition of self-help and mutual aid in the Caribbean. These informal systems are not a substitute for formal safety nets, but they do complement efforts to assist persons in need. Notably, informal systems have limited ability to redistribute income from rich to poor, except perhaps within families. Also, even where informal support systems are strong and functioning well, some people will not be able to rely on such support-those who have never had children, those whose children have died or moved away, or those whose children just do not earn enough to assist. The role of the family The extended family has historically acted as a safety net both for elderly members and for younger members entering the labor market or starting their own family. The family pools the risk of unemployment among its younger members. Social sanctions within close-knit communities have reinforced these institutions. Adult children who do not care for an elderly relative face ostracism by the wider community. For elderly persons without relatives, the community itself often provides support out of a sense of responsibility. Accordingly, the majority of elderly people continue to be cared for in the community. Aging women in Jamaica are most likely to be living with their offspring, usually a daughter, if they are no longer living in their own home (Rawlings 1991, 1994). Similarly in Dominica, nearly half of elderly persons live with family members (and a further 27 percent live with their spouse only; see REACH 1992). The likelihood of living with children is much greater for women than for men, while the majority of residents in elderly people's homes are older men, despite women's longer life expectancy. This differential may be attributed to greater neglect by men of their partners and children in earlier years, resulting in more men losing touch with family networks altogether. The family remains an important source of support in old age, irrespective of whether the elderly person resides in the same household as other family members. A study in Barbados found that more than three-quarters of elderly persons received help from their children. This help included both cash and in-kind support. In Dominica, 37 percent of the elderly receive regular financial help from family members, although there are marked gender differences, with 47 percent of all elderly women receiving such financial support compared with only 20 percent of elderly men. The gender differential is reversed with regard to receipt of welfare income (social security payments or pension), with 29 percent of older women and 46 percent 39 Poverty reduction and human development in the Caribbean of older men relying on such support. In Trinidad and Tobago of persons older than sixty, 32 percent receive income from the faniily and 61 percent receive income from a pension or welfare. However, this pattern may shift in the future. Recent changes in the economic, political, social, legal, and demographic environment have all weakened family systems of support. These include factors such as an aging population, increasing urbanization and therefore overcrowded living conditions, and changes in the concept of familial responsibility. Family structure and the extent of its role in social support are also influenced by migration flows. Migration patterns have led to the concept of the "transnational" family. Parents frequently leave their children with grandparents to search for new opportunities, and this practice has negative as well as positive outcomes. On the one hand, older people benefit from the company of their grandchildren, who provide support in their advancing old age and dependency. On the other hand, caring for one's grandchildren produces economic and social pressures, especially when financial obligations are not met by the absent adult children. The role of community participation Community participation is an important element in the success of many poverty reduction efforts. When projects are initiated at the community level, they are identified and developed by persons who are most in need. The process can build strong consensus and commitment, icading to greater sustainability, greater adoption of new practices, and better use of services. Community development is not a new concept in the Caribbean. Throughout the region, there is a long history of communitarianism, in part due to the small size of the countries. With the recent changes in the macroeconomic environment and the move toward privatization, decentralization, and deregulation, local government and community development activities have grown in importance. In addition, there has been heightened awareness of the work carried out at the community level by government and international agencies through the recent conferences sponsored by the United Nations (such as the Social Summit and the Women's Conference). This has proven to be a positive shift, because the public sector has fewer and fewer resources, and community groups have shown that proximity makes them more effective in addressing the needs of the poor. Community-based activities in the region include activities that have been initiated by local NGOs and community-based organizations, international NGOs, international financial institutions, and donors. An extensive system of local government has helped to facilitate community-based initiatives. Many examples from the Caribbean highlight the strengths and weaknesses of these efforts (Annex VI). Among the lessons are the importance of: * Collaboration between all groups-central government, local government, NGOs, labor, business, and credit unions. * A demand-driven basis for projects. 40 2 Poverty alleviation efforts and coping mechanisms * An understanding of local needs and, where possible, work with existing social structures. * Strong leadership within communities. * A need for long-term financing to sustain efforts that eventually should come from revolving funds, cost recovery, and other independent sources. * Links with NGO umbrella organizations that should provide assistance in advocacy, collaboration, and skills training, particularly in areas such as project management, leadership, and administration. * Mechanisms for generating resources at the local, national, and international level. * A recognition that many individuals need to change their attitude (through training) away from apathy and toward self-empowerment. Nongovernmental and community-based organizations. These groups play a central role in community development and are responsible for many of the successes achieved in the region. They are usually value-based, operate independently from government, and depend, in part or in whole, on charitable donations and voluntary service. Many groups in the Caribbean have been set up and managed by women, with activities broadly defined in the following areas: the provision of social and welfare services, the promotion of community economic development, environmental conservation, and advocacy. Although the scope of work, level of activity, organizational capacity, and size of NGOs vary greatly, the presence of these organizations is important in all Caribbenn countries. For example, there are an ,stinateu' 3OC N(GOs in T4aiti, 300 in Guyana, and 110 in Belize. Many successful and innovative community-level projects have been initiated, financed, and managed by NGOs. They range from the large Self-Help Commission in Trinidad and Tobago that, through government and international grants, has financed approximately 1,000 community-level projects since 1987 to a small local NGO in St. Vincent that provides adult literacy training and has set up a library and pharmacy in a small farming community. In Haiti, where public sector institutions have all but broken down, local and international NGOs supply health services to an estimated 1.5 million people. Although these groups play an invaluable role in fostering community participation, addressing several constraints could make them more effective. First, many NGOs (particularly the smaller ones) lack skills in areas such as management, accounting, and general administration. Second, many groups operate in the absence of a clear legal and regulatory framework, which limits accountability. Third, in countries where an umbrella organization does not exist or is weak, there is a lack of coordination among groups and duplication in many efforts such as fund-raising, advocacy, and training. Some NGOs must spend 40-50 percent of their time on fund-raising activities. Collaboration on these efforts could save valuable resources, while enabling many groups to strengthen their efforts. And fourth, the general decline in financial assistance to the region has 41 Poverty reduction and human development in the Caribbean particularly affected NGOs, which depend largely on grant finan'-ing. With this finding crisis, the future viability of many NGOs in the region is now uncertain. Finally, it is important to recognize that NGOs do not have the capacity or the desire to supersede the role of government or to take on the fundamental responsibilities of ensuring the delivery of basic services. NGO3 can work most effectively as catalysts of grassroots involvement and voluntary efforts, in helping to cater to the specialized needs of particular groups. The value, therefore, of collaboration with government cannot be underestimated. National and regional networks of NGOs. Several networks and federations of NGOs are operating at the regional level with a wide range of functions.39 Moreover, various national umbrella organizations,40 to varying degrees, have been strengthening NGOs in their respective countries, collaborating in fund-raising activities,4" and working with their governments on relevant issues. In some countries, such as Guyana, the absence of such an umbrella group often means a lack of coordination in activities, no opportunities for skills training, and weak ability to generate funds from overseas. Many of these groups have taken on major roles in the area of advocacy, presenting proposals for alternative development approaches with tools to implement these innovations. However, to move forward, there is a need to collaborate better with governments, international organizations, and the private sector. Currently, some of these groups appear antagonistic toward such collaboration, which, if appropriately organized could prove beneficial for all. Local government and community development. Some form of local government exists in most Caribbean countries, and its administrative structure is generally 39 The most comprehensive of these organizations is the Caribbean Policy Development Center in Barbados, which is primarily involved in advocacy with govermnents and intemational organizations, addressing issues such as the impact of adjustment programs, women's issues, rural agricultural development, and economic development. Also at the regional level are the Caribbean Conference of Churches, the Caribbean Network for Integrated Rural Development, Women and Development, the Association of Caribbean Economists, the Caribbean Association for Feminist Research and Action, Caribbean Rights, the Caribbean Conservation Authority, and the Caribbean Association of Media Workers. At the subregional level in the Eastern Caribbean are the Peoples' Development Agency, the Windward Island Farmers' Association, and the Eastern Caribbean Popular Theater Organization. 40 These national networks include in Belize, the Association of National Development Agencies; in the Dominican Republic, the Economic Research Center Incorporated; in Grenada, the Inter-Agency Group of Developmental Organizations; in Haiti, the Haitian Association of Voluntary Agencies; in Jamaica, the Association of Development Agencies, the Association of Women's Organizations of Jamaica and the Council of Voluntary Social Services; and in Trinidad and Tobago, the Network of NGOs of Trinidad and Tobago and the Foundation for the Enrichment of Life. 41 For example, several NGOs in Grenada recently launched a fund-raising trip to North America to mobilize resources from the Grenadian community in several cities. Many NGOs benefited from the collaborative effort. 42 2 Poverty alleviation efforts and coping mechanisms well situated for coordinating between communities, NGOs, and central government and for promoting participation of the community in civic affairs, community development, and poverty reduction activities (see Table 2.2). In addition, the attempts of central governments to stimulate economic growth are likely to improve significantly with assistance from local government, particularly when central government uses the manpower resources at the local level and provides input toward upgrading the performance of local government workers (see World Bank 1993b). Table 2.2 Status of local government in the Caribbean Entire island a local Constitutional and legal Informal local No local government system local government system government system government system Nevis Belize St. Lucia Bahamas Tobago Dominica St. Vincent and the Barbados Jamaica Grenadines Grenada Guyana St. Kitts Trinidad and Tobago To be fully effective, local governments should have constitutional or legal status that enables the establishment of councils as statutory bodies. This gives local authorities the legal authority to act fully as development agencies, to be elected, to have well-defined financial autonomy, and to act as community development and empowering agencies as part of their constitutional and legal mandate. Of the constitutional and legal systems of local government in the Caribbean, the most articulated model is in Guyana, where the legitimacy of the local government system is included in the constitution and where local governments are represented in the Supreme Congress, a central state body. The most autonomous system appears to be in Trinidad. As with NGOs, there are several successful examples of how local government has fostered community participation in poverty reduction. These examples show how government has worked with communities to identify their needs, plan how to meet them, and implement an agreed plan (see Box 2.2). In carrying out projects, communities have also mobilized supplemental resources to add value to the limited financial and material support provided by local and national government, other interest groups, and the international community. Aside from these successes, many local governments in the region suffer from circumscribed legal authority to act autonomously and from weak implementation capacity. 'These factors negatively affect their ability to foster community-based development. Although the function, size, and authority of local government vary substantially from country to country, most of the structures would benefit from having stronger institutions, which can be achieved through more training and resources. Unlike NGOs, their powers and roles can be more readily systematized and formalized into constitutional and legal frameworks and should therefore reflect transparency at all levels. 43 Poverty reduction and human development in the Caribbean Migration An important coping mechanism for many individuals in the Caribbean has been migration. Movement both from the Caribbean and between islands has been significant. In fact, in recent decades, the level of migration as a share of the population has been higher than that of any other region in the world, estimated at an average of 12 percent of Box 2.2 Local government in Dominica: An approach to popular participation Dominica has a particularly high level of community participation, stemming from its system of local government. Local government in Dominica is intended to encourage local autonomy and popular participation in the country's decisionmaking process. The system was introduced about 100 years ago and has evolved into a network comprising thirty-eight local councils (three municipal, one Carib, and thirty-four village councils). Most of the councils have eight members (five elected and three appointed by the minister of community development) who serve for three years. The councils generally have representation from various political parties. Local government councils are popularly elected and empowered by law to regulate and administer affairs in their respective areas. The councils are not fully autonomous, receiving their authority through central government. Local councils are responsible for the development and maintenance of basic amenities such as roads and sanitation and public facilities, the distribution of social assistance (social security, public assistance), and the provision of recreational and educational programs. The local councils are also designed to provide opportunities for residents to participate in the decisionmaking process at the local level through creating effective channels of communication between central government and local communities. As other community-based groups have evolved to address unmet needs, the local councils have also tried to facilitate coordination and avoid duplication of projects. Services provided through the local authorities are financed through local property taxes, grants from government, and fund-raising. The Department of Local Government and Community Development administers these subventions, oversees the operations of the councils to ensure transparency, and provides technical, administrative, and organizational support. For example, under the Self-Help Program, the ministry provides assistance in the construction of access roads and health, educational, and recreational facilities. Typically, a community will submit a proposal through the local council and will receive material, transportation, skilled labor, and technical assistance from the ministry in return for community participation in the project. The structure of local government in Dominica has encouraged participation and provided a mechanism for effective governance. Some of the problematic aspects are related to the lack of autonomy and conflict of interest between the councils and central government. In addition, some councils have not actively collected taxes, limiting their financial base. The most successful councils attribute thcir success to strong leadership and involvement of the council chairperson. Source: World Bank mission 1995 and Department of Local Government and Community Development 1994. the population living in the wider Caribbean region in the 1980s (the total population is about 20 million). Most of the migrants leave for economic reasons: better opportunities and higher living standards. The majority are under thirty, with equal proportions of men and women (see Carlson 1992). Geographic proximity and perceived opportunities make 44 2 Poverty alleviation efforts and coping mechanisms North America a common destination, followed by England and other countries within the region.42 The high levels of migration affect the economy, labor market, poverty, and family structure in several ways. Migration provides a safety valve for individuals who are unable to find employment, remittances from family members abroad, and income security for many of the elderly. As a safety valve, it has likely kept the total numbers of poor in the Region down. Migration also produces a shortage of skilled labor. Macroeconomic impact. Perhaps the most sizable effect of migration is the macroeconomic or economywide effect. On average, remittances account for approximately 6 percent of GNP (SA, Table 36). An estimated 36 percent of households in Guyana, 11 percent in Jamaica, 13 percent in Trinidad and Tobago, and 17 percent in St. Lucia report receiving some remittances. Labor market effects. As discussed in Chapter 1, a high proportion of the individuals who migrate are skilled workers. This drain on skills has likely reduced the pace of economic growth, slowed the overall process of job creation, and lowered the development potential in the region. Family impact. Apart from the economic effects, migration also has an important social effect. Migration can have a negative impact as many families are split up when one or more members migrate. In many cases one person in the household, often a parent and spouse (rather than the entire family), emigrates in the hope of eventually sending for the rest of the family. As household members leave, the family nucleus is eroded, often leaving a single parent or grandparents to care for children. The loss of one or both parents can disrupt the stability of the home environment and reduce the arnount of adequate supervised care the child receives. In some cases, these disruptions and lack of parental supervision can lead to vagrancy, drug use, alcoholism, and crime among the young (World Bank 1994a). Another consequence is that elderly parents are left alone. Social workers in several countries report an increase in cases where an elderly individual receives insufficient, infrequent, or no assistance from family members (Dominica, Grenada). Migration and poverty. Migration can affect the poor through several direct and indirect channels: (i) the migration of the poor themselves, (ii) remittances sent to relatives of the poor who remain in the country, and (iii) indirect labor market effects caused by domestic jobs left vacant by emigrating workers. Migration from the Caribbean is much more common among middle- and upper- income households than among poor households, and thus the poor receive little direct 42 In 1991 the total Caribbean population living in the United States was estimated at 3.5 million, with this number increasing by another 400,000 individuals during 1991-93 (SA, Table 45). These numbers represent the official figures only, which likely underestimate the full extent of migration. 45 Poverty reduction and human development in the Caribbean benefit from migration and remittances from relatives.43 In Guyana and St. Lucia, less than 10 percent of the persons who emigrate are from poor households (see Box 2.3). This is likely due to the fact that migration costs are quite high, enabling few poor workers to save enough to cover them." Costs also determine who receives remittances-for example, in Guyana, while more than one-third of all households receive remittances, only 13 percent of households in the poorest quintile receive them.45 Similarly, in the Dominican Republic less than 2 percent of the income of households in the poorest quintile is comprised of foreign remittances compared with 6 percent in the wealthiest quintile. Although the total proportion of poor households receiving assistance from relatives and friends abroad is quite low, these remittances are important for those households. Of the poor receiving remittances in Guyana, this assistance accounted for an average of one-quarter of total household income. Box 2.3 A profile of migrants from Guyana and St. Lucia Household survey data from Guyana and St. Lucia offer some insights into the individuals who have emigrated as well as the households they have left. On the whole, the households are slightly more likely to be located in rural areas, to be headed by a female, and to be better off economically than households that do not contain an emigrant. Of persons who have emigrated, slightly more than half are women, with the average age in both countries being thirty-three. Before leaving, many had completed some secondary school-close to 75 percent in Guyana and 47 percent in St. Lucia. For both countries, the majority of individuals moved to North America. While 27 percent of St. Lucian emigrants went to other Caribbean countries, only 12 percent of Guyanese stayed in the region. The principal reasons for leaving were economic, family, and study. A high proportion of emigrants sent either cash or in-kind remittances home, though only about half did so on a regular basis. Source: Guyana HIESILSMS 1993; St. Lucia SLC 1995. See Statistical Annex, Table 43. 43 This information is from the household surveys in Dominican Republic, Guyana, Jamaica, St. Lucia, and Trinidad and Tobago. The remittances include cash plus the imputed value of gifts and items received at concessional rates. These remittances may be underestimated due to the sensitivity of survey respondents to questions about income. 44 Estimates for other areas indicate that the costs of international migration can equal as much as fifteen months of local salary. If one includes the costs of subsistence in the new country while searching for a job, this figure would be even higher (L6pez and Schiff 1995). 45 Some households may be considered nonpoor because of the remittances sent by relatives. Some households in the higher income or expenditure quintiles would be below the poverty line if not for the remittances (this is not easiy accmnted for by reclassing households by income other than remiutances, because much of the remittances are probably imvested, yielding a significant part of the other income). 46 Annexes Annex I Measuring living standards There are many conceptual approaches which have been used to measure poverty. Approaches differ in terms of the importance the analyst attaches to the individual's own judgments about his or her well-being, generally classified as the "welfarist" and "non- welfarist" approaches.' Four measures are available for the Caribbean: those based on consumption measures derived from household surveys, community surveys, the human development index, and basic needs indicators. While the advantages and disadvantages of each approach is beyond the scope of this annex, an important concept to keep in mind is that value of measuring poverty is not in identifying a single unequivocal number for a place and time, but rather to find a standard measure to compare levels of poverty across subgroups in the population, over time, and under different policy circumstances. Of the data available in the region, only the consumption-based measures currently provide sufficient information to provide detailed analysis. Consumption based measures Household surveys. Standards of living as measured by household incomes and expenditures per capita is the methodology most frequently used in development literature. The household survey is an important basic tool for measuring poverty in that the data can provide information on the distribution of living standards in a country. Basing the analysis on consumption measures has the weakness of excluding important factors such as health, life expectancy, literacy, and access to public goods or property resources indicating the need to consider these factors as well in carrying out any poverty analysis. Surveys such as the World Bank Living Standards Measurement Study (LSMS) can measure the distribution of welfare and the level of poverty in households, how households react to the economic environment and government programs, and carry out complex analysis of relationships between the various aspects of household welfare. Such surveys have now been carried out in Jamaica (annually since 1988), Guyana (HIES/LSMS, 1993), Trinidad and Tobago (SLC, 1992), Belize (SLC, 1995), St. Lucia (SLC, 1995), and St. Vincent and the Grenadines (SLC, forthcoming 1996). Calculating consumption. Indicators based on household consumption expenditure and household income have been widely used to measure welfare and should l See Ravallion, M., 1992, Poverty Comparisons, A Guide to Concept and Methods, Working Paper, No. 88, World Bank, Living Standards Measurement Study, Washington. Poverty reduction and human development in the caribbean include all goods and income sources, and allow for inter-temporal variability. Consumption, rather than income is preferable in measuring living standards for three reasons: First, it is difficult to measure the income of those working in the informal sector-self-employed workers, and those who receive in-kind payments such as food or housing. Second, survey respondents regard questions about consumption as less sensitive than questions about income and thus responses are likely to be more accurate. Finally, consumption is considered to more accurately represent long-term living standards because income may fluctuate over short periods. Household consumption has been generally measured in the same way in each country where household survey data are available2, with some slight country specific differences. The consumption aggregate represents the sum of the value of total household expenditures on various foods, and non-food goods, such as schooling, medicine, clothing, transportation, housing, etc., the value of home-produced food items, the value of payments in-kind, and housing expenditures including the rental value of owner-occupied housing. In some countries where there is substantial variation in prices across regions (e.g., Guyana) a spatial price index was used in order to make standard comparisons of welfare across regions. The variation in consumption measures across countries is related to the inclusion of a use value on expenditures on consumer durables such as household appliances, furniture, and vehicles, expenditures on house repairs, and the use of adult equivalence scales. For example, in Trinidad and Tobago and Guyana the cost of consumer durables were not included because there was not sufficient information to derive a measure of 'tse value." In St. Lucia and Belize, an allowance of 20 percent of the cost of the purchase price of household durables was included in current consumption expenditure, the assumption being that items such as refrigerators have a life of about five years. Total household consumption is then divided by the number of persons in the household to derive a value for per capita household expenditure. All persons in the sampled households are ranked, from poorest to richest based on this value. Quintiles present the distribution of living standards with quintile 1 representing the poorest twenty percent of the population and quintile 5 referring to the richest twenty percent. Poverty lines. The poverty lines used in this report for Jamaica, Guyana, Trinidad and Tobago, the Dominican Republic, Belize and St. Lucia were all calculated using a similar methodology. The extreme poverty line was based on the average price for a minimum low cost food basket for a 2400 calorie diet collected during the time of the survey. All those individuals whose per capita household consumption value was below this line were classified as extremely poor. Poverty was then defined by adding an allowance for basic non-food goods to the extreme poverty line using information on the 2 This includes Jamaica (1988-1993), Guyana (1993), Trinidad and Tobago (1992), Belize (1991, 1995), St. Lucia (1995), St. Vincent and the Grenadines (1996) and the Dominican Republic (1991). 50 Annex I Measuring living standards consumption patterns of the poor or calculation of such goods by researchers. In most countries, this amount was equivalent roi'ghly 40 percent of total consumption expenditures. Poverty lines are included in the statistical annex Table 2. Poverty measures. The Headcount index, Poverty Gap and FGT P2 measure belong to a class of poverty measures proposed by Foster, Greer and Thorbecke 3 (FGT) and are commonly used in poverty analysis. The Headcount measure is the proportion of the population whose income is below the poverty line. The Poverty Gap is used to Box Li Jamaica's survey of living conditions: the successful use of household survey data for policy analysis The Government of Jamaica launched a Living Standards Measurement Survey in 1988 as a tool to measure the effectiveness of its Human Resources Development Program, a multifaceted initiative to revitalize the social sectors. The survey was largely financed through Government, supplemented by a World Bank loan, and then with some donor assistance. The survey sample is linked to the existing Labor Force Survey, and now carried out on an annual basis. Each year the survey incorporates a core questionnaire with an expanded module for a topic of special emphasis. The survey's development and analysis are overseen by the Planning Institute, which chairs the survey's steering committee comprised of representatives from the Statistical Institute, social sector line ministries, and the University of the West Indies. The Jamaican govermnent has commissioned Jamaican academics to use the data to set a poverty line, to compare food assistance programs, and to redesign the food stamps program. Staff from the Ministry of Health actively collaborated (with the RAND corporation) in studying the effectiveness of prenatal care, patterns in the quality of health care services, aging and functional ability, and patients' choice of health services, including willingness to pay for them. Other studies underway both by local and international researchers will eventually feed into background discussions of social policy. Furthermore, the data sets are being used in a quantitative methods course at UWI, which should help to stimulate more and better quantitative social policy analysis in the long run. In World Bank operations, the Jamaican LSMS data have been used in discussions of poverty, safety nets, targeting, and the reform of secondary education. To further the analytic capacity and use of the data in the country, a Social Policy Unit was set up in 1993 at the Planning Institute. The Unit is designed to build institutional linkages. disseminate information, coordinate training, carry out in-house analysis, and contract additional research as needed. Line Ministries and UWI have benefited greatly from this initiative. Source: Grosh, M. The "Household Survey as a Tool for Policy Change: Lessons from the Jamaican Survey of Living Conditions LSMS Working Paper No. 80, World Bank, Washington, D.C., and Grosh, M. and P. Glewwe, 1995, "An Introduction to the World Bank's Living Standard Measurement Study Household Surveys," LSMS Working Paper No. 120, World Bank, Washington, D.C. measure the depth of poverty for the population as a whole; it represents the amount necessary to raise the income of all poor individuals to the level of the poverty line, as a 3 See James Foster, J. Greer and E. Thorbecke, "A Class of Decomposable Poverty Measures," Econometrica 56(1984):173-177. 51 Poverty reduction and human development in the caribbean proportion of the poverty line. In other words, it is the aggregate poverty deficit relative to the poverty line. The FGT P2 measure is distributionally sensitive in that it is able to give weight to those who are very poor relative to the "mildly poor." Each individual is weighted by their degree of poverty, representing the aggregate of the square of each poor individual's poverty gap, as a proportion of the entire population size. Though it is difficult to interpret the P2 measure in an intuitive sense, it is useful for making comparisons across groups. Human development index This measure is calculated by UNDP4 and represents a composite of three basic components of human development: longevity, knowledge and standard of living. Longevity is measured by life expectancy. Knowledge is measured by a combination of adult literacy (two-thirds weight) and mean years of schooling (one-third weight). Standard of living is measured by purchasing power parity, based on real GDP per capita adjusted for the local cost of living. The HDI as currently designed only represents information at the national level and is therefore useful for cross-country comparisons only. Disaggregated HDI's are being attempted for certain countries with sufficient data (India, the US), which would make it possible to create separate HDIs by gender, income group, geographic region, or ethnic group. In addition, the HDI is based on indicators such as life expectancy and literacy which are almost always interpolations, with actual data collected only about every ten years. Using the HDI, many Caribbean countries have scored very high, placing living standards substantially higher than other developing countries. For example, Barbados was ranked number 20, Trinidad and Tobago 35, and the Bahamas 36, out of 173 countries (including OECD). Basic needs index (BNI) The BNI is a measure close to the HDI as it is based on similar variables, with the exception of the log of per capita income. It is designed to integrate indicators of education, health, sanitation and access to safe water in a composite index, and is calculated using two separate indices: an education index and a health index. The education index combines adult literacy rates and primary school enrollment rates while the health index combines measures of population per physician and infant mortality rates with percentages of rural population with access to health services, safe water and sanitation. The BNI is used to indicate the basic needs status of the population of a 4 See UNDP, Human Development Report 1995 Oxford University Press, New York. 52 Annex I Measur1ng living standards country in order to fill that gap in the estimation of rural poverty which ignores the flow of services from the state to the individual.5 The BNI can take values between one and zero, with a value closer to one representing higher basic needs status of the population of a country, and a value closer to zero representing lower basic needs status of the population. Countries are classified into three groups: Very needy (BNI < 0.50); Moderately needy (0.75 >BNI> 0.50); and Relatively less needy (BNI>0.75). The BNI for 32 Latin American countries (late 1980's) range from 0.439 (Haiti) to 0.926 (Barbados) with only Haiti falling into the Very needy category. Fourteen of the 32 countries are classified as Moderately needy and 17 fall into the Relatively less needy category. Integrated poverty index (1PI) The Integrated Poverty Index attempts to integrate a headcount measure of poverty is a measure of national income-gap ratio, where the ratio is calculated as the difference between the maximum GNP per capita of the group studied and the individual country GNP per capita as expressed as a percentage of first number, a life expectancy at birth factor as a surrogate measure of income distribution below the poverty line, and a discount factor given by the per capita GNP growth factor (1 + per capita GNP annual growth rate). Use of the life expectancy at birth factor as a measure of income distribution is derived from the hypothesis that, ceteris paribus, life expectancy at birth will be negatively correlated with the degree of income inequality, especially below the poverty line.6 The income growth factor is introduced as a means of discounting the composite poverty index used here (Sen 1976), to recognize that under otherwise similar conditions, countries experiencing a relatively high rate of growth of per capita GNP are likely to be better placed to reduce the incidence of poverty with appropriate redistributive and direct intervention methods.7 This is added to express the link between poverty alleviation and overall economic progress by means of a single integrated measure. By using the concept of relatively vis-a-vis the maximum or minimum of the group the IPI avoids problems associated with different definitions of the poverty line by including both absolute and relative concepts of poverty. 5 International Fund for Agricultural Development, 1993, The State of World Rural Poverty - A Profile of Latin America and the Caribbean p. 88. 6Ibid. 7 Sen's composite poverty index (P) is defined as H [I to (1-I)GpJ, where H is the headcount ratio, I is the income-gap ratio (average percentage gap in income of poor households from the poverty line), and Gp, the Gini coefficient of income of households. 53 Poverty reduction and human development in the caribbean The IPI can take values between zero and one, with a value closer to one indicating greater poverty than a value closer to zero. IPI categories are: Severe poverty (IPI > 0.40), Moderate poverty (0.40>IPI>0.20), and Relatively little poverty (IPI < 0.20). Within the group of 32 Latin American countries, the IPI (1990) ranges from 0.806 (Bolivia) to 0.057 (Barbados). Fourteen countries fall into the Severe poverty category, 13 fall into the Moderate poverty category, and five fall into the relatively little poverty group. 54 Annex II Crime and violence: analysisfrom the Caribbean Box ]11. The characteristics of the perpetrator of cCrime in Grenada Results of a micro-survey of 39 randomly selected prisoners in Grenada presents a more in-depth profile of the socio-economic characteristics of those involved with crime. The majority were aged 15-34, and all were men. Almost all of the youths had a previous conviction, and most had been in prison at least once before. The most common offenses were robbery, burglary, and drug possession. A small percent were incarcerated for crimes of violence and rape. Of those interviewed, the majority were from large, low-income families with single mothers or grand-parents as the head of household. Approximately one half dropped out of primary school, with one quarter of the youth unemployed before entering prison and the remainder involved in seasonal self- employment activities such as masonry, carpentry, fishing and plumbing. None of the youth were married, with one-third having one or two children of their own. The majority (72percent) of those interviewed used marijuana while almost half dealt in cocaine. Characteristic Total Belonging to large fanily 33 Family with single mother and grandparents 26 Family with both parents 7 Primary school drop out 19 Secondary school attendance 7 Unemployment rate prior to incarceration 10 Monthly income < EC$500 (US$185) 20 Family monthly income <$EC700 (US$260) 26 Drug Users 31 Drug Dealers 25 Repeat offenders 37 Legal Representation at trial 7 Source: Legal Aid and Counseling Clinic, 1995, "Youth/Conflict with the Law," UNICEF finded survey, Grenada. Poverty reduction and human development in the caribbean Box 112 Perspectives on the causes and solutions of youth crime from prisoners in Port of Spain, Trinidad During a focus group meeting in a prison in Port of Spain, Trinidad, eleven prisoners discussed their views on the causes of crime among youth, the issues that concerned them and the agencies that could assist them. Among the findings; * The causes of crime were attributed to i) The failure of the school system to meet the needs of students who fail the common entrance exam and have large amounts of unstructured time; and ii) High unemployment makes them vulnerable to the remunerative drug trade. * Among their concerns are: i) social welfare for their families while they are in jail, ii) skills training to make them employable on discharge, iii) employment opportunities, iv) grass roots support (church, school, community), and v) drug information and rehabilitation. * Their suggestions for reform and rehabilitation include i) community service as an alternative to prison, ii) drug rehabilitation in prison; iii) half-way houses and drug rehabilitation upon release from prison, iv) educational opportunities in prison to assist in preparation for the School Leaving Examinations, v) access to religious services; and v) some mechanism to facilitate maintenance payments. * Recommendations for the prevention of crime include; i) devoting more attention to youth who drop out of school because of failure on the CEE and expanding opportunities for continuing education; ii) providing probation and rehabilitation services through more effective probation officers; iii) care through foster families as most felt they received no emotional care in their homes; iv) access to '"rop in youth-centers" where youths could get assistance in coping with difficulties; and v) alternative prison situations so that youth, particularly those who are vulnerable, are not influenced by the more hardened criminals. Source: Gabriel, L. and J. Bishop, 1995, "Crime and Violence in Trinidad and Tobago," Port of Spain, Trinidad and Tobago. 56 Annex I] Crime and violence: analysisfrom the Caribbean Box IL3: Rebuilding urban areas: perceptions from Jamaica To elicit perceptions of solutions for rebuilding social capital in poor urban communities in Jamaica with high levels of violence, focus groups in the communities comprising of children, youth, and middle aged and elderly listed the following recommendations: Social assistance intervention Focus eroup total Community based activities: 35 community\youth\daycare centers 15 youth projects 7 drama group 1 literacy classes 1 voluntary work/self help 2 Citizens associations/neighborhood watch 9 Safe centers and staff for counseling around violence on: 14 parenting skills 7 youth involved with gun violence 3 community relations 1 drug addiction 2 family planning 1 Improve relations with police/reduce harassment 7 Soup kitchen/lunch money/school fee assistance 3 Military training for youth 2 Job placement programs 1 Prisoner rehabilitation programs 1 Food subsidies 1 Source: Moser, C. and J. Holland, 1995, "A Participatory Study of Urban Poverty and Violence in Jamaica" World Bank Urban Development Division, Washington, DC. 57 Poverty reduction and human development in the caribbean Box IL4 Estimating the cost of crime, Trinidad and Tobago While it is difficult to determine the economic cost of crime, back-of-the-envelope calculations provide a rough estimate, based on several assumptions. Some costs, such as the value of the loss in tourism and investment, have not been quantified which would indicate that these figures are underestimated. Arrests. The cost of arresting a person and committing them to prison is calculated using the total recurrent budget for the Police Service divided by the number of people committed to Prison. While a better figure might be the number of reports to the Police which led to prosecutions, this data is not available. The Police perform other duties than arrest people but the major one is to ensure that the public is protected from crime and thus detention of criminals can be taken to be an indicator of effectiveness and cost to the nation. Since it is the recurrent costs, not capital costs, that are used it is assumed that any over estimate may well be negated. No. Committed to prison during 1993 = 26,179 Recurrent Expenditure for Police in 1993 = $293,120,869.79 (TT) Cost of arresting and committing one person = $11,196.79(TT) Court appearances. This information was obtained from the Magistracy. The data available was the number of cases laid before the court in a particular year. However, this does not include the cases that: (i) will come to court that were laid in any previous year or (ii) those laid in November and December of a year are not actually heard until the following year. Thus the figure given may be either an under-or over-estimate. In addition the number of cases does not necessarily indicate the number of people who are involved in the matter. In the absence of more accurate data the number of cases filed is used. The capital budget of the Courts are not considered (and there has been an increased demand for new courts) which could lead to a much higher figure. No. of cases filed in 1994 = 26,166 Cost of magistracy in 1994 = $57,641,240 Cost of one appearance in court = $2,202.91(TT) Cost of the prison system. Although 26,179 people were committed to prison in 1993, the daily average prison population was 3,317. All the Prisons except the Youth Training Centre are highly overcrowded (Table II. 1).8 The cost below does not include capital expenditure which is particularly important in the case of the Port of Spain Prison which is in the city center located on prime real estate. Daily average population (1993) = 3,317 Recurrent Expenditure for Prisons = $61,061,980(TT) Daily cost of running the Prisons = $167,293. O1(TT) Cost per prisoner per day = $50.44(TT) Table ILl Prison population in 1994 and original population capacity 1994 population Built to accommodate Port of Spain 1062 250 Golden Grove 1021 350 Remand Yard 881 600 Carrera Convict Prison 555 275 Women's Prison 116 75 Tobago Convict Prison 60 75 Youth Training Centre 248 275 I It is worth noting that for approximately 30 years, 1956-1986, the average daily prison population was 1,111 ranging from 840 to 1,506. From 1987 however it has climbed steadily to 3,943 in 1994. 58 Annex II Crime and violence: analysis from the Caribbean Box 114 Estimating the cost of crime, Trinidad and Tobago (cont'd.) Cost of spending six months in prison. The majority of prisoners, 65percent, spend up to six months in prison. The cost of the loss of earnings is also included (averaged at $1,800 per month" 1992 CSO). The cost of legal representation is not included, thus the cost is conservative. Five court appearances is not unusual, and may arise for a variety of reasons, the most significant at present, being the lack of transport to take prisoners to court on the designated day. If not taken on the day, a warrant issued for his arrest and he is remanded in absentia. In addition, due to the heavy work load of the Magistrates an individual he can be taken to court and the case still not called on that occasion. Thus the Prison Authorities estimate that 5 court appearances on average is a reasonable estimate. Cost of 6 months in prison = $ 9,205.30 Cost of arrest by Police $11,196.79 5 Appearances in court = $11,014.55 Loss of income = $10,800 Total $42,216.64 Private sector expenditure on security. In considering the cost of crime the most expensive and damaging to the society cannot be quantified easily: fear. There has been, particularly since 1990, a downward trend in the quality of life in Trinidad and Tobago. An escalation of fear has meant an escalation of protective devices. There has been an increase in the use of monitoring by patrolling security guards, alarms on private residences and on cars. Car stealing has increased alarmingly. From the early 1970s significant number of people burglar-proofed their homes; that has increased dramatically but this is in addition to all the other measures in Table 11.2. The extreme end would be a burglar-proofed house with guard dogs, alarm system, automatic sliding gates, car alarm and a 24 hour armed guard. Some business people have already reached this stage for their homes and a guard for their business. This would be a fixed cost of $17,862.50 and a recurrent cost of $138,570 per annum. Table IL2 Cost of security devices in $(TT) Type Cost ($TT) 24 hour guard-private residence 115,908 per annum Private Business 46,800 Doctor's Office 31,200 Alarm System 5,000 Security Guard Monitoring 2,400 Burglar Proof-residence 3,000-5,000 Guard dogs (Food) 2,400 Automatic Gates - Sliding swing 6,000-9,000 Garage doors 10,000-14,000 Car alarm 862.50 The lowest recurrent cost would be for a security patrol and the dogs $4,800 per annum. The cost of a 24 hour guard for a private residence is much greater than for a private business because these are exclusive of public holidays, Sundays and normally 9:00 a.m. to 8:00 p.m. Private businesses increasingly have television monitoring, burglar-proofing and metal doors. Doctor's offices are particularly vulnerable since it is known that their patients pay them in cash. The majority of people living in urban areas have homes which are burglar-proofed and guard dogs as a bare minimum. A reduction in the crime rate would have a dramatic effect on the cost of private security. In the absence of other quantifiable data, from experience it seems reasonable to propose that the cost of security monitoring, house and car alarms, and guard dogs could be used as a marginal cost that would respond in the short-term to a decrease in fear. Escalation would lead to even more private security. Thus $10,662.50(TT) can be taken to be the marginal costs of crime. 59 Poverty reduction and human development in the caribbean Box IL4 Estimating the cost of crime, Trinidad and Tobago (cont'd.) Cost of one man spending 6 months in prison = $42,216.64. Recurrent cost to private security $10,662.50 Total = $52,879.14 Effect of crime on tourism and investment. A high crime rate can adversely affect tourism and investment, though the pattern in Trinidad and Tobago is unclear. Table 11.3 shows that for the period 1983-1992 the number of tourists coming to Trinidad and Tobago increased from 131,430 to 173,653. During this period the number of serious crimes which are those mainly highlighted in the media increased. The GDP from tourism fluctuated but can be said to have remained essentially constant from 1986 to 1992, based on 1985 prices. From the factual evidence, there seems to have been no such effect on tourism. It must be borne in mind, however, that Trinidad and Tobago prior to the down turn in the economy did relatively little to promote tourism. Since 1986, however, its efforts have increased considerably. Therefore, the increase could well have been larger than it is given the increased promotion from at least 1987. It is significant that the events in 1990, the year of the attempted coup in July followed by curfews until November seemed to have little impact on tourism. This can be explained by the fact that most visitors come at Carnival time, which is February-March eveiy year, hence the coup would have little effect in 1990 or 1991. The number of business visitors has decreased since 1988 and in 1992 was below that in 1983. The impression in Trinidad and Tobago generally is of increased foreign investment, since there have been more joint ventures etc. The Govermment has also done much more to attract foreign investment. Perhaps the investment from visitors has increased whilst the number has decreased. From the reports in the media, one does not get the impression that visitors are particularly targeted for attack. This has to be considered in the light of the fact that agricultural wage may hamper efficient functioning of labour markets. Small Business Development Provision of credit and business development services to self-employed and unemployed. Mainly through NDFs. Strength - poverty avoidance through income generation rather than poverty alleviation through transfers. Weakness - benefits 'near poor' rather than 'ultra poor' who continue to lack any form of collateral. Unemployment Benefit Cash benefit, entitlement usually on a contributory basis. (Only available in Barbados) 'Working' poor In all countries there is no explicit provision (Households on low of cash benefits for households were the head income with employed is employed but wages are too low to maintain head) the family. Small Business Development as above Elderly Non-contributory Old Age Provision of income security in later life, Pension particularly for those that were too old to acquire sufficient contribution record at establishment of NIS. Weakness - Broad based entitlement, programs not well targeted. Duplication of role of PA. Strength - avoids problems of exclusion errors. Fosters citizenship, and may have objectives other than pure poverty alleviation. 132 Annex IV Social safety nets in the Caribbean Table IV.15 A olo of the major safet net progra ms in the Caribbean region (cont'd.) Target beneficiary Program Aims, strengths, weaknesses Elderly (cont 'd.) NI Old Age Pension Provision of income security in later life. Contributory basis. Weakness - NIS exclude informal sector workers those who have never worked and often also the self-employed. Where contribution and benefit levels are not indexed, benefits quickly become inadequate. Where coverage is low and minimum benefit levels inadequate, NIS are not efficient for poverty reduction. Public Assistance as above Overlap with non-contributory OAP and NIS Food stamps/ in kind as above assistance Social Fund as above Homes for Aged/ Day Care Provision of residential care for the elderly other personal social services and support in the community for elderly living at home, usually in the form of meals and/or home helps. Persons with disabilities NI Invalidity pension Provision of income security for persons unable to continue in formal employment through disability. Contributory basis. as above Public Assistance as above. Overlap with non-contributory OAP and NIS Rehabilitation & training To provide rehabilitation, training and employment opportunities for the disabled in order to help them function as equals in the community. Problems ofjob placement and re-settlement Special schools country specific Society for the Blind country specific Residential care as above 133 Poverty reduction and human development in the Caribbean Table IV.16 Count Safety Net Programs Country Trinidad Target Group and Barbados Belize Dominica Grenada Guyana Jamaica St. Lucia and Tobago Programs Children School Feeding x x x x x x x x Travelto School x x x x x x Uniforms, Books x x x x x x x Assistance Low Income Families Social Assistance (cash) x x x x x x x x Benefits in Kind x x x x x x Unemployed Unemployment Benefit x Youth Training x x x x x x x x Public Works x x x x x x x Small Business x x x x x x x x Development Elderly Non-contributory Pension x x x x x x x x NLS Pension x x x x x x x x In-Kind assistance x x x x x x Homes for the Aged x x x x x x x x Disabled NIS x x x x x x x x Social Assistance x x x x x x x x Residential Care x x x x x x x x 134 Annex V Equity issues in education This annex highlights some of the key issues related to equity in the education system which relate to the poor. Early childhood care and education While preschooling is widespread in the region with enrollments significantly above the average for middle income countries, the poor in many countries do not benefit from these early childhood education opportunities. For example, in Trinidad and Tobago and St. Lucia only half as many poor children in the 3-4 age group attended pre-school compared with the children from wealthy households. This is largely due to the fact that many of these programs are privately run, vith the poor unable to afford the cost of tuition. And in many cases such as Jamaica and Guyana where preschool is publicly provided and enrollment is high, many of the centers only focus on day-care, rather than on children's social and emotional development, or acquisition of cognitive and psychomotor skills important to successful primary school performance.35 The smaller proportion of children from low-income homes enrolling in pre-school and often low quality of services means that a majority of them are disadvantaged from a very early age. Research has shown that active, high quality early childhood education programs have demonstrated impact on the development of initiative and school readiness to the extent that it can mitigate an impoverished home environment and have long-term positive effects on school achievement, social behavior, and earnings.36 Primary At the primary level, access throughout the region is nearly universal with the exception of Haiti (where enrollment for age 6-11 is estimated at 50 percent). Though 35 In Jamaica, though a high proportion of students attended preschool, tests of primary school entrants indicate lagging cognitive and psychomotor skills in almost half the children, with performance consistently lower for boys. Source: Hamilton and Associates, 1990 and World Bank, 1992. Access, Quality and Efficiency in Caribbean Education, p. 51. 36 A longitudinal study of participants in Perry Preschool in Michigan, USA, found that adults who were born in poverty but attended a high-quality, active learning preschool programs at ages 3 and 4 havehigher achievement scores at 14 and 19 than nonparticipants, a greater probability of finishing high school, half as many criminal arrests, higher earnings, greater property wealth, and greater commitment to marriage. Over preschool participants' lifetimes, the public receives an estimated $7.16 for every dollar invested. See L. J. Schweinhart, H. V. Barnes, and D. P. Weikart, Significant Benefits: The High/Scope Perry Preschool Study through Age 27. Ypsilanti, MI: High/Scope Press, 1993. Poverty reduction and human development in the Caribbean coverage is high, there are serious problems of quality with vast inequities by school type and location. Overall achievement levels on the common entrance exams3" in the Region indicate deficiencies even in basic areas such as reading, writing and numeracy. For example, in Trinidad and Tobago results from the 1994 CEE show that on average 40 percent of 11+ age children scored below the minimal acceptable level in Mathematics and 52 percent in English Language Arts. In regions where the incidence of poverty is higher, test scores were lower. The differences in student achievement are in part due to the variation in educational inputs within schools. In Guyana, inputs to student learning such as teacher training and the availability of resource materials are highly skewed across regions with those in poorest areas receiving the lowest quality of services. For example, in Regions 1, 8 and 9 where the incidence of poverty is highest, approximately 70 percent of primary school teachers are unqualified, and the percentage of students receiving textbooks is only half the national average.38 Similarly in Toledo, the poorest district in Belize, 72 percent of primary school teachers were untrained. The wide variation by school type and location has negative consequences for the poor. Results on the Belize National Selection Examinations show that only 8 percent of students from the Toledo district scored in the top quartile.39 In Trinidad and Tobago, the mean group scores of Student Intakes into Secondary Schools was 52 for the lowest income group, compared with 76 for the highest income group demonstrating the vast differences in learning opportunities.40 In addition to the overall low quality and variation among schools, the poor are further disadvantaged by their inability to pay for out-of-pocket educational expenses such as private tutoring (to ensure high CEE scores), transport, textbooks, other learning materials and school uniforms. For example in St. Lucia, even with a limited Government provided transport subsidy for secondary students from Micoud District, the average household outlay on transportation for the academic term is EC$1,200 (US$444), far more than poor households could afford. In some cases the inability to pay for items such as bus fare or uniforms prevents children from poor families from attending school on a regular basis. 37 The Common Entrance Exam (CEE) is administered at the end of the primary cycle in all English- speaking countries except St. Kitts and Nevis. 38 See World Bank, 1993, Public Sector Review, source Guyana Ministry of Education and Culture and World Bank, 1994, Strategies for Reducing Poverty, based on LSMS, Washington, DC. 39 Belize 1992 Education Statistical Digest, Belmopan, Belize. 40 Jules, V. 1994. A Study of the Secondary School Population in Trinidad and Tobago: Placement Patterns and Practices: A Research Report. The Center for Ethnic Studies, University of the West Indies, St. Augustine Campus. 136 Annex V Equity issues in education Secondary level The inequities in education widen even further at the secondary level. High CEE scores are usually necessary to gain entrance to the older, prestigious secondary schools (many with six forms or grades), the second tier go to the other five-year secondary schools, and those with low CEE scores to all-age primary or junior secondary schools for a two- to four-year period. In some countries with limited secondary school places, poor achievers are forced to drop out of the system all together. Jamaica again provides an example. In 1992, 73 percent of the poorest students attend all-age and new secondary schools, compared with 28 percent of the wealthiest.4' Yet the all-age schools have traditionally received the lowest levels of resource allocation and education inputs. As a result, about half of though who finish Grade 9 in All-Age schools are functionally illiterate, lacking the necessary skills for entering the labor market.42 Alternatively, many of these students become frustrated with the low standards and drop out at an early age. Without skills, many of these youth cannot find jobs and are left with large amounts of unstructured time, little parental supervision and no prospects for employment. As discussed, this can lead some to join gangs, become involved with drugs, crime, and seek illegal sources of income. The linkage between the perpetrators of crime and school drop-outs has now been established in several countries, further contributing to the need for improvements in educational access and quality. Increasing opportunities will help to ameliorate some social problems-students who leave school with skills will be better able to enter the labor market, and will develop a more positive self image and greater sense of self-reliance. Tertiary education Very few poor students make it through the system to benefit from tertiary education. Enrollment in tertiary institutions among the poorest 20 percent of the population was only 1.6 percent in Jamaica, and 1 percent in Guyana. Yet per capita expenditures on tertiary education throughout the region are 15-25 times greater than for secondary education and as high as 50 times more than those for primary. Once way of redistributing such inequities for the poor is to reallocate resources toward primary and secondary education, and introduce cost recovery at the higher levels. Well-targeted student loans or grant assistance could be provided for the poorest students. 41 See Planning Institute of Jamaica, 1994, Jamaica Survey of Living Conditions Report 1992. 42 World Bank, 1993, "Jamaica Reform of Secondary Education Project" (No. 11534-3M), Staff Appraisal Report. 137 Annex VI Examples of successful community participation in the Caribbean Community participation has an important role to play in poverty reduction. There have been many successful projects developed and implemented at the community level which provide important lessons. This annex discusses the socio-political environment for community development, highlights a few of case examples, and lessons learned. Good governance The "temper of the times" supports good governance. This usually means liberalization, privatization, deregulation, decentralization, deconcentration, community participation and democratization (in local, central, regional and local government within a country). It also supports notions of sustainable development, environmental protection and social sector development. Two development paradigms exist which address this. The first represents the current reforms promoted both nationally and internationally. It is the reform setting using the macroeconomic development framework which requires local government reform and community development as supportive (and very rarely, co-equal) activities. The second paradigm requires a quantum shift to privilege social sector reform and community development as the centerpiece of economic development strategies. The first paradigm has developed effective strategies which have generated in the Caribbean thousands of community-based economic groupings. While there are questions about sustainability once externally derived funding dries up, there is every reason to assert that a significant proportion of Caribbean poor has been positively strengthened through community development activities working through a variety of NGOs. The second paradigm is not in practice anywhere in the Caribbean region. The governments of the Region have historically, assigned a significant proportion of their national budget to the social sectors. However, the manner in which they have done this have created problems of macroeconomic and social management, requiring "good governance." Much successful community action in poverty alleviation and reduction in the Caribbean is currently financed and/or created by IFIs and International Non Governmental Organizations (INGOs). The work of NGOs in the Caribbean has shown that there is a strong indigenous capacity to achieve success in and sustain good governance activities. This readiness on the part of "beneficiaries" (in the process of becoming true participants) and of local initiators and facilitators will, nevertheless, be demonstrated. With the commitment of the governments of the region to public sector Poverty reduction and human development in the Caribbean reform, decentralization and community participation, the opportunity presents itself for the state to build a new legitimacy through participation with civil society and hence renew and strengthen itself for the development tasks ahead. Examples of community development projects in the region Social Funds. One of the more successful approaches to promoting community participation has been through the social fund, largely financed through the international organizations. This model is designed to facilitate a bottom up approach with broad-based participation. One such example is SIMAP in Guyana. Community groups are encouraged (through the media, community outreach workers, and other mechanisms) to submit applications for subprojects based on the needs within their communities. Following some evaluation criteria, projects are then selected for implementation. Similar funds are now being planned for Jamaica, Trinidad and Tobago, and Belize all focusing on a bottom-up approach. On the whole, this format has been successful at delivering services more equitably than traditional means, and including beneficiaries in the process. There have also, however, been concerns that in an effort to ensure transparency and accountability some of the administrative regulations are not conducive to fostering sustainable community involvement. Project implementation has focused to a large extent on process, rather than sustainable outcomes The sustainability issue will become increasingly important as external funding diminishes. Without a deeply reformed system of governance and capacity at the community level, responsibility for administration of such efforts will be returned to the line ministries. Even if these functions were returned to a more efficient public service administration, this would not necessarily mean more "democratization" only better administration. The Self-Help Commission. Another example which has fostered community participation with much success is the Self-Help Commission of Trinidad and Tobago. This organization has been particularly successful at collaborative management between NGOs, communities, and central and local government. The Commission's board was originally appointed by government in 1987, it began without a government subvention and continues to rely heavily on grant funds. By 1993, the group had carried out nearly 1,000 projects in areas such as water supply, electrification, access road building, community centers construction, educational projects, school extension, repairs, paving, toilet improvement, and the provision of facilities for manufacturing and distribution. To ensure sustainability, the Commission requires that the community group's contribution should be at least 40 percent of the actual project cost, which may include labor and any other assistance generated by the group. In respect of water and electrification projects, a detailed technical evaluation and estimate must be done by either the Water and Sewerage Authority of the Trinidad and Tobago Electricity Commission. This can be sought by the group or the NCSH. For other projects, detailed estimates can be provided by a recognized body, such as the City, Borough, Regional Corporations, the Ministry of Works and Transport or the Tobago House of Assembly. In spite of this necessary and obvious collaboration with central and local government, and the 140 Annex 17 Examples of successful community participation in the Caribbean requirement that projects may be endorsed by the parliamentary representative and the local government representative for the project, the NCSH and its community groups have operated outside the framework of partisan political interference. It also operates outside of racial and ethnic preferences. In many cases, the beneficiaries have attained more than through traditional channels as the Commission is freed from exhaustive administrative procedures and accounting systems. Other NGOs and community-based organizations, some dependent on international funding The Women's Construction Collective, in Jamaica, is a not-for-profit company comprised of women in the construction industry. Its overriding goal was to train and place young, unemployed, low-income women at the trade level of the building and construction industry-a field largely employing men. More importantly, it was a sector in which the prospects for employment and livable wages were very good. Traditional programs for women were usually in areas where the demand for such services were low or there was very little market value. The project proved to be highly focused, flexible, and provided great and financially successful opportunities for collaboration and participation among other achievements. Having existed on external funding since 1983, the collective is now beginning to generate some of the funds needed to become self- sustaining and to help more women. Real success will come when this transition is made although value for the assistance rendered has been achieved several times over. Another program, which addressed the problems of interrupted education and low employment potential among young women as a result of teenage pregnancy, was established by the Women's Center of Jamaica Foundation (WCJF) in 1978. The program achieved a number of well-established successes for thousands of Jamaican young women. Indeed, in 1994, 48 per cent of mothers under 16 years were assisted by the Foundation and of its clients the foundation maintains a world record low second pregnancy rate of 1.4 per cent. By reducing marginalization and alienation of these women and giving them second chances with dignity, the women have responded exceptionally to the empowering opportunities at the individual level. The only quarrel is that the successes are at this level rather than the collective one among the beneficiaries. Survival Eco Foods (SEF) was formed in Dominica against a background of a declining Banana industry in the face of global market changes and the damages the industry sustained from hurricanes David and Allan. It was intended to provide food security and proper nutrition among rural women. It began at the home kitchen level and then grew into a product research and development, training and education, promotion and marketing enterprise. As it grew it attracted increased technical and financial services. Two small outlets for edible processed agricultural products and dehydrated herbs were established (one at the factory in Roseau) The enterprise promoted workshops, exhibitions, field trips, test marketing, etc. 141 Poverty reduction and human development in the Caribbean The outcomes included the generation of new ideas and products, revitalized poor rural women, and reinforced an indispensable role for them in devising and shaping development strategies. The enterprise not only created a diversified market base but also collaborated with regional organizations and raised awareness. The project was plagued throughout by problems of shortage of working capital, limited equipment and work space and, perhaps cultural differences in management. Grenfruit, Grenada, is a women's cooperative group which started out with a home economics orientation to help poor women prepare nutritious meals from local foods, provide education, skills and commercial opportunities based on household production. Resource persons were drawn from Government and the wider community. Through the program some employment was generated, skills were imparted, solar dryers were built and maintenance skills taught, working hours were adjusted in relation to home responsibilities, and so on. At its peak, 175 small farmers were depending upon this group for the sale of their products, with some foreign exchange was earned. However, low productivity, poor work attitudes (including apparently a reluctance to make money), and limited working capital which prevented expansion to overseas markets. There was also the problem of dependence on an overseas grant. It may have been better if the sum of money was provided as a loan to the group. The Rosehall Community in St. Vincent is a farming community of over 1,500 persons. It is fairly isolated with some 4 miles of coastline as part of its boundary. There was a sense of a closed community with shared traditions but with a generally low level of community involvement. The Women and Development (WAND) Unit of the University of the West Indies became involved by encouraging women to take on leadership and development roles through a pilot project. Initial activities started with adult literacy sessions, the setting up of a pharmacy and a library, and the purchase of a van for the delivery of produce to other markets. The project led to a sense of empowerment and a greater sense of community, over the initial suspicions of and lack of support from the men. This group became part of an umbrella body, the National Council on Women. Yet, there were the usual problems of dependency on donor funds, and the intrusion of partisan politics into the effort (which was subsequently reduced through dialogue). In this community there were more women farmers than men farmers, and women predominated as speculators/higglers. The group worked out a suitable market arrangement with the government. Environment, community responses, poverty reduction and collaborative management approaches The Kingshill Forest Reserve (Simmons, 1994) in St. Vincent is over 200 years old, and is the region's first protected area. It was established by an Act of Parliament and has remained intact for the past two decades, and has played a variety of roles in the lives of the villagers. For example, cloud patterns are used to make weather forecasts; local 142 Annex VI Examples of successful community participation in the Caribbean healers use herbs grown in the forest; cultural evenings of singing, dancing and story- telling are held there. However, during the early 1970s the agricultural estates which provided employment for 90 per cent of the residents from the 15 villages adjacent to Kingshill, abruptly ceased production. Forced to survive by other means, residents began to over- exploit the reserve's resources. Land owners adjacent to the reserve began to clear forest lands to extend their property, squatters cleared land for settlements, people cut trees for charcoal burning, fire-wood and small scale timber production and there was overall decimation of wildlife. The resulting destruction propelled the local NGO, the JEMS Progressive Community Organization, to implement a cultural development program aimed at resensitizing residents to the importance of the Kingshill reserve. The emphasis was on mobilizing the communities to take action to resolve their economic and social problems. A number of activities were undertaken. An education program in the primary and secondary schools which focused on the importance of the Forest Reserve to the community; and village members collected relevant information through house to house visits, formal survey and community discussions. This data was then analyzed by representatives from the various villages who came together to develop culturally appropriate ways to communicate the information to the wider community. Cultural presentations were held using traditional calypsos, folk songs and role playing. After the entertainment, discussions were held to identify solutions which could be achieved using the limited resources available to the community. Adult education programs were instituted to train villagers in literacy skills, personal and community development and local resource management. Infrastructure development projects were also implemented on a self help basis, including road improvements, constructing recreational facilities and a community center, installing a water system and creating a solid waste management program. The participatory approach taken in the Kingshill district has been largely successful in conserving the reserve and creating a measure of self reliance in the surrounding communities. The Blue Mountains and John Crow Mountains (Kerr and Parchment, 1994) in Jamaica are of tremendous economic and ecological value. Comprising a popular hiking destination for locals and tourists, they contain the few remaining areas of pristine and unspoiled forest on the island, comprising its most biologically diverse area, with six distinct forest types and a range of climate and vegetation. They are also home to many endemic and endangered species. However the area is under severe threat. The southern ridge of the Blue Mountains zuffers a high rate of deforestation and poor land use. The famous Blue Mountain coffee, a major foreign exchange earner, has placed serious pressure on the forest as farmers scramble for every centimeter of mid-altitude slope, using the quickest and often most destructive methods to establish coffee plantations. The Forestry Industry Development Company, a statutory company, was given a mandate prior to Hurricane Gilbert to make the country self-sufficient in lumber through the development of pine plantations. This activity added pressure on Northern as well as Southern Ridges of the Blue Mountains. More recently, there have been heightened 143 Poverty reduction and human development in the Caribbean expectations that valuable minerals may be present within the area, and prospecting leases were given out to private companies. These activities have increased the competition for land, and small farmers have found themselves increasingly pressured to find "suitable" lands within the forested areas of the mountains. On the southern slopes the poor distribution of water has compounded the problem for many small farmers who have abandoned their home plots for higher altitude areas with moist conditions suitable for the cultivation of short term cash crops. This has led to the invasion and occupation of private lands and sections of the forest reserve. Efforts by some of the larger coffee farmers to use force to remove these small farmers have been met with "fiery reprisals" and resulted in damage to coffee plantations running into thousands of dollars. Many small farmers have no individual tenure of the lands they occupy and are therefore unable to provide collateral for loans from the various government lending agencies. This lack of financial security and tenure is also a problem for those who illegally occupy land in forest reserve areas making it difficult to alter land use patterns in the Blue Mountains. The situation is further compounded by high unemployment, illiteracy, and the lack of infrastructural development (poor roads, water supply and electricity). The community response has been the development of the Blue Mountain/John Crow National Park. Essential to the management of the Park is the fact that the communities in and around the Park play a central role in the implementation of the system of protected areas. They are involved in designing the goals and strategies together with responsible government agencies. This has been facilitated by the establishment of Local Advisory Committees within the major communities around the park. The committees are community-based organizations formed by local residents, including small farmers, teachers, coffee growers, youth and community leaders. Relevant government agencies send representative to attend meetings of the committee and respond to community needs. Support is lent to this process through community outreach programs which provide audio-visual packages, environmental education programs, and public relations programs which use radio, television and printed materials. There is considerable interaction between the park staff and the groups. Efforts are also made at community strengthening and ensuring that practical economic benefits are derived by the communities. As a result, projects that generate income from the natural features of the areas and that are compatible with sustainable use of the resources are given priority. To date the local communities have helped to define their role in the management of the park, largely as "watch dogs" to ensure that the natural resources are not abused and the opportunities for development are not overlooked. There has been a growth in community self confidence and awareness epitomized in the efforts of the Blue Mountain Development Community who repaired the Yallahs River Fording, the only access point between the community and Kingston. This bridge had been impassable for a very long time, and repeated appeals to the government yielded no assistance. The BMDC, a community group which grew out of the LACs and the Park experience, assembled labor and tools and materials from within the community and repaired the bridge. 144 Annex V7 Examples of successful community participation in the Caribbean Other examples The Inter-American Institute for Cooperation on Agriculture from the beginning adopted an integrated rural development approach to their work in various Caribbean countries. However, their work in attempting to strengthen Amerindian skills in Community Development offers many instructive points for adoption in a community development strategy seeking to eradicate poverty. The project in Guyana was undertaken after careful research and used the participatory research approach where the Amerindians themselves were enabled to not only conduct the actual surveys but also to contribute to the design of the surveys and the analysis of the data collected. The project idea itself arose out of two meetings of leaders and members of nine Amerindian communities of the region during 1993. After several enabling workshops, a draft proposal was prepared to address the needs of these communities within the ambit of IICA's Rural Development Project. The objective was to promote sustainable development in selected Amerindian commurities by cultivating the capacity to identify, formulate, manage, monitor, and evaluate sustainable community development activities and projects. It is a project which strengthens the Amerindians as it goes through its various stages. Out of this comes another project to achieve the transferability of experiences and operational mechanisms developed under this project to other regions in Guyana. In 1988, the Government of Trinidad and Tobago embarked upon what was then a unique feature. It attempted a social sector policy as an integral part of its Economic Recovery Program. Three programs: Youth Training and Employment Partnership Programme (YTEPP), Apprenticeship for Industrial Mobilization (AIM), and Youth Employment Support System (YESS) were designed, in an interrelated fashion, to supplement pre-existing government-managed amelioration programs for targeted groups. These along with other programs such as Each Community Helping Out (ECHO) and Labor Intensive Development (LID) were formulated and designed by the Social Sector Unit (Subsequently disbanded) with these programs being reformulated under a new government. The relevant features of these projects are that they were fairly well decentralized and that they were delivered with the support of broad-based management committees (AIM, YESS, ECHO) or a state company (YTEPP). When the Social Sector Unit was disbanded, responsibility for the unit's function was transferred to line ministries with all the predictable outcomes of overlap, cross-purposes, competition, inefficiencies and variable leadership and evaluation. In spite of these agencies, coverage of the most vulnerable population was still inadequate and the results were uncertain. These would indicate a need to refocus such activities away from quasi relationships with the state into fully community-centered activities. Service Volunteered for All (SERVOL) in Trinidad and Tobago has been an NGO which has achieved incredible success in empowering young people. It attracted governmental attention by the success of its efforts, and was contracted by government to 145 Poverty reduction and human development in the Caribbean expand, enabling it to reach hundreds more persons. The YTEPP program of the government itself, in collaboration with IFIs, was an obvious and flattering imitation of SERVOL's program. The importance of this group in poverty reduction is that working at the grassroots level it quickly realized that there are certain social conditions which are common to many disadvantaged areas and which were responsible for a great deal of anti-social behavior. Its Early Childhood care and Education, and, Adolescent Development Nationwide programs demonstrated a capacity to help prevent the transmission of poverty and it consequent social problems from one generation to the next. Driven largely by the efforts of the St. Lucia National Trust and the Caribbean Natural Resources Institute, a new model has been researched and developed for participatory management of common resources based on extensive collaboration among governmental and non-governmental institutions, as well as a significant planning and management role for communities, with co-management as its ultimate goal (Hudson: 1994). The System of Protected Areas was based on a high level of community participation throughout St. Lucia, accomplished through the establishment of an active Advisory Committee comprising national resource management agencies, NGOs and the National Youth Council. There was early consultation with national and local groups, and incorporation of their ideas and advice into the process. There was active and continuing public awareness efforts, e.g., radio phone-in programs, public lectures and community meetings to build recognition and support for the project and to identify resources requiring protection. Twenty public workshops were held at which a wide range of issues were discussed, including identifying significant local sites and traditions, resolving current or potential conflicts over resource use, and designing and coordinating education programs (Ibid). As a result of these efforts, several local communities begun to conduct meetings and field trips to identify and assess significant natural and cultural sites to be included in the Plan. To support these efforts, a training workshop was held by the Trust and CANARI on "Community participation in the Planning and Management of St. Lucia's System of Protected Areas", which sought to link local initiatives with national-level activities. This workshop resulted in the preparation of action plans which are currently being implemented through a partnership of communities and agencies. There have also been subsequent workshops and seminars on topics which have been identified by the communities and agencies as critical to the successful implementation of the plans (Ibid). All of the ideas, recommendation and the results of the research, have been compiled into a Plan for the System of Protected Areas for St. Lucia. The Plan has been published and serves as a flexible working guide for communities and agencies involved in establishing the SPA. Special provisions are now being included in a proposed amendment to the National Trust Act. These provisions would require local construction in park planning and management and a transfer of management responsibility to local organizations, thus institutionalizing the participatory process even further (Ibid). 146 Annex VI Examples of successful community participation in the Caribbean The Mank6te mangrove is a small but locally significant wetland located in the south of St. Lucia. It is important as a wildlife habitat, a nursery, a source of nutrients for coastal systems, a place for recreation and traditional gathering and hunting, and as a source of wood for charcoal production. The mangrove has experienced a number of problems including degradation of the forest and the overall habitat due to the impacts of wood harvesting. There has been contamination of the areas by illegal waste disposal. Moreover, the wood harvesting practices have been unsustainable. As part of an overall conservation and development project for the south east coast of St. Lucia, which was spearheaded by the Eastern Caribbean Natural Area Management Project, now the Caribbean Natural Resources Institute, efforts were made to redress these problems. These involved participatory research with the charcoal producers which was conducted by local students. Dialogue was held between the charcoal producers and project personnel to identify and build upon traditional resource harvesting techniques that would reduce impacts on the resource base. Self-help efforts were organized by the harvesters to rehabilitate drainage patterns in the mangrove to improve regeneration. Efforts were also made to foster a sense of community among the charcoal producers. The project identified and promoted additional income-generating activities in the mangrove, particularly in the context of eco-tourism. Community education and advocacy was carried out at the local and national levels to focus on the importance of the mangrove, the need for conservation and on the opportunities for sustainable utilization. These activities eventually led to the formulation of a plan for co-management. The property was declared a Marine Reserve and a management agreement was developed with the Ministry of Agriculture, the National Trust in whose care the property was vested, and the community of harvesters. The plan makes them all responsible for the management of the area. Efforts are underway to have this agreement officially adopted. When adopted, the co-management plan will restrict access to the mangrove, giving exclusive usage rights to the community of harvesters. It also includes several specific management measures relating to harvesting techniques, zoning of the area for improved mangrove protection, recreation, harvesting and the control of the other uses. The work of Women's United Red Thread in Guyana is highly regarded by its women beneficiaries and covers a wide range of economic activities, among other types. The Women's United Red Thread Research Group is a sub-group in Red Thread which illustrates the validity of adding technological progress at a level and pace which the broad masses can absorb. A group of women were trained in basic research methodology to enable them to undertake a study of Women and Poverty from a grassroots perspective. This project led to these women carrying out work for three months in the field in several communities, both Indo- and Afro-Guyanese. They also received contracts to do similar work on other projects. The group members declared that their involvement in this kind of work, in project design, designing and executing their own survey instruments, and in the treatment of data and the analysis of their findings empowered them and made them more determined to seek for solutions for the problems and challenges. Their research, for example, on squatter communities was of great value to policy makers. 147 Poverty reduction and human development in the Caribbean Lessons learned Among the lessons learned from the community development projects are: Beneficiaries will join together in managing projects when given a reasonable amount of security and control over their situation, even if it means sacrificing some individual short term gains. * In order to build consensus and support for innovative projects, it was found that a long term commitment by implementing and funding agencies and the communities involved is needed, and an understanding that the achievement of objectives may take many years. * Strong support from at least a small number of committed individuals is necessary to maintain group cohesion and progress when benefits are not forthcoming and success seems distant. Although commitment to project goals can sustain efforts over the short term, long term success requires that resources available are adequate to meet economic objectives.43 * Close collaboration between project participants, technical advisors and funding agencies is essential to ensure that external support does not encourage dependence and retard the development of community responsibility. The often very specialized local knowledge and skills of the resource users are an important asset to projects, and should be taken into account in the project design and implementation. * For co-management to be successful, the legal management agency and the co-managing resource users must be equal partners from the start, in determining the management arrangement. Where government lacks the authority to adequately manage resource use, private initiatives that incorporate a conservation component can provide an effect alternative. A small scale approach to resource management may be more profitable than large scale operations. * Project responsibilities of the implementing agencies and the target community must reflect within reason each one's existing institutional capabilities. It is advisable to build upon existing management mechanisms and institutions as much as possible, rather than introduce new ones. * Clear community definition is important for collective action. Development activities, must, therefore, strengthen the community's functional link. Community-based development should be well integrated into the wider village community, even if the target of the project is a specific subset of that community. Effective common property management is more likely to develop when the communal users perceive the resource as both valuable and scarce. Security of community tenure over resources is essential to ensure full community participation in resource management and conservation. 43 See 1994 publications by PANOS and CANARI. 148 Annex VI Examples of successful community participation in the Caribbean * Management responsibilities must be determined and clearly understood as early as possible by all players. This is especially critical for the establishment of local community responsibility. 149 Annex VII Poverty and the environment This annex looks at poverty and the environment in the Caribbean region. It draws on recent poverty studies and the National Environment Action Plans (NEAP) of several Caribbean countries. The peculiarities of the Caribbean region make environmental protection an important part of their development strategy. The main environmental issues have been identified as waste management, land use, water pollution, coastal zone management and natural hazards. Poverty and environmental degradation are inter linked; poverty leads to environmental decay and at the same time, environmental degradation engenders poverty. At the country level, NEAPs have outlined measures that address these issues. At the regional level, the emphasis is on creating capability through research and training. Successful implementation of the action plans will require technical and financial assistance from donor countries. Although Caribbean Countries share many similarities, there are significant differences in terms of their terrestrial and marine resources, and their level of environmental degradation. These vary from very small island states with limited land and forest reserves, to the continental territories of Suriname, Guyana, and Belize, which have extensive arable land and forest reserve. Differences also occur in their mineral resource base. Trinidad, Jamaica, Guyana, Suriname and The Dominican Republic have extensive mineral deposits or petroleum, while the smaller island states have few non-renewable resources available to them. The severity of environmental concerns vary by country, with Haiti, The Dominican Republic and Guyana representing the most severe cases. The most pressing issues facing these countries are monitoring and enforcement of environmental regulations, coastal zone management, deforestation and habitat loss, parks and protected areas, sewage disposal and air pollution.44 Development pressure on coastal and marine resources are common to all Caribbean countries, but are most acute in the smaller islands, where tourism development and urban expansion have had significant effects on coastal zones. Because of the small size of the islands, there is a close relationship between the terrestrial and coastal marine ecosystems to which insufficient attention have been paid. In the larger continental states however, these side effects are less intense. The countries with mineral and petroleum deposits such as Trinidad and Tobago, Guyana, Jamaica, Belize and The Dominican 44 See World Bank, 1994, "Initiatives for Regional Action On Caribbean Environmental Issues" Washington, DC Table 1.1. Poverty reduction and human development in the Caribbean Republic, face a different problem of management. They must contend with the environmental consequences of wide scale removal of topsoil, toxic by- products and land degradation from oil drilling. In addition, Caribbean countries face the problem of natural disasters such as storms surges, hurricanes, earthquakes, volcanic activity and coastal erosion that can do serious damage to the region's fragile ecosystem. Ecological fragility, close interdependence of economy and environment and vulnerability to natural hazards, make it critical that Caribbean countries be vigilant in the preservation of their natural environment. Caribbean countries are also exposed to global environmental problems such as global warming and rising sea levels. This may result in the loss of beaches and productive land. The region's environmental sensitivity, as explained, presents it with special difficulties in maintaining high production levels and implies a clear trade off in defining sustainable development in the region. Poverty and environmental degradation. The two way relationship between poverty and the environment is significant; environmental degradation contributes to poverty by adversely affecting health and by reducing the supply of those resources upon which the poor rely. At the same time, poverty restricts the poor to acting in ways that are damaging to the environment. Environmental decay damages the health of the poor through pollution, particularly, by pollution of water by disease vectors that cause parasitic and infectious illnesses. Access to clean water and sanitation is essential to good health, and lack of such access undermines the effectiveness of other social services in health and education. The poor in rural and urban areas have less access to these services than the non-poor . For example, in Trinidad and Tobago, Guyana and Jamaica, a significant proportion of the poorest 20 percent of the population uses pit latrines as the main type of toilet facility (67 percent, 77 percent and 86 percent respectively). The use of these facilities is highest in locations where poverty is most prevalent, such as the Potaro-Siparuni region in Guyana, the Nariva, St. Andrew and St. Patrick counties in Trinidad and Tobago. The use of inadequate disposal facilities makes the poor more vulnerable to infectious diseases. Access to safe drinking water is also low among the poor. Their major sources of water are public standpipe, public piped into yard and other sources. Only a relatively small percentage of the poorest quintile has access to indoor taps. In the countries mentioned above, these correspond to only 33.7 percent, 3.2 percent and less than 8 percent respectively, compared to 80.3 percent, 44 percent and 59 percent of the richest quintile.45 The availability of water is another important consideration. In Trinidad and 45 Data for Guyana from "Guyana Strategies for Reducing Poverty," World Bank Report No. 12861- GUA, Washington, DC, Tables 23 and 26. For Trinidad and Tobago, see "Poverty and Unemployment in 152 Annex 7V1 Poverty and the Environment Tobago, only 52 percent of the poorest quintile receives water daily compared to 67 percent of the richest. Once again, the poorest counties are those with lowest availability indices. Living conditions of the poor is also reflected in the lighting and facilities and accessibility to health facilities. Data on source of lighting for both countries show the same general pattern; a lower proportion of the poorest quintile uses electricity as their main source of lighting relative to the richest 20 percent. With regard to accessibility to health care, the poor have less access to health care and health insurance. Based on data from Trinidad and Tobago, only 45 percent of the poorest 20 percent that visited health facilities went to private institutions; the mean distance to the facility was almost twice that of the richest 20 percent, as was the time taken to get there. Only 14 percent of persons aged 55-64 in the first quintile was covered by national insurance. As has been shown, locations inhabited by the poor are often environmentally vulnerable or degraded. This can be a result of location density, caused by high population growth rates which are associated with poverty, and directly exacerbate problems of environmental degradation. Population pressures, mainly through location density, have had a serious impact on environmental degradation in the Caribbean. In Guyana, location density has led to the environmental vulnerability of most of the coastal plain where more than ninety percent of the population live. Rapid population growth in Belize, especially in the rural areas, has led to increasing pressures on the tropical forest areas and increased risk of unsustainable agricultural practices. In the small states, in particular the OECS, the concentration of the population on the coastal areas have put much strain on its resources. Lack of concentration can also lead to degradation of the environment and the aggravation of poverty, since it creates difficulties in providing economic and efficient services to the poor. Various manifestations of population- environment- poverty effects are common to many Caribbean countries whether the vast proportions of its population is concentrated along the coastal areas, or whether spread out in remote sites. The inability to provide efficient services to the poor because of high location density or lack thereof, leads to aggravation of poverty and further degradation of the environment. Another poverty environmental link is manifested in the degradation of the natural resource base that the poor needs. When the poor depend on the environment for their economic well being, pressures on natural resources through overgrazing, over fishing and general resource overuse, result in lower productivity and reduced incomes; the degradation of agricultural lands and pasture in itself bring increased risks to poor farmers, lowers land quality and consequently yields, and increases the risks of erosion and flooding. an Oil Based Economy," World Bank Report No. 14382-TR Washington, DC, and for Jamaica "Jamaica A Strategy for Growth and Poverty Reduction," World Bank Report No. 12702-JM. 153 Poverty reduction and human development in the Caribbean The most illuminating example of this is in Haiti, where massive deforestation has left more than ninety percent of the country denuded. The principal reason for this has been the perennial use of charcoal as the main source of fuel and as a means of economic survival. Recent reports suggest that charcoal is being exported to the Dominican Republic where environmental regulations forbid its production.4 Poor cultural practices, as well as rudimentary farming methods also contribute to environmental degradation in Haiti. Due to the high level of poverty, efforts to minimize or reverse environmental damage have not been a major concern of the population nor the authorities. Some analysts argue that the elite have profited from both the instigation and the aftermath of environmental destruction and therefore have little incentive to lead the process of change. This would seem to suggest the importance of both political and economic factors in attempts to curb environmental decay in that country. Degradation of the natural resource base also occurs by the action of the non-poor; the environmental impact of logging in Guyana has resulted in the exploitation of the greenheart, destruction of other tree species, soil erosion, increased biological oxygen demand from the discharge of organic waste from sawmilling, as well as oil pollution from the discharge of petroleum products. The recent spill at the Omai Gold Mine which sent millions of gallons of cyanide infested water pouring into the Essequibo river47, represented the worst environmental disaster in that country. The spill led to the pollution of the Essequibo, and has the consequences of reducing significantly the access to safe drinking water, as well as increasing the risks of diseases, particularly to the poorer section of the population. Main poverty/environment issues facing the Caribbean. The main environmental issues facing Caribbean countries (Table VII.1) are outlined in their National Environment Action Plans'. The five main priority areas are: Waste Management. This is the most important environmental problem in the Caribbean. The region suffers from ineffective and outdated waste disposal systems, concentrated mainly in the cities. The increased amounts of agricultural, industrial and ship generated waste, as well as population pressures have put stress on these facilities causing concern for the health of the population. As a result, there is need for major improvements in the systems of waste collection and disposal. 46 See Paul Wallich "The wages of Haiti's dictatorship," in Scientific American. December 1994, pg. 36. 4' This is Guyana's main river. It is the source of water for many Guyanese, in particular the Amerindian people who live in the interior. 48 NEAPs are available only for the countries in Table 2. However it is considered that the issues identified do reflect the realities of the wider Caribbean area. 154 Annex VII Poverty and the Environment * Land Use. This is a high priority for several Caribbean countries, particularly the small island states. Poor farming methods and growing urbanization have resulted in deforestation and encroachment on prime agricultural lands. Squatting has become an area of concern to many countries. * Water Pollution. The main form of pollution is agrochemical, and pollution due to improper disposal of liquid and solid waste. Presently there is no measure of the level of water pollution, nor to what extent it affects the health of the populations. * Coastal Zone Management. Diminishing fish reserves, the depletion of coastal species, destruction of coral reef and mangrove, and beach damage due to sand mining, are of concern to Caribbean countries, not only from an environmental perspective, but also because of its economic implications, due to the region's dependence on tourism as a major source of foreign exchange and economic growth. * Natural Hazards. Many Caribbean countries lie in the tropical belt and are subject to many natural hazards such as hurricanes, floods, earthquakes and land slides. Dominica, Grenada, St. Vincent and the Grenadines, Antigua and Barbuda, Montserrat, Jamaica and Haiti have experienced such calamities. There is therefore much concern of the damaging effect of natural disasters on the economies and infrastructure of Caribbean countries, as well as the high cost of rehabilitation. Policy interventions. Increased urban and rural poverty can worsen environmental problems. Policy intervention is therefore important in addressing both these issues. Several governments, including those of Jamaica, Guyana, Grenada, St. Vincent and the Grenadines, St. Lucia, Belize, Dominica and St. Kitts /Nevis, have addressed these in their National Environmental Action Plans. The main policy responses are summarized in Table VII.2. Table VILl: Major environmental priorities, selected Caribbean countries Priorities BELIZE DOMINICA GRENADA GUYANA JAMAICA MONSERRAT ST. ST. ST. ______ ________ ________ ________ KITTS LUCIA VINCENT Land use x x x x x x x x x Watershed mnagement x x x Conservation _ x _ x _ Waste management x x x x x x x x x Public awareness x x x Coastal zone mngmnt. x x x x x x x x Natural hazard x x x x x Water pollution x x x x x x Parks and protected x x x x x areas I_I_I_I_I Human resources I_x Natural resource x management Source: National Environmental Action Plans, 1994. Other policies that can directly break the poverty/ environmental degradation cycle are: * Provision of property rights to the poor. * Provision of technical extension support and agricultural credits to small farmers. 155 Poverty reduction and human development in the Caribbean * Expand and improve health and general services to the poor, especially the rural poor. * Conduct special sanitation health seminars for the poor. Implementation of these proposed actions will be difficult without the financial and technical assistance of donor countries, because of lack of resources and expertise in the region. Table VIL2: Policy response to main environmental concerns, Caribbean Region Concern Proposed action Waste management 1. Upgrade infrastructure through improvements in disposal facilities 2. Institute cost recovery measures 3. Strengthen institutional capacity. Land use 1. Introduce land pricing policy or enforce same where it exist. 2. Establish physical planning units 3. Establish zoning regulations 4. Establish land tenure policy and squatter regulations 5 . Designate conservation areas Water pollution 1. Rehabilitation of water facilities 2. Monitoring and improvement of water quality 3. Training in pesticide control Coastal zone management Development of a coastal zone management program Natural hazards 1. Prepare disaster preparedness programs 2. Information Dissemination 3. Development and enforcement of a building code 156 Statistical Appendix List of tables 1 Basic socio-economic indicators of selected Caribbean countries ............................................. 161 2: Poverty estimates of selected Caribbean countries ............................................................... 162 3: The distribution of consumption/welfare in selected Caribbean countries ............................... 163 4: The geographical distribution of poverty in the Caribbean ...................................................... 164 5: Consumption patterns among households in selected Caribbean countries .............................. 164 6: Demographic characteristics of households in selected Caribbean countries ........................... 165 7: Labor force participation in households in selected Caribbean countries ................................. 166 8: Employment by occupational group in selected Caribbean countries ....................................... 166 9: General health indicators of selected Caribbean countries ...................................................... 167 10: General indicators of child survival and development in selected Caribbean countries ............. 167 11: Nutritional status of infants in selected Caribbean countries ................................................... 168 12: Recurrent expenditure on health, education and social welfare in selected Caribbean countries (period averages*) ............................................................... 169 13: Characteristics of the labor force in selected Caribbean countries ........................................... 170 13: Characteristics of the labor force in selected Caribbean countries (cont'd.) ............................. 171 14: Caribbean Exanination Council pass rates in mathematics and english for secondary school and private candidates in selected Caribbean countries ................................................1 72 15: School attendance by type of school and quintile group (column totals) ..................................1 72 16: General indicators on education in selected Caribbean countries ............................................ 173 17: Age Profile of the Population in Selected Caribbean Countries ............................................... 174 18: Measures of Openness of Caribbean Economies ............................................................... 175 19: Caribbean Countries: Real Exchange Rate ............................................................... 176 20: Caribbean countries: parallel exchange rate premium over official rate (percent) .......... ........ 177 21: Guyana: shares of per capita expenditure quintiles in income and expenditure, by tradable and nontradable goods ............................................................... 178 22: Jamaica: shares of per capita expenditure quintiles in income and expenditure, by tradable and nontradable goods ............................................................... 178 23: Dominican Republic: income and expenditure shares by per capita income quintile (percent), 1992 ............................................................... 179 24: Trinidad and Tobago: expenditure shares of per capita expenditure quintiles, by tradable and nontradable goods ............................................................... 180 25: Belize: Income distribution by type of industry of employment (percent) ............................... 180 26: St. Lucia: expenditure/income shares of per capita expenditure quintiles ............................... 181 27: OECS Countries: shares of key industries in GDP ............................................................... 181 28: Government expenditure and deficit for selected Caribbean countries ..................................... 182 29: Government capital and current expenditure for selected Caribbean countries ........................ 183 159 30: Goverrnent expenditure on social sectors for selected Caribbean countries ........................... 184 31: Social indicators for Caribbean countries ...................................................... 185 32: Guyana: Quintile's shares of beneficiaries of public spending ................................................ 186 33: Guyana: Per Capita Recurrent Spending in Health and Education by Region ......................... 186 34: Jamaica: quintile's share of beneficiaries for public services .................................................. 187 35: Dominican Republic: quintile's shares of expenditure for taxed or subsidized consumption items ................... 187 36: Trinidad and Tobago: quintile's share of beneficiaries of public services ............................... 188 37: St. Lucia: quintile's share of beneficiaries of public services .................................................. 188 38: Public employment for selected Caribbean countries ................................................... 189 39: Caribbean countries: wages as percent of total expenditure ................................................... 189 40: Real public sector wages index ......................1,.. . .,. l90 41: Expenditure quintile's share of public sector jobs and income from public sector jobs .............1 90 42: Belize: income distribution by type ofjob (percent) ............................................................ 190 43: Characteristics of migrants from Guyana and St. Lucia ..........................................................1 91 44: Percentage of Students Age 3-4 Attending Pre-school by Quintile ..........................................1 91 45: Legal migration from Caribbean countries to North America and remittance ......................... 192 46: Caribbean countries - private transfer receipts, 1985-94, millions USS ................................... 192 47: Caribbean countries - private transfer receipts, 1985-94, as a percent of GDP ........................ 193 48: Severance pay in selected Caribbean countries ............................................................ 194 Technical notes to tables .............. 195 160 Table 1 Basic socio-economic indicators of selected Caribbean countries Country Population Total Life Infant Daily Adult Enrollment ratios GNP per capita size dependency expectancy mortality calorie illiteracy (1990) 1994 (1994) ratio (1991) (1992) (per 1,000 intake rate (%) (US$) live births)a (1989) (1992) (1992) _ _ Primary Secondary Higher Antigua and Barbuda 65,000 93 74 19 2222 5 n.a. n.a. 1.0 6970 The Bahamas 273,000 65 72 22 2761 1 79.0 52.0 1.4 11500 Barbados 265,000 72 75 9 3279 1 110.0 93.0 19.4 6240 Belize 210,000 108 69 19 2656 9 n.a. n.a. 0.2 2550 Dominica 71,000 73 72 18 2810 6 n.a. n.a. 0.6 2830 The Dominican Republic 7,300,000 94 67 65 2530 20 133.0 47.0 19.3 1040 Grenada 92,000 85 70 15 2706 3 n.a. n.a. 0.5 2620 Guyana 825,000 91 65 50 2710 4 90.0 55.0 2.1 530 Haiti 7,000,000 84 55 97 2013 47 78.0 18.0 1.1 n.a. Jamaica 2,496,000 104 74 13 2609 24 106.0 58.8 4.2 1463 St. Kitts/Nevis 41,000 74 68 24 2609 10 n.a. n.a. 1.1 4760 St. Lucia 145,000 76 71 18 2595 10 n.a. n.a. 0.6 3450 St. Vincent and 111,000 78 71 22 2604 18 n.a. n.a. 0.5 2120 Grenadines Suriname 406,265 106 69 37 2975 5 133.0 66.0 7.7 870 Trinidad and Tobago 1,292,000 76 71 11 2853 4 n.a. 76.0 4.2 3740 n.a.: Not Available. a. Infant Mortality Rate is the number of infants who die before reaching one year of age per thousand live births in a given year. Source: Figures on Life Expectancy Infant Mortality, Adult Illiteracy, Daily Caloric Intake, Enrollment Ratios and GNP per Capita, see World Bank, 1995, Social Indicators of Development, London, The John Hopkins University Press. Population and Dependency Rations from National Censuses (1990-1991). 0% Table 2: Poverty estimates of selected Caribbean countries Country Poverty indicator (Poverty measure Extreme Head Poverty Poverty Annual per Daily per Integrated Basic needs Human derived using 2400 poverty count gap severity capita capita poverty index (very development kcal food basket) index index (P2) poverty equivalent index needy BNI indicator (Pa) (In) line US$ (severe < 0.50) poverty poverty > line 0.40) Belize 7.0 34.6 12.5 6.4 1313(B$) $1.80 0.501 0.677 0.666 Dominican Republic 11.8 20.6 n.a. n.a. 4550(RD$) $1.24 0.380 0.699 0.638 Guyana 29.0 43.2 16.2 8.2 47,500(G$) $1.04 0.591 0.773 0.580 Jamaica n.a. 34.2 10.6 4.4 4151 (J$) $1.76 0.688 0.831 0.749 St. Lucia 5.3 25.1 6.5 3.5 2136(EC$) $2.17 0.355 0.773 0.709 Trinidad and Tobago 11.0 21.2 7.3 3.7 2,420(TT$) $1.56 0.239 0.885 0.855 Poverty estimates derived using alternative methods Antigua and Barbuda n.a. 12.0 n.a. n.a. n.a. n.a. 0.223 0.892 0.796 The Bahamas n.a. 5.0 n.a. n.a. n.a. n.a. n.a. 0.854 Barbados n.a. 8.0 n.a. n.a. n.a. n.a. 0.057 0.926 0.894 Dominica n.a. 33 n.a. n.a. n.a. n.a. 0.501 0.782 0.749 Grenada n.a. 20.0 n.a. n.a. n.a. n.a. 0.192 0.862 0.707 Haiti n.a. 65.0 n.a. n.a. n.a. n.a. 0.755 0.439 0.354 St. Kitts/Nevis n.a. 15.0 n.a. n.a. n.a. n.a. 0.282 0.800 0.730 St. Vincent and the Grenadines n.a. 17.0 n.a. n.a. n.a. n.a. 0.396 0.776 0.732 Suriname n.a. 47.0 n.a. n.a. n.a. n.a. 0.356 0.677 0.818 n.a.: Not Available. Sources: Head count Index, Antigua and Barbuda, Barbados, Domnisica, Grenada, St. KittslNevis, St. Vincent and the Grenadines poverty estimates from IDB as reported in Green, E. "Reducing Poverty in the Caribbean by Interventions in Health and Education," PAHO ,Table 1.1. Belize-(1995) Poverty Assessment, Kairi Consultants; Dominican Republic, 1994, "Estabilizacion Apertura y Pobreza en Republica Dominicana, 1986-1992," Fundacion Economia y Desarollo, Inc.; Guyana-1993 HIES/LSMS as reported in World Bank, 1994 "Guyana: Strategies for Reducing Poverty," Report No. 12861-GUA; Haiti (1987) Poverty estimate reported in ECLAC, 1993, "Poverty Issues and Poverty Alleviation in the Caribbean," Working Paper. Jamaica, Survey of Living Conditions (1992) estimates derived from: "Jamaica: A Strategy for Growth and Poverty Reduction, Country Economic Memorandum; St. Lucia (1995) calculations from Survey of Living Conditions.as reported in CDB St. Lucia Poverty Assessment; Suriname (1986), reported in IDB, 1994, " Suriname: Macro Economic and Social Sector Update"; Trinidad and Tobago 1992, Survey of Living Conditions as reported in World Bank, 1995, "Trinidad and Tobago: Poverty and Unemployment in An Oil Based Economy," Report No. 14382-TR. Integrated Poverty Indices and Basic Needs Indices from IFAD, "The State of World Rural Poverty: A Profile of Latin America and the Caribbean," HDI from UNDP. Table 3: The distribution of consumption/welfare in selected Caribbean countries Country Welfare measure Q Quintile Grou Gini Poorest Q2 Q3 Q4 Q5 coefficient icit Belize .510 n.a. n.a. n.a. n.a. n.a. Domninican Republic .490 4.2 7.9 12.5 19.7 55.6 Guyana .423 4.1 8.2 13.3 19.3 55.1 Jamaica .430 6.5 10.8 15.2 22.3 45.2 St. Lucia .468 7.11 11.99 16.63 22.64 41.63 Trinidad and Tobago .420 4.7 8.6 12.8 21.2 52.7 (Quintile groups derived using Income) Antigua and Barbuda .525 n.a. n.a. n.a. n.a. n.a. The Bahamas .515 3.4 8.8 37.2 50.6 Barbados .460 5.8 12.8 37.4 44.0 Dominica .488 n.a. n.a. n.a. n.a. n.a. Grenada .504 n.a. n.a. n.a. n.a. n.a. Haiti n.a. n.a. n.a. n.a. n.a. n.a. St.Kitts/Nevis .445 n.a. n.a. n.a. n.a. n.a. St.Vincent and Gr|nadines .448 n.a. n.a. n.a. n.a. n.a. Suriname .573 n.a. n.a. n.a. n.a. n.a. n.a.: Not Available. RPI- Regional Price Index Notes: The Gini Coefficient is en index which represents inequality in the distribution of income and consumption. Most quintile groups were constructed using per capita household expenditure adjusted for household composition (equivalence scales) and regional price differentials. Where income is used in the determination of quintiles, it is indicated. Quintile I represents the poorest 20 percent of the population while Quintile 5 represents the wealthiest 20 percent. Source.: Bahamas, Barbados, Dominica, Grenada, Haiti, St. Kitts/Nevis quintile groups and Gini Coefficient estimates based on IDB estimates reported in Greene, E. "Reducing Poverty in the Caribbean by Interventions in Health and Education," 1994 Washington, DC, Pan-American Health Organization. Belize, SLC 1995, Dominican Republic IES, 1990, Guyana HIES/LSMS 1993, Jamaica SLC 1992, St. Lucia, SLC, 1995, Trinidad and Tobago, SLC 1992. 163 Table 4: The geographical distribution of poverty in the Caribbean Country Percent Urban of Headcount Index (%/6) Percent of total poor living Total Population in: Rural Urban Rural Urban Belize 56 21 24 47 53 Dominican Republic 63 30 11 Guyana 37 51 27 68 32 Jamaica 53 41 46 70 30 St. Lucia 34 30 16 78 22 Trinidad and Tobago 45 20 24 52 48 Source: see Table 2. Table 5: Consumption patterns among households in selected Caribbean countries Country Mean budget Quintile group share Q1 Q2 Q3 Q4 Q5 Total Poorest Belize Food 52.0 49.0 47.0 37.0 25.0 37.0 Non- Food 48.0 51.0 53.0 63.0 75.0 63.0 Dominican Republic Food 60.6 n.a. n.a. n.a. 41.2 n.a. Non- Food 39.4 n.a. n.a. n.a. 58.8 n.a. Guyana Food 67.0 61.1 56.8 53.1 44.4 55.2 Non- Food 33.0 38.9 43.2 46.9 55.6 44.8. Jamaica Food 67.4 63.1 61.1 58.9 49.2 n.a. Non- Food 32.6 36.9 38.9 41.1 50.8 n.a. St. Lucia Food 53.4 51.3 46.3 41.5 26.5 38.1 Non- Food 46.6 48.7 53.7 58.5 73.5 61.9 Trinidad and Tobago Food 57.7 56.7 53.5 48.3 41.7 50.0 Non- Food 42.3 43.3 46.5 51.7 58.3 50.0 n.a.: Not Available. Source: see Table 2. 164 Table 6: Demographic characteristics of households in selected Caribbean countries Country Household characteristic Quintile group Q1 Q2 Q3 Q4 Q5 Total Belize Female Headed HH (%/6) 29.1 27.1 20.9 17.0 26.1 23.9 Age of Head of HH (Mean) 46.3 45.2 43.4 45.5 44.7 44.9 HH Size (Mean) 6.5 6.0 5.6 4.6 3.1 4.8 No. of Children (<17 yrs.) 3.9 3.4 3.0 2.1 2.0 2.4 Highest Educational Level (Head): Primary 87.9 81.5 85.1 80.6 60.8 76.3 Secondary 7.1 12.6 12.7 12.4 25.3 15.8 Tertiary -- 0.8 2.2 5.9 12.2 5.3 Guyana Female Headed HH (%/6) 28.2 26.6 24.8 31.1 28.2 28.2 Age of Head of HH (Mean) 45.7 48.3 45.5 44.1 42.8 44.2 HH Size (Mean) 5.6 5.1 4.3 4.1 3.4 4.4 No. of Children (<17yrs.) 2.6 2.1 1.8 1.7 1.4 1.8 Highest Educational Level (Head): Primary 90.0 83.5 77.6 76.7 55.5 74.6 Secondary 10.0 15.3 20.5 21.5 36.0 22.2 Tertiary 0.0 1.2 1.9 1.8 8.5 3.2 Jamaica Female Headed HH (%) 44.1 46.9 46.4 41.0 38.9 43.7 Age of Head of HH (Mean) HH Size (Mean) 6.0 5.2 4.3 3.6 2.5 3.9 No. of Children (< 15 yrs.) 2.63 2.04 1.48 1.09 0.59 1.3 Highest Educational Level (Head): Primary 59.6 51.0 49.9 45.0 31.2 44.5 Secondary 40.4 48.0 48.6 52.5 52.6 50.9 Tertiary 0.0 1.0 1.5 2.5 11.8 4.6 St. Lucia Female Headed HH(%) 45.8 50.8 50.0 37.5 30.0 42.8 Age of Head of HH(Mean) 48.7 48.4 45.2 44.7 45.8 46.6 HH Size (Mean) 5.2 4.5 4.0 3.3 2.6 3.9 No. of Children (<17 yrs.) 2.6 1.9 1.6 1.0 0.6 1.5 Highest Educational Level (Head) Primary 93.0 87.0 81.8 72.7 58.0 78.1 Secondary 6.0 11.1 13.6 22.7 25.0 15.9 = $24,000 2.5 1.1 22.6 3.9 5.2 1.9 2.0 Total - 12,193 93.0 3,441 923 3,459 5,633 Workers Share - 0.5 0.00 0.1 0.0 0.1 0.2 Source: Belize Central Statistical Office (1990). 180 Table 26: St. Lucia: expenditure/income shares of per capita expenditure quintiles 1 2 3 4 5 Expenditures Tradables 5.7 10.9 15.1 23.5 44.9 Nontradables 2.3 4.8 9.9 17.4 65.6 Total 4.3 8.4 12.9 20.9 53.6 Income Tradables 11.2 12.2 22.0 25.5 29.1 Nontradables 4.4 11.3 19.8 20.3 44.2 Total 6.8 11.6 20.6 22.1 39.0 Tradable expenditure share 23.0 24.6 33.0 35.8 52.6 Tradable income share 56.0 35.8 36.3 39.2 25.4 Source: St. Lucia, SLC (1995). Table 27: OECS Countries: shares of key industries in GDP 1980-84 1985-89 1990-94 Antigua and Barbuda Hotels and Restaurants 13.4 15.8 13.3 Agriculture 6.2 4.4 4.1 Manufacturing 5.1 3.6 3.0 Dominica Hotels and Restaurants 1.0 1.3 2.3 Agriculture 29.8 28.3 22.9 Manufacturing 7.2 6.6 7.8 Grenada Hotels and Restaurants 5.2 6.1 7.5 Agriculture 20.1 19.5 15.0 Manufacturing 4.4 5.1 5.4 St. Kitts and Nevis Hotels and Restaurants 3.9 8.0 8.9 Agriculture 13.0 9.6 6.4 Manufacturing 13.9 14.3 12.2 St. Lucia Hotels and Restaurants - 7.8 9.4 Agriculture - 15.2 13.0 Manufacturing - 8.4 7.7 St. Vincent Hotels and Restaurants 2.1 2.1 2.4 Agriculture 16.7 18.3 17.6 Manufacturing 11.2 10.8 8.9 Source: World Bank staff estimates. 181 Table 28: Government expenditure and deficit for selected Caribbean countries Percent of GDP 1980484 198589 1990-92 Antigua and Barbuda Expenditures 33.1 28.1 23.3 Deficit -8.9 -5.5 -2.6 Barbados Expenditures 30.8 31.1 32.2 Deficit -5.2 -4.6 -2.4 Belize * Expenditures 26.6 26.1 32.7 Deficit -0.6 1.0 -3.7 Dominica Expenditures 54.2 46.7 48.7 Deficit -21.0 -9.5 -12.5 The Dominican Republic Expenditures 14.3 15.9 Deficit -2.3 -0.8 Grenada Expenditures 63.1 49.2 37.4 Deficit -31.4 -18.7 -9.1 Guyana Expenditures 77.8 90.6 81.1 Deficit -39.1 -48.9 -31.5 Jamaica Expenditures 42.8 36.5 31.8 Deficit 11.4 -3.2 3.2 St. Kitts & Nevis Expenditures 37.5 33.4 Deficit -6.4 -7.0 St. Lucia Expenditures 32.4 32.3 33.6 Deficit -6.1 -1.9 -2.6 St. Vincent & Grenadines Expenditures 43.1 37.7 37.2 Deficit -12.3 -3.8 -5.4 Trinidad & Tobago ** Expenditures 47.5 35.9 29.8 Deficit * Belize data are for 1983-84 in column 1; 1985, 1988, and 1989 in column 2; and 1990-1993 in column 3. ** Trinidad and Tobago data are for 1981-1984 in column 1 and 1990-1994 in column 3. Sources: World Bank staff estimates; IMF (1992a, b). 182 Table 29: Government capital and current expenditure for selected Caribbean countries Perrent of (I)P 19X(1_9 19XSA9 1990-l9 Antigua and Barbuda Capital 7.0 6.8 2.1 Current 26.1 21.4 21.2 Barbados Capital 7.4 6.2 4.2 Current 23.4 24.9 27.5 Belize* Capital 4.2 6.6 14.0 Current 21.9 19.5 18.7 Dominica Capital 18.8 17.6 19.2 Current 35.4 29.1 29.5 The Dominican Republic Capital 3.2 6.8 Current 10.6 9.0 Grenada Capital 32.6 18.7 8.0 Current 30.5 30.5 29.4 Guyana Capital 18.4 15.6 14.3 Current 59.5 75.0 66.8 Jamaica Capital 11.0 9.4 7.0 Current 31.7 27.1 24.8 St. Kitts & Nevis Capital 6.6 8.3 Cufrent 30.9 25.1 St. Lucia Capital 8.2 10.4 13.4 Current 24.2 22.0 20.1 St. Vincent & Grenadines Capital 12.9 12.2 13.4 Current 30.2 25.5 23.7 Trinidad & Tobago ** Capital 16.4 4.2 2.1 Current 31.1 31.7 27.7 *Belize data are for 1983-84 in column 1; 1985, 1988, and 1989 in column 2; and 1990-1993 in column 3. **Trinidad and Tobago data are for 1981-1984 in column 1 and 1990-1994 in column 3 Sources: World Bank staff estimates; IMF (1992a, b). 183 Table 30: Government expenditure on social secton for selected Caiibbean countries Percent nf GDP 1980-84 1985-89 1990-92 Antigua and Barbuda Education 3.2 2.5 - Health - - Social Security / Welfare - 0.7 0.5 Barbados Education 6.0 5.9 Health 3.4 3.8 Social Security / Welfare 5.1 7.0 - Belize* Education 4.5 4.4 5.5 Health 2.5 2.2 2.6 Social Security / Welfare - - - Dominica** Education - 4.8 4.8 Health - 4.0 4.1 Social Security / Welfare - - The Dominican Republic Education 2.1 1.7 Health 1.5 1.5 Social Security / Welfare 1.2 0.8 - Grenada** Education - 4.3 4.4 Health - 3.1 3.1 Social Security I Welfare - Guyana Education - 5.7 Health - - Social Security / Welfare - - Jamaica*** Education 6.8 4. Health 3.2 2.4 Social Security / Welfare St. Kitts & Nevis** Education - 3.3 2.5 Health - 2.5 2.1 Social Security f Welfare - 2.8 St. Lucia** Education 5.7 4.9 5.0 Health 3.1 2.4 2.3 Social Security / Welfare - - - St. Vincent & the Grenadines** Education - 5.6 4.9 Health - 3.6 3.3 Social Security / Welfare - - - Trinidad & Tobago Education 5.0 5.2 Health - - Social Security / Welfare - * Belize data are for 1983-S4 in colunn 1; 1935, 1933, and 19S9 in column 2, and 1990-1993 in column 3; R .Rcrnt expndiurshaeoy ' Jamaica health data from 'World Bank, Jamica, 'A Strategy for Growth and Povaty Rduction, World Bank, Washington, DC. Sources: World Bank staff etiinata; IMF (1992a, b). 184 Table 31: Social indicators for Caribbean countries Health Enrollment ratios Life Infant Expectancy Primary Secondary Morality at Birth 1980 1990 1980 1990 1980 1988-90 1980 1987-89 Antigua and Barbuda 32 21 71 74 -- - -- -- Barbados 21 9 72 75 100 114 90 87 Belize* 60 45 65 68 -- - -- -- Dominica 13 18 71 72 -- 95 -- -- Dominican Republic 71 56 63 67 118 95 42 74 Grenada 39 31 67 70 -- - -- - Guyana 65 51 61 64 102 115 66 54 Jamaica 21 16 71 73 103 105 67 60 St. Kitts and Nevis* 45 26 67 70 -- -- -- - St. Lucia* 25 18 68 72 -- -- -- -- St. Vincent* 31 21 67 70 -- -- -- -- Trinidad and Tobago 34 20 68 71 99 97 70 83 * Health data are for 1982 rather than 1980. Source: UNESCO (1992). 185 Table 32: Guyana: Quintile's shares of beneficiaries of public spending Expenditure item Quintile Quintile Quintile Quintile Quintile 1 2 3 4 5 Education Primary 28.9 24.9 18.5 19.0 8.6 Secondary 15.7 24.0 22.0 23.5 14.8 Post-Secondary 7.7 12.5 28.0 19.4 32.5 Meal at school 23.4 27.1 19.7 21.0 8.8 Free textbooks 25.6 24.5 22.9 16.4 10.7 First health consultation Public hospital 19.2 22.5 18.1 28.2 12.1 Public health center 28.0 15.8 20.7 21.7 13.8 Public health post 67.0 2.6 7.0 16.4 7.1 Public medicines 18.1 7.4 11.0 31.3 32.2 Payments received from NIS*+ 3.1 4.7 29.1 27.9 35.2 Public services Electricity connection 9.4 15.5 19.4 24.4 31.3 Sewer connection 4.7 13.2 17.6 19.9 44.6 Piped water, house 11.1 10.1 17.2 22.2 39.4 Piped water, yard 8.3 15.7 21.8 25.9 28.4 Other public source 21.2 25.5 20.7 19.0 13.6 Per capita expenditure 5.8 10.0 14.0 19.8 50.4 * Refers to share of actual dollar benefits received, not number of recipients. + All above calculated from HIES and all below from World Bank (1994). Source: Guyana Bureau of Statistics (1992). Table 33: Guyana: Per Capita Recurrent Spending in Health and Education by Region Per capita recurrent spending, 1993 (G$) Region Health Education Head Count Index 1 555 1500a *79a 2 1741 4479 .55 3 2825 7835 .46 4 2897 6635 .32 5 1647 3148 .56 6 7756 7005 .37 7 771 1226a .45 8 128a 575a .95a 9 611a 1477a .93a 10 528a 3403 .31 a. Lowest per capita spending, poorest regions. Source: World Bank (1994). 186 Table 34: Jamaica: quintile's share of beneficiaries for public services Quintile Quintile Quintile Quintile Quintile 1 2 3 4 5 Education Primary 31.0 26.8 20.6 15.4 6.2 Secondary 10.2 14.8 24.8 29.9 20.4 Technical/Vocational 6.2 31.0 22.1 28.9 11.7 Health Hospital 19.1 17.5 23.0 22.6 17.7 Health Center 25.2 30.4 15.6 17.7 11.1 Public Utilities Sew Connection 10.6 8.4 20.3 23.6 37.1 Water connection, indoor 5.8 9.1 20.7 25.3 39.1 Public standpipe 28.7 27.9 17.0 17.5 8.9 Electricity connection 11.6 15.7 21.6 24.1 27.0 Percapitaexpenditure 4.8 9.4 14.6 22.1 49.1 Source: Survey of Living Conditions (1989) and (1992). Table 35: Dominican Republic: quintile's shares of expenditure for taxed or subsidized consumption items Item 1 2 3 4 5 Natural gas subsidy, 1992 4.6 9.8 20.0 22.8 42.7 Petroleum tax, 1992 5.4 8.4 14.8 20.8 50.5 Milk expenditure, 1986 4.1 8.1 14.5 21.5 51.8 Milk expenditure, 1992 6.5 10.0 17.6 19.4 46.6 Rice expenditure, 1986 6.7 14.1 19.6 24.6 34.9 Rice expenditure, 1992 12.9 14.8 18.7 21.3 32.3 Edible oils, 1986 5.0 11.7 18.3 24.9 40.1 Edible oils, 1992 10.3 12.9 16.7 21.7 38.4 Income per capita, 1992 4.4 8.0 12.5 18.6 56.5 Source: FED (Fundaci6n Economia y Desarrollo, Inc.). 1992. Estabilizaci6n, apertura y pobreza: En Repzublica Dominicana, 1986-1992. 187 Table 36: Trinidad and Tobago: quintile's share of beneficiaries of public services Quintile Quintile Quintile Quintile Quintile 1 2 3 4 5 Education Primary 30.9 24.0 22.2 15.6 7.3 Junior Secondary 29.1 23.3 22.4 19.3 5.8 Secondary 17.7 19.6 27.5 20.4 14.9 University/Technical 4.1 9.3 13.6 36.3 36.7 School feeding 43.1 27.3 15.2 10.6 3.8 Free textbooks 19.6 13.6 17.4 27.4 21.9 Health Hospital 16.7 23.4 25.2 16.1 18.6 Health Center 8.1 34.7 14.2 7.1 36.0 Public Utilities Sew Connection 5.7 11.9 12.8 18.7 50.8 Pipedwater, indoor 6.5 12.4 18.9 24.1 38.1 Piped water, outdoor 19.8 24.0 16.4 20.4 19.3 Electricity connection 10.5 16.0 19.1 22.5 32.0 Per capita expenditure 6.8 12.2 16.4 23.8 40.8 Source: Central Statistical Office, Trinidad and Tobago (1992). Table 37: St. Lucia: quintile's share of beneficiaries of public services 1 2 3 4 5 Health Services Public Hospitals 25.8 28.1 14.3 15.0 16.8 Public Health Centers 24.7 25.6 15.4 10.5 23.7 Education Public Primary Schools 26.7 23.6 19.8 19.2 10.6 Public Secondary Schools 16.9 22.0 30.7 19.2 11.2 Free Meal at School 17.4 24.3 47.9 5.5 4.9 Free Textbooks at Schools 20.6 14.0 21.9 13.3 30.4 Public Utilities Sewer Connection 3.8 7.3 11.1 26.4 51.4 Indoor Water Connection 9.7 10.1 20.9 23.9 35.3 Outdoor Water Connection 25.9 26.0 17.1 16.6 14.5 Electricity 11.7 13.4 17.4 25.2 32.3 Per capita expenditures 4.3 8.4 12.9 20.9 53.6 Source: Survey of Living Conditions, (1995). 188 Table 38: Public employment for selected Caribbean countries Public Public employment/ Country employment/ total population total employment Antigua and Barbuda 27.5 13.3 TheBahamas 21.0 11.3 Barbados* 38.0 15.4 Belize** 16.0 5.3 Dominica 17.7 6.5 Grenada 26.2 7.7 Guyana 34.6 11.0 Jamaica 9.7 4.2 St. Lucia*** St. Vincent & the Grenadines 20.7 8.1 Trinidad & Tobago 29.8 12.0 Caribbean average 24.1 9.5 OECD Average, 1978 16.3 15 LDC Average, 1990 (WDR) - 2.9 * Barbados public/total from BID (I994). * * Belize public/total from survey data. *** St. Lucia data are from a household survey, not a labor market survey as in the other countries. Sources: World Bank staff estimates for Caribbean data; World Bank (1995b) for other LDCs; Maveman (1985) for OECD. Table 39: Caribbean countries: wages as percent of total expenditure Country 1985 1989 Antigua and Barbuda 40.3 35.2 Barbados 31.4 34.4 Belize 43.3 39.8 Dominica 36.5 26.8 Dominican Republic 37.0 24.1 Grenada 28.8 41.1 Guyana - 7.5 Jamaica 26.9 21.3 St. Kitts and Nevis 36.7 38.8 St. Lucia 41.8 32.8 St. Vincent 36.1 37.0 Trinidad and Tobago 33.8 35.0 Average* 35.7 33.4 Industrial country average 12.2 11.7 Asian NIC average 21.1 23.7 Latin American average 26.1 26.1 * Excludes Guyana. Source: :MF (1992a). 189 Table 40: Real public sector wages index 1987 1988 1989 1990 1991 1992 1993 Guyana (Grade 16) 100 - - 38.6 41.4 - Guyana (Grade 1) 100 - - - 58.2 62.3 - Barbados - - 95.2 96.4 91.9 82.2 86.3 Table 41: Expenditure quintile's share of public sector jobs and income from public sector jobs Quintile Quintile Quintile Quintile Quintile 1 2 3 4 5 Jamaica Share of public sector jobs 4.4 6.4 16.3 24.6 48.3 Share of income from public section 2.0 4.9 15.0 25.2 52.9 Guyana Share of wage/salary jobs 12.3 18.0 17.8 25.1 26.9 Share of income from wages & salaries 8.0 13.8 16.3 23.5 38.3 Share of public work jobs 27.7 27.2 21.7 23.5 0.0 Share of income from public work jobs 34.5 18.0 28.6 18.8 0.0 Trinidad/Tobago Share of public sector jobs 10.7 13.4 17.0 26.6 32.3 Share of income from public sector 3.6 7.2 13.5 28.1 47.6 St. Lucia Share of public sector jobs 8.3 19.0 19.7 22.7 30.3 Share of income from public sector 3.9 10.3 15.2 20.2 50.4 Sources: PIOJ/SIOJ (1989); Guyana Bureau of Statistics (1992); Trinidad and Tobago Central Statistical Office (1992); Kairi Consultants (1995). Table 42: Belize: income distribution by type of job (percent) Income Nat. Other Self Not Level Avg. Gov't. Public Private Employed Employer Appren- Other Stated tice <$3,000 11.6 4.6 1.7 8.3 19.3 16.4 2.8 9.5 15.2 $5,000 26.9 16.8 7.8 25.1 36.2 37.3 13.5 29.2 26.7 $7,000 23.6 26.2 15.5 26.9 19.6 25.0 35.7 17.0 20.6 $8,000 9.7 11.2 3.8 13.2 4.4 1.0 9.1 14.4 10.5 $9,000 5.5 9.3 10.3 5.5 2.5 4.6 5.2 3.8 6.6 $11,000 8.8 12.5 28.7 8.0 5.6 8.6 7.4 7.1 9.7 $13,000 4.0 6.7 13.7 3.8 2.6 0.6 11.5 12.7 1.3 $17,000 5.3 7.8 10.1 5.1 3.6 3.9 14.8 0.0 6.1 $24,000 2.2 2.6 3.8 1.7 3.3 1.0 0.0 4.7 0.8 >$24,000 2.5 2.2 4.7 2.2 2.8 1.7 0.0 1.7 2.7 Total Workers - 6,283 1,519 19,583 12,757 1,367 364 718 6,086 Share - 13 3 40 26 3 1 1 13 Source: Belize Central Statistical Office, (1990). 190 Table 43: Characteristics of migrants from Guyana and St. Lucia Characteristic Guyana St. Lucia Households Percent Urban 46 45 Percent female headed 35 60 Quintile I 9 8 II 12 14 III 16 20 IV 24 18 V 38 39 Individuals Percent women 53 57 Education attained before migrating Primary or less 23 53 Some secondary 57 30 Post secondary 19 17 Reason for leaving Economic 36 36 Family (e.g., marriage, other) 41 42 Study 11 14 Other 12 8 Area moved to USA 47 40 Canada 18 7 Other Caribbean 12 27 Other Region 23 26 Percent of individuals sending contributions home 70 51 Of those sending, % sending regularly 50 57 Sample Size _ Source: Guyana HIES/LSMS, 1993, St. Lucia, SLC, 1995. Table 44: Percentage of Students Age 3-4 Attending Pre-school by Quintile Country Per Capita Quintile 1 2 3 4 5 Country Total Guyana 100 84 95 94 90 92 Jamaica (age 3-5) 63 69 82 79 81 75 St. Lucia 41 71 81 73 83 66 Trinidad & Tobago 30 40 52 56 69 46 Source: Guyana, HEES/LSMS 1993; Jamaica, SLC, 1992; St. Lucia, SLC, 1995; and Trinidad and Tobago, SLC, 1992. 191 Table 45: Legal migration from Caribbean countries to North America and remittance Country % of the popdatim that legally Millions of U.S.$ Remittances as a % of emigrated to North America 1992 % of exports of goods in 1980-89 remittances GNP Barbados 8.9% 29.1 1.8 18.5% Belize 8.6% 19.2 4.9% 16.6% Dominican Republic 3.3% 345 5.0% 61% Guyana 11.5% 13.0 25.5% 4.2% Haiti 2.4% 145.6 6% 89% Jamaica 10.0% 248 7.2% 23.6% Trinidad & Tobago 4.2% -- -- Source: US Immigration and Naturalization Service; Canada, from A Continent of Nations, Mark Kurlansky. World Bank, lMF reports. Table 46: Caribbean countries - private transfer receipts, 1985-94, millions US$ Country 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 Antigua&Barbuda 13.5 11.2 11.7 12.4 19.5 16.9 12.2 10.9 11.6 11.9 Bahamas 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 Barbados 23.7 29.8 31.7 40.0 45.3 48.9 44.0 50.6 40.9 54.1 Belize 21.7 18.4 17.5 15.5 18.7 19.5 18.0 22.3 18.5 18.4 Dominica 11.1 7.0 11.1 12.1 13.2 14.2 14.3 13.9 15.2 14.5 Dominican Republic 193.2 204.2 257.3 270.1 283.6 297.8 312.7 328.3 344.8 402.3 Grenada 10.6 16.7 22.1 23.3 16.7 18.3 19.5 19.6 18.6 26.9 Guyanaa 11.4 10.3 10.9 12.5 14.0 25.0 25.0 25.0 26.0 23.0 Haitib 90.0 95.8 105.4 113.2 124.1 122.8 117.0 145.6 73.4 42.9 Jamaica 191.4 141.3 139.2 160.1 163.3 184.2 183.3 285.2 331.0 479.8 St. Kitts 7.1 10.4 11.6 12.8 19.3 19.1 14.9 14.7 15.1 16.1 St. Lucia 14.8 17.6 19.9 14.1 13.7 15.2 17.3 17.9 15.1 20.5 St. Vincent 16.0 13.0 13.8 13.7 14.4 15.4 15.2 15.4 16.1 19.3 Surinamea (4.0) (0.5) 14.6 27.8 35.3 41.9 55.5 60.0 58.2 55.0 Trinidad and Tobago n.a. n.a. n.a. n.a. 18.5 12.0 7.2 4.6 7.6 .84 a. Based on net private transfers. b. 1993 and 1994 are based on net private transfers. Source: Ministries of Finance of the various countries and IMF staff estimates. 192 Table 47: Caribbean countries - private transfer receipts, 1985-94, as a percent of GDP Country 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 Antigua and 7.8 5.5 4.9 4.3 6.2 4.3 2.9 2.5 2.6 2.4 Barbuda Bahamas 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Barbados 2.0 2.3 2.2 2.6 2.6 2.8 2.6 3.2 2.5 3.1 Belize 10.4 8.1 6.3 4.9 5.1 4.8 4.2 4.7 3.5 3.3 Dominica 11.3 6.3 8.8 8.4 8.6 8.5 7.9 7.2 7.6 7.0 Doninican 4.3 3.8 5.1 5.8 4.2 3.9 3.9 3.7 3.6 3.7 Republic Grenada 9.2 12.8 14.7 14.0 9.2 8.2 8.0 7.8 7.0 9.6 Guyanaa 2.5 2.0 3.2 3.0 3.7 6.3 7.2 6.7 5.6 4.3 Haitib 4.5 4.3 5.2 5.7 5.9 5.2 7.2 11.8 6.0 2.6 Jamaica 9.5 5.6 4.6 4.5 4.0 4.3 4.9 8.5 7.9 11.3 St. Kitts 9.1 11.0 10.7 10.1 13.5 11.9 9.0 8.1 7.7 7.7 St. Lucia 7.9 7.9 8.3 5.2 4.5 3.8 4.0 3.7 3.1 4.0 St. Vincent 14.2 10.2 9.7 8.5 8.3 8.0 7.3 6.7 6.8 8.1 Suriname' (0.5) (0.0) 1.4 2.3 2.5 2.7 2.7 2.1 1.0 15.8 Trinidad and Tobago n.a. n.a. n.a. n.a. .4 .2 1 .1 .2 .2 a. Based on net private transfers. b. 1993 and 1994 are based on net private transfers. Source: Ministries of Finance of the various countries and IMF staff estimates. 193 Table 48: Severance pay in selected Caribbean countries Qualifying Service Rate of Benefit Antigua and Barbuda 1 year 12 days per year laters basic wage Barbados 2 years 12.5 days per year for first 9 years Belize 10 years 5 days per year with 42 weeks as maximum Donmnica 3 years 5 days for first 3 years + 10 days per year for 3 to 5 years 45 days for next 5 years + 10 days per year for 6 to 10 years 95 days for over 10 years + 15 days per year for over 10 Maximum is 52 weeks Jamaica 2 years 10 days per year for first 10 years 15 days per year for over 10 years St. Kitts and Nevis 1 year 10 days per year for first 4 years 15 days per year for 5 to 10 years 20 days per year for over 10 years Maximum is 52 weeks St. Lucia 2 years 5 days per year for first 2 years 10 days per year for 3 to 7 years 15 days per year for over 7 years Weekly wage limited to EC$ 100 St. Vincent and The Grenadines 2 years 10 days per year up to 52 weeks Trinidad & Tobago 1 year 10 days per year for first 5 years 15 days for over 5 years 194 Technical notes to tables Table 1. The Total Dependency Ratio represents the balance between the number of persons of working age per 100 and the population in the dependency age groups. The underlying assumption is that persons under the age of 15 and over 65 years of age are economically dependent. While many persons 65+ do work, the 15-64 age range is conventionally used for international comparisons over time. A high Dependency figure implies that there is a large dependent population relative to the working population. The Total Dependency Ratio is derived by the formula: Population < 15 and Over 65+ Population 15-64 X 100. LIfe Expectancy at Birth indicates the number of years a newborn infant would live if prevailing patterns of mortality at the time of its birth were to stay the same throughout its life. The Infant Mortality Rate is the number of infants who die before reaching one year of age per thousand live births in a given year. The Adult Illiteracy Rate is here defined as the proportion of the population over the age of fifteen who cannot with understanding, read and write a short, simple statement on their everyday life. This is only one of three widely accepted definitions, and its application is subject to qualifiers in a number of countries. For further details refer to, Social Indicators of Development, World Bank. Primary School Enrollment Ratios are derived from estimates of the ratio of children of all ages enrolled in primary school to the country's population of school age children. Although many countries consider primary school age to be 6 to 11 years, others do not. For some countries with universal primary education, the enrollment ratio may exceed 100 percent because some pupils are younger or older than the country's standard school age. The data on secondary school enrollment are calculated in the same manner, and again the definitions of secondary school age differs among countries. It is most commonly considered to be 12 to 17 years. Late entry of mature students as well as repetition and the phenomenon of "bunching" in final grades can influence these ratios. The Tertiary Enrollment Ratio is calculated by dividing the number of pupils enrolled in all post secondary schools and universities by the population in the 20-24 age group. Pupils attending vocational schools, adult education programs, two year community colleges etc. are included. The distribution of pupils across these different types of institutions varies among countries. The youth population of 20-24 was adopted by UNESCO as the denominator because it represents an average tertiary level cohort even though people above and below this age group may be registered in tertiary institutions. 195 Table 2. See Annex I. Table 4. Urban and Rural estimates for most countries are expressed as a percentage of the total population in the particular geographical region. The Rural estimates for Suriname and Haiti are however expressed as a percentage of the entire population. Table 11. Low Birth Weight Babies: The percentage of babies born weighing less than 2,500 grams. Under Five Mortality Rate: The annual number of deaths of children under five years of age, per 1,000 live births averaged over the previous five years. More specifically, the probability of dying between birth and exactly five years of age times 1,000. Immunization: Measures (as a percentage of the age group) the full vaccination coverage of children under one year of age for two of the target diseases of the Expanded Program of Immunization-measles and DPT (diphtheria, pertussis and tetanus). Note that for some countries the ages at which children are vaccinated may differ from the recommended ages. Under 5 Child Malnutrition: Percentage of children under 5 years with deficiency or excess of nutrients that interferes with the children's health and potential for growth. Methods of assessment vary, but the most commonly used are less than 80 percent of the standard weight for age, less than minus two standard deviations form the 50th percentile of the weight for age reference population or the Gomez scale of malnutrition. Note that for a few countries the figures are for children 3 or 4 years and younger. Table 14. The Labor Force: Of the total population 15 years old and over covered in the census/survey, all persons engaged in, or willing and able to be engaged in the production of economic goods and services are classified as being in the labor force. These include employees, as well as employers and the self -employed. In other words, the labor force is comprised of all persons who either had jobs ( the employed), or if they did not have jobs, were willing and able to work (the unemployed). Persons With Jobs: Classified as with Jobs were: (a)AlI persons who worked for pay for any length of time during the survey week; (b) Persons who were temporarily absent from work because of vacation, illness, industrial dispute or some similar cause, but who had jobs to which they would return at the end of that period of absence ( seasonal workers out of work were not included in this category ) and; (c) persons who worked without pay on a family farm of business or as a leamer. Persons Without Jobs and Seeking Work: A further group of persons included in the Labor Force are those who did not have jobs but were willing and able to work. The criterion "willing and Bole to work" is not, however sufficiently objective to ensure consistent interpretation by different enumerators and at different periods. For this reason 196 it is usual in household surveys of this kind to include in the Labor Force only those persons without jobs who were either actively seeking work during the specific survey reference period, or otherwise would have been looking for work except for one or other of a few specified conditions. In most surveys in he Caribbean persons are classified as having looked for work during the survey week if they actually made an effort to obtain a job or, if in reply to the question, "Did you look for work?," they indicated that they wanted a job but did not look for work for one of the following reasons: (a) They were discouraged from seeking work (b) They were awaiting results of previous application for employment (c) They were temporarily ill and could not look for work in that week. (d) They wanted a job but did not know of anywhere to get suitable employment. 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New York: Oxford University Press. 1996a. Prospectsfor Service Exportsfrom the English Speaking Caribbean, Washington, D.C. 1996b. Public Sector Modernization in the Caribbean. Washington, D.C. 205 Poverty reduction and human development in the Caribbean Yitzhaki, Shlomo, and Joel Slemrod. 1991. "Welfare Dominance: An Application to Commodity Taxation." American Economic Review 81 (3): 480-96. 206 Distributors of COLOMBIA HAITn ITALY NEW ZEALAND ROMANIA SWITZERLAND Infoenlace Uda. Cufture Diusbo Licosa Commissbnaria Sansoni SPA EBSCO NZ Ltd. Compani De Librarii Bucuresli S.A. Librairie Payot Service Institutionnel W orld Bank Carrera 6 No. 51-21 5, Rue Capois Via Duca Di Calabria, 1/1 Private Mail Bag 99914 Str, Upscani no. 26, sector 3 Cdtes-de-Montheron 30 Apartado Aereo 34270 C.P 257 Casella Postale 552 New Market Bucharest 1002 Lausanne Publications Sanlae de Bogota, D.C. 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