71687 Nicaragua Social Protection Public Expenditure Review Prepared by Jose Silverio Marques for The World Bank March 12, 2008 1 Acronyms EBI Intercultural Bilingual Education (Educación Bilingue Intercultural) ECD Early Childhood development Casas Maternas Maternity Houses CAP Institutions for Previsional Attention (Health) CCT Conditional Cash Transfers CDI Kindergarten (Centro de Desarrollo Infantil) CENAGRO Agriculture Census (Censo Nacional Agropecuario) CEPAL Economic Commission for Latin America CICO Community kindergarten (Centro Infantil Comunitario) CIDA Canadian International Development Agency CNEPTI National Commission for the Eradication of Child Labor CONAPAS National Commission for Water and Sanitation CONPES Economic and Social Planning Council CPP Council of Citizen Power DANIDA Danish International Development Agency DEA Department of Adult Education (MINED) EBACIT Program of Basic Education and Citizenship for All ECLA Economic Commission for Latin America EFA-FTI Education-For-All Fast Track Initiative ENDESA Health Survey (Encuesta Nicaragüense de Demográfica y Salud) EMNV Living Standard Measurement Survey ENACAL Public Water and Sanitation Company ENDIS Survey of People with Disabilities (Encuesta Nicaragüense para Personas con Discapacitada) EU European Union FISE Emergency Social Investment Fund FfW Food for Work FfT Food for Training GDP Gross Domestic Product HDI Human Development Indicator (UNDP) IDA International Development Association (World Bank) IDB Inter-American Development Bank IDR Rural Development Institute INAA Water and Sanitation Regulatory Institute INATEC National Technologic Institute INE Nicaragua Electricity Institute 2 Acronyms (continuation) INIDE Statistical Institute ( Instituto Nacional de Información de Desarrollo) INITER National Institute of Territorial Studies INISER Nicaragua Insurance and Reinsurance Institute INJUVE National Institute of Youth INSS Nicaraguan Social Security Institute JICA Japan International Cooperation Agency KFW Kreditanstalt für Wiederaufbau (Reconstruction Bank) MAGFOR Ministry of Agriculture and Forestry MiFAMilia Ministry of the Family MINED Ministry of Education, Culture, and Sports MINSA Ministry of Health MITRA Ministry of Labor MHCP Ministry of the Finance and Public Credit MTI Ministry of Transport and Infrastructure NBI Unsatisfied Basic Needs PAHO Pan American Health Organization PAEBANIC Adult Literacy and Basic Education Program PAINAR Program for the Integral Attention to Children and Adolescents at Social Risk PAININ Comprehensive Care Program for Nicaraguan Children PASEN Support to the Structural Transformation of the Education System Program PEBI Intercultural Bilingual Education Program PINE Comprehensive School Nutrition Program PMA World Food Program PND National Development Plan (Plan Nacional de Desarrollo) PPA Food Productive Program PREVDA Regional Program for the Reduction of Vulnerability and Environmental Degradation PROCOSAN Health and Nutrition Community Program (Programa Comunitario de Salud y Nutrición) RAAN Autonomous Region of Atlantic North RAAS Autonomous Region of Atlantic South SA Social assistance SEAR Regional Autonomous Education System SETEC Office of the Technical Secretary to the Presidency SI Social insurance 3 Acronyms (continuation) SILAIS Local Health Systems SINAPRED National System for the Prevention, Mitigation and Attention to Disasters SINASID National System to Monitor Development Indicators SNIP Sistema Nacional de Inversión Pública SP Social protection SRM Social Risk Management SWAp Sector Wide Approach UNDP United Nations Development Program UNICEF United Nations Children's Fund URACCAN University of the Autonomous Regions of the Atlantic (Universidad de las Regiones Autonomous de la Costa del Caribe Nicaraguense) USAID United States Agency International for Development VAM Vulnerability Analysis Mapping (WFP) WFP World Food Program This report was prepared by Jose Silverio Marques with the support of Miriam Montenegro (social programs) and Stanislao Maldonado (LSMS/EMNV). 4 Table of Contents Page No. Executive Summary I. Analytical Framework ……………………………………………………………….. 1 II. Source of Risks…………………………………………………………………………. 2 III. Risks and Groups-At-Risk………………………………………………………………. 3 1. 0-5 Years Old ……………………………………………………………………. 4 2. 6-17 Years Old ………………………………………………………………….. 7 3. 18-59 Years Old…………………………………………………………………. 15 4. 60 Years Olds and More…………………………………………………………. 20 5. Households ………………………………………………………………………. 22 6. Indigenous and Ethnical Groups ………………………………………………… 29 IV. Public Programs to Address the Risks …………………………………………………. 32 1. 0-5 Years Old ……………………………………………………………………. 33 2. 6-17 Years Old ………………………………………………………………….. 36 3. 18-59 Years Old…………………………………………………………………. 41 4. 60 Years Olds and More ………………………………………………………… 45 5. Households ………………………………………………………………………. 46 6. Indigenous and Ethnical Groups …………………………………………………. 55 V. Assessment of the Social Protection System …………………………………………… 58 1. Spending …………………………………………………………………………. 58 2. Relevance and Coverage…………………………………………………………. 63 3. Targeting………………………………………………………………. ………… 64 4. Equity……………………………………………………………………………. 68 5. Cost-Effectiveness ………………………………………………………………. 73 6. Monitoring and Evaluation ……………………………………………………… 75 7. Institutional Arrangements ……………………………………………………… 77 VI. Conclusions and Recommendations …………………………………………………… 77 1. Strategic approach ……………………………………………………………….. 77 2. Program Priorities ……………………………………………………………….. 79 3. Targeting and Transparency………………………………………………..……. 82 4. Monitoring and Evaluation and Accountability…………………………………. 84 References………………………………………………………………………………….. 85 Box 1. Risk and Vulnerability……………………………………………………………… 1 Box 2. The Cost of Malnutrition……………………………………………………………. 5 Box 3. The Costs of Health Care……………………………………………………………. 24 Box 4. The Cost of Domestic Violence……………………………………………………… 26 Box 5. The Cost of Under-investing in Natural Disaster Management…………………….. 28 Box 6. Risky Business in the Atlantic Region ……………………………………………... 30 Box 7. Innovative Approaches in Healthcare ………………………………………………. 35 5 Table of Contents (continuation) Box 8. Food Insecurity and Zero Hunger (Hambre Cero) …………………………………. 39 Box 9. Emergency Aid for the Victims of Hurricane Felix ………………………………… 54 Box 10. Evaluation of the Poverty Reduction and Local Development Project ……………. 75 Box 11. How To Build a Results-Based M&E System ……………………………………... 76 Figure 1. Results of Education Tests, 2002,2006 …………………………………………... 10 Figure 2. Results of Education Tests, by Region, 2002, 2006 ……………………………... 10 Figure 3. Average Years of Schooling ……………………………………………………… 16 Figure 4. Agricultural Credit, by Source …………………………………………………… 19 Figure 5. Time to Health Post ………………………………………………………………. 20 Figure 6. Persons with 60 Years and More Receiving a Retirement Pension ……………… 22 Figure 7. Poverty Incidence in the Indigenous and Ethnical Groups and Total Population ... 30 Figure 8. Household Participation in Associations …………………………………………. 32 Figure 9. ENACAL- Actual and LRMC Water Tariffs in Managua ………………………. 51 Figure 10. Rate of Water Tariff Subsidy, by Type of Consumer in Managua ……………… 51 Figure 11. Residential Electricity Tariff, Actual and Without Subsidy …………………….. 52 Figure 12. Rate of Subsidy, by Consumption level (kWh) …………………………………. 52 Figure 13. Distributional Incidence of Public Education Expenditures ……………………. 70 Figure 14. Utilization of Public Health Facilities by the Poor and Non-Poor ……………... 71 Figure 15. Access to Water and Electricity, by Consumption Quintile ……………………. 72 Table 1. Mortality Rates, 1998, 2001, 2006 ……………………………………………….. 4 Table 2. Chronic Malnutrition Among Children Under 5 Years, 1998, 2001, 2005 ………. 6 Table 3. Children 0-3 Years Old Who Attend Kinder ……………………………………... 6 Table 4. Preprimary Net Enrollment, by Department, 2007 ………………………………... 7 Table 5. Primary Net Enrollment, by Department, 2007 …………………………………… 8 Table 6. Reasons Why Children 7-12 Years Old Are Not Enrolled in School……………… 9 Table 7. Time to Primary School, 2001, 2005……………………………………………… 9 Table 8. Secondary Net Enrollment, by Department, 2007 ………………………………… 11 Table 9. Reasons Why 13-18 Years Old Are Not Enrolled in School………………………. 12 Table 10. Prevalence of Disability, by Age Group …………………………………………. 13 Table 11. Education Achievement for People with Disabilities……………………………. 13 Table 12. Children and Teenager Workers, 2005…………………………………………… 14 Table 13. Early Childbearing ……………………………………………………………….. 14 Table 14. Employment and Underemployment, 2005, 2007………………………………... 15 Table 15. Illiteracy, by Age Groups ………………………………………………………… 16 Table 16. Land Distribution by Number and Area of Farms ……………………………….. 17 Table 17. Area Under Irrigation ……………………………………………………………. 17 Table 18. Ownership of Cattle and Pigs ……………………………………………………. 18 6 Table of Contents (continuation) Table 19 . Farms that Request and Obtained Credit ……………………………………….. 18 Table 20. Producers that Received Technical Assistance or Training …………………….. 19 Table 21. Population with Pensions, 2005-2007 …………………………………………… 21 Table 22. Place of Consultation for Those that Sought Help ………………………………. 23 Table 23. Motives for Not Seeking Healthcare …………………………………………… 23 Table 24. Distance to Health Post or Health Center ………………………………………... 23 Table 25. Health Expenditures and Financing …………………………………………….. 24 Table 26. Health Spending …………………………………………………………………. 24 Table 27. Inadequate and Overcrowded Housing ………………………………………….. 25 Table 28. Access to Basic Services ………………………………………………………… 25 Table 29. Prevalence of Violence Against Women ……………………………………….. 26 Table 30. Impact of Major Natural Disaster in Nicaragua, 1926-2007 …………………….. 28 Table 31. Indigenous and Ethnical Groups ……………………………………………… 30 Table 32. Social Indicators and Access to Social Services in RAAN and RAAS ………….. 31 Table 33. Programs for the 0-5 years Old Group …………………………………………… 34 Table 34. Programs for the 6-17 years Old Group ………………………………………….. 38 Table 35. Program for the 18-59 Years Old Group …………………………………………. 42 Table 36. Programs for 60 Years Olds and More ………………………………………….. 45 Table 37. Programs for Households ……………………………………………………….. 47 Table 38. ENACAL Tariff Subsidies ……………………………………………………… 50 Table 39. Government Transfers to ENACAL …………………………………………….. 51 Table 40. Intercultural Bilingual Education in the Autonomous Regions ………………….. 56 Table 41. Selected Programs for Indigenous and Ethnical Groups ………………………… 57 Table 42. Population at Risk, Program Coverage and Program Cost, 2007 ………………. 59 Table 43. International Comparison of Public Social Spending …………………………… 58 Table 44. MiFAMILIA, MINED and MINSA Expenditures, 2006-2008 ………………… 62 Table 45. Distribution of Social Assistance Spending, 2007 ………………………………. 63 Table 46. Typology of Coverage of Social Protection Programs …………………………... 64 Table 47. Incidence and Distribution of Extreme Poverty …………………………………. 66 Table 48. Municipalities with Greatest Incidence of Indigence (5 NBI) ………………….. 67 Table 49. Characterization of Social Protection Programs Targeting on the Poor …. 68 Table 50. Benefit-Incidence of Public Spending …………………………………………… 69 Table 51. Reasons Why Children 7-12 Year Old Are Not Enrolled in School ……………. 70 Table 52. MINSA’s Five-Year Health Plan, 2005-2009 …………………………………… 71 Table 53. Utilization of Health Facilities …………………………………………………… 72 Table 54. Reclassification of “Capital Expenditures”, 2008 ……………………………… 74 Table 55. Suggested Program Priorities …………………………………………… 81 7 I. Analytical Framework This review of public expenditures on Social Protection (SP) in Nicaragua is based on the analytical framework of social risk management (SRM) developed by the World Bank.1 The concept of managing social risk comes from the notion that certain groups in society are vulnerable to unexpected shocks which threaten their livelihood and/or survival. However, some groups live in a chronic state of impoverishment which places their livelihood in a constant state of risk. Social Protection focuses on the poor since they are more vulnerable to the risks and normally do not have the instruments to handle these risks. This prevents the poor from taking more risky activities that usually yield higher returns and that could help them overcome gradually their poverty situation. Social risk management involves policies and programs aimed at reducing key risks, breaking inter-generational cycle of poverty and vulnerability (Box 1). Risk management consists in the choice of appropriate risk prevention, mitigation and coping strategies to minimize the adverse impact of social risks. In general, it is less costly to society to prevent risk than to cope with it afterwards; for individuals and households it is often better to self-protect, rather than turn to the government for assistance that may not be forthcoming. However, the great majority of the poor in Nicaraguans do not have the means (assets and income) to be able to self-protect, thus this group should be the focus of public programs. Box 1. Risk and Vulnerability The terms risk and vulnerability are sometimes used interchangeably because people or households that are at-risk are usually considered vulnerable, and vice versa. Risk is the probability of a loss or injury. Its potential negative impact may arise from some present process or future event. In the context of poverty analysis, vulnerability is defined by the World Bank as the probability or risk today of being in poverty or of falling into deeper poverty in the future. It is a key dimension of welfare, since a risk of large changes in income may constrain households to lower investments in productive assets and in human capital. Vulnerability may influence household behavior and coping strategies and is thus an important consideration of poverty reduction policies. The fear of bad weather conditions or the fear of being expelled from the land they cultivate can deter households from investing in more risky but higher productivity crops and affect their capacity to generate income. Source: Aline Coudouel, Jesko S. Hentschel, and Quentin T. Wodon, PRSP Sourcebook, Chapter 1. Poverty Measurement and Analysis. World Bank. p. 54. Social Protection under SRM is defined as public interventions to assist individuals, households and communities to better manage risk and provide support to the critically poor.2 Thus Social Protection should provide: 1) A safety net, particularly for the poor that are likely to fall in the cracks of established programs; 1 Holzmann, Robert and Steen Jorgensen, “Social Risk Management: A New Conceptual Framework and Beyond”. World Bank, February 2000. 2 Ibid. p. 3. 8 2) A springboard for the poor to bounce out of poverty; In practice, SP includes social insurance (SI) such as unemployment, old age or pension, disability, sickness, etc.; social assistance (SA), in turn, include: (i) programs that help the extreme poor access basic social services, avoid social exclusion, and resist coping strategies with irreversible negative effects during adverse shocks (safety net); and (ii) programs that help build the assets (human and physical) of the poor through either transfers in cash or kind, vocational training and technical assistance, or micro finance that together with SI provide opportunity for the poor to adopt higher risk-return activities, improve their income generating opportunities, and avoid inefficient risk management strategies (springboard). II. Source of Risks The Nicaraguan poor population faces a series of risks. These risks result from: i) macroeconomic disturbances and consequent variations in employment, income, and consumption; ii) natural disasters; and ii) microeconomic conditions that expose the poorest families to a series of vulnerability situations. The Social Protection (SP) system must contribute to minimize the impact of all these risks through a strategy that involves market insurance, self-insurance, and the self-protection as well as measures in areas such as fiscal policy, sector policies, and natural disaster management. In order to diminish the risk originating from cyclical variations in economic activity, there is a need to implement an integral strategy.3 For example, in order to face the impact of terms of trade deterioration, it is possible to resort to market insurance mechanisms such as future contracts in the international markets, self-insurance mechanisms such as commodity price stabilization funds or the diversification of external trade. In order to face the volatility in private capitals, it is possible to resort, for instance, to contingent lines of credit. On the other hand, in order to face the fluctuations of the economic activity it is important to count on an ample tax base, being able to contain fiscal expenditures in time of economic expansion, and count with a portfolio of well structure programs and projects which can be activated or implemented quickly in time of recession. It is fundamental to maintain a solid financial system to ensure that the funds of depositors are preserved and to provide credit and other services to the companies and families, particularly during difficult economic periods. Nicaragua is very vulnerable to the natural disasters, particularly earthquakes, hurricanes, floods, and droughts. In order to diminish the risk associated with the natural disasters, it is necessary in general to count with a good civil defense organization, to invest in reducing the vulnerability of the national infrastructure, and develop and implement sound land use and natural resources management policies. In order to prevent or mitigate these risks, it is necessary sometimes to resettle the populations that are in zones of high risk or live in inadequate housing and to develop and implement civic education and disaster preparedness programs. And when the disaster strikes, it is necessary to provide emergency relief to the victims and reconstruction assistance. 3 See De Ferranti, David y Guillermo E. Perry, Indermit S. Gill y Luis Serven, “ Hacia la Segurd Económica en la Era de la Globalización”. World Bank,, 2000, p. 7. 9 Microeconomic vulnerability relates to the risks facing the poor households because of the conditions in which they live.4 These risks are related to poor lack of assets and employment and income generating opportunities, lack of access to basic services, as well as to other conditions that can affect certain groups in society such as exclusion, violence or family disintegration. The existing microeconomic vulnerabilities may magnify the vulnerability resulting from macroeconomic disturbances or natural disaster. For example, if the level of education of a poor worker is low, he may find it difficulty to obtain a job in good times, but it will be even much more difficult in bad times, when there might be many more better qualified job seekers competing for jobs. On the other hand, the strategies that must pursued by individuals and families to face the risks to which they are exposed directly also help to diminish their vulnerability to the risks associated with changes in economic activity or natural disaster. The taking of a non-agricultural job by a member of a family farmer (diversification of production), the constitution of a saving account (diversification of assets), the participation in a training course (investment in human capital) the buying of insurance (begin to contribute to a pension plan or take a crop insurance), are self-insurance, self-protection and market insurance strategies at the individual level which help facing the risks that may affect the community or the whole country. This assessment of the Nicaragua public expenditure on SP programs focuses on the microeconomic risks facing the poor families and to lesser extent on risks associated to natural disasters. The microeconomic risks are related mainly to the access of the poor families to food, education, health, housing, other basic services and income generating assets, as well as to medical and old age insurance. The analysis of the risks facing the Nicaraguan poor that follows is organized around the risks that face each age group (life-cycle) and the risks that affect the households in general; for each group, risks are identified, the population-at-risk is quantified, and the public programs that are in place to address the specific risk are discussed. On the basis of existing group-at-risk and programs, public expenditure program on SP is then assessed focusing on spending, relevance and coverage of the existing programs, targeting, cost effectiveness, equity of spending, monitoring and evaluation, and institutional arrangements. The paper concludes with recommendations to strengthen the SP system. Several boxes in the text illustrate the cost of doing nothing to prevent of mitigating the risks. III. Risks and Groups-At-Risk This section discusses the principal risks that face the different age groups and the households in general and estimates of the number of people or households facing each risk. The review of the risks is not comprehensive but focuses on the major risks facing individual and families that can contribute, if not addressed, to perpetuate the intergenerational transmission of poverty. 4 Risks may also be classified as idiosyncratic when they only affect one individual or household (i.e., death of the breadwinner) or covariate when they affect several households or even the whole country (i.e., the recent oil price shock.) 10 1. 0-5 Years Old The main risks that poor children 0-5 years of age face are that they are born with low weight, experience debilitating and live threatening diseases, have inadequate diet and lack of early stimulation, both of which will impaired their development and may contribute to perpetuate their poverty. Low birth weight. The health of an infant depends on the health of the mother. To promote the birth of healthy babies, the Ministry of Health (MINSA) must ensure, first, that reproductive health services are available so that only desired pregnancies are observed and pregnancies are sufficiently spaced. In Nicaragua 20 percent of the pregnancies are undesired (2.26 desired total fertility rate versus 2.69 observed). Secondly, pregnant women should receive early and regular pre-natal controls; MINSA has established that all pregnant women should receive at least four controls and immunization against tetanus but actually only 63 percent of pregnant women receive this care. Thirdly, the delivery of babies should be assisted by professional medical staff; this takes place in only 74 percent of the cases in Nicaragua. After the baby is born, MINSA recommends beginning immediately with breastfeeding and maintaining it exclusively during the first 6 months. As it is well known, exclusive breastfeeding prevents disease and build the baby immune system against future diseases; actually only 31 percent of women in Nicaragua breastfeed exclusively during the recommended 6 months.5 Table 1. Mortality Rates, 1998, 2001, 2006 1998 2001 2006 Maternity a/ 118 107 86.5 Neonatal (<28 days) b/ 17 16 16 Postnatal (28 days-1 year) b/ 22 15 13 Infant (<1 year) b/ 39 31 29 Post infant (1-4 years) b/ 11 7 7 Under 5 b/ 50 38 35 Source: ENDESA-2006 and “Indicadores Básicos de Salud, 2006” MINSA a/ Per 100,000 live births. Data for 1999, 2002, 2005. MINSA. b/ Per 1,000 live births. These gaps in attention translate into high maternal mortality rates, babies that are born with low weight and that do not resist well to disease and/or do not develop well, and into high neonatal, infant and under five mortality rates (Table 1). Maternal mortality rates at 86.5 per 100,000 live births in Nicaragua remain amongst the highest in Latin America.6 This national average encompasses a wide range from 287 per 100,000 live births in RAAN and 23 per 100,000 live births in Managua. According to MINSA, 8.4 percent of the children are born with low weight. Acute respiratory infection and acute diarrhea disease affects 29 percent and 16 percent of children under five years, respectively. Lack of breastfeeding impacts the resistance to these diseases. The mortality rate for infants under 1 year is 29 (per 1,000 births) and more than one-half are neonatal deaths which occur during the first 28 days. Neonatal mortality remains at about 16 since 1998, and most of these deaths could be prevented with 5 Data from ENDESA-2006. “Encuesta Nicaragüense de Demográfica y Salud 2006/07”. INIDE, Agosto 2007. 6 The maternal mortality is the intuitional rate reported by MINSA. WHO reports a rate of 230 per 100,000 live births in 2000. 11 appropriate care and nutrition. Under-five mortality rates have declined significantly in the last several years but still are at 35 per 1,000. Malnutrition in children. Low weight at birth because of inadequate food intake by mothers may lead to premature death or poor development in the early years of live. Lack of breastfeeding, low food intake in infants, and inadequate feeding practices, is a critical risk in children because it can lead to stunted development, illness and early death. Iron deficiency in children impairs development. It is estimated that anemia affects one-third of children 12 to 59 months. Malnutrition has not only a high cost for the individual and their families but also for the country as whole in terms of health costs, poor education performance, and loss of live and productivity (Box 2). Box 2. The Cost of Malnutrition In a recent study, the WFP and ECLA estimate the costs of malnutrition for Nicaragua and other Central American countries. The study estimates the accumulated or “retrospective” cost of malnutrition based on its impact on: (a) the health of the cohort of children less than 5 years old in 2004; (b) education of children between 6-18 years old who in 2004 were enrolled in primary or secondary education and who suffer malnutrition when they were under five years old; (c) productivity loss of youth and adults between 15 and 64 years old who suffer malnutrition during their first five years of live. For Nicaragua the estimated cost of malnutrition is US$ 224 million equivalent to 5.8 percent of GDP and 64 percent of total social spending. The health cost represents 10.2 percent of the total and corresponds to an estimated 85,000 additional consultations demanded from the health system (US$ 27 million); the education cost represents 0.6 percent of the total and corresponds an estimated additional 9,000 repeaters (US$ 2 million); the productivity cost represents the remaining 89.2 percent and corresponds to 164,000 people who did not make it to their productive live (US$ 152 million) and the 1.9 years in average schooling deficit for those that did make it and suffered malnutrition (US$ 84 million). The study also estimates the “prospective” cost or how much will cost in the future malnutrition that affect the current cohort of children under five years old. It estimates the present value of the cost at US$ 78 million, with 52 percent corresponding to the potential productivity loss, 47 percent increased health costs, and 1 percent increased education costs. Source: “El Costo del Hambre: Impacto Social y Económico de la Desnutrición Infantil en Central America y Republica Dominicana”. PMA/CEPAL, June 2007 According to ENMV-20057 about 18.5 percent of children under 5 years of age (129,000 children in 20078) suffered from chronic malnutrition (height for age) (Table 2). Chronic malnutrition has declined nationally since 2001 but at a much slower rate than in the previous period (2001-1998). It remains much higher in rural areas than in urban areas (23 percent versus 12 percent) and in the Central and Atlantic Regions than in Managua. According to ENDESA-2006, malnutrition for children in the lowest income quintile is 28 percent, while for the richest income quintile is 4.5 percent. ENDESA-2006 also corroborates regional 7 “Encuesta Nacional de Medios de Vida” or the Living Standard Measure Survey conducted by INIDE in 1998, 2001 and 2005. 8 All the estimates of the number of population at-risk are based on INIDE latest population estimates for 2007. “Nicaragua: Proyecciones de Población (Revision 2007)”. INIDE, November 2007. 12 disparities: the rate of malnutrition in Jinotega, Madriz, Matagalpa and the RAAN is more than twice the rate in Managua. Table 2. Chronic Malnutrition Among Children Under 5 Years, 1998, 2001, 2005 a/ Total Urban Rural Managua Pacific Central Atlantic Total WHO b/ 1998 (%) 25.8 20.1 30.5 10.7 21.6 34.5 24.3 30.6 2001 (%) 19.8 14.2 24.7 7.4 21.2 15.3 26.0 24.3 2005 (%) 18.2 12.3 22.6 11.5 11.7 21.8 19.2 22.6 2001-1998 -6.0 -5.9 -5.8 -3.3 -0.4 -19.2 1.7 -6.3 2005-2001 -1.6 -1.9 -2.1 4.1 -9.5 6.5 -6.8 -1.7 Source: “Análisis de la Situación Nutricional de Menores de 5 Anos en 2005 y Análisis de Tendencias de Desnutrición 1998-2001-2005”. INIDE, MECOVI, Julio 2007. a/ Height for age (NCHS reference value, 1977) based on ENMV. This indicator reflects the nutritional history of the children; other indicators are weight for age (global malnutrition) which reflect past and present nutritional status of children and weight for height (acute malnutrition) which reflects present nutrition status. b/ Height for age (new WHO standards introduced in 2005) based on ENMV. Low coverage of early child development programs (ECD) and preprimary education. As indicate in the World Development Report-2006, there is mounting evidence that ECD programs benefit poor children and families. Nutritional supplementation and stimulation interventions administrated concomitantly, especially in poor children under 2 years old, are very cost effective and may help malnourished children to catch up with other children with “normal” development. They also help mothers participate in the labor force and improve the academic performance of older children.9 ENMV-2005 indicates that only 3.3 percent of children less than 3 attended kindergarten (CICO, Centro Infantil Comunitario, or CDI, Centro de Desarrollo Infantil), 3 percent in urban areas in 3.5 percent in rural areas (Table 3). This implies that ECD programs do not reach 300,000 children; of these 170,000 (54 percent) are poor. Note that some of these infants are taken care of by their mothers, which is generally the first best situation; in other instances, infants may be taken care for by sibling or other persons. Therefore, mostly at-risk are poor infants whose mothers are not able to take care of them because they must work. Table 3. Children 0-3 Years Old Who Attend Kinder Total Extreme All Poor Non-Poor Urban Rural Poor CICO/CDI (%) 3.3 2.9 3.3 3.2 3.0 3.5 Source: ENMV-2005 (Nicaragua Poverty Assessment. World Bank, 2007. Annex I, Table A2-E06). There is also ample evidence that preprimary schooling (and ECD) increases children's cognitive ability when they enter the first grades of primary education as well as over the longer term. Repetition rates in primary education are lower for children who have attended preprimary education and overall educational attainment is increased by preprimary school attendance. MINED reports that the net enrollment rate for preprimary increased from 28.4 percent in 2001 to 53.6 percent in 2007. This is a significant increase but still there are 9 World Development Report-2006, p. 136. World Bank, 2005. 13 179,000 children of preprimary age that do not attend school.10 The enrollment rates are similar for girls and boys and are higher in rural areas compared to urban areas. Rates vary also widely by Department: they reach a high of 74.1 percent in Leon and a low of 30.4 percent in RAAS (Table 4). In general the rates have increase significantly in the Autonomous Regions of the Atlantic and have declined in the of the central and northern Departments. Table 4. Preprimary Net Enrollment, by Department, 2007 (Percentage) Departments 2006 2007 Difference National 52.3 53.6 1.3 Nueva Segovia 48.7 45.7 -3.0 Madriz 61.6 58.7 -2.9 Estelí 66.2 63.5 -2.7 Chinandega 56.3 56.6 0.3 Leon 73.2 74.1 0.9 Managua 60.3 63.4 3.1 Masaya 48.1 49.8 1.7 Carazo 60.4 61.0 0.6 Granada 63.0 60.9 -2.1 Rivas 56.6 56.3 -0.3 Boaco 51.8 47.3 -4.5 Chontales 56.4 48.5 -7.9 Jinotega 37.5 40.3 2.8 Matagalpa 50.3 48.4 -1.9 RAAN 44.0 53.8 9.8 RAAS 26.8 30.4 3.6 Rio San Juan 42.2 48.8 6.6 Source: Statistics Division. MINED, December 2007. 2. 6-17 Years Old For children in the primary education age group (6-12 years) and teenagers in the secondary education age group (13-17 years), the major risk they face is that they do not attend school or drop-out of school because they need to work, girls become pregnant, or any other reason.11 Low level of schooling generally leads to poor job market prospects, low salaries, and, possibly, a life in poverty. Several IDB studies have also shown a strong correlation between dropping-out of school and teen delinquency.12 10 Estimates of children out of the education systems are based on data provided by MINED’s Division of Statistics. They are based on the difference between estimates of the total number of children of a given age group and the number of children of the same age group enrolled in school, independently of grade or modality that they attend. 11 Beginning in 2006, MINED has changed the official age for the different education levels. Preprimary education is now from 3 to 5 years; primary education from 6 to 11 years; and secondary education from 12 to 16 years. During the transition, MINED is calculating the net primary enrollment rates for children 6-12 and net secondary enrollment for children 13-17 years. 12 See for instance, Mark A. Cohen and Mauricio Rubio “Violence and Crime in Latin America” June 2007. Paper prepared for Consulta de San José 2007, cosponsored by the Copenhagen Consensus Center and the Inter- American Development Bank, San José, Costa Rica October, 2007 14 Deficient primary education. According to MINED, net primary enrolment in Nicaragua has increased from 78.5 percent in 2001 to 86.5 percent in 2007. Overall net enrollment in 2007 was similar to 2006 (Table 5). The Departments with the lowest net enrollment are Rivas, Masaya, Chontales and RAAN. Net enrollments are slightly higher for boys than for girls and also slightly higher in rural areas than in urban areas. Estimates using ENMV-2005 indicate that there are a 10 percent point difference in primary net enrollment between the extreme poor and the non-poor (75 percent versus 86 percent). Consequently, despite the rapid increase in enrollment in the last years, there are still 74,130 children out of school, mostly poor. Table 5. Primary Net Enrollment, by Department, 2007 (Percentage) Primary Department 2006 2007 Difference National 86.4 86.5 0.1 Nueva Segovia 88.0 86.9 -1.1 Madriz 84.9 84.6 -0.3 Estelí 87.9 88.9 1.0 Chinandega 87.7 85.3 -2.4 Leon 84.7 83.9 -0.8 Managua 85.3 86.8 1.5 Masaya 81.5 82.1 0.6 Carazo 88.0 88.6 0.6 Granada 86.1 85.1 -1.0 Rivas 80.8 81.3 0.5 Boaco 84.7 84.8 0.1 Chontales 96.3 82.4 -13.9 Jinotega 86.4 85.1 -1.3 Matagalpa 89.0 87.7 -1.3 RAAN 83.2 83.1 -0.1 RAAS 85.9 95.8 9.9 Rio San Juan 102.8 a/ 100.3 a/ -2.5 Source: Statistics Division. MINED, December 2007. a/ According to MINED these estimates above 100 result from children from neighboring Departments that assist in Rio San Juan and/or by an underestimation of the population. Measures of internal efficiency of the education system indicate that the repetition and desertion rates at the primary level remain high, particularly during the first grades. The repetition rate for the first grade is 16.3 percent and gradually drops to 8.5 percent in the 3rd grade and to 2.6 percent in the 6th grade. The desertion rate is 21.2 percent in first grade and gradually declines to 10.8 percent in 3rd grade and 5.9 percent in the 6th grade.13 Consequently, completion rates are still low, particularly for the poor. According to ENMV-2005, only 20 percent of boys and 25 percent of girls in the poorest quintile completes the six grades of primary school. Education attainment is much lower in the Atlantic and Central Regions than in Managua and Pacific Regions.14 Money is a major impediment for children to attend school, as over 40 percent of children that do not attend gives this as the major reason (Table 6). In rural areas and in the Atlantic, the 13 “Indicadores de Educación Basic y Media en Nicaragua, 2006 ”. MINED, Noviembre 2007. 14 Nicaragua Poverty Assessment. World Bank 2007. (Paragraph 2.20 and Figure 2.17.) 15 second most important reason for not attending school is “the school is too far”. Data from ENMV-2005 indicate, as expected, that more extreme poor children give lack of money as the reason for not attending school compared to non-poor children (for boys: 47 percent compared to 36 percent; for girls: 52 percent compared to 23 percent); it further indicates that motivation appears to be more of a problem for boys than for girls: about 15 percent of the boys say they do not attend because are not interested compared to about 5 percent for girls. Table 6. Reasons Why Children 7-12 Years Old Are Not Enrolled in School (Percentage) Rural Urban Managua Pacific Central Atlantic Lack of money 39.1 49.1 32.5 59.1 39.6 38.5 Had to work 4.2 0.6 0.0 0.9 3.7 4.6 Not interested 10.4 12.5 4.2 16.5 11.6 9.5 School is too far 22.0 2.2 0.0 2.1 14.7 30.2 Family problems 6.1 17.5 38.3 7.9 6.5 4.9 Other 18.2 18.2 24.4 13.5 23.8 12.4 Source: ENMV-2005. Nicaragua Poverty Assessment. World Bank 2007. Table 2.7. Distance to school has decline significantly in recent years as the Government has been making a significant effort to expand the education system to the most isolated areas of the country. In the rural areas of the Atlantic, the time required to reach the nearest school has been cut by about one-third, from 37 to 28 minutes (Table 7). However, this is still three times longer than in urban areas of the Atlantic or in Managua. In rural areas of the Central Region it also takes over 20 minutes to reach the nearest school. Table 7. Time to Primary School, 2001, 2005 Total Managua Pacific Pacific Central Central Atlantic Atlantic Urban Rural Urban Rural Urban Rural 2001- Minutes 15.1 11.0 7.9 18.0 11.4 24.4 10.6 37.0 2005-Minutes 13.7 9.9 7.9 16.9 8.9 21.1 8.6 27.7 Source: ENMV-2005. Nicaragua Poverty Assessment. World Bank 2007. Annex 1, Table A1.2. The quality of primary education is deficient. The standardized education tests for the 3 rd and 6th graders, in Spanish and Math, conducted by MINED in 2002 and 2006 show low average scores. The expected average score is 250 points in both tests. Figure 1 shows the difference in the results obtained relative to the average. As it can be observed, in all cases the scores are below the average with the only exception is Math 3rd grade which is slightly above the average. Generally, the scores are better for private schools than for public schools and for urban schools than for rural schools. Comparing the scores in 2006 and 2002, there are small increases in the scores for Spanish 3rd grade and Math 6th grade and declines in the scores for Spanish 6th grade and Math 3rd grade. At regional level, the results for Managua are generally better than for the other regions (Figure 2). Managua also shows a consistent increase in scores between 2002 and 2006. The Atlantic Region shows the lowest scores for Spanish 3rd grade and Spanish 6th grade, with scores for Spanish 3rd grade increasing slightly in 2006 but declining for Spanish 6th grade. The Central Region had scores for Math 3rd and 6th grades above the average in 2002, but these have decline in 2006. 16 Figure 1. Results of Education Tests, 2002, 2006 (Score deviation to the expected average of 250 points) 2.0 0.0 Points -2.0 -4.0 -6.0 -8.0 Spanish 3rd Spanish 6th Math 3rd Math 6th 2002 2006 Source: “Informe Resumen de Resultados: Evaluación Nacional del Rendimiento Académico de 3 y 6 Grado 2002-2006.” MINED, Noviembre, 2007 Figure 2. Results of Education Tests, by Region, 2002, 2006 (Score deviation to the expected average of 250 points) 20 15 10 5 0 Points -5 -10 -15 -20 -25 -30 - M 3rd - S 6t h h h - M 6th - M 6th d d d d rd h d h h rd 6t 6t en n 3r 3r 6t 3r 3r 3r 6t 6t en th 3 3 h an n th n h an a an h th h an h at pa pa at Sp pa at at a at a a p Sp Sp Sp M M M -M -S -S M -S c- c- l- c- c- l- an l- l- en an Pa en an an At At Pa At At Pa Pa C M C M C C M M 2002 2006 Note: Man-Managua; Pac-Pacific; Cen-Central; Atl-Atlantic; Span-Spanish. Source: “Informe Resumen de Resultados: Evaluación Nac ional del Rendimiento Académico de 3 y 6 Grado 2002-2006.” MINED, November, 2007 Low secondary education coverage. Enrollment at secondary level drops sharply compared to primary education. According to MINED, net secondary enrolment in Nicaragua has increased from 25.7 percent in 2001 to 46 percent in 2007 (Table 8). The Departments with the lowest 17 net enrollment are RAAN, Jinotega and RAAS. Net enrollments are higher for girls than for boys (48.7 percent versus 43.4 percent) and in urban areas than in rural areas (61 percent versus 28 percent15). Estimates using ENMV-2005 indicate that there was a 47 percent point difference in net enrollment between the extreme poor and the non-poor (17 percent versus 64 percent). Consequently, there are still 240,280 children and teenagers out of school, mostly poor. Table 8. Secondary Net Enrollment, by Department, 2007 (Percentage) Secondary Department 2006 2007 Difference National 43.7 46.0 2.3 Nueva Segovia 32.8 34.7 1.9 Madriz 33.0 37.1 4.1 Estelí 51.8 54.2 2.4 Chinandega 49.3 51.6 2.3 Leon 52.2 54.1 1.9 Managua 62.2 62.5 0.3 Masaya 49.9 52.4 2.5 Carazo 54.8 58.2 3.4 Granada 52.5 52.2 -0.3 Rivas 45.6 47.3 1.7 Boaco 32.6 36.3 3.7 Chontales 40.7 41.8 1.1 Jinotega 25.0 29.0 4.0 Matagalpa 36.1 40.2 4.1 RAAN 18.8 22.2 3.4 RAAS 23.6 29.8 6.2 Rio San Juan 26.1 31.6 5.5 Source: Statistics Division. MINED, December 2007. In addition to the low enrollment rate, secondary completion rate is also low as only 39 percent of those that enter secondary education complete the level. The completion rate for girls is higher than boys (45.9 percent versus 32.1 percent).16 According to estimates based on the ENMV-2005, only 1 percent of boys or girls in the poorest quintile complete 11 grades of schooling. Net enrollment is much lower in the Atlantic and Central Regions than in Managua and Pacific Regions; for instance, while net enrollment is 67 percent in urban Managua, it is only 14 percent in rural Atlantic. 17 The principal reason given by teenagers (13-18 years old) for not attending secondary school is also money. Table 9 indicates that two-thirds of the extreme poor boys give “lack of money” and “need to work” as the reasons for not attending school. For girls, the need to take care of children or pregnancy (12.7 percent) and the need to do domestic work (9.5 percent) also are other important reasons for not attending school. 15 ENMV-2005. Nicaragua Poverty Assessment. World Bank 2007. Table A2-E01. 16 “Indicadores de Educación Basic y Media en Nicaragua, 2006 ”. MINED, Noviembre 2007. 17 Nicaragua Poverty Assessment. World Bank 2007. Paragraph 2.20 and Figure 2.17. 18 Table 9. Reasons Why 13-18 Years Old Are Not Enrolled in School (Percentage) Boys Girls Extreme All Non- Extreme All Poor Non- Poor Poor Poor Poor Poor Lack of money 29.3 26.6 29.6 30.0 31.6 33.1 Had to work 34.3 34.0 25.9 3.1 7.9 8.1 Domestic work 0.0 0.0 0.8 9.5 3.5 7.5 Not interested 27.8 30.6 30.9 24.8 23.2 16.2 School is too far 1.9 1.9 1.1 3.7 3.7 2.6 Family problems 1.1 1.2 2.5 4.6 4.7 5.3 Child care/ pregnancy 0.0 0.0 0.0 12.7 14.2 17.2 Other 5.6 5.7 9.2 11.6 11.2 10.0 Source: ENMV 2005. Nicaragua Poverty Assessment. World Bank 2007. Annex I, Table A2-E04. The quality of secondary education is poor. During the last three years according to MINED, less than 4 percent of the secondary education graduates approved the university admission exam on mathematics. Recently, it was reported that out of 9,477 students that took the admission exam to the National University of Nicaragua (UNAN), only 252 students (2.6 percent) obtained the minimum grade required.18 Low education attainment has strong adverse impact on the future earning potential. Vulnerable children/teens. Poor children with disabilities, children that work, and poor teens that are moms are very vulnerable groups whose situation may contribute to perpetuate the intergenerational transmission of poverty. Disability prevalence rates in Nicaragua are among the highest in Latin America. The Survey of Nicaraguans with Disabilities (ENDIS)19 conducted in 2003 by INIDE with the support of the World Bank20, IDB, UNDP and the Government of Sweden and Norway, indicates that 10.3 percent of the Nicaraguan population has some disability, with a higher prevalence rated for women than man (11.3 percent versus 9.1 percent) (Table 10). This compares to 7.1 percent in Argentina (ENDI 2001), 7.8 percent in Costa Rica (EHPM 1998), 8 percent in Uruguay (ENEVISA 1999), and 3 percent in Paraguay (Metropolitan Survey). 21 The principal causes of the disabilities in Nicaragua are: diseases including degenerating diseases and old age (67 percent of those disabled); injuries provoked by accidents (12.2 percent); disability at-birth (9 percent); infectious of parasitic diseases (4 percent); work related disease (3.4 percent); war related (2.2 percent); and aggression by other persons (1.8 percent).22 Assuming the disability incidence rate remained unchanged since 2003, it is estimated there were 62,000 persons with disabilities (3.8 percent) in the 6-17 years old cohort in 2007. The total number of persons with disabilities is estimated at 576,340 in 2007, as the prevalence of disability increases rapidly 18 El Nuevo Diario, 16 de Enero de 2008. 19 “Encuesta Nicaraguense para Personas con Discapacdes”. ENDIS-2003. INIDE, 2004. This survey is based on the WHO’s International Classification of Functioning, Disability and Health (ICF) which is its framework for measuring health and disability at both individual and population levels. The ICF was officially endorsed by 191 WHO Member States in the Fifty-fourth World Health Assembly on 22 May 2001. According to WHO, ICF takes into account the social aspects of disability and does not see disability only as 'medical' or 'biological' dysfunction. 20 References to the World Bank include the International Development Agency (IDA). 21 IDB’s Disability and Development Team, 2006. 22 ENDIS-2003, Table 5.1., page 212. 19 with age (because of its functionality based definition). About 60 percent of the persons with disabilities live in urban areas and the remaining 40 percent live in rural areas. Table 10. Prevalence of Disability, by Age Group Age Total Man Women 6-9 3.7 4.1 3.2 10-11 4.2 5.4 3.1 12-16 3.9 4.6 3.3 17-19 3.2 3.5 2.9 25-29 b/ 5.0 6.3 5.4 55-59 b/ 27.3 19.9 33.8 75-79 b/ 64.5 59.5 68.4 80+ 85.3 71.6 98.1 Total 10.3 9.1 11.3 Total in 2003 461,000 204,000 257,000 Estimate in 2007 a/ 576,340 255,039 321,301 Source: “ENDIS 2003, Informe General”. INIDE, Agosto 2004, Cuadro 3.2.2, pag. 61. a/ On the basis of INIDE’s (Noviembre 2007) population estimates for 2007 . b/ Note the discontinuity in the age intervals. If education is important for all citizens, it is even more important for those with disabilities if they are going to have any change of securing a decent job. The population with disabilities lags the general population in education achievement (Table 11). The Illiteracy rate for the 10- 14 age group is 26 percentage points higher for those with disabilities than for the general population. This lag declines for older cohorts and it nearly disappears for those 55 years and older because of the high level of incidence of disability within this older age group (again given the functional definition of disability). ENDIS-2003 indicate that for the 6- 29 years old cohort, 52 percent of the general population attended school compared to 46 percent of the population with disabilities; however, this difference declines for younger cohorts: 79 percent versus 78 percent for the 6-12 cohort and 62 percent versus 56 percent for the 13-17 years old cohort, which seems to indicate that recent efforts to integrate children with disabilities in schools may be succeeding.23 Table 11. Education Achievement for People with Disabilities Age Illiteracy a/ General Population with Population (1) Disabilities (2) 3=(2)-(1) 10-14 14 40 26 15-19 11 32 21 20-24 14 37 23 25-29 17 35 18 30-34 13 30 17 35-39 16 23 7 55-59 b/ 37 39 2 75-79 b/ 50 51 1 80+ 53 54 1 Source: “ENDIS 2003, Informe General”. INIDE, August 2004, Table 3.3.1, p. 68. a/ Cannot read and cannot write. b/ Note the discontinuity in the age intervals. 23 ENDIS 2003, Table 3.3.2., page 101. 20 Poor children that are forced to work often do not attend school. Without schooling they are likely to remain poor. Under Nicaragua law, children under 14 cannot work and those between 14-17 years old can only work 30 hours a week in activities that are not classified as danger.24 According to Ministry of Labor (MITRA), there are 86,220 children workers between 5-13 years old and 152,600 teenagers (14-17 years old) for a total of 238,827 children workers in Nicaragua (Table 12). Most of these children (57 percent) work in agriculture and commerce (22%). Some are forced to work in the streets of the major cities or take other dangers jobs in mines, construction, or manufacturing. Table 12. Children and Teenager Workers, 2005 Economic Activity 5--9 years 10-13 years 5-13 years 14-17 years (5-17 years) % Agriculture, hunting & fisheries 10,648 42,213 52,861 82,272 135,133 56.6 Mining 247 541 788 180 968 0.4 Manufacturing 1,663 6,117 7,780 15,977 23,757 9.9 Electricity, gas & water supply 0 106 106 318 424 0.2 Construction 146 212 358 4,294 4,652 1.9 Commerce 4,843 14,833 19,676 31,870 51,546 21.6 Transport and storage 0 424 424 2,799 3,223 1.3 Finance 292 212 504 1,209 1,713 0.7 Community services 978 2,746 3,724 13,687 17,411 7.3 Total that work 18,817 67,404 86,221 152,606 238,827 100.0 Total 641,753 550,738 1,192,491 491,167 1,683,658 % that work 2.9 12.2 7.2 31.1 14.2 Source: MITRA based on a 2005 survey. Poor teenagers that give birth at early age usually have to leave school and must work to raise their children. Fourteen percent of the poor girls age 13-18 years old that do not assist to school give pregnancy or motherhood as the reason (Table 9). The probability that these girls and their babies remain poor is most likely high. Indeed, teen pregnancy appears to be a major cause of the intergenerational transmission of poverty. ENDESA-2006 indicates that 25 percent of girls 15-19 years old (73,400) “are already mothers or are pregnant with the first child” (Table 13). It shows that early pregnancy is greater in rural areas than in urban areas (31 percent versus 20 percent) and more prevalent in poor girls (34 percent in the lowest income quintile compared to 12 percent in the highest quintile); furthermore, early pregnancy is inversely related to education (64 percent in girls with “no studies” versus 9.9 percent in girls with “higher education”); finally, there are marked regional differences: it is higher in the Atlantic Region (31.3 percent) particularly in the RAAN (34.4 percent), compared to the Pacific (22.4 percent). Table 13. Early Childbearing Urban Rural Total Girls mothers or pregnant with first child 33,906 38,873 73,414 Total no. of girls 15-19 year old 168,687 123,798 292,485 % of total number of girls 20.1 31.4 25.1 Source: ENDESA-2006. Informe Preliminar. Cuadro 6, p. 38. 24 Nicaragua is signatory of ILO Convention No. 138 on minimum age and ILO Convention No. 182 on Worst Forms of Child Labor. 21 3. 18-59 Years Old The principal risk facing the poor working population is that their income is low and variable because they have low paid and insecure jobs. Low paid jobs, unemployment or underemployment is often associated with low capital endowment (human and physical). Low and unstable income. The most important indicator of low income is the extent of poverty. The headcount measure of poverty indicates that 46 percent of all Nicaraguans are poor (40 percent for the 18-59 years old) and 15 percent are extreme poor (8 percent for the 18-59 years old). Poverty and extreme poverty are more prevalent in rural areas compared to urban areas: 68 percent in poverty in rural areas compared to 29 percent in urban areas; and 27 percent in extreme poverty in rural compared to 5 percent in urban areas. The main income generating asset of the poor is their labor. Therefore, employment rates are good indicators of the poor capacity to generate at least some income. In 2007, about 135,000 persons (5.9 percent of the labor force) were unemployed and 810,000 persons (37.9 percent of those employed) were underemployed (Table 14). The unemployment rate has been declining for young adults entering the labor force, but it still remains almost twice the rate for older workers. A worker is considered underemployed when (s)he either receives less than the minimum wage or works less than 40 hours a week. One in every four occupied workers receives less than the established minimum wage and 13 percent of all waged-workers works less than 40 hours a week. Table 14. Employment and Underemployment, 2005, 2007 July 2005 July 2007 July 2005 July 2007 (in 000) (in 000) % % Economic Active Population (labor force) 2,025 2,273 100 100 Employed 1,875 2,138 92.6 94.1 Formal sector 695 764 37 35.7 Informal sector 1,181 1,374 63 64.3 Fully occupied 1016 1054 54.2 49.3 Voluntary part-time 225 274 12 12.8 Underemployed 634 810 33.8 37.9 Visible (< 40 hours) 201 286 10.7 13.4 Invisible (