Social Safety Nets Social Protection & Labor Policy Note September 2015 | Number 20 Highlight From Conflict to Peace: Post-conflict cash benefits A Note on Designing and Transitioning War are necessary to restore social balances after long Related Cash Benefits periods of civil unrest or war and are part of the Anita M. Schwarz and Mirey Ovadiya reconciliation process for a country and society. However, these policies/ programs can have a I. Introduction long-term fiscal impact, Fragile and post-conflict countries tend to spend heavily on conflict-related social be very regressive, be benefits, particularly in the years immediately following the conflicts, many times difficult to retract, and to the exclusion of other types of social protection. The motivations to provide these benefits can come from at least four sources: (a) efforts to reward and thank those who crowd out other social made sacrifices to reach the post-conflict outcomes; (b) an inducement for combatants protection programming. to lay down their weapons; (c) housing and resettlement support for internally displaced Hence, policymakers people; and (d) efforts to alleviate the suffering the general population faced during the need to carefully weigh conflict. Clear distinctions between benefits arising from these different motivations is not always clear and some of the benefits given may have multiple purposes. In addition, the advantages and governments bear the cost of rebuilding infrastructure that was damaged or destroyed disadvantages of different during the conflict. All of these expenditures combine to impose a heavy burden on the design options in the already strained fiscal budgets of fragile and post-conflict countries. Nevertheless, all delivery of these cash of these benefits are a critical element in establishing the legitimacy of the post-conflict government. benefits. Different types of conflicts generate different types of benefits. Conflicts that resulted in a new country being formed tend to generate benefits which reward and thank those who made sacrifices, while civil war within an existing country which ends with some type of peace settlement often results in payments to combatants who lay down their weapons or other types of demobilization payments. The need for housing and resettle- ment support typically arises when ethnic or religious conflicts cause people to move to a different country or to a different part of the same country. Almost all conflicts create suffering for the general population and destruction of infrastructure which then needs to be replaced. Governments are not the only providers of conflict-related benefits. In some cases, religious or other civil society organizations, or even donors, may be the prime provid- ers of benefits rather than the government. In other cases, these other organizations This note could not have been prepared without Miglena Abels, Sandra Patricia Alves Lopes Silva, Jasmine Rajbhandary, and Zoran Anusic who helped in gathering data and with the analysis. 1 Policy Note: Social Safety Nets September 2015 | Number 20 complement what is provided by the government. In yet oth- continuing benefits, not only do not always cover these poor ers, the government maintains the primary role or even exclu- and vulnerable populations, but also tend to crowd out spend- sive role of providing benefits. All of these make it impossible ing on the poor and vulnerable. Over time, these countries to conduct a comprehensive cross-country analysis. will want to gradually shift their spending away from the heavy emphasis on conflict-related benefits and toward all the Part II of this note relies heavily on examples from a few poor and vulnerable in the society, whether or not their pov- countries where detailed data were available. The examples erty and vulnerability was directly derived from the conflict. are illustrative and are likely to be relevant to other countries as well. Detailed data were available for the two separate Countries with one-off benefits also often start with ben- entities of Bosnia and Herzegovina, the Federation of Bosnia efits that are less targeted toward the poor and vulnerable. and Herzegovina and Republika Srpska, as well as Croatia, Initially being more inclusive may help promote social cohe- Kosovo, Nepal, Namibia, and Timor-Leste. These will be pre- sion, but eventually these countries also need to move toward sented in the second part of the paper, documenting the types more focus on the poor and vulnerable, regardless of their of programs in each country and the cost of each program. treatment during the conflict.1 While detailed data are available on the number of beneficia- ries, level of benefits, and total costs of the cash benefits pro- Finally, Part IV offers conclusions based on the experience vided in these countries, there are still other in-kind benefits, and analysis contained in Part II, on delivering conflict related such as free education, free health care, subsidized housing, benefits. subsidized energy, and free or subsidized transportation, as well as special tax treatment, which are scattered through- out the government budget. Often these in-kind benefits are II. Examples of Conflict-related Benefits subsumed within separate ministry budget categories and and their Costs are difficult or impossible to separate. The spending numbers presented should thus be considered as the minimum amount A wide variety of post-conflict benefits exist in countries spent on war-related beneficiaries rather than the total spend- and are often widely scattered throughout the budget, ing on these beneficiaries. making it impossible to get a comprehensive listing of programs, beneficiaries, and costs. The scope, intensity, and Countries seem to be divided into two types: (a) those that duration of the conflict have an impact on the types of ben- provide continuing benefits on a monthly basis and (b) efits provided and how they are structured, which affects how those that provide benefits as a one-time payment often easy they are to identify. Countries which have set up depart- immediately following the resolution of the conflict. The ments for veterans’ benefits or even ministries make it easier limited data combined with secondary sources seems to sug- to identify these benefits, but even then, there is often political gest that countries fall into one of these two types As a rough sensitivity regarding the benefits, making it difficult to obtain generalization, middle-income countries and those that are the information. Furthermore, while benefits for non-regular more resource-rich tend to favor continuing benefits, while fighting forces are typically separated into special veterans’ poorer countries which often experience a donor inflow im- benefits, sometimes these benefits are subsumed within the mediately after a conflict, tend to use their limited financing regular military benefits budgets, particularly in cases where to pay one-off benefits. much of the fighting was done by regular military or where the irregular militia were incorporated within the regular Part III of this note looks at how countries can begin to military. Other benefits like education benefits or special con- move their social protection spending away from the huge sideration for government jobs are scattered elsewhere in the focus on conflict-related categorical benefits and toward the budget or become difficult to quantify. Most often these are typical categories that other governments protect with cash noncontributory cash and in-kind benefits, whereas in some benefits, the poor and the vulnerable, but recognizes that countries, they can include social insurance benefits which this process will be different for the two types of countries. have been adjusted as flat benefits due to circumstances. Recognizing and rewarding the efforts and suffering of fight- ers, their families, and the general population is important Despite the difficulties with the data, evidence suggests to the legitimacy of a government. Maintaining peace is even that a fairly significant percentage of the gross domestic more important in not only creating a nation, but in establish- product (GDP) is being spent on post-conflict benefits in ing the foundation for growth and prosperity. Nevertheless, each of the countries, where data are available, particularly post-conflict countries face the same social protection needs in countries where the benefits are provided monthly on that non-conflict countries do, the need to protect the poor a continuous basis. Figure 1 shows the spending on post- and the vulnerable. These beneficiaries could be the house- conflict benefits in each of the countries as a percentage of holds in the bottom quintile of the income distribution or the GDP. Even these spending numbers mask some of the actual elderly, disabled, unemployed, families who have lost their spending. In the case of the Federation of Bosnia and Herze- breadwinner, or others who are unable to work. The conflict- related benefits, particularly in those countries which offer 1 Rebecca Holmes. 2009. “Cash-Transfers in Post-conflict Contexts.” Project Briefing No. 32. Overseas Development Institute. 2 Social Protection & Labor | World Bank Group Figure 1: Spending on Conflict-Related Noncontributory Benefits as a Percentage of GDP 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% FBiH RS Croatia Kosovo Timor Leste Nepal Namibia Sources: Bosnia and Herzegovina from “Non-contributory Cash Benefits for Social Protection in BiH: What Works and What Does Not,” Maastricht University Graduate School of Governance, June 2013; Croatia from Croatian Government Budget; Kosovo from Kosovo Ministry of Labor and Social Welfare; Timor-Leste from National Directorate for Veterans Affairs of Timor-Leste; Nepal from Nepalese Relief and Rehabilitation Unit of the Ministry of Peace and Reconstruction; Namibia from the World Bank ASPIRE database (www.worldbank.org/aspire). govina, for example, some of the support to veterans comes of fighters who died during the conflict or are still missing and through the pension fund and not directly through the vet- presumed dead. The benefits are typically provided in relation erans’ agency. This high level of spending on conflict-related to the number of family members lost and not to the level of benefits, which does not appear to be well-targeted,2 tends to need. So a single surviving individual who lost multiple family crowd out other forms of social protection spending. It should members could receive a substantially large payment, while a be noted that a large part of the Nepalese benefits are typically family of ten people which lost only one person will compara- paid as one-time benefits and what is listed is what has been tively receive little. The level of benefits when compared to paid in total since the conflict ended and compared to 2013 average wage varies greatly across governments, but most are GDP. It is impossible to know what was actually paid in the below average wage. year 2013. In the other cases, these are monthly benefits for the most part which will continue throughout an individual’s The ex-Yugoslav countries also provide benefits to healthy lifetime and possibly that of his survivors as well, although veterans. Republika Srpska in Bosnia and Herzegovina explic- about 1.3 percent of the total benefits shown for Timor-Leste itly provides pensions for healthy veterans who served during are also one-time benefits. the conflict. The Federation of Bosnia and Herzegovina and Croatia provide benefits for healthy veterans, but largely The various types of benefits offered by each country are through the pension system, where additional benefits are different and tailored to its own needs, given that each con- provided to people who served. The benefits provided through flict is different. The conflicts in former Yugoslavia tended to the pension system are not necessarily reflected in the spend- be of shorter duration, but more intense and involving a large ing numbers shown in figure 1. Kosovo is in the process of fraction of the general population. There has also been a bit specifying who qualifies as a veteran so that they can also of a comparative game among the former Yugoslav countries provide veterans’ pensions. In the case of Republika Sprpska, with no country wanting to deny its population benefits that these pensions are provided right away, irrespective of age. In another country has given. Unsurprisingly, the types of ben- the cases of the Federation of Bosnia and Herzegovina and efits offered by the four governments for which there are data, Croatia, the pensions are generally provided in line with the the two Bosnian entities, Croatia, and Kosovo are quite simi- pension system, although the pension system in the Federa- lar. They all provide pensions to disabled veterans, including tion of Bosnia and Herzegovina allows a fair amount of early those with as little as 20 percent impairment in both entities retirement. In Kosovo, the rules are yet to be fully defined. In of Bosnia and in Kosovo. They all provide benefits to families some cases, further additional payments have been made to a subset of fighters. For example, in the case of Kosovo, as the 2 Timor-Leste Social Assistance Public Expenditure and Program Performance militias were converted into the Kosovo Protection Corps, Report, World Bank, 2013; Targeting Systems for Safety Nets in Nepal: A Review, some payments, one-off or periodic, were often made to peo- World Bank, 2009; and Non-contributory Cash Benefits for Social Protection in BiH: What Works and What Does Not, Maastricht University, 2013. ple who were not included in the new downsized force. Then, 3 Policy Note: Social Safety Nets September 2015 | Number 20 when the Kosovo Protection Corps was further downsized participated full time in the resistance. There are three types to the Kosovo Security Force, again, payments were made to of ranks—superior, medium, and inferior; and three partici- some individuals who were not included in the newer force. pation categories—those who participated 20 or more years, This type of payment is also not included in the spending those who participated full time between 15 and 19 years, numbers shown in figure 1. and those who participated full time between 8 and 14 years. The highest grade individual with 20 or more years of service Given the severity and breadth of the conflict, payments receives 5 times the minimum civil service wage, while the have also been instituted to the civilians disabled and to the highest grade individual in the 8–14 year category receives 60 families of civilians who were killed during the conflict or percent of that amount. Disabled combatants unable to work are still missing in former Yugoslavia. This type of benefit is also receive 60 percent of the amount received by those who a bit unusual in countries like these that already have a fairly participated 20 or more years, regardless of the years served. extensive social protection framework. Typically civilians Unlike the ex-Yugoslav countries which provided benefits disabled or survivors of civilians dead due to the conflict are to those with injuries, irrespective of their work capacity, treated the same as anyone in the population who is disabled benefits in Timor-Leste are tied either to the length of service or the survivor of a civilian who died an early death, given or to disability and inability to work. Those who served full that there are social protection programs in place that cover time between 4 and 7 years receive a one-time payment equal disability and death. However, the choice was made in these to 12 times the monthly minimum wage. The direct survivors countries to separate those affected by conflict and provide of those who died—widows, parents, siblings, and children— them with a separate category of benefits. The benefit levels receive a total pension equal to 50 percent of the highest pen- in all cases are below those for fighters or families of fighters sion amount appropriate to the grade of the individual who suffering similar circumstances and the eligibility criteria is died, which is divided equally by the number of beneficiaries. stricter. In the case of the two Bosnian entities, the degree of Family members of those who currently receive a pension will invalidity must be at least 60 percent for a civilian to qualify receive a survivor’s pension when the current pension recipi- for a benefit. ent dies. Finally, more distant family members of people who died but did not leave a direct heir also receive a lump-sum The ex-Yugoslav countries also provide long-term care for benefit equal to whatever a direct heir would have been en- those suffering from conflict-related injuries, including or- titled to receive for 12 months. These family members include thopedic benefits, as well as a variety of other privileges. As direct descendants or ascendants up to four generations away would be expected, those who require caregiving services and as well as nephews and nieces, aunts and uncles, and cousins. orthopedic benefits, as well as medical treatment and reha- bilitation are provided those services, generally free of charge. Timor-Leste combatants also receive non-cash benefits not Other benefits provided in Bosnia and Herzegovina, which included in the figure 1 calculations. Timor-Leste combat- are less typical elsewhere, include unemployment benefits; ants, like those from former Yugoslavia, receive non-cash priority employment on equal terms; priority when renting benefits which are harder to measure. These include funeral and purchasing business premises on equal terms; priority honors, free medical care, special training and employment enrollment in educational institutions on equal terms; free programs which provide assistance in reintegration in civilian required textbooks for full-time education; priority in award- life, and free access to education for combatants, widows, and ing scholarships and lodging in student dormitories; priority descendants. access to housing on equal terms; funeral benefits; priority access to employment programs; exemption from payment of The difference between the Timor-Leste benefits and the construction land use fee; and eligibility for privileged pen- ex-Yugoslav countries benefits reflects both the differences sions. Kosovo adds free transportation as well as free electric- in the scope, duration, and intensity of the conflicts, as well ity if needed, to this list of additional benefits. The spending as societal choices on how to define disability. Timor-Leste on all of these benefits are in addition to what is specified in benefits are more akin to regular military benefits that are figure 1. given to people who serve full time in the military, as op- posed to awards to people who were pulled into fighting from The post-conflict benefits offered in Timor-Leste, by con- their civilian jobs. The conflict also seems to have generated trast, are much more focused on the combatants them- fewer disabled combatants, only 319 as of 2014, approximately selves, irrespective of their health status, and are noncon- one disabled combatant for every 20 health combatants. By tributory. The conflict in Timor-Leste and the post-conflict contrast, in Republika Srpska, there were more than 35,000 benefits offered are quite different from the ex-Yugoslav receiving disability benefits, with just over 135,000 receiving countries’ benefits. The conflict was largely a resistance move- general veterans’ benefits, or one out of every four combatant ment which continued for 24 years, followed by a relatively beneficiaries. While the conflicts themselves were different, short intense conflict which took place between the vote for the definition of disability was also markedly different, result- independence in August 1999 and the establishment of the ing in far fewer disabled beneficiaries in Timor-Leste. The United Nations Transitional Administration in October 1999. level of the benefits are also substantially different, with the Benefits are based on the military rank that a person held highest benefits set at approximately 83 percent of the average during the resistance period and the number of years a person 4 Social Protection & Labor | World Bank Group wage in Bosnia, while the highest benefits in Timor-Leste on compensation of property. A number of other very small were more than 330 percent of the average wage. This partly benefits seem to be provided on a monthly basis—an allow- reflects the oil windfall experienced by Timor-Leste and its ance to martyrs’ families, a monthly allowance to the disabled, greater ability to pay generous benefits, but also partly the so- scholarships to the children of the disabled, relief to the cietal choice to limit benefits to those who had the most active disabled, and subsistence for the severely disabled. But aside participation or were most significantly injured.3 from the scholarships, most of these recurring benefits go to very few people and constitute a minimal proportion of the While less data are available on Namibia, it seems to follow overall post-conflict spending. the pattern of middle-income countries providing relatively generous benefits to combatants and their families. Na- During and following the conflict, due to challenges with mibia very much follows the pattern of the Western Balkans personal records and proper administration, the govern- countries and Timor-Leste. Four programs exist to help veter- ment of Iraq reverted the pension scheme at that time to ans and their families, providing annual cash benefits between provide only ‘flat emergency’ cash benefits paid out of the average wage and twice average wage depending on the years general budget, until a new pension system was created in spent in the liberation struggle, providing entrepreneurship 2006. In 2014, new pensioners were benefiting from the new grants worth up to about 10 years of average wages upon pension scheme (being paid out from the new official pension submission and approval of a proposed project, vocational fund) while an estimated 2 million people were still benefit- and education training, funeral assistance, and coverage of ting from the ‘flat’ cash benefits, among them around 100,000 medical and psychological needs. The cost of these programs war victims and martyrs, all being paid out of the general amounted to 31 percent of the total social protection spending budget. Essentially, most of the pension benefits are still in Namibia in 2012. outside the formal pension scheme and need to be eventually either phased out or brought into the system in a fiscally sus- The Nepalese conflict of 1996–2006 was yet another type tainable manner (around 2 million beneficiaries are receiving of conflict that generated different types of noncontribu- benefits from the general budget, while at the moment less tory benefits and also reflected the more limited resources than 200,000 beneficiaries–although increasingly growing–are of the Nepalese government. The Nepalese conflict was a receiving benefits from the contributory pension scheme). completely internal conflict, which unlike the ex-Yugoslav countries conflicts and the Timor-Leste conflict, did not cre- Other post-conflict cash transfer programs (within the ate a new country, but ultimately replaced a monarchy with a category of programs termed disarmament, demobiliza- representative government. The fighters of the Peoples Libera- tion, and reintegration [DDR] include those piloted in tion Army were eventually merged with the Nepal Army, with Mozambique in the 1990s, donor-implemented programs the combatants being given three choices: (a) integration with in Somalia in the early 2000s which included both cash the Nepal Army; (b) voluntary retirement; and (c) rehabilita- transfers and cash-for-work projects, cash-for-work tion. Those who were integrated received the normal salary programs in Afghanistan beginning in 2002, and donor- and benefits package provided to the Nepal Army. Those who implemented cash-for-work programs in the Democratic chose voluntary retirement received a lump sum worth be- Republic of Congo in the early 2000s.5 These programs tween 8 to 12 years salary at average wage. Only six combat- are often small scale and do not take up much of social ants registered for rehabilitation packages.4 protection spending. In the West Bank and Gaza, the Sup- port of the Families of Martyrs and Injured Citizens Founda- Benefits to families of those killed and disabled, whether tion provides cash, rehabilitation, education, and health care civilian or combatant, were paid as one-off benefits rather assistance to those inside and outside of Palestine who fall than as continuing pension payments for the most part. within the two categories.6 Zimbabwe also has a much small- Cash grants worth almost 5 years of average wage were given er program for surviving spouses and children of national to families of those who were killed or who had disappeared. heroes. The benefits are a relatively small US$26 per month An additional cash grant of 5 months of average wage was for each surviving spouse and US$6 for each child. In 2012, given to widows of those killed or disappeared as well as to there were only 582 beneficiaries at a cost of 0.3 percent of those who were kidnapped. Cash grants of almost 2 years of the social protection budget.7 average wage were given to children who lost both parents during the conflict. Cash grants of 9 months of average wage were provided as an allowance to caregivers for the severely disabled. The displaced were given on average 2 months salary and on average about 7 months average salary has been spent 3 There is discussion in Timor-Leste about dropping the requirement for 5 Harvey, Paul, and Rebecca Holmes. 2007. “The Potential for Joint full-time participation in the conflict to qualify for benefits, which will move Programmes for Long-Term Cash Transfers in Unstable Situations,” Timor-Leste more toward the ex-Yugoslav countries model. Humanitarian Policy Group, August. 4 Singh, Ajit Kumar. 2012. “Nepal: Consolidating the Peace – Analysis,” 6 World Bank, West Bank and Gaza, Country Case Study. Eurasia Review. http://www.eurasiareview.com/24042012-nepal- consolidating-the peace-analysis/ 7 World Bank, ASPIRE database. 5 Policy Note: Social Safety Nets September 2015 | Number 20 III. Moving from Post-conflict Benefits limited time frame also does not distort the social protection program going forward. to Social Protection of the Poor and Vulnerable Figure 3 shows the relatively high percentage of the social protection budget spent on conflict-related benefits in the Countries emerging from conflict need to gradually countries for which there are data. While a richer country transition from a focus on conflict-related benefits to a like Croatia spends heavily on pensions and other social social protection policy which focuses on the poor and the protection needs, the two Bosnian entities and Kosovo which vulnerable and on providing a springboard to employment. spend heavily on pensions, in addition to conflict-related ben- The initial focus on conflict-related benefits serves a useful efits, have little financing left for social assistance. In Bosnia purpose in recognizing those who contributed to bringing and Herzegovina, 80 percent of the spending8 on noncon- about peace, providing relief to those who were injured or suf- tributory social transfers are allocated to categorical benefits fered the loss of a breadwinner, and creating a sense of social including non-war-related disabilities, civilian victims of war, cohesion, with the government seen as provider of benefits. and war veterans (figure 2). However, if benefits are too generous or too widespread, over time, they can prevent the country from moving past the con- flict. They can constitute a large share of the social protection Noncontributory Social Transfers in Figure 2:  budget, squeezing out room for other spending which might Bosnia and Herzegovina better jump-start growth and build even more social cohe- sion. They can sow seeds for future conflicts by encouraging Social Protection ex-combatants to remain idle. They can also be so generous Child and family that they discourage healthy family members from joining the protection labor force, limiting the labor force participation and more general social participation of these families. For example, in Veterans’ benefits Bosnia and Herzegovina only about 54 percent of the labor Persons with non-war force is active, partially due to disincentives to work created related disabilities by poorly designed and targeted social benefits. Civilian victims of war Middle-income post-conflict countries are more likely to face difficulties with phasing out of categorical ben- efits than lower-income countries. In middle-income and resource-rich countries, governments had sufficient resources immediately after the end of a conflict to initiate many of Further, in both Kosovo and Timor-Leste, the process for these benefit schemes and continue to have resources to determining conflict-related beneficiaries is still ongo- finance such schemes. These benefits also become legal en- ing which suggests a further potential for squeezing other titlements engrained into the social contract as in the Western social protection needs. In Nepal, the only lower-income Balkans. As such, they tend to be ongoing benefits rather than country with data available, much of the spending is discrete lump-sum benefits, which then have a continuing impact on and so less likely to affect future budgets. the budget even many years after a conflict has ended. The benefits tend to be more generous, often allowing individu- als and families to live at the poverty line or above without Between 10% and Two-Thirds of the Figure 3:  working. Retrenchment becomes politically very difficult as Social Protection Budget is Being Spent veterans and their families who receive these relatively gener- On Conflict-Related Benefits ous benefits have considerable voice and political influence. 80% By contrast, in lower-income countries, the benefits tend 70% to be financed by donors who provide limited funding for 60% a limited period of time and, therefore, in most cases are 50% hastily phased out without adequate attention to welfare 40% implications on the conflict-affected population. The ben- 30% efits tend to be paid as one-off benefits and tend to end when 20% the donors withdraw funding. The one-off benefits provide in- 10% centives for individuals receiving them to think about invest- 0% ing in something that will provide income in the future since FBiH RS Croatia Kosovo Timor Leste Nepal Namibia they otherwise have no assurance of future income. While the limited time period and sometimes the pilot nature of the projects may fall short of providing an adequate springboard 8 Spending on social assistance/safety nets is 3.9 percent of GDP. for full economic and social integration of individuals, the 6 Social Protection & Labor | World Bank Group The data also suggest that the conflict-related benefits are performs relatively better, with 27 percent of its cash benefits going to relatively few beneficiaries. While the data sug- going to the bottom quintile, although still far from a major- gest that in general, there is more or less a match between ity, and 26 percent of its conflict-related benefits going to the the percentage of GDP going to conflict-related beneficiaries bottom quintile, with 21 percent of these benefits going to the and the percentage of the population that are beneficiaries, richest quintile.11 Timor-Leste seems to be an outlier where almost 4.5 percent of non-oil GDP is going to less than 2 percent of the popu- lation. However, the measure of number of beneficiaries is Veterans’ Benefits in Republika Srpska, Figure 5:  somewhat flawed and may include both double-counting and by Quintiles of Consumption of the undercounting. It is impossible to tell from the aggregate data Population, 2011 if one individual is collecting multiple benefits and therefore counted as multiple beneficiaries. The beneficiary count was 25.6% corrected for obvious cases, such as excluding those disabled 25% 23.4% receiving caregiver supplements, as they were already includ- ed in the total of those who were receiving disability benefits. 20% 18.5% 18.5% In the case of a benefit going to the family of someone who died or was declared missing during the conflict, only a single 15% 14.0% beneficiary might be listed in the administrative records, while a much larger family is benefitting. Some countries list 10% each orphan child who receives additional benefits separately 5% from their widowed parent, while others only list the parent who receives own benefits as well as the benefits of the minor 0% children in one joint payment. As a result, the numbers across 1 2 3 4 5 countries are not strictly comparable. Nevertheless, figure 4 presents rough estimates of the number of beneficiaries as a percentage of the population.9 Given the high percentage of the budget going to these types of benefits and their negative impact on labor force  ercentage of Population Receiving Conflict- Figure 4: P participation, countries which have already instituted Related Benefits in Most Recent Year these programs need to find ways to reduce the spending without introducing social tensions and damaging the 16% reconciliation brought about by instituting them. What can 14% countries do? The easiest measure is most likely to be keeping 12% the benefits paid constant in nominal terms from some point 10% forward. This will result in a very gradual reduction in spend- 8% ing, but is less likely to be as contentious as other approaches. Social assistance programs should not exclude these benefi- 6% ciaries if they are in fact poor. Some programs using a proxy 4% means test use receipt of any other government benefit as an 2% exclusion factor. Removing this factor from the eligibility cri- 0% teria for social assistance will protect these beneficiaries from FBiH RS Croatia Timor Leste Nepal Namibia falling into poverty. If poverty is a particular concern for these beneficiaries, the constant nominal benefit can be augmented by increases for those whose households fall below a thresh- The limited analysis done, to date, also suggests that the old, using a conventional or proxy means test. An alternative conflict-related cash benefits are highly regressive and do approach can be to grant benefits, but not pay all of them if not benefit the poor or vulnerable. In the case of Repub- government revenues fall below a threshold. This approach lika Srpska, a Maastricht University study showed that the has the advantage that people have been recognized for their majority of benefits do not reach the poorest. Only about efforts and may receive only limited benefits today, but might 18 percent of post-conflict cash benefits reached the bottom expect to see greater future benefits if the economy improves. quintile in 2011. The Federation of Bosnia and Herzegovina Kosovo used this approach in 2007 when only certain catego- shows an even lower percentage of cash transfers going to the ries of beneficiaries were paid, although all were recognized, bottom quintile, 10 percent, as documented in the same study and, even among those paid, the benefits were paid at 70 per- while the top quintile receives 26 percent.10 Timor-Leste cent of what was written in the law. The two Bosnian entities have applied this budget constraint approach to other social 9 Even the population estimates are not certain in the case of the two Bosnian entities with no census having been taken since the war. 11 World Bank. 2013. “Timor-Leste Social Assistance Public Expenditure and 10 “Non-Contributory Cash Benefits for Social Protection in BiH: What Works Program Performance Report,” Report No. 73484-TP, June, p. 50. and What Does Not,” Maastricht University Graduate School of Governance, June 2013, p. 53 and p. 97. 7 Policy Note: Social Safety Nets September 2015 | Number 20 benefits, although not necessarily consistently for post-conflict fall into poverty and need complementary social care services benefits. The danger of this approach is twofold: (a) individu- or other services along with a cash transfer and/or initial als may interpret these reductions as arrears and demand full vocational training or a benefit package. payment when the economy recovers, suggesting that the leg- islation which institutes partial payments has to very clearly state that arrears are not be accumulated and (b) the increase in these payments when the economy begins to recover may Box 1. Experiences from DDR Programs cause a drag on growth, preventing a real recovery. DDR programs beyond the disarmament have often The better approach is to be more cautious about granting provided beneficiaries (‘ex-combatants’) either with recurrent benefits, granting them to as few individuals as training; support for self-employment/entrepreneur- possible, and to carefully cost out the lifetime costs of these ship, grants, and access to land; employment; psycho- benefits. Almost all post-conflict countries experience a bal- social counseling; or a combination of several ben- looning of the number of claimants. In Kosovo, for example, efits. Analysis of DDR programs from Southern and the former prime minister who had been a Kosovo Liberation Western Africa point to several weaknesses of these Army (KLA) leader, once quipped that if he had the number programs from a social protection and, more broadly, a of soldiers as there were claimants to veterans’ benefits, he poverty reduction perspective. In particular, DDR pro- would not have needed NATO help in securing independence. grams have not been successful in providing a sustain- And even 10 years after the conflict ended, the number of able productive safety net mechanism for ‘integrating’ disabled claims related to the conflict continued to grow. A the ex-combatants and enabling them to provide for very careful vetting process needs to be undertaken, as soon their livelihoods in the long run. Analysis also suggests as possible after the conflict, when memories are still fresh. that the program designs are very gender biased and Recurrent benefits are clearly needed, where affordable, for have not been very effective in attending to the needs the severely disabled and for caregivers for these individuals. of female ex-combatants or their families. Analysis of Even countries such as Nepal, with limited resources, provide programs, such as the Liberian DDR program, at the recurrent benefits for these categories. Individuals who suf- end found that both those who had completed reinte- fered lesser injuries might be better served with rehabilitation gration and non-participants in the DDR program re- and training rather than disability benefits. Healthy veterans ported very similar income patterns: approximately 36 could receive recognition, training, lump sums, or a promise percent of both groups self-reported earning less than of an old-age pension when they reach a normal retirement US$2 per day, while 26 percent of non-participants age. All of these encourage reintegration into the economy reported earning more than US$5 per day (versus only and labor force over paying someone to remain idle. 21 percent of reintegration completers).* * K.M, Jennings, 2009 “The Political Economy of DDR in Liberia: A One-off payments provided by many lower-income coun- Gendered Critique”, Conflict, Security and Development tries provide somewhat better incentives for economic reintegration and growth based on mixed international evidence coming from DDR programs. One-off payments can provide financing for replacing housing and other durable goods, start-up financing for entrepreneurial activities, or IV. Conclusions financing for retraining. All of these can possibly provide Post-conflict countries, particularly middle- and higher- a future stream of income which can make an individual income countries, tend to provide recurrent benefits for productive and bring the household out of poverty. Even those who participated in and were affected by the con- though these programs have the advantage of being limited flict, resulting in substantial fiscal costs, a crowding out in duration and hence having no recurring fiscal implica- of expenditures on other poor and vulnerable groups, tions, international evidence from DDR programs suggest and limited reintegration in the labor market. The need mixed evidence in terms of their poverty reduction impact to recognize those who suffered during a conflict, either as and their efficiency. International experience also indicates participants or as civilians, is important in building social co- that most program beneficiaries will continue to be poor un- hesion in a post-conflict country. However, the benefits given less they receive further social assistance. The initial one-off are often generous and given to many people, saddling the payments have often been insufficient to create enough of a country with unaffordable fiscal costs and providing incen- future income for households, if it were poorly spent. Entre- tives for ‘conflict participants’ to remain out of the labor force. preneurial activities undertaken often fail in fragile settings. The benefits themselves can make it difficult for the coun- While post-conflict rebuilding typically provides employment try to move beyond the conflict and establish a meaningful and entrepreneurial opportunities, more general business need-based social contract as its other social protection needs opportunities may require a minimum level of infrastructure remain unmet. For countries which have not yet taken these to be successful, making initial business activities more risky. decisions, recurring benefits should be limited to the severely Therefore, these programs need to be complemented by social disabled, with others provided one-off benefits. For countries assistance systems that provide a safety net for those who still 8 Social Protection & Labor | World Bank Group which have already instituted substantial recurring benefits, the existing safety nets systems/programs in the country to the note suggests non-indexation of benefits or paying only provide continuity. a percentage of what has been granted as alternative to lower the current fiscal expenditures. In summary, post-conflict cash benefits are necessary to restore social balances after long periods of civil unrest or Numerous post-conflict countries, in particular, lower- war and are part of the reconciliation process for a country income countries, most commonly in Africa and Asia, and society. However, as documented based on a few illus- have also delivered one-off benefits to ‘war veterans’ or trative cases in this note, these policies/programs can have ‘ex-combatants’ through demobilization and reintegration a long-term fiscal impact, be very regressive, be difficult to programs. Although these programs are fiscally contained retract, and crowd out other social protection programming. and time bound with negligible negative impact on govern- Hence, policymakers need to carefully weigh the advantages ment budgets (largely because they are externally financed) and disadvantages of different design options in the delivery and medium-term social protection programming, they have of these cash benefits. not been particularly effective in improving the welfare of the affected populations. The large body of literature on the A smooth transition to sustainable safety nets and pension performance and effectiveness of such programs indicates on systems is necessary for these benefits to have impact and average poor results, in particular, with respect to the reinte- be fiscally sustainable. However, without proper gover- gration of the affected populations. Nevertheless, for coun- nance, transparent financing, targeting, and delivery mecha- tries with limited resources and income, opting for one-off nisms in place, a smooth and timely transition from conflict- benefits may be a good option. The design of these programs related benefits to better-targeted safety nets or pensions will need to take into consideration recommendations on might not be possible. If appropriate safeguards and design better involvement of communities and improved content. parameters are not in place, these programs may result in The benefit package can be of a limited duration including a perpetuating inequalities, creating labor market distor- combination of training, cash benefits, psycho-social support, tions, and causing economic inefficiencies (or even further employment support, and preferential access to education conflict) as opposed to reducing poverty and re-balancing and health care, however, carefully crafted with clear links to post-conflict social dynamics. 9 The findings, interpretations, and conclusions expressed herein are those of the author(s), and do not necessarily reflect the views of the International Bank for Reconstruction and Development/The World Bank and its affiliated organizations, or those of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. © 2015 International Bank for Reconstruction and Development/The World Bank