Does ‘cash-for-work’ work?

IRIN: As the Sri Lankan Government launches a cash-for-work programme in areas hit by recent flooding, following similar schemes in the former conflict areas in the north, experts warn of potential pitfalls of such schemes.

The new programme will be operating in 12 Northern and Eastern Districts devastated by flooding in January and February, which affected more than two million and displaced close to 700,000, according to the Government.

Regional Government officials have been instructed to employ those affected by flooding to rebuild rural roads, minor irrigation tanks and channels. Participants are to be paid about US$ 4 daily for up to four days a week.

More than $ 3 million has been allocated by the Ministry of Economic Development for the scheme, launched in early March.

Model

As residents started returning in late 2009 to areas formerly controlled by the Liberation Tigers of Tamil Eelam (LTTE) rebels in the north, the World Bank implemented a $ 7.5 million cash-for-work programme. Some 28,652 families benefited between December 2009 and July 2010, according to the bank.

The programme is the largest of about a dozen, which typically run for at most a year, that have operated in the north since the 2004 tsunami.

To limit the number of participants, the bank set wages 15 per cent below market rates and allowed one member per returning family to apply.

The work involves hand-dug construction and small-scale irrigation, and repairs to roads, health clinics, community drinking water facilities or schools.

“The cash-for-work programmes have been quite successful, given the lack of economic activity as the war-displaced began to move back... So far the work has been completed satisfactorily,” said G.A. Chandrasiri, the Northern Province Governor.

No official unemployment figures are available for the province, but some analysts estimate half the population remains unemployed or is not working enough to support their needs; when cash-for-work programmes end, permanent jobs rarely replace them.

The programme was never intended to be a long-term employment solution, stressed the World Bank office in Sri Lanka. “The priority and challenge at the end of the conflict was to create essential community infrastructure, ensure returning IDPs have short-term income-earning opportunities... so that IDPs will resume their normal livelihood activities in agriculture, informal sector activities, etc.”

But short-term cash may actually have long-term negative consequences, said local economist and principal researcher with Point Pedro Development Institute in Jaffna Province (heart of the former conflict zone), Muttukrishna Sarvananthan.

“It [cash-for-work] may distort labour market wages (i.e. after the CfW [cash-for-work] ends, the beneficiaries could expect similar or higher wages than what they received under CfW), discourage labour mobility [and] self-employment initiatives. Many CfW programmes in Jaffna and Vanni run for a long time with no meaningful work done.”

Major repairs are still handled by Government agencies with heavy equipment or foreign workers rather than local manual labour, he added.

“I have seen Chinese workers employed in building of cantonment for army personnel stationed in [the northern district of] Kilinochchi. Local unskilled or semi-skilled labour could have been employed for this purpose.”

Sarvananthan estimates unemployment to be above 20 per cent in the areas controlled by the LTTE until 2009, under-employment to be at least another 30 per cent, and that almost half the work force in these areas survived on occasional employment, earning less than $1 per day.

“There are very limited job opportunities available in this area right now,” said Manoharan Seenathamby, the World Bank’s senior rural research specialist in Sri Lanka.

This could change if the Government switched from capital-intensive to labour-intensive construction, suggested Sarvananthan.

“One way to generate meaningful employment in former conflict-affected regions is to employ labour-intensive – or what the ILO [International Labour Organization] calls labour-based – technologies in rehabilitation/reconstruction of infrastructure including roads, houses, public buildings.”

Insecurity

Kathiravel Krishna, a 31-year-old father of five from the northern village of Tharmapuram, said temporary work brought cash, but little stability. “Cash for work is available only for a limited time and in certain parts. Not all the people get it and it cannot replace the security of a job.”

He survives on the odd day job on farms and doing construction work. Some of the returnees, especially those who live alongside the main highway, have used parts of their UN-funded government cash grants of $220, given to each returnee family, to set up tea shops.

As of end 2010, 76,000 families had registered with the UN Refugee Agency (UNHCR) to receive these grants, intended to help in building temporary living quarters, for a total of about $7 million.

Krishna said tea-shop owners and other small business vendors near the highway were the most secure financially. “But, for those living [in the] interior, there is no such option and the cash grant is now long gone.”