Reviewing our social welfare scheme | Sunday Observer

Reviewing our social welfare scheme

Weathering the storm: Improving disaster resilience of rural workers
Weathering the storm: Improving disaster resilience of rural workers

Samurdhi is one of the major welfare schemes in Sri Lanka. It was launched in 1995 with the main goal of reducing poverty through economic development based on public participation. By the end of the 1990s, the program was fully functioning in 21 of the country’s 25 districts.

The program has gone through considerable transformations over the years. More recently, it has been modified to consist two main components – the relief program and the empowerment program. The former includes cash transfer, social security fund, and nutrition. The empowerment program comprises rural infrastructure, livelihood, social development, Samurdhi housing programs, and microfinance through Samurdhi Bank Societies.

Samurdhi gives a maximum of Rs. 3,500 for a household with 3 or more family members with a monthly income less than Rs.4,000 - the official poverty line for the country.

A few years ago, the World Bank reported as follows: “Sri Lanka’s main safety net program, Samurdhi suffers from poor targeting and benefit adequacy. If targeting was focused on individuals with the greatest need, intuitively, there should be more Samurdhi beneficiaries in districts with high levels of poverty.”

CBI

Many developing countries in the world have now adapted a program known as “Guaranteed Minimum Income (GMI)”, (also called minimum income), as a more dependable social welfare system. It is a system that guarantees that all citizens or families have an income sufficient to live on, provided they meet certain conditions.

In UK, the system is known as citizen’s basic income (CBI). It is a periodic cash payment delivered to all on an individual basis (not family basis) without a means test or work requirement.

CBI is an unconditional payment granted to every individual as a right of citizenship. It’s not a high figure – barely enough to survive on alone, and below the minimum wage – but it is designed to prevent all from falling into poverty traps. Compellingly, it removes the stigma from state support. There is no difference between a student, a person managing life with a disability, a pensioner or someone struggling to find stable employment if we all share the same basic starting point.

Positive response

Social policy and economic policy can no longer be conceived separately, and the CBI scheme is increasingly viewed as the only viable way of reconciling two of their respective central objectives: poverty relief and full employment.

CBI establishes greater financial security and prosperity for all, supporting economic and social justice and inclusion by reducing poverty and inequality, and improving people’s quality of life and well-being.

CBI would assist in the realisation of the right of every person to have an adequate standard of living as set in Article 25 of the 1948 Universal Declaration of Human Rights and the linked International 1976 Convention of Economic, Social and Cultural Rights.

That is why many prominent social scientists have now come out in favour of it - among them are several Nobel laureates in Economics. India, among other countries, is also seriously considering implementing this system.

Fair shot

In 2018, Facebook co-founder Chris Hughes outlined his plan in his book ‘Fair Shot’. He said U.S. workers, students, and caregivers making $50,000 or less a year should receive a guaranteed income of $500 a month. “Cash is the best thing you can do to improve health outcomes, education outcomes and lift people out of poverty,” Hughes said.

Hughes suggested tax of 1 percent on top businessmen. He said it could work through a modernization of the earned income tax credit. To Hughes, it’s the only solution to an economy where “a small group of people are getting very wealthy while everyone else is struggling to make ends meet.”

Both Mark Zuckerberg and Bill Gates agree. They argue that modernisation has fundamentally changed the structure of the U.S. economy. Sir Richard Branson said CBI was inevitable, adding that if the idea is adapted, the ‘poverty trap’ would be removed from traditional welfare programs. Citizens could have simple, straightforward financial assistance that minimizes bureaucracy.

Poverty is inhumane and unnecessary, but it is also expensive and economically inefficient - reducing productivity, consumption and tax payments as well as leading to increasing demand for health care and other public services.

CBI payments would help young couples start families. The payments could help stabilize the economy during recessionary periods. The benefits are immense.

Cons

Of course, there are disadvantages also. Inflation might be triggered because of the increase in demand for goods and services. It might result in inflated prices in the long-term. But economists say, due to increased production it will be stabilized.

A reduced program with smaller payments won’t make a real difference to poverty-stricken families.

Despite these drawbacks, basic income is one of the most innovative and straightforward proposals to address poverty and growing inequalities. Maybe, Sri Lanka should also take the concept seriously.

On a final note - is CBI affordable? Many economists believe it is, if the Government puts its heart and soul to make it happen.

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