Strategies in a Globalising World : Learning from International
Introduction : Globalisation and the New Poor
It is widely recognised that the current phase of globalisation is contributing to a restructuring and reorganisation of labour markets in both the global South and North. In many countries policies based in the assumption that the norm for the working population would be a 30 40 year employment career in the formal labour market are now having to be rapidly revised in the face of the recognition that flexibilisation is leading more and more to outsourcing, subcontracting, casual and informal forms of work For increasingly large sector s of the work force the reality they face is exclusion from labour markets or adverse inclusion in conditions which do not allow them to attain sustainable standards of living for themselves or their dependants.
A parallel development has been the recognition that poverty in the globalising and sophisticated world of today is not simply captured in terms of income poverty. Analysis and therefor policy needs to reflect a more holistic and multidimensional understanding of poverty. In this view, the understanding of poverty must be expanded to capture the denial not just of access to basic goods and services, but also to appropriate dignified working conditions and returns on labour power, dignified and secure residential and community environment and conditions and entitlements to the communications and leisure opportunities produced by the global economy
The term social exclusion has been coined to reflect this multidimensionality of the poors detachment from the benefits of mainstream economic growth and development. This concept focuses not just on labour market exclusion but on the lack of possibilities and opportunities for political participation whether in mainstream political parties, trade unions or organisations of civil society, education and life-long learning, environmental and personal security and freedom from violence.
New Economics approach to poverty alleviation
Increasingly the "new economics" approach to poverty alleviation has taken into account these elements and attempted to build an alternative development strategy. This strategy goes beyond a conventional critique of conventional economic management and income distribution but is based on bottom up approach. This includes a raft on community level economic development strategies which attempt to keep in mind the broader agenda of social exclusion rather than the narrower understanding of poverty. The approach, whilst focusing on community level initiatives cannot be though of as a strategy unless there is a macro policy framework , led and supported by government at the national and local level.
In this paper I explore three elements of an alternative policy approach to income generation which I have termed :- income generation (micro credit and community finance, support for micro enterprise) income enhancement ( institutional structures, policies and initiatives) to allow income poor access to non wage benefits and services expenditure substitution and social capital building strategies ( LETS and time banks)
Income Generation Strategies : micro finance and micro credit
There is a widespread acceptance that we have to drop the assumption that the majority of the labour force will access adequate income through formal sector employment. This implies that, far from being the destination of modernisation and economic growth, most contemporary economies will not provide a high level of salaried jobs either in private or public enterprises or the public sector.
More attention must therefore be focused on the informal sector which encompasses a variety of small scale, own account, casual, temporary, piece rate, agency and insecure forms of work. Again rather than assuming economic growth will eliminate such forms of work - new globalisation has produced a series of reorganisations of the labour process international sourcing, outsourcing, privatisation, deregulation- which makes it clear that various forms of contingent employment and own account enterprises are likely to be the norm rather than the exception in the 21st century. At the same time technological change is producing a rang eof new products and service, new forms of participating in financial, commodity and service markets ( e-commerce) which reflect the new flexibility of work practices and work places. But also such changes intensify the divides between those whose income and lifestyles are rewarded in the new global economy and those which are impoverished and excluded. More and more these divides are not solely on geographic lines but within regions and cities there is a coexistence of the new affluent and the new poor.
The nature of markets and accumulation is also changing rapidly. In many societies in the global North and increasingly amongst the urban populations of the global South the proportion of income which is devoted to what used to be called basic needs (food, clothing, housing) is falling; meanwhile demand from all sectors of society or new goods and leisure and non basic services such as transport, fashion, sport, computer games, , vacations, personal services ( beauty parlours, hairdressers, keep fit etc is escalating in response to new market created by new technology and work organisation. Whilst the new poor have aspirations but little access to such non basic goods and services, the are also involved (through their own, often precarious, labour power) in the supply of a whole range of personal care and reproductive services which form the consumption and life style elements of the middle classes. These services include care services for household cleaning and cooking (maids, child care, care for the sick and disabled, elderly care etc). These are services which in most of the last half of the 20th century could have been expected to be provided by the state and accessed through employment related benefits or taxation. However at the present time, as the result of privatisation and deregulation, and also the demographic changes, in countries such as Argentina and Britain there is an ageing population with a diminished formal sector working population to finance public provision of currently consumed personal services. Many of the new poor, currently trying to eke out a living from the provision of personal services to the better off, are themselves from social groups, who some three of four decades earlier might themselves have expected to access such services for their own households through public provision or privately purchased services from rural immigrants and other marginal groups.
In the current situation, then, poverty analysis, and therefore poverty alleviation strategies must take into account the multi dimensional aspects of social exclusion. It is not sufficient to just focus on average household incomes and commodity equivalent purchasing power of basic goods and services. In this day and age we are dealing with population groups who are also facing diminishing access and participation to a whole range of economic and social activities and institutions. Not only do they have little access to formal labour markets and therefor to the political and social organisations, activities and institutions which have historically been so central to societies such as Argentina. They are also locked into an environment which offers them little access to civil society participation leisure activities, participation in new technology and commerce activities. This is a poverty context which is located in deteriorating environments where not only physical assets in the pubic and private sphere housing stock, road maintenance, traffic regulation, utility functioning, public transport, vulnerability to and or a fear of various kinds of crime and assault ie a deterioration in the physical and human assets of their lives. As the outline paper indicates, in the context of an economy where access to the relatively few formal sector posts is managed on the basis of escalating credentialism in terms of academic qualifications, household survival strategies tend to focus on short term opportunities for income generation in the informal and unregulated sectors.
One of the chief aspects of such contemporary poverty, from a subjective if not a structural view point, is the inability of the poor to devise strategies and select options which might provide a route out of poverty or alternative options for their own or their childrens futures. It is therefore essential that policy responses take into account the need not just to tackle short term purchasing power but long term social political and psychological aspects of urban deprivation and social exclusion.
Income generation policies : enterprise opportunities
It is therefore in this context which policies to promote small scale (micro) enterprise using micro credit and complementary training and support services must be developed and evaluated.. Micro credit has long featured prominently in the anti poverty strategies of key multilateral development institutions such as the World Bank and the Inter-American Development Bank (See WDReport 2000/2001. In the framework of these institutions offering small amounts of working capital through micro credit institutions or intermediaries enables the "working poor" those outside formal labour markets who are achieving low productivity on their labour the opportunity to generate a higher returns n their labour and to develop more efficient enterprises which have the possibility to increase productivity, investment, employment creation. Small and micro enterprises in this model are both the occupation of the last resort of the destitute and the potential engine for growth for the national economy.
This approach has been rightly critiqued from all kinds of perspectives. But it is also important to record that this approach has been successfully adapted to the very different contexts of the USA, Canada, the UK and Western and Northern Europe. Such initiatives in the North have proven successful in assisting low income, often benefit dependent groups ( eg single mothers, farming and fisher women, ethnic minority youth) to develop the skills confidence and entrepreneurial approaches to successfully commercialise small businesses and set off on an enterprise path that offers a particular route out of poverty and unemployment.
Of course the context in Northern economies with extensive if not comprehensive income and benefit social security systems is very different from the situation of rural poverty in agrarian economies where agriculture cannot provide the basis of a rapidly commoditising local economy. The initiatives in the North have been very much project and neighbourhood focussed. But learning from some of the technologies develop in microcredit programmes in the global South such as the group collateral approach of the Grameen Bank in Bangladesh has provided a framework to develop programmes which have the potential to both support individual enterprises and to create solidarity groups which have contributed not just to the success of the credit and enterprise initiatives but to the personal empowerment and development of the individuals concerned. This has been especially the case for particular groups of the socially excluded single parents of small children, in particular of disabled children who require a targeted and flexible package of support in order to have a chance to (re) enter the mainstream economy as micro entrepreneurs.
Whilst the debates in the South about the efficacy of credit only or credit plus programmes and financial and institutional sustainabiliy rage in development institutions and agencies, the debates in the North are somewhat different. In addition to the project based credit for enterprise programmes referred to above there have been a number of initiatives which have taken a different form. These are Community Finance and Enterprise initiatives which have been developed by a new kind of economic actor the social entrepreneur and the social banker. These generally take the form of an investment /loan fund, raised either directly amongst the sectors of the general population desiring to invest their capital in a socially productive manner, or via social funds and banks which are dedicated to profitable but not profit maximising modes of operations. These funds for example the Aston Reinvestment trust in Birmingham, the London Rebuilding Society (LRS) the Local Investment Fund (LIF), the Glasgow Regeneration Fund to give some UK examples, are made available to individual enterprises and to community projects and co-operative businesses who have little chance of raising capital in the mainstream market. They can be accessed directly or via a social intermediary which also offers complementary training and support and have proved increasingly successful in supporting existing businesses in low income neighbourhoods, encouraging new starts and enabling people operating in the grey economy to legalise their businesses and become successful micro entrepreneurs.
These initiatives have something in common with experience in South America for example the launching of the BancoSol in Bolivia as a successful and financially sustainable micro credit bank. But the UK experience also taps into an increasing interest in alternative economic strategies and new approaches to urban regeneration which are strongly neighbourhood and community based and which are focused on economic transactions, assets and facilities within areas where low income households are concentrated, areas with inferior provision of communal services or access to quality health, education and leisure facilities.
Such initiatives are being developed with new groups, and with innovatory and cross sectoral parternships. For example in Liverpool the home of the now ageing Beatles, an initiative called "Banking on Culture" aims to "stimulate investment, local development and employment opportunities in the cultural sector -- music, computer/videos, plastic and fine arts etc. Focussed very much at the ethically diverse population of the inner city it starts from the premise that cultural workers are creative, have the ability to develop new products, markets, new ways of learning and working, linking ideas to techniques which requires entrepreneurship and adaptability. Current public funding to the cultural sector is inadequate and unable to reach this sector of potential cultural enterprises so the project has set itself the task of linking innovations in this sector with existing third sector/voluntary sector institutions, social banks and financial institutions . Interesting, the partnership set up to fund and steer this project includes not only the regional Arts Funding board and the Arts Council of England but also the International Association of Investors in the Social Economy, a European wide network and the Trade Union Manufacturing and Scientific Workers (MSF).
2. Income Enhancing strategies
The policy approaches described above are aimed at income generation for low income groups excluded from the labour market or aiming to enter the economy as independent micro entrepreneurs and own account workers. An issue for such workers is the absence of any direct access to non wage benefits available to employees in the formal sector that is health insurance, sickness insurance, maternity benefits, life insurance and old age pensions. There have been a number of initiatives internationally which have been concerned to develop insurance services for micro enterprises. For example the German bilateral GTZ and USAID have worked with SEWA to develop insurance for sickness, death and accident disability. The ILO has been involved in developing health insurance and Mutual health Organisations (MHOs in the Philippines Latin America and Sub-Saharan Africa. In many contexts insurance and other benefits can be linked to savings and credit programmes to minimise transaction cots and facilitate community investment in the schemes. The ILO STEP (Strategies and Tools against Social Exclusion and Poverty) programme is working with a whole range of organisations at national and international level to develop innovatory approaches to non wage benefits and insurance for informal sector workers.
These issues are also of concern to the large group of the new poor whom we can describe as contingent workers that is those who work on casual and temporary contracts, for agencies on hourly or weekly rates, in unregulated care and domiciliary services including domestic work, child care and care for the elderly and disabled. Like micro entrepreneurs they have little or no access to non wage benefits to enhance the value of their income generation in terms of both securing them from fluctuations, crisis , disability and the effects of ageing on their ability to maintain their income generation strategies.
This is an area in which there has been much less systematic research and policy formulation. However some European and Latin American trade unions have begun to interest themselves in this issue from an international perspectives. The North-South Network of the German Trade Union Congress organised a conference in March 1999 on the "Shadow Economy and Trade Union representation" at which several examples of organising contingent workers were discussed. Best known is the Self Employed Womens Association in India, which has successfully established skills training, a bank, insurance policies, and legal and political advocacy for its membership. This organisation has been adapted by SEWU (the Self Employed Womens Union) to the conditions of South Africa where it represents street traders, home worker s and household employees., and has a programme of awareness, business skills and leadership training, political education, access to financial and legal services, as well as negotiations for maternity, illness, invalidity holiday and life insurance, occupational insurance and pensions. There are other interesting precedents which might be instructive in the Latin American context. These include the Service Employees International Union (SEIU) in San Francisco, USA which organises precarious workers in a number of different sectors, including home care workers. Organising in this sector is difficult because of the absence of a single or direct employer to negotiate with. However SIWU has successfully negotiated best practice contracts, housing services, and language training for their members working in domiciliary care.. A similar project has begin in Toronto (the Contingent Workers Project), and discussions are beginning in Germany and the Netherlands as to what might be the most appropriate institutional form to work with informal and casual workers to access training, advice and insurance and other services.
Whilst many of these initiatives appear to be outside national policy frameworks, government support is vital if they are to be scaled up and influence mainstream policy an provision. National government can create the legislative framework for organisations of contingent workers, which in many contexts will resemble a hybrid between a traditional trades unions, a community based organisation, an NGO and an employment agency. The national bodies of trade unions can assist such initiatives by ensuring that there is a voice for incipient organisations at tripartite forums such the ILO which traditionally has looked to private sector organisations and unions to represent all workers. The extent to which fledgling initiatives of this type are able to develop and shape policy initiatives depends very much on the enabling framework established by national government.
The discussion has up till now focussed on strategies which offer opportunities for income generation outside the formal labour market and initiatives which can assist in increasing the returns on such activities both for self employed entrepreneurs and for a range of own account, casual and precarious workers. However there is an additional approach which deserves some attention here-t hat of strategies which reduce the need for money income to access appropriate services by providing an alternative form of economic transactions.
There are two main forms of economic exchange systems which do not require the expenditure of national currency. The best known is LETS the Local Exchange Trading Systems. LETS are local associations whose members list their offers of, and requests for goods and services in a directory and then exchange them priced in a local unit of currency. In this way a group of people can access goods and services in exchange for offering their own skills and time, without requiring money in the form of official currency. Thus participating in a LETS scheme can increase the value of goods and services access with a given income, without increasing money expenditure
In the Uk local authorities have given substantial resources to supporting LETS schemes since they have the potential to offer poor and unemployed groups the opportunity to increase their access to goods and services . However recent research indicates that the majority of the participants remain the so called "disenfranchised middle class" who are able to access a high LETS currency value for their goods and skills, a value derived from formal markets maintaining a favourable terms of trade in relation to the goods and services offered by their unskilled or low or unpaid counterparts in socially excluded groups.
In spite of the enthusiasm of their supporters, LETS appear to have had, as yet , a limited effect on credit and expenditure reduction for low income and excluded groups. Partly this is because they are often inspired by a sustainable development agenda which is oriented more to environmental rather than social or economic sustainabiliy. The activities supported by LETS schemes are mainly seen as contributing to an alternative economy rather than supporting increasing participation in the mains stream economy. Moreover they do not necessarily add to the stock of goods and services in circulation, but rather enable the exchange of the existing stock at different exchange values. Although this leaves open the possibility of revaluing so called unskilled work which can include gardening, or decorating, or indeed of putting an economic if not monetary value on work normally unpaid -such as caring for elderly relatives, in practice such redistribution has not been widespread in LETS schemes in the UK and North America.
Time banks offer an alternative community currency which enables a growth in the tradable goods and services in the community, an intrinsic bias towards (re)valuing unpaid work and the opportunity to build individual empowerment and community social capital. Time banks involve co-ordinating the supply and demand for goods and services from participating members and enterprises with the scheme. Time banks differ from LET in that members can earn time currency from a whole range of activities some economic, some civic and some social and do not have to barter directly with the agent supplying the service or commodity they desire.
Time Banks are a social provisioning strategy , initially pioneered in the US in the mid 1980s. Very recently they have attracted interest in the UK and are being pioneered in London and several regional locations. Time banks require a co-ordinating agency, group or project prepared to take a proactive approach to encouraging participation by time unit earners and spenders. In the UK they are being operationalised by social services departments and local government health and employment agencies. They operate on the basis of individuals earning time currency units from a wide range of community oriented activities including shopping for elderly neighbours, participation in council consultation exercises, organising childrens holiday entertainments, gardening, driving patients to hospital outpatients clinics, plant watering, form filling, sports coaching , listening, foot massage, phoning friends, dog walking pet care, knitting, laundry etc.
Each time bank will allocate an account for joining members who are then encouraged not only to earn but to spend time dollars on services offered by other participating members. Mainstream agencies can utilise time dollars to provide access for poor people to complementary health services ( therapy, chiropody), to provide training for unemployed, to collaborate with elderly neighbourhood projects and to build patients support networks at a local health centres. In the US commercial participation has been ensured from banks and insurance companies who will accept local time currencies for certain services, and from mainstream businesses such as restaurants and supermarkets who are willing to donate surplus items ( off peak meals, about to pass sell by date food, unsold flowers) as part of their support to community initiatives.
Time banks offer the potential to value activities generally unpaid in conventional markets, particularly caring an reproductive work carried out by women and the elderly. In contrast to Etzionis genderless communitarianism, there is an awareness that such schemes which essentially rest on volunteer work rather than paid work, can exploit the high share of unpaid work women normally carry out in all economies, they also offer an avenue to make such work visible, and to offer access to services and goods which can make a difference to the economic and social exclusion of poor household members.
Time banks are not auto gestated. They need an investment of interest, funds and resources from external sources foundations, NGOs, local councils, government departments. But in extension of the discussion about LETS and social capital they offer the opportunity of cross class solidarity as non indigent individuals and business can be enthused to contribute time dollar redeemable goods and services without necessarily spending their full allocation of time currency. On the other hand an essential element to this approach is the creation of demand for services and activities carried out by economically and socially excluded individuals, often older people, women with childcare and other domestic responsibilities, a demand which can restore the self esteem of the individual as well as (re)connecting her/him to networks and opportunities which have been increasingly denied over time.
It is important of course not to underestimate the problems with adopting such an approach on a large scale. Encouraging strangers to offer domicilary and personal services may be hazardous and for security reasons local government may require time banks to conform with certain health and safety and security procedures, or monitor best practice compliance. It is well known that voluntary schemes have a high rate of burn out, especially if successful as members find real jobs or more lucrative activities to replace unpaid activities in time bank schemes. Therefore a long term strategy needs to be adopted which will be ever aware of the need to recruit new cohorts of participant s- the newly retired, the disaffected teenagers, the young mothers, the relatives of drug addicts to participate in such measures.
New approaches to income generation need to be based on a realistic understanding of the dynamics of new poverty in a global economy and the multidimensionality of exclusion from economic, social and political activities. Whilst this approach does not challenge the structural or cyclical nature of economic growth, nor the critique of mal distribution or the gains from rising national income, it takes a holistic approach to the subjective experience of poverty, the complexity of income generation outside the formal labour markets and the need to explore income enhancement and expenditure substitution strategies as well as the focus on income generation per se.
The paper describes a range of policy approaches, to rebuilding impoverished communities and revaluing low productivity work and unpaid work by marginal groups. Most of these initiatives are derived from mature Northern economies which are also experiencing the rapid growth of the new poor and a dynamic of urban decline and insecurity which is part of the context an dynamic of contemporary poverty.
Sceptics and opponents of this socially focussed approach accuse its proponents of tokenism of supporting small scale initiatives which can only have a marginal effect on participants and in macro terms will not radically alter income distribution nor real standards of living. However as yet many of these initiatives are still in pilot phases and little empirical research or evaluation has so far been carried out. But the experience to date does indicate that such approaches are most successful where there is national government support and leadership to place social entrepreneurship and new social actors in the economy high up on the policy agenda. Government has an important role to play in providing and appropriate enabling regulatory environment which might mean fine tuning regulation for micro credit and other financial services, or dovetailing universal or employment related benefits and safety nets to support and financial credit for budding micro entrepreneurs. Many initiatives described in this paper require creative partnerships form a range of stake holders- government, voluntary sectors, community organisations and NGOs, , regional development boards, private sector companies and entrepreneurs. Government has a key role to play in encouraging such partnerships, by providing seed corn funding, by supporting a national challenge funds, by co-partnering approaches to international donors, by facilitating applied policy research by academics and practitioners and by providing forums for discussion and debate and sharing of experience.
References and Resources
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Websites and Other useful addresses
New Economics Foundation
6-8 Cole Street, London SE1 4YH