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Public Works Programmes (PWPs) have been widely employed in both developed and developing countries to provide social protection to people of working age who are living in poverty. Beyond social protection, adequately designed PWPs can potentially enhance local productivity and contribute to overall economic development through three main channels: i) cash transfers; ii) creation or improvement of assets; and iii) creation or development of skills. By transferring cash to beneficiaries, PWPs can protect household consumption while promoting savings and investments in productive assets. Through the generation of public goods and the provision of training, public works can also lead to the accumulation of community assets and the development of skills, alleviating local productivity constraints.
Despite increasing interest and the theoretical arguments on the productive role of PWPs, existing evidence mostly focuses on the impact of cash on smoothing consumption and reducing poverty, rather than on the potential of PWPs to promote economic growth. Despite the lack of evidence, a literature review of existing programmes around the developing world allowed us to identify a number of design considerations for PWPs that are relevant if they are going to achieve growth-related impacts (McCord 2012; Beazley and Vaidya 2015).
Piece-rate payment systems can lead to significant increases in the levels of output by attracting individuals who are more productive and incentivising workers to produce more. However, effective functioning of these systems requires strong administrative and managerial capacity.
Compared to piece-rate systems, time-based systems are easier to implement, although likely to cause major productivity losses.
If programmes aim to both support consumption and foster economic growth, and the management capacity is relatively good, setting simple daily tasks and linking payments to their completion could be a good compromise between both methods.
Most PWPs in poor countries offer single short-term episodes of employment to prevent sudden reductions in consumption. It is rare to find PWPs that have been explicitly designed for the promotion of growth, even though conventional discourse emphasises the productive role of these programmes. This One Pager provides some considerations that emerge from the limited evidence base for programmes with both protective and productive goals. Combined with a clear vision for programme objectives and context-specific analysis, it should help policymakers improve future programme design.
This One Pager is a partnership between the IPC-IG and Oxford Policy Management, and was first published on July 2016.
Beazley, R., and M. Farhat. 2016. How can Lump-sum Cash Transfers be designed to improve their Productive Potential?Oxford: Oxford Policy Management.
Beazley, R., and K. Vaidya. 2015. Social protection through work: Supporting the rural working poor in lower income countries. Oxford: Oxford Policy Management.
McCord, A. 2012. “Appraising productivity enhancing Publics Works Programmes.” Social Protection Toolsheet. London: Overseas Development Institute.