Support of families with children to reduce poverty
The poverty level in Kazakhstan is 2 times underestimated. The Ministry of Labor's proposal to increase the threshold for recipients of the targeted social assistance to 100% of the subsistence minimum will make the figure even higher.
According to statistics, the living wage in Q3 2019 was 31,120 tenge. And behind the poverty line was only 4.5% of citizens of Kazakhstan. But if we consider the World Bank's independent calculations, which they conducted in 2015, 26% of the population in Kazakhstan was considered poor.
World Bank annually estimates the international poverty line at purchasing power parity to the local. Kazakhstan, like Russia, has the status of a lower-middle-income country, which means that the poverty line is $5.5 per person per day. It is about KZT64,000 per month, and it is at least twice as much as the established subsistence minimum.
The interesting fact that the Russian subsistence minimum corresponds to the World Bank's data - 11,012 roubles in Q3 2019 (KZT65,800).
Then, according to the Committee on Statistics in 2018, 7.4% of the population was below the line. If we trust the median calculation, the poverty rate in 2018 was 10%. The median approach is common in the EU and OECD countries, where income is 60% of the national median income.
Why is the real level underestimated twice?
In Kazakhstan, the poverty rate is measured by the number and proportion of the population with incomes below the subsistence level. The main criterion, in this case, is the consumer basket. But the methodology has some vulnerabilities:
- The selection of goods is carried out by experts and nutritionists, rather than on the basis of household behaviour.
- The subsistence minimum is the income needed to achieve a certain standard of living. International experience shows that household consumption is the most appropriate welfare measure for measuring poverty than income. Therefore, In global practice, welfare measures based on consumption rather than income are more commonly used.
If the state recognizes that the poverty level is higher than the current one, it will become an expensive item in the budget. For example, in 2016 the government spent about 1% of GDP on social welfare.
By the way, from 2016 to 2019 expenditures on the item "Social assistance and social security" increased from KZT 1.9 trillion to KZT 3.5 trillion (84%).
Kazakhstan increased the number of people below the poverty line to 11% in Q3 2019, having revised the criteria for granting the targeted social assistance. As a result, the number of recipients of targeted social assistance increased 88 times.
Appropriate assessment and understanding of the causes of poverty may contribute to effective decision-making and reduce social tensions. For example, the World Bank's analysis shows that the poorest group is dominated by large families (with three or more children). Having analyzed social payments, the system of state support for families with children is the most profitable. For each tenge allocated for its implementation, the poverty gap is reduced by KZT 0,605.
Thus, the benefits addressed to children or families with children will have a high level of targeting.
Analytical group of the Atameken NCE RK
Please, join our Telegram channel to stay up to date on the latest news.
Leave comment:
Comments: