Kosovo Poverty Assessment

Promoting Opportunity,Security and Participation

September 2005

Outline

Challenge of poverty monitoring – statistics and assessing the poverty situation

Multi-dimensional nature of poverty – income poverty, low health and education outcomes, lack of security, deficit in empowerment

Social cohesion – how fragile is it?

The need to strengthen public service delivery

Policy options

Challenge of monitoring poverty

Substantial progress has been made with the collection of household level data

However, there are several challenges ahead:

- Lack of a population census

- Current household survey system does not allow critical comparison between income and non-income poverty (health, education, security, empowerment) estimates. Difference with Living Standards measurement survey

- Lack of data on non-income dimensions of poverty

- Restricted access to data

Income poverty is widespread, but relatively shallow

Data from 2002 Household Budget Survey shows:

- 37 percent of population living with less than €1.42 per day

- 15 percent extremely poor with less than €0.93 per day

- Poor close to thresholds. Average consumption deficit of the poor is 11 percent of the poverty line

Income poverty not spread evenly across all households and individuals. Groups most at risk are: children, the elderly, female-headed households, disabled, RAEs, and unemployed and precarious job holders

Education outcomes have improved, but overall level of education is low

Gross primary enrolment rates up to 95.4 percent in 2003 and illiteracy 0.5 percent among children and youth. In 2002, half of adult population had only completed primary education and 6 percent illiterate

Early child care is extremely limited (pre-school)

Enrolment drops substantially at secondary level – only 75.2 percent in 2003

Problem in service delivery. Insufficient space/ classrooms. Children do not have full day’s education. Schools on 2-4 shifts per day

Education enrollment rates decline at secondary level and gender gap

0

5,000

10,000

15,000

20,000

25,000

30,000

1 2 3 4 5 6 7 8 9 10 11 12

Primary and secondary school enrollment by gender and grades, 2002

Grade

Males

Females

Health outcomes are poor and among worse in South East Europe

Considerable uncertainty on health estimates, but those available suggest outcomes are poor

Health around birth and over first year of life is major problem. Infant mortality rates is 4-10 times higher than EU average. Inadequate nutrition is particular problem

Tuberculosis and disability are major problems. Mental health issues are widespread, especially amongst young people. Due to lack of knowledge, threat of rapid increase in HIV/AIDS

Exposure to environmental health risks is high

Environmental pollution and contamination is widespread and represents a serious hazard to health:

- Contamination of soil and foodstuff by heavy metal

- Evidence of lead poisoning in children from Northern Kosovo

- Kosovo remains one of highest air polluters in SE Europe

Environmental problems mainly come from:

- Outdated mining practices and industrial infrastructure that ignored environmental impacts

- Poor housing conditions and quality of basic infrastructure services

- Weak environmental management systems

Income insecurity is high

Lack of political stability may affect prospects for economic growth

Many households rely on natural resources for their living (especially in rural areas) and are vulnerable to environmental depletion

High risk of becoming unemployed (precarious employment)

Low coverage of formal safety net

Unexpected private health-care expenses appear catastrophic for some households

Personal security needs to be improved

Standards stipulate “all people in Kosovo should be able to travel, work and live in safety and without fear of attack, harassment or intimidation”

Inter-ethnic tensions and violence

Domestic violence (particularly against women) and trafficking in women and girls

Elevated environmental risks:

- Kosovo belongs to major seismic area, but the housing stock does not seem to comply with security codes

- High risk of landslides (high deforestation rate, mining)

There has been some improvement in empowerment of citizens…

Empowerment – capacity of all people, regardless of income status, ethnicity, race, religion or gender to participate in, negotiate with and hold accountable institutions that affect their lives

Some positive developments:

- Legal framework promotes democratic society and the rule of law

- Gender equality is promoted in formal state institutions and has enabled a greater representation of women in public life

- Constitutional framework guarantees participation and representation of ethnic minorities

…but key challenges remain

Achievements in political and civil freedom is mixed. Need to raise participation of Serbs and other minorities in local institutions

Youths’ ability to influence the institutions that affect their lives seems limited

Influence of women in decision making remains at stake

Access to information. Environmental awareness still low and youth knowledge on HIV/AIDS is weak

Corruption is considered a problem of medium to high importance

Social cohesion is fragile

May undermine the sustainability of economic growth and the impact of growth in poverty reduction

Positively, consumption inequality is moderate

However, clear disparities exist which may become sources of discontent and political unrest:

- Large spatial socio-economic disparities (rural v secondary cities)

- Non-Serb ethnic minorities face substantial disadvantage in consumption inequality. Security disadvantage for Serbs and other ethnic minorities

- Gender inequality widespread. Youth face substantial labor market disadvantage

Public service delivery needs to be adequately financed…

Insufficient public spending and low coverage on health (4.5 percent of GDP) and social protection (5.8 percent) compared to regional average. Social protection limited in overall terms, in terms of amount of benefits and coverage of poor

Education (6.1 percent) on par with region, but main focus on primary schools. Little spent on pre-school

This combines with a decrease in donor assistance in these sectors

…and made more efficient and equitable

Poverty reducing potential of service delivery may be compromised by low effectiveness:

- Health: low quality of antenatal care. Inadequacy and inefficiency in staffing allocations

- Education: quality of teaching and issue of space/number of shifts

- Social assistance: high exclusion due to fiscal constraints

Challenge in ensuring equitable delivery:

- Health: out of pocket expenditures disproportionately hit poorest

- Education: poor areas more affected by teaching quality

- Social assistance: Serb and over 4 children households disadvantaged

Formulating a poverty reduction strategy

Importance of developing a multi-pronged strategy, reflecting the various dimensions of poverty and the need for robust evidence. Poverty reduction embedded in Kosovo Development Plan

Need to take into account tight fiscal constraints in which public programs need to be developed. Realistic strategy, properly costed and affordable. Need proper prioritization and appropriate sequencing

Growth enhancing and efficiency reforms should be at centre of poverty reduction strategy

Needs support of international community

Improving statistics and access to data on poverty

Recognition that proper dialogue on poverty needs to be based on robust evidence

Need to improve the statistical infrastructure. Helped by conducting a population census. Also need to fill in knowledge gaps in current household survey system

Improve accessibility. Provide access to data and create a data user group

Promoting income opportunities

Implement a policy program that sustains/accelerates broad-based growth. Includes strengthening policy environment conducive to private sector led-growth

Enhance social cohesion:

- Strengthen the unification of social protection system

- Reduce most pressing inequalities by gender, ethnicity and age

Enhance the link between growth and job creation. Requires improving overall investment climate to attract investment and supporting agricultural competitiveness (through fair trade agreements and developing advisory services)

Raising health and education capabilities

Large unmet investment needs in human capital. Need to reconcile with prudent macroeconomic and fiscal management

Improve efficiency and equity of public health expenditures. Clear efforts needed to reduce undue out-of-pocket health expenditures resulting from corruption and inefficiency in drug prescription

Improve quality and access by the poor to education. Raise secondary school enrollment (particularly in rural areas, and for women)

Empowering disadvantaged groups

Promote women and youth influence in economic, social and political life (e.g. youth organizations heavily involved in forming of youth policies)

Improve level of knowledge of youth on HIV/AIDS prevention

Raise awareness on environmental issues

Reducing vulnerability

More responsive growth and better environmental management to reduce environmental risks. Enforce safeguards. Continue rehabilitation of basic infrastructure services

Support conflict prevention and peaceful conflict resolution (e.g. promote tolerance in school curriculum)

Eradicate extreme poverty at no additional costs through improvements in efficiency and equity of social assistance. Aim at extreme poor

Summary

Progress has been made, yet poverty in Kosovo is still widespread and has many dimensions

Lack of opportunity, security and participation in decision-making are major aspects of poverty in Kosovo

Improving employment opportunities for youth, improving health and education outcomes, increasing the efficiency and equity of social service delivery, and reducing a sense of vulnerability are vital in reducing poverty