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This is the last of a series of four reports examining the ongoing impact of World Bank policy on the welfare of children in transition countries.

The transition countries of Eastern Europe, the former Soviet Union and Mongolia arguably had the world's most comprehensive formal social safety nets - packages of goods, services and income support intended to guarantee basic needs. All citizens were, at least in principle, guaranteed employment and housing, water and fuel were either free or greatly subsidised, staple food prices were mostly controlled, and there were a range of benefits to support low income or "vulnerable" groups, such as children and elderly or disabled people. There were undoubtedly holes in this safety net, and it was clearly fiscally unsustainable . However, although it was widely recognised that a restructured state welfare system had an important role to play in preventing and alleviating poverty and cushioning the shock of transition, in many countries the safety net was in fact "unravelled" quite rapidly, ironically at a time when such support has been most needed. The social consequences of removing this support were underestimated, as it was assumed by many that the economy would rapidly be back on track, and the strengths as well as weaknesses of the pre-transition system overlooked by many policy makers and advisors.

Today, formal safety nets still exist in most transition countries, but are much less comprehensive than ten years ago. Even where the majority of the population are now below the poverty line, as in Kyrgyzstan or Tajikistan (60 and 70 per cent respectively by conservative estimates) , most benefits are quite strictly targeted to very poor families and individuals. Food and fuel subsidies have been scaled down or eliminated. Benefit levels have been eroded due to inflation and are often very low - in Tajikistan in 1999, the monthly cash benefit for low income families was only sufficient to buy two loaves of bread . Furthermore, in some countries anybody with a plot of land over a certain size is ineligible for income support benefits - even where these plots are too small to make a living. Due to irregular state revenues, benefits are often paid late - and in Kyrgyzstan, sometimes in kind. These problems and complex application procedures put off many poor applicants. As a result, often only a relatively small proportion of the population take up the benefits for which they are eligible . Nonetheless, benefits appear an important source of support for those who do receive them.

Extended families and communities are often the principal source of support to poor or vulnerable individuals and have played a vital role in preventing destitution over the transition period. However, due to unemployment, and lack of assets, many families are under great stress and struggle to support one another. In the words of one Kyrgyz man "having relatives is expensive these days". In parts of Eastern Europe, pressure on families is so acute that the percentage of children living in institutional care has risen 45 per cent in Romania and Russia and 75 per cent in Latvia since 1991.

Recommendations:

The World Bank Asian Development Bank and other donors are putting increasing emphasis on social protection, including adequate safety nets. We believe that adequate social protection will require some significant changes to current approaches:

1: A more holistic approach. At present, poverty issues are often depoliticised and compartmentalised. Most aid has focused on technical assistance for restructuring parts of the safety net, often broadly in a Western model. This is often disconnected from wider debate on the role of donor-sponsored or mandated economic policies in creating poverty, how poverty should be tackled, and what might constitute an appropriate safety net. This tunnel vision may help explain how radical changes to almost all aspects of social and economic life could be implemented simultaneously, underestimating the social costs. For example in Kyrgyzstan, due to the devaluations, collapse of state-owned enterprises and inequitable privatisation, in the space of a few years, millions were plunged into poverty, formerly universal cash benefits were removed, or re-targeted to the very poor, food and fuel subsidies were cut and people were suddenly asked to pay for health care, pre-school and university education, to contribute to school running costs, and the pension fund, and to pay land and water taxes. In the words of one rural pre-school teacher, a mother of four, 'we have to pay for everything now - and everything is expensive'.

2: Greater emphasis on damage prevention. Much WB and donor involvement, particularly in the early 1990s when poverty was increasing fastest, focused on cost-containment, at the expense of social protection. Now social protection is back on the agenda, but for many poor people the damage has been done, as notable increases in child malnutrition and reductions in school enrolment in Central Asia make clear. Serious attention to social protection is needed to reverse these trends.

3: Social funds (SFs). The World Bank has introduced stand-alone SFs (anti poverty or community investment programmes) in Mongolia, South East Europe and the Caucasus. While many of the activities supported by SFs are useful, the funds are usually too small and their activities too patchy to have a significant impact.

4: A fundamental rethink of how to protect poor and vulnerable people is needed. This will necessitate debate on a range of models, rather than restructuring social protection everywhere in line with the very low state provision of the American model. How this can be financed in the medium to long-term must be discussed. Donors may need to provide budget support in the short to medium term, while sustainable long-term financing options are developed.

For further information contact:

Caroline Harper, Head of Research and Development (c.harper@scfuk.org.uk) Rachel Marcus, Research and Policy Advisor (r.marcus@scfuk.org.uk) Anna McCord, International Advocacy Co-ordinator (a.mccord@scfuk.org.uk) John Wilkinson, Policy and Learning Officer (j.wilkinson@scfuk.org.uk)