Pantawid Pamilya: Money for nothing?

Published on Thursday, 19 February 2015

Published by Karin Schelzig on Thursday, 19 February 2015

More than 4.4 million poor Filipino families receive regular cash grants from the government to help them make ends meet. But they aren’t getting money for nothing – there is a catch: families only get the cash if their children go to school and get regular health checkups, and if the parents go to family development sessions every month. Family development sessions cover a diverse range of topics from nutrition and hygiene to disaster preparedness and active citizenship.  
From small beginnings in 2008, the Pantawid Pamilyang Pilipino Program has grown to become the 3rd largest conditional cash transfer program in the world, after Brazil and Mexico. The name loosely translates to building bridges for Filipino families, implying temporary support to help poor families cross over to a life of self-sufficiency.
Is it working?  In a word, yes. The verification system shows that families are complying with the conditions, which are sometimes also called co-responsibilities.  In other words, they are holding up their end of the bargain.  
The most recent impact evaluation compared families just below the poverty line (who receive Pantawid grants) with families just above the poverty line (who don’t receive the grants). In most other respects these families are fairly similar.  By comparing these two groups, we can see that Pantawid improves children’s access to health services, keeps children in school, and reduces child labor in terms of the number of days they work.  Also, the Pantawid parents surveyed were more optimistic about their children’s future than then non-Pantawid parents. 
And yet there are some vocal critics in the Philippines who seem to think that the cash transfers are overly generous politically motivated hand-outs that which encourage people to be lazy. We have clear evidence from here, and from more than 50 other countries with similar programs, to show this is not true. So what is going on?  
Maybe some people don’t understand what kind of money we are talking about. It is not actually very much, and it is definitely not enough to make people kick back, stop working, and enjoy the good life.  
Families get 500 pesos ($11.40) per month for meeting the health conditions. For meeting the education conditions, they get 300 pesos ($6.80) per month for each child in preschool or elementary, and 500 pesos for each child in high school, for up to three children during the 10 months of the school year. While a family with two children in high school and one in elementary could receive up to 19,000 pesos ($431), a young family with a pregnant mother and a toddler would receive at most 6,000 pesos ($136) per year.
In 2014, the average family right at the poverty line received about 9,400 pesos ($213). That clocks in at only about 7% of their total annual spending. Pantawid families can’t afford to be lazy, and the evidence confirms this: Pantawid adults are actually more likely to be looking for additional work than adults from near-poor families that don’t get the grant. 
Maybe some people don’t understand why poverty rates have not come down very much if the government is spending all this money on Pantawid Pamilya. It turns out that while the cash transfers are reducing the poverty gap—which measures the depth of poverty—they are not high enough to actually lift many people over the line.  
In other words, poor people are becoming less poor, but they are not becoming non-poor. This has a lot to do with the fact that the value of the benefit hasn’t changed since the program started in 2008. Inflation has made the grants worth a lot less today than they were then.  
At the beginning, average transfers were about 20% of families’ annual spending, making the support much more significant than the 7% we see today. Benefit levels ought to be increased at least to keep pace with inflation, as recently happened in Indonesia. 
Despite the erosion in value, the regular cash support is helping poor families make sure that their children are healthier and more educated so that they have a shot at a better future. I would call that money well spent.