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The Challenges and Contradictions of Social Protection, Self Targeting and Market Distortion in the Context of an Imperfect Labour Market

Anna McCord | December 2004


The question this paper sets out to address is how, and at what level, the public works wage should be set in Malawi if public works are to contribute to ‘improved livelihoods of vulnerable and marginalised groups in Malawi society by enhancing their productivity and thereby increasing their self-reliance’, the goal of the Malawi Poverty Reduction Strategy. In exploring this question, a second issue emerges; whether using the wage as an instrument to promote self-targeting by the poor in public works programmes remains an appropriate and useful strategy, for public works programmes with social protection objectives in the context of imperfect labour markets. The paper summarizes the findings of a study conducted into the wage rate offered under the World Bank and DFID funded Malawi Social Action Fund (MASAF) in May 2004. The need for a study into the wage rate emerged from the outcomes of CARE Malawi’s livelihood monitoring work in the Improving Livelihoods through Public Works Programme. The paper links the question of wage setting with the broader economic debate on wage setting in public works programmes internationally.

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