Protecting the poor from COVID's economic effects

Since 2019, North Macedonia has been implementing changes to boost the coverage, targeting, and efficacy of its social welfare scheme. The implementation of a means-tested Guaranteed Minimum Assistance (GMA) system consolidated and took over several social welfare programs. Prior social welfare programs, according to the World Bank, were segmented, difficult to manage, and had little effect on poverty reduction.

53 percent of social welfare recipients are in the poorest quintile, up from 44 percent prior to the GMA. Recipients have increased by 20%. GMA households can receive a child and education stipend to help them invest in their human capital. Under the GMA and its related advantages, a family of five can now enjoy twice as much.

Guaranteed Minimum Assistance during the Pandemic

The GMA was highly relevant in the nation's quick response to the COVID-19 pandemic, since many poor families encountered job and earnings losses, exacerbating imbalances and putting the most susceptible at risk of falling deeper into poverty.

The government of North Macedonia acted fast to protect the poor from the economic impacts of COVID-19. The government modified the GMA eligibility rules in early 2020, reducing the income appraisal time frame from three to one month. This revision came after other significant changes to the tracking system, such as reducing the amount of required documentation and analysis applications through a special registry that integrated various major government agency databases to streamline inspections.

The COVID-19 outbreak altered the GMA's eligibility rules. It has increased North Macedonia's social welfare program by approximately 25%, allowing 7,210 new families to enroll and receive a glimmer of hope.

Sead Abduloski's family is a GMA recipient.  He's a father of four and the primary provider inthe city of Prilep. Before the outbreak, Sead gathered metals and bottles. When the virus struck and restrictions were put in place, his earnings ceased, and the unparalleled disaster quickly depleted his savings. According to Sead, "this difficulty" ended when he was alerted of his GMA eligibility. "During COVID, the GMA managed to keep us afloat," says Sead. When COVID cut off my income, this is how I met my family's basic needs." Sead's four children also receive child and school entitlements.

During the lockdown, Orhan Raifoski and Sara Rasimoska were in a similar circumstance. They strived as young parents in their twenties with two children. Sara was unable to work in the care sector due to the pandemic, and Orhan lost his seasonal job. They decided to apply for the GMA, which now includes a child living allowance and an electricity subsidy.

In the Western Balkans, the GMA reaction stands out as an example of a country widening its current social aid program, allowing the government to use existing investments and processes. It was also noteworthy how quickly the government adopted the revised GMA eligibility and communicated it to the public. The government and its stakeholders sent good sanitation parcels to GMA beneficiaries and other vulnerable people during the COVID-19 pandemic.

Enhanced shock preparedness

Without the GMA, it would have been tough for North Macedonia to reach impoverished people affected by COVID-19-related job cuts and company shutdowns. The GMA and the elimination of category perks permitted the nation's welfare system to react quickly when it was most needed for Orhan, Sara, and Sead.  A centralized, computerized recipient registry improved the government's capacity to track and adapt existing programs and policies while also increasing surveillance and controls.

Investing in a system ahead of time helps to mitigate the impact of hardship. The decade-long reform push in North Macedonia has paid off.

It has not been easy. Regardless of changes to the governmental infrastructure to synchronize and simplify the GMA application procedure, the estimated duration between applying for and getting support was lengthy in the epidemic's first year.  These delays were induced by the closure of Social Work Centers, where GMA requests are accepted, as well as COVID-19 infections.

Addressing such constraints will enhance the nation's ability to respond to future financial and climate shocks. North Macedonia must continue investing in delivery methods and build on COVID-19 pandemic lessons in order to serve as a model for the region in designing flexible and dynamic social safety nets.