SURINAME POVERTY AND EQUITY ASSESSMENT July 2024 © 2024 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved This work is a product of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. The boundaries, colors, denominations, links/footnotes and other information shown in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. The citation of works authored by others does not mean the World Bank endorses the views expressed by those authors or the content of their works. Nothing herein shall constitute or be construed or considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Attribution—Please cite the work as follows: “World Bank. 2024. Suriname Poverty and Equity Assessment. © World Bank.” Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e mail: pubrights@worldbank.org. Cover design: manthra comunicación CONTENTS Acknowledgments 8 Foreword 9 Nederlandse samenvatting 10 Executive Summary 14 1. Macroeconomic Background: From Sluggish Growth to Crisis to Recovery…to an Oil Boom? 18 2. Poverty and Inequality 23 3. What Characterizes Poverty and Inequality in Suriname? 28 3.1 Disadvantaged Groups 29 3.2 Overlapping Deprivations 32 3.3 Disparities in Access to Productive Assets 36 4. Human Capital 38 5.Labor Market Outcomes 45 6. Opportunities for Further Poverty Reduction through Improved Social Assistance 56 7. Reflections on the Implications of the Expected Oil and Gas Boom for Poverty and Inequality 63 8. Policy Recommendations 66 9. References 73 BOXES Box 1. A Note on Poverty Lines. 24 Box 2. Suriname: Historical and Demographic Background. 30 Box 3. The Human Opportunities Index. 42 Box 4. Suriname’s New Social Program to Enhance Purchasing Power. 60 SURINAME POVERTY AND EQUITY ASSESSMENT FIGURES Figure 1. Suriname’s Long-term Growth Has Been Sluggish and Volatile 19 Figure 2. Suriname’s GDP Per Capita Did Not Bounce Back Quickly After the 2020 Crisis, 2018–2022 20 Figure 3. Suriname Is Showing Signs of Recovery 22 Figure 4. Suriname: Poor Health and Education Are Major Drivers of Multidimensional Poverty 26 Figure 5. Suriname: Poverty and Inequality Commensurate with the Country’s Level of Economic Development 28 Figure 6. Suriname: Poverty Rates Higher in the Interior of the Country 31 Figure 7. Suriname: Poverty Rates Differ by Ethnic Group 31 Figure 8. Suriname: Poverty Rates Increase Rapidly with Household Size 31 Figure 9. Suriname: Overlap Between Poor Health, Poor Education, High Dependency Ratios, and Monetary Poverty 35 Figure 10. Suriname: The Poor Face Disparities in Access to Bank Accounts and the Internet 37 Figure 11. Suriname’s Education Expenditure Is Comparable to that of Other Countries 39 Figure 12. In International Comparisons, Suriname Stands Out for Poor Education Outcomes 40 Figure 13. Suriname: Women Outperform Men in Education Outcomes 41 Figure 14. Suriname: Low Education Intersects with Historical Geographic and Ethnic Inequality as Evidenced by the Share of the Population that Completed Seconday Education 42 Figure 15. Suriname Does Not Stand Out in Core Labor Market Indicators 46 Figure 16. Suriname: Strong Disparities in Labor Market Outcomes of Women and Men 47 Figure 17. Suriname: Gender Disparities in Labor Market Outcomes at All Levels of Educational Attainment 48 Figure 18. Suriname: High Rates of Early Marriage and Adolescent Fertility Contribute to Gender Disparities in Labor Market Outcomes 49 Figure 19. Suriname: Causes of Skill Shortages according to Firms 50 Figure 20. Suriname: Hourly Wages Differ by Region. 51 Figure 21. Suriname: Earnings of Workers from Disadvantaged Groups More Likely to Be Below the Minimum Wage 52 Figure 22. Suriname: A Clear Association Between Informality and Earnings 53 Figure 23. Suriname: Returns to Education Are Comparatively Low 54 Figure 24. Suriname: Mismatch in Labor Supply and Demand, 2017–2023 54 Figure 25. Of Suriname’s Four Main Programs, the Old Age Pension Represents the Bulk of Social Assistance Expenditure, 2017–2023 54 Figure 26. Suriname: The Old Age Pension Has the Strongest Impact of All Social Programs on Poverty. 59 Figure 27. Suriname: Historically Disadvantaged Groups Not Especial ly Well Covered by the Main Social Assistance Programs 62 Figure 28. Suriname: The Oil and Gas Boom Could in Theory Have a Pronounced Impact on Poverty Rates (In percent, based on the World Bank’s US$6.85 poverty line) 64 TABLES Table 1. Suriname: Sociodemographic Characteristics of the Poor 29 Table 2. Suriname: Overlap Between Monetary and Multidimensional Poverty. 33 Table 3. Suriname: The Poor Have Less Access to Assets. 36 Table 4. Suriname: Poor Education Outcomes Are Associated with Poverty. 44 Table 5. Suriname’s Main Social Assistance Programs Are Moderately Progressive. 61 Table 6. Foundational Education Policy Recommendations for Suriname. 68 Table 7. Policy Priorities for Vocational Training in Suriname. 69 Table 8. Policy Priorities to Enhance Gender Equality & Women’s Labor Market Outcomes in Suriname. 70 Table 9. Policy Recommendations to Improving Suriname’s Social Assistance System. 71 Table 10. Policy Recommendations to Improving Data Availability in Suriname’s Statistical System. 72 SURINAME POVERTY AND EQUITY ASSESSMENT ACRONYMS AKB General Child Allowance (Algemene Kinderbijslag) AOV General Old Age Provision Fund (Algemene Ouderdomsvoorziening) EFF Extended Fund Facility FBMMEB Financial Support to Persons with Disabilities (Financiële Bijstand voor mensen met een beperking) FBZWHH Financial Support for Poor Households (Financiële Bijstand voor zwakke huishoudens) GBS General Bureau of Statistics GDP Gross domestic product HOI Human Opportunities Index ICT Information and communications technology IDB Inter-American Development Bank ILO International Labour Organization IMF International Monetary Fund KKV Social Program to Enhance Purchasing Power (Koopkracht Versterking) LAC Latin America and the Caribbean M&E Monitoring and evaluation MICS Multiple Indicator Cluster Survey MIS Management Information System NEET Not in employment, education or training OECD Organization for Economic Development and Cooperation 6 PPP Purchasing power parity SLC Suriname Survey of Living Conditions TVET Technical and Vocational Education and Training UN DESA United Nations Department of Economic and Social Affairs UNESCO United Nations Educational, Scientific and Cultural Organization UNFPA United Nations Population Fund UNICEF United Nations Children’s Fund 7 SURINAME POVERTY AND EQUITY ASSESSMENT ACKNOWLEDGMENTS This Poverty and Equity Assessment was prepared jointly by the Inter-American Development Bank (IDB) and the World Bank. The work was implemented under the guidance of Anton Edmunds (Manager of the Caribbean Country Department), Adriana la Valley (Representative in Suriname), and David Rosenblatt (Regional Economic Advisor for the Caribbean) from the IDB and Lilia Burunciuc (Country Director), Oscar Calvo-Gonzalez (Regional Director, Equitable Growth, Finance, and Institutions), Diletta Doretti (Resident Representative), Luis-Felipe Lopez-Calva (Director, Poverty and Equity Global Practice), and Carlos Rodriguez-Castelan (Practice Manager, Poverty and Equity Global Practice) from the World Bank. Implementation of the poverty assessment was led by Diether W. Beuermann Mendoza of the IDB and Jacobus de Hoop of the World Bank. Rosita Woodly-Sobhie, Senior Researcher at Suriname’s Anton de Kom University and a member of Suriname’s National Poverty Committee, played a senior advisory role. The broader team included the following members of the two institutions, in alphabetical order: Agustin Arakaki, Clemente Avila Parra, Karen Barreto Herrera, Penny Bowen, Tamoya Christie, Laura Clavijo Torres, Yyannu Cruz Aguayo, Carolina Echeverri Duran, Santiago Garganta, Lauren Marston, Nataliya Mylenko, Emre Ozaltin, Trinidad Saavedra Facusse, Diana Sanchez Castro, Tessa Sendar, Ricardo Sierra, Carlos Sobrado, Gisele Teixeira Braun, and Mateo Uribe Castro. The team gratefully acknowledges opportunities to present initial drafts of the work to, among others, Suriname’s Ministry of Finance, Ministry of Labor, Poverty Committee, and State Council. The team is also grateful for feedback and inputs received at a presentation of initial findings in Suriname to a diverse group of stakeholders and from the following IDB and World Bank colleagues: Gustavo Javier Canavire Bacarreza, Maria Davalos, Jozef Draaisma, Samuel Freije-Rodriguez, Carolina Freire, Ian Ho-A- Shu, Cynthia Hobbs, Jeetendra Khadan, Hugo Ñopo Aguilar, Pedro Olinto, Yevgeniya Savchenko, and Dhiraj Sharma. The team tried to address helpful observations and questions received. David Einhorn provided outstanding professional editing services. Any remaining errors are those solely of the team. 8 FOREWORD This Poverty and Equity Assessment aims to inform efforts to reduce poverty and inequality at what could be an important turning point for Suriname. The assessment was written as Suriname was gradually emerging from a severe macro-fiscal crisis. After the implementation of stringent reforms, the economy is now showing signs of recovery and Suriname is turning attention to longer-term priorities. The assessment draws heavily on a new Survey of Living Conditions (SLC) carried out in 2022 to describe patterns of poverty and inequality (IDB 2022). An initiative of the Inter-American Development Bank, the 2022 SLC was conducted during the 2022 calendar year and covered about 2,500 households and 7,500 persons. The survey is nationally representative and provides a representative image of poverty and inequality in the country. Based on the 2022 SLC and other data sources, the Poverty and Equity Assessment addresses some critical data gaps. Despite the dedication of many professionals and institutions in Suriname to data and evidence, until recently there were few reliable data sources to assess poverty and inequality after the economic crisis that started in 2020. In fact, the 2022 SLC has allowed for the generation of the first internationally comparable poverty and inequality statistics for Suriname since 1999. These international comparisons feature prominently in this assessment. Three more detailed background studies are being published as a compendium to this report. The first is a detailed diagnostic of poverty and inequality in Suriname (Annex 1). The second is an analysis of labor market challenges and opportunities (Annex 2). The third is a diagnostic of Suriname’s main social assistance programs (Annex 3). The present Poverty and Equity Assessment brings the core findings of these studies together. The analysis provides insight into the characteristics of poverty and inequality in Suriname and opportunities to address them. The picture that emerges is one of human capital deficiencies at the heart of poverty and inequality and historical inequities still driving patterns of poverty and inequality. However, the current situation also represents a significant opportunity to reduce poverty and inequality through improvements in education outcomes, better connection of labor supply and demand, increased access to economic opportunities for women, and improvements in social assistance. It is our hope that this assessment will contribute to Suriname seizing these opportunities. ________________________________ ________________________________ Anton Edmunds Lilia Burunciuc Manager, Caribbean Country Department Country Director Inter-American Development Bank World Bank 9 SURINAME POVERTY AND EQUITY ASSESSMENT NEDERLANDSE SAMENVATTING 10 Na decennia van trage en volatiele economische groei kwam Suriname in 2020 in een diepe economische crisis terecht, waarbij het Bruto Binnenlands Product (BBP) per hoofd van de bevolking met meer dan 17 procent zakte in reële termen. Deze crisis werd veroorzaakt door een daling van de wereldwijde grondstoffenprijzen en slecht economisch beheer, en werd verergerd door de COVID-19-crisis. Sinds de invoering van strenge hervormingen vertoont de economie tekenen van herstel. Suriname richt zich nu op de middellange termijn, wanneer inkomsten uit offshore olie- en gaswinning verwacht worden. Velen hopen dat deze inkomsten bij zullen bijdragen aan verhoogde welvaart. Een gedegen voorbereiding is echter vereist om te profiteren van deze potentiële verhoogde Staatsinkomsten. In 2022 was het armoedecijfer van Suriname 17,5 procent, gemeten tegen de armoedegrens van US$6,85 per dag van de Wereldbank voor landen met een hoger middeninkomen (uitgedrukt in de koopkrachtpariteit van 2017). Dit armoedecijfer is vergelijkbaar met dat van andere landen met een soortgelijk BBP per hoofd van de bevolking. Ongeveer 1,1 procent van de bevolking leefde onder de internationale extreme armoedegrens van US$2,15 per dag. Tekorten in menselijk kapitaal zijn belangrijke determinanten van armoede en ongelijkheid in Suriname. Het aanpakken hiervan is cruciaal om de levensstandaard te verbeteren. Met name een laag opleidingsniveau lijkt zowel een oorzaak als een gevolg van armoede te zijn. Hoewel Surinames’s uitgaven aan onderwijs in lijn zijn met die van andere landen met een hoger middeninkomen, zijn bepaalde onderwijsindicatoren van Suriname vergelijkbaar met die van aanzienlijk armere landen. Zo is het percentage leerlingen dat het lager middelbaar onderwijs afrondt in Suriname vergelijkbaar met dat van landen met een lager middeninkomen zoals Djibouti en Senegal en zelfs met lage- inkomenslanden zoals Mozambique. Deze tekortkomingen in menselijk kapitaal, en armoede en ongelijkheid in het algemeen, zijn verweven met etnische en geografische ongelijkheid die hun wortels hebben in de geschiedenis van koloniale overheersing en slavernij in Suriname. Meer dan één op de vier Surinamers in het binnenland leeft onder de armoedegrens voor landen met een hoger middeninkomen (US$6,85 per dag), vergeleken met ongeveer één op de zes op landelijk niveau. Naast andere beperkingen voor economische groei worden tekortkomingen in vaardigheden van werknemers door ondernemingen uit de private sector aangehaald als een aanzienlijke belemmering voor hun bedrijfsvoering. Tekorten aan vaardigheden hebben betrekking op zowel fundamentele vaardigheden die worden verkregen op voortgezet onderwijs op Junioren en Senioren niveau, als met de technische, sociale en beroepsvaardigheden. Deze tekorten aan vaardigheden resulteren in een mismatch tussen vraag en aanbod op de arbeidsmarkt, met een overschot aan laaggeschoolde werknemers en een tekort aan hooggeschoolde werknemers. Naast verschillen in opleidingsniveau, kenmerkt armoede in Suriname zich niet alleen door slechtere toegang tot materiele zaken, maar ook tot diensten zoals ziektekostenverzekeringen, bancaire diensten, en het internet. Gezien het belang van financiële inclusie en digitale technologie in de moderne economie, vermindert dit de mogelijkheid van de armen om op een productieve manier deel te zijn van de samenleving. 11 SURINAME POVERTY AND EQUITY ASSESSMENT Suriname mist kansen om tekorten aan vaardigheden tegen te gaan, groei te bevorderen en armoede te verminderen door de relatief sterke onderwijsprestaties van vrouwen niet optimaal te benutten. Vrouwen presteren aanzienlijk beter dan mannen op school. Uit de statistieken blijkt dat ongeveer 15 procent van de vrouwen het hoger onderwijs voltooit, vergeleken met slechts 6 procent van de mannen. Deze goede leerprestaties vertalen zich echter niet in sterke arbeidsmarkt resultaten. Een van de redenen lijkt te zijn dat het aangaan van relaties en het krijgen van kinderen op jonge leeftijd de transitie naar de arbeidsmarkt belemmert. Suriname legde na de economische crisis veel nadruk op het sociale bijstandsysteem om armoede tegen te gaan. Toch zijn verdere verbeteringen in het huidige systeem van sociale zekerheid nodig om armoede en ongelijkheid aan te pakken. Huidige programma’s, waarvan de meeste zich richten op specifieke demografische groepen targeten. Deze programma’s ondersteunen de ouderen effectief, maar ondersteunen steunen een significant deel van de armen en historisch gemarginaliseerde groepen niet adequaat. Het kinderbijslagprogramma heeft een uitgebreide dekking, maar de uitkeringen die het biedt zijn bescheiden, en huishoudens met kinderen hebben nog steeds een aanzienlijk hoger armoedecijfer dan huishoudens zonder kinderen (ongeveer 22 versus 8 procent). Dit laatste is belangrijk omdat kinderarmoede vaak resulteert in slechte uitkomsten in het onderwijs met lange termijn gevolgen op de arbeidsmarkt. Toekomstige olie- en gasinkomsten kunnen resulteren in meer werkgelegenheid en economische activiteit en dus bijdragen aan het verlichten van armoede en ongelijkheid. Aanvullende fiscale ruimte voor armoedebeleid zal echter mogelijk niet direct beschikbaar zijn. Bovendien kan de impact van de olie- en gasinkomsten tegenvallen op de langere termijn, bijvoorbeeld doordat exploitatie van offshore olie vooral kapitaalintensief en niet arbeidsintensief is, doordat arbeidskrachten mogelijk niet kunnen profiteren van nieuwe economische kansen door een gebrek aan vaardigheden, en door veel voorkomende problemen bij de vondst van nieuwe grondstoffen zoals “Dutch disease” en “resource curse” (beschreven in dit rapport). Een gedegen voorbereiding is van dringend belang om toekomstige olie- en gasinkomsten zodanig te gebruiken en te investeren dat rechtvaardige en duurzame groei gestimulerd wordt. Om het economisch herstel van Suriname voort te zetten, blijft een focus op monetaire en fiscale discipline van essentieel. Dienovereenkomstig richt de regering zich momenteel op een promair overschot van de centrale overheid, wat betekent dat de fiscale ruimte voor hervormingen om de hierboven geschetste uitdagingen aan te pakken op korte termijn beperkt zal zijn. Zelfs in dit scenario zijn er echter een aantal mogelijkheden voor beleid om armoede terug te dringen. Om een basis te leggen voor verbeteringen in het onderwijs, is de ontwikkeling van effectieve systemen voor het management van het onderwijs om de resultaten van (beroeps)opleidingen te volgen van belang. Suriname zou zich ook kunnen onderzoeken wat de belangrijkste oorzaken zijn van vroegtijdig schoolverlaten en wat de belangrijkste belemmeringen zijn voor het voltooien van hoger onderwijs. Aanpassing van wetten die de arbeidsmarktparticipatie van vrouwen niet effectief ondersteunen zou ook kunnen helpen om de sterke schoolprestaties van meisjes en vrouwen beter te benutten. Ondanks de huidige beperkte fiscale ruimte zijn de uitgaven aan sociale bijstand om de armsten en meest kwetsbaren te helpen aanzienlijk. Suriname heeft recentelijk de bedragen die worden uitgekeerd door enkele van de langlopende sociale bijstandsprogramma’s verhoogd. Het heeft ook een groot nieuw programma geïnitieerd dat gericht is op de armsten en zwakke huishoudens, met als 12 doel om de impact van economische hervormingen te compenseren. Hervormingen voor efficiënte en effectieve implementatie van deze sociale bijstandsprogramma’s zijn echter noodzakelijk. Denk hierbij aan het herzien van programmadoelstellingen, ervoor zorgen dat de meest behoeftige groepen kunnen deelnemen, het oplossen van uitdagingen in de implementatie van sociale bijstandsprogramma’s, en het verbeteren van de samenhang tussen programma’s. Op de middellange termijn, wanneer groei en olie-- en gasinkomsten naar verwachting zullen bijdragen aan meer fiscale ruimte, zou Suriname diepgaandere beleidshervormingen kunnen overwegen om armoede en ongelijkheid aan te pakken. Het voeren van een integraal beleid via een armoede autoriteit of systeem zou hierbij goed aansluiten. Het verbeteren van resultaten in fundamenteel onderwijs zal systemen en beleid vereisen om schooluitval aan te pakken, de effectieve inzet van leraren zelfs in moeilijk bereikbare gebieden te bevorderen, schoolfaciliteiten aan te passen aan de behoeften van studenten met een beperking, er voor te zorgen dat beroepsopleidingen en hoger onderwijs aansluiten op de eisen van de arbeidsmarkt, en trainingsmogelijkheden te verbeteren voor groepen die momenteel slechte toegang hebben tot de arbeidsmarkt. De invoering van gezinsvriendelijke beleidsmaatregelen zal cruciaal zijn om verbeteringen in de arbeidsparticipatie van vrouwen te bereiken. Een modern raamwerk voor sociale zekerheid, gemoderniseerde digitale betalingssystemen, en de ontwikkeling van een sociaal register zijn essentieel om armoede aan te pakken onder degenen die niet kunnen werken. Tot slot zou voortdurende investering in het statistische systeem en institutionele regelingen die de productie van armoedestatistieken verzorgen, bijdragen aan een focus op armoede en ongelijkheid in beleid. 13 EXECUTIVE SUMMARY After decades of sluggish and volatile economic growth, Suriname entered a deep economic crisis in 2020 during which GDP per capita declined by more than 17 percent in real terms. This crisis was driven by a slump in global commodity prices and poor economic management, and exacerbated by the COVID-19 crisis. Since the implementation of stringent reforms, the economy has shown signs of recovery, and Suriname is now focusing on the medium term, when offshore oil revenues are expected to materialize. Many hope that these revenues will be a game changer for enhanced prosperity. However, urgent preparation is required for Suriname to capitalize on this potential windfall. In 2022, Suriname’s poverty rate was 17.5 percent when measured against the World Bank’s upper- middle-income poverty line of US$6.85 (2017 purchasing power parity). This poverty rate is similar to that of other countries with comparable GDP per capita. About 1.1 percent of the population lived below the international extreme poverty line of US$2.15 per day. Human capital deficiencies are important determinants of poverty and inequality in Suriname. Addressing them is crucial to enhance living standards. Low educational attainment, in particular, appears to be both a driver and a result of poverty. Although Suriname’s expenditure on education is in line with that of other upper-middle-income countries, some of Suriname’s education indicators are comparable to those of markedly poorer countries. For instance, Suriname’s lower secondary completion rate is similar to that of lower-middle-income countries such as Djibouti and Senegal and even low-income countries such as Mozambique. These human capital deficiencies, and poverty and inequality more generally, intersect with patterns of ethnic and geographic inequality that have their roots in Suriname’s history of colonial rule and slavery. More than one in four Surinamese in the interior of the country lives below the upper-middle-income line, compared to about one in six at the national level. Human capital deficiencies contribute to a skill shortage that, in addition to broader constraints to economic growth and doing business, is referenced by enterprises as a significant impediment to their operations. Skill shortages relate both to foundational skills obtained in primary and secondary school, and technical and soft skills. These skill shortages result in a mismatch in labor demand and supply, with over-supply of low-skill workers and under-supply of high-skill workers. In addition to differences in education, the poor face significant disparities in both tangible and intangible assets. This holds not only for ownership of physical assets, but also for access to services such as health insurance, as well as to markets through bank accounts and the Internet. Considering the importance of financial inclusion and digital access in the modern economy, it is not hard to see how this further reduces the ability of the poor to participate productively in society. Suriname is missing out on opportunities to mitigate skill shortages, enhance growth, and reduce poverty by not capitalizing on women’s comparatively strong education performance. Women substantially outperform men in school, with a tertiary education completion rate of about 15 percent compared to only about 6 percent for men. However, this strong educational performance has not translated into strong labor market outcomes. Part of the reason appears to be that school-to-work transitions are hampered by early entry into relationships and early pregnancies. 15 SURINAME POVERTY AND EQUITY ASSESSMENT While Suriname placed significant emphasis on social assistance to address poverty in the aftermath of the economic crisis, improvements in the functioning of the social assistance system are needed to address poverty and inequality. Current programs, most of which are target specific demographic groups, effectively support the elderly but do not adequately support a significant part of the poor and historically marginalized groups. A child allowance program has extensive coverage, but the transfers it provides are modest, and households with children still face a markedly higher poverty rate than households without children (about 22 vs. 8 percent). The latter group is important because child poverty is linked to the human capital deficiencies referenced above. Although oil revenues could contribute to alleviating poverty and inequality through more employment and economic activity, additional fiscal resources to cover unmet basic needs may not be immediately available. Furthermore, the risks of Dutch disease and the “resource curse,” the fact that offshore oil exploitation is capital- rather than labor-intensive, and skills shortages that may keep Suriname’s labor force from benefitting from new economic opportunities could all contribute to disappointment down the line. Broad preparations to adequately absorb future oil revenues and funnel them to assets and investments that drive equitable and sustainable growth are an urgent priority. For Suriname to continue its economic recovery, a focus on monetary and fiscal discipline remains key. Accordingly, the government currently targets a primary central government surplus, which implies that fiscal space for reforms to address the challenges outlined above will be limited in the short term. Yet, there are policy opportunities even in a fiscally constrained environment. To lay the foundation for improvements in education outcomes and skill formation, Suriname could begin the development of effective education management information systems as well as systems to track the outcomes of its vocational training programs. Suriname could also focus on understanding the main drivers of early school dropout and the main barriers to completing tertiary education. A short- term effort to enhance laws that do not effectively support women’s labor market participation could help to close skill gaps. Within its restricted fiscal space, Suriname is prioritizing significant social assistance spending to assist the poorest and most vulnerable. Indeed, Suriname has both increased the value of long- standing social transfer programs and initiated a major new program targeted at the poorest to offset the impact of painful economic reforms. However, a focus on efficient and effective implementation of these social assistance programs is also needed, including reviewing program targeting, ensuring that the groups most in need are included, resolving challenges in the entire delivery chain, and enhancing linkages between programs. In the medium term, when growth and oil revenues are expected to contribute to enhanced fiscal space, Suriname could consider bolder policy reforms to address poverty and inequality. Enhancing outcomes in foundational education outcomes will require systems to address school dropout issues, implement policies to promote the effective deployment of teachers even in hard-to-reach areas, build school facilities that consider the needs of students with disabilities, improve linkages of vocational training and tertiary education with the demands of the labor market, and enhance 16 training opportunities for groups that stand to gain the most. The adoption of family-friendly policies will be key to achieving improvements in women’s labor force participation. A modern social protection framework, modernized digital delivery systems, and development of a social registry are key to address poverty among those who cannot work. Finally, continued investment in the statistical system and institutional arrangements governing the production of poverty statistics would contribute to a focus on poverty and inequality in policy. 17 1. MACROECONOMIC BACKGROUND: FROM SLUGGISH GROWTH TO CRISIS TO RECOVERY…TO AN OIL BOOM? 18 Before the macro-fiscal crisis of the early 2020s, Suriname had experienced decades of sluggish economic growth and high volatility, as shown in Figure 1. Panel A of Figure 1 shows that, from 1960 to 2019, Suriname’s average real GDP per capita growth rate of about 1.5 percent was below that of other small Caribbean states, the Latin America and Caribbean region, and other upper- middle-income countries. In contrast, the volatility of Suriname’s GDP per capita (measured as the standard deviation of growth) was high, reflecting a rocky growth trajectory. This volatility has been the result both of high commodity dependence (previously on bauxite, now on gold and oil) and weak institutions. Panel B of Figure 1 shows just how strong the impact of a seemingly small difference in average annual GDP growth can be. In 1960, Suriname’s GDP per capita was above that of other small Caribbean states, the Latin America and Caribbean region, and other upper-middle-income countries. By 2019, Suriname’s GDP per capita was well below that of other small Caribbean states, while it was Caribbean region and other upper-middle- roughly on par with that of the entire Latin America and 5,0 income countries. 4,0 3,0 2,0 1,0 FIGURE 1. SURINAME’S LONG-TERM GROWTH HAS BEEN SLUGGISH AND VOLATILE 0,0 Suriname Caribbean small LAC Upper middle states income Average growth Volatility A. GDP Per Capita Annual Growth and Volatility (Percent) B. GDP Per Capita (Constant 2015 U.S. dollars) 5,0 12000 4,0 10000 3,0 8000 6000 2,0 4000 1,0 2000 0,0 0 2008 2005 2002 1960 1990 1966 1969 1996 1999 1984 2014 1963 1993 Suriname Caribbean small LAC Upper middle 1978 1987 2017 1975 1972 1981 2011 states income Average growth Volatility Suriname Caribbean small states LAC Upper middle income 12000 Source: World Bank, World Development Indicators. 10000 Note: Averages refer to the period from 1960 to 2019. LAC: Latin America and the Caribbean. 8000 6000 4000 2000 Suriname’s high dependence on natural resources continues to be a key aspect of the 0 2008 2005 2002 1960 1990 1966 1969 1996 1999 1984 2014 1963 1993 1978 1987 2017 1975 1972 economy. Gold mining and oil extraction, along with milling and refining operations, account for some 1981 2011 30 percent of GDP value added, Suriname annual but small Caribbean states growth rates have varied with fluctuations in commodity prices and production levels. Similarly, agriculture, forestry, and fishery generate on average some 10 LAC Upper middle income percent of value added, but price fluctuations plus adverse weather events have resulted in persistent declines in the share of agriculture value added since 2015. In contrast, the services sector expanded from about 56 percent to 63 percent of GDP value added between 2015 and 2022. However, services have tended to be more concentrated in low-productivity activities such as trade, transport, and 19 SURINAME POVERTY AND EQUITY ASSESSMENT hospitality services, rather than high-productivity sectors such as financial, insurance, and professional business services. Due to deep underlying challenges, Suriname did not recover quickly from the macroeconomic crisis that started in the early in the 2020s. The macro-fiscal aspect of the crisis was the result of a decline in commodity prices and a buildup of imbalances over years of economic mismanagement, combined with the onset of the COVID-19 pandemic. The crisis of 2020 followed another recent economic crisis in 2015, during which GDP per capita declined by nearly 8 percent and Suriname experienced severe economic output losses. In 2020, GDP per capita declined by nearly 17 percent in real terms and general gross government debt peaked at nearly 150 percent of GDP. In 2021, already high inflation increased to over 50 percent after the introduction of a floating exchange rate and rising global commodity prices. Interest paid on public debt increased rapidly, to over 5 percent of GDP annually. In contrast with the other Caribbean small states and the broader Latin America and Caribbean region, Suriname’s economy did not bounce back quickly after 2020. Indeed, as confirmed in Figure 2, Suriname’s GDP per capita was on par with that of the average for Latin America and the Caribbean and other upper-middle-income countries before the start of the pandemic. Suriname’s 2020 decline in GDP per capita, however, was markedly steeper than that of other Caribbean small states and the rest of Latin America and the Caribbean. And while GDP per capita in the Caribbean small states and the rest of Latin America and the Caribbean had more than recovered by 2022, this was not the case for Suriname. The reason is that Suriname’s economic contraction was driven not only by the COVID-19 pandemic, but also by a more complex combination of underlying economic challenges that had been building up for years. FIGURE 2. SURINAME’S GDP PER CAPITA DID NOT BOUNCE BACK QUICKLY AFTER THE 2020 COVID-19 CRISIS, 2018–2022 (CONSTANT 2015 U.S. DOLLARS) 12000 11000 10000 9000 8000 7000 6000 2018 2019 2020 2021 2022 Suriname Caribbean small states LAC Upper middle income Source: World Bank, World Development Indicators. Note: LAC: Latin America and the Caribbean. 20 At the height of the economic turmoil, the impact on the Surinamese population was profound. The National Accounts indicate that from 2019 to 2021, the gross value added of most economic sectors declined strongly. In four sectors it declined by more than 30 percent in real terms: construction and education both declined by 38 percent, mining and quarrying by 36 percent, and public administration by 32 percent. In accommodation and food services, value added declined by 76 percent.1 Indeed, over 90 percent of the workforce was employed in sectors that would experience a generally dramatic decline in value added during the crisis years.2 Accordingly, a phone survey in August 2020 found household income losses driven by declining employment, business closures, and lower remittances (Garavito, Beuermann, and Khadan 2021). Moreover, the survey data show that these effects were not distributed equally across Suriname’s population, but were more pronounced among the lowest pre-pandemic income groups, indicating that poorer households are less able to cope with shocks. To improve the macroeconomic situation and put the country back on a path of fiscal sustainability, the government launched an economic recovery program in 2020 (Republic of Suriname 2021a). After the 2020 elections, the newly elected government first implemented a crisis program for nine months, mainly consisting of debt restructuring and social support to buffer the initial impact of the COVID-19 crisis. Subsequently, the government began implementing a comprehensive macroeconomic stabilization reform program to address debt sustainability, improve monetary and exchange rate policies, promote financial sector stability, and strengthen economic governance. Due to the country’s vulnerable economic situation and the limited resources available to finance regular programs or external debt payments, the program entailed restructuring of official and external debt (Republic of Suriname 2021b),3 with support from the International Monetary Fund (IMF) under an Extended Fund Facility (EFF) arrangement (IMF 2021). There are now signs of economic recovery. Public debt, which spiked at nearly 150 percent of GDP in 2020 because of declining GDP and exchange rate devaluation, declined to 92 percent of GDP in 2023 (panel A of Figure 3). Inflation, which had fluctuated around 50 percent year-over- year, came down to 27 percent by January of 2024, the lowest since the start of the economic crisis in early 2020. 1 See Suriname Bureau of Statistics, https://statistics-suriname.org/wp-content/uploads/2023/09/NRsheet-2023-base- year-2015-FINAL-1-september-2023-secured.pdf (accessed June 1, 2024). 2 Suriname has not published labor force statistics since 2019. The latest information on the distribution of workers across sectors is available for 2017 (General Bureau of Statistics 2018). At the time, only about 7.5 percent of workers were em- ployed in financial activities or other services, the only two sectors that did not experience a decline in value added over the pandemic. 3 https://gov.sr/wp-content/uploads/2023/12/financieel-jaarplan-2022.pdf 21 140 115,8 116,8 120 SURINAME 100 75,4 73,0 84,0 91,8 POVERTY AND EQUITY ASSESSMENT 80 68,6 60 41,2 40 27,9 25,2 20 0 2020 2022 2023 2018 2016 2019 2014 2015 2021 2013 2017 FIGURE 3. SURINAME’S ECONOMY IS SHOWING SIGNS OF RECOVERY (PERCENT) Domestic External A. Public Debt as a Share of GDP B. CPI (percentage change, y.o.y.) 80 160 146,4 140 60 115,8 116,8 120 100 91,8 84,0 40 75,4 73,0 80 68,6 60 20 41,2 40 27,9 25,2 20 0 Mar-20 Sep-20 Jun-20 Mar-24 Dec-20 Mar-22 Sep-22 Mar-23 Sep-23 Jun-22 Jun-23 Dec-22 Dec-23 Mar-21 Sep-21 Jun-21 Dec-19 Dec-21 0 2020 2022 2023 2018 2016 2019 2014 2015 2021 2013 2017 Others Domestic External Transportation Housing and utilities Food and non-alcoholic beverages 80International Monetary Fund, World Economic Outlook (October 2023); and Suriname General Bureau of Statistics Sources: (February 2024). 60 40 Expected large-scale investments in the oil and gas sector could positively, and possibly dramatically, 20 change the macroeconomic outlook. TotalEnergies announced plans to invest US$9 billion in Block 58 to extract around 700 million barrels of oil. And this is only one of multiple investments that could materialize 0 in Block 58 alone. The revenues could promote higher growth and improve fiscal and external balances within the period of commercial exploitation of the natural resources. However, Mar-20 Sep-20 Jun-20 Mar-24 Dec-20 Mar-22 Sep-22 Mar-23 Sep-23 Jun-22 Jun-23 Dec-22 Dec-23 Mar-21 Sep-21 Jun-21 Dec-19 Dec-21 there is also the risk that the investments might further expose existing macroeconomic vulnerabilities, namely Suriname’s dependence Others on commodities. Moreover, as will be explained in Section 7, oil Transportation revenues do not guarantee reductions Housing and utilities in poverty and inequality. Food and non-alcoholic beverages Suriname’s Multi-Annual Development Plan sets out a long-term vision of a just society in which values of justice, inclusiveness, freedom, and sustainability are fulfilled (Republic of Suriname 2021c). The plan emphasizes a need to accompany newfound oil wealth with enhanced room for private sector development and an economic focus on added value rather than extraction. If Suriname is to achieve this vision, urgent preparation is needed to ensure that oil revenues are managed prudently and translate into meaningful progress. 22 2.POVERTY AND INEQUALITY SURINAME POVERTY AND EQUITY ASSESSMENT Calculations based on the new Survey of Living Conditions (SLC) indicate that in 2022, after several years of economic hardship, about 17.5 percent of Suriname’s population lived in poverty. That is, the total daily value of their consumption was below the World Bank’s poverty line for upper-middle-income countries of US$6.85 (2017 purchasing power parity – PPP). If the national poverty line established by Suriname’s Poverty Committee in 2023 (Sobhie & Kisoensingh, 2023) were applied instead, the share of the population living in poverty would be 17.6 percent (Box 1). Extreme poverty, defined as daily consumption below the US$2.15 line, was relatively uncommon. About 1.1 percent of the population could be classified as extremely poor. A substantial part of the population (38.7 percent) was not poor, according to the World Bank’s poverty definitions, but lived below US$14 a day and could thus be considered “vulnerable” to falling into poverty.4 The remaining 43.9 percent of the population could be considered middle class and up. BOX 1. A NOTE ON POVERTY LINES For this Poverty and Equity Assessment, poverty rates are calculated by comparing the value of household and individual consumption to what are referred to as poverty lines. These calculations are based on a new SLC carried out in 2022 (IDB 2022). When the value of a person’s consumption falls below the poverty line, this person is classified as poor. The estimated poverty rate depends on the poverty line applied; if the poverty line is ambitious (high), a larger share of the population will be classified as poor. This report shows results both for the poverty lines applied globally by the World Bank and by Suriname’s Poverty Committee. The World Bank uses three poverty lines for international comparisons. These poverty lines respectively approximate the average national poverty lines applied by poor countries, lower-middle-income countries, and upper-middle income countries. For more discussion see Jolliffe et al. (2022). Suriname’s Multidisciplinary Poverty Committee, established in 2016, proposed a national poverty measurement method and poverty line, which was updated in 2023 (Sobhie and Kisoensingh 2023). The national poverty line was determined based on a basic needs approach, applying the food-energy intake method. It relied on the 2013/2014 national household budget survey (the government-mandated data source for establishing the poverty line) and consumer price index data collected by Suriname’s General Bureau of Statistics. The national poverty line reflects the cost of acquiring a minimum food basket and basic non-food expenditure (at a 60/40 ratio). An equivalence scale was applied to determine the total national poverty line at the household level. Annex 1 provides more background. Box Table 1.1 displays the values of the different poverty lines. 4 See World Bank (2023a) for further discussion of how the threshold of US$14 was established. 24 BOX TABLE 1.1. SURINAME: POVERTY LINES (DAILY 2017 PURCHASING POWER PARITY U.S. DOLLARS) A. World Bank Poverty lines Extreme US$2.15 Lower-middle-income US$3.65 Upper-middle-income US$6.85 B. National Poverty Lines by Household Size and Composition in 2022 Number of Children Number of Adults 0 1 2 3 4+ 1 US$13.38 US$9.47 US$7.91 US$7.02 US$6.42 2 US$10.58 US$8.58 US$7.48 US$6.77 US$6.25 3 US$9.22 US$7.93 US$7.10 US$6.52 US$6.08 4+ US$8.36 US$7.43 US$6.78 US$6.29 US$5.91 Source: Sobhie and Kisoensingh (2023) Multidimensional poverty analysis highlights the importance of health and education deprivations in Suriname. Multidimensional poverty analysis maps out broader deprivation beyond low consumption. Suriname’s Multidisciplinary Poverty Committee recently proposed a Multidimensional Poverty Index for Suriname that covers four domains: health, education, standard of living, and socioeconomic security using Census 2012 and MICS 2018 data. An effort to mimic this index based on the 2022 Suriname Survey of Living Conditions (SLC) finds that about 46 percent of Surinamese are multidimensionally poor. This share markedly exceeds the monetary poverty rate, which signals that a broader view is important to understand poverty in Suriname. As shown in Figure 4, poor health and education outcomes are especially important drivers of multidimensional poverty. In total, 62 percent of all households have a chronically ill member and 34 percent a member with a disability. In over half of the households (52 percent), the head did not complete lower secondary education. And in nearly four out of 10 households at least one member does not use the Internet. 25 SURINAME POVERTY AND EQUITY ASSESSMENT FIGURE 4. SURINAME: POOR HEALTH AND EDUCATION ARE MAJOR DRIVERS OF MULTIDIMENSIONAL POVERTY (PERCENT) 0 10 20 30 40 50 60 70 Chronic Illness 61,8 Health Disabilty 33,8 Level of education 52,1 ICT skills 38,8 Education School attendance 12,9 Communication 0,7 Literacy 9,8 Learning delay 14,0 Cooking fuel 7,1 Standard of living Sanitary facilities 9,2 Drinking water supply 7,0 Housing 0,2 Overcrowding 8,6 Household appliances 22,0 Financial support 0,2 Socioeconomic Medical insurance 40,0 security Employment status 13,2 Safety 3,8 Dependency ratio 47,5 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: The figure shows the share of the population living in households considered deprived on each of the indicators that are part of the Multidimensional Poverty Index. Multidimensional poverty is measured in accordance with the methodology proposed by Sobhie and Kisoensingh (2023). Table 2 provides more detail on the definitions of the indicators in the Multidimensional Poverty Index. ICT: information and communications technology. Despite a paucity of comparable data sources, there appears to be a downward trend in poverty over time in Suriname, though tracking changes in poverty and inequality and analyzing the main drivers of these changes is challenging. A lack of comparable data sources hampers longitudinal analysis. However, a few pieces of evidence point to a long-term declining trend in poverty rates. First, in 1999 the World Bank estimated the poverty rates in urban areas to be 44.5 percent using the US$6.85 poverty line and 18.4 percent using the US$2.15 poverty line. As these estimates are for urban areas only (which cannot be directly identified in the 2022 SLC) and are based on a different data source, they are not directly comparable to the estimates presented in this report. However, most of Suriname’s population lives in urban areas, so the estimates do suggest that poverty decreased substantially over the past quarter of a century. Second, UNICEF collected Multiple Indicator Cluster Survey (MICS) data in 2006, 2010, and 2018. There are differences between the MICS and the 2022 SLC that prevent the construction of identical multidimensional poverty measures for both instruments. Yet, these data also suggest that most elements of multidimensional poverty decreased over time (Annex 1). 26 Suriname’s Gini coefficient is about 39, while its Palma ratio is 1.7. The Gini coefficient is one of the most widely used indicators of inequality,5 and a Gini coefficient above 40 is generally considered to represent high inequality. At 39.2, Suriname’s Gini coefficient lies a little below this threshold. On the other frequently used measure of inequality, the Palma ratio, Suriname’s ratio is 1.7, meaning that the value of the consumption of the richest 10 percent of the population is 1.7 times that of the poorest 40 percent of the population. Suriname’s poverty and inequality in 2022 were commensurate with its level of economic development. This can be inferred from a comparison of poverty and inequality statistics for Suriname to those of other countries, shown in Figure 5. To avoid comparing apples to oranges, countries are sorted by level of economic development (GDP per capita) on the horizontal axis. The vertical axis of panel A shows the share of people consuming (or earning) less than the World Bank’s upper-middle income line of US$6.85 (2017, PPP). A dotted regression line indicates the approximate level of poverty expected given a country’s GDP per capita. Panel B of Figure 5 has a similar setup to panel A but shows the Gini coefficient on the vertical axis. These metrics for Suriname align with those of other countries with comparable GDP per capita in the region, such as 100 Brazil, Grenada, and St. Lucia.6 80 60 FIGURE 5. SURINAME: POVERTY AND INEQUALITY 40 COMMENSURATE WITH THE COUNTRY’S LEVEL OF ECONOMIC DEVELOPMENT 20 0 0 10000 20000 30000 40000 50000 A. Poverty Rate (Poverty line of 2017 PPP US$6.85, percent) B. Gini Coefficient (0-100) GDP per capita (US$ 2017 PPP) 100 100 80 80 60 60 40 40 20 20 0 0 10000 20000 30000 40000 50000 0 GDP per capita (US$ 2017 PPP) 0 10000 20000 30000 40000 50000 GDP per capita (US$ 2017 PPP) 100 80 Source: Latest poverty rates, Gini coefficients, and corresponding PPP-adjusted GDP per capita are from the World Bank’s World Development Indicators. For Suriname, the source is the poverty assessment team based on the 2022 Suriname Survey of 60 Living Conditions (IDB 2022). 40 Note: PPP: purchasing power parity. 20 0 0 10000 20000 30000 40000 50000 ranges 5 The coefficient GDP from zero to 100. A Gini coefficient of zero represents the scenario of complete equality, in which per capita (US$ 2017 PPP) everyone’s consumption is identical. A Gini coefficient of 100 represents the scenario of complete inequality, in which one person consumes everything. 6 These comparisons combine countries that measure poverty and the Gini coefficient based on income and consumption. Restricting the comparisons to countries that use measurements based on consumption (similar to Suriname) does not substantially alter the date or the conclusions drawn from it. Moreover, these comparisons are restricted to countries with a GDP per capita below US$50,000 (2017 PPP), but again this restriction does not alter the conclusions. 27 3. WHAT CHARACTERIZES POVERTY AND INEQUALITY IN SURINAME? 3.1 DISADVANTAGED GROUPS Important variations in poverty can be seen by geographic area and population group in Suriname. A disproportionate share of the poor population lives in the interior of the country. This can be inferred from Table 1, which examines how the socio-demographic characteristics of the poor differ from the vulnerable and those in the middle class and up. The table shows that only about 9 percent of the population lives in the interior of the country. Yet, about 14 percent of the population living below the World Bank’s US$6.85 poverty line lives in this part of the country. TABLE 1. SURINAME: SOCIODEMOGRAPHIC CHARACTERISTICS OF THE POOR (PERCENT) Poor Vulnerable Middle Class and Total   (US$14) Population Region              Greater Paramaribo  67.7 68.5 73.2 70.4 Rest of the coastal region  18.3 20.2 21.5 20.5 Interior  14.0 11.3 5.2 9.1 Ethnicity              Creole  10.6 13.5 18.3 15.1 Hindustani  27.9 27.2 27.4 27.4 Maroon  40.2 22.2 13.1 21.3 Indigenous  4.2 2.5 1.9 2.5 Javanese  8.7 16.1 19.2 16.2 Mixed  8.4 17.9 18.7 16.6 Other  0.0 0.6 1.4 0.9 Household size (number 5.3 4.3 3.1 3.8 of household members) Gender of household head              Female  46.2 34.1 35.3 36.7 Male  53.8 65.9 64.7 63.3 Age              0-5  15.6 9.1 7.7 9.6 6-11  16.0 12.5 7.7 11.0 12-14  7.8 6.2 4.4 5.7 15-17  7.1 6.2 4.5 5.6 18-24  11.7 12.9 10.4 11.6 25-59  34.3 42.9 49.5 44.3 60+  7.4 10.2 15.7 12.1 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Great Paramaribo consists of the capital Paramaribo and some urban parts of the district Wanica. The rest of the coastal region consist of the districts: Wanica (remaining part), Para, Saramacca, Commewijne, Nickerie and Coroni. The interior consists of the districts Marowijne, Brokopondo and Sipaliwini 29 Moreover, the Maroon and indigenous population are overrepresented among the poor, (see Box 2). They respectively make up about 21 and 2.5 percent of the population, but about 40 and 4.2 percent of the poor. The poor further tend to live in larger households, with more than 5 members on average, while vulnerable and middle-class (and up) households have 4.3 and 3.1 members on average. Children make up a large share of the poor. In contrast, working-age adults (25 to 60 years old) and the elderly (60+) make up a large share of the vulnerable and the middle class and up. Household headed by women make up about 46 percent of the poor, but only about 37 percent of the total population. The remainder of this subsection explores this sociodemographic variation in poverty rates in more detail. BOX 2. SURINAME: HISTORICAL AND DEMOGRAPHIC BACKGROUND A remnant of its colonial history, Suriname is home to a wide range of ethnic groups, none of which constitute a majority. Starting in the 17th century, the Dutch ran Suriname as a plantation colony, relying heavily on enslaved people from Africa. After slavery was formally abolished in 1873, indentured laborers from China, India, and Indonesia were relied on for labor. According to the 2012 census, Suriname’s main ethnic groups were Hindustani’s (27 percent), Maroons (22 percent), Creoles (16 percent), Javanese (14 percent), mixed (13 percent), indigenous (4 percent), and Chinese (1.5 percent). The areas of the country where these groups reside have been influenced by Suriname’s history of slavery and indentured labor. In particular, Maroons, the descendants of runaway enslaved people, live predominantly in the country’s interior. This population group, as well as Suriname’s indigenous population, has historically been marginalized, and the implications are still visible in Suriname’s poverty data today. More than 50% of the population in the coastal districts Saramacca, Nickerie and Commewijne are Hindustani’s. The districts Coroni and Para have a majority of Creoles. The urban region with the districts Paramaribo and Wanica, home to about 67% of the total population, have a more equal distribution by ethnicity. Suriname’s demographic profile is changing, according to the UN Department of Economic and Social Affairs (2022). As a result of its population structure and increased longevity, the share of the elderly population (65+) is increasing, and this growth is projected to continue beyond the end of the century. In contrast, the share of children (up to age 14) is falling because of declining fertility rates. These changes are important because there are substantial differences in poverty rates (and access to social assistance) by age group as discussed in this study. Poverty rates are markedly higher in the interior of the country. As can be inferred from Figure 6, this holds both for monetary poverty (panel A) and multidimensional poverty (panel B). In the interior of the country, an estimated 27 percent of the population lives below the World Bank’s upper- middle income poverty line of US$6.85 (2017 PPP), and 72 percent lived in multidimensional poverty. In contrast, monetary and multidimensional poverty rates are lower (and fairly similar) in the Greater Paramaribo region and the other coastal areas of the country at about 17 and 43 percent, respectively. 30 30 26,9 25 20 17,5 16,8 15,6 15 FIGURE 6. SURINAME: POVERTY RATES HIGHER 10 IN THE INTERIOR OF THE COUNTRY 5 0 A. Monetary Poverty (Based on the World Bank’s B. Greater Paramaribo Poverty Multidimensional (percent) Coastal Interior National US$6.85 poverty line, percent) 30 80 72,4 26,9 70 25 60 20 17,5 50 44,1 46,5 16,8 43,2 15,6 15 40 30 10 20 5 10 0 0 Greater Paramaribo Coastal Interior National Greater Paramaribo Coastal Interior National 80 72,4 70 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). 60 50 44,1 46,5 43,2 40 Poverty rates are also well above the national average of 17.5 percent among the Maroons 30 and the indigenous. As shown in Figure 7, nearly a third of the Maroon population can be classified as 20 poor (living under the US$6.85 poverty line). Among the indigenous population, the poverty rate is 29 10 percent. The picture in terms of geographic and ethnic variation in poverty rates is not much different 0 one considers if Greater Paramaribo multidimensional Coastal National of monetary poverty. For multidimensional poverty, poverty instead Interior the interior is over-represented and poverty rates are above the national average for the Maroon and indigenous populations. The only difference is that the multidimensional poverty rate is also above average for the Hindustani population. FIGURE 7. SURINAME: POVERTY RATES DIFFER BY ETHNIC GROUP (BASED ON THE WORLD BANK’S US$6.85 POVERTY LINE, PERCENT) Other (0.9%) 0,9 Javanese (16.2%) 8,8 Mixed (16.6%) 9,4 Creole (15.1%) 12,3 Hindustani (27.4%) 17,8 Indigenous (2.5%) 29,0 Maroon (21.3%) 32,9 0 5 10 15 20 25 30 35 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Share of the population of each ethnic group is shown in parentheses. 31 SURINAME POVERTY AND EQUITY ASSESSMENT Finally, poverty rates tend to be higher in large households and households with many children. Households with children are markedly more likely to be poor than households without children to begin with. The respective poverty rates in these two groups are 22.3 and 8 percent, and the difference between the two is thus more than 14 percentage points. Moreover, as shown in Figure 8, poverty rates increase rapidly with household size. In the smallest households with only one member, the poverty rate is about 2 percent. Of the large households with 10 or more members, typically many of them children, nearly half can be classified as poor. FIGURE 8. SURINAME: POVERTY RATES INCREASE RAPIDLY WITH HOUSEHOLD SIZE (IN PERCENT, BASED ON THE WORLD BANK’S US$6.85 POVERTY LINE, PERCENT) 50 47,3 45 40 35 30 25 20 15 10 5 2,1 0 1 2 3 4 5 6 7 8 9 10 Number of household members Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). 3.2 OVERLAPPING DEPRIVATIONS Nearly 9 percent of Surinamese can be classified as chronic poor, meaning that they are poor in both monetary and multidimensional terms. To be precise, 11.5 percent of the population lives below the US$6.85 poverty line and could be classified as multidimensionally poor. Those referred to as the structural poor, who live in multidimensional but not in monetary poverty, represent about a third of the population (34 percent). Another 6 percent of the population is transient poor, that is, poor in monetary but not multidimensionally terms. Table 2 further examines the overlap between monetary poverty and the (indicators of) the multidimensional poverty index. A clear correlation can be observed 32 between monetary poverty and most of the indicators in the Multidimensional Poverty Index. For instance, monetary poor households are more likely to have a chronically ill member, or a member with a disability. They are less likely to have a head who completed junior secondary education, have all children in school, have good sanitary facilities, or have health insurance, while they are more likely to live in an overcrowded home. TABLE 2. SURINAME: OVERLAP BETWEEN MONETARY AND MULTIDIMENSIONAL POVERTY (PERCENT) Poor Vulnerable Middle Class and Total     (<$US6.85) (US$6.85-US$14) up (>US$14) Population Multidimensionally poor  65.9 51.0 34.8 46.5 Health                 At least one member Chronic illness  of the household has a 67.7 61.7 59.6 61.8 chronic illness  At least one member Disability  of the household has a 37.1 32.4 33.8 33.8 disability  Education                 Head of household did Level of not complete lower 63.8 58.5 41.8 52.1 education  secondary education  Information and At least one person in communications the household does not 59.3 44.2 25.8 38.8 technology skills  use the Internet at all  Not all children of School school age in the 20.6 13.7 9.2 12.9 attendance  household are attend- ing school  Household does not Communication  have any communica- 1.1 0.7 0.4 0.7 tion device  At least one person Literacy  unable to read/write in 21.3 11.7 3.5 9.8 the household  Household has at least Learning delay  one person who has a 26.4 15.6 7.7 14.0 school delay  33 SURINAME POVERTY AND EQUITY ASSESSMENT Standard of living              The household does not Cooking fuel  have access to quality 16.1 7.7 2.9 7.1 cooking fuel sources  The household does not have access to Sanitary facilities  21.2 9.2 4.3 9.2 improved sanitary con- ditions The household does Drinking water not have access to 13.3 6.9 4.5 7.0 supply  quality drinking water facilities nearby  The house has a roof Housing  made of inadequate 0.4 0.2 0.0 0.2 materials  Household members Overcrowding  share a bedroom with 20.5 8.8 3.7 8.6 more than three people  Household does not Household own half of a list of 40.7 17.3 9.3 17.4 appliances appliances Socioeconomic security              Income from transfers Financial  is the main source of 1.0 0.0 0.0 0.2 income  Not all members of the Insurance  household have health 61.1 44.8 27.3 40.0 insurance  No member of the Employment  19.4 9.4 14.1 13.2 household has a job  At least one member Safety  of the household was a 2.4 4.9 3.5 3.8 victim of a crime  Households with more Dependency  than three members/ 49.7 53.2 41.6 47.5 working-age members Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). There is also notable clustering and overlap between some of the indicators of multidimensional poverty: poor health, poor education, and high dependency ratios. The overlap can be inferred from a “heat map” displayed in Figure 9. Cells in this map appear darker if the share of households suffering from both the deprivation on the vertical and horizontal axis is higher. There is a cluster of darker cells in the top left corner, indicating a relatively high share of households that are deprived in terms of a combination of ill household members, members with a disability, 34 heads with low education, and members with few information and communications technology (ICT) skills. These four elements thus appear to be interlinked. Likewise, there are clusters of darker cells in the bottom left and top right corner, indicating overlap and linkages between the aforementioned deprivations and monetary poverty. FIGURE 9. SURINAME: OVERLAP BETWEEN POOR HEALTH, POOR EDUCATION, HIGH DEPEN- DENCY RATIOS, AND MONETARY POVERTY (PERCENT) Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Figure shows the correlation between indicators that are part of the Multidimensional Poverty Index. Each cell shows the share of the population living in households considered deprived on the two relevant categories. The last two indicators are the poverty rate at US$6.85 purchasing power parity per day (World Bank) and the national poverty rate (National Line). ICT: information and communications technology. What is the cause of the overlap between human capital deprivation and monetary poverty? The linkages can be numerous. Causal effects may run, for instance, from poor education to poor labor market outcomes, which in turn limit income generation and thus contribute to poverty. Vice- versa, poverty may have an impact on learning outcomes, as poor children grow up in environments that are less conducive to attending and learning in school. Moreover, there may be linkages at the macro level, with a poorly educated workforce hampering economic development and growth. In fact, as this Poverty and Equity Assessment describes, Suriname appears to find itself in an equilibrium in which all these factors are at play. The poorest Surinamese exhibit lower education outcomes. Those with lower education have worse prospects in the labor market. And employers mention skill shortages as one of the important obstacles they face in running their operations. 35 SURINAME POVERTY AND EQUITY ASSESSMENT 3.3 DISPARITIES IN ACCESS TO PRODUCTIVE ASSETS Significant disparities in both tangible and intangible assets hamper the participation of the poor in society and the economy. This holds for dwelling characteristics and ownership of physical assets, which may be intuitive considering poorer households’ lower purchasing power. For instance, as shown in Table 3, poorer households are less likely to own their dwelling or a car. But it also holds for labor market outcomes, as the poor are less likely to be in the labor force and, conditional on being in the labor force, more likely to be unemployed. And it holds for access to bank accounts and the Internet. To visualize just how steep the difference can be, panel A in Figure 10 shows the share of the population with access to a bank account, and panel B shows the share with access to the Internet. In both panels, the horizontal axis shows consumption deciles. In decile 1, which represents the poorest 10 percent of the population, approximately 29 percent of all individuals have access to a bank account. In the richest decile, the share is 71 percent. Likewise, in the poorest decile, a little over 60 percent have access to the Internet. In the richest decile, this share is 85 percent. Considering the importance of financial inclusion and digital access in the modern economy, it is not difficult to see that this lack of access to services further reduces the ability of the poor to generate income and participate productively in society. TABLE 3. SURINAME: THE POOR HAVE LESS ACCESS TO ASSETS (PERCENT) Poor Vulnerable Middle Class and Total   (US$14) Population Dwelling               Not owned by household  42.1 38.2 31.9 35.3 Low-quality material  5.5 4.5 3.9 4.3 No access to electricity  1.1 0.1 0.2 0.3 Physical assets          Cellphone  96.7 96.3 97.2 96.9 TV  69.9 80.6 86.6 82.6 Cable TV  0.2 2.7 9.8 6.2 Car  35.0 59.5 72.1 63.3 Owns less than half of list of appliances  49.9 25.9 16.5 23.8 Adult labor market outcomes          Labor force participation  52.2 65.1 70.4 65.5 Unemployed  15.6 9.3 4.1 7.5 Sector (Employed)          Agriculture  10.1 6.7 5.2 6.3 Mining  1.7 5.0 3.2 3.7 Manufacturing  8.5 7.7 6.2 7.0 Construction  14.1 9.8 5.7 8.1 36 Retail  4.0 6.7 6.1 6.1 Hospitality  7.0 4.6 5.6 5.4 Public administration  2.6 5.6 7.4 6.2 Education and health  9.3 15.0 18.3 16.1 Households as employer  4.3 2.5 2.7 2.8 Administrative services  9.2 12.5 17.4 14.7 Transportation  4.3 5.8 7.7 6.6 Utilities  1.9 4.3 2.4 3.0 Other  23.0 13.9 12.3 14.0 Access to markets          Bank account  53.1 70.3 80.9 73.9 Phone  96.8 97.0 98.2 80 71,0 97.6 Internet  57.8 69.3 79.5 73.4 60 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). 40 29,0 FIGURE 10. SURINAME: THE POOR FACE DISPARITIES 20 IN ACCESS TO BANK ACCOUNTS AND THE INTERNET (PERCENT) 1 2 3 4 5 6 7 8 9 10 Consumption decile A. Has bank account B. Has internet access 80 71,0 60 100 85,2 40 29,0 80 64,3 20 60 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 Consumption decile Consumption decile Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). 100 To provide further insight into poverty 85,2 and inequality in Suriname, the following sections focus on human capital, labor markets, and social protection. A focus on these topics is 80 64,3 to understanding poverty and inequality in Suriname. An analysis of labor markets and paramount 60 assistance is of critical importance to understand households’ main income sources, which social 1 2 determine ultimately 6 7 and 3 4 5 poverty 8 inequality. 9 10 And an understanding of deficiencies in human capital outcomes, in turn, is critical to Consumption decile understand some of the most important challenges for Suriname’s workers. Of course, there are other aspects that matter for poverty reduction, some of which lie outside the scope of this Poverty and Equity Assessment. The final section of this report describes additional areas of analysis that could be considered for follow-up research. 37 4.HUMAN CAPITAL Although Suriname’s expenditure on education is not out of line with that of other countries, its education outcomes compare poorly. Figure 11 shows that, in 2021, Suriname spent approximately 3.8 percent of GDP on education. This figure was comparable to that of other countries. Yet in international comparisons, Suriname stands out negatively in terms of education outcomes. For instance, as shown in panel A of Figure 12, Suriname’s lower secondary school completion rate is on par with countries with a markedly lower GDP per capita, such as Djibouti, Senegal, and Mozambique. The situation is no better when examining enrollment in tertiary education (panel B of Figure 12), which compares to that of markedly poorer countries such as Burkina Faso, Ivory Coast, Lesotho, and Zimbabwe. As this section and the next will discuss, these poor education outcomes and associated skill shortages are important determinants of poverty and inequality in Suriname. FIGURE 11. SURINAME’S EDUCATION EXPENDITURE IS COMPARABLE TO THAT OF OTHER COUNTRIES (PERCENT OF GDP) 18 16 14 12 10 8 6 4 2 0 0 10000 20000 30000 40000 50000 GDP per capita (2017 PPP U.S dollars ) Source: Latest data on education expenditure and corresponding GDP per capita adjusted for purchasing power parity (PPP) from the World Bank’s World Development Indicators database based on UNESCO Institute for Statistics data. Note: Comparison restricted to countries with a GDP per capita of US$50,000 or less. 39 140 SURINAME 120 100 POVERTY AND EQUITY ASSESSMENT 80 60 40 20 0 FIGURE 12. IN INTERNATIONAL COMPARISONS, SURINAME 0 STANDS20000 10000 OUT FOR POOR EDUCA- 30000 40000 50000 TION OUTCOMES (PERCENT) GDP per capita (2017 PPP U.S dollars) A. Lower secondary completion rate, total B. School enrollment, tertiary (Gross, in percent) (Percent of relevant age group) 140 160 120 140 100 120 100 80 80 60 60 40 40 20 20 0 0 0 10000 20000 30000 40000 50000 0 10000 20000 30000 40000 50000 GDP per capita (2017 PPP U.S dollars) GDP per capita (2017 PPP U.S dollars) Source: Latest education statistics and corresponding GDP per capita adjusted for purchasing power party (PPP) from the World Bank’s World Development Indicators database based on UNESCO Institute for Statistics data. Note: Comparison restricted to countries with a GDP per capita of US$50,000 or less. 160 140 120 100 High dropout rates and limited learning in school are important challenges in Suriname. The 80 literacy rate among boys and girls ages 15-24 is 99 percent, compared to 95 percent of the population 60 age 15 and older.7 However, prior UNICEF research shows that dropout rates are high across all secondary 40 20 school grades, especially after the final grade.8 Almost half of the children who complete secondary 0 school do not continue to postsecondary education. In addition, concerns exist about students’ skills acquisition. 0 Findings 10000 from UNICEF 20000 30000 indicate 40000 that by Grade 6 only 42 and 63 percent of children have 50000 the numeracy and per capita skills, GDPreading (2017 PPP U.S dollars) that they should have acquired by Grade 3. Moreover, respectively, challenges in learning among children with disabilities were noted, with school facilities generally not being prepared to accommodate children with physical difficulties. Women’s education outcomes are markedly stronger than those of men at all levels. As in many other countries in the region, there is a “reverse gender gap” in education outcomes, with women outperforming men in education outcomes by a sizable margin (UNESCO 2020). Figure 13 shows the education levels completed by women and men. The differences are clear at the extremes of the distribution. About 20 percent of men have not completed any education, while among women this share is 16.5 percent. Vice-versa, about 11 percent of women have completed tertiary education, while among men this share is only 5.4 percent. 7 See the World Bank’s EdStats (Education Statistics) data portal, available at https://datatopics.worldbank.org/education/ (accessed June, 2024). 8 This paragraph is based on UNICEF (2019). 40 FIGURE 13. SURINAME: WOMEN OUTPERFORM MEN IN EDUCATION OUTCOMES (HIGHEST LEVEL OF EDUCATION COMPLETED BY ADULTS, PERCENT) 0 20 40 60 80 100 Female 16,5 31,8 22,8 18,0 10,9 Gender Male 20,2 34,5 26,8 13,2 5,4 National 18,4 33,2 24,8 15,5 8,0 All None or kindergarten Primary Middle school High school Higher education Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Highest level of education completed by women and men ages 15 and older. It can be challenging to ensure a high quality of education for all students across varied ethnic, cultural, and language backgrounds. For instance, despite Dutch being the official language of the country and the primary language of instruction, approximately 30 different languages are spoken in Suriname. This can create language barriers and affect learning outcomes for students who do not speak Dutch as their first language. In addition, it is sometimes difficult to find teachers willing to work in the country’s interior due to accessibility issues and the distance from urban centers, complicating the delivery of quality education (UNESCO 2020). Indeed, poor education outcomes intersect with historical ethnic and geographic inequality. Figure 14 examines level of education completed by geographic area of the country and by ethnic group. The share of adults who completed secondary education is lower in the interior (7 percent) and among indigenous Surinamese and Maroons (both around 14 percent) than among other groups. Interestingly, household size and education have an inverted U-shaped relationship. The reason appears to be that many of the smallest households (with one or two members) tend to be made up of elderly members (who grew up when education opportunities were more limited). Larger households tend to be the ones with many children from less- advantaged socioeconomic backgrounds. The Human Opportunities Index provides further detail on disparities in access to education and other services, as shown in Box 3. 41 SURINAME POVERTY AND EQUITY ASSESSMENT FIGURE 14. SURINAME: LOW EDUCATION INTERSECTS WITH HISTORICAL GEOGRAPHIC AND ETHNIC INEQUALITY AS EVIDENCED BY THE SHARE OF THE POPULATION THAT COMPLETED SECONDARY EDUCATION (PERCENT) 50 40 30 20 10 0 8 6 9 4 National 5 2 3 Coastal Hindustani 7 Interior Javanese Other 10 Maroon Mixed Greater Paramaribo 1 Indigenous Creole Region Ethnicity Household Size Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Highest level of education completed by women and men ages 15 and older. BOX 3. THE HUMAN OPPORTUNITIES INDEX The Human Opportunities Index (HOI) provides further insight into disparities in access to education and other services. As described by the World Bank’s LAC Equity Lab, the HOI “measures how individual circumstances (i.e., characteristics such as place of residence, gender, and education of the household head that should not determine access to basic goods and services) can affect a child’s access to basic opportunities such as water, education, electricity, and sanitation.” These services, in turn, may affect children’s’ development and opportunities later in life. Following Paes de Barros et al. (2008), the index can be used to compare actual coverage of these services against coverage corrected for inequalities in individual circumstances. In the case of Suriname, as shown in Box Figure 3.1, the index highlights inequities especially in terms of access to the Internet, water, and primary school completion. The actual coverage for each of these, shown as diamonds, equals about 75 percent. However, the picture is less optimistic after correcting for inequities in access by geographic area, gender of the child, years of education of the head of household, gender of the household head, 42 whether the household has both parents, number of children in the household, and the value of household consumption. On the three indicators (access to the Internet, water, and primary school completion), Suriname also compares poorly to much of the rest of Latin America and the Caribbean both in terms of actual coverage and HOI. Of the countries for which recent data are available, only Paraguay, Jamaica, and Bolivia have lower HOI scores. For water and primary school completion, in particular, Suriname’s HOI score is about 10 percentage points below the actual coverage rate, pointing to a negative role of individual circumstances in accessing basic services. BOX FIGURE 3.1. SURINAME’S HUMAN OPPORTUNITIES INDEX (HOI) SCORES 100 90 80 70 60 50 40 30 20 10 0 Cellphone School enrollment Sanitation Internet Water Finished primary school HOI Coverage Source: World Bank LAC Equity Lab based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Household circumstances include the gender of the child and head of household, the educational level of the head of household, the presence of both parents in the household, the number of children under 17 years in the household, household income or consumption and place of residence (Great Paramaribo region, other coastal areas, and the interior). HOI focuses on 7 opportunities grouped into three dimensions. 1. Education: The indicator “School Enrollment” (10-14 years) measures whether young people have equitable access to education and the indicator “Finished Primary School” (12-16 years) refers to whether a young person completed their basic education. 2. Dwelling (youth 16 and under): The “Electricity” indicator measures the household’s access to electricity, the “Water” indicator considers whether the household has running water inside the dwelling or the yard, finally, the “Sanitation” indicator measures whether a household has a flush toilet on the dwelling or the yard. 3. Information and communication technologies (youth 16 and under): The indicators “Internet” and “Cellphone” measure whether a household has access to internet and cellphones, respectively. Poverty and poor education outcomes are associated. Moreover, education is an important element in the intergenerational transmission of poverty. There is a clear correlation between highest level of education completed and poverty, as shown in Table 4. More than two fifths of the poor (42 percent) live with a head of household who did not complete any education. In middle-class or richer households, this share is only 17.5 percent. Virtually none of the poor live with a household head who has completed tertiary education, whereas 10 percent of the middle class live with a household head who has completed higher education. Moreover, children in poor households are more likely to be 43 SURINAME POVERTY AND EQUITY ASSESSMENT out of school. This holds for different age groups, from young children ages zero to 5 to young adults ages 18 to 24.9 In other words, education deprivations start early in life and are more prevalent among the poor, indicating that education is at the root of intergenerational transmission of poverty. TABLE 4. SURINAME: POOR EDUCATION OUTCOMES ARE ASSOCIATED WITH POVERTY (PERCENT) Poor Vulnerable Middle Class and Total   (US$14) Population Highest level of education completed       Head of household         None 42.4 22.0 17.5 23.2 Primary 34.6 42.4 27.5 34.4 Middle school 14.0 24.6 29.0 24.9 High school 8.8 8.6 15.3 11.6 Higher education 0.2 2.5 10.8 5.8 Female         None  32.4 18.3 10.6 16.5 Primary  39.7 35.2 27.1 31.8 Middle school  15.2 23.8 24.1 22.8 High school  12.3 17.2 20.3 18.0 Higher education  0.3 5.5 17.8 10.9 Male         None  40.4 19.9 15.7 20.2 Primary  34.2 39.9 30.4 34.5 Middle school  17.0 26.2 29.5 26.8 High school  8.3 11.5 15.6 13.2 Higher education  0.0 2.5 8.8 5.4 School attendance by age group       0-5 28.5 31.3 33.3 31.2 6-11 93.8 99.2 98.4 97.5 12-14 92.3 98.1 99.8 97.4 15-17 91.9 91.1 92.8 91.9 18-24 33.4 48.2 55.9 48.8 Source: Poverty assessment team based on 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Table shows distribution of population within income group across different categories given by education of the head of household and education of 15+ years old individuals. It also shows school attendance rates by age brackets between 0 and 24 years old. 9 Related, UNICEF (2019) found that 6 percent of children in the country engage in child labor, which is typically an indication of poverty. This share is higher among boys (8 percent) than girls (5 percent) and markedly higher in the rural interior, at 19 percent. 44 5. LABOR MARKET OUTCOMES SURINAME POVERTY AND EQUITY ASSESSMENT By 2022, as Suriname was past the deepest part of the economic crisis, core labor market outcomes were in line with expectations. However, the poor were both significantly less likely to participate in the labor market and significantly more likely to be unemployed. Figure 15 shows that both Suriname’s overall labor force participation and unemployment rates were aligned with what would be expected in terms of global comparisons. The same holds for many other key indicators not displayed here. These include, for instance, the shares of wage workers, workers in vulnerable employment, youth not in employment, education or training (NEET), the 100 part-time employed, and the self-employed. In fact, on some of these indicators Suriname compared90relatively positively to peers with a similar level of GDP per capita. Nonetheless, as shown in Table 3, when decomposing overall statistics, the poor show 80 significantly lower rates of labor force participation (52.0 percent) relative to the middle class (69.8 percent). Similarly, conditional on participating in the70 labor force, the poor are significantly more likely to be unemployed (12.1 percent) when compared to the middle class (5.5 percent).Suriname 60 50 40IN CORE LABOR MARKET INDICATORS (PERCENT) FIGURE 15. SURINAME DOES NOT STAND OUT 30 $0 $5.000 $10.000 $15.000 $20.000 $25.000 $30.000 $35.000 $40.000 A. Labor Force Participation Rate, Total B. National Estimate of GDP per Unemployment, capita Total PPP (constant 2017 U.S. dollars) (Percent of total population ages 15-64) (Percent of total labor force) 100 35 90 30 80 25 70 20 Suriname 60 15 50 10 Suriname 40 5 30 0 $0 $5.000 $10.000 $15.000 $20.000 $25.000 $30.000 $35.000 $40.000 $0 $10.000 $20.000 $30.000 $40.000 $50.000 $60.000 GDP per capita PPP (constant 2017 U.S. dollars) GDP per capita PPP (constant 2017 U.S. dollars) Source: Latest labor force participation and unemployment rates and corresponding GDP per capita adjusted for purchasing 35 power parity (PPP) from the World Bank’s World Development Indicators. For Suriname: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). 30 25 20 Moreover, women’s labor market outcomes compare poorly to those of men, despite women’s stronger education outcomes. In fact, women are worse off than men on virtually all 15 the main labor market outcomes (Figure 16). These disparities are visible at an early age. On average, 10 11 percent of youths ages 16 to 25 are not in employment, education, or training (NEET). However, Suriname 5 the share of those who are NEET is markedly higher among females (16.3 percent) than males (6.4 0 $0 $10.000 $20.000 $30.000 $40.000 $50.000 $60.000 46 GDP per capita PPP (constant 2017 U.S. dollars) percent). Differences are no less pronounced among many other core outcomes related to labor market participation. The share of women in the labor force is 54.5 percent for women vs. 76.7 percent for men. And, even within those in the labor force, the unemployment rate is markedly higher for women (10.5 percent) than for men (5.3 percent). FIGURE 16. SURINAME: GENDER DISPARITIES IN THE LABOR MARKET OUTCOMES OF WOMEN AND MEN (PERCENT) 100 78,0 80 59,3 60 40 20 16,3 10,5 6,4 5,3 0 Men Women Men Women Men Women NEET Labor force participation Unemployment Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Labor force participation is the ratio of economically active to working-age population. Unemployment indicates the ratio of the unemployed to the economically active population. NEET: not in education, employment, or training. The relatively low labor market attachment of women can be observed across all educational levels. Figure 17 shows that, although the differences are more pronounced at lower levels of education, women are significantly more likely to be out of the labor force at all levels of educational attainment. While 52 percent of women with primary education or less are out of the labor force, only 17 percent of men with the same educational attainment are out of the labor force. Among persons with secondary education, 30 percent of women are out of the labor force compared to 10 percent of men. Even among tertiary-educated individuals, 9 percent of are out of the labor force, more than double the 4 percent of men. Moreover, among those who are employed, women are significantly less likely to work on a full- time basis, and this also holds for all levels of educational attainment. For example, among tertiary- educated persons, 43 percent of women are employed on a full-time basis and 47 percent work part- time. In contrast, 69 percent of men with tertiary education work full-time and only 23 percent work part-time. 47 SURINAME POVERTY AND EQUITY ASSESSMENT FIGURE 17. SURINAME: GENDER DISPARITIES IN LABOR MARKET OUTCOMES AT ALL LEVELS OF EDUCATION ATTAINMENT (PERCENT) 5,8 3,7 0,5 3,2 3,6 100 1,2 90 23,3 23,5 23,4 28,1 80 33,1 46,8 70 60 19,2 50 33,7 51,3 65,1 40 68,9 30 43,4 51,6 20 29,5 10 17,3 9,4 10,5 4,0 0 Primary or less Secondary Tertiary Primary or less Secondary Tertiary Women Men Out of labor force Employed full time Employed part time Unemployed Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). High levels of early marriage and adolescent fertility contribute to women’s poor labor market outcomes.10 Of course, the reasons behind gaps in the labor market outcomes of women and men are complex and multifaceted. Research in many countries around the world indicates that one important explanation tends to be that the school-to-work transition can be more challenging for women (World Bank, undated). Indeed, the pronounced gender difference in the share of NEET youth indicates that the school-to-work transition is challenging for young women in Suriname. The literature on school-to-work transitions points to teenage pregnancy and early marriage as important barriers to a successful school-to-work transition. And in both outcomes, Suriname does not compare favorably. Panel A of Figure 18 shows that Suriname is an outlier in terms of early marriage rates. According to the 2018 UNICEF Multiple Indicator Cluster Survey (MICS), 36 percent of women ages 20 to 24 had been married by the age of 18, a rate comparable to that of Mauritania, Nicaragua, and the Sudan.11 Panel B shows that, although Suriname is not a clear outlier, adolescent fertility rates are nonetheless substantial. Gender norms tend to be an important driver of high levels of early marriage and adolescent fertility and contribute to an environment where women are perceived as mothers and caregivers, but not as income earners. Indeed, according to the 2022 SLC, women often mention that they are out of the labor force because of caregiving duties. For men, this is rarely the case. 10 UNFPA (2023), estimated the socio-economic opportunity cost of adolescent pregnancy and early motherhood to be 1.6% of the GDP. 11 The category married includes those who or engaged in a long-term relationship as per common law, in a traditional mar- riage, or living (apart) together. 48 100 80 60 40 20 0 0 10000 FIGURE 18. SURINAME: HIGH RATES OF EARLY MARRIAGE 20000 30000 AND ADOLESCENT 50000 40000 CON- FERTILITY GDP per capita (2017 PPP U.S. dollars) TRIBUTE TO GENDER DISPARITIES IN LABOR MARKET OUTCOMES A. Women First Married by Age 18 B. Adolescent Fertility Rate (Percent of women ages 20-24) (Births per 1,000 women ages 15-19) 100 200 80 150 60 100 40 50 20 0 0 0 10000 20000 30000 40000 50000 0 10000 20000 30000 40000 50000 GDP per capita (2017 PPP U.S. dollars) GDP per capita (2017 PPP U.S. dollars) Source: World Bank Gender Data Portal, based on the 2018 UNICEF Multiple Indicator Cluster Survey for Suriname (panel A) and UN Population Division data (panel B). Note: PPP: purchasing power parity. 200 150 The human capital deficiencies that are at the heart of poverty and inequality in Suriname are also an important obstacle for private sector growth. Over 55 percent of firms mention an 100 inadequately educated and trained workforce as an obstacle to their operations. Among larger, more mature 50 firms, this share increases to 90 percent. When asked about the causes of skill shortages (Figure 19), nearly half of all firms mention that the quality of education and training offered by local educational 0 institutions is a very important or even critical factor behind the country’s skill shortage problem. 0 This 10000 20000 labor is followed 30000 protection laws and regulations, and the lack of necessary personal, soft 40000 50000 skills (training) offered by local institutions. GDP per capita (2017 PPP U.S. dollars) 49 SURINAME POVERTY AND EQUITY ASSESSMENT FIGURE 19. SURINAME: CAUSES OF SKILL SHORTAGES ACCORDING TO FIRMS (PERCENT) Quality of the education and training o ered 49,3 by local educational institutions Labour protection laws and regulations 38,8 Lack of necessary personal, soft skills o ered 34,1 by local institutions Shortage in number of professionals trained 31,1 by local institutions Worker emigration 15,7 Professionals moving to other sectors 13,7 of the economy or other enterprises High expectations from new hires 10,0 0 10 20 30 40 50 60 Source: Poverty assessment team based on the 2020 Innovation, Firm Performance and Gender Survey conducted by Compete Caribbean (2020). Real hourly wages are lower in the interior (where the poor are concentrated), while labor market returns to education imply a growing gap unfavorable to the lower-educated poor that reinforces inequalities. While the average hourly wage stands at 2017 PPP US$9.40 nationally, the interior has a noticeably lower figure of 2017 PPP US$7.90 (Figure 20 panel A). This coincides with the relatively higher concentration of poverty in the interior and the associated lower levels of human capital there. Relatedly, as 37 percent of the poor have not completed primary school and 28 percent have only completed primary education, labor market returns to education would relegate the poor further. Panel B of Figure 20 shows that the return for completing high school is about 86 percent (relative to no education or incomplete primary). As only 5 percent of the poor have completed high school (with none completing tertiary education), this implies that most of the poor will see their earnings fall significantly behind the higher educated (mostly non-poor) population. 50 8 6 10,5 9,4 9,1 4 7,9 2 0 National Great Coastal Interior FIGURE 20. SURINAME: HOURLY WAGES DIFFER BY REGION Paramaribo A. Hourly Wages by Region (2017 PPP U.S. dollars) B. Returns to Education (Percent) 12 250 10 200 8 150 6 10,5 100 9,4 9,1 4 7,9 50 2 0 0 National Great Coastal Interior Primary Middle High Higher Paramaribo school school school education Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: In panel B, returns to education are calculated with respect to the omitted category of none or incomplete primary education from Mincer regressions controlling for gender, age, geographic area, and labor market experience (95 percent 250 confidence intervals presented along with the point estimates). Note: PPP: purchasing power parity. 200 The percentage of workers whose wages are below the minimum wage is higher in the 150 among indigenous and maroon populations, and among those with no formal interior, education. Overall, 18 percent of people who reported income in 2022 earned an average wage below the minimum wage threshold set by the Ministry of Labour, Employment and Youth Affairs (Figure 21).12 100 The proportion of individuals earning below the minimum wage is considerably higher in the interior, at 39.8 percent. The same holds among Maroon and indigenous workers (24.4 and 31.9 percent, 50 respectively). Also, Figure 21 shows how the proportion of individuals earning below the minimum wage decreases with education. Indeed, 21.2 percent of individuals with no education or kindergarten earn below0 the minimum wage, compared to 12.4 percent among those with higher education. Primary Middle High Higher school school school education 12 The minimum hourly wage was recently set at SRD49.12 by the Ministry of Labor. In 2022, the figure was SRD20, which is equivalent to US$1.30 (2017 PPP) and which was used for the calculations in Figure 21. See https://www.sris.sr/Beschik- king-Minimum-uurloon-2022.pdf for the official release of the 2022 minimum wage (accessed June 1, 2024). 51 SURINAME FIGURE 21. SURINAME: EARNINGS OF WORKERS FROM DISADVANTAGED GROUPS MORE LIKELY TO BE BELOW THE MINIMUM WAGE (PERCENT) 40 30 20 10 0 Greater Paramaribo Hindustani Higher Education None or kindergarten Primary National Coastal Middle School Javanese Indigenous High School Interior Maroon Others Mixed Creole All Location Ethnicity Education Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Informality negatively affects earnings and is related to a higher probability of earning below the minimum wage. About 53 percent of Surinamese workers can be classified as working in the informal sector (i.e., without access to employment benefits such as a pension or retirement fund, medical insurance, and maternity and paid sick leave). The share is higher among men (59 percent) than women (44 percent). On average, formal Surinamese workers have a wage premium of US$3.80 (2017 PPP) over their informal counterparts (Figure 22). Formal workers earn, on average, US$11.30 per hour, well above the national average (US$9.40) and the average of informal workers (US$7.50). For women, despite their lower labor force participation conditional on working, average wages are higher among female workers and their formality wage gap is higher. Formally employed women earn US$12.20 on average, 65 percent more than their informal counterparts (US$7.40). The implied earning benefits derived from formal work are also noticeable in terms of the percentage of individuals whose earnings are below the minimum wage. While the national share of individuals earning below the minimum wage is 17.8 percent (Figure 22, panel B), this proportion increases to 24.1 percent among informal workers and is only 11.2 percent for formal workers. 52 FIGURE 22. SURINAME: A CLEAR ASSOCIATION BETWEEN INFORMALITY AND EARNINGS A. Average Wages (2017 PPP U.S. dollars) 14 12 14 10 12 108 86 64 42 9,4 7,5 11,3 20 9,4 7,5 11,3 0 National Informal Formal National All Informal Formality Formal Female Male All Formality Female Male B. Persons Earning Below Minimum Wage (Percent) 30% 25% 30% 20% 25% 20% 15% 10% 15% 5% 10% 17,8% 24,1% 11,2% 0% 5% 17,8% 24,1% 11,2% 0% National Informal Formal National All Informal Formality Formal All Female Male Formality Female Male Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Informality is represented by individuals who have no access to employment benefits, including a pension or retirement fund, medical insurance, and maternity and paid sick leave. PPP: purchasing power parity. In addition to the gap in labor market returns unfavorable to the less educated and poorest individuals, the increase in wages due to an increase in one year of schooling is relatively low. Indeed, the country’s overall returns to an additional year of education are on the lower side of the distribution among countries with comparable development. On average, each additional year of schooling raises wages by 6.2 percent in Suriname, which is similar to what Montenegro and Patrinos (2022) estimate for Nicaragua, Yemen, and Guinea. Figure 23 shows the relationship between returns to schooling and GDP per capita (panel A) and labor force participation rates (panel B). Suriname’s returns to education are thus lower than what would be expected for its level of income and labor force participation. Nonetheless, as was shown in Figure 20 (panel B), when estimating differential returns across educational levels, obtaining a tertiary education degree raises earnings by about 41 percent with respect to a high school degree (i.e., an average return of about 10 percent for each additional year of tertiary education). 53 20 Returns to schooling SURINAME 15 POVERTY AND EQUITY ASSESSMENT 10 5 Sunname FIGURE 23. SURINAME: RETURNS TO EDUCATION ARE COMPARATIVELY LOW (PERCENT) 0 A. Returns to schooling (percent) plotted against B. Returns to schooling (percent) plotted against labor 0 20.000 40.000 60.000 80.000 100.000 GDP per Capita (Constant 2017 PPP U.S. dollars) force participation rate GDP per capita PPP (constant 2017 U.S. dollars) 25 20 25 Returns to schooling Returns to schooling 15 20 15 10 10 5 Sunname 5 Sunname 0 0 0 20.000 40.000 60.000 80.000 100.000 40 60 80 100 GDP per capita PPP (constant 2017 U.S. dollars) Labor force participation rate, total (% of total population ages 15-64) Source: Poverty assessment team based on Montenegro and Patrinos (2022) for the rest of the world and on the 2022 Suriname Survey of Living Conditions (IDB 2022) for Suriname. 25 Returns to education for Suriname were calculated by a standard Mincer equation where earnings (natural log of hourly Note: wages) were regressed on years of schooling (continuous variable), labor market potential experience, and experience-squared. PPP: purchasing power parity. Returns to schooling 20 15 The lack of adequately trained workers translates into a mismatch between labor demand 10 and supply that exacerbates the labor market outcomes of the poor. Firm-level data from the 2014 Productivity, Technology and Innovation in the Caribbean Survey give an indication of the 5 distribution of minimum educational levels that firms in Suriname require when hiring workers (labor Sunname demand). 0 This labor demand is represented by the firms’ required level of education for both filled positions and the vacancies for all different job types.13 On the other hand, the distribution of the 40 60 80 100 workforce by educational levels can be calculated based on the 2022 SLC (labor supply). The resulting Labor force participation rate, total distributions of both labor supply and demand, displayed in Figure 24, show that there is an oversupply (% of total population ages 15-64) of workers with lower levels of education (primary or less) and an undersupply of workers with tertiary education. While 23 percent of positions in the private sector demand workers with primary education or less (mostly driven by the demand for craft and related trade workers and elementary occupations), 13 Job types included in the survey are managers, professionals, technicians and associate professionals, clerical support workers, service and sales workers, skilled agricultural, forestry and fishery workers, craft and related trades workers, plant and machine operators, and elementary occupations. 54 over 43 percent of the Surinamese labor force has primary education as its highest educational attainment. Labor supply and demand for secondary-educated persons is largely balanced. However, workers with tertiary education are in low supply. The labor market demand for persons with either vocational training or a university degree is 30 percent, and strongly exceeds the 9.4 percent of the labor force that meets this educational attainment criterion. As none of the poor reach tertiary education, their labor supply characterized by low levels of human capital is more than what the labor market demands. This explains their lower labor force participation, higher unemployment, and lower wages. Therefore, enhanced opportunities to access quality education among the poor are greatly needed to break the intergenerational transmission of poverty and reduce structural inequalities. FIGURE 24. SURINAME: MISMATCH IN LABOR SUPPLY AND DEMAND (PERCENT) 60 Labor demand 50 46,5 47,1 43,5 Labor supply 40 30,2 Percent 30 23,3 20 9,4 10 0 Primary or less Secondary Tertiary Source: Labor Demand: 2014 Productivity, Technology and Innovation in the Caribbean Survey (Compete Caribbean 2014). Labor Supply: Suriname 2022 Survey of Living Conditions (IDB 2022). 55 6. OPPORTUNITIES FOR FURTHER POVERTY REDUCTION THROUGH IMPROVED SOCIAL ASSISTANCE Reducing disparities in economic opportunities, complemented by an effective social assistance system, are critical to reduce poverty. As is clear from the previous discussion, inclusive growth is of first-order importance for poverty reduction in Suriname. Achieving such inclusive growth requires improvements in education and skill formation, enhanced economic inclusion of disadvantaged groups, better opportunities for the poor to participate in the modern economy, and reduced gender disparities in labor market outcomes. In addition, well-functioning social assistance is a key priority to address chronic poverty and protect those at risk of falling into poverty due to aggregate shocks such as oil price fluctuations, changing commodity prices, pandemics, and natural disasters. Social assistance became an increasing priority for Suriname as it entered a challenging process of economic readjustment in 2020. Several stringent structural economic reform measures were implemented, including a move to a floating exchange rate and reductions in subsidies on basic needs and services (such as electricity, fuel, basic foods, and health services). To help offset these effects, Suriname implemented specific measures to provide social support for poor and vulnerable households and set ambitious social assistance spending targets. These efforts are ongoing as the government develops, updates, and modernizes its social protection system and initiates new programs. Four unconditional and mostly categorically targeted cash transfer programs form the backbone of Suriname’s social assistance system. The two largest programs are the General Old Age Provision Fund (Algemene Ouderdomsvoorziening, or AOV in Dutch) and the General Child Allowance (Algemene Kinderbijslag - AKB). The other two programs are Financial Support for Poor Households (Financiële Bijstand voor zwakke huishoudens - FBZWHH) and the Financial Support to Persons with Disabilities (Financiële Bijstand voor mensen met een beperking - FBMMEB). Except for the FBZWHH, these programs all follow what are called categorical targeting approaches – that is, they target beneficiaries based on observed demographic characteristics. Suriname’s total social assistance spending on these four programs equaled approximately 1.5 percent of GDP in 2022 (Figure 25). AOV is the most prominent of the four programs. In 2022, it reached approximately 90 percent of Suriname’s population ages 60 and older and provided sizable transfers (value equal to 45 percent of the World Bank’s upper-middle-income poverty line of 2017 PPP US$6.85). Total expenditure on the program equaled about 1.2 percent of GDP (Figure 25). Spending on the other three programs is about an order of magnitude smaller. The AKB also has a high number of beneficiaries (all households with children under the age of 18 are eligible), but in 2022 the value of its transfers equaled only about 5 percent of the international upper-middle-income poverty line. The other two programs provide benefits of a magnitude similar to that of the AOV, but cover only a smaller minority of the population. In 2023, a new program was initiated, the Social Program to Enhance Purchasing Power (Koopkracht Versterking - KKV), a significant but temporary social assistance program providing substantial transfers to the elderly (ages 60+) and workers with a monthly wage lower than SRD6,000 (Box 4). 57 SURINAME POVERTY AND EQUITY ASSESSMENT FIGURE 25. OF SURINAME’S FOUR MAIN PROGRAMS, THE OLD AGE PENSION REPRESENTS THE BULK OF SOCIAL ASSISTANCE EXPENDITURE, 2017–2023 (PERCENT) 2,50 2,00 1,50 1,00 0,50 0,00 2017 2018 2019 2020 2021 2022 2023 Old Age Pension ( AOV) General Child Allowance (AKB) Financial Support for Poor Households (FBZwHH) Financial Support to Persons with Disabilities (FBMMEB) Social Program to Enhance Purchasing Power (KKV) Total Source: Expenditure data for Suriname provided by the Ministry of Social Affairs. Suriname’s expenditure on social assistance is now above average when compared internationally. Comparisons based on the Atlas of Social Protection Indicators of Resilience and Equity (ASPIRE) indicate that public spending on social assistance equaled 1.68 percent of GDP in Latin America and the Caribbean, 1.47 percent of GDP in the Caribbean, and 1.42 percent of GDP globally. By this measure, Suriname’s expenditure on the main programs alone already exceeded the average of all these regions in 2024, while expenditure on social assistance was set to increase more (Tesliuc, Paffhausen, and Avila, 2023). Of Suriname’s four main social assistance programs, the AOV has the biggest impact on poverty. Annex 3 of this report shows a range of simulations to examine the impact of the four main social assistance programs on poverty and explains how these are carried out. According to these simulations, in 2022, the four programs jointly reduced poverty by about 1.5 percentage points (Figure 26). In other words, the poverty rate would have been about 19 percent instead of 17.5 percent without these programs. In line with its expenditure, the AOV is estimated to have the highest impact of the four programs, resulting in a reduction in poverty of about 1 percentage point. The impact of the other programs is modest. 58 FIGURE 26. SURINAME: THE OLD AGE PENSION HAS THE STRONGEST IMPACT ON POVERTY OF ALL SOCIAL PROGRAMS (BASED ON THE WORLD BANK’S 2017 PPP US$6.85 POVERTY LINE (PERCENTAGE POINTS)) 0,00 -0,25 -0,20 -0,27 -0,28 -0,50 Change in poverty rate (Percentage points) -0,75 -1,00 -1,00 -1,25 -1,50 -1,54 -1,75 All four government Old age pension General child Financial support Financial support programs (AOV) allowance (AKB) for poor households for persons with (FBZWHH) disabilities (FBMMEB) Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Each bar shows the difference between the actual poverty rate (2017 PPP US$6.85 poverty line) and the counterfactual poverty rate (in percentage points) if beneficiary households did not receive social assistance programs. PPP: purchasing power parity. Because of the categorical targeting of the main programs, the coverage of Suriname’s social assistance programs is only moderately progressive. As shown in Table 5, about 55 percent of poor households receive benefits under at least one of the main social assistance programs. At the top of the consumption distribution, this share is about 44 percent. In other words, Suriname’s main social assistance programs miss a sizable portion (about 45 percent) of the poor. Clearly, Suriname’s mainly categorically targeted social assistance programs are insufficient to reach all the population in need. Moreover, the average per capita value of transfers received at the bottom of the income distribution (conditional on participating in the programs) is still well below the international upper-middle-income poverty line (which translates to about 2017 PPP US$208 in monthly terms). And there is significant variation in the extent to which the individual programs are progressive. If anything, the targeting of the AOV old age pension, Suriname’s most important permanent social assistance program, is regressive. Its coverage is lower among the poor than among the vulnerable and the middle class. The coverage of the AKB child allowance, in contrast, is markedly more progressive. But the transfers provided through the program are insufficient to make much of a dent in poverty. Enhanced child allowance transfers would be beneficial, as they would simultaneously be pro-poor and help to address some of the challenges underlying poor education outcomes. 59 SURINAME POVERTY AND EQUITY ASSESSMENT BOX 4. SURINAME’S NEW SOCIAL PROGRAM TO ENHANCE PURCHASING POWER Suriname’s new Social Program to Enhance Purchasing Power (Koopkracht Versterking - KKV) may serve as a learning opportunity for the long-term strengthening of Suriname’s social assistance system. The program was rolled out quickly at the start of 2023, and its design has since evolved rapidly. By March 2024, approximately 123,000 applicants were receiving a monthly transfer of SRD1,800 under the program. In the absence of a social registry, a significant program registration effort had to be set up in a short period of time, drawing in part on income statements to determine eligibility. Payments are made through ATM cards that do not require access to a bank account. Although the program is temporary in nature, its end date has been shifting. A thorough assessment of the program is likely to lead to significant lessons for future poverty-targeted social assistance initiatives, related for example to inclusion and exclusion errors and challenges related to payment procedures. Estimating the impacts of the KKV is challenging. One reason is that it was implemented after the 2022 Survey of Living Conditions data collection process was completed, so beneficiaries are not observed in the data. Under the assumption that the program effectively reaches the elderly and the poorest workers in the country, and under the ceteris paribus assumption of no other changes in the economy, the impact could be as strong as reducing poverty by nearly 7 percentage points. However, it is important to keep in mind that this program is temporary and some uncertainties surround its implementation. While a reduction in poverty of 7 percentage points may be substantial, calculations presented in Annex 3 of the main report suggest that the impact of a program of this magnitude could be markedly more substantial. In 2017 PPP U.S. dollars, the value of the transfers provided by the program equal about US$3.32 per day, nearly half (48 percent) of the international upper-middle-income poverty line. If the program were to reach the 123,000 poorest Surinamese (26 percent of them children), it would result in a dramatic reduction in poverty of 13.7 percentage points against the upper-middle- income poverty line. There would be no remaining poverty at more extreme poverty lines. However, because the program provides blanket coverage to the elderly, 58 percent of the beneficiaries of the program are in fact not poor. The latter stymies the impact of the program and translates into a reduced impact on poverty. Suriname’s social assistance system was not designed to cope with shocks. As shown in Table 5, households commonly experience economic shocks. About two-thirds of all households experienced an economic shock in the 12 months before they participated in the 2022 SLC, with negative implications for their purchasing power. And while poor households were affected by economic shocks more often than other groups, exposure to shocks was high among all groups of households, poor or not. Yet, Suriname does not currently have a major permanent social assistance program that protects households from shocks. Development of shock responsive social assistance will become an increasingly important challenge as climate change increases the prevalence of economic shocks. 60 TABLE 5. SURINAME’S MAIN SOCIAL ASSISTANCE PROGRAMS ARE MODERATELY PROGRESSIVE Poor Vulnerable Middle Class and Total   (US$14) Population Social assistance (percent)         Participation: Lives in household with at least one member receiving: Any of the four main programs 55.0% 53.1% 44.2% 49.5% Old age pension (AOV) 26.7% 28.5% 34.0% 30.6% Child allowance (AKB) 31.2% 24.6% 10.9% 19.7% Financial support for poor households 3.2% 0.9% 0.7% 1.2% (FBZWHH) Persons with disabilities benefits (FBMMEB) 9.1% 4.2% 3.0% 4.5% Per capita benefits conditional on household participation (PPP U.S. dollars, monthly) Any of the four main programs 20.31 24.89 38.28 29.24 Old age pension (AOV) 26.77 36.01 45.41 39.18 Child allowance (AKB) 7.08 5.85 5.25 6.04 Financial support for poor households (FB- 9.54 38.43 24.39 21.65 ZWHH) Persons with disabilities benefits (FBMMEB) 16.76 27.29 24.08 22.69 Shocks (percent)  Economic shock 78.1% 70.8% 61.2% 66.5% Health shock 24.2% 19.0% 18.6% 19.4% Conflict shock 1.3% 2.4% 3.2% 2.7% Theft 4.7% 9.0% 8.2% 8.1% Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Moreover, historically disadvantaged groups are not especially well covered by the main social assistance programs. If anything, the coverage of the programs is lower in the interior of the country than in other regions, according to the 2022 SLC (Figure 27, panel A). While about half of the population in the Greater Paramaribo Region and the other coastal areas receive at least one social assistance benefit (even if indirectly through another household member), this share is only about a third in the interior of the country. The average per capita value of transfers received in the interior is comparable to that in other parts of the country (Figure 27, panel B). Indigenous Surinamese appear to participate relatively frequently in the main social protection programs (Figure 27, panel A). However, Surinamese of Maroon background, a large share of whom live in the interior of the country, benefit from the main programs at rates that are among the lowest of all ethnic groups. Moreover, as the General Child Allowance (AKB) is the most common social assistance benefit they receive, the average per capita transfer value of social assistance received by indigenous and Maroon Surinamese is low compared to many other population groups (Figure 27, panel B). 61 SURINAME POVERTY AND EQUITY ASSESSMENT Bigger households are less generously covered by the main social assistance programs, despite the fact that large households are more likely to be poor than smaller households. On average, large households are more likely to benefit from the main social assistance programs. About 44 percent of single-person households benefit from a social assistance program vs. about 64 percent of people in households with 10 persons or more. However, as larger households tend to benefit primarily from the AKB, they need to share transfers over more members, and the number of children for which AKB benefits can be received is capped at four, so the per capita value of social transfers drops rapidly with household size. In one-person households, the value is over 2017 PPP US$100 per month. In households with 10 persons or more the per capita monthly value is only about US$10. FIGURE 27. SURINAME: HISTORICALLY DISADVANTAGED GROUPS ARE NOT ESPECIALLY WELL COVERED BY THE MAIN SOCIAL ASSISTANCE PROGRAMS A. Share of the Population In Households Receiving at Least One Social Assistance Benefit (Percent) 80 60 40 20 0 8 6 9 4 5 2 3 Coastal Hindustani 7 Interior Javanese Other 10 Maroon Mixed Greater Paramaribo 1 Indigenous Creole Region Ethnicity Household size B. Average Per Capita Monthly Social Assistance Receipt (2017 PPP U.S. dollars) 120 100 80 60 40 20 0 Greater Paramaribo Hindustani Javanese Coastal Interior Indigenous Maroon 8 6 9 4 Other Mixed 5 Creole 2 3 7 10 1 Region Ethnicity Household size Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Panel B is average for individuals in households with at least one member enrolled in one of the four main government programs. PPP: purchasing power parity. Note: Figure A shows the percentage of population living in households with at least one member enrolled in a social assistance program. Figure B shows the average monthly per capita social assistance receipt for individuals living in households with at least one member enrolled in any government program. 62 7. REFLECTIONS ON THE IMPLICATIONS OF THE EXPECTED OIL AND GAS BOOM FOR POVERTY AND INEQUALITY 63 SURINAME POVERTY AND EQUITY ASSESSMENT Suriname has high expectations of the potential of the impending oil and gas boom to improve overall living standards and reduce poverty. Indeed, taken at face value the prospects are enticing. At the time of this writing, TotalEnergies was expected to sanction off the first oil project in what is known as Block 58 at the end of 2024. If this timeline is met, the first oil revenues could materialize as early as 2028. The royalties of this project alone are expected to amount to US$200 million on an annual basis (about 6 percent of current GDP). And indeed, this is only one of multiple potentially viable offshore oil projects off the coast of Suriname. Macro-economic growth projections provide insight into how strong the potential impact of the oil and gas boom on poverty might be. Figure 28 takes the economic growth projections of the IMF in its latest review of the EFF (IMF 2024) as a starting point. These projections, which the IMF emphasizes are “subject to a lot of uncertainty”, suggest that annual growth in GDP per capita could jump to over 20 percent in the years from 2028 to 2030 after which it will gradually taper off. Simulations in Figure 28 illustrates that this growth could in theory contribute to rapid poverty reduction. These simulations are based on two strong assumptions. First, the so-called passthrough rate from GDP growth to poverty is 0.7 (i.e. every percentage point of GDP growth translates into a 0.7 percentage point increase in household consumption). Second, the impact of economic growth is distribution neutral (i.e. growth in consumption is identical in the bottom and top of the consumption distribution). Under these assumptions, poverty measured against the World Bank’s US$6.85 poverty line would drop to below 3 percent ten years from now. FIGURE 28. SURINAME: THE OIL AND GAS BOOM COULD IN THEORY HAVE A PRONOUNCED IM- PACT ON POVERTY RATES (IN PERCENT, BASED ON THE WORLD BANK’S US$6.85 POVERTY LINE) 20 17,5 18 16 14 12 10 8 6 4 2,5 2 0 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Yet, poverty and inequality reduction as a result of future oil revenues should not be taken as a given. First, there is still uncertainty about the broader viability of Suriname’s offshore oil and gas fields. Final investment decisions have been postponed by the major firms exploring oil and gas in Suriname’s offshore oil fields for years. A reason for this is the technical difficulty and hence comparatively high cost of offshore oil exploitation in Suriname’s part of the Guyana basin, making the oil fields viable only against relatively high expected future oil prices. Downward pressure on oil prices when the world gradually moves away from hydrocarbons could further reduce the attractiveness of Suriname’s oil fields. 64 But even if Suriname’s offshore oil and gas exploitation comes on stream at scale, economic growth might not be pro-poor. The direct impact of the development of the oil and gas sector on job opportunities may be limited. As discussed in Section 4, mining and oil already represent close to 30 percent of GDP and 90 percent of Suriname’s exports. But they employ only a small minority of the population. And the ratio of revenue to the share of workers may become more skewed. The reason is that the offshore oil and gas industry is especially capital- and knowledge-intensive and demands mainly high skilled workers. Considering the skill shortages discussed throughout this report, much of the expertise required to operate offshore oil projects may have to be imported from abroad. Likewise, the opportunity for local content policies to create high-quality job opportunities through backward and forward linkages between the petroleum industry and other sectors (notably manufacturing of heavy equipment and legal and financial services) may be hampered by skill shortages. Spin off in other sectors (transport, hospitality, and food services) may have relatively low value added. Moreover, it is not yet clear if the refinement process will take place in Suriname or if the crude oil will be shipped to a foreign refinery. The expected spin off will be lower if the refinement will not take place in Suriname. Dutch disease could have further implications for job opportunities and purchasing power. Natural resource discoveries have in many countries been documented to make other exporting segments of the domestic economy less competitive due to an increase in the real exchange rate following the inflow of foreign currency (Ebramhimzadeh 2023). Importantly, in the case of Suriname, this means that a sector intensive in capital and foreign knowledge displaces other exporting sectors that may be more intensive in local labor. Indeed, experience from around the world and numerous studies highlight the risk of poor economic growth after the discovery of natural resources (often referred to as a “resource curse”). Then there is the question of how the influx of oil wealth will be managed by a fragile democracy. Risks are numerous. Underdeveloped auditing bodies and rudimentary public financial management systems contribute to vulnerability in the stewardship of public finances. As described in a recent World Bank study, “Converting oil revenues into assets that support sustainable and equitable growth will require public spending and investment without overwhelming the absorption capacity of the domestic economy, prudent fiscal policy, and the saving of some of the resource wealth in foreign financial assets” (World Bank 2023c, p. 8) Significant and rapid improvements in governance and institutions in Suriname are required to address these vulnerabilities. Finally, dependence on oil could potentially expose Suriname to significant economic shocks. Commodity price shocks have in the past had significant implications for Suriname’s macroeconomic development. In fact, the 2020 economic crisis was the result of a longer-term buildup of macroeconomic imbalances partly driven by declining commodity prices. And dependence on oil too could go hand-in-hand with significant volatility. Indeed, after major oil discoveries other countries have struggled with the challenges outlined in this section. Ghana is a case in point. Its GDP growth peaked with the start of commercial oil production in 2011. However, subsequent GDP growth was below expectation and more volatile, and poverty reduction was disappointing (World Bank 2021). Guyana is a few years ahead of Suriname in its scale up of oil production. While lack of recent data on poverty and equity inhibits an assessment of poverty reduction in Guyana, for a large part of the population primary sectors of agriculture, forestry, and fishing remain important for income generation (World Bank 2024a). 65 SURINAME POVERTY AND EQUITY ASSESSMENT 8. POLICY RECOMMENDATIONS 66 • Maintain the commitment to macro-fiscal stability and preparation for the absorption for potential oil revenues as a first priority. Now that its economy shows signs of recovery, Suriname will have to maintain its commitment to sound macro-fiscal principles to reduce volatility and return to a longer- term path of economic growth. Moreover, Suriname will have to prepare rapidly for the potential for substantial revenues from offshore oil exploitation. This preparation will need to include measures related to the management of oil revenues (related to sovereign wealth management and fiscal rules), with the aim to convert them into assets and investments that support equitable and sustainable economic growth. For private sector enterprises to benefit, it is critical to address the backlog in adopting crucial legislation, the high cost of doing business, the dominance of state-owned enterprises, and the lack of access to finance. A sense of political urgency is needed. Suriname faces significant challenges in governance and institutions that affect government capacity, effectiveness, and accountability. Addressing these weaknesses ahead of the oil windfall is paramount.14 A commitment to sound macro-fiscal principles implies that fiscal space for short-term reforms is limited. At the time of this writing, the government of Suriname is aiming for a primary surplus equal to 2.7 percent of GDP.15 Achieving this surplus requires continued efforts to increase revenue while curbing expenditure. Key measures being implemented to increase revenue include efforts to expedite implementation of an expanded value-added tax and reforms to newly introduced fuel taxes. Measures to curb expenditure include keeping the wage bill constant by raising real public sector wages while stopping pay to unregistered civil servants and continuing to phase out energy subsidies. As a result of this commitment to a primary surplus, the fiscal space for reforms in other sectors is limited in the short term. In the medium term, economic growth and revenues from offshore oil exploration are expected to improve Suriname’s fiscal position. The royalties of the first project expected to be sanctioned off at the end of 2024 alone are expected to equal about a fifth of Suriname’s 2023 government revenue on an annual basis. Hence, opportunities for more ambitious reforms may materialize in the medium term. With this in mind, this section reflects on policy priorities, separating comparatively low-cost, short-term policy options for the next two years from longer-term, more fundamental reforms and programs. • Make education and skill development a high priority. Education and skill development are integral to addressing poverty and inequality in Suriname. The country’s education system does not appear to provide good value for money. Although Suriname’s expenditure on education is not out of line with that of other countries, its education outcomes compare poorly. Moreover, the poor and historically marginalized groups have significantly worse education outcomes. Poor education and low skills are associated with substantially worse labor market outcomes. On the other side of that equation, skill shortages are listed by enterprises as an important barrier to their operations. Moreover, an urgent focus on skill development is key for Suriname’s population to build on the economic opportunities that newfound oil wealth may offer. Improvements in educational outcomes start with foundational, primary, and secondary education, 14 See World Bank (2023c) for a detailed discussion of these governance and institutional challenges. 15 This paragraph is based on the fifth review of the IMF’s Extended Fund Facility (IMF 2024). 67 SURINAME POVERTY AND EQUITY ASSESSMENT and should include interventions to address obstacles at the governance level. While this Poverty and Equity Assessment was not designed specifically to provide policy recommendations related to education, based on prior analytics, detailed dialogue with stakeholders in country, and lessons from other countries, Table 6 provides a few suggestions for Suriname’s education policy. TABLE 6. FOUNDATIONAL EDUCATION POLICY RECOMMENDATIONS FOR SURINAME Short Term Medium Term Education system management: Carry out Establish an Education Management Information consultations to garner recommendations to improve System to consolidate school-level data, including but the management of schools and enhance the existing not limited to enrollment, attendance, completion education strategy. rates, and academic performance. School dropout: Carry out a dedicated study to bet- Implement an early warning system and other ter understand the core drivers of early school dropout interventions to identify and address school dropout issues and under-performance of boys in school. issues.1 Teachers: Develop a teacher mapping and account- Develop a National Teacher Policy to promote the effi- ing system to elucidate the number of teachers, where cient and equitable deployment of qualified teachers they work, etc. across the country, including (i) selection and certi- fication of teachers, and (ii) incentive structures to encourage deployment in hard-to-reach areas (OECD 2006, Chapter 2). Disabilities: Commit to considering the needs of stu- Develop and revise a School Facilities Policy that dents with physical and intellectual disabilities and considers the needs of students with disabilities and include mitigating measures in school construction/ includes key standards for inclusion in school rehabili- rehabilitation activities. tation/ construction activities.2 Tertiary education: Identify the supply- and Review the tertiary education curriculum, with a focus demand-side barriers that limit people from starting on ensuring the inclusion of skills required by employ- and completing tertiary education. ers. 1 With an early warning system pilot program in Guatemala, the dropout rate in transition from primary to secondary school was reduced by 4 percent among schools assigned to the program, and by 9 percent among program compliers (Haimovich, Vazquez and Adelman, 2021). See also Alegría, Avitable, and Chumpitaz Torres (2023). 2 See suggestions for disability considerations in school infrastructure in World Bank (forthcoming). • In addition to strengthening foundational skills, support vocational training and broader active labor market policies. Vocational training is critical to address some of the observed skill shortages in the short term, including those related to ICT skills (identified as a contributor to multidimensional poverty and an impediment to labor market outcomes in this Poverty and Equity Assessment and its compendia). There is a need for an overarching focus on national vocational training policies that govern the sector to ensure that they promote efficient governance, clarify the mandates of involved entities, install coordination mechanisms, promote engagement with the private sector, outline standards and certification, include a sustainable financing structure for the sector, promote the use of modern technology, and promote gender balance. Table 7 outlines more detailed priorities to improve vocational training. This focus on vocational training can be complemented with a broader 68 agenda of active labor market policies to support job seekers and employers through employment services such as job search support, job counseling, job placement, and recruitment and selection. TABLE 7. POLICY PRIORITIES FOR VOCATIONAL TRAINING IN SURINAME Short Term Medium Term Establish a Technical and Vocational Education and Training (TVET) Management Information System (MIS) and a digital platform linked to the MIS to provide information on training opportunities and Monitoring: Implement a registry and monitoring policy dialogue and communication campaigns to system to track attendance, graduation, and labor promote a favorable view of TVET and its importance market outcomes throughout the training process. in promulgating relevant skills (World Bank 2023b).   Build on monitoring and evaluation systems to assess the effectiveness of each training program measured by indicators of employability, and make necessary adjustments. Enhance targeting mechanisms to boost participation Entry barriers: Reduce entry barriers to training such in training programs among groups that stand to ben- as opportunity costs (e.g., loss of wages), financial efit the most, including women not in the workforce constraints for course fees and materials, transporta- and Maroon and indigenous populations (World Bank tion expenses, childcare, and domestic obligations. 2023b). Analyze barriers to higher educational attainment Link training with demand: Generate a system in and review tertiary education curricula and appren- which potential employers and training institutions ticeship opportunities to benefit both employers and collaborate to increase productive employment. job seekers. • Put a special focus on the interior of the country and historically marginalized groups in order to support efforts to address skill shortages and enhance employability. Those living in the interior of the country, indigenous peoples, and the Maroon have markedly lower educational attainment, are less likely to participate in the labor force, and face higher rates of unemployment compared to non-indigenous and non-Maroon groups. Moreover, when they are employed, they have lower access to social security and lower wages. Altering this situation and improving alternative livelihood opportunities in the interior is intrinsically important, and it can also be part of a strategy to limit deforestation. Artisanal gold mining is currently a key source of income in the interior, with often devastating effects for Suriname’s pristine forests and the broader environment. Offering alternative routes to income generation, ideally linked with forest conservation, could help offset this trend. • Make a deliberate effort to address poor labor market outcomes of women. Considering the comparatively strong education performance of women, Suriname’s poor labor market outcomes are a missed opportunity to address skill shortages, economic growth, and poverty reduction. The World Bank’s flagship Women, Business, and the Law 2024 publication 69 SURINAME POVERTY AND EQUITY ASSESSMENT highlights Suriname’s strong performance on laws related to women’s decisions to work and women’s property and inheritance. On these outcomes, Suriname gets a perfect score (World Bank 2024b). However, there are also domains where there is room for enhanced legal equality between women and men. Table 8 shows these domains as short-term priorities and also discusses family-friendly policies and affordable alternative care services as a medium-term priority. However, it should be noted that in addition to these practical changes, a broader shift in gender norms may be needed to achieve substantial progress towards gender equality in (economic) outcomes. Table 8 provides some reflections on this. TABLE 8. POLICY PRIORITIES TO ENHANCE GENDER EQUALITY AND WOMEN’S LABOR MARKET OUTCOMES IN SURINAME Short Term Medium Term Adopt family-friendly policies and enhance access to affordable care services to support the transition from school to work, especially for females (ILO 2018). Female labor force participation: Enhance laws Prioritize efforts that address the multiple and affecting women’s decisions to work, laws affecting complex constraints (including social norms) that women’s pay, constraints related to marriage, laws af- contribute to child marriage and teenage pregnancy. fecting women’s work after having children, and con- Although beyond the remit of this assessment, there straints on women starting and running a business. is evidence that gender-based violence stifles wom- en’s participation in society and productive activities and requires urgent short and medium-term action (Joseph, Pemberton, and Phillip 2019). • Improve Suriname’s social assistance system, which could have a direct and tangible impact on poverty and inequality. The analysis presented in this Poverty and Equity Assessment shows that Suriname’s main social assistance programs currently do not effectively reach all the poor or the groups that have been historically marginalized. One notable group is households with children. Poverty rates in these households tend to be markedly higher than in households without children. Although Suriname’s General Child Allowance Program (AKB) has extensive coverage, it does not universally cover all households with children and its benefits are insufficient to address child poverty. Altering this situation is critical because child poverty has been documented in many contexts to have a detrimental impact on human capital outcomes that are so central to poverty in Suriname. Similarly, the currently programs do not appear to adequately reach the interior of the country and certain ethnic groups. • Improve the delivery systems of Suriname’s social assistance programs and linkages between these programs in order to help reduce poverty. An assessment of the aspects of program delivery that affect coverage in the interior and of disadvantaged groups is a priority. Investing in these improvements is also important preparation for possible future oil revenues, which are likely to result in a need for significant, efficient, and effective wealth transfers. Table 9 provides more detail on each of these aspects. To avoid exclusion of poor 70 households, it is worth examining the development of a permanent means-targeted program. The assessment will have to build on the lessons learned (in terms of both successes and limitations) during the roll-out of the temporary Social Program to Enhance Purchasing Power (KKV). The advantage of reduced exclusion errors will have to be weighed against several downsides, such as the cost and complexity of administering a means-targeted program. TABLE 9. POLICY RECOMMENDATIONS TO IMPROVE SURINAME’S SOCIAL ASSISTANCE SYSTEM Short Term Medium Term Delivery: Develop and implement an adequate and Modernize social protection delivery systems, with predictable approach to determine transfer amounts a focus on inclusion of vulnerable groups and the of individual programs and correct for inflation. interior. Rules: Begin formulating and drafting operational Define and enforce exit procedures. rules and procedures for all social protection programs. Integrate the monitoring and evaluation (M&E) Linkages: Identify linkages between social protection systems of all programs into one central system to measures and complementary interventions to sup- monitor and coordinate the targeting of all programs. port households suffering multiple deprivations.   Building on the integrated M&E system, create a social registry. Coverage and adequacy: Assess the coverage of social support to households with children in order to Update the social protection policy framework and reduce child poverty and poverty among vulnerable draw on the social registry to complement current groups. Consider a substantial increase in transfer programs targeted to key vulnerable groups. amounts provided through the Child Allowance Program (AKB). Sustainability: Provide clarity on the envisioned evolution of the Social Program to Enhance Purchas- Assess the sustainability of the General Old Age Provi- ing Power (KKV) to avoid both risks associated with sion Fund (AOV) under an aging population profile. continuing and discontinuing the program. • Support efforts to enhance data and evidence, which are key to inform efforts to address poverty and inequality Timely statistics are especially relevant during times of rapid change. Suriname’s General Bureau of Statistics continues to perform admirably, despite significant financial challenges. Nonetheless, Suriname faces significant limitations in the regular production of survey data, administrative data, and social statistics, among other efforts (World Bank 2023c). These data gaps hamper the design of targeted policies to reach the poorest and address the factors underlying poverty. The World Bank recently implemented an assessment of Suriname’s statistical system and developed an action plan to improve it (World Bank 2023d). Table 10 summarizes key findings of this action plan. Beyond addressing these data limitations, Suriname would benefit from further detailed reviews of public expenditure and human capital, among other areas, to inform policy. Moreover, while the aim of this assessment is to provide a comprehensive report on poverty in Suriname, there are other areas of analysis that could provide further insight, such as the impact of climate change and the fiscal system on poverty and inequality. 71 SURINAME POVERTY AND EQUITY ASSESSMENT TABLE 10. POLICY RECOMMENDATIONS TO IMPROVE DATA AVAILABILITY IN SURINAME’S STATISTICAL SYSTEM Short Term Medium Term Develop a quality framework for data production Data quality: Adopt best practices related to data and dissemination. Pilot new approaches to enhance documentation, data anonymization, and sampling survey reliability. Adopt the Data Documentation frameworks. Promote the use of administrative data. Initiative standard and a microdata documentation plan, and develop a National Data Archive catalogue. National accounts: Test approaches to compile Consider approaches to improve the system of Na- quarterly GDP figures, at least through the production tional Accounts, including a new base year. approach. Institutional development: Develop a strategic Develop regulations linked to the 2002 Statistical Act. plan and implement an organizational assessment of Set up sectoral statistical committees, including on the General Bureau of Statistics (GBS). vital statistics and environmental statistics. Develop a new GBS webpage with interactive and Technical improvement: Equip the GBS with a dedi- automatically generated reports and invest in more cated information technology team. complex information technology systems that are able to handle additional and more complex operations • Make long-term institutional arrangements governing the production of poverty statistics to support a continued focus on poverty and inequality in policy. During implementation of the macroeconomic recovery plan in 2021, Suriname’s Ministry of Labor, Employment Opportunity and Youth Affairs re-installed the National Poverty Committee with the aim to measure and study poverty. The committee developed the monetary and multidimensional poverty measures discussed in this assessment (Sobhie and Kisoensingh 2023). The monetary poverty line developed by the committee is also used in policy dialogue, for instance in relation to determining the minimum wage. The approach shows that a committee dedicated to poverty measurement and diagnostics can play a significant role in the development of poverty alleviation policies. Hence, formalization and institutionalization of an authority tasked with assessment and monitoring of poverty and inequality following the best practices of other countries in the region is recommended. 72 9. REFERENCES 73 SURINAME POVERTY AND EQUITY ASSESSMENT Alegría, Camila, Ciro Avitable, and Annie Chumpitaz Torres. 2023. Early Warning Systems Can Help Prevent Dropouts, but Administrators Need to Consider Critical Aspects to Increase Effectiveness. World Bank Blog (May 24). Available at https://blogs.worldbank.org/en/education/early-warning-systems- can-help-prevent-dropouts-administrators-need-consider-critical#:~:text=In%20response%2C%20 many%20Latin%20American,school%20to%20prevent%20this%20outcome Ali, Kashif, and Satirenjit Kaur Johl. 2022. Entrepreneurial Competencies Needed to Improve Innovation Performance in Industry 4.0: An Artificial Neural Network Approach. In Entrepreneurial Innovations, Models, and Implementation Strategies for Industry 4.0, edited By Ravindra Sharma, Geeta Rana, and Shivani Agarwal. Routledge: 1–19. Compete Caribbean. 2014. Productivity, Technology, and Innovation Survey. Available at: https://www. competecaribbean.org/proteqin-ifpg-datasets/ Compete Caribbean. 2020. Innovation, Firm Performance and Gender Survey. Available at: https:// www.competecaribbean.org/proteqin-ifpg-datasets/ Ebramhimzadeh, Christine. 2023. Dutch Disease: Wealth Managed Unwisely. Finance & Development 40(1). Available at https://www.imf.org/en/Publications/fandd/issues/Series/Back-to-Basics/ Dutch-Disease Francis, D.C, N. Karalashvili, H. Maemir, and J. Rodriguez Meza. 2020. Measuring Total Factor Productivity Using the Enterprise Surveys: A Methodological Note. Policy Research Working Paper No. 9491. World Bank, Washington, DC. Garavito, Arteaga, Diether Beuermann, and Jeetendra Khadan. 2021. The Consequences of COVID-19 on Livelihoods in Suriname: Evidence from a Telephone Survey. Caribbean Group Country Department Technical Note No. 2147. Inter-American Development Bank, Washington, DC. Available at https:// publications.iadb.org/en/consequences-covid-19-livelihoods-suriname-evidence-telephone-survey General Bureau of Statistics. 2018. Statistical Papers - 18. Republic of Suriname. Available at https:// statistics-suriname.org/wp-content/uploads/2020/06/STATISTICAL-PAPERS-18v1.pdf. Haimovich, Francisco, Emmanuel Vazquez and Melissa Adelman. 2021. Scalable Early Warning Systems for School Dropout Prevention Evidence from a 4.000-School Randomized Controlled Trial. Policy Research Working Paper No. 9685. World Bank, Washington, DC. Available at https://openknowledge. worldbank.org/server/api/core/bitstreams/880226ca-0894-58ae-9b00-c08fc0aa3e37/content Inter-American Development Bank (IDB). 2022. 2022 Suriname Survey of Living Conditions. IDB, Washington, DC. Available at https://mydata.iadb.org/Social-Protection/2022-Suriname-Survey-of- Living-Conditions/prbn-x74x/about_data International Labour Organization (ILO). 2018. Addressing Care for Inclusive Labour Markets and Gender Equality. Issue Brief No. 3. ILO, Geneva. Available at https://www.ilo.org/wcmsp5/groups/ public/---dgreports/---cabinet/documents/publication/wcms_618165.pdf 74 International Monetary Fund (IMF). 2021. Request for an Extended Arrangement under the Extended Fund Facility—Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Suriname. IMF Country Report No. 21/280. IMF, Washington, DC. Available at https://gov.sr/ wp-content/uploads/2023/12/1surea2021001.pdf International Monetary Fund (IMF). 2024. Suriname: Fifth Review under the Extended Arrangement under the Extended Fund Facility. IMF Country Report No. 2024/097. Available at https://www.imf.org/ en/Publications/CR/Issues/2024/04/25/Suriname-Fifth-Review-Under-the-Extended-Arrangement- Under-the-Extended-Fund-Facility-548310 Jolliffe, Dean, Daniel Gerszon Mahler, Christoph Lakner, Aziz Atamanov, and Samuel Kofi Tetteh-Baah. 222. Assessing the Impact of the 2017 PPPs on the International Poverty Line and Global Poverty. Policy Research Working Paper No. 9941. World Bank, Washington, DC. Available at https://documents1. worldbank.org/curated/en/353811645450974574/pdf/Assessing-the-Impact-of-the-2017-PPPs-on- the-International-Poverty-Line-and-Global-Poverty.pdf Joseph, Joel, Cecile, and Philippe Pemberton, and Ursan Phillip. 2019. National Women’s Health Survey for Suriname. Inter-American Development Bank, Washington, DC. Available at https://publications. iadb.org/en/national-womens-health-survey-suriname Montenegro, C.E., and H.A. Patrinos.  2023. A Data Set of Comparable Estimates of the Private Rate of Return to Schooling in the World, 1970–2014. International Journal of Manpower 44(6) 1248–268.  Organization for Economic Cooperation and Development (OECD). 2006. Teachers Matter: Attracting, Developing and Retaining Effective Teachers. Paris: OECD Publishing. Available at https://read.oecd- ilibrary.org/education/teachers-matter-attracting-developing-and-retaining-effective-teachers/why- is-teacher-policy-important_9789264018044-3-en#page1 Paes de Barros, Ricardo, José R. Molinas, Jaime Saavedra, and Marcelo Giugale, with Louise J. Cord, Carola Pessino, and Amer Hasan. 2008. Do Our Children Have A Chance? The 2010 Human Opportunity Report for Latin America and the Caribbean. Washington, DC: World Bank. Available at https://documents.worldbank. org/en/publication/documents-reports/documentdetail/992421468299148824/main-report Republic of Suriname. 2021a. Herstelplan 2020-2022. Ministry of Finance and Planning. Available at https://gov.sr/wp-content/uploads/2023/12/herstelplan-2020-2022-versie-10-mei-2021.pdf Republic of Suriname. 2021b. Financieel Jaarplan 2022. Available at https://gov.sr/wp-content/ uploads/2023/12/financieel-jaarplan-2022.pdf Republic of Suriname. 2021c. Financieel Jaarplan 2022. Multi-Annual Development Plan 2022-2026. Available at MOP-2022-2026-Volledig-FINAL-DNA-approved-Engels.pdf (cepal.org) Sobhie, Rosita, and Anjali Kisoensingh. 2023. Methoden en technieken ter vaststelling en bestrijding van armoede in Suriname Multidisciplinaire Weregroep Armoedegendsbepaling 2020-2023. Ministerie van Arbeid Werkgelegenheid & Jeugdzaken. Available at https://gov.sr/wp-content/uploads/2023/05/ STATISTIEK-ARMOEDE-FINAL-DRUK-230423.pdf 75 SURINAME POVERTY AND EQUITY ASSESSMENT Tesliuc, Paffhausen, and Avila. 2023. Caribbean Social Protection Reponses to Surging Inflation. World Bank, Washington, DC. Available at https://documents1.worldbank.org/curated/ en/099011524164041723/pdf/P1805881cbe55c0fd1a8d71ea4bf565a31f.pdf United Nations Children’s Fund (UNICEF). 2019. Suriname Education Fact Sheets 2019: Analyses for Learning and Equity Using MICS Data. Education Analysis for Global Learning and Equity Initiative. UNICEF, Paramaribo. Available at https://data.unicef.org/resources/suriname-education-fact- sheets-2019/ United Nations Department of Economic and Social Affairs (UN DESA). 2022. World Population Prospects 2022. DESA Population Division. United Nations, New York. Available at https://population. un.org/wpp/ United Nations Educational, Scientific and Cultural Organization (UNESCO). 2020. Global Education Monitoring Report 2020, Latin America and the Caribbean; Inclusion and Education: All Means All. Paris: UNESCO. Available at https://unesdoc. unesco.org/ark:/48223/pf0000374614 United Nations Population Fund (UNFPA). 2022. Socio-Economic Impact of Adolescent Pregnancy and Early Motherhood in Suriname. UNFPA, Paramaribo. Available at https://suriname.un.org/sites/ default/files/2023-09/Socio-Economic%20Impact%20of%20adolescent%20pregnancy%20 and%20early%20motherhood%20in%20Suriname.pdf World Bank. 2021. Ghana Country Economic Memorandum : Ghana Rising - Accelerating Economic Transformation and Creating Jobs (English). Ghana Country Economic Memorandum Washington, D.C. : World Bank Group. Available at https://documents.worldbank.org/en/publication/documents- reports/documentdetail/178001636617909989/ghana-country-economic-memorandum-ghana- rising-accelerating-economic-transformation-and-creating-jobs World Bank. 2023a. From Infection to Inflation: Global Crises Hit Hard Poor and Vulnerable Households in Latin America and the Caribbean. LAC Team for Statistical Development: Regional Poverty and Inequality Update Poverty & Equity Global Practice. World Bank, Washington, DC. Available at https://documents1.worldbank.org/curated/en/099051023085511851/pdf/ P1775290e5f78f0e60b2860466e45a038ad.pdf World Bank. 2023b. Building Better Formal TVET Systems Principles and Practice in Low- and Middle- income Countries. World Bank, Washington, DC. Available at https://documents1.worldbank.org/ curated/en/099071123130516870/pdf/P175566137a5e20651a657168b5152205bf.pdf World Bank. 2023c. Suriname: Systemic Country Diagnostic. World Bank, Washington, DC. Available at https://documents1.worldbank.org/curated/en/099062923162588381/pdf/ BOSIB1913074e817f3914e6f18d7313e018d2993a1.pdf World Bank. 2023d. Improving the Productivity of National Offices for Statistics: Suriname Case Study. World Bank, Washington, DC. Available at https://documents1.worldbank.org/curated/ en/099712002052433660/pdf/IDU139dfe36d1cf7e142901b045118374f710b56.pdf 76 World Bank, 2024a. Macro-Poverty Outlook for Guyana. World Bank, Washington, DC. Available at https://www.worldbank.org/en/publication/macro-poverty-outlook/mpo_lac World Bank. 2024b. Women Business and the Law 2024: Suriname. World Bank, Washington, DC. Available at https://wbl.worldbank.org/content/dam/documents/wbl/2024/snapshots/Suriname.pdf World Bank. Forthcoming. Gender and Disability Considerations in School Infrastructure: Cases and Entry Points. World Bank, Washington, DC. World Bank. Undated. Facilitating the School to Work Transition of Young Women. LCR Regional Gender Coordination in the Poverty and Equity Global Practice. World Bank, Washington, DC. Available at https://documents1.worldbank.org/curated/en/354491642741732903/pdf/Facilitating-the-School- to-Work-Transition-of-Young-Women.pdf 77 ANNEX 1. SURINAME: POVERTY AND EQUITY DIAGNOSTIC SURINAME POVERTY AND EQUITY ASSESSMENT CONTENTS Key Findings 84 1. Introduction 85 2. Headline 2022 Poverty and Inequality Statistics for Suriname 89 2.1. Poverty, Inequality, and Prosperity 90 2.2. International Comparisons 91 2.3. Multidimensional Poverty 92 3. Poverty Profile 94 3.1. Where Do the Poor Live? 95 3.2. Sociodemographic Characteristics of the Poor 96 3.3. Consumption Expenditure of the Poor 100 3.4. Food Security 101 4. Income-generating Assets 103 4.1. Education 104 4.2. Employment 105 4.3. Own Production 107 4.4. Ownership of Physical Assets 107 4.5. Access to Services 108 5. Evolution of Poverty 110 5.1. Macroeconomic Background 111 5.2. Poverty Trends 112 APPENDICES 116 Appendix A1.1. The Suriname Survey of Living Conditions 117 Appendix A1.2. Consumption Aggregates 117 80 Appendix A1.3. Poverty Lines 118 Appendix A1.4. Multidimensional Poverty 120 Appendix A1.5. Comparison of Reported Income and Consumption 122 Appendix A1.6. Results Based on Panel Data 123 Appendix A1.7. Additional Poverty Profile Tables 125 References 131 BOX Box A1.1. A Note on Estimating Poverty in Suriname 86 FIGURES Figure A1.1. About 17.5 Percent of the Population Lives Below Suriname’s National Poverty Line 90 Figure A1.2. Comparison of Poverty with Other Countries: Suriname’s Poverty Rate Is Not Out of Line with Its Level of GDP Per Capita (Percent) 91 Figure A1.3. Inequality and Prosperity Indicators in Suriname Are Comparable to Those of Countries with Similar Levels of GDP Per Capita 92 Figure A1.4. About 46 percent Surinamese Are Multidimensionally Poor (Percent) 93 Figure A1.5. Suriname: Illness, Low Education, Limited ICT Skills, and Lack of Medical Insurance Are Important Determinants of Multidimensional Poverty 93 Figure A1.6. Suriname: Poverty Rates Are Higher in the Interior of the Country (Percent)   95 Figure A1.7. Suriname: The Interior Is Home to a Disproportionate Share of the Poor (Percent) 06 Figure A1.8. Poverty Is Highest among Surinamese of Maroon, Indigenous, and Hindu Ethnicity (Percent) 97 Figure A1.9. Suriname: A Clear Correlation between Poverty and the Level of Education of the Household Head (Percent) 97 Figure A1.10. Suriname: Poverty Rates Are Higher in Larger Households (Percent) 98 81 SURINAME POVERTY AND EQUITY ASSESSMENT Figure A1.11. Suriname: Poverty Rates Are Higher in Households with Children (Percent) 99 Figure A1.12. Suriname: Poverty Rates of Women and Men Overlap in Most Age Ranges (Percent) 99 Figure A1.13. Suriname: Expenditure Type as Percent of Total Expenditure 100 Figure A1.14. Suriname: Expenditure Type as a Percent of Non-food Expenditure Based on the Classification of Individual Consumption According to Purpose (COICOP) Groups 101 Figure A1.15. Suriname: Food Insecurity Is More Common in the Interior (Percent) 102 Figure A1.16. Suriname: The Poor Have Less Education 104 Figure A1.17. Suriname: The Poor Are Less Likely to Be in the Labor Force and More Likely to Be Unemployed (Percent) 105 Figure A1.18. Suriname’s Informality Rate: Work in the Informal Sector Is Especially Common in the Poorest Households (Percent) 106 Figure A1.19. Suriname: Weekly Working Hours Are Somewhat Lower in the Bottom Decile (Weekly hours worked) 106 Figure A1.20. Suriname: Share of Consumption Derived from Own Production Is Higher in the Interior (Percent) 107 Figure A1.21. Suriname: Share of Population that Owns a Car or Their Dwelling, b y Consumption Decile (Percent) 108 Figure A1.22. Suriname: Share of Population with Private Health Insurance, Bank Account, or Internet Access, by Consumption Decile (Percent) 108 Figure A1.23. Suriname Has Continued to Experience a Macroeconomic Slump since 2016 111 Figure A1.24. Suriname: Inflation Has Recently Been High, Especially for Food and Non-alcoholic Beverages, Housing, and Transportation (Annual percentage) 112 Figure A1.25. Suriname: A Longer-term, Downward Trend in Multidimensional Poverty (Percent) 113 Figure A1.26. Suriname: A Mixed Picture of Changes in Poverty 2016 and 2022 (Percent) 114 Figure A1.27. Apparent Underreporting of Income Data in the 2022 Suriname Survey of Living Conditions 123 Figure A1.28. Suriname: Trends in the Panel Data Mimic Those in the Overall Sample (Percent) 125 82 TABLES Table A1.1. Poverty Lines Expressed in Daily 2017 Purchasing Power Parity 2017 U.S. Dollars 119 Table A1.2. Multidimensional Poverty Index Indicators Available by Survey 120 Table A1.3. Description of Multidimensional Poverty Index Indicators 121 Table A1.4. Characteristics of Panel Households Differ from Those of the Average Household 124 Table A1.5. Poverty Profile: Sociodemographic Characteristics (Percent) 125 Table A1.6. Poverty Profile: Household Composition (Percent) 126 Table A1.7. Poverty Profile: Education (Percent) 127 Table A1.8. Poverty Profile: Labor Market Characteristics (Percent) 128 Table A1.9. Poverty Profile: Housing Characteristics and Physical Assets (Percent) 129 Table A1.10. Poverty Profile: Access to Markets (Percent) 130 83 SURINAME POVERTY AND EQUITY ASSESSMENT KEY FINDINGS • About 17.5 percent of Suriname’s population could be classified as poor in 2022, meaning that their consumption was below the national poverty line and the World Bank’s upper-middle-income poverty line. • About 46 percent of Surinamese could be classified as multidimensionally poor. Significant contributors to multidimensional poverty include chronic illness, disability, lack of health insurance, low levels of education, and limited information and communications technology skills. • The poverty rate is higher in the interior of Suriname than in the rest of the country. Poverty rates differ by ethnicity and are higher in households headed by a single parent, households with a less- educated head, and large households. • A large share of the consumption of the poor goes to food and non-alcoholic beverages, housing, and transport. Accordingly, while food insecurity is common throughout the population, it is especially pressing in poorer households. • Poorer households are deprived in terms of a broad array of income-generating assets. Heads of poor households generally have less education. Adults in poor households are less likely to be employed and more likely to work in the informal sector. Poor households have less access to physical assets and essential services, such as bank accounts, insurance, and the Internet. • Tracking trends in poverty and wellbeing over time is challenging due to a paucity of comparable longitudinal data. However, there is evidence that Suriname experienced a spell of declining multidimensional poverty in the decades before the 2020 economic crisis. However, there is also evidence of a negative impact on wellbeing at the height of the crisis. Preparation of this annex was led by Jacobus de Hoop, Laura Clavijo Torres, Mateo Uribe Castro, and Rosita Woodly-Sobhie. Diether W. Beuermann Mendoza and Gisele Teixeira Braun contributed with extensive feedback and input. 84 1. INTRODUCTION 85 SURINAME POVERTY AND EQUITY ASSESSMENT Accurate measurement of poverty is an urgent priority for Suriname. In the media and the public debate, much of the discussion about poverty centers on the impact of the macroeconomic crises that started in 2016 and worsened in 2020. Based on a phone survey administered in August 2020, Arteaga, Beuermann, and Khadan (2021) documented a deterioration in numerous outcomes at the peak of the recent crisis, including employment and business closures, which exacerbated prior inequalities. The National Annual Reports of 2022 and 2023 (Republic of Suriname 2022, 2024) documented a significant decline in purchasing power of 32 percent in 2022 compared to 2019. Accordingly, although not nationally representative, the World Food Programme’s Caribbean Food Security and Livelihoods Survey indicated a deterioration in food security over this period.1 However, a detailed description of poverty and its characteristics after the macroeconomic crisis was not available until recently. Building on a new household survey, this annex describes poverty and how it manifests in Suriname after the recent economic crisis. The IDB’s Survey of Living Conditions (SLC), was administered in 2022 (Appendix A1.1). Drawing on this survey, the objective of the poverty and equity diagnostic is not only to document poverty numbers for Suriname, but also to provide a deeper insight into poverty by describing who the poor are, where they live, what characterizes them, and how they generate their income (Box A1.1 provides detail on how poverty was estimated based on the SLC). Understanding these aspects of poverty beyond the headline statistics is critical for the formulation of anti-poverty policy. Indeed, the other more policy-oriented components of the poverty assessment, including the labor market and social assistance analysis presented in Annexes 2 and 3, respectively, depart from the poverty diagnostic. BOX A1.1. A NOTE ON ESTIMATING POVERTY IN SURINAME Estimating poverty can be complex, and it requires a variety of methodological decisions. A core aspect of the estimation of poverty is to examine the distribution of the value of consumption. That value is not reported in a survey as one single number. Rather, poverty researchers need to piece together the value of consumption by drawing on reported consumption of food, frequently purchased non-food items, less-frequently purchased durable goods, and housing. The process of piecing together this information requires many steps, which are described in more detail in Appendix A1.2 of this annex. When the calculated value of a person’s consumption falls below a certain threshold (what is called a poverty line), this person is classified as poor. The estimated poverty rate depends on the poverty line applied; if the poverty line is ambitious (high), a larger share of the population will be classified as poor. This report shows results for poverty lines established by Suriname’s Multidimensional Poverty Working Group, the World Bank’s international poverty lines, and poverty lines for Suriname calculated by the IDB. More information on these poverty lines can be found in Appendix A1.3 of this annex. 1 See the Caribbean Food Security and Livelihoods Survey dashboard at https://analytics.wfp.org/t/Public/views/ CaribbeanFoodSecurityLivelihoodsSurvey/Foodsecurity?%3Aembed=y&%3AisGuestRedirectFromVizportal=y&_ ga=2.134417140.486188591.1710731574-908087354.1710731574 (accessed on March 19, 2024). 86 The analysis complements a recent report on poverty in Suriname by Sobhie and Kisoensingh (2023) of Suriname’s Multidimensional Poverty Working Group, which develops the approved national monetary and multidimensional poverty definitions and measurements and examines poverty rates based on the 2013 household budget survey and UNICEF’s 2018 Multiple Indicator Cluster Survey. The approach taken in this poverty diagnostic is in accordance with the Asset-based Framework, which forms the cornerstone of much of the poverty analysis carried out by the World Bank. The framework considers income-generating assets as an important aspect of poverty and prosperity. These can be physical assets, but also intangible assets such as education and access to services. Accordingly, this poverty diagnostic looks at the income-generating assets on which the poor rely and describes how these assets differ from those of the wealthier part of the population. Annex 2 complements this analysis by taking a detailed look at labor market outcomes. In addition, the Asset-based Framework considers three other aspects that matter for poverty and prosperity: the income transfers households receive, the prices of the goods and services households consume, and external shocks that generate variability in incomes. Annex 3 looks into income transfers by examining the functioning of Suriname’s social assistance system. Although not analyzed separately, prices are implicitly accounted for in the calculation of the poverty rates presented in this diagnostic (Appendix A1.2 of this Annex). And while it is challenging to analyze the impact of shocks due to limited availability of panel data, the poverty diagnostic reflects the situation in Suriname after it recently experienced a deep macroeconomic shock. The analysis finds that poverty is common, with a little over one in six Surinamese (about 17.5 percent of the population) living below the national poverty line and the World Bank’s upper-middle-income poverty line. Multidimensional poverty, measured in accordance with Suriname’s national approach, is even more common. About 46 percent of Surinamese could be classified as multidimensionally poor. Chronic illness, disability, lack of health insurance, low levels of education, and limited information and communications technology (ICT) skills are significant factors contributing to multidimensional poverty. The poverty rate is higher in the interior than in the rest of the country. Poverty rates differ by ethnicity and are higher in households headed by a single parent, households with a less-educated head, and large households. A high share of the consumption of the poor goes to food and non-alcoholic beverages, housing, and transport. Accordingly, while food insecurity is common throughout the population, it is especially pressing in poorer households. Poorer households are deprived in terms of a broad array of income-generating assets. Heads of poor households generally have less education. Adults in poor households are less likely to be employed and more likely to work in the informal sector. Poor households have less access to physical assets such as a car or their own dwelling. They also have less access to essential services such as bank accounts, insurance, and the Internet. 87 SURINAME POVERTY AND EQUITY ASSESSMENT Documenting trends in poverty is challenging for Suriname because there is a paucity of comparable data over time. UNICEF’s Multiple Indicator Cluster Survey (MICS) indicates that Suriname experienced a spell of declining multidimensional poverty in the decades before the 2020 economic crisis. Surveys collected during the COVID-19 pandemic point to a significant decline in wellbeing at the height of the economic crisis. And although somewhat tentative, analysis based on the 2022 SLC suggests that 2022 poverty rates were comparable to those in 2016 at the time of Suriname’s previous major macroeconomic crisis. Section 2 of this annex describes headline 2022 poverty, inequality, and prosperity statistics. Section 3 provides a profile of the poor. Section 4 describes the income-generating assets of the poor, and Section 5 discusses poverty trends. The annex ends with detailed appendices that provide methodological background to the study, including the design of the 2022 SLC (Appendix A1.1), the construction of the consumption aggregate based on the 2022 SLC (Appendix A1.2), the poverty lines applied (Appendix A1.3), the approach to measuring multidimensional poverty (Appendix A1.4), a comparison of reported income to reported consumption (Appendix A1.5), the robustness of the trends analysis to using panel data (Appendix A1.6 ), and additional poverty profile tables (Appendix A1.7). 88 2. HEADLINE 2022 POVERTY AND INEQUALITY STATISTICS FOR SURINAME 89 SURINAME POVERTY AND EQUITY ASSESSMENT 2.1. POVERTY, INEQUALITY, AND PROSPERITY Based on the 2022 SLC data, about 17.5 percent of Surinamese can be classified as poor and about 1 to 2.5 percent can be classified as extreme poor. Figure A1.1 shows the three sets of poverty estimates mentioned above. The moderate poverty rate as measured by Suriname’s national poverty line and the World Bank’s upper-middle income line equal 17.6 and 17.5 percent. Applying the IDB’s moderate poverty line, which is a bit more ambitious, results in a poverty rate of 21.7 percent. One percent of the population lives below the World Bank’s lower-middle income poverty line and 2.6 percent of the population lives below the IDB’s extreme poverty line. FIGURE A1.1. ABOUT 17.5 PERCENT OF THE POPULATION LIVES BELOW SURINAME’S NATIONAL POVERTY LINE 25 21,7 20 17,5 17,6 15 10 5 4,2 2,6 1,1 0 UMIC US$6.85 LMIC US$3.65 Extreme National IDB moderate IDB extreme US$2.15 poverty line poverty line poverty line Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: National poverty line depends on household composition. World Bank international lines expressed in 2017 purchasing power parity U.S. dollars. The IDB poverty line is based on update of the IDB’s 2017 minimum needs assessment. Average consumption would need to increase by a factor of 2.5 to equal the average poverty line applied by high-income countries. In addition to the poverty headcount, there is a wide range of additional metrics to monitor poverty, prosperity, and inequality. The World Bank recently adopted a new welfare measure called the Prosperity Gap that measures how far a country is from achieving a per capita income of US$25 per day, the typical poverty line applied in high-income countries. In Suriname, the Prosperity Gap has a value of 2.5, meaning that the average factor by which individuals’ consumption must be multiplied to attain a prosperity standard of US$25 per day is 2.5. 90 Suriname’s Gini coefficient is about 39, while its Palma ratio is 1.7. The Gini coefficient is one of the most widely used indicators of inequality. A Gini coefficient of zero represents the scenario of complete equality, in which everyone’s consumption is identical. A Gini coefficient of 100 represents the scenario of complete inequality, in which one person consumes everything. Generally, a Gini coefficient above 40 is considered to represent high inequality. At 39.2, Suriname’s Gini coefficient lies a little below this threshold. On another frequently used measure of inequality, the Palma ratio, Suriname has a ratio of 1.7, meaning that the value of the consumption of the richest 10 percent of the population is 1.7 times that of the poorest 40 percent of the population. 2.2. INTERNATIONAL COMPARISONS Poverty in Suriname is not out of line with its level of economic development. Is a moderate poverty rate of 17.5 percent high? To answer this question, Figure A1.2 compares poverty in Suriname to poverty in other countries. To make sure that the figure does not compare apples to oranges, countries are sorted by level of economic development (GDP per capita) on the horizontal axis. The vertical axis shows the share of people living below the World Bank’s upper-middle-income line. A dotted regression line indicates the approximate level of poverty one would expect given a country’s GDP per capita. Suriname’s poverty level, displayed in orange to facilitate comparison, appears to compare somewhat favorably to that of other countries with similar levels of economic development. FIGURE A1.2. COMPARISON OF POVERTY WITH OTHER COUNTRIES: SURINAME’S POVERTY RATE IS NOT OUT OF LINE WITH ITS LEVEL OF GDP PER CAPITA (PERCENT) Poverty rate (percentage, US$6.85 line) 140 120 100 80 60 40 20 0 0 10000 20000 30000 40000 50000 GDP per capita (2017 PPP U.S. dollars) Sources: 2022 Suriname Survey of Living Conditions (IDB 2022); and World Bank, Development Indicators. Note: Poverty measured against the World Bank poverty line of US$6.85 line expressed in 2017 purchasing power parity (PPP) U.S. dollars. The orange dot represents Suriname. 91 SURINAME POVERTY AND EQUITY ASSESSMENT 70 Inequality and prosperity indicators for Suriname are also within the expected range. Figure 60 A1.3 again examines how Suriname’s Gini coefficient compares to that of other countries. The figure’s 50 setup is comparable to that of Figure A1.2, with GDP per capita on the horizontal axis and a dotted 40 regression line showing the expected relationship between GDP per capita and inequality. At 38.89, 30 Suriname’s Gini coefficient is approximately where one would expect. 20 10 0 0 10000 FIGURE A1.3. INEQUALITY AND PROSPERITY INDICATORS 20000 IN SURINAME 30000 40000 ARE COMPARABLE 50000 60000 TO THOSE OF COUNTRIES WITH SIMILAR LEVELS OF GDPGDP PERper capita (2017 PPP U.S. dollars) CAPITA A. Gini Coefficient B. Prosperity Gap 30 70 25 60 50 20 40 30 15 20 10 10 0 0 10000 20000 30000 40000 50000 60000 5 GDP per capita (2017 PPP U.S. dollars) 0 0 10000 20000 30000 40000 50000 GDP per capita (2017 PPP U.S. dollars) 30 Sources: 2022 Suriname Survey of Living Conditions (IDB 2022); and World Bank, Development Indicators. 25 Notes: Gini Coefficient (left) and Prosperity Gap (right). The orange dot represents Suriname. 20 15 2.3. MULTIDIMENSIONAL POVERTY 10 Of course, poverty is not purely a monetary phenomenon. People can be deprived in many other outcome 5 areas even if they are not classified as poor by standard consumption metrics. Understanding these other deprivations is important to gain a holistic understanding of poverty and thus to guide 0 Multidimensional poverty indices are often used as a tool to gain insight into broader aspects of policy. 0 10000 20000 30000 40000 50000 deprivation. Suriname’s Multidimensional Poverty Working Group recently proposed a Multidimensional GDP per capita (2017 PPP U.S. dollars) Poverty Index covering four domains: health, education, standard of living, and socioeconomic security. For this report, an effort was made to mimic the working group’s index as closely as possible (see Appendix A1.4 for more detail). A total of 19 indicators were identified across the four domains. In Suriname, roughly 46 percent of all people can be classified as multidimensionally poor and experiences substantial challenges in the four domains covered by the Multidimensional Poverty 92 Index (Figure A1.4).2 On average, those who are classified as multidimensionally poor are deprived in 35.2 percent of the indicators covered by the index (see the column entitled “Intensity” in Figure A1.4). Figure A1.5 shows the share of the population deprived according to each of the 19 indicators in the index. A few of these indicators stand out as particularly important drivers of multidimensional poverty. A high share of households has one or more members who are chronically ill (62 percent) or disabled (34 percent). It is common for household heads to have little education (52 percent) or to have limited ICT skills (39 percent). And a sizable share of households have insufficient health insurance (40 percent) and a high dependency ratio, i.e., a high number of members compared to the number of working household members (47.5 percent). FIGURE A1.4. ABOUT 46 PERCENT OF SURINAMESE ARE MULTIDIMENSIONALLY POOR (PERCENT) 50 46,5 40 35,2 30 20 10 0 Headcount Intensity Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Multidimensional poverty measured in accordance with the methodology proposed by Sobhie and Kisoensingh (2023). FIGURE A1.5. SURINAME: ILLNESS, LOW EDUCATION, LIMITED ICT SKILLS, AND LACK OF MEDICAL INSURANCE ARE IMPORTANT DETERMINANTS OF MULTIDIMENSIONAL POVERTY 0 10 20 30 40 50 60 70 Chronic illness 61,8 Health Disabilty 33,8 Level of education 52,1 ICT skills 38,8 Education School attendance 12,9 Communication 0,7 Literacy 9,8 Learning delay 14,0 Cooking fuel 7,1 Standard of living Sanitary facilities 9,2 Drinking water supply 7,0 Housing 0,2 Overcrowding 8,6 Household appliances 22,0 Financial support 0,2 Socioeconomic Medical insurance 40,0 security Employment status 13,2 Safety 3,8 Dependency ratio 47,5 Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Each bar shows the share of the population considered deprived of each of the indicators. Elements of multidimensional poverty based on from Sobhie and Kisoensingh (2023) ICT: information and communications technology. 2 Note that the World Bank’s Poverty and Inequality Platform also publishes multidimensional poverty estimates for Surina- me. Those are based on a methodology developed for poorer countries and thus result in markedly lower poverty rates. 93 SURINAME POVERTY AND EQUITY ASSESSMENT 3. POVERTY PROFILE 94 This section provides a description of who the poor are. It examines where the poor live, their sociodemographic profile, their consumption expenditures, and their food security. To simplify the presentation, most of the section focuses on two measures of poverty: the World Bank’s upper- middle income poverty line (US$6.85, expressed in 2017 purchasing power parity - PPP) and the Multidimensional Poverty Index. Results are mostly qualitatively similar when other poverty metrics are applied. Tables A1.5 and A1.6 in Appendix A1.7 provide additional detail on the sociodemographic characteristics of the poor and poverty by household composition. 3.1. WHERE DO THE POOR LIVE? As shown in Figure A1.6, poverty rates tend to be markedly higher in the interior of Suriname. This holds both for monetary poverty (panel A) and multidimensional poverty (panel B). In the interior of the country, an estimated 27 percent of the population lives below the World Bank’s upper-middle income poverty line of US$6.85 (2017 PPP), while nearly 59 percent lives in multidimensional poverty. In contrast, monetary and multidimensional poverty rates are lower (and fairly similar) in the Greater Paramaribo region and the other coastal areas of the country (at about 16.5 and 40 percent, respectively). Accordingly, a disproportionate share of the poor population lives in the interior of the country. This can be inferred from Figure A1.7, which shows that a little over 70 percent of the Surinamese population lives in the Greater Paramaribo region. Yet, only about 68 percent of the population living below the World Bank US$6.85 poverty line lives in this part of the country. In contrast, only about 9 percent of the population lives in the interior of the country, but about 14 percent of the population living below the World Bank US$6.85 poverty line lives in this part of the country. The share of the population living on less than US$2.15 a day, the World Bank’s poor country poverty line, is even higher at a little over 30 percent. 70 60 50 40 FIGURE A1.6. SURINAME: POVERTY RATES ARE HIGHER IN THE INTERIOR OF THE COUNTRY 26,9 30 (PERCENT)   16,8 17,5 20 15,6 10 A. Monetary poverty rate B. Multidimensional poverty rate (percent) 0 (percent, World Bank US$6.85 poverty line) Greater Coastal Interior National Paramaribo 70 60 80 72,4 50 70 60 40 46,5 50 44,1 43,2 30 26,9 40 16,8 15,6 17,5 30 20 20 10 10 0 0 Greater Coastal Interior National Greater Coastal Interior National Paramaribo Paramaribo 80 72,4 70 Source: 2022 Suriname Survey of Living Conditions (IDB 2022). 60 Note: Monetary poverty is measured against the World Bank poverty line of US$6.85 expressed in 2017 purchasing power 50 parity dollars. Multidimensional 46,5 (PPP) U.S. 43,2 44,1 poverty is measured in accordance with the methodology proposed by Sobhie and 40 Kisoensingh (2023). 30 20 10 95 0 Greater Coastal Interior National Paramaribo SURINAME POVERTY AND EQUITY ASSESSMENT FIGURE A1.7. SURINAME: THE INTERIOR IS HOME TO A DISPROPORTIONATE SHARE OF THE POOR (PERCENT) 80 70,4 67,7 70 60 52,6 50 40 29,0 30 20,5 18,3 18,5 20 14,0 9,1 10 0 Greater Paramaribo Rest of the coastal Interior region Share of total population Poor US$6.85 Poor US$2.15 Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: The bars show the fraction of three population groups by region. For instance, 70.4% of total population lives in Greater Paramaribo. The other bars show the share of poor populaton living in each region, using the World Bank poverty lines of US$6.85 and US$2.15 lines in 2017 purchasing power parity U.S. dollars. 3.2. SOCIODEMOGRAPHIC CHARACTERISTICS OF THE POOR There is substantial variation in poverty rates across ethnic groups in Suriname. Figure A1.8 shows how monetary and multidimensional poverty (panels A and B, respectively) differ by ethnic group. In both cases, the three ethnic groups with the highest poverty rates are Surinamese of Maroon, indigenous, and Hindu ethnicity. There is overlap in the poverty rates by ethnic group and geographic region, as most of the Maroon live in the interior of the country. There is a clear correlation between poverty and the education level of the household head. Among the population living in a household with a head who did not complete any education, nearly 30 percent lives below the World Bank’s upper-middle income poverty line (Figure A1.9, panel A). In households where the head completed primary education, the monetary poverty rate is about half as high at 16 percent. Among households with a head who completed higher education, the monetary poverty rate is close to zero. The multidimensional poverty rate also drops quickly with the level of education of the household head (Figure A1.9, panel B). In households with a head who did not complete education, the multidimensional poverty rate is about 62 percent. In households with a head who completed higher education, the multidimensional poverty rate is markedly lower (22 percent) but still not negligible. 96 Other 0,9 Javanese 9,4 Mixed 8,8 Creole 12,3 Hindustani 17,8 Indigenous 29,0 Maroon OF MAROON AND INDIGENOUS FIGURE A1.8. POVERTY IS HIGHEST AMONG SURINAMESE 32,9 ETHNICITY (PERCENT) A. Monetary poverty rate B. Multidimensional poverty rate (percent) (percent, World Bank $6.85 poverty line) 0 10 20 30 40 0 10 20 30 40 50 60 70 Mixed 32,7 Other 0,9 Creole 34,9 Javanese 9,4 Javanese 37,8 Other 39,3 Mixed 8,8 Hindustani 52,6 Creole 12,3 Indigenous 55,3 Hindustani Maroon 63,4 17,8 Indigenous 29,0 Maroon 32,9 35 29,3 30 25 2022 Suriname Survey of Living Conditions (IDB 2022). Source: Note: Monetary poverty is measured against the World Bank US$6.85 poverty line expressed in 2017 purchasing power parity (PPP) 20 16,1 U.S. dollars. 0 20 30poverty Multidimensional 10 40 is measured 50 60 in accordance 70 with 15the methodology proposed by Sobhie and Kisoensingh (2023). 12,1 Mixed 32,7 9,0 10 Creole 34,9 5 0,5 Javanese 37,8 A CLEAR CORRELATION FIGURE A1.9. SURINAME: 0 BETWEEN POVERTY AND THE LEVEL OF Other HOUSEHOLD HEAD (PERCENT) EDUCATION OF THE 39,3 ion y l ol ne oo ar ho at im No ch Sc uc Hindustani eS 52,6 Pr Ed gh dl A. Monetary poverty rate B. Multidimensional poverty rate (percent) Hi er id Indigenous 55,3 M gh Hi (percent, World Bank $6.85 poverty line) Maroon 63,4 35 29,3 30 70 61,8 25 60 52,7 20 16,1 50 15 12,1 40 31,5 31,2 9,0 30 22,2 10 20 5 0,5 10 0 0 n y ol l n y l l ne oo ne oo ar oo tio ar tio ho im No h im No ch ch ca ca Sc Sc Pr eS Pr S du du le gh gh E dl rE d Hi Hi er id id e M gh M gh Hi Hi Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Monetary poverty is measured against the World Bank US$6.85 poverty line expressed in 2017 purchasing power parity (PPP) U.S. dollars. Multidimensional poverty is measured in accordance with the methodology proposed by Sobhie and 70 61,8 (2023). Primary education refers to the first six years of school, mandatory for all children between 6 and 12 years Kisoensingh 60 52,7(VOJ) can be a four-year academic period, vocational training, or three-year technical school. High school old. Middle school 50 (VOS) refers to secondary education and can last up to four years, depending on whether it is academic, vocational, or a 40 teacher 31,5 path. Higher education refers to a college education, university, HBO, Master’s, or PhD. 31,2 training 30 22,2 20 10 97 0 n y l l ne oo oo ar tio im No ch h ca Sc eS Pr du gh dl rE Hi id SURINAME POVERTY AND EQUITY ASSESSMENT In larger households, the poverty rate tends to be higher. The monetary poverty rate in households with only one or two members is relatively low, as can be inferred from Figure A1.10. In these households the monetary poverty rate ranges from approximately 20 to 30 percent. In large households with 10 or more members, the monetary poverty rate is nearly 50 percent. Multidimensional poverty rates reach about 73 percent in large households. 50 47,3 40 30 FIGURE A1.10. SURINAME: POVERTY RATES ARE 20 HIGHER IN LARGER HOUSEHOLDS (PERCENT) 10 2,1 0 A. Monetary poverty rate 3 poverty B. Multidimensional 1 2 4 rate 5 6 7 8 9 10 (percent, World Bank US$6.85 poverty line) (percent) Household size 100 47,3 50 73,5 80 40 60 30 34,5 40 20 10 20 2,1 0 0 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 Household size Household size 100 80 73,5 Source: 2022 Suriname Survey of Living Conditions (IDB 2022). 60 Note: Monetary poverty is measured against the World Bank US$6.85 poverty line expressed in 2017 purchasing power parity (PPP) U.S. dollars. Multidimensional poverty is measured in accordance with the methodology proposed by Sobhie and 34,5 40 Kisoensingh (2023). Households with more than 10 members are included in the group of households with 10 members. 20 0 1 2 3 4 5 6 7 8 9 10 Households with children Household size are poorer than households without children, especially when one parent raises the children alone. Figure A1.11 shows that the difference in monetary poverty rates between households with and without children is substantial. The poverty rate is about 22 percent in households with children and only about 8 percent in households without children. The poverty rate is especially high in households with one adult parent raising children alone (over 35 percent for both mothers and fathers). In two-parent households, the poverty rate is only 14.9 percent. Poverty rates are not clearly different by gender, but there are some differences by age group. Figure A1.12 shows poverty by age group separately for women and men. In much of Latin America and the Caribbean, there is a high poverty rate among children and then progressively lower poverty rates for older age groups. There is also a divergence in poverty rates of women and men around reproductive ages, with the poverty rate of women above that of men. Finally, the poverty rate in much of the region trends up again at the highest ages (Buitrago-Hernandez et al. 2024). In Suriname, the pattern is not as clear cut. Poverty rates fluctuate up and down throughout the life cycle, and the poverty rates of women and men are comparable and cross each other at numerous points. Poverty rates appear to be higher among children (roughly 0 to 20 years old) and in the age ranges when adults raise children (roughly 30 to 50 years old). 98 FIGURE A1.11. SURINAME: POVERTY RATES ARE HIGHER IN HOUSEHOLDS WITH CHILDREN (PERCENT) Monetary poverty rate (percent, World Bank US $6.85 poverty line) 40 35,2 35,6 35 30 25,0 25 22,3 20 14,9 15 10 8,0 5 0 With children Without children Adult female with Adult male with Two parent household Other households with children children with children children Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Monetary poverty is measured against the World Bank US$6.85 poverty line expressed in 2017 purchasing power parity (PPP) U.S. dollars. Bars represent poverty rates for different groups of households according to their composition. The green bars are households with and without children <15 years old. Among households with children, there are four groups of households, represented by the red bars: with one adult, female or male, with two parents, and all other households with children. FIGURE A1.12. SURINAME: POVERTY RATES OF WOMEN AND MEN OVERLAP IN MOST AGE RANGES (PERCENT) Monetary poverty rate (percent, World Bank US $6.85 poverty line) 30 Women 25 Men 20 15 10 5 0 4 4 4 9 9 4 4 4 9 9 9 -14 0- -6 -4 -19 5- -5 -4 -2 -3 -5 -2 -3 d 60 40 on 50 20 30 45 55 25 35 10 15 ey db an 65 Age ranges Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Monetary poverty is measured against the World Bank US$6.85 poverty line expressed in 2017 purchasing power parity (PPP) U.S. dollars. 99 SURINAME POVERTY AND EQUITY ASSESSMENT 3.3. CONSUMPTION EXPENDITURE OF THE POOR Food and housing are a prominent part of the consumption expenditure of the poor. Figure A1.13 examines how consumption is distributed across three broad categories: food, non-food, and housing. To understand whether the consumption patterns of the poor are different, the population is split into 10 consumption deciles. Decile 1 represents the poorest 10 percent of the population (the 10 percent with the lowest consumption per capita), while decile 10 represents the richest 10 percent of the population. As shown in Figure A1.13, non-food represents about 37 percent of the expenditure of those in the poorest deciles. In higher deciles, this share is closer to 50 percent. While food represents around 40 percent of consumption in the bottom two consumption deciles, it represents only about 30 percent in the top half of the consumption distribution. FIGURE A1.13. SURINAME: EXPENDITURE TYPE AS PERCENT OF TOTAL EXPENDITURE 1 10,0 10,3 10,9 10,6 7,4 12,2 12,6 8,5 12,4 13,9 0,8 37,1 46,9 45,8 49,1 40,5 47,8 48,1 46,0 49,3 47,0 0,6 0,4 42,3 38,0 35,2 0,2 34,8 33,7 33,8 33,2 32,6 32,9 31,2 0 1 2 3 4 5 6 7 8 9 10 Consumption Deciles Food expenditure Non-food expenditure Housing Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Distribution of consumption across food, non-food, and rent by consumption decile (1 is the poorest decile and 10 the wealthiest). Transport, utilities, and housing equipment represent an important share of the non-food consumption of the poor. Figure A1.14 shows the components of non-food consumption based on the United Nations Statistics Division’s Classification of Individual Consumption According to Purpose (COICOP) groups. The figure focuses on the bottom quintile, which is the poorest 20 percent of the population (and which roughly corresponds to the population living below the World Bank’s upper-middle income line). Utilities and housing equipment represent 8 and 6 percent of non-food expenditure, respectively. Transport represents about 20 percent of non-food expenditure. What are called “temptation goods” (alcohol and tobacco) represent 15.5 percent of expenditure, while education and health represent a small share (8 percent combined). 100 FIGURE A1.14. SURINAME: EXPENDITURE TYPE AS A PERCENT OF NON-FOOD EXPENDITURE BASED ON THE CLASSIFICATION OF INDIVIDUAL CONSUMPTION ACCORDING TO PURPOSE (COICOP) GROUPS 25 20,5 20 17,2 15,5 15 9,3 10 7,9 6,6 6,4 5,8 4,4 3,5 5 1,5 1,4 0 Transport ICT Alcohol and tobacco Personal care Housing, water, electricity, gas Clothing and footwear Health House equipment Insurance, financial services Recreation Education Restaurants, Accommodation Serv. Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Notes: Distribution of non-food expenditure within the lowest consumption quintile by COICOP group. Acc. Services: accommodation services. ICT: information and communications technology. In accordance with COICOP definitions, expenditure related to the principal, or secondary dwellings is classified in Division 04 (Housing, water, electricity, gas and other fuels). Expenditure related to accommodation services away from the principle or secondary dwelling (excluding vacation homes), such as resorts, hotels, motels and vacation homes, is classified to Group 11.2 (Accommodation services). 3.4. FOOD SECURITY Food security is a substantial concern for a large part of the population, particularly the poor. The 2022 SLC contains a separate survey module to measure food insecurity. This module is comprised of nine questions to measure whether households experience any form of food insecurity.3 For purposes of analysis, a household is classified as food insecure if it responds positively to any of these questions. It is common for households to be food insecure according to this measure. At the national level, 61 percent of the population is food insecure according to this definition. As can be inferred from Figure A1.15, food insecurity is even more common in the interior of the country. There, nearly 80 percent of the population can be classified as food insecure. As might be expected, food insecurity is even more pronounced in the poorest households. In the bottom consumption decile, nearly 90 percent of the population is classified as food insecure. Although food insecurity is markedly lower in the highest consumption deciles, even among this group, nearly a third answers positively to at least one of the food insecurity questions. 3 To give one example of a survey question: “In the last 12 months, was there a time when you or others in your household worried about not having enough food to eat because of a lack of money or other resources?” 101 SURINAME 100 POVERTY AND EQUITY ASSESSMENT 79,2 80 61,1 59,7 57,9 60 40 20 FIGURE A1.15. SURINAME: FOOD INSECURITY IS MORE COMMON IN THE INTERIOR (PERCENT) 0 National Greater Coastal Interior Paramaribo A. Food insecurity by region (percent) B. Food insecurity by consumption decile (percent) 100 100 92,2 79,2 80 80 61,1 59,7 57,9 60 60 40 32,8 40 20 20 0 1 2 3 4 5 6 7 8 9 10 0 Consumption decile National Greater Coastal Interior Paramaribo 100 92,2 Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Food insecurity is determined on the basis of a separate module of the Survey of Living Conditions comprised of nine 80 questions about different indicators of food insecurity, such as skipping meals for lack of resources. If the response is positive to 60 any of the nine questions, a household is classified as food insecure. 40 32,8 20 0 1 2 3 4 5 6 7 8 9 10 Consumption decile 102 4. INCOME-GENERATING ASSETS 103 SURINAME POVERTY AND EQUITY ASSESSMENT To better understand the poverty rates described above, this section examines the income- generating assets of the poor. This approach is in accordance with the Asset-based Framework as developed and described by Attanasio and Székely (1999), Bussolo and Lopez-Calva (2014), Carter and Barrett (2006), and Lopez-Calva and Rodríguez-Castelán (2016). The latter authors describe a household’s market income potential “as a function of four main components: (i) the capacity of households to generate income based on the assets they own; (ii) the transfers they receive that are independent of household income-earning assets; (iii) the set of prices of the basket of goods and services that the household consumes; and, (iv) the realization of external shocks that generates variability of incomes”(Lopez-Calva and Rodríguez-Castelán 2016, p. 2). Annexes 2 and 3 delve deeper and provide more insight into two components of the Asset- based Framework. Annex 2 focuses on the first component mentioned above and examines labor market outcomes in more detail. Annex 3 focuses on the second component and zeroes in on the transfers and social assistance benefits received by households. 4.1. EDUCATION The poor are more likely to live in a household with a less-educated head. This, of course, is a common phenomenon in many countries. In the poorest consumption decile, as shown in panel A of Figure A1.16, the average number of years of education of the household head in the poorest decile is approximately six. In the richest decile, the years of education of the household is roughly twice as high at 12. In the bottom half of the consumption distribution (Figure A1.16, panel B), virtually no household head has completed more than secondary education. Table A1.7 in Appendix A1.7 provides additional information on the association between education outcomes and poverty. FIGURE A1.16. SURINAME: THE POOR HAVE LESS EDUCATION A. Average years of education B. Completed more than high-school education (percent of adults) 11,4 14,5 15 12 10 10 5 8 6,5 0,0 6 0 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 Consumption decile Consumption decile Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Years of education of adults (panel A) and share of adults who completed more than high school education (panel B) by consumption decile. 104 4.2. EMPLOYMENT Labor market outcomes of the poorest households are markedly worse than those of richer households, starting with a lower labor force participation rate. As employment is a key source of income, it may be expected that employment outcomes and poverty are significantly related (Table A1.8 in Appendix A1.7). Indeed, core labor market indicators confirm this conjecture. Panel A of Figure A1.17 looks at the labor force participation rate by consumption decile.4 The labor force participation rate, which equals the share of adults who are either employed or looking for work, ranges from 49 percent in the bottom of the consumption distribution (the poorest 10 percent) to 71 percent in the top of the consumption distribution (the richest 10 percent). Among the poorest households, a low labor force participation rate is compounded by a high unemployment and informality rate. The unemployment rate reflects the share of adults who are in the labor force, but not employed. The informality rate is the share of workers who are informal according to the productive informality classification80of the World Bank’s Socio-Economic Database for Latin America and the Caribbean (SEDLAC). As can 5 70 be inferred from panel B of Figure A1.17, in the poorest households about 16 percent of adults in the60 labor force are not employed. In the richest half of the population, by contrast, the unemployment rate 50 is below 10 percent. Moreover, in the poorest 40 households it is common for those who do work to be employed in the informal sector. Figure A1.18 2 3 adults shows that in the bottom decile, more than 50 percent of employed 1 4 5 work6 in 8 informal 7 the 9 10 sector. This share drops rapidly as one moves up the consumption distribution. Consumption decile FIGURE A1.17. SURINAME: THE POOR ARE LESS LIKELY TO BE IN THE LABOR FORCE AND MORE LIKELY TO BE UNEMPLOYED (PERCENT) A. Labor force participation rate (percent) B. Unemployment rate (percent) 18 16 14 12 80 10 70 8 60 6 50 4 40 2 0 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 Consumption decile Consumption decile Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Labor force participation rate: employed plus unemployed population as a share of the working-age population (panel A). Unemployment rate: unemployed as a share of the labor force (panel B). Persons 15 years of age and older are unemployed if they did not work in the past seven days and were looking for a job. 4 The labor force participation rate is defined as the total employed and unemployed population as a share of the work- ing-age population. 18 According to SEDLAC (2014), individuals are considered informal workers if they correspond to any of the following catego- 5 16 ries: (i) unskilled self-employed, (ii) salaried worker in a small private firm, (iii) zero-income worker. 14 105 12 10 8 SURINAME POVERTY AND EQUITY ASSESSMENT FIGURE A1.18. SURINAME’S INFORMALITY RATE: WORK IN THE INFORMAL SECTOR IS ESPE- CIALLY COMMON IN THE POOREST HOUSEHOLDS (PERCENT) Share of informal workers (percent) 57,1 60 50 40 30 18,1 20 10 0 1 2 3 4 5 6 7 8 9 10 Consumption decile Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Share of the employed working in the informal sector, with the informal sector defined by occupation. Specifically, informal workers are unskilled self-employed workers, salaried workers in a small private firm, and zero-income workers. Weekly working hours appear to be similar across the consumption distribution. According to Figure A1.19, workers in the bottom decile work nearly 35 hours a week. In the remainder of the consumption distribution, working hours are close to 40. FIGURE A1.19. SURINAME: WEEKLY WORKING HOURS ARE SOMEWHAT LOWER IN THE BOTTOM DECILE (WEEKLY HOURS WORKED) Average hours worked in a week 45 40 35 30 1 2 3 4 5 6 7 8 9 10 Consumption decile Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Weekly hours worked (conditional on being employed). 106 4.3. OWN PRODUCTION Own production is more important for those living in the interior of the country. Figure A1.20 examines the share of own production in total consumption. In the interior of the country, which is more reliant on agriculture, this share is 9 percent. Not surprisingly, in the mostly urban Greater Paramaribo area, the share of own production is consumption is low, at approximately 2 percent.6 FIGURE A1.20. SURINAME: SHARE OF CONSUMPTION DERIVED FROM OWN PRODUCTION IS HIGHER IN THE INTERIOR (PERCENT) Own production (percent of total consumption) 10 9,0 9 8 7 6 5 4,1 4 3,2 3 2,2 2 1 0 Greater Paramaribo Coastal Interior National Source: 2022 Suriname Survey of Living Conditions (IDB 2022). 4.4. OWNERSHIP OF PHYSICAL ASSETS There are substantial differences in ownership of physical assets and real estate between poorer and richer households. Figure A1.21 shows this for two important categories: cars (panel A) and dwellings (panel B). Ownership of a car can contribute to the ability to participate in society and the labor market, while ownership of a dwelling eliminates the need to pay rent and may offer opportunities to build up capital. Ownership of a car is relatively uncommon among poor households, though approximately a third of poor households own a car. In the top half of the consumption distribution, this share is above 60 percent. About 58 percent of the poorest households own their dwelling. Among the richest households, this share is approximately 70 percent. Table A1.19 in Appendix A1.7 examines additional housing characteristics and physical assets. 6 The SLC does not contain sufficient information to further document physical assets and landholding associated with own production. 107 100 SURINAME 80 POVERTY AND EQUITY ASSESSMENT 60 40 20 0 1 2 3 4 5 6 7 8 9 10 FIGURE A1.21. SURINAME: SHARE OF POPULATION THAT OWNS A CAR OR THEIR DWELLING, BY CONSUMPTION DECILE (PERCENT) Consumption decile A. Owns a car B. Owns dwelling 100 80 80 60 60 40 40 20 20 0 0 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 Consumption decile Consumption decile Source: 2022 Suriname Survey of Living Conditions (IDB 2022). 80 4.5. 60 ACCESS TO SERVICES 40 Finally, access of the poor to key services is restricted. Figure A1.22 examines access to three important services: private health insurance, a bank account, and the Internet. It is clear that richer 20 households have better access to all three of these services than poorer households. In the bottom of 0 consumption distribution, only about one in five households has private health insurance. In the the 2 is 1 share top, this 4 to 3 close 5 80 7 8 The 6percent. 9 numbers 10 are broadly comparable for access to a bank account, Consumption decile with approximately three in ten of the poorest and seven in ten of the richest households having a bank account. Access to the Internet ranges from approximately 65 percent in the poorest households to about 85 percent in the richest households. Table A1.10 in Appendix A1.7 provides additional detail. FIGURE A1.22. SURINAME: SHARE OF POPULATION WITH PRIVATE HEALTH INSURANCE, BANK ACCOUNT, OR INTERNET ACCESS, BY CONSUMPTION DECILE (PERCENT) A. Has private health insurance 100 80 60 40 20 0 1 2 3 4 5 6 7 8 9 10 Consumption decile 108 100 40 20 0 1 2 3 4 5 6 7 8 9 10 Consumption decile B. Has bank account 100 80 60 40 20 0 1 2 3 4 5 6 7 8 9 10 Consumption decile C. Has internet access 100 80 60 40 20 0 1 2 3 4 5 6 7 8 9 10 Consumption decile Source: 2022 Suriname Survey of Living Conditions (IDB 2022). 109 SURINAME POVERTY AND EQUITY ASSESSMENT 5. EVOLUTION OF POVERTY 110 5.1. MACROECONOMIC BACKGROUND On the back of a global commodity price boom, Suriname’s GDP per capita increased rapidly from the early 2000s to 2014, with 2004 as an exception due to an economic crisis. As described in the World Bank’s recent 2023 Systematic Country Diagnostic, “The economic performance of the country has been volatile over the past two decades. The fluctuation in economic activity and incomes is closely related to the natural-resource-based nature of the economy. The commodity price boom, which started around 2000 (with high dependency on bauxite and oil), led to a significant Bank 2023, p. 15). In 2014, reflecting Suriname’s increase in GDP per capita in U.S. dollar terms” (World10000 9199 engagement in oil and gold mining, GDP per capita peaked9000at over US$9,000 in current U.S. dollars, or nearly US$20,000 in 2017 PPP U.S. dollars (Figure A1.23). 8000 The subsequent period from 2016 to 2022 was 7000 one of significant economic upheaval. As commodity prices slumped and the government began to implement an austerity program, the economy 6000 5858 contracted quickly in 2016, with an unbalanced exchange rate, inflation, and debt ratio. Macroeconomic 5705 5000 mismanagement compounded by the effects of the COVID-19 pandemic led to a further contraction of 4000 in 2017 PPP U.S. dollars and the strong the economy in 2020. By 2022, GDP per capita was US$14,922 macroeconomic growth in the period since 2005 had effectively 3000 been undone. 2000 1000 FIGURE A1.23. SURINAME HAS CONTINUED TO EXPERIENCE 0 A MACROECONOMIC SLUMP SINCE 2016 1990 1995 2000 2005 2010 2015 2020 A. GDP Per Capita (Current U.S. dollars) B. GDP Per Capita (Constant international 2017 PPP U.S. dollars) 10000 25000 9199 9000 19778 8000 20000 7000 17663 14922 6000 5858 15000 5000 5705 4000 10000 3000 2000 5000 1000 0 0 1990 1995 2000 2005 2010 2015 2020 1990 1995 2000 2005 2010 2015 2020 Source: World Bank, Development Indicators. Note: Vertical red lines denote 2014, 2016, and 2022, respectively. 25000 19778 111 20000 17663 14922 SURINAME POVERTY AND EQUITY ASSESSMENT In addition to the macroeconomic downturn, Suriname has experienced rapid inflation since the start of 2020. As part of broader macroeconomic reforms, Suriname transitioned to a floating exchange rate in mid- 2021. As discussed in the aforementioned 2023 Systematic Country Diagnostic , “Because Suriname is a small economy, with imports equaling about 50 percent of GDP, a significant pass-through from exchange rate depreciation to domestic prices led to a sharp rise in inflation. Annual inflation ran above 60 percent during both 2020 and 2021 and was well above 50 percent in 2022” (World Bank 2023, p. 18). Figure A1.24 shows the main components of inflation as documented in the Consumer Price Index. Inflation was pronounced in the most dominant categories of consumption for poor households (see Section 2.3): food and non-alcoholic beverages, housing, and transportation. FIGURE A1.24. SURINAME: INFLATION HAS RECENTLY BEEN HIGH, ESPECIALLY FOR FOOD AND NON-ALCOHOLIC BEVERAGES, HOUSING, AND TRANSPORTATION (ANNUAL PERCENTAGE) 80 60 40 20 0 Feb-24 May-22 May-23 Feb-22 Feb-23 Nov-22 Nov-23 Aug-22 Aug-23 May-21 Nov-21 Aug-21 Other Housing and utilities Transportation Food and non-alcoholic beverages Source: World Bank Macro Poverty Outlook dashboard, available at https://www.worldbank.org/en/publication/macro- poverty-outlook#sec1 (accessed on June 17, 2024), based on the Consumer Price Index published by Suriname’s General Bureau of Statistics. 5.2. POVERTY TRENDS There is evidence that the population of Suriname was strongly affected at the peak of the macroeconomic crisis of 2020. Based on a phone survey administered in August 2020, Arteaga, Beuermann, and Khadan (2021) documented a deterioration in numerous outcomes, including employment, business closures, and remittances. The study concluded that, due to these deteriorations, “preexisting inequalities across income and gender groups were exacerbated” (Arteaga, Beuermann, and Khadan 2021, p. 1). 112 However, tracking longer-term, fundamental trends in poverty and the distribution of income and consumption in Suriname is challenging. It requires data on household consumption, income, or other poverty-related wellbeing indicators that can be compared over time. And for Suriname such data are generally not collected on a regular basis. For instance, the latest household budget survey was last collected in 2013/2014. And that survey is considered the formal source of information for the calculation of monetary poverty in Suriname. There is evidence indicating that multidimensional poverty was declining in the period before the macroeconomic crisis. One source of information that provides insights into longer-run trends is UNICEF’s MICS. Analysis of MICS data collected in 2006, 2010, and 2018 points to a structural decline in multidimensional poverty. This can be seen in Figure A1.25.7 According to further analysis (not displayed), over this period there were improvements in all domains of the Multidimensional Poverty Index, including education, health, living standards, and socioeconomic security. FIGURE A1.25. SURINAME: A LONGER-TERM, DOWNWARD TREND IN MULTIDIMENSIONAL POVERTY (PERCENT) Multidimensional poverty rate (percent) 25 20,6 19,1 20 14,1 15 10 5 0 2006 2010 2018 Source: UNICEF, 2006, 2010, and 2018 Multiple Indicator Cluster Surveys. Note: Multidimensional poverty is measured in accordance with the methodology proposed by Sobhie and Kisoensingh (2023). The numbers in this figure are not identical to those reported for 2018 by Sobhie and Kisoensingh (2023) because some of the indicators in the 2018 data are not available in the older Multiple Indicator Cluster Surveys. To facilitate comparisons over time, only those indicators available for all three years were used. Inferences on the trends in poverty during the recent times of economic crisis need to be interpreted with caution. A previous round of SLC data collected in 2016 provides some insight into poverty trends in the subsequent period up to 2022. However, it is important to interpret these findings with care. First, both the 2016 and 2022 surveys took place during economically challenging and volatile times, which may influence the comparison. Second, the 2022 survey was conducted at a time of high 7 This finding contrasts with that of Suriname’s Multidimensional Working Group (Sobhie and Kisoensingh 2023), which examined trends in multidimensional poverty based on the 2012 population census and the 2018 UNICEF MICS. Based on these two data sources, the group concluded that over this period there had been no noteworthy improvement in house- hold living conditions. 113 SURINAME POVERTY AND EQUITY ASSESSMENT inflation and thus in a fundamentally different environment.8 Third, because the 2016 and 2022 SLC data cover only two points in time, they do not provide insight into poverty dynamics in the interim period and the height of the 2020 crisis, when households faced significant challenges. The SLC data paint a mixed picture of trends since 2016 and depend on the poverty threshold considered. This can be inferred from Figure A1.26. The figure shows the same poverty rates discussed in Section 1.1 and displayed in Figure A1.1. But it also includes estimates for poverty in 2016. For the higher poverty lines, such as Suriname’s national poverty line, the World Bank’s upper-middle-income poverty line, and the IDB’s moderate poverty line for Suriname, there appears to be a decline in poverty from 2016 to 2022. For the more extreme forms of poverty, in contrast, poverty appears to have increased. For instance, poverty measured against the World Bank’s upper-middle-income line was 18.2 percent in 2016 and 17.5 percent in 2022, while poverty measured against the World Bank’s most extreme poverty line was 0.7 percent in 2016 and 1 percent in 2022. However, none of these changes are statistically significant at conventional levels.9 In other words, one cannot conclude that poverty changed from 2016 to 2022 with a reasonable level of statistical certainty. FIGURE A1.26. SURINAME: A MIXED PICTURE OF CHANGES IN POVERTY 2016 AND 2022 (PERCENT) 30 26,2 25 21,7 20,3 20 17,5 18,2 17,6 15 10 4,2 3,8 5 2,6 1,7 1,1 0,7 0 UMIC US$6.85 LMIC US$3.65 Poor countries National poverty IDB moderate IDB extreme US$2.15 line poverty line poverty line 2022 2016 Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: The national poverty line depends on household composition. The World Bank’s international lines are expressed in 2017 purchasing power parity U.S. dollars. The IDB poverty line is based on update of IDB 2017 minimum needs assessment. LMIC: lower-middle-income country; UMIC: upper-middle-income country. 8 To illustrate, the Consumer Price Index reported by Suriname’s General Bureau of Statistics was 381.7 in January of 2022, 460.8 in July, and 572.5 in December. 9 The changes against the national and IDB poverty lines are statistically significant. 114 Why has there not been a clearer increase in poverty in recent years, considering the substantial macroeconomic challenges Suriname has had to confront? The research team looked into this issue in detail. While this question cannot be answered with certainty, a few factors are important to keep in mind. First, industry and mining represent about a third of Suriname’s value added but employ only about a tenth of the labor force. Hence, while changing commodity prices have a significant effect on GDP, they affect only a minority of the labor force. A second factor to consider is that a large share of workers in the bottom of the consumption distribution are employed in the informal sector (see Section 3.2 of this Appendix)). Movements in the informal sector may not track movements in GDP per capita and may be less volatile. A third factor is that a large share of the poorest population lives in the interior of the country, which is relatively insulated from broader conjunctural movements in the economy. Finally, the government of Suriname made efforts to scale up social assistance programs during the COVID-19 crisis. While these efforts are unlikely to have been sufficient in and of themselves, they may have helped offset the impact of the economic crisis on poverty. Annex 2 returns to this issue. 115 SURINAME POVERTY AND EQUITY ASSESSMENT APPENDICES 116 APPENDIX A1.1. THE SURINAME SURVEY OF LIVING CONDITIONS The analysis presented in this annex draws heavily on the 2022 Survey of Living Conditions (SLC). This appendix summarizes some core elements to understand the methodological approach of the 2022 SLC, drawing on the Methodology Report accompanying the survey.10 The 2022 SLC is a multipurpose household survey initiated by the IDB. The survey was administered from January to December 2022, during which time approximately 2,500 households and 7,500 individuals were interviewed. The rationale for administering surveys over the period of 12 months was to ensure that cyclical changes (for instance, in expenditure) would not bias (poverty) measurement. The 2022 SLC is representative at the national level and for three geographical regions: the Greater Paramaribo region, the other coastal areas of Suriname, and the interior. For the Greater Paramaribo region and the other coastal areas of Suriname, the sampling frame was constructed based on administrative information on customer connections to the electrical grid provided by Suriname’s electricity company, the Energie Bedrijven Suriname (EBS). Efforts to construct a sampling frame in the interior of the country were more involved. As the EBS does not cover the interior of the country, a listing exercise had to be carried out in a selection of small villages. Survey weights were constructed to account for differences in the probability of inclusion by geographical domain and to correct for nonresponses. As the 2022 SLC is a multipurpose survey, it covers a large range of outcomes. The survey contains 21 sections, some of which are critical for understanding household consumption and poverty. They include sections on personal expenses, education expenses, and household consumption of (or expenditure on) food and beverages, clothing and footwear, and frequently and less-frequently purchased non-food items. Appendix A1.2 returns to these sections. But the survey also covers a wide range of other domains, including sections on education, health, employment, food security, and housing. The Poverty and Equity Assessment as well as this and the other two annexes draw extensively on all these sections. It is worth noting a few specific observations on the organization of the fieldwork and quality control procedures. Because of the length of the questionnaire, households were visited on multiple occasions. In principle, proxy responses were not allowed; each individual household member had to provide his or her relevant information. Extensive quality assurance protocols were in place to ensure the delivery of reliable results. These included checks built into the data processing software, daily review of completed surveys, randomized audio supervision, and audio supervision feedback to enumerators. APPENDIX A1.2. CONSUMPTION AGGREGATES The consumption aggregate was constructed based on the different survey modules providing information on individual and household expenditure. This appendix provides a summary description of how the construction of this aggregate was carried out. It is based on a forthcoming World Bank note entitled “Constructing Harmonized Consumption-based Welfare 10 Available at https://mydata.iadb.org/Social-Protection/2022-Suriname-Survey-of-Living-Conditions/prbn-x74x/about_ data (accessed June 16, 2024). 117 SURINAME POVERTY AND EQUITY ASSESSMENT Aggregates for Poverty and Inequality Analysis in Caribbean Countries” by Saavedra and Sanchez (Forthcoming). That note compares efforts to harmonize household survey data in multiple countries in the Caribbean (including Grenada, Jamaica, and St. Lucia).11 The harmonization of the consumption aggregate was carried out in line with global best practices. To be precise, the harmonization of the consumption aggregate closely follows the guidelines of Mancini and Vecchi (2022). These guidelines, in turn, are an update to the seminal work of Deaton and Zaidi (2002) and are applied globally by the World Bank as the standard for constructing consumption aggregates. In accordance with these guidelines, the consumption aggregate measures the value of four types of consumption: food, non-food, durables, and housing. While this measurement at first may sound straightforward, the reality is complex. Many decisions need to be made along the way to construct a consumption aggregate. And some of these decisions can have significant implications for estimated consumption and poverty. Interestingly, for the case of Suriname, both the IDB and the World Bank independently generated a consumption aggregate.12 These two aggregates, although not identical, lead to very similar results and thus give a sense of confidence in the accuracy of the findings. There are a few respects in which the construction of the consumption aggregate in Suriname had to depart from that which is optimal. First, the food component of the consumption aggregate reflects expenditure on food rather than consumption of food. To the extent that the value of food consumed differs from the value of food purchased, this could lead to some distortions. Moreover, although the 2022 SLC does collect information about household ownership of durable goods, it does not collect the information needed to estimate what is called the “use value” of these goods, and hence this is not reflected in the consumption aggregate. Moreover, households that own their dwelling were not asked to estimate the rental value of their home. What are called “hedonic regressions” techniques were therefore applied to estimate the value of the housing component of the consumption aggregate for households that own their home. APPENDIX A1.3. POVERTY LINES This appendix shows results for three different poverty lines: Suriname’s national poverty lines, the poverty lines for Suriname calculated by the IDB, and the World Bank’s international poverty lines. The appendix summarizes how the three poverty lines were calculated and compares them. A Multidimensional Poverty Working Group recently established and then updated Suriname’s national poverty line (Sobhie and Kisoensingh 2023). The working group determined the national poverty line based on a basic needs approach. It relied on the 2013/2014 household budget survey and Consumer Price Index data. The national poverty line reflects the cost of acquiring a minimum food basket and basic non-food expenditure (at a 60/40 ratio). An equivalence scale was applied to determine the total national poverty line at the household level. 11 This effort note was prepared by a team led by Trinidad Saavedra. 12 For the IDB aggregate, see the Methodological Report on the Consumption Aggregate and Poverty Lines, available at https://mydata.iadb.org/Social-Protection/2022-Suriname-Survey-of-Living-Conditions/prbn-x74x/about_data (ac- cessed June 16, 2024). 118 The IDB followed a comparable procedure to establish its own poverty line for Suriname. To establish an extreme poverty line, the IDB (Sobrado 2018) calculated the cost of purchasing a minimum caloric intake for the average person in Suriname. The moderate poverty line also includes the cost of basic non-food consumption. This cost was approximated by calculating the share of non- food consumption in the consumption aggregate of the poorest households. The poverty lines were adjusted for prices in each region (Greater Paramaribo, other coastal areas, and the interior). The World Bank uses three poverty lines for international comparisons. The poverty lines approximate the average national poverty lines applied by poor countries, lower-middle-income countries, and upper-middle-income countries. For more discussion, see Jolliffe et al. (2022). Table A1.1 shows the different poverty lines. For comparability, they are all expressed in daily 2017 purchasing power parity (PPP) U.S. dollars. The national poverty line differs substantially by household composition. For a one-person household, it is US$13.38 2017 PPP daily. For a household comprised of four adults and four children, the poverty line is US$5.91 2017 PPP daily per capita. The average IDB extreme and moderate poverty lines are US$3.05 and US$7.76 2017 PPP daily per capita, respectively, with modest variation by region. The World Bank’s extreme poverty line (US$2.15 2017 PPP daily per capita) and upper-middle- income line (US$6.85) are each about US$0.90 2017 PPP daily per capita lower than the IDB extreme and moderate poverty lines. TABLE A1.1. POVERTY LINES EXPRESSED IN DAILY 2017 PURCHASING POWER PARITY 2017 U.S. DOLLARS A. World Bank Poverty Lines Extreme US$2.15         LMIC US$3.65         UMIC US$6.85         B. IDB Poverty lines   Region  Greater Paramar- Coastal Other Interior Average   ibo Extreme US$3.15 US$2.97 US$2.45 US$3.05   Moderate US$8.28 US$6.70 US$6.04 US$7.76   C. National Poverty Lines           Number of Children  Number of Adults 0 1 2 3 4+ 1 US$13.38 US$9.47 US$7.91 US$7.02 US$6.42 2 US$10.58 US$8.58 US$7.48 US$6.77 US$6.25 3 US$9.22 US$7.93 US$7.10 US$6.52 US$6.08 4 US$8.36 US$7.43 US$6.78 US$6.29 US$5.91 Sources: Jolliffe et al. (2022); Sobhie and Kisoensingh (2023); and Sobrado (2023). Note: LMIC: lower-middle-income country; UMIC: upper-middle-income country. 119 SURINAME POVERTY AND EQUITY ASSESSMENT APPENDIX A1.4. MULTIDIMENSIONAL POVERTY The measures of multidimensional poverty presented follow the approach of Suriname’s Multidisciplinary Poverty Working Group (Sobhie and Kisoensingh 2023). The working group established a Multidimensional Poverty Index (MPI) that can be applied to UNICEF’s Multiple Indicator Cluster Survey (MICS). The index covers four domains – health, education, standard of living, and socioeconomic security – each covering a series of indicators. Examples of these indicators include that the head of the household did not complete at least junior high school, the household does not have access to quality cooking fuel, and others. Each domain carries an equal weight of one-fourth, which is then divided equally among the indicators in the domain. For instance, if a domain has four indicators, each indicator in the domain carries a weight of one-sixteenth. A household is classified as poor if the positive scores combine to a total weight of one-fourth or more. The MPI had to be adjusted to the IDB’s Survey of Living Conditions (SLC). Not all of the indicators available in the UNICEF MICS are available in the SLC. Therefore, an effort was made to approximate the domains and indicators in the MICS survey. Table A1.2 shows the indicators available for each round of the MICS (2006, 2010, and 2018) and each round of the SLC (2016 and 2022). The table provides a description of the MPI indicators. There is some overlap in the indicators between each domain in the MICS and the SLC. But the indicators included in each domain in the MICS and the SLC are never identical. For this reason (and because there are other methodological differences in the way the MICS and the SLC data were collected), it is not possible to generate a combined time series including both the MICS and the SLC data. TABLE A1.2. MULTIDIMENSIONAL POVERTY INDEX INDICATORS AVAILABLE BY SURVEY MICS MICS MICS Dimension Indicator SLC 2017 SLC 2022 2006 2010 2018 Mortality X - X - - Chronic illness - - - X X Health (1/4) Dysfunctionality - - X X X Nutrition X X X X - Level of education X X X X X ICT skills - - - - X School attendance X X X X X Education (1/4) Communication - - - X X Literacy - - - X X Learning delay X X X X X 120 Cooking fuel X X X X X Sanitary facilities X X X X X Residence or place of living - X X - - Drinking water supply X X X X X Standard of living (1/4) Electricity X X X X - Housing and living condi- X X X X X tions Overcrowding X X X X X Household appliances X X X X X Financial support - - X X X Medical insurance - - X X X Socioeconomic Employment status - - - X X security (1/4) Safety - - X X X Dependency ratio X X X X X Source: Prepared by the authors. Note: ICT: information and communications technology; MICS: Multiple Indicator Cluster Survey; SLC: Survey of Living Conditions; TABLE A1.3. DESCRIPTION OF MULTIDIMENSIONAL POVERTY INDEX INDICATORS Cut-off point: The household lacks/does not have (qualitative/optimal) Dimension Indicator access or experiences a disadvantaged or undesirable situation in relation to (indicator), if… There is at least one death before the average age of life expectancy is Mortality reported. Chronic illness At least one member of the household has a chronic illness. Health (1/4) At least one member of the household has a disability, dysfunctionality, or Dysfunctionality has been declared unfit for the job market. He/she lives in a household where there is at least one child under the age Nutrition of 5 who is malnourished or severely overweight. The head of the household has not completed at least junior high school Level of education education. ICT skills There is no member in the household with a minimum level of ICT basic skills. There is at least one member in the household in the 6-16 age group who is School attendance no longer attending school. Education (1/4) The household does not have access to any of the following communication/ Communication information sources: newspaper, radio, television, Internet, mobile phone. At least one person in the household is illiterate, unable to read and write, Literacy or has never attended school. At least one person in the 6-16 year old age group has a learning delay of Learning delay two or more years compared to the required level. 121 SURINAME POVERTY AND EQUITY ASSESSMENT Cooking fuel The household does not have access to quality cooking fuel sources. The household does not have access to quality sanitation facilities and/or Sanitary facilities shares these facilities with other households. Drinking water The household does not have access to quality drinking water facilities supply located within a range of 200 meters. Drinking water defined as in SGD. Electricity The household does not have access to quality electricity supply. Housing and living The material of the residential dwelling such as the roof, walls, and floor is Standard of conditions inferior, or the household does not have its own residential dwelling. living (1/4) Overcrowding The household has more than three people per sleeping area. The household has access to less than half of the following household appliances and possessions (or similar items): radio, television, telephone, Household computer, means of transportation, washing machine, microwave oven, appliances air conditioner/fan, water pump, gas stove with or without oven, and refrigerator. Residence The residence where the members of the family live is not their own. At least one household member receives financial support other than old Financial support age allowance (Algemene Ouderdomsvoorziening - AOV) from the govern- ment as the main income to cover living expenses. At least one member of the household does not have health insurance or is Socioeco- Medical insurance covered by basic healthcare insurance (Basiszorgverzekering - BAZO). nomic Employment status No member of the household has a job. security (1/4) At least one member of the household was a victim of a crime in the past Safety year. The dependency ratio (number of household members/number of work- Dependency ratio ers) is more than 2. Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: ICT: information and communications technology. APPENDIX A1.5. COMPARISON OF REPORTED INCOME AND CONSUMPTION This report primarily focuses on consumption-based measures of poverty. One reason is that there appears to be underreporting of income in the 2022 Suriname Survey of Living Conditions data (a phenomenon that is not uncommon for household surveys).13 As can be seen in panel A of Figure A1.27, there is a fairly strong correlation between reported income and consumption. However, panel B shows that reported income is below reported consumption throughout the entire distribution. In the bottom decile, reported consumption (US$3.77) exceeds reported income (US$2.84) by a factor of 1.3. In higher deciles the discrepancy increases. In the top decile, reported consumption exceeds reported income by a factor of 2.2. 13 Another reason is that income data are missing for a share (approximately 5 percent) of households. 122 As a result, the estimated poverty rate for Suriname would be markedly higher when relying on reported income. Poverty as measured in accordance with the World Bank’s upper-middle- income line of US$6.85 (2017 purchasing power parity) would be 52.5 percent. Poverty as measured in accordance with the national poverty line would be 54.3 percent. FIGURE A1.27. APPARENT UNDERREPORTING OF INCOME DATA IN THE 2022 SURINAME SUR- VEY OF LIVING CONDITIONS A. Household Income and Consumption B. Reported Income and Consumption Average daily 2017 PPP U.S. dollars 60 40 20 0 1 2 3 4 5 6 7 8 9 10 Consumption decile Income Consumption Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: (A) Correlation between household reported income and consumption (in logs). (B) Average per capita daily reported income and consumption by consumption decile (in 2017 PPP US dollars). Daily income and consumption per capita in 2017 purchasing power parity U.S. dollars. APPENDIX A1.6. RESULTS BASED ON PANEL DATA As part of the 2022 Survey of Living Conditions (SLC), an attempt was made to re-interview households that had also participated in the 2016 SLC. In total, about 39.6 percent of the households included in the 2022 SLC had also been covered in the 2016 SLC. These households can be used to generate a panel dataset to examine changes over time. Analysis suggests that the households covered in both rounds of the SLC are not a random sample of the households in the 2022 data. This can be seen in Table A1.4. For instance, these households tend to be smaller, with an older head, and with fewer working-age adults. However, the differences tend to be small and there is value in looking at trends over time in panel households. 123 SURINAME POVERTY AND EQUITY ASSESSMENT TABLE A1.4. CHARACTERISTICS OF PANEL HOUSEHOLDS DIFFER FROM THOSE OF THE AVERAGE HOUSEHOLD (1) (2) (3) (4) Only SLC SLC 2017 and t-Stat Means Test Characteristic All 2022 2022 ((3) – (2)) Total number of persons 3.78 3.95 3.64 -3.63 Head of household’s age 38.11 37.20 38.87 1.82 Number of children 0.99 1.08 0.92 -3.02 Number of elderly (65+) 0.28 0.26 0.30 1.94 Number of adults (15 to 64) 2.50 2.61 2.42 -3.12 Number of employed 1.55 1.66 1.46 -4.21 Number of self-employed 0.21 0.19 0.22 1.10 Number of members working in… Agriculture 0.15 0.15 0.16 0.32 Manufacturing 0.23 0.26 0.21 -2.46 Services 1.16 1.24 1.10 -3.43 Public administration 0.64 0.72 0.57 -4.34 Education and health 0.25 0.25 0.25 0.36 Source: 2016/2017 and 2022 Suriname Survey of Living Conditions (IDB 2022). Note: The table compares average characteristics of households on the 2022 Survey of Living Conditions (SLC) according to whether or not they were also interviewed for the 2016/2017 SLC. Column (1) shows average characteristics for all households in the 2022 SLC. Column (2) presents average characteristics for households interviewed only in the 2022 SLC. Column (3) is for households present in both survey waves. Column (4) shows t-statistics for hypothesis tests where the null hypothesis is that the average of column (3) minus the average on column (2) equals zero. The panel data poverty trends mimic those observed in the overall sample. Figure A1.28 replicates the results on changes in poverty from 2017 to 2022 discussed in Section 4.2 and displayed in Figure A1.26. However, this time the sample is restricted to households in the panel data (i.e., the subset of households observed both in 2016 and 2022). It is relevant to note that the overall 2022 poverty levels are quite comparable for the full sample and the panel sample. And the trends are also qualitatively similar in the full sample and the panel sample. In both cases, there appears to be a decline in poverty when the higher poverty lines are considered, while there may have been an increase in more extreme forms of poverty. 124 FIGURE A1.28. SURINAME: TRENDS IN THE PANEL DATA MIMIC THOSE IN THE OVERALL SAM- PLE (PERCENT) 25 22,7 20 17,6 18,2 15,7 15 10 4,0 5 2,3 1,1 0,1 0 UMIC US$6.85 LMIC US$3.65 Poor countries National poverty line US$2.15 2022 2016 Sources: 2016/2017 and 2022 Suriname Survey of Living Conditions (IDB 2022). Note: The national poverty line depends on household composition. The World Bank international poverty lines are expressed in 2017 purchasing power parity U.S. dollars. Sample restricted to panel households. LMIC: lower-middle-income country; UMIC: upper-middle-income country. APPENDIX A1.7. ADDITIONAL POVERTY PROFILE TABLES TABLE A1.5. POVERTY PROFILE: SOCIODEMOGRAPHIC CHARACTERISTICS (PERCENT) Poverty Rate Poor Vulnerable Middle Class and Total   (US$6.85 PPP daily) (US$14) Population   (1) (2) (3) (4) (5) Region           Greater Paramaribo 16.8 67.7 68.5 73.2 70.4 Rest of the coastal region 15.6 18.3 20.2 21.5 20.5 Interior 26.9 14.0 11.3 5.2 9.1 Ethnicity            Creole/Afro-Surinamese 12.3 10.6 13.5 18.3 15.1 Hindustani 17.8 27.9 27.2 27.4 27.4 Maroon 32.9 40.2 22.2 13.1 21.3 Amerindian/Indigenous 29.0 4.2 2.5 1.9 2.5 Javanese 9.4 8.7 16.1 19.2 16.2 Mixed 8.8 8.4 17.9 18.7 16.6 Other 0.9 0.0 0.6 1.4 0.9 Gender           Female 18.3 52.5 50.2 49.3 50.2 Male 16.7 47.5 49.8 50.7 49.8 125 SURINAME POVERTY AND EQUITY ASSESSMENT Age           0-5 28.3 15.6 9.1 7.7 9.6 6-11 25.4 16.0 12.5 7.7 11.0 12-14 24.0 7.8 6.2 4.4 5.7 15-17 22.0 7.1 6.2 4.5 5.6 18-24 17.6 11.7 12.9 10.4 11.6 25-60 13.5 34.3 42.9 49.5 44.3 60+ 10.7 7.4 10.2 15.7 12.1 Missing age 44.3 0.2 0.1 0.0 0.1 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Column (1) shows the poverty group by category in the stub column. Columns (2) – (4) show the share of the population by each group listed in the column headings. Greater Paramaribo consists of the capital Paramaribo and some urban parts of the Wanica district. The rest of the coastal region consists of the districts of Wanica (remaining part), Para, Saramacca, Commewijne, Nickerie, and Coroni. The interior consists of the districts of Marowijne, Brokopondo, and Sipaliwini. TABLE A1.6. POVERTY PROFILE: HOUSEHOLD COMPOSITION (PERCENT) Poverty Rate Vulnerable Middle Class Poor Total (US$6.85 PPP (US$6.85- and Up (US$14)   (1) (2) (3) (4) (5) Children in household           No children 8.0 15.5 27.7 46.5 33.8 Any children 22.3 84.5 72.3 53.5 66.2 1-3 children 17.3 55.9 63.1 50.8 56.4 3+ children 51.3 28.6 9.2 2.7 9.7 Strict dependents (<6 and >80)           No 12.3 37.0 48.4 62.8 52.7 Yes 23.3 63.0 51.6 37.2 47.3 Number of household members           1 2.1 0.5 1.5 6.9 3.7 2 6.8 3.5 5.7 14.1 9.0 3 9.1 7.0 10.9 18.0 13.3 4 9.1 11.0 20.6 25.8 21.2 5 13.5 16.0 24.0 19.9 20.8 6 28.4 17.9 11.9 7.5 11.0 7 27.2 10.3 8.1 3.8 6.6 8 33.6 12.4 8.6 2.2 6.5 9 47.5 9.3 4.2 0.4 3.4 10+ 47.3 12.2 4.5 1.4 4.5 126 Household composition           Single 2.1 0.5 1.5 6.9 3.7 Couple without children 2.8 0.7 2.6 7.7 4.5 Couple with children 17.0 34.3 34.8 36.1 35.3 Single parent with children 20.0 11.3 9.0 10.2 9.9 Multigenerational household 21.8 38.5 34.5 24.8 30.9 Other 16.3 14.7 17.7 14.4 15.7 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Column (1) shows the poverty group by category in the stub column. Columns (2) – (4) show the share of the population by each group listed in the column headings. PPP: purchasing power parity. TABLE A1.7. POVERTY PROFILE: EDUCATION (PERCENT) Poverty Rate Vulnerable Middle Class Poor Total (US$6.85 (US$6.85- and Up (US$14)   (1) (2) (3) (4) (5) Household head’s education status           None 29.3 42.4 22.0 17.5 23.2 Primary 16.1 34.6 42.4 27.5 34.4 Middle school 9.0 14.0 24.6 29.0 24.9 High school 12.1 8.8 8.6 15.3 11.6 Higher education 0.5 0.2 2.5 10.8 5.8 Women’s education status (15+)                None 26.9 32.2 18.3 10.7 16.4 Primary 17.2 39.8 35.0 27.1 31.8 Middle school 9.2 15.3 23.9 24.0 22.8 High school 9.4 12.4 17.3 20.3 18.1 Higher education 0.4 0.3 5.5 17.9 10.9 Men’s education status (15+)                None 23.8 39.8 19.7 15.3 19.9 Primary 11.9 34.4 39.7 30.4 34.4 Middle school 7.6 17.3 26.5 29.7 27.0 High school 7.6 8.5 11.6 15.7 13.3 Higher education 0.0 0.0 2.5 8.9 5.4 School attendance by age                0-5 28.52 31.26 33.30 31.23 28.52 6-11 93.81 99.17 98.45 97.54 93.81 12-14 92.26 98.09 99.77 97.37 92.26 127 SURINAME POVERTY AND EQUITY ASSESSMENT 15-17 91.89 91.06 92.77 91.90 91.89 18-24 33.45 48.21 55.90 48.81 33.45 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Column (1) shows the poverty group by category in the stub column. Columns (2) – (4) show the share of the population by each group listed in the column headings. PPP: purchasing power parity. TABLE A1.8. POVERTY PROFILE: LABOR MARKET CHARACTERISTICS (PERCENT) Poverty Rate Vulnerable Middle Class Poor Total (US$6.85 (US$6.85- and Up (US$14)   (1) (2) (3) (4) (5) In the labor force           No 21.4 47.8 34.9 29.6 34.5 Yes 12.1 52.2 65.1 70.4 65.5 Unemployed No 17.2 84.4 90.7 95.9 92.5 Yes 25.4 15.6 9.3 4.1 7.5 Informal employment No 7.7 47.7 66.8 69.1 66.0 Yes 16.3 52.3 33.2 30.9 34.0 Sector (of employed) Agriculture 17.1 10.1 6.7 5.2 6.3 Mining 4.9 1.7 5.0 3.2 3.7 Manufacturing 12.9 8.5 7.7 6.2 7.0 Construction 18.5 14.1 9.8 5.7 8.1 Retail 7.0 4.0 6.7 6.1 6.1 Hospitality 13.9 7.0 4.6 5.6 5.4 Public administration 4.5 2.6 5.6 7.4 6.2 Education and heath 6.1 9.3 15.0 18.3 16.1 Household as employers 16.2 4.3 2.5 2.7 2.8 Administrative services 6.6 9.2 12.5 17.4 14.7 Transportation 6.9 4.3 5.8 7.7 6.6 Utilities 6.6 1.9 4.3 2.4 3.0 Other 17.4 23.0 13.9 12.3 14.0 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Column (1) shows the poverty group by category in the stub column. Columns (2) – (4) show the share of the population by each group listed in the column headings. Labor force equals the employed and unemployed population. Informal worker status is defined by occupation. Specifically, informal workers are unskilled self-employed workers, salaried workers in a small private firm, and zero-income workers. PPP: purchasing power parity. 128 TABLE A1.9. POVERTY PROFILE: HOUSING CHARACTERISTICS AND PHYSICAL ASSETS (PERCENT) Poverty Rate Poor Vulnerable Middle Class and Total   (US$6.85 PPP daily) (US$14) Population   (1) (2) (3) (4) (5) Housing           Homeowner           No 14.7 42.1 38.2 31.9 35.3 Yes 11.0 57.9 61.8 68.1 64.7 Housing material Good quality 12.1 94.5 95.5 96.1 95.7 Low-quality 15.7 5.5 4.5 3.9 4.3 Access to water No 20.4 31.8 20.7 15.2 19.1 Yes 10.4 68.2 79.3 84.8 80.9 Access to bathroom No 36.2 18.7 4.7 4.6 6.3 Yes 10.7 81.3 95.3 95.4 93.7 Access to electricity No 50.0 1.1 0.1 0.2 0.3 Yes 12.2 98.9 99.9 99.8 99.7             Physical Assets           Owns more than half of list of appliances         No 8.1 49.9 25.9 16.5 23.8 Yes 25.8 50.1 74.1 83.5 76.2 Owns TV No 21.2 30.1 19.4 13.4 17.4 Yes 10.4 69.9 80.6 86.6 82.6 Has cable TV No 13.1 99.8 97.3 90.2 93.8 Yes 0.4 0.2 2.7 9.8 6.2 Has video device No 12.5 97.5 96.5 94.4 95.5 Yes 7.0 2.5 3.5 5.6 4.5 Has car No 21.8 65.0 40.5 27.9 36.7 Yes 6.8 35.0 59.5 72.1 63.3 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Column (1) shows the poverty group by category in the stub column. Columns (2) – (4) show the share of the population by each group listed in the column headings. PPP: purchasing power parity. 129 SURINAME POVERTY AND EQUITY ASSESSMENT TABLE A1.10. POVERTY PROFILE: ACCESS TO MARKETS (PERCENT) Poverty Rate Vulnerable Middle Class Poor Total Popula- (US$6.85 (US$6.85- and Up (US$14)   (1) (2) (3) (4) (5) Phone           No 16.6 3.2 3.0 1.8 2.4 Yes 12.2 96.8 97.0 98.2 97.6 Landline No 17.6 90.8 68.8 53.6 63.3 Yes 3.1 9.2 31.2 46.4 36.7 Cellphone No 13.0 3.3 3.7 2.8 3.1 Yes 12.3 96.7 96.3 97.2 96.9 Bank account No 23.4 46.9 29.7 19.1 26.1 Yes 8.1 53.1 70.3 80.9 73.9 Internet No 19.5 42.2 30.7 20.5 26.6 Yes 9.7 57.8 69.3 79.5 73.4 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Column (1) shows the poverty group by category in the stub column. Columns (2) – (4) show the share of the population by each group listed in the column headings. PPP: purchasing power parity. 130 REFERENCES 131 SURINAME POVERTY AND EQUITY ASSESSMENT Arteaga, Maricruz, Diether Beuermann, and Jeetendra Khadan. 2021. The Consequences of COVID-19 on Livelihoods in Suriname: Evidence from a Telephone Survey. IDB Technical Note No. 2157. Inter-American Development Bank, Washington, DC. Available at https://publications.iadb.org/en/consequences- covid-19-livelihoods-suriname-evidence-telephone-survey Attanasio, Orazio P., and Miguel Székely. 1999. An Asset-Based Approach to the Analysis of Poverty in Latin America. IDB Working Paper No. R-376, Inter-American Development Bank, Washington, DC. Available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=223582 Bussolo, Maurizio, and Luis F. Lopez-Calva. 2014. Shared Prosperity: Paving the Way in Europe and Central Asia. Washington, DC: World Bank. Available at https://www.worldbank.org/content/dam/Worldbank/ Feature%20Story/ECA/shared-prosperity-paving-the-way-in-europe-and-central-asia.pdf Buitrago-Hernandez, Paola, Jacobus De Hoop, Phoebe Ishak, Raquel Melgard Calderon, and Hugo Ñopo. 2024. Poverty Is Not Gender Neutral in Latin America and the Caribbean. World Bank Blog (March 1). Available at https://blogs.worldbank.org/en/latinamerica/poverty-not-gender-neutral-latin-america- and-caribbean Carter, Michael R., and Christopher B. Barrett. 2006. The Economics of Poverty Traps and Persistent Poverty: An Asset-Based Approach. Journal of Development Studies 42(2): 178–99. Deaton, Angus, and Salman Zaidi. 2022. Guidelines for Constructing Consumption Aggregates for Welfare Analysis. Living Standards Measurement Study Working Paper No. 135. Available at https:// documents1.worldbank.org/curated/en/206561468781153320/pdf/Guidelines-for-constructing- consumption-aggregates-for-welfare-analysis.pdf Inter-American Development Bank (IDB). 2022. 2022 Suriname Survey of Living Conditions. IDB, Washington, DC. Available at https://mydata.iadb.org/Social-Protection/2022-Suriname-Survey-of- Living-Conditions/prbn-x74x/about_data Jolliffe, Dean, Daniel Gerszon Mahler, Christoph Lakner, Aziz Atamanov, and Samuel Kofi Tetteh-Baah. 2022. Assessing the Impact of the 2017 PPPs on the International Poverty Line and Global Poverty. Policy Research Working Paper No. 9941. World Bank, Washington, DC. Available at https://documents1. worldbank.org/curated/en/353811645450974574/pdf/Assessing-the-Impact-of-the-2017-PPPs-on- the-International-Poverty-Line-and-Global-Poverty.pdf Lopez-Calva, Luis F., and Carlos Rodríguez-Castelán. 2016. Pro-Growth Equity A Policy Framework for the Twin Goals. Policy Research Working Paper No. 7897. World Bank, Washington, DC. Available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2876953 Mancini, Giulia, and Giovanni Vecchi. 2022. On the Construction of a Consumption Aggregate for Inequality and Poverty Analysis. World Bank, Washington, DC. Available at https://documents1.worldbank.org/ curated/en/099225003092220001/pdf/P1694340e80f9a00a09b20042de5a9cd47e.pdf Republic of Suriname. 2022. Financieel Jaarplan 2023. Available at https://gov.sr/wp-content/ uploads/2022/10/Financieel-Jaarplan-2023_final.pdf 132 Republic of Suriname. 2024. Financieel Jaarplan 2024. Available at https://www.gov.sr/wp-content/ uploads/2023/10/Financieel-Jaarplan-2024.pdf Saavedra, Trinidad, and Diana Sanchez. Forthcoming. Constructing harmonized consumption- based welfare aggregates for poverty and inequality analysis in Caribbean countries. World Bank, Washington, DC. Sobhie, Rosita, and Anjali Kisoensingh. 2023. Methoden en technieken ter vaststelling en bestrijding van armoede in Suriname Multidisciplinaire Weregroep Armoedegendsbepaling 2020-2023. Ministerie van Arbeid Werkgelegenheid & Jeugdzaken. Available at https://gov.sr/wp-content/uploads/2023/05/ STATISTIEK-ARMOEDE-FINAL-DRUK-230423.pdf Sobrado, Carlos. 2023. Methodological Report on the Consumption Aggregate and Poverty Lines based on the 2022 Suriname Survey of Living Conditions. IDB, Washington, DC. Available at https://mydata. iadb.org/Social-Protection/2022-Suriname-Survey-of-Living-Conditions/prbn-x74x/about_data World Bank. 2023. Suriname Systematic Country Diagnostic. June. World Bank, Washington, DC. Available at https://openknowledge.worldbank.org/entities/publication/d022eb9f-03a2-4378-a171- 825991ce08ad 133 ANNEX 2. SURINAME: LABOR MARKET DIAGNOSTIC SURINAME POVERTY AND EQUITY ASSESSMENT CONTENTS Key Findings 139 1. Introduction 140 2. International Benchmarking 140 3. Structural Labor Supply-side Issues 147 3.1. Characteristics of the Labor Force 148 3.2. Employed Population 148 3.3. The Unemployed and the Population Outside of the Labor Force 154 4. Structural Labor Demand-side Issues 158 4.1. Firm Characteristics 159 4.2. Firm Performance 163 4.3. Skills and Vacancies 165 5. Labor Market Equilibrium 169 5.1. Potential Skills Mismatch 170 5.2. Wages and Returns 171 5.3. Skill Shortages Aggravated by the Failure to Capitalize on Women’s Strong Educational Performance 175 6. Policy Recommendations 178 References 181 136 FIGURES Figure A2.1. Suriname: Labor Force Participation and Wage and Salaried Workers (Percent) 144 Figure A2.2. Suriname: Vulnerable Employment and Unemployment (Percent) 145 Figure A2.3. Suriname: Youth Not in Education, Employment, or Training (Percent) 146 Figure A2.4. Suriname: Average Years of Schooling 149 Figure A2.5. Suriname: Average Schooling Years by Consumption Quintile 149 Figure A2.6. Suriname: Highest Level of Educational Completed (Percent) 150 Figure A2.7. Suriname: Software and Office Skills (Percent) 150 Figure A2.8. Suriname: Employment Status (Percent) 151 Figure A2.9. Suriname: Contribution and Affiliation to Social Security (Percent) 152 Figure A2.10. Suriname: Firm Size (Percent) 152 Figure A2.11. Occupations in Suriname (Percent) 153 Figure A2.12. Employment Sectors in Suriname (Percent) 154 Figure A2.13. Suriname: Sources Used to Look for a Job (Percent) 155 Figure A2.14. Suriname: Occupations that Jobseekers Look For (Percent) 155 Figure A2.15. Suriname: Reason for Not Working (Percent) 156 Figure A2.16. Suriname: Reasons for Not Looking for a Job (Percent) 156 Figure A2.17. Suriname: Duration of Unemployment (Months) 157 Figure A2.18. Gender Considerations (Percent) 161 Figure A2.19. Employment Benefits (Percent) 162 Figure A2.20. Skill Shortages Reported by Firms as an Obstacle (Percent) 162 Figure A2.21. Suriname: Potential Causes of Skill Shortages (Percent) 163 Figure A2.22. Suriname: Productivity and Wages (U.S. dollars) 164 Figure A2.23. The Caribbean and Suriname: Labor Productivity and Wages (U.S. dollars) 165 137 SURINAME POVERTY AND EQUITY ASSESSMENT Figure A2.24. Suriname: Required and Average Level of Education (Percent) 166 Figure A2.25. Percentage of Firms Offering Formal Training (Percent) 167 Figure A2.26. Suriname: Desired Characteristics and Skills (Percent) 167 Figure A2.27. Suriname: Difficulty Finding Appropriate Job Candidates 168 Figure A2.28. Suriname: Labor Supply and Demand by Level of Education (Percent) 170 Figure A2.29. Suriname: Hourly Wages and Returns to Education 172 Figure A2.30. Suriname: Population Earning Below the Minimum Wage (Percent) 173 Figure A2.31. Suriname: Informality and Earnings 174 Figure A2.32. Suriname: Returns to Education and Development 174 Figure A2.33. Suriname: Highest Level of Education Completed by Adults, National and by Gender (Percent) 175 Figure A2.34. Suriname: Gender Differences in Labor Market Outcomes (Percent) 176 Figure A2.35. Suriname: Labor Force Participation and Employment by Gender and Educational Attainment (Percent) 177 Figure A2.36. Suriname: High Rates of Early Marriage and Adolescent Fertility Contribute to Gender Disparities in Labor Market Outcomes 177 TABLES Table A2.1. Suriname: Demographic and Socioeconomic Characteristics of the Workforce 148 Table A2.2. Profile of Firms in Suriname 160 138 KEY FINDINGS • Suriname’s aggregate labor market indicators, such as the labor force participation rate, unemployment rate, share of wage workers, share of workers in vulnerable employment, and share of youth not in employment, education, or training, are where they would be expected to be given the country’s level of development. • Labor productivity and wages in Suriname are significantly below other Caribbean nations, a phenomenon that is likely determined by the human capital deficiencies documented in Annex 1. Over 55 percent of firms report an inadequately educated and trained workforce as an obstacle to their operations, with the low quality of local educational institutions being the main factor behind the skill shortage. • The lack of adequately educated workers translates into a mismatch between labor supply and demand. While 30.2 percent of the positions in the private sector demand workers with either vocational training or a university degree, only 9.4 percent of the labor force has this level of educational attainment. • Skill shortages are exacerbated by a failure to capitalize on women’s strong educational performance. While women significantly outperform men in terms of educational attainment, they are also significantly less likely to participate in the labor market and more likely to be unemployed. A combination of high rates of teen marriages and pregnancies together with social norms that disproportionately place the burden of domestic and family chores on women contribute to women’s unfavorable labor market outcomes. Preparation of this annex was led by Diether W. Beuermann Mendoza, Carolina Echeverri Duran, Yyannu Cruz-Aguayo, Ricardo Sierra, and Gisele Teixeira Braun. Clemente Avila Parra and Jacobus de Hoop contributed with extensive feedback and input. 139 SURINAME POVERTY AND EQUITY ASSESSMENT 1. INTRODUCTION 140 The labor market constitutes a major component of any economy because it is intricately linked to markets for capital, goods, and services. In the labor market, jobseekers (i.e., labor supply) offer their skills and time to employers (i.e., labor demand), which in turn offer wages and benefits, thereby creating jobs and a source of income for employees. In a well-functioning labor market, supply and demand typically reach equilibrium wages aligned with the productivity of workers. However, several frictions often impede a well-functioning labor market. For example, the unavailability of needed skills to support productivity growth, or barriers that restrain the labor market participation of productive individuals, can greatly affect the development prospects of an economy. The availability of both a household-level survey (the 2022 Suriname Survey of Living Conditions - SLC) conducted by the IDB and a firm-level survey (the 2020 Innovation, Firm Performance, and Gender Survey - IFPG) conducted by Compete Caribbean offers an opportunity to analyze labor supply and demand in Suriname.1 The SLC allows for examining key characteristics of labor supply, such as education levels and labor market engagement and success. The IFPG survey is used to explore the demand for skills by firms. Finally, both sources of information are combined to shed light on the extent to which supply and demand for skills are appropriately met and whether potential frictions may be impeding a well-functioning labor market. The analysis finds that most of Suriname’s core labor market indicators are in line with what would be expected given its level of economic development. The labor force participation rate of 65.7 percent and the unemployment rate of 7.8 percent are effectively where they would be expected to be given the country’s GDP per capita. The same holds for many other indicators such as the share of wage workers, share of workers in vulnerable employment, and share of youth not in employment, education, or training (NEET). Nonetheless, labor productivity and wages in Suriname are significantly below other Caribbean countries. Evidence form the IFPG shows that labor productivity in Suriname, measured as the U.S. dollar value of sales per full-time worker, is only a bit over a fourth of the average in the rest of the Caribbean. Likewise, annual wages (also expressed in current U.S. dollars) are only a little over a quarter of those wages in other countries in the region. The poor health outcomes and low levels of educational attainment documented in Annex 1 are likely to be contributing factors to low productivity and wages. Indeed, 55 percent of firms mention an inadequately educated and trained workforce as an obstacle to their operations. Among larger, more mature firms, this share increases to 90 percent. Overall, nearly half of firms consider the low quality of education and training offered by local educational institutions to be a very important or even critical factor behind the skill shortage in the country. This is followed by labor protection laws and regulations and the lack of necessary personal, soft skills (training) offered by local institutions. The lack of an adequately trained workforce translates into a mismatch between the skills demanded by employers and those offered by workers. The analysis shows that there is an excess supply of workers with lower levels of education (primary and secondary) and excess demand for workers with tertiary education. Indeed, 23.3 percent of positions in the private sector demand workers with primary education (mostly driven by the demand for craft and related trade workers and 1 For the 2022 SLC, see IDB (2022). For the IFPG, see the Compete Caribbean website at https://www.competecaribbean. org/proteqin-ifpg-datasets/ (accessed June 21, 2024). 141 SURINAME POVERTY AND EQUITY ASSESSMENT elementary occupations), but 43.5 percent of the Surinamese labor force has primary education as its highest educational attainment. The opposite occurs for tertiary education. The labor market demand for persons with either vocational training or a university degree is 30.2 percent, strongly exceeding the 9.4 percent of the labor force that has this level of educational attainment. While the comparatively strong educational attainment of women offers an opportunity to address skill shortages, such academic advantage is not reflected in women’s labor market outcomes. As in many other countries in the region, there is a “reverse gender gap” in education outcomes in Suriname, with women outperforming men y a sizable margin. While 15 percent of men have not completed any education, among women this share is 8 percent. On the other hand, about 15 percent of women have completed tertiary education compared to 6 percent of men. That said, women are still worse off than men on virtually all the main labor market outcomes. These disparities are visible at an early age. On average, 11 percent of youths ages 16 to 25 are NEET. However, the share of those who are NEET is markedly higher among females (16.3 percent) than males (6.4 percent). Differences are no less pronounced among many other core outcomes related to labor market participation. The share of women in the labor force is 54.5 percent, versus 76.7 percent for men. And even among persons in the labor force, the unemployment rate is markedly higher for women (10.5 percent) than for men (5.3 percent). Section 2 of this annex benchmarks some key aggregate labor market indicators within a global perspective. Section 3 describes the labor supply, while Section 4 analyzes labor demand. Section 5 explores the intersection between labor supply and demand. Section 6 closes with policy recommendations. 142 2. INTERNATIONAL BENCHMARKING 143 SURINAME POVERTY AND EQUITY ASSESSMENT International benchmarking provides valuable insights into the performance, efficiency, and dynamics of employment systems around the world. Benchmarking analysis usually includes metrics related to workforce participation, employment, and unemployment rates, among other indicators. By benchmarking these indicators, policymakers can evaluate whether existing labor market policies would yield the desirable outcomes and identify areas of improvement. The benefits of benchmarking can be further enhanced by international collaboration through the promotion of global or regional standards. However, the analysis and policy discussions derived from international benchmarking have usually been scarce in the Caribbean due to a lack of available data. As such, the SLC provides an invaluable opportunity to shed light on these issues for Suriname. The benchmarking analysis places Suriname’s key labor market indicators within a global perspective. This is done by (i) considering all countries globally with available data, and (ii) adding an appropriate “norm” against which each indicator is measured. Such a norm is the level of achievement that could be expected in each country considering its level of economic development (measured as real GDP per capita). Hence, the graphic representation for this international benchmarking analysis is a series of scatter plots of relevant labor market indicators with respect to GDP per capita. While Suriname’s labor force participation is at the expected level given its real GDP per capita, its share of wage and salaried workers is above the expected level. The overall labor force participation rate of 65.7 percent is perfectly aligned with what would be expected from a global benchmarking exercise (panel A, Figure A2.1). Wage and salary workers account for 78 percent of employees in Suriname, which is above what is expected given its level of economic development (panel B, Figure A2.1). The prominence of the public sector and state-owned enterprises in Suriname’s economy is part of the explanation for this high level of wage and salary workers. 90 Bahamas, The Jamaica 70 LCN FIGURE A2.1. SURINAME: LABOR FORCE PARTICIPATION AND WAGE AND Suriname SALARIED Caribbean Trinidad and Tobago Percent WORKERS (PERCENT) small states Guyana 50 A. Labor Force Participation Wage B. 30 $0 and Salaried $10.000 Workers $20.000 $30.000 $40.000 (Percent of total population ages 15-64) (Percent of total labor force) GDP per capita PPP (constant 2017 U.S. dollars) 100 Bahamas, The 90 Suriname 80 Trinidad and Tobago Bahamas, The Jamaica Caribbean Guyana 70 LCN 60 LCN small states Jamaica Suriname Percent Caribbean Trinidad and Tobago Percent small states 40 Guyana 50 20 30 0 $0 $10.000 $20.000 $30.000 $40.000 $0 $10.000 $20.000 $30.000 $40.000 $50.000 $60.000 GDP per capita PPP (constant 2017 U.S. dollars)   GDP per capita PPP (constant 2017 U.S. dollars) 100 Sources: Latest labor force participation and unemployment rates and corresponding PPP-adjusted GDP per capita from the Bahamas, The World Bank’s World Development Suriname Indicators. For Suriname, poverty assessment team based on 2022 Suriname Survey of Living Trinidad and Tobago 80 Conditions (IDB 2022). Caribbean Guyana Note: LCN: Latin America and Caribbean; PPP: purchasing power parity. 60 LCN small states Jamaica Percent 40 144 20 0 Suriname’s level of vulnerable employment is below its income level norm, while the unemployment rate is commensurate with what would be expected. Vulnerable employment is defined as the sum of own-account workers (defined as self-employed workers without employees) and contributing family workers. A high proportion of vulnerable employment is indicative of weak development, poor job growth prospects, and often a large share of employment in the rural economy. As opposed to wage and salaried workers, this indicator is inversely related to income per capita. Panel A of Figure A2.2 shows how Suriname’s rate of vulnerable employment (18.5 percent) is below 100 what would be expected given its level of economic development. Panel B of Figure A2.2 shows that Suriname’s unemployment rate (7.8 percent) is aligned 80 with the fitted line representing the norm between unemployment and economic development. 60 Percent 40 Jamaica LCN Caribbean small states Guyana Trinidad and Tobago(PERCENT) FIGURE A2.2. SURINAME: VULNERABLE EMPLOYMENT AND UNEMPLOYMENT Suriname Bahamas, The 20 0 $0 $10.000 $20.000 $30.000 $40.000 $50.000 $60.000 GDP per capita PPP (constant 2017 U.S. dollars) A. Vulnerable Employment B. Unemployment 100 35 30 80 25 60 20 Percent Percent 40 Jamaica 15 Guyana LCN Caribbean small states Guyana 10 Suriname Bahamas, The 20 Trinidad and Tobago Jamaica LCN Suriname Bahamas, The 5 Caribbean small states Trinidad and Tobago 0 0 $0 $10.000 $20.000 $30.000 $40.000 $50.000 $60.000 $0 $10.000 $20.000 $30.000 $40.000 $50.000 $60.000 GDP per capita PPP (constant 2017 U.S. dollars) GDP per capita PPP (constant 2017 U.S. dollars) 35 30 25 Sources: Latest statistics available from the World Bank’s World Bank’s World Development Indicators. For Suriname, poverty 20 assessment team based on 2022 Suriname Survey of Living Conditions (IDB 2022). Percent 15 Guyana Note: LCN: Latin America and Caribbean; PPP: purchasing power parity. 10 Suriname Bahamas, The Jamaica LCN 5 Caribbean small states Trinidad and Tobago 0 $0 The proportion $10.000 $20.000 Surinamese of $30.000 $40.000 youth $50.000 that $60.000 are NEET is commensurate with the country’s level of development . The GDP per capita PPP (constant 2017 U.S.standard dollars) definition of unemployed persons analyzed above includes individuals without work in a given period who are currently available for, and actively seeking, employment. Nonetheless, there may be persons who do not actively search for a job because they do not find the available job opportunities to be attractive, face discrimination, have restricted labor mobility, or face other structural barriers. NEET partially captures the untapped potential of a country’s youth. Figure A2.3 shows how Suriname is positioned practically at the fitted regression line between NEET and income per capita. Suriname’s NEET rate is below that of Jamaica and the average for Caribbean small states. Trinidad and Tobago, with a higher income per capita, has a similar proportion of NEET than Suriname. 145 SURINAME POVERTY AND EQUITY ASSESSMENT FIGURE A2.3. SURINAME: YOUTH NOT IN EDUCATION, EMPLOYMENT, OR TRAINING (PERCENT) 50 Guyana 40 30 Jamaica Caribbean small states Percent 20 LCN Trinidad and Tobago Suriname 10 Bahamas, The 0 $0 $10.000 $20.000 $30.000 $40.000 $50.000 $60.000 GDP per capita PPP (constant 2017 U.S. dollars) Source: Latest statistics available from the World Bank’s World Development Indicators. For Suriname: Poverty assessment team based on 2022 Suriname Survey of Living Conditions (IDB 2022). Note: LCN: Latin America and Caribbean; PPP: purchasing power parity. 146 3. STRUCTURAL LABOR SUPPLY-SIDE ISSUES 147 SURINAME POVERTY AND EQUITY ASSESSMENT 3.1. CHARACTERISTICS OF THE LABOR FORCE The average age of persons in the workforce in Suriname is 38.8 years old, with 59 percent male, 10.23 years of schooling, and 21.37 years of potential work experience (Table A2.1).2 About half are married, while around 39 percent are identified as household heads. On average, there are 0.72 children younger than 18 years old in their household. Furthermore, the average number of years of potential work experience among individuals in the Surinamese workforce is 21.37 years. TABLE A2.1. SURINAME: DEMOGRAPHIC AND SOCIOECONOMIC CHARACTERISTICS OF THE WORKFORCE   Mean Age 38.83 Male 0.59 Years of schooling 10.23 Married 0.52 Household head 0.39 Number of children younger than 18 years old 0.72 Years of potential experience 1 21.37 Source: 2022 Suriname Survey of Living Conditions (IDB 2022). The population in Suriname accumulates on average 10.2 years of schooling, with levels especially low in the interior, among Maroon and indigenous populations, and among people at the bottom of consumption distribution. Disaggregation of schooling years shows important heterogeneities (Figure A2.4). By location, the average number of years of schooling in the interior is 5.8, compared to around 10 years for coastal areas. By ethnicity, indigenous and Maroon people have fewer years of schooling compared to other ethnic categories, which are closer to the national level. By gender, women outperform men with more years of schooling. Figure A2.5 shows a positive correlation between consumption levels and years of schooling, that is, people in the top consumption distribution are on average more educated. More than 40 percent of Surinamese people have completed primary education or less, and less than 10 percent have completed higher education. Concerning the highest education level attained and completed, at the national level 12.1 percent of individuals have completed none or kindergarten, 31.3 percent have completed up to primary education, and 21 percent have completed secondary education. Less than 10 percent of the population has attained a higher education degree (Figure A2.6). Comparatively, within specific geographic and demographic categories, a larger proportion of individuals in the interior, indigenous communities, Maroons, males, and those at the lower end of the income distribution have completed primary education or less. 1 Potential years of experience is calculated as age minus years of education minus seven, assuming most children start school at age 7. 2 The workforce consists of individuals currently working or actively looking for employment. 148 FIGURE A2.4. SURINAME: AVERAGE YEARS OF SCHOOLING 0 2 4 6 8 10 12 National All 10,23 Great Paramaribo 10,70 Location Coastal 9,77 Interior 5,79 Creole 11,36 Hindustani 10,01 Maroon 8,06 Ethnicity Indigenous 8,73 Javanese 10,46 Mixed 11,64 Others 10,59 Female 11,28 Gender Male 9,50 Source: 2022 Suriname Survey of Living Conditions (IDB 2022). FIGURE A2.5. SURINAME: AVERAGE SCHOOLING YEARS BY CONSUMPTION QUINTILE 13 12 11 10 Years 9 8 7 6 5 1 2 3 4 5 Consumption quitile Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: The horizontal axis represents quintiles of per capita consumption (excluding durables). 149 SURINAME POVERTY AND EQUITY ASSESSMENT FIGURE A2.6. SURINAME: HIGHEST LEVEL OF EDUCATIONAL COMPLETED (PERCENT) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% National 12,1% 31,3% 26,1% 21,0% 9,4% All Great Paramaribo 9,5% 29,9% 27,0% 22,8% 10,8% Location Coastal 14,0% 34,8% 28,2% 16,9% 6,1% Interior 44,7% 38,8% 3,5% 10,7% 2,3% Creole 4,5% 27,5% 30,7% 26,4% 10,8% Hindustani 16,4% 30,9% 23,9% 17,4% 11,3% Maroon 23,3% 37,7% 20,1% 14,1% 4,8% Ethnicity Indigenous 18,8% 46,3% 24,8% 7,2% 3,0% Javanese 9,8% 32,0% 28,3% 23,4% 6,5% Mixed 3,5% 27,0% 29,2% 28,4% 11,9% Others 7,1% 31,2% 16,8% 19,8% 25,2% Female 7,5% 24,6% 22,4% 30,4% 15,2% Gender Male 15,3% 35,9% 28,6% 14,7% 5,5% Q1 Consump 25,2% 43,2% 20,6% 10,8% tion Q5 6,4% 22,7% 27,6% 23,3% 20,0% None or kindergarten Primary Middle School High School Higher Education Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Q1 represents the first quintile based on per capita consumption. Q5 represents the fifth quintile, with the highest values of per capita consumption. A low proportion of the population in Suriname performs activities associated with software and office skills, which are among the skills in high demand by employers. Among individuals ages 15 and older, 37.7 percent report engaging in activities related to software skills, while 35.8 percent report involvement in office-skill-related activities (Figure A2.7). However, these proportions are notably lower among individuals residing in the interior, indigenous and Maroons communities, and persons in the lowest consumption quintile. FIGURE A2.7. SURINAME: SOFTWARE AND OFFICE SKILLS (PERCENT) 60% 40% 20% 0% National Great Paramaribo Coastal Interior Creole Hindustani Maroon Indigenous Javanese Mixed Others Female Male Q1 Q5   All Location Ethnia Gender Consumption Software skills O ce skills Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Q1 represents the first quintile based on per capita consumption. Q5 represents the fifth quintile, with the highest values of per capita consumption. 150 3.2. EMPLOYED POPULATION This section examines indicators associated with the characteristics of participants in the labor force. Specifically, it explores employment status, affiliation with and contribution to social security, firm size, economic sector, and occupation. Examining these factors provides insight into the nature of employment opportunities within the country, focusing on aspects related to job security, benefits, and the organizational structure of workplaces. Approximately 80 percent of the employed population in Suriname report to be employees; 11.5 percent of the employed population work in self-employment; and the rate of self- employment is relatively higher in the interior and among Indigenous people (Figure A2.8). By income group, a higher proportion of employers and self-employees are at the top of the consumption distribution than at the bottom, and a higher proportion of contributing family workers are in the lowest consumption category. FIGURE A2.8. SURINAME: EMPLOYMENT STATUS (PERCENT) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% National All Great Paramaribo Location Coastal Interior Creole Hindustani Maroon Ethnicity Indigenous Javanese Mixed Others Female ption Gender   Male   Q1 Consum Q5 Employer Self-employed Contributing family worker Employee Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Q1 represents the first quintile based on per capita consumption. Q5 represents the fifth quintile, with the highest values of per capita consumption. At the national level, persons who contribute to and are affiliated with social security account for less than 50 percent of employees (Figure A2.9). Notably, affiliation rates closely align with contribution rates, suggesting a strong correlation between participation and financial support. However, there is discernible heterogeneity in contribution and affiliation rates among spe- cific demographic groups. Indigenous populations, males, and individuals in the lowest consumption 151 SURINAME POVERTY AND EQUITY ASSESSMENT quintile have relatively lower rates of contribution to and affiliation with social security programs, underscoring potential disparities in access to social safety nets among these groups. FIGURE A2.9. SURINAME: CONTRIBUTION AND AFFILIATION TO SOCIAL SECURITY (PERCENT) 60% 40% 20% 0% Female National Great Paramaribo Coastal Male Q1 Q5 Interior Hindustani Indigenous Javanese Others Maroon Mixed Creole All Location Ethnia Gender Consumption Contributes to social security A liated to social security Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Q1 represents the first quintile based on per capita consumption. Q5 represents the fifth quintile, with the highest values of per capita consumption. Most employees in Suriname work in small firms, with over half (50.1 percent) of the employed population engaged in firms with fewer than 10 workers (Figure A2.10), 29.6 percent employed in medium-sized companies with 10 to 49 employees, and 20.4 percent employed in larger firms with 50 or more employees. Notably, the prevalence of employment in small businesses is more pronounced in the interior and among individuals in the lowest consumption quintile. FIGURE A2.10. SURINAME: FIRM SIZE (PERCENT) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% National 16,2% 18,9% 15,0% 29,6% 20,4% All Great Paramaribo 16,5% 18,4% 14,5% 28,4% 22,3% Location Coastal 14,1% 20,1% 16,5% 32,7% 16,7% Interior 19,5% 22,3% 16,2% 34,2% 7,9% Creole 17,0% 14,0% 13,6% 31,7% 23,8% Hindustani 16,3% 21,1% 14,9% 29,0% 18,8% Maroon 21,3% 18,9% 15,1% 30,0% 14,6% Ethnicity Indigenous 23,2% 18,2% 8,7% 32,3% 17,6% Javanese 12,2% 23,1% 17,6% 28,3% 18,8% Mixed 13,9% 15,7% 15,2% 28,3% 26,8% Others 13,5% 19,4% 5,1% 34,4% 27,5% Female 18,0% 13,8% 10,7% 38,1% 19,4% mption Gender Male 15,0% 22,3% 17,8% 24,0% 21,0% Q1 21,5% 32,9% 15,9% 19,2% 10,5% Consu Q5 16,8% 14,2% 12,6% 31,7% 24,8% Only 1 person 2 to 4 persons 5 to 9 persons 10 to 49 persons 50 or more persons Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Q1 represents the first quintile based on per capita consumption. Q5 represents the fifth quintile, with the highest values of per capita consumption. 152 Most employed individuals in Suriname hold elementary occupations, service and sales positions, clerical and support functions, and professional roles, with notable gender disparities in occupation distribution (Figure A2.11).3 Conversely, occupations such as skilled agricultural, forestry, and fish work, managerial roles, armed forces positions, and other positions account for less than 5 percent of the employed population. Gender disparities are evident, with men predominantly occupying most roles, except for professionals, clerical support workers, and service and sales positions. Suriname’s major employment sectors include administrative services, education, construction, and manufacturing. The primary industries driving employment in Suriname include administrative and support services, education, construction, and manufacturing (Figure A2.12). Gender- based sectorial segregation is apparent, with a notable overrepresentation of women in fields such as education, human health and social work activities, accommodation, and food services, as well as administrative and support services. FIGURE A2.11. OCCUPATIONS IN SURINAME (PERCENT) 3,0% Other 3,5% 2,2% 2,5% Armed Forces Occupations, other ranks 3,8% 0,4% 22,7% Elementary Occupations 25,0% 19,1% 5,1% Plant and Machine Operators and Assemblers 8,4% 0,0% 6,0% Craft and Related Trades Workers 7,3% 3,9% 3,9% Skilled Agricultural, Forestry and Fish 4,9% 2,4% 22,3% Services and Sales Workers 19,5% 26,7% 10,3% Clerical Support Workers 4,8% 18,8% 7,6% Technicians and Associate Professionals 10,6% 3,1% 13,4% Professionals 8,8% 20,4% 3,2% Managers 3,4% 3,0% 0% 5% 10% 15% 20% 25% 30% All Male Female Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Occupations listed are defined according to the International Standard Classification of Occupations (ISCO-08). 3 According to the International Standard Classification of Occupations, elementary occupations consist of simple and rou- tine tasks that mainly require the use of hand-held tools and often some physical effort. 153 SURINAME POVERTY AND EQUITY ASSESSMENT FIGURE A2.12. EMPLOYMENT SECTORS IN SURINAME (PERCENT) Other Water supply, sewerage, waste managemen Agriculture, forestry & fishing   Administrative and support service activities Mining and quarrying Transportation & storage Activities of households as employers Accommodation & food service activities Manufacturing Human health and social work activities Education Construction Public administration, defense Wholesale & retail (trade) 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% All Male Female Source: Suriname Survey of Living Conditions (IDB 2022). 3.3. THE UNEMPLOYED AND THE POPULATION OUTSIDE OF THE LABOR FORCE This section aims to examine the channels that unemployed individuals use in their job search, the specific occupations that job seekers target, the causes of unemployment, and barriers that prevent people from entering the labor market and looking for jobs. The potential difficulties in finding jobs may be related to the sources used to find employment opportunities. In Suriname, a significant majority of job seekers rely on the Internet and personal networks, while only a small fraction leverage public or private intermediation services (Figure A2.13). In particular, women have a greater tendency to use online platforms and intermediation services, while men rely more on informal sources such as friends and word of mouth. 154 FIGURE A2.13. SURINAME: SOURCES USED TO LOOK FOR A JOB (PERCENT) Ministry of Labour Word of mouth Private recruitment agency Newspapers Internet Family or friends Other 0% 5% 10% 15% 20% 25% 30% 35% 40% Female Male Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Unemployment in Suriname may stem from job seekers pursuing occupations not in high demand by firms. Another potential explanation for unemployment is the mismatch between the occupations that jobseekers look for and the occupations demanded by firms. Figure A2.14 illustrates the types of occupations that job seekers are actively pursuing. The most searched occupations are elementary occupations, clerical support workers, and occupations in the public sector. Women dominate in searches for occupations such as clerical support, occupations in the public sector, service and sales workers, and professionals. Other occupations such as technician/associated professional, plan and machine operator, craft, and skilled agricultural are more frequently sought after by men. FIGURE A2.14. SURINAME: OCCUPATIONS THAT JOBSEEKERS LOOK FOR (PERCENT) Clerical support worker Elementary occupation Public Service and sales worker Technician/ Associate Professional Plant and machine operator Craft and related trades worker Skilled agricultural/ fishery worker Professional Other 0% 5% 10% 15% 20% 25% 30% Female Male Source: 2022 Suriname Survey of Living Conditions (IDB 2022). The 2022 SLC also investigates the reasons why people do not work and the main reasons that prevent them from looking for jobs. The primary causes reported for not working include the difficulty in finding a job, student status, other undefined reasons, and household or family obligations (Figure A2.15). There are also significant gender disparities in terms of the challenges faced to find work. Women encounter greater challenges than men in finding a job and balancing household and family responsibilities. 155 SURINAME POVERTY AND EQUITY ASSESSMENT FIGURE A2.15. SURINAME: REASON FOR NOT WORKING (PERCENT) Seasonal inactivity Did not want to work Disabled Cannot find a job No work available Retired Household/ family duties Other Student and do not work 0% 5% 10% 15% 20% 25% 30% Female Male Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: The following question was asked of unemployed persons 15 years old and older: “What was the main reason why you did not work in the last 7 days?” Some individuals face barriers to entering the labor market, while others give up or are discouraged by pessimistic perceptions about the possibilities of finding a job that fits their needs. Gender differences also exist. Figure A2.16 presents the primary reasons individuals cite for not actively seeking employment. Among the notable factors, student status and retirement account for about 45.2 percent. The other causes more directly related to barriers and discouragement includes household duties at 19.8 percent, long-term illness at 9.4 percent, not wanting to work at 4.6 percent, and discouraged or no work available at 2.4 percent. The “other” category, which accounts for 15 percent, may encompass other important reasons related to pessimism about the labor market. Finally, there is a noticeable gender discrepancy. A larger proportion of women cite household duties as their primary constraint to seeking work: 19.1 percentage points for women compared to only 0.7 percentage points for men. FIGURE A2.16. SURINAME: REASONS FOR NOT LOOKING FOR A JOB (PERCENT) Fear of COVID-19 Maternity Knew of no vacancy Awaiting results of applications Caring for someone Temporary illness Discouraged/ no work available Did not want to work Long term illness Other Already retired Household duties Student & do not work 0% 2% 4% 6% 8%   10% 12% 14% 16% 18% 20% Female Male Source: 2022 Suriname Survey of Living Conditions (IDB 2022). 156 It takes people in Suriname almost a year to find a job. Females have on average a longer duration of unemployment. A proxy of the difficulties in finding jobs is measured by the time that passes until people find employment. In Suriname, the average duration of unemployment is almost 12 months (Figure A2.17). This time period is longer for certain segments of the population. People in the interior, Creole and Maroon populations, and females spend more time in unemployment compared with other groups. Finally, people at the top quintile of consumption distribution experience a longer duration of unemployment, which suggests that they may wait until finding higher-paying jobs. FIGURE A2.17. SURINAME: DURATION OF UNEMPLOYMENT (MONTHS) 0 2 4 6 8 10 12 14 National All Great Paramaribo Location Coastal Interior Creole Hindustani Maroon Ethnicity Indigenous Javanese Mixed Others Female Gender Male Consumption Q1 Q5 Source: 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Q1 represents the first quintile based on per capita consumption. Q5 represents the fifth quintile, with the highest values of per capita consumption. 157 SURINAME POVERTY AND EQUITY ASSESSMENT 4. STRUCTURAL LABOR DEMAND-SIDE ISSUES 158 4.1. FIRM CHARACTERISTICS This section draws on firm-level data that has been collected in the Caribbean over the past decade, namely the 2014 Productivity, Technology, and Innovation Survey (PROTEqIN) and the 2020 IFPG.4 These surveys represent the continuous effort by the IDB through its Compete Caribbean Partnership Facility to complement the Latin America and Caribbean Enterprise Survey (LACES) implemented jointly in 2010 by the IDB and the World Bank. The selection of firms in the final sample was done using a stratified random sample with a final data set that is representative at the country level and two aggregated sectors: (i) mining and quarrying, manufacturing, aquaculture, and fishing; (i) and services, retail, arts and entertainment, office, and business support.5 The survey includes data on performance indicators, corporate governance, innovation, digital competencies, and resource management, among other private sector development topics. The average Surinamese firm is relatively small, mostly male-managed, operates in sectors other than tourism, and has been in operation for more than 15 years. Firms were classified according to their size as small (less than 20 employees; 42.8 percent), medium-sized (between 20 and 100 employees; 54.5 percent), and large (over 100 employees; 2.7 percent).6 Firms whose top manager is a woman were classified as women-led, and these represent 23.6 percent of the total number of firms in Suriname, compared to 24.6 percent in the rest of Caribbean in the IFPG sample.7 A significant proportion of Caribbean countries rely heavily on tourism-related sectors for economic growth. The sector classification used in Table A2.2 differentiates tourism-related services from other service industries. Tourism is not the main driver of growth in Suriname, with firms in the tourism sector representing only 8 percent of the total number of firms, compared to the 16.7 percent in the rest of the Caribbean countries. Finally, Surinamese firms are comparatively older than those in the rest of the Caribbean: 35 percent have been operating for over 30 years, whereas the share of young firms stands at 23.6 percent. These proportions are 30 percent and 27.3 percent, respectively, for the rest of Caribbean. 4 The IFPG was conducted in 2020 for a random sample of 1,979 firms in 13 Caribbean countries in order to collect compara- ble firm-level data on innovation, use of digital technologies, firm performance, gender, and management practices. The sample for Suriname consisted of 162 firms that were surveyed between July and September 2020. 5 Given the unexpected occurrence of COVID-19, the IFPG initiative extended its original reach to include information about the impact of the pandemic on the investment climate, marketing and sales, innovation, human resources, finance, and digitalization. Furthermore, in light of the pandemic and the fact that respondents were working remotely, most interviews were completed in multiple interview sessions. All were conducted by phone, Zoom, Webex, or other suitable software. See the survey’s technical report, available at https://www.competecaribbean.org/proteqin-ifpg-datasets/ (accessed on June 21, 2024). 6 All proportions presented in this section take into account the survey’s sampling design and use the medium weight es- timation procedure for making inferences about the population. Given the low sample sizes for the 2020 IFPG and 2014 PROTEqIN surveys, all estimations should be considered with caution. 7 Only formal firms with five or more employees were included in the sample. The countries covered in the 2020 IFPG are Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago. 159 SURINAME POVERTY AND EQUITY ASSESSMENT TABLE A2.2. PROFILE OF FIRMS IN SURINAME Suiname Rest of Caribbean Number of firms 162 1.817 Statistical population 1.608 24.085 Firm size Small 42,8% 58,6% Medium 54,5% 30,5% Large 2,7% 10,9% Gender Men-led 76,4% 75,4% Women-led 23,6% 24,6% Sector Manufacturing, Mining & Quarrying 20,4% 16,1% Tourism related services 8,0% 16,7% Other services (retail, arts, etc) 71,6% 67,2% Age New 23,6% 27,3% Young 41,8% 42,7% Mature 34,6% 29,9% Source: 2020 Innovation, Firm Performance, and Gender Survey. Another set of firm characteristics relevant for the analysis of demand-side labor dynamics is related to employment benefits, overall gender considerations, and the perceptions of firms about potential skill shortages. IFPG data on the benefits provided by firms is not exhaustive, but the analysis of variables related to health and insurance coverage and paid leave (maternity and paternity) can shed light about the overall conditions faced by formal Surinamese workers. The human resource management module of the survey included questions about protocols to address workplace sexual harassment and whether the firm seeks to employ, retain, develop, and promote women in different ways (Women promotion). On average, three of 10 firms in Suriname have protocols in place to address sexual harassment in the workplace. This is slightly lower than the rest of the Caribbean, where 38.8 percent firms report having such protocols in place. The heterogeneity among countries is substantial. The average proportion of firms with harassment protocols ranges from 24.4 percent (Barbados) to 50 percent (Antigua and Barbuda). In addition, the share of Surinamese firms that actively seek to employ, retain, and promote women (15 percent) is relatively lower than in the rest of the Caribbean (19.7 percent), so efforts that support the advancement of women in the labor market could help reduce the observed gap (Figure A2.18). The within-country differences point towards more prevalent harassment protocols among small and medium-sized firms, older firms, and those firms that are currently being managed by females. These firms tend to be more active in promoting women, as are firms that have been operating between 15 and 30 years (Young). 160 LCA VCT BLZ BHS GUY JAM TTO DOM Harassment protocol FIGURE A2.18. GENDER CONSIDERATIONS (PERCENT) GRD Women promotion SUR 29,6% 15,4% KNA A. Regional Comparison BRBSuriname, by Firm Size, Age, B. In Location, 0% and Gender 10% 20% 30% 40% 50% ATG LCA 40% VCT 30% BLZ 20% BHS GUY 10% JAM 0% Small New TTO Male Female Large Mature Young Other Paramaribo Medium DOM Harassment protocol GRD Size Age Location Gender Women promotion SUR 29,6% 15,4% KNA BRB 0% 10% 20% 30% 40% 50% Source: 2020 Innovation, Firm Performance, and Gender Survey. 40% 30% 20% While the metrics for the promotion of Surinamese women are relatively worse than in the 10% rest of the Caribbean, the country is well placed in terms of employment benefits, with 71.4 percent of firms in Suriname reporting that they provide health and insurance coverage for their employees 0% (Figure A2.19). This figure could be divided between the 9 percent of firms that only provide that Small New Male Female Large Mature Young Other Paramaribo Medium benefit and the 62.4 percent that provide coverage and either maternity or paternity leave (or both). These numbers place Suriname behind only St. Vincent and the Grenadines in terms of benefits.8 While Size Age Location Gender all large firms provide insurance coverage and leave, small and medium-sized firms still have uninsured employees (40 percent and 21 percent, respectively). The difference between Paramaribo and other districts is substantial. The proportion of firms located in the capital that provide coverage and leave is 73 percent, compared to 56.4 percent of firms located in other districts. The proportion of Surinamese firms reporting an inadequately educated workforce is slightly below the Caribbean average of 56.7 percent (Figure A2.20, panel A), and it ranks as the fifth-largest obstacle in the country, behind electricity, access to finance, customs and trade regulations, and tax rates. There are clear differences with respect to firm size, age, and location. Ninety percent of large firms report an inadequately educated workforce to be a major obstacle for their operations, as opposed to smaller firms that typically employ a larger proportion of lower-skilled individuals. The perception about skill shortages deteriorates with firm age and is also worse among firms located in Paramaribo (Figure A2.20, panel B). Finally, no significant differences arise when disaggregating the indicator by the gender of the firm’s top manager. 8 Comparing these figures with the supply-side data (2022 SLC), 42 percent of employed workers report having health insur- ance and leave, while 36 percent have no insurance coverage (compared to 28.6 percent obtained from firm-level data). 161 SURINAME BRB BLZ POVERTY AND EQUITY ASSESSMENT KNA GRD DMA ATG TTO LCA JAM FIGURE A2.19. EMPLOYMENT BENEFITS (PERCENT) GUY BHS SUR 28,61 8,96 62,44 VCT A. Region B. In Suriname, 0 by Firm Size, 20 40 Age, 60 80 100 Location, and Gender No insurance coverage Insurance coverage Insurance coverage and leave BRB 100 BLZ KNA 80 45 55 49 67 67 64 63 61 GRD 69 60 DMA 100 ATG 40 TTO 53 20 40 44 27 27 33 LCA 21 24 17 0 JAM Small Paramaribo Female New Mature Male Large Young Other Medium GUY BHS BRB 73,1% SUR 28,61 8,96 62,44 Size Age Location Gender VCT BLZ 0 20 40 60 80 100 GRD No insurance coverage Insurance coverage Insurance coverage and leave KNA TTO 100 JAM Source: 2020 Innovation, Firm Performance, and Gender Survey. LCA 80 45 55 49 67 67 64 63 61 SUR 56,7% 69 60 100 GUY 40 FIGURE A2.20. SKILL SHORTAGES REPORTED BY FIRMS AS AN OBSTACLE (PERCENT) 53 BHS 20 40 44 27 27 33 21 24 17 ATG 0 DOM Small Paramaribo Female A. Region B. In Suriname, by Firm Size, Age, New Mature Male Large Young Other Medium VCT 39,7% Location and Gender 0% 20% 40% 60% 80% Size Age Location Gender BRB 73,1% BLZ 100% GRD 80% KNA 60% TTO 40% JAM 20% LCA 0% SUR Small 56,7% Paramaribo Female Male Large Young New Mature Other Medium GUY BHS Size Age Location Gender ATG DOM VCT 39,7%   0% 20% 40% 60% 80% 100% Source: 2020 Innovation, Firm Performance, and Gender Survey. 80% 60% 40% 162 20% 0% Small maribo emale Male Large Young New Mature Other edium Almost half of the firms in Suriname believe that the quality of the education and training offered by local educational institutions is a “very important or critical factor” behind the skill shortage in the country.9 This is followed by an institutional factor (labor protection laws and regulations) and another quality factor regarding the lack of necessary personal, soft skills taught by local institutions (Figure A2.21). It follows – from the previous classification and ranking – that Surinamese firms experience skill shortages related to a lack of quality rather than a problem of quantity (i.e., lack of demand due to the number of trained professionals or to emigration). Furthermore, average labor productivity among firms that perceive quality of education to be lacking is lower than those firms that do not perceive this as a binding constraint. FIGURE A2.21. SURINAME: POTENTIAL CAUSES OF SKILL SHORTAGES (PERCENT) Quality of the education and training o ered 49,3% by local educational institutions Labour protection laws and regulations   38,8% Lack of necessary personal, soft skills o ered 34,1% by local institutions Shortage in number of professionals trained 31,1% by local institutions Worker emigration 15,7% Quality Professionals moving to other sectors of the Quantity 13,7% Institutional economy or other enterprises   High expectations from new hires 10,0% Other 0,0% 0% 10% 20% 30% 40% 50% 60% Source: 2020 Innovation, Firm Performance, and Gender Survey. 4.2. FIRM PERFORMANCE Labor productivity increases with firm size in Suriname, and average wages follow a similar pattern. The most common performance metric used with enterprise survey data is labor productivity, measured as sales per worker (converted to U.S. dollars).10 Average labor productivity in Suriname is US$15,527, but it is significantly lower in small firms (US$12,500) than in large ones (US$21,500). The average Surinamese annual wage is calculated at US$3,618. Small and medium-sized firms have 9 The IFPG survey included a subjective question about the potential causes for skill shortages. These causes were classified as pertaining to quality, quantity, or institutional factors in the country. 10 Sales are from the previous fiscal year, and the number of workers corresponds to permanent full-time workers in each firm. Total factor productivity (TFP) was also calculated using a Cobb-Douglas production function with three factors of produc- tion: capital, labor, and intermediate goods. However, evidence exists in favor of using a more flexible translog specification (Francis et al. 2020). The sample of Caribbean firms covered in the IFPG provides TFP estimates that should be taken with caution. Therefore, for purposes of this annex, labor productivity is used as the relevant performance metric. 163 SURINAME POVERTY AND EQUITY ASSESSMENT an average wage of around US$3,500 while large firms have an average wage of US$5,600 (Figure A2.22). There is a 40 percent labor productivity premium among male-managed firms in Suriname.11 Finally, Paramaribo-based firms have lower levels of labor productivity and wages than firms located in other districts. This coincides with supply-side data that shows that hourly wages are higher in coastal areas than in Paramaribo. These demand-side results are explained by the higher concentration of Surinamese small firms with lower performance metrics in the capital district compared to the relatively low number of firms operating in other districts. FIGURE A2.22. SURINAME: PRODUCTIVITY AND WAGES (U.S. DOLLARS) Labor productivity Wages 20.000 16.000 12.000 US $ 8.000 4.000 0 Small Paramaribo Female Male Large Young New Mature Other Medium Size Age Location Gender Source: 2020 Innovation, Firm Performance, and Gender Survey. Surinamese firms show lower levels of labor productivity and average annual wages. To put the metrics presented in Figure A.22 in perspective, Figure A2.23 compares average labor productivity and annual wages in Suriname to that of the rest of the Caribbean. Annual wages in Suriname represent 28 percent of the average annual wage earned in the rest of the Caribbean (US$3,618 versus US$12,510). There is a vast body of literature documenting the relationship between low wages and undesirable outcomes such as labor supply surplus, underemployment, higher rates of informality, higher turnover rates, dependency on low-skilled labor, and an overall erosion of human capital. If the wage differential were even larger with respect to more advanced recipient countries (like the Netherlands), evidence suggests that Surinamese emigration would increase, which in turn would support the “brain drain” hypothesis.12 Labor productivity is significantly lower in Suriname than in the rest of the Caribbean. A typical Surinamese firm has average sales per worker of US$15,527, which is slightly more than a quarter of the labor productivity of an average Caribbean firm (US$58,718). 11 Ruprah and Sierra (2016) provide evidence of the female-owned business underperformance hypothesis in terms of being less open to trade and more concentrated in smaller firms. However, using 2010 enterprise survey data, the authors find that female-managed firms in the Caribbean outperform their male counterparts in terms of sales and employment growth. 12 See Section 3.3 for a discussion of the mismatch between labor demand and supply and a brief discussion about a poten- tial brain drain phenomenon. 164 FIGURE A2.23. THE CARIBBEAN AND SURINAME: LABOR PRODUCTIVITY AND WAGES (U.S. DOLLARS) 60.000 58.718,3 50.000 Labor productivity Wages 40.000 US $ 30.000 20.000 15.527,6 12.511,0 10.000 3.618,1 0 Rest of Caribbean Suriname Source: 2020 Innovation, Firm Performance, and Gender Survey. 4.3. SKILLS AND VACANCIES The 2014 PROTEqIN survey is used to complete the labor supply representation by incorporating an analysis on employment composition and the desired level of education and skills that a firm seeks when filling vacancies.13 The characterization presented in previous sections was useful to analyze basic firm characteristics that could affect labor market outcomes, firm productivity, and long-term growth in Suriname. However, other key features about the education and skills required by firms, and about the importance of certain characteristics while filling vacancies, was part of the 2014 PROTEqIN survey but not the 2020 IFPG survey. Hiring managers were asked about the minimum required level of education for different job types in the PROTEqIN survey. Hence, it is possible to know if a firm has, on average, been successful in fulfilling job vacancies with the desired level of education. Whenever a firm’s required level of education is higher than the employees’ average level of education (for each job type), the firm is getting lower skills than what it requires (Underqualified). In contrast, there are some cases in which the average level of education of employees exceeds the minimum required (Overqualified), and cases in which these are the same (Match). There are large disparities between the required and the average level of education observed in Surinamese firms. Figure A2.24 shows how difficult it is for a Surinamese firm to find a job candidate with a desired (or better) minimum level of education for some of the most common job types, such as professionals. Managers, who are typically required to have more than secondary education, constitute the job type with the largest proportion of employees (76.3 percent) meeting 13 It is worth bearing in mind that while some issues remained unchanged between the PROTEqIN surveys of 2014 and 2020, there was no 2020 follow-up regarding skills, vacancies, and the required level of education. A subset of questions was included in the 2020 IFPG survey. 165 SURINAME POVERTY AND EQUITY ASSESSMENT the firm’s minimum educational requirements. Clerical support workers are required to have a relatively lower level of education (from primary to vocational training), and this job type shows the highest share (12.9 percent) of employees exceeding these requirements. However, the remaining job types are filled by employees with a lower level of education than what it is required by the firms (Underqualified). FIGURE A2.24. SURINAME: REQUIRED AND AVERAGE LEVEL OF EDUCATION (PERCENT) Elementary occupations 34,3 65,5 Plant and machine operators, and assemblers 17,8 78,6 Craft and related trades workers 91,2 Skilled agricultural, forestry 96,1 and fishery workers Service and sales workers 53,1 35,1 Clerical support workers   12,9 58,0 29,1 Technicians and associate professionals 43,8 50,3   Professionals 39,4 60,6 Managers 76,3 17,0 0 20 40 60 80 100 Overqualified Match Underqualified Source: 2014 Productivity, Technology, and Innovation Survey. While Figure A2.24 shows that Surinamese firms tend to have underqualified employees in terms of education levels. Firms could overcome the existing gap between required and actual qualifications by providing on-the-job training tailored to each job type within the firm. Unfortunately, the share of firms that run formal training programs for their permanent full-time employees is relatively low compared to the rest of Caribbean countries. Slightly less than a third of Surinamese firms provide formal training programs for their employees. This contrasts with the Caribbean average of 50 percent. Medium-sized and large firms provide relatively more training than their small counterparts. This also holds for older firms and firms from the services sector (Figure A2.25). Honesty is the most desirable personal characteristic that Surinamese hiring teams consider when filling vacancies, with 80 percent of firms considering honesty as very important or critical when fulfilling vacancies for directors, managers, or professionals (Figure A2.26). Similarly, 68 percent of firms rate this personal characteristic as the most important when recruiting skilled personnel. Similarly, responsibility, reliability, and trustworthiness stand out as the most important core skills considered when Surinamese firms recruit employees. Finally, two job-related skills are important when recruiting management and skilled workers: practical knowledge of the job and the minimum required level of education. This points to a potential skill mismatch issue arising in Suriname. Half of the surveyed firms believe that the minimum required level of education is the most important job- related skill when hiring skilled personnel. 166 LCA DMA KNA VCT GRD ATG GUY BRB SUR 32,2% FIGURE A2.25. PERCENTAGE OF FIRMS OFFERING FORMAL TRAINING (PERCENT) JAM BLZ 27,1% 0% 10% 20% 30% 40% 50% 60% 70% 80% A. Country Comparison B. Suriname BHS 73,3% 75% 62,1% TTO 56,7% 50% 47,3% LCA 42,1% 38,7% DMA 32,9% 28,4% 26,1% 23,5% KNA 25% 16,3% 12,9% VCT GRD 0% Small Medium Large New Young Mature Male Female Manufacturing Retail Other services ATG GUY BRB Size Age Gender Sector SUR 32,2% JAM BLZ 27,1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 75% Source: 2014 Productivity, Technology, and Innovation Survey. 62,1% 56,7% 50% 47,3% 42,1% 38,7% FIGURE A2.26. SURINAME: 32,9% DESIRED CHARACTERISTICS AND SKILLS (PERCENT) 26,1% 28,4% 23,5% 25% 16,3% 12,9% 42,5% Practical knowledge of the job Job related skills 0% Minimum required level of education Small Medium Large New Young Mature Male Female Manufacturing Retail Other services 49,7% Core skills 58,0% Responsibility, reliability and trustworthiness 64,9% Size Age Gender Sector characteristics Personal 79,4% Honesty 68,0% 0% 20% 40% 60% 80% Director, manager or professional Skilled (production, administrative, sales, technical, craftsmen) Source: 2014 Productivity, Technology, and Innovation Survey. Almost one in four firms in Suriname have extremely difficultly finding the right set of core skills required for managerial positions. Overall, personal characteristics are the least difficult to find for most job types. However, these are less easy to find when recruiting craft workers. Due to the specificity of the tasks of technician and associate professionals, their job-related skills are the hardest 167 SURINAME POVERTY AND EQUITY ASSESSMENT to find. The average time needed to fill vacancies ranges from two weeks for elementary occupations to seven weeks for professionals. Filling managerial vacancies also takes close to seven weeks for the average Surinamese firm, while it takes an average of 5.6, 4.6, and 3.8 weeks to fill technician, clerical support and service worker vacancies, respectively (Figure A2.27). FIGURE A2.27. SURINAME: DIFFICULTY FINDING APPROPRIATE JOB CANDIDATES 30 8 Personal characteristics Core skills 7 25 Job-related skills Time needed (rhs) 6 20 5 15 4 3 10   2 5 1 0 0 Managers Professionals Technicians and associate professionals Clerical support workers Service and sales workers Skilled agricultural, forestry, and fishery workers Craft and related trades workers Plant and machine operators, and assemblers Elementary occupations Source: 2014 Productivity, Technology, and Innovation Survey. 168 5. LABOR MARKET EQUILIBRIUM 169 SURINAME POVERTY AND EQUITY ASSESSMENT 5.1. POTENTIAL SKILLS MISMATCH The characterizations of both labor supply and demand suggest skill mismatches in Suriname’s labor market. The distribution of the minimum education levels that firms require when hiring workers (labor demand) is calculated from the 2014 firm-level data. Demand is represented by the firms’ required level of education for both filled positions and the vacancies for all different job types.14 The labor supply distribution by education level was computed from the 2022 SLC applying the same criteria.15 Figure A2.28 presents the resulting distributions of both labor supply and demand by level of education. There is an oversupply of workers with lower levels of education (i.e., below primary) and an undersupply of workers with tertiary education. Indeed, 23 percent of positions in the private sector demand workers with primary education or less, but 43.5 percent of the Surinamese labor force have primary education or less as their highest educational attainment. Labor supply and demand for secondary-educated persons is largely balanced. The opposite situation occurs with tertiary education. The labor market demand for persons with tertiary education is 30.2 percent, but only 9.4 percent of the labor force meets this educational attainment criteria. FIGURE A2.28. SURINAME: LABOR SUPPLY AND DEMAND BY LEVEL OF EDUCATION (PERCENT) 60 Labor demand 50 46,5 47,1 43,5 Labor supply 40 30,2 Percent 30 23,3 20 9,4 10 0 Primary or less Secondary Tertiary Sources: 2022 Suriname Survey of Living Conditions (IDB 2022); and the 2014 Productivity, Technology, and Innovation Survey. 14 Job types included in the survey are managers, professionals, technicians and associate professionals, clerical support workers, service and sales workers, skilled agricultural, forestry and fishery workers, craft and related trades workers, plant and machine operators, and elementary occupations. 15 Unfortunately, the education levels used in both surveys are coded differently. Vocational training education is not coded as a separate level of education in the 2022 SLC. Hence, education levels were aggregated into primary or less, secondary, and tertiary. 170 Private sector managers in Suriname perceive that the country’s skill shortage is mainly driven by the quality of the education and training offered by local educational institutions. Indeed, over 55 percent of firms mention an inadequately educated and trained workforce as an obstacle to their operations. Among larger, more mature firms, this share increases to 90 percent. When asked about the causes of skill shortages, nearly half of all firms mention that the quality of education and training offered by local educational institutions is a very important or even critical factor behind the skill shortage problem. This is followed by labor protection laws and regulations, and lack of necessary personal, soft skills (training) offered by local institutions. Another potential determinant of the shortage of skills pertains to out-migration of the more educated population (i.e., brain drain). International migration is one of most studied topics related to skill shortages in the Caribbean. Evidence suggests that migration is positively related to educational attainment, and the percentage of Surinamese labor with higher education migrating to Organization for Economic Cooperation and Development (OECD) countries is higher than the share of migrant workers with primary education.16 Indeed, Mishra (2006) showed that 48 percent of tertiary- educated individuals emigrated from Suriname to OECD countries in the 1965–2000 period. Currently, 7 percent of the 2.5 million residents of the Netherlands that were born in a foreign country are from Suriname.17 However, the disaggregation of this foreign-born population by educational attainment was not readily available at the time of this analysis. 5.2. WAGES AND RETURNS Real hourly wages are lower in the interior (where the poor are concentrated), while labor market returns to education imply a growing gap unfavorable to the lower-educated poor that reinforces inequalities. While the average hourly wage nationally stands at US$9.40 in 2017 purchasing power parity (PPP) U.S. dollars, the interior has a noticeably lower figure of US$7.90 in 2017 PPP U.S. dollars (Figure A2.29, panel A). This coincides with the relatively higher concentration of poverty in the interior and the associated lower levels of human capital there. Relatedly, as 37 percent of the poor have not completed primary school and 28 percent have only completed primary education, labor market returns to education would relegate the poor further. Panel B of Figure A2.29 shows that the return for completing high school is about 86 percent (relative to no education or incomplete primary). As only 5 percent of the poor completed high school (with none completing tertiary education), this implies that most of the poor will see their earnings fall significantly behind the higher educated (mostly non-poor) population. 16 Ruprah and Sierra (2016) provide evidence of the brain drain hypothesis in the Caribbean using data from Mishra (2006) and Docquier, Lohest and Marfouk (2005). Their calculations are better suited for Caribbean migration to the United States, Canada, and the United Kingdom, while the most common destination for Surinamese migrants is the Netherlands. 17 See Statistics Netherlands (2023) for further details. 171 10 9,4 9,1 8 SURINAME 7,9 POVERTY AND EQUITY ASSESSMENT 6 4 2 FIGURE A2.29. SURINAME: HOURLY WAGES AND RETURNS TO EDUCATION 0 National Greater Coastal Interior Paramaribo Location A. Hourly Wages (2017 PPP U.S.dollars) B. Returns to Education (Percent) 12 250% 10,5 10 9,4 9,1 200% 8 7,9 150% 6 100% 4 50% 2   0 0% National Greater Coastal Interior Primary Middle High Tertiary Paramaribo Location school school school education   250% Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: In panel B, returns to education are calculated with respect to the omitted category of none or incomplete primary education from Mincer regressions controlling for gender, age, geographic domain, and labor market experience (95 percent 200% confidence intervals presented along with the point estimates). The percentage of Surinamese whose wages are below the minimum wage is higher in the 150% interior, among indigenous and Maroon populations, and among those with no formal education. Overall, 18 percent of individuals who reported income in 2022 earned an average wage 100% below the minimum wage threshold set by the Ministry of Labour, Employment and Youth Affairs 50% A2.30). The proportion of individuals earning below the minimum wage is considerably higher (Figure 18 in the interior, at 39.8 percent. The same holds among individuals who identify themselves as Maroon or indigenous (24.4 and 31.9 percent, respectively). Figure A2.30 also shows how the proportion of 0% individuals earning Primary the minimum below High Middle Tertiary wage decreases with education: 21.2 percent of individuals education with no school or schoolkindergarten earn below the minimum wage, compared to 12.4 percent among school education those with higher education. 18 The minimum hourly wage was recently set at SRD 49.12 by the Ministry of Labor. In 2022, the figure was SRD 20, which is equivalent to US$1.30 (2017 PPP) and was used for the calculations in Figure A2.30. See https://www.sris.sr/Beschik- king-Minimum-uurloon-2022.pdf for the official release of the 2022 minimum wage. 172 FIGURE A2.30. SURINAME: POPULATION EARNING BELOW THE MINIMUM WAGE (PERCENT) 40 30 20 10 0 National Greater Paramaribo Coastal Interior Creole Hindustani Maroon Indigenous Javanese Mixed Others None or kindergarten Primary Middle school High school Higher education All Location Ethnicity Education Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Informality negatively affects earnings and is related to a higher probability of earning below the minimum wage. On average, formal Surinamese workers have a wage premium of US$3.80 (2017 PPP).19 This wage premium puts formal worker earnings at US$11.30, placing them above the national average of US$9.40 (Figure A2.31, panel A). Average wages are higher among female workers, and their formality wage gap is higher. Women employed formally earn US$12.20, on average, 65 percent more than their informal counterparts (US$7.40). The implied earning benefits derived from formal work are also noticeable in terms of the percentage of individuals whose earnings are below the minimum wage. While the national share of individuals earning below the minimum wage is 17.8 percent (Figure A2.31, panel B), this proportion increases to 24.1 percent among informal workers and is only 11.2 percent for formal workers. Again, the relatively better position of women in terms of earnings is preserved in terms of the share of female workers earning below the minimum wage, which is consistently lower than for Surinamese male workers. Besides the existing gap in labor market returns unfavorable to the lower-educated and poorest individuals, the increase in wages due to an increase in one year of schooling is relatively low. Panel B of Figure A2.29 already showed how less-educated individuals in Suriname have relatively lower returns to education than those with tertiary education. Indeed, the country’s overall returns to an additional year of education are on the lower side of the distribution among countries with comparable development levels. On average, each additional year of schooling raises wages by 6.2 percent in Suriname, which is similar to what Montenegro and Patrinos (2023) estimate for Nicaragua, Yemen, and Guinea. Figure A2.32 shows the relationship between returns to schooling and GDP per capita (panel A) and labor force participation rates (panel B). Suriname’s returns to education are lower than what would be expected given its level of income and labor force participation. Nonetheless, as was shown in panel B of Figure A2.29, obtaining a tertiary education degree raises earnings by about 41 percent with respect to a high school degree (i.e., an average return of about 10 percent for each additional year of tertiary education). 19 See OECD (2024) for a detailed discussion of the double burden of informal employment and low-paying work that sees low-tier informal workers earn less than modest incomes and face higher risks of individual and household poverty. 173 SURINAME POVERTY AND EQUITY ASSESSMENT 14 Female Male 12 10 8 6 FIGURE A2.31. SURINAME: INFORMALITY AND EARNINGS 4 2 9.4 7.5 11.3 0 A. Average Wages (2017 PPP U.S. dollars) B. Earning Below Minimum PersonsNational Informal Wage Formal (Percent) All Formality 14 Female Male Female Male 12 30% 25% 10 20% 8 15% 6 4 10% 2 5% 9.4 7.5 11.3 17.8% 24.1% 11.2% 0 0% National Informal Formal National Informal Formality Formal All Formality All Formality 30% Female Male 25 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). 25% Note: Informality is represented by individuals who have no access to employment benefits that include a pension or retirement 20 20% fund, medical insurance, and (maternity and paid sick) leave. PPP: purchasing power parity. Returns to schooling 15 15% 10% 10 5% FIGURE A2.32. SURINAME: 17.8% 24.1% 11.2% TO EDUCATION AND DEVELOPMENT RETURNS 0% 5 Suriname National Informal Formality Formal All Formality 0 Panel A 0 B Panel 20,000 40,000 60,000 80,000 100,000 GDP per capita PPP (constant 2017 U.S. dollars) 25 20 25 Returns to schooling 15 20 Returns to schooling 10 15 10 5 Suriname 5 Suriname 0 0 0 20,000 40,000 60,000 80,000 100,000 40 50 60 70 80 90 GDP per capita PPP (constant 2017 U.S. dollars) Labor force participation rate, total (percent of total population ages 15-64) Source: Poverty assessment team based on Montenegro and Patrinos (2022) for the rest of the world, and on the 2022 Suriname Survey of Living Conditions (IDB 2022) for Suriname. 25 Note: Returns to education for Suriname were calculated by a standard Mincer equation where earnings (natural log of hourly wages) were regressed on years of schooling (continuous variable), labor market potential experience, and experience-squared. 20 PPP: purchasing power parity. Returns to schooling 15 10 5 174 Suriname 0 40 50 60 70 80 90 Labor force participation rate, total (percent of total population ages 15-64) 5.3. SKILL SHORTAGES AGGRAVATED BY THE FAILURE TO CAPITALIZE ON WOMEN’S STRONG EDUCATIONAL PERFORMANCE The comparatively strong educational performance of women offers an opportunity to address skill shortages in Suriname. As in many other countries in the region, Suriname has a “reverse gender gap” in education outcomes, with women outperforming men by a sizable margin. Figure A2.33 shows the levels of education completed by women and men. The differences are clear at the extremes of the distribution. About 18.5 percent of men have not completed any education. Among women, this share is 13 percent. On the other hand, about 12 percent of women have completed tertiary education compared to 6 percent of men. FIGURE A2.33. SURINAME: HIGHEST LEVEL OF EDUCATION COMPLETED BY ADULTS, NATION- AL AND BY GENDER (PERCENT) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Female 7,5% 24,6% 22,4% 30,4% 15,2% Gender Male 15,3% 35,9% 28,6% 14,7% 5,5% National 12,1% 31,3% 26,1% 21,0% 9,4% All None or kindergarten Primary Middle School High School Higher Education Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Sample was restricted to individuals whose ages range between 25 and 65. This is because by age 25, more than 98 percent of adults declare that they have completed formal education. Women outperform men in terms of education outcomes, yet women’s strong educational performance is not reflected in their labor market outcomes. Women are worse off than men on virtually all the main labor market outcomes (Figure A2.34). These disparities are visible at an early age. On average, 11 percent of youths ages 16 to 25 are NEET. However, the share of those who are NEET is markedly higher among females (16.3 percent) than males (6.4 percent). Differences are no less pronounced among many other core outcomes related to labor market participation. The share of women in the labor force is 59.3 percent versus 78 percent for men. And, even among those in the labor force, the unemployment rate is markedly higher for women (10.5 percent) than for men (5.3 percent). 175 SURINAME POVERTY AND EQUITY ASSESSMENT FIGURE A2.34. SURINAME: GENDER DIFFERENCES IN LABOR MARKET OUTCOMES (PERCENT) 100% 78,0% 80% 59,3% 60% 40% 16,3% 20% 6,4% 10,5% 5,3% 0% Men Women Men Women Men Women NEET Labor force Unemployment participation Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Labor force participation is the ratio of the economically active to the working-age population (15-65 years old). Unemployment indicates the ratio of the unemployed to the economically active population. NEET: not in employment, education or training. Figure A2.35 shows that women are significantly more likely to be out of the labor force at all levels of educational attainment. While 52 percent of women with primary education are out of the labor force, only 17 percent of men with the same educational attainment are not participating in labor market activities. Among persons with secondary education, 30 percent of women are out of the labor force compared to 10 percent of men. Even among tertiary-educated individuals, the 9 percent of women who do not participate in the labor force more than doubles the 4 percent of men. Moreover, among those who are employed, women are significantly less likely to work on a full-time basis, and this also holds for all levels of educational attainment. For example, among tertiary-educated persons, 43 percent of women are employed on a full-time basis and 47 percent work part-time. Among tertiary- educated men, 69 percent work full-time and only 23 percent work part-time. High levels of early marriage and adolescent fertility contribute to women’s poor labor market outcomes. Of course, the reasons behind gaps in the labor market outcomes of women and men can be complex and multifaceted. However, research in many countries around the world indicates that one important explanation tends to be that the school-to-work transition can be more challenging for women (World Bank, undated), and the pronounced gender difference in NEET indicates that that transition is indeed challenging for women in Suriname. The literature on school-to-work transition points to teenage pregnancy and early marriage as important barriers. Suriname does not compare favorably in either area. Panel A of Figure A2.36 shows that Suriname is an outlier in terms of early marriage rates. According to UNICEF’s 2018 Multiple Indicator Cluster Survey (MICS), 36 percent of women ages 20 to 24 had been married by the age of 18. Panel B shows that, although Suriname is not a clear outlier, adolescent fertility rates are nonetheless substantial. Gender norms tend to be an important driver of high levels of early marriage and adolescent fertility, and they contribute to an environment in which women are perceived as mothers, but not as income earners. Indeed, according to the 2022 SLC, 19.1 percent of women out of the labor force report that they do not look for a job because of household duties. By contrast, among men who are out of the labor force, only 0.7 percent do not look for a job for this reason. 176 FIGURE A2.35. SURINAME: LABOR FORCE PARTICIPATION AND EMPLOYMENT BY GENDER AND EDUCATIONAL ATTAINMENT (PERCENT) 0 3 1 100 4 4 6 23 23 28 80 23 33 47 60 19 34 65 51 40 69 43 52 20 30 90 17 10 9 80 4 0 Primary or less Secondary Tertiary Primary or less Secondary Tertiary 70 Women Men 60 Out of labor force Employed full time Employed part time Unemployed 50 40 Source: Poverty assessment team based on the Suriname 2022 Suriname Survey of Living Conditions (IDB 2022). 30 20 FIGURE A2.36. SURINAME: HIGH RATES OF EARLY MARRIAGE AND ADOLESCENT FERTILITY 10 CONTRIBUTE TO GENDER DISPARITIES IN LABOR MARKET OUTCOMES 0 0 20000 40000 60000 80000 100000 A. Women Who Were First Married by Age 18 B. Adolescent Fertility Rate (Percent of women ages 20-24) (Births per 1,000 women ages 15-19) 90 180 80 160 70 140 60 120 50 100 Suriname 40 Suriname 80 30 60 20 40 10 20 0 0 0 20000 40000 60000 80000 100000 0 20000 40000 60000 80000 100000 Source: World Bank Gender Data Portal based on UNICEF’s 2018 Multiple Indicator Cluster Survey for Suriname (panel A) and data from the UN Population Division (panel B). 180 177 160 140 SURINAME POVERTY AND EQUITY ASSESSMENT 6. POLICY RECOMMENDATIONS 178 An inadequately skilled workforce, a shortage of efficient matching mechanisms between jobseekers and employers, and gender and ethnicity gaps result in low labor productivity and low wages, posing impediments to Suriname’s economic growth. It is imperative to implement policies that encourage adjustments to align labor supply and demand, with specific considerations that would allow women and diverse populations to contribute to the country´s productivity while improving the wellbeing of their households. These measures should aim to sustain existing employment opportunities, create new job prospects, promote continuous participation in the labor market, and reintegrate individuals who have been unemployed or inactive for extended periods. Policy actions to encourage efficient matching processes are essential. A key strategy to reduce the gender gap in labor markets is to reduce or eliminate constraints that women face but that men do not. Specifically, one of the factors affecting women’s labor market trajectories but not men’s is becoming a parent. The intrinsic gender roles related to maternity increase the costs of women’s entry into the labor market, and these costs are often reinforced by other caregiving and home responsibilities that usually fall to women. This results in declines in labor force participation of mothers, with little evidence of recovery in the medium term. It is of major importance to relax constraints on women’s time by promoting the implementation of parental and family leave policies and expanding the childcare system to allow women out of the labor market and employed women to balance their household and care responsibilities. Finally, cultural and business changes must be implemented to promote the advancement of women in the workplace. For example, the proportion of Surinamese companies actively seeking to employ, retain, and promote women is relatively lower than in the rest of the Caribbean. Active labor market policies can help address the employability constraints resulting from skill shortages and information gaps that hinder adequately meeting labor supply and demand. Such policies often include training for employment programs (reskilling and upskilling), as well as employment services such as job search support, job counseling, and job placement. Some recent evidence has highlighted the importance of strengthening the partnership between these training institutions and industry as one solution to reduce the skill gap (Nganda, Kirimi, and Nyambura 2021; Widiastuti et al. 2021). More specifically, active labor market policies in Suriname should focus on three key aspects. The first is the quantity and especially the quality of training. Training for employment providers should be equipped with the inputs needed to generate the specific set of skills demanded by the productive sector, the most important being an updated curriculum, instructors with adequate technical and pedagogical skills, and essential materials.20 A registry and monitoring system for the beneficiaries of these providers must be in place to evaluate the success of each training program (measured by indicators of employability) and make any necessary adjustments. Such a system should be able to track attendance, graduation, and labor market outcomes throughout the process. Finally, to increase the participation of individuals who would benefit most from these training programs – such as women out of the labor force and indigenous and Maroon populations – it is necessary to reduce 20 Training for employment providers includes all institutions that offer vocational education/training and whose ultimate goal is to prepare individuals to increase their employability. Among these are public entities that work under the Ministry of Educa- tion and the Ministry of Labor, Employment Opportunity, and Youth Affairs, public/private entities, and private entities. 179 SURINAME POVERTY AND EQUITY ASSESSMENT entry barriers such as opportunity costs (i.e., loss of wages, or other income sources), lack of resources to pay for the courses or the materials, transportation costs, childcare, and other domestic responsibilities. Technical and vocational training should be focused on alleviating skill shortages by equipping people with the skills necessary to perform the occupations that are currently in high demand, and in the economic sectors with foreseen expansion and growth. In the short to medium term, this implies generating a system in which potential employers and training institutions work together to increase productive employment. For the medium to long term, it should be considered that there is high demand for people with tertiary or higher education in Suriname, so it is important to examine the barriers that limit people from attaining higher education levels. It is important to identify the reasons why so few people complete tertiary education, whether those reasons relate to an insufficient supply of such education or very high costs. Anecdotal information from conversations with private sector conglomerates reveals that even when vacancy candidates meet the requirement of higher education levels, they often do not have the skills to perform the tasks that the position requires. This suggests that a review of the tertiary education curricula is necessary and that apprenticeship opportunities might also be beneficial for both the hiring firm and the job seeker. Finally, to be able to match the demand for and supply of skills needed for current and future jobseekers and the productive sector to effectively benefit, it is necessary to support jobseekers with job-search tools, interview preparation workshops, a referral system for training programs, and services tailored to the needs of those with the most significant employability constraints. For potential employers, it is fundamental to support the implementation of recruitment services, including by establishing wider spaces of communication between employers and potential employees, systems for the pre-selection of candidates, and more robust on-the-job training opportunities. Incentives to place and promote vacancies in the current national employment service systems should be considered. 180 REFERENCES 181 SURINAME POVERTY AND EQUITY ASSESSMENT Docquier, F., and A. Marfouk. 2005. International Migration by Educational Attainment (1990–2000)-Release 1.1 database, 1990. Francis, D.C., N. Karalashvili, H. Maemir, and J. Rodriguez Meza. 2020. Measuring Total Factor Productivity Using the Enterprise Surveys: A Methodological Note. Policy Research Working Paper No. 9491. World Bank, Washington, DC. Available at https://elibrary.worldbank.org/doi/epdf/10.1596/1813-9450-9491 Inter-American Development Bank (IDB). 2022. 2022 Suriname Survey of Living Conditions. IDB, Washington, DC. Available at https://mydata.iadb.org/Social-Protection/2022-Suriname-Survey-of- Living-Conditions/prbn-x74x/about_data Mishra, P. 2006. Emigration and Brain Drain: Evidence from the Caribbean. IMF Working Paper No. 6/25. International Monetary Fund, Washington, DC. Montenegro, C.E., and H.A. Patrinos.  2023. A Data Set of Comparable Estimates of the Private Rate of Return to Schooling in the World, 1970–2014. International Journal of Manpower 44(6): 1248–268.  Nganda, Aidah Trevelynn, Francis Kirimi, and Salome Nyambura. 2021. An Exploration of Funding Avenues in Technical, Vocational Education and Training that Promote Gender Equity of Students in Uganda. International Journal of Vocational Education and Training Research 7(2). OECD. 2024. Breaking the Vicious Circles of Informal Employment and Low-Paying Work, OECD Publishing, Paris. Available at https://doi.org/10.1787/f95c5a74-en Ruprah, I., and R. Sierra. 2016. Engine of Growth? The Caribbean Private Sector Needs More Than an Oil Change. Washington, DC: Inter-American Development Bank. Statistics Netherlands. 2023. How Many Residents Have a Foreign Country of Origin? (January 18) Available at https://www.cbs.nl/en-gb/dossier/asylum-migration-and-integration/how-many- residents-have-a-foreign-country-of-origin- Widiastuti, Indah, Taufik Wisnu Saputra, Wahyu Noviansyah, and Lilis Trianingsih. 2021. TVET Institutions’ Perspective on Implementation of Public-Private Partnerships Model in the Southeast Asia Countries. Journal of Physics: Conference Series 1808(1). World Bank. Undated. Facilitating the School to Work Transition of Young Women. LCR Regional Gender Coordination in the Poverty and Equity Global Practice. World Bank, Washington, DC. Available at https://documents1.worldbank.org/curated/en/354491642741732903/pdf/Facilitating-the-School- to-Work-Transition-of-Young-Women.pdf 182 184 ANNEX 3. ASSESSMENT OF SURINAME’S SOCIAL PROTECTION SYSTEM 185 SURINAME POVERTY AND EQUITY ASSESSMENT CONTENTS Key Findings 188 1. Introduction 189 2. Suriname’s Social Protection System 193 2.1. Background: Vision, Plans, Recent Developments, and Challenges 194 2.2. Implementation of Social Assistance Programs for Poverty-Targeting 195 2.3. Social Protection Landscape 196 2.4. Scale of Suriname’s Main Social Assistance Programs 199 3. Detailed Description of Suriname’s Four Main Social Assistance Programs 202 3.1. Elderly Allowance (AOV) 203 3.2. General Child Benefit (AKB) 204 3.3. Financial Assistance (FBZWHH and FBMMEB) 206 3.4. Total Contribution of Transfers to Household Income 208 4. Do Social Assistance Programs Reach the Sociodemographic Groups Most in Need? 209 4.1. Coverage by Consumption Quintile 210 4.2. Coverage by Region 211 4.3. Coverage by Ethnic Group 212 4.4. Coverage by Level of Education 213 4.5. Coverage by Household Composition 214 5. Policy Simulations 217 5.1. Current Impact of Social Assistance on Poverty 218 5.2. Which Ongoing Program Has the Strongest Per Dollar Poverty Reduction Potential? 219 5.3. The Impact of Recent Increases in Transfer Amounts 220 5.4. The Impact of Suriname’s New Program to Strengthen Household Purchasing Power 222 6. Recommendations 225 References 228 186 FIGURE Figure A3.1. Suriname: Social Assistance Expenditure, 2017–2023 (Percent of GDP) 201 TABLES Table A3.1. Overview of Suriname’s Social Assistance Programs and Provisions 197 Table A3.2. Coverage of Suriname’s Main Social Programs According to Administrative Records, 2018–2023 200 Table A3.3. Suriname: Targeting Accuracy of the AOV Elderly Allowance (Percent) 204 Table A3.4. Suriname: AOV Elderly Allowance Transfer Amounts 204 Table A3.5. Suriname: AKB Child Benefit Program Transfer Amounts 206 Table A3.6. Suriname: Financial Assistance Transfer Amounts 207 Table A3.7. Suriname: Per Capita Contribution of Transfer Programs to Household Income 208 Table A3.8. Suriname: Coverage by Consumption Quintile 211 Table A3.9. Suriname: Coverage by Geographic Area 212 Table A3.10. Suriname: Coverage by Ethnicity 212 Table A3.11. Suriname: Coverage by Level of Education Completed 213 Table A3.12. Suriname: Coverage by Presence of Children 214 Table A3.13. Suriname: Coverage by Household Size 215 Table A3.14. Suriname; Coverage by Sex of the Household Head 216 Table A3.15. Suriname: Impact of Social Assistance on Poverty 219 Table A3.16. Suriname: Impact of Allocating an Additional SRD100 Million to Any of the Four Main Social Assistance Programs 220 Table A3.17. Suriname: Evolution of Transfer Amounts Provided by the Four Main Social Assistance Programs 221 Table A3.18. Suriname Impact of Increased 2024 Transfer Amounts on Poverty 221 Table A3.19. Suriname: Impact of the KKV Program on Poverty 224 187 SURINAME POVERTY AND EQUITY ASSESSMENT KEY FINDINGS • As part of its macroeconomic recovery program, Suriname has scaled up its social assistance programming in recent years through a combination of increased transfer amounts and implementation of a major temporary purchasing power program. • Estimates in this annex indicate that in 2022, in the absence of Suriname’s four permanent social assistance programs, poverty (as defined by the World Bank’s US$6.85 purchasing power parity poverty line expressed in 2017 U.S. dollars) would have been more than 1.5 percentage points higher. • Of these four permanent programs, a universal allowance for the elderly provides the most generous support and had the strongest impact on poverty in 2022. The other programs, which target disabled persons, children, and vulnerable households, either have more moderate coverage or provide more modest benefits. • An outdated social protection policy framework and rudimentary delivery systems have led to inefficiencies and limited inclusiveness in social assistance. This has hindered the ability of Suriname’s social protection system to protect the poor. • Due to targeting based primarily on demographic characteristics, coverage of the main social assistance programs is suboptimal among the socioeconomic groups that have the highest poverty rates and need the support the most, that is, persons who live in the interior, deprived ethnic groups, and those with low education. Over 37 percent of households in the bottom consumption quintile do not benefit from the main programs. • Coverage falls particularly short for households with children. While these households (especially large households with many children) are significantly more likely to be poor (with a 22 percent incidence of poverty versus 8 percent in households without children, using the US$6.85 poverty line), they receive only limited benefits from social programs. The social transfer for children is low and limited to a maximum of four children per household. • Recent expansions in transfer amounts provided through the main social assistance programs, and especially a new program to support poor households’ purchasing power, are estimated to have a significant impact on poverty. However, the new program is inefficient and has only a muted impact on poverty in households with children. • A greater impact on poverty will require, among other measures, improvements in delivery systems, higher coverage among households with children, and stronger permanent poverty targeting. Preparation of this annex was led by Jacobus de Hoop, Clemente Avila Parra, Laura Clavijo Torres, Mateo Uribe Castro, and Rosita Woodly-Sobhie. Diether W. Beuermann Mendoza and Gisele Teixeira Braun contributed with extensive feedback and input. 188 1. INTRODUCTION 189 SURINAME POVERTY AND EQUITY ASSESSMENT In response to the macroeconomic crisis of 2020, the government of Suriname launched an economic recovery program to put the country back on a path of fiscal sustainability (Republic of Suriname 2021a). Several stringent structural economic reform measures were implemented under the program, with potentially significant implications for Suriname’s population. To help mitigate the effects of the crisis, the reform program included specific measures to provide social support for poor and vulnerable households. As a condition of support from the International Monetary Fund (IMF), the program set an indicative and quantitative indicator of 3 percent of GDP as a minimum social assistance spending target (IMF 2021). In its implementation efforts, the government continues to develop, update, and modernize its social protection system and initiate new programs in close collaboration with representatives from the private sector and labor unions.1 The availability of the IDB’s 2022 Survey of Living Conditions (SLC) data provides an opportunity to inform these social assistance efforts (IDB 2022). Drawing on the 2022 SLC, this annex aims to provide new insight into the functioning and effectiveness of social assistance in Suriname. The annex has four principal goals: • Describe the performance of existing programs. Do they reach the groups they are supposed to reach in an efficient manner? Is the support they provide meaningful? • Map out groups that are underserved by the social assistance programs. Specifically, the focus will be on groups that were identified as poor in Annex 1 and on whether they receive meaningful social assistance benefits. • Determine the impact of Suriname’s main social assistance programs on poverty. • Analyze the impact of potential policy reforms on the effectiveness of social assistance and their ability to further reduce poverty. The aim is to contribute to an improved understanding of Suriname’s social protection sector and inform policy decisions to strengthen the social protection system, especially the social assistance pillar. The analysis of the main programs indicates that there are opportunities for a greater impact on poverty through improvements in social assistance. As a result of the categorical targeting (on characteristics such as age) of the main programs, coverage of Suriname’s social assistance programs is only moderately progressive.2 Nearly 63 percent of households in the bottom consumption quintile receive benefits under at least one of the main social assistance programs. At the top of the consumption distribution, this share is a little over 40 percent. In other words, Suriname’s main social assistance programs miss a sizable portion (nearly 38 percent) of the poorest. Clearly, Suriname’s mainly categorically-targeted social assistance programs are insufficient to reach all the population in need (Sobhie, Gillis, and Wallerlei 2024). Moreover, the average per capita value of transfers received in the bottom of the income distribution is still only a fraction of the international upper-middle-income poverty line. On top of that, groups that are historically disadvantaged are not especially well covered 1 See the Tripartiet Akkoord of November 24, 2021, available at tripartiet-akkoord-24nov2021-final.pdf (gov.sr) 2 These are categorized as Suriname’s main programs because they operate on a regular basis, have the largest proportion of the targeted population, and have a legal basis and a transparent and accountable administrative system. 190 by the main social assistance programs. For instance, if anything, the coverage of the main social programs is lower in the interior of the country, where there is more poverty. An outdated social protection policy framework and rudimentary delivery systems have led to inefficiencies and limited inclusiveness. This has hindered the ability of Suriname’s social protection system to protect the poor, promote human capital development and build resilience against shocks, including economic shocks, health-related shocks, and shocks related to climate change and extreme weather events. The social protection framework lacks key elements such as a more focused approach to poverty reduction, an explicit adaptive social protection approach to increase preparedness and responsiveness to shocks, and a linkage of social protection to other complementary interventions. The latter could be particularly helpful for households with multiple deprivations that might require integrated assistance. It could also help individuals with productive capacity who can be connected to jobs or other productive opportunities, and to further increase the human capital of those individuals by focusing on areas with high labor demand. The rudimentary delivery chain of social protection interventions results in significant exclusion of vulnerable households. This can be explained both by the lack of poverty targeting to prioritize key vulnerable groups with the existing interventions, as well as by challenges throughout the delivery chain. For instance, outreach efforts seem to be limited, which could result in low awareness among the target population. Intake and registration is on demand, but given limited territorial coverage of the Ministry of Social Affairs and Public Housing (MOSAH), this means that poorer households that tend to be in the interior and in remote areas face de facto higher cost to access the programs. Together with burdensome administrative procedures, this can be a barrier to inclusion. In addition, program intake is mostly done manually, which is more prone to errors and inaccuracies and causes delays in processing applications. There are also problems with other critical steps in the delivery chain, including manual payments in parts of the country. Only recently did MOSAH start to work with the IDB on modernizing some steps in the delivery chain, but challenges remain. This annex complements other analytical efforts to underpin reforms of Suriname’s social assistance system. In collaboration with UNICEF, Suriname’s Planning Office is completing a study focused on the demand side (Sobhie, Gillis, and Wallerlei 2024). The study assesses the effectiveness and quality of the programs being carried out and the overall system based on the views of beneficiaries and key stakeholders. In addition, the Ministry of Labor is conducting a study with support from the International Labour Organization (ILO) to propose and develop a National Social Protection Strategy and an Action Plan for its implementation (van de Meerendonk 2023). Efforts to prepare the strategy and Action Plan are a collaborative effort among related ministries, the ILO, and the IDB. The comprehensive social assistance review assesses the current situation of Suriname’s social protection systems and provides guidance regarding the future reforms needed for a sustainable and responsive social protection system, including a social protection floor.3 Section 2 of this annex provides an overview of Suriname’s social protection system. It describes the government’s vision and plans for social protection, discusses implementation arrangements, and provides an overview of the different social protection programs. Section 3 then 3 In line with Convention No 102 – which is set to be ratified by Suriname – and Recommendation No. 202 on Social Protec- tion Floors, as well as the Sustainable Development Goals, notably SDG 1.3. 191 SURINAME POVERTY AND EQUITY ASSESSMENT turns to Suriname’s four most important social assistance programs, which represent the bulk of social protection expenditure and have the strongest potential to reduce poverty. The section describes the objectives and implementation of these programs, examines whether they reach the intended target population, and explores whether the benefit they provide is meaningful for beneficiaries. Section 4 examines the extent to which these same four social programs reach the population groups that most need support according to the poverty diagnostic presented in Annex 1. Section 5 carries out micro- simulations to understand the impact of the main social assistance programs on poverty and examines the effects of potential and ongoing policy initiatives. Section 6 closes with policy recommendations. 192 2. SURINAME’S SOCIAL PROTECTION SYSTEM 193 SURINAME POVERTY AND EQUITY ASSESSMENT 2.1. BACKGROUND: VISION, PLANS, RECENT DEVELOPMENTS, AND CHALLENGES The social protection system in Suriname originates in the state’s priority to provide social support, assistance, and protection to those who are not (fully) equipped and able to take care of themselves, including those who are unemployed, the (working) poor, and those who are not part of the active labor force. This priority is reflected in Suriname’s constitution and in a decree describing the tasks and mission of MOSAH.4 Based on a human rights approach, the aim of Suriname’s social protection system is to support those who are not provided with – or do not have access to – the necessary resources, opportunities, and capabilities to survive and live a decent life within their own capacity. Suriname’s social protection system can be described as a blend of contributory and non- contributory programs. The government of Suriname’s vision for its social assistance policies is described in the Multi-Annual Development Plan 2022–2026 (Republic of Suriname 2021b), which aims for a more equal and righteous Suriname that offers prosperity and wellbeing for every citizen. It is built on the vision of a society in which “everyone can decide freely within the system of law and justice about the realization of his /her own potential while taking into account the sustainability of the environment” (Republic of Suriname 2021b, p. III). It is a special priority for the government to leave no minority and vulnerable groups behind. The Multi-Annual Development Plan 2022–2026 outlines a series of strategic priority actions, including: transfer of social benefits through debit cards and the banking system, a shift towards conditional cash transfers, dedicated resources and facilities for the homeless, creation of a job bank for job seekers, enhanced support and protection for people with disabilities, and a regular update of the minimum wage and poverty line.5 The Multi-Annual Development Plan 2022–2026 was prepared on the back of the severe macro-fiscal crisis and implementation of the Recovery Plan 2020–2022, at a time when the government had started implementing reforms under the recovery program, with support from the IMF. These reforms included eliminating subsidies on basic utilities (electricity, water, and cooking fuel) and transport as a priority action under the IMF program. Other measures included moderating wage raises and decreasing the number of government employees, with potentially significant implications for households and businesses. To mitigate the impact of these measures on the most vulnerable, the government expanded and upgraded Suriname’s social safety net programs. These upgraded social assistance measures were bolstered by midterm evaluations of the IMF’s Extended Fund Facility (EFF), which strictly advised prioritizing social protection targets, improving the targeting system, and increasing social benefits. In accordance with the Multi-Annual Development Plan 2022–2026 and the EFF arrangement with the IMF, the government has taken numerous steps to restructure the economy and support the most vulnerable groups. In line with one of the prior actions of the EFF program – to spend about 3 percent of GDP on social programs – the government increased the value of transfers provided through its main social assistance programs. It initiated short-term projects (both nationwide 4 The decree is available at dna.sr/media/76886/SB_2014__no_114_Wet_Nationale_Basiszorgverzekering.pdf. 5 On the latter, see also Sobhie and Kisoensingh (2023). 194 and in specific regions) to provide school nutrition, school clothing, and food parcels. And it recently launched a major new social assistance program to financially support poor, near-poor, and vulnerable households. The program aims to compensate these households for the negative consequences of the economic crises and the rapid increase in prices of basic needs and utilities. This Purchasing Power Enhancement Program (Koopkracht Versterking - KKV), aims to reach new beneficiaries quickly and improve the current targeting system to reach the 3 percent of GDP goal under the reform program supported by the EFF. Besides the social safety net policy measures, the government has also worked towards a plan to establish a social protection floor in collaboration with the ILO’s Decent Work Country Program (ILO 2023), review the social protection system (van de Meerendonk, 2023),6 and improve current legislation. Despite these efforts, work remains to be done. The most important expansion of social assistance in recent years consisted of increasing the transfer amounts provided through existing programs. Suriname does not have a social registry that enables it to expand social assistance coverage rapidly to new beneficiaries in need. Lacking information and communications technology infrastructure further hampers the expansion of social assistance programs. Moreover, government employees hesitate to contribute to programs that are not run through accountable systems (Sobhie, Gillis, and Wallerlei 2024).7 All of these factors have held Suriname back in meeting its social assistance ambitions. Indeed, meeting social assistance targets has turned out to be one of the most challenging elements of the IMF program. As recently as March 2024, the IMF (2024) concluded that “all quantitative performance criteria and indicative targets under the program were met, except for the spending floor on social assistance.” 2.2. IMPLEMENTATION OF SOCIAL ASSISTANCE PROGRAMS FOR POVERTY-TARGETING MOSAH fulfills a leading role in the execution of (non-contributory) social assistance programs to combat poverty (as described in the government decree Staatsbesluit van 10 oktober 1991, S.B. 1991 no. 58).8 The ministry provides three types of services: cash transfers to households, in-kind services to households, and cash transfers to institutions that provide social assistance services (such as orphanages, daycare centers, and centers for elderly and disabled persons). 6 See ILO, 2023 “ILO Continues Work on Comprehensive Review of Suriname’s Social Protection System,” press release (February 17), available at https://www.ilo.org/resource/news/ilo-continues-work-comprehensive-review-surinames-so- cial-protection-system 7 As a high level of institutionalized corruption is one of the main threats of the public sector. See CFATF (2023, p. 22). 8 The ministry oversees Suriname’s welfare policy and is responsible for general wellbeing, in particular social and community care for the elderly (senior citizens), people with a physical and/or intellectual disability, and youth, including the care of those under the supervision of the State; general social work; supervision of orphanages, boarding schools and similar social institutions; general social development work, including the promotion of indirect actions aimed at improving the living environment; the social insurance system, in collaboration with other ministries, as well as social provisions and social security; upgrading/enhancement of housing; enhancement of the credit system for social housing, in collaboration with the Ministry of Finance; and management and distribution/assignment of public housing. For additional information, see https://www.dna.sr/media/18325/besluit_taakomschrijving_departementen_1991.pdf. 195 SURINAME POVERTY AND EQUITY ASSESSMENT One of the main goals of MOSAH is to set up a system to identify and select targeted beneficiaries. The goal is to move towards an integrated approach in which all poverty reduction programs can be coordinated and implemented in relation to each other. With that purpose, and with support of the IDB, MOSAH is implementing a Beneficiary Information System (BIS) for the registration and monitoring of target groups and clients.9 Currently, the system is comprised of information on the beneficiaries of Suriname’s two largest, long-running social assistance programs. Ultimately, the aim is not only for this system to integrate information for all social programs, but also to serve as a database for the targeting of social programs. Drawing on regional and international experience and prior Surinamese experience (e.g., Suriname’s Affordable Housing Project), the system would include a proxy means test algorithm to select beneficiaries based on objective criteria, rather than the relatively subjective criteria that are currently used. There are social assistance programs that are executed under the supervision of special units outside MOSAH. To avoid under-delivery on social assistance targets, the government decided to carry out the social assistance measures as an overarching activity, referred to as the Integral Social Program.10 The program entails collaboration between MOSAH, the Ministry of Finance, and the Secretary of the President on several social programs. Under this initiative, all the poverty-targeting programs are under direct supervision of the president. The KKV is an example of such a program. 2.3. SOCIAL PROTECTION LANDSCAPE Suriname does not have an overarching social protection legal framework. There is no broad social assistance act that guides the country’s social protection architecture, nor is there an encompassing social protection strategy. Rather, the system is governed through acts for individual programs and the national budget. Four unconditional and mostly categorically targeted cash transfer programs have formed the core of Suriname’s social assistance system. The two largest programs are enshrined in legislation: the General Old Age Provision Fund (Algemene Ouderdomsvoorziening - AOV) and the General Child Benefit Provision (Algemene Kinderbijslag - AKB). The AOV elderly allowance is governed by the General Old Age Provision Act (WET van 20 maart 1981 tot instelling van een Algemeen Oudedagsvoorzieningsfonds, S.B. 1981, No. 30, subject to later amendments). The AKB child allowance is covered by the General Child Allowance Act (Algemene Kinderbijslagregeling, 1973, G.B. 1973, No. 107). The other two programs find their regulatory basis in the National Annual Budget approved by Parliament, and their procedures and workflows are further described in operational manuals. These programs are the Financial Contribution to Socially Weak Households Program (Financiële Bijstand voor 9 In 2022, the IDB approved a US$30 million loan for a four-year period to support the ministry to bring the system in place and fulfill the social and financial inclusion target. The development of the BIS application was initiated in 2020 and completed in July 2022. The beneficiary form can be viewed at BIS SOZAVO | Social beneficiary form (gov.sr) (accessed June 19, 2024). 10 With reference to the formal decision in the government’s meeting of 2 December 2023 (Missive no.164/RvS/22 of 02 December 2023, approved RV481/G), the Integral Social Program was established under the Secretary of the President to monitor and enhance the social assistance programs. See Kabinet van de President, President geïnformeerd over voort- gang Integraal Sociaal Programma (gov.sr) (accessed June 19, 2024). 196 zwakke huishoudens - FBZWHH) and the Financial Contribution to People with Disabilities Program (Financiële Bijstand voor mensen met een beperking - FBMMEB). Much of the remainder of this annex will focus on these four programs, and Section 2.4 describes them in more detail. In addition to these four cash transfer programs, the social assistance system covers a range of other programs and provisions. The most important of these, also enshrined in legislation, is the Basic Health Insurance Act (Wet Nationale Basiszorgverzekering, S.B. 2014, No. 114). In addition, the government recently initiated the large-scale KKV program. It is not enshrined in legislation but instead run through the National Annual Budget. Suriname also operates a number of mostly smaller programs. Table A3.1 provides an overview of the main programs. TABLE A3.1. OVERVIEW OF SURINAME’S SOCIAL ASSISTANCE PROGRAMS AND PROVISIONS Program Objective Targeted Population Main Characteristics Benefit: SRD1,250 per month (2022), increased to SRD1750 in 2023 Surinamese people Budget in 2023: SRD1,281,096,000; in ages 60+ and residents 2022: SRD1,068,000,000 with a non-Surinamese General Old Total number of beneficiaries in 2022: 71,175 Income support to nationality 60+ who Age Provision Frequency: Continuous/Monthly aging population have lived continuously Fund (AOV) Geographic coverage: National, reaching about and contributed to the 87 percent of the targeted group in 2023 fund for at least 10 Funding: Government years. Implementing agency: Ministry of Social Affairs and Public Housing (MOSAH)/AOV Foundation Benefit: SRD125 per child per month (2021/2022), for a maximum of four children per family of SRD200 as of July 2023 Households with Budget in 2023: SRD260,788,000; in 2022: children ages 0 to General Child SRD128,759,500 Income support to 17 whose heads are Benefit Provi- Total number of beneficiaries in 2022: 87,806 young population unemployed and not sion (AKB) children in 45,408 households entitled to child bene- Frequency: Continuous/Monthly fits on other grounds. Geographic coverage: National Funding: Government Implementing agency: MOSAH Benefit: SRD1,250 (2022) Financially weak Budget in 2023: SRD337,167,000 Financial household members Total number of beneficiaries in 2022: 13,574 Contribution to Income support ages 21 to 60 and for Frequency: Continuous/Monthly Socially Weak to socially weak children between 0 Geographic coverage: National Households households and 18 years old with Funding: Government (and IDB for (FBZWHH) income of SRD4,500 SRD28,161,000) or less. Implementing agency: MOSAH 197 SURINAME POVERTY AND EQUITY ASSESSMENT People up to the age of 60 with a permanent Benefit: SRD1,750 per month (2022) disability who are no Budget in 2023: SRD518,549,000. longer able to work Financial Total number of beneficiaries: in 2022: 1,750 (according to indi- Contribution Income support Frequency: Continuous/Monthly cations by a medical to People with to people with Geographic coverage: National specialist) and with Disabilities disabilities Funding: Government (and IDB for income of SRD4,500 (FBMMEB) SRD32,855,000) or less. Persons with Implementing agency: MOSAH a temporary disability receive a temporary allowance. Benefit: SRD1800 (2024) Temporary pro- Budget in 2023: SRD1,610,430,600; in 2024: Social Program gram to raise the SRD5.2 billion to Enhance purchasing power Total number of beneficiaries: 120,972 as of Purchasing of economically Households with February 2024 Power (KKV), vulnerable house- total income up to Frequency: Continuous/Monthly also referred holds to cope with SRD6,000 Geographic coverage: National to as Social the elimination of Funding: Government Beneficiary subsidies on utilities Implementing agency: MOSAH, assisting agen- Program and price increases cies, and departments of the Ministry of Finance and the Secretary of the President Budget in 2023: SRD200 million. Total number of beneficiaries in 2022: Unknown Premium to research team To pay the premium Payments for Registered residents in Frequency: Continuous for Basic Health Basic Health Suriname ages 17-59 Geographic coverage: National Insurance Insurance Funding: Government Implementing agency: MOSAH in collaboration with State Health Foundation Budget in 2023: SRD119 million Total number of beneficiaries in 2022: Unknown to research team Basic Health Residents of Suriname To provide basic Frequency: Continuous Care Assistance under age 17 and older health care Geographic coverage: National (BAZO) than age 60. Funding: Government Implementing agency: MOSAH in collaboration with State Health Foundation Budget in 2022: SRD345,000. To provide medical Total number of beneficiaries in 2022: Unknown device such as CT Contribution to research team and MRI scan devic- By medical recommen- to Medical Frequency: Continuous, upon request es, glasses, hearing dation Equipment Geographic coverage: National aids, mobility scoot- Funding: Government ers, walkers, etc. Implementing agency: MOSAH 198 Budget in 2023: SRD500,000 Provision of neces- Total number of beneficiaries in 2022: Unknown sary basic supplies/ People with disabilities to research team tools needed to in the 18-59 age group Frequency: Continuous, upon request Home Care provide home and seniors living at Geographic coverage: National, based on avail- care for vulnerable home able services and infrastructure in areas populations Funding: Government Implementing agency: MOSAH To finance uncov- Budget in 2023: SRD20 million ered medical costs Total number of beneficiaries in 2022: Unknown under the Basic to research team Additional National Health Geographic coverage: National, upon request by Costs for Medi- Insurance (med-   emergency cal Care icines, hospital Funding: Government and nursing costs, Implementing agency: MOSAH in collaboration outpatient costs, with Ministry of Health and others) Support for the Those who live on Budget in 2023: SRD95,092,000. costs of care for the edge of subsis- Total number of beneficiaries in 2022: Unknown parents with trip- tence and lack food, to research team Poverty lets, nutrition and safe drinking water, Frequency: Ongoing, upon request Reduction special projects for sanitation, health, Geographic coverage: National vulnerable families, education, shelter and Funding: Government and nutrition for re- information Implementing agency: MOSAH ception institutions Budget in 2023: SRD9,250,000 Total number of beneficiaries in 2022: Unknown to research team Social Frequency: Irregular; restarted in 2024 to en- Provision of food Socially disadvantaged Protection hance social targeting as requested by the inter- parcels people and households Programs national Monetary Fund Geographic coverage: National Funding: Government Implementing agency: MOSAH Sources: Prepared by the authors based on information from the Ministry of Finance and the Ministry of Social Affairs and Public Housing. 2.4. SCALE OF SURINAME’S MAIN SOCIAL ASSISTANCE PROGRAMS The empirical analysis in the following sections focuses primarily on the four main cash transfer programs that have formed the core of Suriname’s social assistance system: the AOV elderly allowance, the AKB child allowance, the FBZWHH for financially weak households, and the FBMMEB for households with a disabled person. These programs cover a large share of the population and represent the bulk of social assistance spending. Section 5 will also focus on the major new KKV purchasing power program, which was initiated after the SLC had been conducted. Before moving to the empirical analysis, this section documents the scale of these programs both in terms of number of beneficiaries and budgets. 199 SURINAME POVERTY AND EQUITY ASSESSMENT The coverage of Suriname’s main social assistance programs has increased over time. As shown in Table A3.2, the number of beneficiaries in all four of these programs increased substantially in recent years. The coverage of the AOV elderly allowance increased from approximately 66,000 persons in 2020 to 71,000 in 2022. Coverage of the FBZWHH for financially weak households increased from 10,000 to 13,000 persons, and the increase was similar for the FBMMEB for persons with a disability. The only exception is the AKB child allowance program, which declined in size from approximately 91,000 beneficiary children in 2020 to 88,000 in 2022. TABLE A3.2. COVERAGE OF SURINAME’S MAIN SOCIAL PROGRAMS ACCORDING TO ADMINIS- TRATIVE RECORDS, 2018–2023   2018 2019 2020 2021 2022 2023 Total number of beneficiary households:             Elderly allowance (AOV) 60,578 62,482 65,878 68,450 71,175 73,015 Financial assistance (FBZWHH) 5,500* 5,744 6,458 5,765 6,076 7,300* Financial assistance-Disability (FBMMEB) 12,791 11,166 10,094 10,759 13,068 15,711 Total number of beneficiary children:             Child allowance (AKB) 90,207 90,533 91,191 88,659 87,806 n.a. Beneficiaries as share of target population:           Elderly allowance (AOV) 86% 86% 99% 87% 84% 87% Child allowance (AKB) 54% 54% 54% 52% 52% n.a.  Sources: Prepared by the authors based on information from the Ministry of Finance and the Ministry of Social Affairs and Public Housing. Note: n.a.: not available. * Estimate, not all areas of the interior are included. In terms of budget, the AOV elderly allowance is the most sizable of Suriname’s four main social assistance programs. Figure A3.1 examines Suriname’s expenditure on social assistance in recent years. It first shows total social assistance expenditure as a share of GDP for the main programs. In accordance with its high coverage and the sizable transfers it provides, the AOV elderly allowance clearly has had the largest budget in recent years. The expenditure equaled about 1.5 percent of GDP in 2017. Since then, the expenditure as a share of GDP has been declining quite rapidly. By 2023, it represented a little less than 1 percent of GDP. Nonetheless, the AOV elderly allowance remains the most sizable of the four programs. Expenditure on the other three main social assistance programs is markedly lower than that of the AOV. The AKB child allowance program, although it has high coverage, represents a much smaller share of GDP, as it provides only modest benefits. The expenditure as a share of GDP hovered around 0.2 percent of GDP in past years but declined in 2023. The expenditure on the two other main social assistance programs (the FBZWHH for financially vulnerable households and the FBMMEB for persons with a disability) is limited as a share of GDP. The FBZWHH represented about 0.05 percent of GDP in 2022, while the FBMMEB equaled about 0.2 percent of GDP. 200 The size of the new KKV program to enhance purchasing power approximately equaled that of the AOV elderly allowance in 2023. By 2024, the total budget of the KKV program equaled about 1.8 percent of GDP. The budget exceeded even that of the AOV program. In other words, the KKV program represented a major change in Suriname’s social assistance landscape. FIGURE A3.1. SURINAME: SOCIAL ASSISTANCE EXPENDITURE, 2017–2023 (PERCENT OF GDP) 2,5 2,0 Percentage of GDP 1,5 1,0 0,5 0,0 2017 2018 2019 2020 2021 2022 2023 Old Age Pension ( AOV) General Child Allowance (AKB) Financial Support for Poor Households (FBZwHH) Financial Support to Persons with Disabilities (FBMMEB) Social Program to Enhance Purchasing Power (KKV) Total Source: Prepared by the authors based on information from the Ministry of Finance and the Ministry of Social Affairs and Public Housing. Note: Data for 2023 represent budget rather than expenditure. Jointly, the four main programs constitute a sizable share of social assistance expenditure. The total expenditure on the four main programs represented approximately 1.5 percent of GDP in recent years. With the inclusion of the new KKV program in 2023, this combined budget increased to well over 2 percent of GDP. Suriname’s expenditure on social assistance is now above average when compared internationally. Tesliuc, Paffhausen, and Avila (2023) examined public spending on social assistance as a share of GDP relying on the Atlas of Social Protection Indicators of Resilience and Equity (ASPIRE). They found that public spending on social assistance equaled 1.68 percent of GDP in Latin America and the Caribbean, 1.47 percent of GDP in the Caribbean, and 1.42 percent of GDP globally.11 By this measure, Suriname’s expenditure on its main social assistance programs, including the KKV, already exceeded that of all these benchmarks in 2023. 11 While ASPIRE data may have limitations, they represent a significant effort to enhance data comparability across countries and serve as a relevant benchmark for assessing and comparing social assistance systems. 201 SURINAME POVERTY AND EQUITY ASSESSMENT 3. DETAILED DESCRIPTION OF SURINAME’S FOUR MAIN SOCIAL ASSISTANCE PROGRAMS 202 3.1. ELDERLY ALLOWANCE (AOV) The AOV elderly allowance is a universal program for all residents ages 60 and older. The AOV is regulated by the General Old Age Provision Act.12 All Surinamese nationals (and migrants with a legal permit who have lived in Suriname for 10 years or more and had contributed to the program) are eligible to receive AOV benefits, irrespective of any other income sources they receive. The AOV is run by MOSAH. The AOV Foundation as a sub-unit of this ministry relies on MOSAH’s country-wide offices for implementation. The program’s General Old Age Allowance Fund (Algemeen Oudedagsvoorzieningsfonds), with its own management and board, is financed with contributions and State transfers (subsidies). Contributors are residents with an income from earnings or dividends. The rate has been set at 4 percent of insurable income and is collected through payroll tax or income tax (the latter for non-salaried income earners). Therefore, the tax office collects the contributions. Non- nationals are supposed to contribute in the same way and for at least for 10 years to receive the AOV elderly allowance. Payments are made both through bank accounts and in cash. For the first application, the person needs to submit a request and proof of age and nationality to the nearest MOSAH office. Participants are asked to submit an Attestation de Vita (proof of being alive) on an annual basis and to show up in person for verification. The AOV allowance is provided as long as the person lives. Once an AOV application is approved, the beneficiary is asked to provide a bank account for monthly payments. In the interior and some of the rural coastal areas where the banking system is not up to date, the payments are made in cash. The same holds for beneficiaries in urban areas who do not have a bank account, mostly those who have never held a formal job. In order to limit transportation costs, the cash transfers are not provided on a frequent basis. Most locations are visited once or twice a year, depending on the remoteness of the area. Beneficiaries in remote areas of the country are known to face constraints both in terms of enrolling in the program and receiving timely benefits, especially if there is no MOSAH unit in a village. As Sobhie, Gillis, and Wallerlei (2024) show, in this case applicants in remote areas must travel far to initially apply for system benefits or obtain the documents (such as nationality and birth certificates) from public agencies that they need to submit. Moreover, because benefits in remote areas are paid in cash, there are important delays in the interior for those payments. The AOV elderly allowance program has high coverage among the population age 60 and older. According to administrative records of MOSAH and the General Bureau of Statistics, approximately 84 percent of the elderly (60+) population in Suriname received AOV benefits in 2022 (Table A3.2). SLC data broadly confirm this coverage rate. In fact, as shown in Table A3.3, the share of the elderly (60+) who reported receiving the AOV allowance was somewhat higher, at 91 percent. Mistargeting of the program does not appear to be a concern. As findings from a Sobhie, Gillis, and Wallerlei (2024) suggest, special attention needs to be paid to migrants living in Suriname for over 10 years, some of whom are not covered because they did not contribute to the system as required, or are not aware that they are eligible. 12 WET van 20 maart 1981 tot instelling van een Algemeen Oudedagsvoorzieningsfonds, S.B. 1981, No. 30, subject to later amendments. 203 SURINAME POVERTY AND EQUITY ASSESSMENT TABLE A3.3. SURINAME: TARGETING ACCURACY OF THE AOV ELDERLY ALLOWANCE (PERCENT) Category Share of Individuals Enrolled in the AOV Elderly Allowance Program 0-59 0.00 Age 60+ 91.14 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). The AOV benefits are identical for all beneficiaries irrespective of age, physical condition, or labor market history. Table A3.4 examines the value of the AOV transfers. The official transfer amount in 2022 was SRD1250 monthly per beneficiary. Hence the daily value of the transfer equaled SRD41.1 (US$3.08) in December 2022 (2017, in purchasing power parity - PPP), which represents about 45 percent of the World Bank’s upper-middle-income per capita poverty line of US$6.85. The transfer comes close to the World Bank’s lower per capita poverty lines for lower-middle-income countries and exceeds that for poor countries. The SLC also asked households about actual AOV transfer amounts received by beneficiaries. These amounts are indeed similar to the official amounts, as shown in the bottom rows of Table A3.4. TABLE A3.4. SURINAME: AOV ELDERLY ALLOWANCE TRANSFER AMOUNTS   Elderly Allowance (AOV) Average official daily income from program:   In SRD 41.1 December 2022 value in 2017 PPP U.S. dollars 3.08 As a percentage of the international UMIC US$6.85 poverty line 45.0% As a percentage of the international LMIC US$3.65 poverty line 84.4% As a percentage of the international poor country US$2.15 poverty line 143.4% Average reported daily income from program, per beneficiary:   In SRD 38.3 December 2022 value in 2017 PPP U.S. dollars 2.87 Source: Poverty assessment team based on official information on program characteristics and the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: LMIC: lower-middle-income country; PPP: purchasing power parity; UMIC: upper-middle-income country. 3.2. GENERAL CHILD BENEFIT (AKB) The AKB child allowance provides financial support to households with children. The program was started in 1973 and is implemented by MOSAH. The program is a specific provision by the government for households with children under the age of 18 with an unemployed household head, 204 or a working head who does not receive a child benefit through the workplace. Program benefits are allocated at the request of the household head for children who have not yet reached the age of 18, have no paid employment, and are not (or have been) married. The program provides a flat transfer for up to four children per household. Although it provides only modest support, the AKB child benefit program is Suriname’s main program providing direct support to (households with) children. Together with a program supporting disabled children, the AKB is the only program for children to run for more than a decade. All the other projects mentioned in Table A3.1 have faced discontinuity; the school clothing/ bags program, for example, has not been operational for two years now. Discontinuities in program implementation are especially common in the interior of the country, and the issue has become a bigger concern since 2020. Other programs that might also be beneficial for children are often not known about or cannot be accessed by stakeholders from rural and interior districts (Sobhie, Gillis, and Wallerlei, 2024) ). Households apply to participate in the AKB child allowance program in the MOSAH office closest to where they live. MOSAH officers are responsible for program intake and field workers carry out needs assessments. Relevant documents are requested to check that the head and his or her partner do not receive child benefits from an employer. Registration is filled out in a paper form and later included in the new digital system. The aim is to work toward a full digital system, starting by having an applicant fill out the form on the social beneficiary app, and as a follow-up inviting the applicant for intake. Additional documentation (statements from the Civil Registry Office) is required each year to prove that the children are under 18 and unemployed, and that the head and his or her partner do not receive child benefits elsewhere. A child who turns 18 is removed from the system, and if there is another child in line, that one is included. The entitlement ends when the child has his or her own income, marries, dies, leaves Suriname, or reaches the age of 18. The AKB is disbursed in cash or through the newly introduced “Moni Karta” pay card. Payments are made monthly, except in the interior where they are disbursed once a year. Sobhie, Gillis, and Wallerlei (2024) point out that there is a delay in payments in rural districts and the interior. Some regions have had a delay in payments for over two years. Delays are especially pressing in remote areas, where payments are made in cash. Payments in cash are coordinated by the main MOSAH office, and special arrangements are made for these operations, since the cash transfers must be safe and financially accountable. According to the 2022 SLC, about a quarter of households with children in Suriname receive the AKB child allowance.13 Because the targeting criteria for the AKB are more complex than those for the AOV elderly allowance (especially criteria related to the employment status of the household head and receipt of child benefits through the workplace), it is challenging to mimic and check targeting of the program on the basis of the SLC data. Hence the SLC data do not lend themselves to a close examination of the targeting accuracy of the AKB child allowance program. 13 A cursory check indicates that this share is lower than the expected share according to administrative records: about 47 percent of children. 205 SURINAME POVERTY AND EQUITY ASSESSMENT In contrast to the AOV elderly allowance, AKB benefits are modest. In 2022, official program benefits had a value of approximately SRD125 per child per month/SRD4.1 per child per day, which in December 2022 equaled about US$0.31 (2017 PPP). As shown in Table A3.5, this amount represents only about 4.5 percent of the international upper-middle-income poverty line or about 18 percent of the poor country poverty line.14 According to Sobhie, Gillis, and Wallerlei (2024), the low amount presents a major constraint. The transportation costs that heads of households make to collect the payments can be higher than the benefit received. Moreover, youth groups have pointed out that the child benefit received by parents, especially if it is a cumulated amount over one or two years, is not always used for the child, but rather spent mainly on purchases of household appliances. TABLE A3.5. SURINAME: AKB CHILD BENEFIT PROGRAM TRANSFER AMOUNTS   General Child Benefit (AKB) Average official daily income from program:   In SRD 4.1 December 2022 value in in 2017 PPP U.S. dollars 0.31 As a percentage of the international UMIC US$6.85 poverty line 4.5% As a percentage of the international LMIC US$3.65 poverty line 8.4% As a percentage of the international poor country US$2.15 poverty line 14.3% Average reported daily income from program, per beneficiary:   In SRD 3.1 December 2022 value in in 2017 PPP U.S. dollars 0.23 Source: Poverty assessment team based on official information on program characteristics and the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: LMIC: lower-middle-income country; PPP: purchasing power parity; UMIC: upper-middle-income country. 3.3. FINANCIAL ASSISTANCE (FBZWHH AND FBMMEB) Suriname runs two other main social assistance programs: the FBZWHH for financially vulnerable households and the FBMMEB for persons with a disability. Both programs are not regulated by law, but are part of the government budget approved by Parliament, which provides the legal basis for the programs. Both programs aim to reduce the poverty risks for vulnerable groups and persons. The programs started officially in 1999, backed by a missive from the Council of Ministers (Missive, RvM 58, van 18 februari 1999). 14 Interestingly, the benefits households report receiving from the AKB child benefit program are only about SRD3.1 per day, or about 75 percent of the expected amount. Of course, the discrepancy between amounts transferred according to pro- gram rules and the amounts reportedly received by program beneficiaries could be driven by misreporting. The survey does not provide further evidence to determine if amounts received by households are truly lower than the formal allowance amounts. However, this is a point that deserves follow-up inspection. 206 The FBZWHH and the FBMMEB programs operate in a similar way. Both target individuals in the 21-59 age group, and the head of the household can request this support for children with a disability. Since June 2023, the elderly with a disability can receive this benefit in addition to the AOV that they receive. Applicants are required to submit their applications to their local MOSAH branch office. In the case of the FBMMEB, this application must include a medical attestation. Both programs are means-targeted, and households must show documentation that their income is less than SRD4,500. Applicants can be eligible for the FBMMEB in addition to the FBZWHH. Both programs make payments through the Moni Karta pay card, except for in the Sipaliwini district in the interior. Both financial assistance programs provide substantial benefits. Table A3.6 examines the size of the transfers provided by both the FBZWHH and FBMMEB. The 2022 daily value of the two programs was SRD41.1 and SRD57.5 per beneficiary per day, respectively. In December 2022, the U.S. dollar value of these transfers (2017 PPP) equaled US$3.08 and US$4.32. In other words, the value of the programs per beneficiary was about 45 and 63 percent of the international upper-middle-income poverty line.15 16 TABLE A3.6. SURINAME: FINANCIAL ASSISTANCE TRANSFER AMOUNTS Financial Assistance Financial Assistance- (FBZWHH) Disability (FBMMEB) Average official daily income from program:     In SRD 41.1 57.5 December 2022 value in 2017 PPP U.S. dollars 3.08 4.32 As a percentage of the international UMIC US$6.85 poverty line 45.0% 63.0% As a percentage of the international LMIC US$3.65 poverty line 84.4% 118.2% As a percentage of the international poor country US$2.15 poverty line 143.4% 200.7% Average reported daily income from program, per beneficiary:     In SRD 30.0 31.4 December 2022 value in 2017 PPP U.S. dollars 2.25 2.35 Source: Poverty assessment team based on official information on program characteristics and the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: LMIC: lower-middle-income country; PPP: purchasing power parity; UMIC: upper-middle-income country. 15 As with the AKB child allowance, reported daily income from the two transfers was substantially lower than the value ex- pected according to formal program rules. However, in the case of these programs this may be driven by changes in transfer amounts over the period of the survey. It is therefore harder to understand if this finding is driven by measurement error. 16 Given their relatively small scale, it is not possible to examine the targeting accuracy of these two programs based on the SLC. 207 SURINAME POVERTY AND EQUITY ASSESSMENT 3.4. TOTAL CONTRIBUTION OF TRANSFERS TO HOUSEHOLD INCOME At the household level, the AOV elderly allowance program makes the most notable contribution. The previous sections examined the per beneficiary value of the transfers provided by each of the four programs. But, obviously, most households will have additional members who are not program beneficiaries. And the social assistance income from the programs will therefore typically be shared with other household members. As a result, at the household level, the per capita value of the transfer programs will be lower than the per beneficiary value. Table A3.7 therefore examines the per capita contribution of the transfer programs to household income. By this measure, the AOV elderly allowance program provides the most substantive support. Its transfers represented about SRD18.5 or US$1.4 (2017 PPP) daily per capita in beneficiary households in December 2022. This equals about 20 percent of the World Bank’s poverty threshold for upper-middle-income countries. The contribution of the other three programs is more modest at the household level. The per capita value of the AKB child allowance transfers to beneficiary households equals about US$0.14 (2017 PPP) or about 2 percent of the upper-middle-income poverty line daily per capita. The value of the FBZWHH for financially vulnerable households and the FBMMEB for persons with a disability respectively equaled US$1 and US$1.13 (2017 PPP) daily per capita, or about 14 percent and 16 percent of the upper-middle-income poverty line. The reason that the per capita values of these programs for beneficiary households are lower than those of the AOV elderly allowance is that the beneficiary households tend to be bigger and hence must spread the transfer over more members. TABLE A3.7. SURINAME: PER CAPITA CONTRIBUTION OF TRANSFER PROGRAMS TO HOUSEHOLD INCOME General Financial Elderly Allowance Financial Assistance-   Child Benefit Assistance (AOV) Disability (FBMMEB) (AKB) (FBZWHH) Average official daily income from program:         In SRD 18.45 1.85 13.27 15.03 December 2022 value in 2017 PPP U.S. dollars 1.38 0.14 1.00 1.13 As a percentage of the international UMIC 20.2% 2.0% 14.5% 16.5% US$6.85 poverty line As a percentage of the international LMIC 37.9% 3.8% 27.3% 30.9% US$3.65 poverty line As a percentage of the international poor 64.4% 6.5% 46.3% 52.4% country US$2.15 poverty line Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Columns (1) to (4) show the average daily per capita income of households with at least one member benefitting from the AOV, AKB, FBZWHH, and FBMMEB, respectively. LMIC: lower-middle-income country; PPP: purchasing power parity; UMIC: upper-middle-income country. 208 4. DO SOCIAL ASSISTANCE PROGRAMS REACH THE SOCIODEMOGRAPHIC GROUPS MOST IN NEED? 209 SURINAME POVERTY AND EQUITY ASSESSMENT This section discusses whether Suriname’s main social assistance programs reach the population groups that are most likely to live in poverty. Annex 1 provided an examination of who the poor are, focusing on where they live and their socioeconomic profile. The annex found that the poverty rate is higher in the interior of the country, among certain ethnic groups (Maroon and indigenous), and among those living in a household with a less-educated head, in larger households, and in households with children. This annex takes another look to see if these sub-groups are reached by the main social assistance programs. 4.1. COVERAGE BY CONSUMPTION QUINTILE The analysis starts by examining the extent to which Suriname’s social assistance programs reach the poorest part of the population. Table A3.8 examines the coverage of each social program across the (pre-transfer) consumption distribution.17 Quintile 1 represents the poorest 20 percent of the pre-transfer consumption distribution, quintile 5 the richest 20 percent. Table 3.8 first examines the share of the population in each quintile covered by each of the four programs individually. For the programs that are targeted at the individual level, coverage is examined at the individual level. For the AKB child allowance program, coverage is examined at the household level. The AOV elderly allowance is the least progressive of Suriname’s social assistance programs, and the AKB child allowance is most progressive. The coverage of the AOV program is higher in the upper consumption quintile than in the bottom quintile. Among the poorest 20 percent of the population, only about 9 percent benefit from the AOV program. Among the richest 20 percent of the population, coverage is about 15 percent. The pattern is the opposite for the AKB child allowance. Over a quarter of households in the bottom consumption quintile receive the AKB allowance, while in the top quintile this share is only about 6 percent. The explanation is that households with children will generally tend to be poorer because they spread income across more dependent members. And they will be especially likely to be poor if they have an unemployed household head. Hence, beneficiaries of the AKB child allowance are over-represented in the bottom of the consumption distribution. Generally speaking, Suriname’s social assistance programs are moderately pro-poor. Over 60 percent of the households in the bottom consumption quintile receive benefits through at least one of the main social assistance programs. In the top of the consumption distribution, this share is about 40 percent.18 Moreover, on average the per capita value of transfers received is highest in the bottom consumption quintile. In accordance with its objective to provide income support to financially vulnerable households, the FBZWHH is the most strongly poverty-targeted. 17 To generate the pre-transfer consumption distribution, we start with households’ reported total consumption. From this total, the value of the transfers they receive is subtracted. Essentially, it is assumed that consumption would drop by an amount equal to the transfer if the household were to not benefit from social assistance programs. (Or, to use more tech- nical terminology, it is assumed that households’ marginal propensity to consume is 100 percent.) Households are then ordered in accordance with their pre-transfer consumption. 18 An important reason for the high overall coverage of social assistance programs is that many AOV beneficiaries live in a small or single-person household. 210 At the same time, Suriname’s main social assistance programs miss a sizable portion (nearly 38 percent) of the poorest quintile. Clearly, Suriname’s mainly categorically targeted social assistance programs are insufficient to reach all the population in need. Moreover, the average per capita value of transfers received in the bottom of the income distribution is still only a fraction of the international upper-middle-income poverty line. TABLE A3.8. SURINAME: COVERAGE BY CONSUMPTION QUINTILE Share of Households Average   Share of Individuals Enrolled in: Receiving: Combined Per Pre-transfer Elderly Financial Financial Assis- Capita Benefits Child Allowance Any Consumption Allowance Assistance tance-Disability (2017 PPP U.S. (AKB) Program Quintiles (AOV) (FBZWHH) (FBMMEB) dollars) 1 9.06% 0.84% 1.90% 26.30% 62.7% 0.81 2 10.85% 0.19% 0.84% 17.37% 54.2% 0.72 3 8.95% 0.05% 1.29% 16.43% 48.1% 0.53 4 10.99% 0.35% 0.72% 7.83% 41.6% 0.65 5 15.39% 0.13% 1.02% 6.42% 40.1% 0.78 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Program coverage by per capita monthly pre-transfers per consumption quintile. To estimate pre-transfers consumption, a marginal propensity to consume of 100 percent for transfer income is assumed. Coverage is as a share of the population for the AOV, FBMMEB, and FBZWHH. Coverage is at the household level for the AKB, i.e., the share of households with at least one child enrolled in the AKB. The table reports the share of total households with at least one member enrolled in at least one program. The last column on the right shows the average daily per capita income from all programs. PPP: purchasing power parity. 4.2. COVERAGE BY REGION The coverage of Suriname’s main social assistance programs is lower in the interior of the country, which is the most deprived area of Suriname. Annex 1 showed that both monetary and multidimensional poverty rates are markedly higher in the interior than in the Greater Paramaribo area or other coastal areas. The monetary poverty rate in the interior was 27 percent (versus 17.5 percent nationwide), while 59 percent of the population was classified as multidimensionally poor (versus 41 percent nationwide). However, if anything, the coverage of the main social programs is lower in the interior of the country than in other regions, according to the 2022 SLC (Table A3.9). While over 11 percent of individuals receive the AOV elderly allowance in Greater Paramaribo and the other coastal areas, only a little over 9 percent receive this benefit in the interior. This is the case even though, according to 2022 SLC data, the share of the elderly is similar (around 12.5 percent) in all three regions. Similarly, coverage of the AKB child allowance is lower in the interior (8 percent of households) than in Greater Paramaribo and other coastal areas (13 and 17 percent respectively).19 The average per capita value of transfers received in the interior is comparable to that in other parts of the country. 19 Coverage of the other two programs is zero in the interior, but this finding needs to be interpreted with caution because the sample size to accurately measure coverage in the interior is not attained in the survey. 211 SURINAME POVERTY AND EQUITY ASSESSMENT TABLE A3.9. SURINAME: COVERAGE BY GEOGRAPHIC AREA Share of Households   Share of Individuals Enrolled in: Average Com- Receiving: bined Per Capita Elderly Financial Financial Assis- Benefits (2017 Child Allow- Any Region Allowance Assistance tance-Disability PPP U.S. dollars) ance (AKB) Program (AOV) (FBZWHH) (FBMMEB) Greater 11.15% 0.28% 1.36% 13.28% 49.03% 0.71 Paramaribo Coastal 11.49% 0.55% 0.98% 17.06% 51.01% 0.68 Interior 9.23% 0.00% 0.00% 7.79% 33.44% 0.68 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Program coverage by region. Coverage is as a share of population for the AOV, FBMMEB, and FBZWHH. Coverage is at the household level for the AKB, i.e., the share of households with at least one child enrolled in the AKB. The table reports the share of total households with at least one member enrolled in at least one program. The last column on the right shows the average daily per capita income from all programs. PPP: purchasing power parity. 4.3. COVERAGE BY ETHNIC GROUP Coverage of the poorest ethnic groups in Suriname is mixed. As discussed in Annex 1, both monetary and multidimensional poverty rates are highest among Surinamese of Maroon and indigenous background. Indeed, indigenous Surinamese appear to participate relatively frequently in the main social protection programs (Table A3.10). Indigenous Surinamese are especially likely to benefit from the AKB child allowance. However, Surinamese of Maroon background, a large share of whom live in the interior, benefit from the main programs at a low rate. Only about 7 percent benefit from the AOV elderly allowance and only about 11 percent from the AKB child allowance. These rates are among the lowest of all ethnic groups. Moreover, the average per capita transfer amounts received by these groups are not markedly higher than those received by other groups. TABLE A3.10. SURINAME: COVERAGE BY ETHNICITY Share of Households Ethnicity of Share of Individuals Enrolled in: Average Com- Receiving: Household bined Per Capita Head (for Elderly Financial Assis- Child Benefits (2017 Financial Assis- Any AKB) Allowance tance-Disability Allowance PPP U.S. dollars) tance (FBZWHH) Program (AOV) (FBMMEB) (AKB) Creole 15.80% 0.13% 1.08% 14.10% 56.01% 0.84 Hindustani 12.84% 0.31% 1.93% 13.55% 51.61% 0.80 Maroon 7.18% 0.04% 0.89% 11.08% 35.23% 0.54 Indigenous 10.50% 3.13% 0.17% 24.98% 67.67% 0.62 212 Javanese 14.32% 0.45% 0.86% 14.94% 52.04% 0.72 Mixed 5.58% 0.28% 0.72% 12.63% 39.86% 0.56 Other 11.33% 0.00% 1.35% 10.82% 37.69% 0.68 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Program coverage by ethnicity of the household head. Coverage is as a share of population for the AOV, FBMMEB, and FBZWHH. Coverage is at the household level for the AKB, i.e., the share of households with at least one child enrolled in the AKB. The table reports the share of total households with at least one member enrolled in at least one program. The last column on the right shows the average daily per capita income from all programs. PPP: purchasing power parity. 4.4. COVERAGE BY LEVEL OF EDUCATION Although the four main social assistance programs have quite strong coverage among the least educated, those who are more highly educated reap the highest benefits. As discussed in Annex 1, a strong gradient in poverty can be observed by level of education. Among households with a head who has not completed any education, the monetary and multidimensional poverty rates are 30 percent and 54 percent, respectively. In contrast, among households with a head who completed tertiary education, the monetary and multidimensional poverty rates are only 0.5 and 22 percent, respectively. A gradient in coverage of social programs by level of education can also be observed. About 30 percent of those who have completed no education receive the AOV elderly allowance, while only about 13 percent of those who have completed tertiary education receive it. This is in line with the fact that the elderly in particular are less likely to have completed any education.20 Similarly, about 54 percent of households with a head who completed no education receive benefits under any of the four programs, while less than 40 percent households where the head completed tertiary education receive these benefits. Interestingly, though, the average benefits received per capita are relatively high among those who completed higher education. One reason is that households with a more educated head tend to be smaller.21 TABLE A3.11. SURINAME: COVERAGE BY LEVEL OF EDUCATION COMPLETED Education Share of Households Share of Individuals Enrolled in: Average Com- Level of Receiving: bined Per Capita Household Elderly Financial Financial Assis- Child Allow- Any Benefits (2017 Head (for Allowance Assistance tance-Disability ance (AKB) Program PPP U.S. dollars) the AKB) (AOV) (FBZWHH) (FBMMEB) None 29.97% 0.57% 2.88% 13.04% 53.50% 0.90 Primary 15.54% 0.76% 1.38% 18.36% 50.60% 0.64 Middle school 16.45% 0.37% 1.06% 15.39% 48.08% 0.62 20 According to the 2022 SLC, 60 percent of people age 60+ have less than primary education. This share is 50.5 percent for the 30-59 age bracket, and 32.8 percent for the 20-29 age bracket. 21 Of households with a head who completed tertiary education, 58.9 percent have up to two members, while 21.9 percent have four or more members. Of households with a head who completed no formal education, 48 percent have up to two members, while 35 percent have four or more members. 213 SURINAME POVERTY AND EQUITY ASSESSMENT High school 10.96% 0.00% 0.27% 6.94% 40.21% 0.61 Higher edu- 12.74% 0.00% 0.00% 3.88% 37.37% 0.72 cation Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Program coverage by highest level of education achieved by the household head. Coverage is as a share of the population for the AOV, FBMMEB, and FBZWHH. Coverage is at the household level for the AKB, i.e., the share of households with at least one child enrolled in the AKB. The table reports the share of total households with at least one member enrolled in at least one program. The last column on the right shows the average daily per capita income from all programs. PPP: purchasing power parity. 4.5. COVERAGE BY HOUSEHOLD COMPOSITION Households with children are more likely to be poor, but benefit less from social assistance. Annex 1 reported that there are substantial differences in poverty rates by household composition. Households with children, for instance, are markedly more likely to be poor than households without children (22 versus 8 percent for the international upper-middle-income poverty line of US$6.85). However, households with children are less well covered by social assistance programs (Table A3.12). On average, the probability of benefitting from at least one program is 38 percent in households with children and 55 percent in households without children. Moreover, when they do benefit from social assistance, households with children typically receive the AKB child allowance, which provides only modest benefits. Indeed, the average per capita benefit from social assistance is only about US$0.18 (2017 PPP) in households with children versus US$1.33 in households without children. TABLE A3.12. SURINAME: COVERAGE BY PRESENCE OF CHILDREN Share of Households Average Share of Individuals Enrolled in: Receiving: Combined Per Has Children Financial Financial Assis- Capita Bene- Elderly Allow- Child Allow- Any fits (2017 PPP Assistance tance-Disability ance (AOV) ance (AKB) Program U.S. dollars) (FBZWHH) (FBMMEB) Yes 2.64% 0.21% 0.62% 25.60% 37.56% 0.18 No 13.09% 0.34% 1.29% 4.60% 55.21% 1.09 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Program coverage is by household size. Coverage is as a share of the population for the AOV, FBMMEB, and FBZWHH. Coverage is at the household level for the AKB, i.e., the share of households with at least one child enrolled in the AKB. The table reports the share of total households with at least one member enrolled in at least one program. The last column on the right shows the average daily per capita income from all programs. PPP: purchasing power parity. Smaller and bigger households tend to benefit from different types of social assistance. Table A3.13 shows coverage of the main social assistance programs by household size. A gradient can be observed for all the main programs. For the individual-level programs, this gradient is negative; 214 the larger the household, the lower the number (share) of beneficiaries. This gradient is particularly pronounced for the AOV elderly allowances, which can be logically explained: the elderly are more likely to live by themselves or in a small household, so the share of the elderly in smaller households tends to be high. In contrast, the gradient is positive for the AKB child allowance. Children up to the age of 17 are highly unlikely to live on their own. And, hence, households with only one member do not receive the child allowance. Larger households, on the other hand, are likely to have one or more children and to be poor. Accordingly, they are also markedly more likely to benefit from the AKB child allowance. Among households with 10 or more members, the share receiving the AKB benefits is more than half. Bigger households are less generously covered by the main social assistance programs, despite the fact that they are more likely to be poor than smaller households (about 3 percent in single-person households versus nearly 50 percent in households with 10 or more members). On average, big households are more likely to benefit from the main social assistance programs: about 63 percent of households with 10 persons or more versus about 44 percent of single- person households. However, as bigger households tend to benefit primarily from the AKB child allowance and need to share transfers over more members, and because the number of children for which AKB benefits can be received is capped at four, the per capita value of social transfers drops rapidly with household size. In one-person households, the value is US$1.56 (2017 PPP) per day. In households with 10 persons or more the per capita daily value is only US$0.22. TABLE A3.13. SURINAME: COVERAGE BY HOUSEHOLD SIZE Share of Households Average Share of Individuals Enrolled in: Number of Receiving: Combined Per Household Financial Financial Assis- Capita Benefits Members Elderly Allow- Child Allow- Any (2017 PPP U.S. Assistance tance-Disability ance (AOV) ance (AKB) Program dollars) (FBZWHH) (FBMMEB) 1 41.11% 0.66% 2.40% 0.00% 44.02% 1.56 2 33.50% 0.61% 1.69% 2.35% 53.41% 1.32 3 14.05% 0.41% 1.65% 7.73% 41.85% 0.58 4 8.76% 0.24% 0.99% 12.81% 39.62% 0.35 5 5.83% 0.29% 1.17% 24.47% 50.59% 0.30 6 6.30% 0.49% 0.97% 29.05% 59.50% 0.32 7 6.18% 0.00% 1.53% 33.08% 66.54% 0.32 8 2.46% 0.00% 0.00% 33.11% 49.22% 0.14 9 4.87% 0.32% 0.12% 26.05% 45.47% 0.26 10+ 3.32% 0.00% 0.70% 50.20% 63.39% 0.22 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Program coverage is by household size. Coverage is as a share of the population for the AOV, FBMMEB, and FBZWHH. Coverage is at the household level for the AKB, i.e., the share of households with at least one child enrolled in the AKB. The table reports the share of total households with at least one member enrolled in at least one program. The last column on the right shows the average daily per capita income from all programs. PPP: purchasing power parity. 215 SURINAME POVERTY AND EQUITY ASSESSMENT Differences in coverage by sex of the household head are modest. Generally, as shown in Table A3.14, households with a female head are more likely to benefit from social assistance (54 percent for female heads versus 44 percent for male heads). This is driven primarily by women’s higher participation in the AOV elderly allowance program (12 percent versus 10 percent for men). On average, households with a female head also receive somewhat higher per capita benefits from social assistance. However, generally speaking, the differences are marginal. TABLE A3.14. SURINAME; COVERAGE BY SEX OF THE HOUSEHOLD HEAD Share of Households Share of Individuals Enrolled in: Average Combined Sex of Receiving: Per Capita Bene- Household Elderly Financial Financial Assis- Child Allowance Any fits (2017 PPP U.S. Head Allowance Assistance tance-Disability (AKB) Program dollars) (AOV) (FBZWHH) (FBMMEB) Male 9.92% 0.35% 1.34% 13.71% 43.88% 0.63 Female 12.16% 0.27% 0.97% 13.07% 53.96% 0.83 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: Program coverage is by sex of the household head. Coverage is as a share of the population for the AOV, FBMMEB, and FBZWHH. Coverage is at the household level for the AKB, i.e., the share of households with at least one child enrolled in the AKB. The table reports the share of total households with at least one member enrolled in at least one program. The last column on the right shows the average daily per capita income from all programs within households benefitting from at least one program. PPP: purchasing power parity. 216 5. POLICY SIMULATIONS 217 SURINAME POVERTY AND EQUITY ASSESSMENT This section carries out policy simulations to examine the impact of the four main social assistance programs on poverty in Suriname, understand the impact of potentially improving the effectiveness of implementation of these programs, determine the potential for additional budget allocations to the four main programs to reduce poverty, and get a sense of the impact of recent policy changes on poverty. These simulations rely on a few critical assumptions. First, it is assumed that households consume the entire transfer they receive. Accordingly, it is assumed that consumption would drop by an amount equal to the transfer if a household were to stop receiving it, or that consumption would increase by an amount equal to the transfer if a household were to start receiving it. (Or, to use more technical terminology, it is assumed that households’ marginal propensity to consume is 100 percent.) Of course, in practice some households will not consume the entire transfer income they receive. However, the assumption of a very high marginal propensity to consume does not appear to be unreasonable. Many households at the bottom of the consumption distribution have very limited financial buffers, and transfers from social assistance programs are a key resource supporting their consumption. Second, it is assumed that changes in social assistance policy do not have behavioral implications. For instance, when a social assistance program falls away, it is assumed that the household cannot (or will not) compensate for this through increased labor force participation or increased receipt of remittances. Finally, it is assumed that policy changes do not result in so-called general equilibrium effects. For example, when there are major program changes, it is assumed that these do not affect the macroeconomic context (e.g., it is assumed that the implementation of a large new program does not lead to higher inflation). These assumptions may not be entirely realistic, but nonetheless the simulations presented in this section can offer some insight into the magnitude and first-order effects of policy changes. 5.1. CURRENT IMPACT OF SOCIAL ASSISTANCE ON POVERTY This section first examines the impact of the main social assistance programs on poverty in 2022, starting with the original 2022 consumption distribution observed and constructed based on the 2022 SLC. Then, relying on the assumptions outlined above, a simulation is put forth indicating what the distribution of consumption would have looked like in the absence of the main social assistance programs. Based on this distribution, a calculation is made of counterfactual poverty rates – that is, poverty rates in the absence of social assistance transfers. Suriname’s AOV elderly allowance is the social program with the strongest impact on poverty. Poverty at the World Bank’s upper-middle-income threshold of US$6.85 (2017 PPP) would be about 1 percentage point higher in the absence of the program (Table A3.15). Poverty measured against Suriname’s national poverty line would be almost 1.9 percentage points higher. The reason for the comparatively strong impact of the AOV program is that it covers a substantial share of the population and provides sizable transfers. The other three programs have a markedly smaller impact on poverty. This finding is in accordance with the setup of the programs. The AKB child allowance also covers a sizable share of the population, but transfer amounts are modest and hence the program has a smaller impact on poverty. The other two social assistance programs (FBZWHH and FBMMEB) provide sizable transfers but cover a much smaller share of the population than the AOV program. In 218 the absence of all four programs, it is estimated that the upper-middle-income poverty rate (measured gains the US$6.85 line) would be more than 1.5 points higher, while the poverty rate measured against Suriname’s national poverty line would be more than 2.5 percentage points higher. TABLE A3.15. SURINAME: IMPACT OF SOCIAL ASSISTANCE ON POVERTY   World Bank International Lines   LMIC Poor Countries National Poverty   UMIC (US$6.85) (US$3.65) (US$2.15) Line Consumption poverty         Current situation 17.5% 4.2% 1.1% 17.5% Change in consumption poverty         (percentage points), without: Any of the four government programs 1.54 1.44 0.73 2.58 AKB 0.27 0.22 0.00 0.14 AOV 1.00 1.14 0.38 1.86 FBZWHH 0.20 0.01 0.00 0.17 FBMMEB 0.28 0.34 0.20 0.23 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: The table shows poverty rates under counterfactual simulations of consumption poverty. Scenarios consider cases where one or all government programs are not available. Beneficiary households’ consumption per capita is adjusted assuming that the marginal propensity to consume is 100 percent. The first row presents factual poverty rates. LMIC: lower-middle-income country; UMIC: upper-middle-income country. National poverty line is based on household composition. 5.2. WHICH ONGOING PROGRAM HAS THE STRONGEST PER DOLLAR POVERTY REDUCTION POTENTIAL? A critical question is: Which program has the greatest potential to reduce poverty per dollar spent? In the counterfactual simulation conducted to answer this question, it is assumed that the government can allocate an additional SRD100 million (current, 2024) to social assistance (over and above the 2022 baseline scenario). The government can decide to allocate this funding to any of the four programs focused on here. And it would do so without increasing the number of beneficiaries, which would give a sense of the marginal impact of increasing transfer amounts on poverty. To understand the impact of the additional SRD100 million, note that the amount it would generate per beneficiary differs markedly by program. As shown in Table A3.16, the SRD100 million would translate into a relatively small additional transfer amount for the AOV elderly allowance and AKB child allowance because these programs reach a high number of beneficiaries. In 2022 SRD, the value of the additional transfer would be about SRD74 per elderly beneficiary of the AOV program and about SRD121 per child for the AKB program. In contrast, for the other two programs (the FBZWHH and the FBMMEB) the amount would be substantive. 219 SURINAME POVERTY AND EQUITY ASSESSMENT Investing in the current FBZWHH for financially vulnerable households would result in the strongest marginal impact on poverty. This is in line with its objective to provide income support to financially vulnerable households, and to the fact that the program has relatively high coverage among the poorest households, as discussed in Section 4.1. An additional investment of SRD100 million in the program would result in an estimated reduction in poverty of about 0.2 percentage points against the World Bank’s international upper-middle-income poverty line and a reduction of 0.6 percentage points against Suriname’s national poverty line. The impact of investing in the other two programs would be markedly less from a poverty reduction perspective. TABLE A3.16. SURINAME: IMPACT OF ALLOCATING AN ADDITIONAL SRD100 MILLION TO ANY OF THE FOUR MAIN SOCIAL ASSISTANCE PROGRAMS   World Bank International Lines   Change in Consumption Poverty (Percentage Points), UMIC LMIC Poor Countries National with Additional SRD100 Million in Budget (US$6.85) (US$3.65) (US$2.15) Poverty Line AKB (SRD121 per beneficiary) -0.02 0.00 0.00 -0.20 AOV (SRD74 per beneficiary) -0.03 0.00 0.00 -0.12 FBZWHH (SRD2,599 per beneficiary) -0.19 0.00 0.00 -0.60 FBMMEB (SRD700 per beneficiary) -0.03 0.00 -0.15 -0.13 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: The table shows poverty rates under counterfactual simulations of consumption poverty. Scenarios consider cases where each government program expands by SRD100 million per year, providing equal extra income for current program beneficiaries. Beneficiary households’ consumption per capita is adjusted assuming that the marginal propensity to consume is 100 percent. LMIC: lower-middle-income country; UMIC: upper-middle-income country. 5.3. THE IMPACT OF RECENT INCREASES IN TRANSFER AMOUNTS This section examines the impact of recent increases in transfer amounts on poverty. As part of implementation of the Multi-Annual Development Plan, the government of Suriname has recently increased the value of transfers provided through each of the four programs. Table 3.17 shows the evolution of transfer amounts both in nominal and real terms. Estimating the impact on poverty of these increases in transfer amounts is not straightforward. The economic situation in Suriname has changed considerably since 2022, and all changes since then would have to be accounted for to truly measure the impact on poverty of the increases in transfer amounts. In practice, we abstract away from these challenges and instead work from the 2022 baseline scenario. It is assumed that the consumption of beneficiary households changed in accordance with the real increase in transfer amounts described in Table 3.17. 220 TABLE A3.17. SURINAME: EVOLUTION OF TRANSFER AMOUNTS PROVIDED BY THE FOUR MAIN SOCIAL ASSISTANCE PROGRAMS Change in Real Terms since   Nominal Amounts 2022   2022 2023 2024 2023 2024 Total per household:           Elderly allowance (AOV) 1,250 1,750 2,250 -7.70% 8.10% Financial assistance (FBZWHH) 1,250 2,500 3,000 31.90% 44.20% Financial assistance-Disability (FBMMEB) 1,750 1,750 2,250 -34.10% -22.80% Total per child:       Child allowance (AKB) 125 200 450 4.80% 116.0% Source: Prepared by the authors. Note: The table uses inflation estimates from the International Monetary Fund between 2022 and January 2024. The inflation rate for 2023 is 51.6 percent. The inflation rate between 2022 and January 2024 is 66.4 percent. For illustration, the AOV amount in 2024, expressed in 2022 prices, is SRD1,351.8. Table A3.18 shows the impact of the real increases in transfer amounts (from 2022 to 2024) on poverty rates for the four social assistance programs. Generally, the effects are modest, with the increase in transfer amounts provided through the AKB child allowance being the most substantive. It reduces poverty measured against all the different poverty lines. The changes in the transfer amounts provided through the AOV elderly allowance depend on the poverty line applied. Changes in the amounts provided through the FBZWHH for financially vulnerable households had almost no discernable impact. The real value of the FBMMEB program for the disabled decreased, which is estimated to have had a modest upward impact on poverty rates (although of course the impact for individual households may have been profound). TABLE A3.18. SURINAME IMPACT OF INCREASED 2024 TRANSFER AMOUNTS ON POVERTY   World Bank International Lines Change in Consumption Poverty (Percentage UMIC LMIC Poor Countries National Points), with Increased Transfer Amounts (US$6.85) (US$3.65) (US$2.15) Poverty Line All four government programs -0.22 -0.34 -0.20 -0.22 AKB (SRD145) -0.04 -0.34 -0.20 -0.20 AOV (SRD101) -0.05 0.00 0.00 -0.12 FBZWHH (SRD552) -0.02 0.00 0.00 -0.05 FBMMEB (- SRD398) 0.01 0.19 0.00 0.15 Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: The table shows the simulated reduction in poverty rates after a change in the program amounts in 2024, as detailed in Table A3.17. The five simulations scenarios are as follows: all programs increase their real amounts to 2024, and four other scenarios, one for increasing each program’s real transfer amount at a time. LMIC: lower-middle-income country; UMIC: upper- middle- income country. 221 SURINAME POVERTY AND EQUITY ASSESSMENT 5.4. THE IMPACT OF SURINAME’S NEW PROGRAM TO STRENGTHEN HOUSEHOLD PURCHASING POWER As part of its economic recovery program, the government initiated an effort to wind down subsidies on fuel and energy. Prior actions were designed under the IMF EFF to reduce government subsidies on fuel, electricity, water, cooking fuel, basic food, transportation, and medicine. In 2024, the government aimed to reduce the total annual expenditure on electricity subsidies from approximately SRD4.5 billion (about 3.3 percent of GDP) to about SRD2.4 billion. To reduce the impact of reduced electricity subsidies on the poorest households, electricity users were divided into four groups by electricity usage. For the group using the least electricity (<400 kWh) and facing the lowest increase in electricity prices, the government estimated that the average monthly electricity expenditure would increase from SRD535 to SRD747). To further offset the impact of removing energy subsidies, the government launched a new program to support the purchasing power parity of households. In agreement with Suriname’s Tripartite Council, a decision was made to help vulnerable households and the working class cover the additional increase of expenditures due to the reduction in subsidies. Accordingly, the government initiated the temporary KKV purchasing power program at the start of 2023. The program is coordinated by MOSAH, with a combined coordination team with members from the Ministry of Finance and the Secretary of the President. The program budget was set to be broadly commensurate with the total savings achieved by abolishing subsidies on energy and fuel. The setup of the KVV program has been rapidly evolving. After multiple iterations on the appropriate design of the program, it was initially set up to provide a monthly transfer of SRD1,800 to all households with an income of SRD6,000 or less. The program was launched in February 2023 and initially aimed to provide support to about 60,000 households for a period of six months (to start retroactively in January 2023). The initial budget was SRD100 million per month. Subsequently, the program was adjusted to include the elderly (60+) and the disabled, providing a top-up to their AOV elderly allowance and FBMMEB disability allowance, respectively. Moreover, in practice, the program changed to a setup in which it operates at the individual level, providing a transfer of SRD1,800 to all the elderly, disabled, and individuals ages 21 and older who can prove that they have an income below SRD6,000.22 By March 2024, 123,441 applicants were receiving benefits under the KKV purchasing power program. Registration for the program started in February 2023. As with the other main social assistance programs, payments take place through the banking system. To register, applying households need to confirm their identity and submit documents to confirm where they live and their household size, and confirm that they run a household (electricity bill) and provide their income statement/tax statements to confirm their level of income. After this registration, which is now country-wide and coordinated from several temporary units (to enroll as many eligible persons as rapidly as possible), the information is uploaded in a system. Back-office employees examine eligibility and activate field observations where needed. The main eligibility examination relates to the verification of income (below SRD6,000). Unlike the other beneficiary programs, this new program has no described or executed exit procedures for now. Applicants do not need a bank account to participate in the program. Once approved, they receive a pay 22 To view the application form, go to Koopkrachtversterking aanvraag (gov.sr) (accessed June 19, 2024). 222 card from the program – a debit card that can be used at all ATMs.23 Persons in urban areas can pick up their card at a local bank office. In more rural and remote areas, special units of the coordination team are involved with the distribution of the pay cards. The formal end date of the program has been shifting. The program is temporary in nature and was initially designed to last for six months. However, it was subsequently extended and is currently expected to end in the third quarter of 2025. The possibility that the program will be extended beyond the third quarter of 2025 cannot be ruled out, as the government seeks to meet its target of spending 3 percent of GDP on social programs. Estimating the impact of the KKV program on poverty requires some important assumptions. We follow an approach similar to that used to estimate the impact of recent increases in transfer amounts provided by the four traditional social assistance programs. That is, we abstract away from the changes that took place in the economy (including the reduced electricity subsidies) and instead work from the 2022 baseline scenario. About 123,000 people currently receive the subsidy. It is assumed that this group is made up entirely of the 74,902 elderly ages 60+ and the 48,057 poorest individuals ages 21 to 59. In other words, it is assumed that the program is perfectly targeted at the groups it is supposed to reach.24 We can mimic and identify this group in the 2022 SLC data and see what happens to their consumption if they receive benefits under the KKV program, again assuming a marginal propensity to consume 100 percent. The KKV has a substantial impact on poverty, though the effect of the transfers on the elderly is limited. Table 3.19 shows total estimated impact of the KKV program on poverty. Under the assumption that the program effectively reaches the elderly and the poorest adults in the country, and under the ceteris paribus assumption of no other changes in the economy, the impact could be as strong as reducing poverty by nearly 7 percentage points (based on the US$6.85 in 2017 PPP poverty line). Most of this impact is driven by the transfers that reach the poorest adults, which reduce poverty by about 6 percentage points. The impact of the additional transfers to the elderly is modest. The program would have a strong impact on poverty even if the assumption that it reaches the poorest adults were relaxed. In an imperfect targeting scenario, where only 75 percent of the poorest population ages 21 to 59 get the transfer while the rest is allocated to non-poor individuals, the program still reduces poverty by approximately 6 percentage points. In theory, the impact of the KKV program would be markedly stronger if it were purely poverty-targeted. Table A3.19 also examines the potential change in poverty rates if the program were redirected entirely towards the poor population. Given the program’s size, it would cover all 108,000 poor Surinamese and around 15,000 vulnerable Surinamese. Poverty measured against the upper-middle-income poverty line would decline by 14 percentage points. Poverty measured against lower poverty lines would effectively disappear. To understand why the impact would be so much more pronounced, note that the current program reaches mostly the elderly, many of whom already benefit from the AOV elderly allowance and are non-poor. 23 Beneficiaries of other social programs do not receive a new card, but use the same card they use in other programs 24 We deflate the proposed transfer amount of SRD1,800 (using IMF data for inflation and the official Consumer Price Index to determine the real value in 2022 terms: SRD1,800 in 2024 is equivalent to SRD1,198 in 2022 SRD. See IMF Country Indexes and Weights at https://data.imf.org/regular.aspx?key=61015892 (accessed June 19, 2024). 223 SURINAME POVERTY AND EQUITY ASSESSMENT TABLE A3.19. SURINAME: IMPACT OF THE KKV PROGRAM ON POVERTY World Bank International Lines UMIC LMIC Poor Countries National Poverty (US$6.85) (US$3.65) (US$2.15) Line Change in consumption poverty (percentage points) with the KKV program Full program (~123,000 beneficiaries) -6.87 -2.63 -1.10 -5.81 For 60+ population (74,902 beneficiaries) -0.69 -0.53 -0.14 -1.27 For poorest adults, ages 21 to 59 (48,057 -6.18 -2.11 -0.97 -4.54 beneficiaries) Change in consumption poverty (percentage points), with an imperfectly targeted KKV program Full program, imperfect targeting -6.05 -2.25 -1.10 -4.94 Change in consumption poverty (percentage points) if KKV were instead perfectly poverty-targeted Poverty-targeted (108,017 poor and 14,937 -13.71 -4.16 -1.10 -11.59 non-poor beneficiaries) Source: Poverty assessment team based on the 2022 Suriname Survey of Living Conditions (IDB 2022). Note: See text for details on the simulations. LMIC: lower-middle-income country; UMIC: upper-middle-income country. 224 6. RECOMMENDATIONS 225 SURINAME POVERTY AND EQUITY ASSESSMENT Based on the analysis presented in this annex, this final section closes with a series of policy recommendations. Some of the recommended actions can be prioritized and implemented in the short and medium term, while others are actions recommended for the longer term. • An overarching priority is to start the process of updating the social protection policy framework. This includes a revision of the social protection policy framework to complement current programs directed toward key vulnerable groups through poverty-targeted interventions to close coverage gaps. Ideally, the update would integrate an adaptive social protection approach to enhance resilience to shocks, establish clear linkages between social protection measures and complementary interventions to support households suffering multiple deprivations, and connect individuals with productive opportunities. Currently programs are run in isolation and without clear definitions, screening objectives, or targeting goals. • Households with children deserve more priority in Suriname’s social assistance programming. These households tend to be markedly poorer than households without children. Yet the main programs currently do not provide meaningful support to households with children. Because supporting households with children is both progressive and known to have a long-term beneficial impact on child development, one approach would be to put more emphasis on the AKB child allowance program. • Vulnerable groups with relatively high poverty rates deserve special attention. These groups include persons living in the interior of the country. A focus on effective program execution, especially in poor and deprived areas in the interior, is pertinent. This includes special measures to detect and address challenges faced by the population in the interior to participate in – and benefit from – social assistance programs. Measures could include active outreach to households in areas that are known to be “hotspots” for persons in need of support, and covering transportation costs incurred by beneficiaries in remote areas to access their transfers. • A predictable process for adjustment of transfer amounts in accordance with inflation would help beneficiaries plan and smooth their spending. Although Suriname is a high-inflation context, processes for adjusting transfer amounts of the main social assistance programs continue to be ad hoc. As a result, beneficiaries cannot plan on the income they will receive, and the real value of social benefits can fluctuate significantly. Implementation of systems for predictable inflation correction could be considered in the short term. • Generating clarity on the future of the KKV program is important for beneficiaries. At the time of this writing, there was no clarity on the future of the KKV program. While the program was considered temporary, there were questions around the timeline and process of phasing it out. Yet, this program represents a major boost in income for many households. For these households, clarity on the future of the program is critical. It is worth considering the risks both to continuing the program (in 226 terms of a bloated social assistance budget and adverse incentives) and to discontinuing the program (dropping households in need). • In the somewhat longer term, modernization of social protection delivery systems is a priority. The entire chain of the delivery system of Suriname’s social protection programs – from outreach and intake to payments and exit procedures – needs to be modernized. This involves strengthening efforts to reach out to key vulnerable populations using a geographic prioritization strategy, multiple appropriate channels that take into account cultural diversity, human resource plans to improve coverage of underserved areas, and engagement with local organizations and community leaders, among other initiatives. It will also require the gradual adoption of a digital transformation strategy in the social assistance sector to increase efficiency and adaptive capacity throughout the delivery chain from intake to payments. Digital transformation would also be an important stepping stone towards the integration of monitoring and evaluation systems for all programs in one central system to monitor and coordinate the targeting of all programs. This system could become the cornerstone of a social registry. • Finally, there is a need to assess ways to better target the poorest. As discussed in the analysis, about a third of the poorest quintile in Suriname does not benefit from any of the major social transfer programs. From a poverty reduction perspective, this implies a lost opportunity. Development of a strong information system and a proxy means test integrated into the central information system discussed above could be part of efforts to reduce such exclusion errors. 227 SURINAME POVERTY AND EQUITY ASSESSMENT REFERENCES 228 Caribbean Financial Action Task Force (CFATF). 2023. Anti-money Laundering and Counter-terrorist Financing Measures: Suriname. CFATF Mutual Evaluation Report. Available at https://www.fatf-gafi. org/content/dam/fatf-gafi/fsrb-mer/CFATF-Mutual-Evaluation-Suriname-2023.pdf.coredownload. inline.pdf Inter-American Development Bank (IDB). 2022. 2022 Suriname Survey of Living Conditions. IDB, Washington, DC. Available at https://mydata.iadb.org/Social-Protection/2022-Suriname-Survey-of- Living-Conditions/prbn-x74x/about_data International Labour Organization (ILO). 2023. Decent Work Country Programme, Suriname, 2023-2026. Available at https://vsbstia.org/wp-content/uploads/2023/03/Download-Document-DWCP-3.pdf International Monetary Fund (IMF). 2021. Suriname Request for an Extended Arrangement Under the Extended Fund Facility. Country Report No. 21/280. IMF, Washington, DC. Available at https://gov.sr/ wp-content/uploads/2023/12/1surea2021001.pdf International Monetary Fund (IMF). 2021. Fifth Review of the Extended Arrangement Under the Extended Fund Facility. IMF, Washington, DC. Available at https://www.imf.org/en/News/Articles/2024/03/07/ pr2474-suriname-imf-reach-sla-5th-rev-extended-arrangement-eff Republic of Suriname. 2021a. HERSTELPLAN 2020-2022 [Recovery Plan 2020-2022]. Ministry of Finance and Planning (10 May). Available at https://gov.sr/wp-content/uploads/2023/12/herstelplan- 2020-2022-versie-10-mei-2021.pdf Republic of Suriname. 2021b. Multi-Annual Development Plan. Available at https://www. planningofficesuriname.com/wp-content/uploads/2022/10/MOP-2022-2026-Volledig-FINAL-DNA- approved-Engels.pdf Sobhie, Rosita, Michael Gillis, and Saskia Wallerlei. 2024. A Deep Dive in the Social Protection System of Suriname. UNICEF. Sobhie, Rosita, and Anjali Kisoensingh. 2023. Methoden en technieken ter vaststelling en bestrijding van armoede in Suriname Multidisciplinaire Weregroep Armoedegendsbepaling 2020-2023. Ministerie van Arbeid Werkgelegenheid & Jeugdzaken. Available at https://gov.sr/wp-content/uploads/2023/05/ STATISTIEK-ARMOEDE-FINAL-DRUK-230423.pdf Tesliuc, Cornelia, Anna Luisa Paffhausen, and Clemente Avila. 2023. Caribbean Social Protection Reponses to Surging Inflation. World Bank, Washington, DC. Available at https://documents1. worldbank.org/curated/en/099011524164041723/pdf/P1805881cbe55c0fd1a8d71ea4bf565a31f.pdf van de Meerendonk, Arthur. 2023. Suriname, Comprehensive Review of the Social Security System. International Labour Organization, Geneva. Available at https://vsbstia.org/wp-content/ uploads/2023/10/Draft-SPER-report.pdf 229