Causes of poverty a case study of loc thanh village

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS, HO CHI MINH CITY FULBRIGHT ECONOMIC TEACHING PROGRAM BUI NHU DIEU CAUSES OF POVERTY A CASE STUDY OF LOC THANH VILLAGE PUBL

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS, HO CHI MINH CITY

BUI NHU DIEU

CAUSES OF POVERTY

A CASE STUDY OF LOC THANH VILLAGE

MASTER OF PUBLIC POLICY THESIS

HO CHI MINH CITY, 2013

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS, HO CHI MINH CITY

FULBRIGHT ECONOMIC TEACHING PROGRAM

BUI NHU DIEU

CAUSES OF POVERTY

A CASE STUDY OF LOC THANH VILLAGE

PUBLIC POLICY MAJOR Code: 60340402

MASTER OF PUBLIC POLICY THESIS

SUPERVISOR

DR JOHNATHAN R PINCUS

HO CHI MINH CITY, 2013

ACKNOWLEDGEMENT

I would like to express deeply appreciation to my supervisor, Dr Jonathan R Pincus, who has helped me in performing the thesis With rich knowledge, experience, thoughtful and patient,

he has provided me a huge encourages to finish my thesis

I would like to thank all my teachers and friend in Fulbright Economics Teaching Program for wonderful time in this school

ABSTRACT

The thesis focuses on finding the causes of poverty and the factors helping people escape from it The causes of poverty in Loc Thanh village are unstable jobs, low returns from land and high dependency ratios Failed investments in pepper farms and high interest debt are two main factor of decline On the contrary, high returns from land are the factor that helps a majority escape from poverty Good jobs are another path to exit poverty Diversification of income sources not only helps household reduce the risks associated with agricultural markets but also helps them have a stable and reasonable income Therefore, policies should focus on increasing farming investment and job opportunity creation

TABLE OF CONTENTS

ACKNOWLEDGEMENT ii

ABSTRACT iii

TABLE OF CONTENTS iv

ABBREVIATIONS vi

LIST OF TABLES vii

LIST OF FIGURES vii

LIST OF BOXES vii

CHAPTER 1: INTRODUCTION 1

1.1 Problem Statement 1

1.2 Thesis Objective 3

1.3 Research Question 3

1.4 Structure of the Study 4

CHAPTER 2: THEORETICAL BACKGROUND 5

2.1 The Concept of Poverty 5

2.2 Causes of poverty 6

2.3 Poverty Reduction 7

2.4 Data Collection 7

CHAPTER 3: FINDINGS 9

3.1 Loc Thanh– a snap shot 9

3.2 The poor – who are they? 13

3.3 Why are they poor? 19

3.3.1 Unstable jobs 19

3.3.2 Low returns to land 20

3.3.3 Poverty and Dependents 21

3.3.4 Getting old and becoming poor 22

3.3.5 Failed investment in pepper farms 23

3.3.6 Poverty and debt 24

3.4 Escaping from poverty 25

3.4.1 Intensive farming 25

3.4.2 Diversification 27

3.4.3 Good jobs 27

CHAPTER 4: CONCLUSION AND RECOMMENDATION 29

4.1 Conclusion 29

4.2 Policy Recommendations 30

4.2.1 Review the poor household list 30

4.2.2 Help farmers improve their farming skills, increase investment on their farms and diversify their income source 30

4.2.3 Create job opportunities 31

4.2.4 Prevent people from taking on high interest debt 32

4 3 Limitation of this research 32

REFERENCES 33

APPENDICES 36

ABBREVIATIONS

AusAID Australian Agency for International Development GSO General Statistics Office

PCA Principle Components Analysis

SES Socio- economic status

VASS Vietnam Academy of Social Science

VBSP Vietnam Bank of Social Policy

LIST OF TABLES

Table 3.1: Housing character by ethnic group 14

Table 3.2: Housing character by ethnic group 14

Table 3.3: Percentage of respondents do not have listed durable goods by ethnic group 15

Table 3.4: Frequency of having meat per week by ethnic group (respondents,%) 16

Table 3.5 : Frequency of having fish per week by ethnic group (respondents,%) 16

Table 3.6: Access to sanitation facility by ethnic group ( respondents, %) 17

Table 3.7: Indicators use to build PCA score 17

Table 3.8: PCA score by ethnic group 18

Table 3.9: Occupation of poor householders by ethnic (respondents) 19

Table 3.10: Education of poor wage labor 20

Table 3.11: Main crop of poor farmers (respondents) 20

LIST OF FIGURES Figure 1.1: Poverty proportion from 1993-2010 1

Figure 3.1: Poverty rate in Loc Thanh Village 10

Figure 3.2: Poverty rate of Kinh versus local tribes 12

Figure 3.3: Distribution of PCA score 18

LIST OF BOXES Box 3.1: Out of the poor list 11

Box 3.2: Getting old, becoming poor 22

Box 3.3: Health care and debt 11

CHAPTER 1: INTRODUCTION 1.1 Problem Statement

Historically, poverty has always been a major concern of governments Most countries – regardless of location or political regime - consider improving residents’ living conditions

as an important objective Hence, reducing the incidence of poverty is the first target of the Millennium Development Goals (MDGs) established by United Nations in 2000

In retrospect, Vietnam has achieved remarkable progress in poverty reduction From

1993-2008, about 30 million people escaped from poverty (VASS, 2011) This has helped Vietnam accomplish the first goal of the MDGs and the country has been widely applauded

by the international community

Figure 1.1: Poverty proportion from 1993-2010

Source: VASS (2011) and GSO (2010)

The percentage of the population living in poverty decreased quickly from 58.1 percent in

1993 to 18.1 percent in 2004, dropping by 3.6 percent every year Broad-based economic growth was the main cause of improvements in living standards “In turn, rapid and pro-poor growth is explained by a series of far reaching market reforms undertaken in the 1990s and the early 2000s” (VASS, 2006, p.15)

From 2004-2010, the proportion declined slightly about 0.7 percent every year, from 18.1 percent to 10.7 percent In 2010, the number climbed up to 14.2 percent if the poverty line

of period 2011-2015 is applied.1 This increase reflects the fact that there are many people living around the margins of poverty A slight rise in the poverty line or fall in their incomes could send them back below the poverty line Economic growth is good for the poor but all of the poor do not benefit from growth, especially individuals and households whose incomes are very far below the median income (Pincus, 2012) The VASS report also agrees with this idea “… despite the general impressive achievements, progress in poverty reduction has been uneven across different groups of the population” (VASS,

2011, p.6) Still, the poverty rate in rural areas is higher than that in urban areas While the number in urban areas is only 5.1 percent, it was still 13.2 percent in rural areas Poverty tends to be higher in rural than urban areas because of the lack of access to employment opportunities and lower average labor productivity in rural areas There are fewer ways to earn income, less education, health care and even more vulnerability to the weather and forces of nature (Perkins, 2006, pp.218-219)

This proportion is not only different by area but also by ethnic group:

As reflected in the changed poverty profile, the largest difference in the progress made

in poverty reduction was between the Kinh/Hoa group and ethnic minorities, with poverty rate rapidly falling for the former (from 53.9 percent in 1993 to only 9 percent

in 2008) but only modestly declining for the latter (from 86.4 percent in 1993 to 50.3 percent in 2008) (VASS, 2011, p.xiv)

As a matter of fact, a deep understanding of why some people can exit from poverty and some fall deeper into it, or stay in that difficult situation needs to be revealed Studying the causes of poverty and economic strategies of poor households provides a solid basis on which to formulate policy “A common and clear understanding of poverty helps build a common agenda with development partners, linking specific causes of poverty in each setting with suitable policies and actions (OECD, 2001, p.18) Hence, identifying the main causes of poverty is the first step to constructing a sustainable poverty reduction program

In addition, the poor themselves are not waiting for the benefits of economic growth or government programs but also apply many strategies to generate income and find their way

1 The official poverty line for period 2011-2015 is VND 400,000 per person per month in rural and VND 500,000 per person per month

in urban area The official poverty line in 2010 is VND 350,000 per person per month in rural and VND 440,000 per person per month

in urban area

out of difficult situations A deep understanding of why people fall into poverty and what they are doing to exit will provide a solid basis on which to build reasonable poverty reduction policies

Therefore, this thesis will study the causes of poverty and strategies applied by poor households to escape poverty In view of limitations of time and data, the author was not in

a position to address the question on the national or regional level Instead, the author has carried out a case study of one village, Loc Thanh Village, to explore the dynamics of poverty This border village has similar characteristics to other locations in Binh Phuoc Fifty percent of the population consists of ethnic minorities including the two main local groups in Binh Phuoc: Khmer and S’Tieng The location also has a high percentage of residents living in poverty The three main crops of Binh Phuoc are cashew, rubber and pepper, and all are cultivated in this village Thus the location was viewed as a suitable place to study the causes of poverty and households strategies in Binh Phuoc province Of course the results of a case study cannot be generalized to the province as a whole, but case studies do help identify issues and processes that can be explored on a larger scale in future research

1.2 Thesis Objective

This research is written as a case study so the immediate relevance of the findings is limited to the research area However, it is hoped that the study contributes to an in-depth understanding about the main causes of poverty and economic activities that poor people are adopting This research also looks at non-poor households’ economic strategies to find out core factors that help them to escape from poverty Based on the results, the study suggests policies that assist poor families exit from poverty, and also point to future avenues for productive policy research

1.3 Research Question

As stated above, this research will attempt to answer the following questions:

- Why do some people fall into poverty and others do not?

- What are people doing to escape from poverty?

1.4 Structure of the Study

The thesis has four chapters Following this introduction, Chapter Two presents the theoretical background, including the concept of poverty and studies concerning poverty and poverty reduction It also describes the research methodology and data collection method Chapter Three discusses the findings In this chapter, the interesting story of why people are poor and how they escape from poverty will be told The last chapter concludes and summarizes the thesis and policy recommendations

CHAPTER 2: THEORETICAL BACKGROUND 2.1 The Concept of Poverty

Poverty is widely understood as income or consumption below a minimum accepted standard as represented by a poverty line There is no universally accepted poverty line, and richer countries adhere to a higher standard However, the World Bank has regularly provided poverty headcount rates for the $1.25 per day poverty line as measured in purchasing power parity terms However, many countries have their own levels In Vietnam, the official poverty lines are VND 400,000 per person per month for rural areas and VND 500,000 per person per month for urban regions (Decision No 09/2011/QĐ-TTg issued by Prime Minister on 31/10/2011)

Collecting expenditure information requires much information about consumption This information is built up in a long questionnaire, which takes several hours to administer In addition, people hardly remember exactly what they buy and the price of each good or service “[T]he data collection is often of dubious reliability, given recall problems and the impossibility of verifying most of the information provided” (Ngan, Pincus and Sender

2012, p 44) Moreover, poverty is dynamic, people frequently move in and out of poverty Some are chronically poor, but others are only temporarily in a difficult situation

In 2012, Ngan, Pincus and Sender introduced an index of scocio-economic status (SES) Durable goods, housing conditions, access to clean water and sanitation facilities were used to measure living standards “Data collection is quick and easy, and there is less room for error because most indicators can be visually checked” (Ngan, Pincus and Sender 2012, p.44) Observation of housing conditions, durable goods, santitation and consumption of high nutrition food will shed the light on who is poor and who is not

Recently, the concept of multi-dimensional poverty has gained acceptance It not only covers minimum human needs but also includes access to basic social services and human rights According to OECD (in DAC guidelines) the dimensions of poverty cover distinct aspects of human capabilities: economic (income, livelihoods, decent work), human (health, education), political (empowerment, rights, voice), socio-cultural (status, dignity) and protective (insecurity, risk, vulnerability) The Australian Agency for International Development (AusAID, 2002, p.6) introduced four criteria to measure well-being including:

- adequate resources for attaining the basic necessities of food, water, shelter and clothing;

- access to acceptable levels of health and education;

- accountability from state institutions and civil society; and

- freedom from excessive vulnerability to adverse shocks

This understanding is reflected somewhat in Vietnam’s poverty reduction policy Although the government uses an official poverty lines to identify the poor, all policies are targeted

to develop human capital, increase access to basic social services like education and medical care and to improve knowledge of citizens about people’s rights under the law

In this thesis, two main concepts of poverty will be used First, the official line is used to present secondary data as well as provide a general view of poverty in the research location Similar indicators of SES are applied to identify poor households at the local level

2.2 Causes of poverty

According to the OECD, the causes of poverty vary with history, geography and governance Wars, armed conflict and failed states are associated with poverty in all regions of the world Corruption, rent-seeking, violations of human rights, inefficient bureaucracies and a lack of commitment to institution reform are all obstacles to poverty reduction (OECD, 2001) Environmental degradation, gender discrimination and rapid population growth also result in poverty

Observing 35 villages in India, Krishna also finds that “poverty has some distinctly local antecedents” (Krishna, 2004, p.121) In this paper, he concludes that poverty is combination of many factors Three principal factors are health, debt, and social expenses Health problems and heavy expenses on healthcare account for a majority of households that fall into poverty Unexpected expenditures drive people to private debt with high interest rates In these villages, funerals and wedding expenses were heavy This is another reason for falling into poverty The three factors combined made up 85 percent of households that became poor Losing jobs, facing unexpected expenditures like hospital costs or the need to look after small children can also reduce income and send households into poverty

2.3 Poverty Reduction

There is no common answer for all poverty problems Although “growth is good for the poor,” economic growth itself, however, is not enough for poverty reduction among the poorest groups of the population (Dollar and Kraay 2001, Foster and Szekely 2008)

In Krishna’s paper, reliable healthcare services and available consumption loans at appropriate interest rates reduce the risk of falling into poverty Bridging the gap with the city can provide opportunities to diversify income sources Agreeing with this, Pincus (2012) suggested that policies including increasing investment in education, in agricultural productivity, and reducing obstacles to mobility could accelerate poverty reduction

In addition, Krishna finds that diversification of income sources is the most important factor in helping households escape from poverty Reliable information sources are the key

to successful diversification

Diversification is defined as changing the nature of full time work rather than working at multiple jobs There are six factors affecting income diversification in rural areas: crops, risk, labor markets, credit markets, asset strategies, coping behavior (Tran Tien Khai, 2010)

2.4 Data Collection

To eliminate inaccuracy in identifying poor households, the thesis uses snowball sampling,

a technique for finding research subjects in which subjects provide names of additional respondents (Vogt, 1999 cited from Atkinson and Flint (2001)

Target respondents consisted of 2 groups:

Group 1: Poor households classified by people in the village

Group 2: Non-poor households identified by residents

The research began by contacting leaders of Loc Thanh People’s Committee for general information about the area including economics, population and social conditions In this conversation, the two vice presidents told us about major crops in the village, the distribution of local tribes, infrastructure and existing programs to reduce poverty

Secondly, we had meetings in three hamlets: K’Lieu, Loc Binh I, Can Duc K’Lieu hamlet

is at the center of the village Located here are the People’s Committee office, the local clinic, the primary and secondary school, and the only market of the village This hamlet

has two sok (sub-hamlets) of Khmer and many Kinh people live here All of the villagers

in Loc Binh I are S’Tieng– this is considered the poorest hamlet according to the villagers All residents in Can Duc are Khmer In meetings at the hamlet level the author collected information about how each ethnic group was doing, their habits, their customs and their living standards

Third, individual interviews with questionnaires were made Respondents also discussed their life stories; some were successful, some less so Information was sought about poor and rich families in the communities in order to identify the poorest as well as some households that have sustainable livelihoods This turned out to be a sensitive question People shared the names of disadvantaged families, but for the rich ones they just gave hints Sometimes respondents’ neighbors also took part in the conversations, and helped respondents remember their story about why they fell into poverty or how they succeeded The guides (usually the chief of the community, Farmer’s Union officers and so on) also provided a lot of information about the respondent The guides talked about the respondent’s character such as whether they worked hard or they were addicted to alcohol, their family’s story, their difficulties as well as their opportunities and how long they have been living in the village

We also observed the condition of interviewee’s house, the material of the floor, walls and roof, their clothes and their meals This information would help distinguish the truly poor from those who are not

CHAPTER 3: FINDINGS 3.1 Loc Thanh – a snap shot

Loc Thanh village is located in the west of Loc Ninh District (Binh Phuoc Province) It has

a 12.5 km border with Cambodia Loc Thanh has nine communes and 1,064 households One-third of the population is Khmer who mostly live in K’lieu and Can Duc hamlets One-third of residents are S’Tieng, and they live mainly in Ta Te 1, Ta Te 2 and Loc Binh

I hamlets These are the two main local tribes of Binh Phuoc province As is traditional,

ethnic minorities live together in groups A hamlet might have one or more than one sok

Kinh people live in seven hamlets, predominantly in Loc Binh II, Tan Binh I, Tan Binh II and Tan Mai

General economic situation

Agriculture accounts for 86 percent of GDP in Loc Thanh village and the rest comes from trade and the service sector (People’s Committee of Loc Thanh village, 2012) The main crops of this area are rubber, pepper, cashew and rice

The local tribes in Loc Binh I, Tà Tê I and K’lieu hamlets grow mainly rice and cashew In Loc Binh I, a private rubber company let poor families intercrop rice on their rubber farm Poor workers clear grass on rubber farms in return As they have to share this job with many other families, their yields are only enough for their own consumption Cashew has been grown here for a long time It easy to grow and does not cost much to cultivate Ethnic minorities first grew cashews for their own consumption, and then Kinh traders came to buy it and people could earn a lot from selling cashew nuts This type of tree became one of the major crops in this village

The Khmer in Can Duc hamlet have the highest living standards compared to other minority groups in other hamlets They grew rubber along with cashew They diversify their incomes with other activities like trading fertilize, pesticides and other goods

Kinh economic strategies are more varied They work in agriculture as well as agriculture They grow cashew, rubber, pepper and other annual crops; they also raise many different kinds of animals, including poultry and cattle, to diversify their incomes

non-Infrastructure

This village is building its infrastructure The main road connecting the village to the center of the district is paved Roads to remote hamlets, where ethnic minority people mostly live, have recently been built Even though they are wide and clear, they make transport easy in the dry season but they get muddy in the rainy season The villagers mainly use motorbikes as transportation The share of households that have electricity is 85 percent Households that not have power for lighting are mostly in Ta Te II as this is a new hamlet; all of the infrastructure is under construction Everyone living in the research

region uses water from a well They may have their own well or share with their neighbors

Loc Thanh has one junior high school, two primary schools and six classrooms in remote hamlets Thanks to these facilities, all of the children at primary age can go to school (Loc Thanh People’s Committee)

Poverty in Loc Thanh

There are two main poverty trends in Loc Thanh First, the poverty rate declined sharply from 2011 to 2013 Second, the percentage of ethnic minorities living in poverty is on an upward trend

As is common, the poverty rate of Loc Thanh village dropped rapidly over the last three years From 2011-2013, there were 117 households that escaped from poverty

Figure 3.1: Poverty rate in Loc Thanh Village

Source: Loc Thanh People’s Committee (2009-2012)

Due to a revision of the poverty line, the headcount poverty rate climbed up to 17 percent

in 2011 From that year, the share of households in poverty dropped about three percent every year This rate of decrease is exactly equal to the local government’s target for the years 2009-2013 There are nine hamlets in this village This means that each hamlet has to lift about four to five poor households out of poverty each year Some households really do escape from poverty, but some do not It is not clear if the local government is meeting its poverty reduction target by removing poor or non-poor households from the poor household list (see Box 3.1)

This situation could occur because the official poverty line is inappropriate Four hundred

to VND 500,000 per person per month is not enough to provide 2,100 Kcal per person per day (Mai Thi Xuan Trung, 2011) Thus, with the average daily wage of VND 100,000-120,000, a laborer can reach this level in four to five working days However, this sum of money only can help them escape from hunger but not from poverty As the poverty line is too low, mostly hamlet dignitaries decide who are registered as poor in their hamlets As

the result, some households that really need help have to be left out of poor lists and vice

versa

Another important point in the poverty picture of Loc Thanh is the increasing gap between the Kinh group and ethnic minorities This is another challenge to reducing poverty in this

Box 3.1: Out of the poor list

Mrs Kê’s husband just passed away in January He had been coughing heavily, but they did not have enough money to bring him to the hospital After a long cough, he was gone Their neighbors donated some money so they could bury him This year, a private rubber company let Mrs Kê grow rice in their rubber farm She harvested 30 bags of rice Hence, the chief of her hamlet took her off the poor household list

In the same situation, Mr Tran’s family will be off the poor list this year Their economic status has not improved However, to meet the target, five households in this hamlet have to be removed from the list Because he is a gambler and a drinker the hamlet did not get a “Cultural unit” title last year Therefore, his household was the first to be eliminated from the poor household list

*All names in this report have been changed to protect the privacy of respondents

village The percentage in poverty of local tribes is higher than the one of the Kinh group and this number is going up

Figure 3.2: Poverty rate of Kinh versus local tribes

Source: Loc Thanh People’s committee (2009-2012)

The figure also shows that while the poverty rate in the Kinh group is decreasing, the number of poor ethnic minorities on the contrary is increasing year by year Using VLSS and VHLSS, Bob Baulch and co-authors in their paper in 2009 also found that the poverty rate of minorities reduced slower than the rate among Kinh and Hoa VASS’s Poverty Assessment in 2010 also agreed that poverty appeared to increase among ethnic minorities The lower living standards of minorities results from the complex interplay of overlapping

disadvantages, which starts in utero and continues until adult life (Baulch, Hoa, Phuong

and Hung, 2010, p 2) In this village, the drivers of the ethnic gap are also associated with the causes of poverty, which are discussed in section 3.3

In short, over the past four years the poverty rate in Loc Thanh has decreased sharply However, the scale and depth of poor ethnic minorities is a challenge to reducing poverty in this village This phenomenon reflects the negative points of an inappropriate official poverty line: the People’s Committee adjusts the poverty proportion according to their targets and the poor household list does not necessarily reflect the actual situation Some households that face difficult conditions do not get support from government This problem not only reduces

the impact of poverty reduction policy but also reduces the trust of residents in the government

3.2 The poor – who are they?

This is the most important part of this thesis It is easy to see who is extremely in poor by observation of housing conditions, durable goods and food consumption However, it is difficult to distinguish the poor from the non-poor if we just base our decisions on each criterion alone To measure the economic well-being of respondents, we use Principle Components Analysis (PCA) to create a wealth index PCA is a multivariate statistical technique used to combine many individual indicators into a linear weighted component (Vyas and Kumaranayake, 2006) The PCA 2007 add-in in excel also produces the scores for each observation (household) This score helps identify who is better off and who is worse off

Description of the variables

Applying the indicators of the SES score introduced in Ngan, Pincus and Sender (2012),

we collect information on housing characteristics, durable goods, consumption of high nutrition foods and access to sanitation These indicators are easy to observation and capture

1 Material of the house

The house style in the research area varies Local tribes like to live in Nhà sàn or houses on

stilts The houses are built upon four high legs and have only one door This type of house

is made of wood, bamboo or thatch Families that have higher incomes make more rooms and tile their floors, building two story houses We can only find this “new” kind of house

in Can Duc hamlet Others have built separate brick cottages next to their traditional houses All houses on stilts have two main parts One is used as a living room and bedroom and the other is a kitchen The type of house is therefore not a good indicator of poverty The material of the floors, walls and roof are better indicators, and they are easy to observe and evaluate

The construction materials used in building houses reflect the living conditions of the people in the house Only extremely poor families live with earthen floors This type of floor does not cost money, and people can make them flat by themselves or even do

nothing Seventeen respondents have this type of floor No matter how difficult their economic situation is, Kinh people try to keep their floors clean by constructing cement floors There are two Kinh households that have earthen floors These are special cases One man built a temporary house to take care of his rubber land He is from Nghe An province; he comes to this village to invest in property so he does not want to build a permanent house The other clay floor house belongs to Mrs Quế She is an old lady and likes living alone in this house and earning money to support herself by selling groceries Her elder son lives three cottages apart from hers He lives in a nice brick house and has a stable income from his photography shop Except for these two special cases, the other families with clay floors have low living standards Wood and cement floors are used in 45 houses, they can be poor or non-poor families Floors with ceramic tiles mostly belong to richer families

Table 3.1: Housing character by ethnic group

Material of floor Kinh Khmer S’Tieng Total

Earth or clay/ bamboo 2 2 13 17

Table 3.2: Housing character by ethnic group

Material of wall Kinh Khmer S’Tieng Total

Nylon sheet/ reed or thatch 5 8 17 20

Material of roof Kinh Khmer S’Tieng Total

Nylon sheet/ reed or thatch 4 4 11 19

Total observations 36 30 34 100

Source: Survey 2012

Table 3.3: Percentage of respondents do not have listed durable goods by ethnic group

Type of good Kinh Khmer S’Tieng Grand Total

3 Food and diet

There are no differences between the diet of Kinh households and the diet of local ethnic minority households Local tribes’ meals are as diverse and varied as that of Kinh

households Differences only occur between poor and non-poor households Most off families - whether S’Tieng, Khmer or Kinh- eat a diversified diet They consume poultry or pork every day Pork is purchased at a local market or food store nearby Poultry can be purchased or self-supplied Moreover, children in better off families usually have milk or soft drinks The only difference between the poor and non-poor is the frequency with which they have high nutrition foods like meat and fish While wealthier households buy food every day or every other day, and often vary between different types of meat and fish, the meals of poor households are mainly vegetables, which are picked from backyard gardens, from their fields, and from employer’s farms As the matter of fact, poor households do not have meat very often When they are paid for their work or harvest their crops, they pay back their old debts and buy some meat or fish

better-Sixteen percent of respondents have meat less than one time per week, 37 percent villagers have pork or poultry meat two to four times per week and the rest eat meat almost every day

Table 3.4: Frequency of having meat per week by ethnic group (respondents,%)

Frequency have meat per week Kinh Khmer S’Tieng Grand Total

Less than 1 time 1% 5% 10% 16%

it from the river The families that have fish less than once per week mostly do not have a young man in the house They are mostly widows or old people

Table 3.5: Frequency of having fish per week by ethnic group (respondents,%)

Frequency have meat per week Kinh Khmer S’Tieng Grand Total

Less than 1 times 1% 3% 10% 14%

More than 4 times 1% 3% 8% 4% Grand total 36% 30% 42% 100%

Source: Survey 2012

4 Sanitation facilities

In this village, waste collection services are not available Even the commune health facility has to burn its garbage Households throw litter behind their houses or burn it Poor families have temporary toilets or even do not have sanitation facilities Half of respondents do not have access to sanitation The rest use flush toilets built inside or outside of their houses For the sake of simplicity, we associate “temporary toilets” with households that do not have toilets Hence, the binary from for this indicator is “do you have a permanent toilet?”

Table 3.6: Access to sanitation facility by ethnic group (respondents, %)

Type of toilet Kinh Khmer S’Tieng Grand Total

Do not have toilet 0% 18% 32% 50%

Temporary toilet 7% 0% 1% 8%

Built toilet outside the house 3% 5% 0% 8%

Built toilet in the house 26% 7% 1% 34%

Table 3.7: Indicators use to build PCA score

House condition Durable good High nutrition food

Do you have a tiled floor? Do you have a motorbike? Did you have meat/poultry at

least once in the last week?

Do you have a brick-floor? Do you have a bicycle? Did you have fish last week?

Do you have a tiled roof? Do you have a TV?

Do you have permanent

toilet?

Do you have a refrigerator?

Do you have a washing

machine?

Do you have a computer?

Figure 3.3: Distribution of PCA score

The histogram has a positive skewness, which means the data appear to bunch up to the left

of the histogram The mode of the distribution is at -1.07, the mean is -0.05 and the standard deviation is 1.02 points The wide range of scores shows that the gap between poor and rich households is large (3.18 points) The shape of this histogram shows there are more households living in a difficult situation than prosperous households (Appendix 2)

Households with scores larger than the mean live in permanent dwellings and have some luxury goods Therefore, we use this point as a line to classify poor and non-poor households Based on this line we have 63 poor households and 37 non-poor households Not only the gap between poor and rich but the gap between ethnic groups is also clear when compared using this score

Table 3.8: PCA score by ethnic group

Mean 0.61 -0.05 -0.74 Standard Deviation 1.03 0.98 0.42

From the score, we can see that there are poor people even among the Kinh population However, the ranking of scores among the Kinh and Khmer groups is wide; they have the poorest as well as the richest in the village S’Tieng have the lowest standard of living with lowest mean and maximum scores

3.3 Why are they poor?

The causes of poverty in this village are many and varied In general, the four main causes

of poverty in this village are low incomes due to unstable, low-paying jobs, low returns from farming, failure to invest in pepper, and high interest on debt

3.3.1 Unstable jobs

Unstable jobs with low pay are a major cause of poverty, keeping 41 respondents in poverty in the sample Jobs are an importance source of income A bad job will not help people have a stable income (Phan Thi Bich Tran, 2011) In this section, we focus on the occupations of householders as they contribute the major share of income to the family Wage work is unstable in this village All 41 heads work for wages Of that number, 40 respondents work for a wage in agriculture, one for a non-farm wage (Appendix 3)

Both on-farm and off- farm jobs are seasonal and unstable In the beginning of the summer and spring there is plenty works on farms, and a farm wage worker could work for 25 days

in these months In other months, they only work for three to five days The wage depends

on the job, but it is generally around VND 90,000-120,000 per day Earnings from these jobs are only enough for daily food The one non-farm wage laborer is a bricklayer He can earn VND 180,000 per day, but this type of job is not always available in the village We also note that 60 percent of farm-wage workers are S’Tieng, while Kinh and Khmer contribute 20 percent each to this occupation

Table 3.9: Occupation of poor householders by ethnic (respondents)

Occupation Kinh Khmer S’Tieng Grand Total

high school and the rest dropped out of primary school As result, these people cannot enter the official labor market or find a job with a stable income

Table 3.10: Education of poor wage labor

Education

Farm-wage

Bricklayer

Grand Total Kinh Khmer S’Tieng Total

Do not go to school 0 6 20 26 0 26 Have not finish primary 2 0 1 3 0 3

3.3.2 Low returns to land

In the poor household group, eleven respondents earn their main income from their farms Five of them have rubber farms, and two farms have just harvested for one or two months One in five is from another province Four of them replaced cashew with rubber trees They also intercrop cassava on their rubber farms to earn money for daily expenses and to reinvest in their rubber farms All five households expect profits from rubber can help them get out of poverty Six other farmers are old so they focus on rice and cashew which

do not require as much labor and are closer to their houses One family has six hectares of farmland However, the quality of their soil is poor, so they cannot get earn much profit from their land

Table 3.11: Main crop of poor farmers (respondents)

Crop Grow Do not Grow

Cashew 3 8 Pepper 0 0 Rubber 5 6 Other 0 11 Source: Survey 2012

Except for the five rubber farmers, most of the 32 other farmers – even those who have farming as their main or secondary job - do not invest much in their farms We compare investment in cashew farming because this crop is grown by the poor and non- poor group While the non-poor fertilize their farms one time per year and spray pesticides twice per crop, poor farmers rarely take care of their cashew farms As result, the revenue from the cashew farms of non-poor famers is almost double in comparison with poor farmers (Appendix 6)

Unstable jobs and low returns from farming are also the main drivers of the ethnic gap Among the three groups, the S’Tieng people control the smallest land area S’Tieng households have 0.93 hectares of cultivated land while Kinh households possess on average 1.82 hectares and a Khmer household own 2.78 hectares The number of S’Tieng household that own less than one hectare is double that of Kinh and triple that of Khmer households (Appendix 7&8) The main crops of S’Tieng are rice and cashew Rice is grown mainly for food Revenue from cashew farms is a source of income However, like the general case of poor households, this sum of money is only enough to spend for Tet holiday

Like most poor households, low education is a significant factor that prevents S’Tieng people from entering the formal labor market The average years that S’Tieng go to school

is 0.74, almost the same as the Khmer group but much lower in comparison with the Kinh group As result, they can only work for wages in casual employment (Appendix 9&10) These overlapping disadvantages make the gap between S’Tieng people and other ethnic groups wider

3.3.3 Poverty and Dependents

Having too many dependents – mostly young children - is another reason that people stay poor On average, a family in this village has about two to three laborers and one to two dependents This means the dependency ratio is less than one (Appendix 11) Families that have too many children not only increases the number of people needing support but also reduces labor supply, as women have to take care of their young children The situation is worse in poor households In our survey, nine poor households have more than two dependents per laborer (Appendix 12)