Five Reasons Not to Use Cash For Work
Rethinking Cash-for-Work (Part 1)
Written by: Mohamed IREG, Sandrine Chetail, Kristin Smart and Rachel Shah
During the last decade and a half, Cash-for-Work (CfW) programs have been widely used across humanitarian and development aid as a tool to provide temporary employment opportunities, provide manual labor for small scale community projects, and inject cash into households and markets. Despite the widespread use of CfW, it is crucial to scrutinize the limitations and potential drawbacks of this intervention modality.
CfW evolved as an alternative modality to ‘food for work’ programming or in-kind distributions. At the time, it was supported, because, when compared to in-kind distributions “it enable[d] people to determine their own choices and priorities,” and could be “implemented far more quickly and with fewer delays than food aid.”¹As Mercy Corps’ own guide to Cash-for-Work programming from 2007, put it “aid agencies [had] only recently started using cash as a viable programming option” — CfW was advocated because it represented a new push towards the use of cash but retained some level of conditionality by requiring work in exchange for receiving aid.
The landscape has now changed, and cash transfers are a much more widely accepted modality of assistance. Extensive research shows how effective cash is, particularly unconditional cash transfers², as well as how much less risky it is than originally feared. In this new context, cash for work as a tool to inject cash into households and markets to facilitate access to basic needs in emergencies is no longer as compelling as it once was. Evidence has shown that unconditional cash assistance is a better alternative. It is not only cheaper, quicker and less risky to administer than cash-for-work, but it is also better at enabling people to determine their own choices and priorities. In short, the very reasons cash-for-work was originally adopted have since become the reasons to abandon it as a modality.
Here, we delve into five reasons not to use cash for work interventions. These reasons, at the very least, warrant a critical examination of the use of CfW as a modality of assistance for communities affected by crisis. In the second post of this series, we will give our perspective on how to mitigate these risks if you find yourself in a scenario where you have no choice but to use cash for work.
Lack of sustainability: CfW is a poor way to address unemployment
A central concern regarding CfW programs revolves around their lack of sustainability. Designed to provide short-term access to income, these initiatives fall short of creating lasting impacts on the livelihoods and long-term economic stability of program participants.
In fact, the transient nature of CfW opportunities may even hinder program participants from building a longer-term livelihood strategy. While participants are engaged in temporary work, potential for meaningful skill development is limited. The ‘work’ required in CfW initiatives is usually, by design, low-skilled physical labor (to make the intervention broadly accessible) and focused on building community assets (on the basis that this will aid medium-term development outcomes). As such, the skills gained in a CfW intervention — if any — bear little relation to the skills demanded by employers in the labor market. While participants gain immediate income, the lack of emphasis on long-term skill-building can limit their ability to secure sustainable employment in the future.
Furthermore, unlike other forms of unconditional cash transfers, CfW takes up workers’ time, limiting the time they have available to conduct other livelihood activities, such as agricultural activities, job searching or building a small business. The work also takes up time individuals may otherwise have used to do unpaid tasks, such as childcare, contributing to subsistence farming, or building social networks, all of which could have negative economic impacts on the household. In short, CfW initiatives leave workers without the tools and time needed to build towards sustainable economic opportunities.
Market distortions: CfW is a poor way to build inclusive labor markets
CfW interventions, while intended to alleviate immediate economic challenges, can inadvertently distort local labor markets, particularly during seasons when communities rely on the availability of daily laborers to support day-to-day tasks. This could divert labor away from other activities, and the infusion of cash incentives for short-term jobs may also artificially inflate wages, by increasing demand for low-skilled labor, or by paying higher-than-average wages to CfW participants. While this might initially seem to be beneficial, increased production costs for businesses could inflate costs for others in the community and even reduce the number of available jobs.³ This distortion can lead to increased (or decreased) competition for available jobs, particularly in areas where labor markets are already fragile.
Logistical challenges: CfW is an expensive and risky way to distribute cash
Relative to unconditional cash, cash-for-work is an expensive modality. Implementing CfW programs poses significant logistical and safe programming challenges, particularly in complex operational environments. One estimate suggests that CfW interventions, with all the associated capital, logistical and technical costs, are about twice as expensive to administer as unconditional cash transfers.⁴ Furthermore, CfW programs come with unique risks. For example, a CfW implementer needs to consider the safety or participants, alongside compensation and liability if someone is injured while working on the program. In some cases, communities may encourage under-age participation in cash for work activities, for example as a substitute for the participation of an elderly family member, therefore inadvertently supporting child labor. Though these risks can be mitigated through strong program design, implementation, and monitoring systems they pose an additional burden to program implementation teams.
Community Infrastructure: CfW is a poor way to build community assets
One justification that is often used for CfW’s high costs is that it supports community assets while providing cash to highly vulnerable households struggling to meet basic needs. However, experience shows that this is often not as effective in practice. In some cases, community models to maintain assets are pre-existing, such as collective work to clear lands during planting seasons, and CfW distorts the incentive structure that otherwise enables sustainable management. In other cases, new community assets, such as irrigation channels or latrines, are created, but there is rarely a plan or the resources in place to ensure that resulting asset can be effectively maintained by the community.
Research⁵ into what contribution assets from public work programs⁶ had made to communities in the medium term could not find a single case where aid agencies had monitored whether the resulting assets were sustained post intervention, yet alone what value they had for communities. A handful of cases from two projects — both selected because they were deemed to be ‘successful’ — were assessed by the researchers who found little to no livelihood contribution from the assets at all.
This raises questions about such programs’ true impact and intention — and undermines a key argument for using cash-for-work instead of unconditional cash as a modality.
Ethical considerations: CfW is a poor way to provide cash to crisis-stricken households
The most important reasons not to use CfW, in our view, are the ethical concerns that arise in the implementation of CfW programs. CfW is primarily used in contexts where poverty and crisis-stricken households need cash to meet their basic needs, which raises the question: why not use unconditional cash? Are we creating cash-for-work models only because we feel people should work to be able to receive cash? If so, aid agencies run precariously close to turning the concept of “cash-for-work” into “work-for-cash,” resembling a form of coerced labor that requires highly vulnerable individuals to complete tasks just to meet their basic needs for survival. CfW can also exclude vulnerable, hard to reach, or marginalized groups who are unable to work from accessing much-needed cash.
Furthermore, the conditions of CfW may compromise the dignity of participants. While this is not always the case, CfW interventions often require hard and/or undignified labor and make the participants clearly visible to the other members of their community. CfW projects are often focused on physical labor and therefore exclude those that are less able bodied. By definition, a CfW intervention implies that participants are not well-placed to decide how to spend their time during periods of crisis, and the work itself can take people away from other tasks like community organizing and household management. The work itself is unchosen by participants (though community members may collectively have a say in what work is done), and the amount of cash provided is often not appropriate for the type and amount of work required.
If not CfW, then what?
The starting point for any intervention is to question what the purpose of the intervention is. What do you want to achieve? Not all challenges apply equally in all contexts; by determining the purpose of an intervention, you will be better able to assess how to find an alternative intervention modality, or how to mitigate the risks of using CfW.
Is the intervention intended to meet immediate needs for survival, such as access to food or water?
This purpose is not well paired with a CfW modality. Where people need cash, use unconditional cash to get them the money they need quickly to meet their household’s emergency needs for survival. Mercy Corps recommends the use of Multi-Purpose Cash (MPC), an unrestricted and unconditional cash transfer designed to meet basic needs. MPC mitigates the ethical considerations outlined above, while also freeing up people’s time and labor to cope, adapt and — when appropriate — invest in building longer-term livelihood strategies. MPCA is less likely to distort labor markets than a CfW intervention, is cheaper and less risky to administer, and can be layered with other forms of assistance (referred to as Cash+) to quickly get cash into the hands of the people who need it most.
Is the purpose to address un- and under-employment in the medium to long term?
In this case, the first step is to undertake a systems analysis to better understand why labor markets are not working effectively and inclusively for the targeted population, and what labor market trends suggest the future of work will be in the given context. Interventions can then be designed to respond to this contextual analysis, using a systems change approach to achieve sustainable outcomes. Mercy Corps recommends our Market System Development for Employment approach (MSD4E).
In a crisis situation, implementing unconditional cash transfers layered with Market in Crises (MiC)⁷ interventions can help address immediate needs while laying the groundwork for systemic development. By providing individuals with cash assistance, coupled with market-based interventions (such as strengthening job placement services, supporting training services to become more inclusive, or enabling employers to recover and adapt quickly), we can begin to stabilize the labor market and create opportunities for sustainable employment. Grants for micro and small businesses may be appropriate to help them continue to provide products and services and maintain jobs. This dual approach not only addresses immediate vulnerabilities but also contributes to long-term resilience and economic recovery.
Is the purpose to build sustainable community assets?
If so, invest the time and resources to co-design a project with communities that will lead to that outcome specifically. Invest in the required skills to assess, design, manage and monitor the project according to those objectives, and wherever possible, look for ways to build community assets that will be owned and funded by community groups, the private sector and/or local government — with clear maintenance plans. Ensuring that resources for maintenance are sustainable and can be managed by the community. The use of Group Cash Transfers, an approach that provides resources in the form of cash transfers to community groups to implement projects that benefit either a sub-section of the community or the community at large, maybe an effective modality to consider. Consider how work on the community assets might empower community members with valuable skills or social capital, enabling them to participate in similar projects and contribute meaningfully to community asset creation, management and ownership. Additionally, explore collaborative ventures with local businesses or cooperatives to sponsor and oversee asset development projects, fostering economic growth and community ownership.
Whatever the purpose, there is almost always a better modality to use than CfW. But what if CfW is required? Look out for part 2 of this series, where we address how to mitigate the risks we have laid out.
Footnotes:
- Both quotes are from Mercy Corps (2007) Guide to Cash-for-Work Programming, pg. 3
- Cash transfers are a modality of assistance that can be applied with or without conditions (i.e. something has to be done in order to receive the cash) and with or without restrictions (i.e. restricted to only be used to purchase set goods or services). A cash for work program is an example of a conditional cash program. A voucher program is an example of a restricted cash program. Multi-purpose cash assistance (MPC) is an unconditional and unrestricted transfer set at a transfer value equal to a range of basic needs defined by an expenditure basket.
- See Beazley et al (2016) Designing public work programs and transfers to promote growth and mitigate violence
- 30%-70%, average 50%, see McCord, A. (2012) Public works and social protection in Southern Africa: Do public works work for the poor? Helsinki: Juta Press and UNU
- ODI and SPARC, 2024, forthcoming
- Public works programs are broadly equivalent to cash-for-work programs; they are interventions, which offer a cash (or in some cases food or other in-kind) wage in return for labour used for the creation of public assets.
- See Mercy Corps (2018) Beyond Cash
