In January this year, Viet Nam’s prosperous Ho Chi Minh City saw the ranks of its poor lengthen by roughly 100,000 households, pushing its poverty headcount upwards by about 4-5 per cent. Officials at HCMC have taken great pains to ensure a greater number of people are listed as poor. This change not only holds great promise in shaping stronger social welfare systems in Viet Nam, it could change how other Asian megacities tackle deep-seated urban poverty.
What the city authorities at HCMC are doing is changing the rules of how they define poverty and who is considered poor. Poverty levels in Ho Chi Minh City have not actually risen. Rather the approach recognizes that poverty is a multi-faceted concept. In addition to those residing below the poverty line, HCMC’s new ‘poverty list’ will now include families who may not be poor in terms of income, but lack minimum levels of access to education, vocational training, health care, employment, proper housing and water. This will qualify them for government-run social welfare programmes that seek to tackle these deprivations.
As the country’s most prosperous city, the nature of poverty in Ho Chi Minh City has changed over the past decade, as is the case among many of Viet Nam’s middle income neighbours.
Fewer and fewer residents of HCMC are poor using an absolute income standard, such as dollar a day measures or one based on the monetized value of basic needs. Though its own income poverty threshold is higher than the national line, HCMC nevertheless had an official income poverty rate of less than 1 per cent in 2015.
A poverty line that measures wellbeing solely in terms of income ignores the real nature of poverty in these dynamic, rapidly changing cities. Poverty can manifest itself across a wide range of dimensions, with many people, particularly temporary migrants, living without proper access to basic social services (such as education and health care), basic living conditions (housing, water, sanitation and so forth), and social protection.
Although HCMC has the resources available to support such poor households, their toolkit for measuring poverty based solely on income told them very little about the key deprivations citizens faced, and in turn the constraints which prevent them from exiting their situation.
Income is an important indicator, but it also tends to obscure the drivers of poverty and exclusion that are common in urban areas. In this sense, multi-dimensional approaches offer advantages in enabling a diagnosis of the causes of poverty.
Rather than simply raise the city’s income poverty line of approximately US$ 600 per month, officials opted to utilise an alternative tool: the multi-dimensional poverty approach to measure poverty.
The advantages of this approach are several: First, it provides policymakers with a more detailed picture of poverty. They can understand who are deprived and in what dimensions (e.g. education, health, housing).
Second, the approach allows them to see the incidence of poverty but also how various dimensions of poverty overlap (given by the intensity measure incorporated within the MPI). They would know for instance whether a household is deprived in housing and water access and also in education levels. This in turn allows for them to make the most efficient use of limited resources, by targeting those areas and people suffering the greatest number of deprivations, and targeting those deprivations that are affecting the greatest number of people.
The City’s new set of policies informed by poverty studies conducted since 2009 can be expected to have a positive impact on the lives of many households, on the overall levels of poverty and exclusion, and contribute towards social cohesion within the City.
Beyond this, the multi-dimensional poverty approach provides a tool for other Asian megacities to improve inter-agency coordination and resource allocation between localities, which is famously weak in the region.
Precisely because it deals with poverty across multiple dimensions, it demands a response that combines the work of a variety of agencies. This has important implications for tackling the rapidly changing pattern of needs in dynamic urban centres. Equally it enables policymakers to address other multi-dimensional challenges like climate change vulnerability, closely linked to poverty, and like poverty difficult to understand through a single policy lens or address through uni-dimensional interventions.