ReportNo. 18564-AL Democraticand PopularRepublic of Algeria Growth, Employmentand PovertyReduction

Public Disclosure Authorized (In Two Volumes)Volume I: Annexes

January20, 1999

Human Development Group Micldle Eastancl North Africa Region Public Disclosure Authorized Public Disclosure Authorized

Public Disclosure Authorized Documentof the WorldBank

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties.Its contentsmay not otherwise be disclosedwithout World Bankauthorization. CURRENCY EQUIVALENTS

Currency Unit = Algerian Dinar (DZD)

US$1 = DZD 54.68

FISCAL YEAR

January 1-December 31

WEIGHTS AND MEASURES

Metric System

ABBREVIATIONS

ADS Agence de DeveloppementSocial AFS Solidarity Transfer - Allocation Forfaitaire de Solidarite AGEP Agence Nationale de I 'Eau Potable et Industrielle et de l 'Assainissement CNEP Caisse Nationale d'Epargne et de Prevoyance CNP Conseil National de la Planification EDCM Enquete sur les Depenses de Consommation des Menages 1988 ENMNV Enqu6te Nationale sur la Mesure des Niveaux de Vie des Menages Algeriens 1995 EAI Individual Farms EAC Collective Farms HSAL Housing Structural Adjustment Loan IAIG Public Work Program - Indemnite pour Activite d'Intret General ONAPSA Office National d'Approvisionnement et de Services Agricoles SAL Structural Adjustment Loan SONELGAZ Societe Nationale de V'Electricite et du Gaz

Vice President: Mr. Kemal Dervis Country Director: Mr. Christian Delvoic Sector Director: Mr. Jacques Baudouy Task Manager: Ms. Setareh Razmara

This report was prepared by a team led by Setareh Razmara and is based on background papers prepared by Ragui Assaad, Vincenzo Atella, Paul G(ewwe, Kathy Lindert, Nicola Rossi, Lynn Salinger, and Dan Levy. Domir ique van de Walle was the peer reviewer and the Principal Advisor. Additional advice and valuable suggestions were provided by Habib Fetini, Elizabeth Ruppert, Daniela Gressani, John Underwood, Sarosh Sattar, Kutlu Somel, Fritz Rodriguez, George Schieber and Miria Pigato. Micheline Faucompre, lqbal Kaur, Alia Achsien, and Marisa Stubbs provided production support. The report could not have been written without the active collaboration of the Government of Algeria. In particular, extensive assistance was received from the National Office of Statistics for preparing the results of the 1995 Living Standards Survey. FOR OFFICIALUSE ONLY

ANNEXES

Annex A. 1. MethodologyUsed in ConstructionPoverty Lines for Algeria AnnexA.2. Measuresof Povertyand Inequality Annex A.3. PovertyProfiles in 1988and 1995 Annex A.4. RecommendationsTo ImproveSocial Data

Annex B.1. LaborMarkets in Algeria

AnnexC. 1. Educationand Training Annex C.2. HealthCare System AnnexC.3. HousingSector AnnexC.4. Overviewof the Food SubsidyProgram Annex C.5. SocialAssistance Programs

StatisticalAnnex

This documenthas a restricteddistribution and may.be used by recipientsonly ia the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Annex A.1 Page 1 of 12

METHODOLOGY USED IN CONSTRUCTING POVERTY LINES FOR ALGERIA

Concepts for Constructing Poverty Lines

The guiding principle in setting poverty lines for different sub-groupsof a population, or for differentdates, is a consistentprofile of poverty,in that any two individualswith the same standardof living shouldbe treated identically. Whenmaking comparisons over time,this meansthat one shouldadjust solely for differencesin the cost-of-living(using a suitable price index). The same principle also applies to comparisonsacross regionsor sectorsof the economyat the same date.

The reason for followingthis principle stems from the main purpose of constructinga poverty profile, namely to provide informationon the living standards in different regions or sectors of the economy.' The povertyprofile tells us how livingstandards vary within a countryand this informationcan have great bearing on the policy choices made in attemptingto reduce aggregatepoverty. It is important then that the povertyprofile is consistent,in that a person with a given standardof living is treated the same way whateversector or region in whichthe person is located.

However, puttingthis principle into practice presentsa number of problemsfor the anal3st.The components of the poverty lines are: an allowancefor "basic foods", or a food poverty line, and an allowancefor "basic non-foodgoods". The precisedefinition of both componentswill vary from countryto country,and they will also be subjectto debatewithin any one country. There is no single idealmethod of settingpoverty lines, andthe choicesmade will almostcertainly be contentious.

Nutritionalrequirements for good health are the obviousanchor for determiningbasic food needs. Almost all poverty lines have been tied to nutritionalrequirements, though the methods used to do so have varied. The food povertyline cannot be determinedsolely from nutritionalrequirements. There are many food combinations which can achieve any given food energy intake. One possibility is to find the combinationof foods which minimizesthe cost of achievingthe food energyrequirements at given prices. However,in the Algeriansetting (as in many countries)it is unreasonableto insiston a compositionof a diet which is aliento existingfood habitsof the country. Therefore,the food poverty.line has been measuredby the local cost of a bundle of goods which attainthe pre-determinedminimum food energyrequirements for Algeriain a way which is consistentwith local foodtastes. The bundleof goods is chosento accordwith the consumptionpattern of a referencegroup. Having set the food bundle, its cost is estimatedseparately for each of the urban and rural sectorsof each economicregion using the localprices.

In principle,one could proceedthe same way for non-food goods i.e., set a bundle of such goods and determinethe cost of that bundleseparately in each region and sector. However,certain considerations mitigate against that approach in the case of non-food goods. While food energy requirementsare the obviousanchor for food consumption,there is no analogousbasis for settingbasic non-food consumption. Furthermore,as is commonfor most developingcountries, non-food prices are difficultto monitorreliably (indeed,no prices for non-foodgoods are availablefrom the 1988and 1995surveys in Algeria).

See M. Ravallion(1992) " Povertycomparisons: a guideto conceptsand methods",LSMS, Workingpaper 88, World Bank. Annex A.1 Page 2 of 12 The practical approach is how one can best allow for differencesin the basic non-food goods needed to achieve the same standard of living in the various sectors or regions being compared. An alternativeapproach is motivatedby the observationthat attainingbasic food needs is undoubtedly a strong motive for consumptionbehavior. Thus, one criterionfor defininga "basic non-foodgood" is that one is willingto forgo basic food needs in orderto obtain that good. We can thus ask: What level of non-food spendingwill people allow to displacebasic food spending,as embodiedin the food poverty line? There will undoubtedlybe some displacementof basic food spendingover a wide range of consumptionlevels. Even those householdswhose total consumptionexpenditure is below that requiredto meet their nutritional requirements,with the traditionaldiet, will almostcertainly spend somethingon non-foodgoods. The better measureof basic non-foodspending is to look at how much is spenton non-foodgoods by householdswho are capableof reachingtheir nutritionalrequirements, but choosenot to do so.

Of course, large sums of money might be spent by some householdson non-food goods, even though their nutritionalrequirements are not being adequatelymet. One would not necessarilywant to identifyall such householdsas "poor". There will also be some variationin spendingpatterns at any given budget level because of measurementerrors or randomdifferences in tastes. Given this heterogeneity, a more reasonableapproach is to ask: What is the typicalvalue of non-foodspending by a householdthat is just capableof reachingfood requirements?As long as food is a normalgood, this will also equal the lowest level of non-foodspending among all householdsthat are capableof acquiringthe basic food bundle. It can thus be considereda minimalallowance for non-foodgoods, consistent with allowancefor basic foods.

Poverty Lines for Algeria

The starting point for deriving poverty lines for Algeria is the assumptionthat householdshave a minimumnutritional need of 2100 caloriesper person per day? There are many ways to find a "basket"of food itemsthat offers 2100 caloriesper day per person. As mentionedabove, the most realisticbasket is one that reflects actual food consumptionpatterns in Algeria. Therefore,for both 1988 and 1995 the baskets used will be the baskets consumedin each year by those householdsin Algeria whose estimated caloric intakeis approximately2100 caloriesper personper day.3

2 For Algeriathe 2100 caloriesper personper day is basedon FAO guidelines,as countryspecific data werenot available. This is an averagerequirement per personper day acrosshousehold members of differentages and occupations;in general, adults will requiremore while children will require less, but for purposesof constructinga poverty line an average requirementwill suffice. The 2100 caloriesused for Algeriais consistentto that obtainedfrom neighboring countries with nationaldata. For example,according to the nationaldata, in Tunisia,a countrywith an incomelevel similar to that of Algeria,the minimumnutritional need was estimatedat 2200 caloriesper personper day, and in Morocco,a countrywith an incomelevel lower to that of Algeria,a minimumnutritional need of 2000 caloriesper personper day was used to estimatethe poverty lines.

3 The 1988 Enquetesur les Dipenses de Consommationdes Mdnages- EDCM interviewed10,368 households from all regionsof Algeria from January 1988to January1989. Detailedinformation on food and non-foodexpenditures were collected,including the quantities of each food item consumed. The 1995 Enquete Nationalesur la Mesure des Niveaux de Vie des MenagesAlgeriens - ENMNVinterviewed 5,910 households over only two months from August to September 1995. It collected informationon food and non-food expenditures,but not on quantities of food consumed. In both surveysinformation on incomewas collected,but in a very differentway, particularlywith respect to incomefrom farning activitiesand incomefrom self-employment.The 1995 data had more detailed informationon other aspectsof householdliving standardsthan the 1988 survey. Both surveyswere conductedby Algeria's Office Nationaldes Statistiques(ONS). Annex A.1 Page 3 of 12

A. Application to the 1988 Household Consumption Survey (Enquete sur les D4penses de Consommation des Menages -- EDCM)

Setting the Food Poverty Lines

After choosing a basket of food items that supplies this minimal amount of calories, (estimated at 2100 calories per person per day), one should choose a reference group of households that consume approximately 2100 calories per capita per day, and then construct a food basket based on their consumption patterns. To choose such a reference group, the households in the 1988 EDCM were divided into deciles (as measured by per-capita expenditures). For each decile, a basket of food items was constructed using the average quantities consumed per person by the households in that decile. Although the 1988 EDCM provided information on the consumption of almost 220 food items, many of these were consumed in very small quantities and were therefore dropped from the basket. Specifically, any item for which the annual per capita consumption was less than 0.2 kg was excluded. Note that the per capita quantities consumed for each decile were computed by dividing the total quantity consumed by the number of people in the decile.

The second step is quite simple. For those items included in the food basket, the caloric values are computed using caloric conversion tables available from the Food and Agriculture Organization (FAO). For each decile, the calories consumed per capita from the food baskets were computed.

The third step is to calculate, for each decile, the calories acquired from expenditures on food items that were excluded from the food basket, either because their annual consumption was small or because the expenditures were on food purchased outside the home (and thus it is not known what the food item is). Here it was assumed that calories derived from each Algerian dinar spent on the excluded items and on food bought outside the home were the same as the average calories derived per dinar spent on food items included in the basket. Thus, total calories attained from the food basket of each decile were to be scaled up by a factor of 1/(1-k), where k is the share of total food expenditures in that decile devoted either to commodities not included in the food basket or to purchases of food outside the home. With these calculations for each decile, the second decile was chosen as the reference group because calories consumed per person per day are estimated to be 2232, which is closer to 2100 than were the calories for any other decile. The quantities from the food basket consumed by households in the second decile are shown in the first column of Table A. 1. Note that because the food baskets exclude items and restaurant expenditures, these food items provides only 1934 calories per person per day. One more step is needed to get a food bundle that provides 2100 calories per day.

The fourth step involves the rescaling the food bundle of the people in the second decile, so that it yields 2100 calories per person per day. Two modifications are required here. First, the people in this decile actually consumed 2232 calories per person per day, not 2100. Thus all food items should be deflated by 2100/2232. However, this yields a food basket that has only 1820 calories per person per day (1820 = 1934 x 2100/2232). The difference between 1820 and 2100 is due to the small items that were not included in the food basket and to expenditures on food outside the home. These account for 13.36% of total food expenditures thus, each item in the food basket must be multiplied by 1/(1-0.1336). These two modifications yield the food basket in the third column of Table A. 1, which gives 2100 calories per person per day. The cost of purchasing this food basket is referred to as the Food Poverty Line. Annex A.1 Page 4 of 12

The next step is to set the food poverty line in each region. On the basis of 1988 survey, Algeria has been divided into Algiers, other metropolitan areas, smaller urban areas (which Will henceforth be referred to as "towns"), and "zones eparses", which are sparsely populated rural areas. For each of these four parts of Algeria the cost of the food basket was calculated to obtain a food poverty line for 1988. These four food poverty lines are shown in the first column of Table 1. There is not much difference between the cost of the food basket in the different areas, except that the cost in other metropolitan areas is about 4-5% higher than in the other parts of Algeria.

The fifth step is to calculate the value of the food basket at local prices. Since individual prices were not collected in the survey, regional prices were estimated for each food item by calculating the ratio of the expenditures over the quantity consumed for each item, by region. In order to control for variation in prices across regions due to differences in product quality, the prices were imputed using consumption data for the middle six (national) deciles only. Four sets of average prices were derived that were then used to value the food commodities, i.e. the per capita quantities of each item in the food basket were multiplied by the mean regional prices to arrive at the mean regional per capita expenditures on each item. These values were summed across the food commodities, resulting in figures for the Food poverty Line, which are displayed in Table A.2. The food poverty lines for 1988 are AD 2163 per person per year for Algiers, AD 2266 for other metropolitan areas, AD 2170 for small urban towns, and DZD 2160 for rural areas ("zones eparses").

Setting the Allowance for Non-food Goods

Finally, as explained earlier, a non-food component was added to obtain an overall poverty line that incorporated both food and non-food needs. To illustrate, let us assume that food spending increases with total spending, with a slope less than unity (Figure 1). (This can be thought of as a regression line, giving the expected value of food spending for any given value of total spending.) Let us also assume that there is a unique expenditure level needed to reach nutritional requirements, as indicated in Figure 1. This is the food poverty line, z Among those households (with given tastes) that can afford to reach their nutritional requirements, the lowest level of non-food spending is given by the distance NF in Figure 1, all of which displaces basic food spending. NF is the basic level of non-food spending. The combined poverty line is then given by ZL (the essential food component plus NF). ZL is the Lower Poverty Line, in which non-food spending equals the non-food expenditures of those households whose total expenditures are just equal to the cost of food basket.

The value of NF can be conveniently estimated as follows. We can begin with a demand function for food, representing the food share as a linear function of the log of the value of total spending (food plus non-food) relative to the food component of the poverty line. Then, across the j=l,..,n regions for which a poverty line is to be estimated, we have for household in sector (large cities/other urban areas/rural) j and household composition variables (including the number of children in age groups 0-1, 2-5, 6-12, 13-17, and the number of adults): line (sum of the food poverty line and non-food spending) for each sector is then given by: Annex A.1 Page 5 of 12

This linear regression is:

sij = y + bjlog(xij/zFi) + gj[log(xij/zFi)]2 + fj.(nij-nrj) + error ternij (1) where a, b, g, and f are parameters that vary across sectors (regions), sij is the budget share devoted to food by household i in sector j, xij is total consumption expenditure, zFi is the food poverty line in j, nij is actual household size, and nrj is the size of the reference household in j.4 lHaving estimated this equation separately for each region, the values of the intercepts, ai (i=1,2,3), are then estimates of the average food shares for each sector of those households who can just afford to reach the food poverty line. The total poverty

zj = zFj(l + non-food budget share at the food poverty line) = zFj(2- aj) (2)

That is, the total poverty line is obtained by scaling up the food poverty line, the proportionate increase being given by the estimated non-food budget share at the food poverty line. The poverty measures are then estimated for the urban and rural sectors of each region. The total poverty line is shown under the heading "Lower line" in Table A.2.

For sensitivity analysis, it is always a good idea to consider more than one poverty line.5 Therefore, an alternative approach is to ask: what is the level of non-food spending found among those who actually reach the food poverty line, rather than those who can merely afford to do so if they cut all non-food spending? (In Figure 1, this is given by N*F*.) This allowance, which gives a higher poverty line, can be considered the maximum reasonable amount for basic non-food needs, assuming that those who reach their food requirements will also have reached their basic non-food needs. This amount is more difficult to calculate exactly from the above regression, and it must be solved numerically; a simple line search was used to find the higher poverty lines from the estimated food-demand functions.6

The Upper Poverty Line uses the level of non-food spending of those households whose food expenditures are equal to the cost of the food basket (food poverty line). A good first approximation can be obtained using the following formula, along with intercept and slope coefficients estimated earlier, for the value of the food share at the point where food spending equals the food poverty line:

Such a food demand model can be derived from Deaton and Muellbauer "Nearly Ideal Demand System", satisfying the standard choice-theoretic assumptions. See B. Bidani and M. Ravallion "Poverty in Indonesia 1990: A consistent Regional Profile and its Implications for Regional Targeting", 1993.

See M. Ravallion (1993) "Poverty Comparisons: Fundamentals in Pure and Applied Economics", Vol. 56, New York: Harwood Academic Press.

6 This is Newton's method of solving a nonlinear equation. Further iterations using this formula can then yield an estimate of the food share when spending equals the food poverty line to any desired accuracy. On dividing the food poverty line by this estimated food share, one obtains the poverty line at which a person typically reaches the basic food requirement. This procedure can be done separately for each region. Annex A.1 Page 6 of 12

Estimated food share when food spending

equals the food poverty line =sestP (ai+bi)/(1+bi)

This estimate can be improved by iterating the following equation twice:

s = sest - (sest+ blog (sest)- a)/(1+ b/sest).

The total poverty line is calculated by dividing the food poverty line by the final estimate for s. This poverty line is shown in Table A.2 under the heading "Upper Poverty Line".

One can thus suggest two lines: a poverty line, which incorporates a minimal allowance for non- food goods (being the typical non-food spending of those who can just afford the food requirement; and, for sensitivity analysis, an upper poverty line, which gives a more generous allowance for non-food goods (being the typical non-food spending of those who just attain the food requirement).

B. Application to 1995 Enquete Nationale sur la Mesure des Niveaux de Vie Des Menages Aigeriens (EN1INV)

As with the 1988 EDCM, the first step is to choose a basket of food items that supplies 2100 calories per capita per day, based on household consumption patterns. To choose a reference group the households were again divided into deciles as measured by per-capita expenditures. For each decile, the average amount of expenditures on each food item is determined using the 1995 ENMNV data.

The next step involves calculating, for each decile, the average quantity consumed of each food item. Unlike the 1988 EDCM, the 1995 ENMNV collected data only on food expenditures, not on quantities. Thus, quantities were calculated by dividing the average amount of expenditures in each decile by the price of that particular food item. Prices for each of these food items were obtained from the Office Nationale des Statistiques (ONS).

The third step is to calculate the average number of calories consumed by each decile. This is done by multiplying the average quantity consumed of a food item by the calories derived from each unit of this item, and then determining the sum of these products for all food items.

As with the 1988 EDCM, it is not possible to determine the calories derived from food consumption outside home (i.e. restaurants, cafeteria). To include this type of consumption in the food basket of each decile, it is again assumed that the average number of calories derived from each Algerian dinar spent on food bought outside the home is the same as the average calories derived per dinar spent on food items included in the basket. Thus, total calories attained from the food basket of eachdecile are scaled up by a factor of 1/(l-k), where k is the share of total food expenditures in that decile devoted to purchases of food outside the home.

At this point, the decile whose average number of calories consumed per day is closest to 2100 calories is chosen as the "representative" decile. The third decile was chosen to be the representative one because it consumed an average of 2062 calories, which is slightly less than 2100. A final adjustment involved scaling up the quantities consumed by the third decile so that the basket would account for exactly 2100 calories. Hence quantities were multiplied by a factor of 1.018 (=2100/2062). Annex A.1 Page 7 of 12

The representative food basket, which now accounts for 2100 calories, is then priced to determine the food poverty line. Again, price information was obtained from the Office Nationale des Statistiques. Two sets of prices were used, one for urban areas and the other for rural areas. Multiplying the quantities of each food basket by each of the two sets of prices, a food poverty line for each area (urban and rural) was calculated.

Finally, a non-food component was added to obtain an overall poverty line that incorporated both food and non-food needs. This was done in exactly the same way as it was done using the 1988 EDCM, which was explained above. Table A.3 presents the poverty lines for urban and rural areas in Algeria for 1995.

Due to the lack of comparability in the surveys' consumption expenditures (particularly for non- food expenditures), poverty lines were constructed separately for 1988 and 1995, as opposed to adhering to one year and updating the line with the cost-of-living index. If 1988 poverty lines were inflated by price indices for 1995, the food poverty lines would be almost the same than the ones calculated above, but both the lower and upper general poverty lines would be slightly lower: the adjusted lower poverty lines would be DZD 14,109 in urban areas and DZD 14,522 in rural areas (compared to DZD 14,706 and DZD 14,946 based on the method calculated above); the adjusted upper poverty lines would be DZD 15,581 in urban areas and DZD 16,738 in rural areas (compared to DZD 17,666 and DZD 18,706 based on the method calculated above). Although the incidence of poverty line might be slightly lower on the basis of adjusted poverty lines, the characteristics of the poor will be virtually unchanged.

Data Problems in Algeria

The poverty analysis of this report relies heavily on two nationally representativehousehold surveys that are available for 1988 and 1995. There are, however, a number of problems in using these two surveys to conduct poverty analysis in Algeria and, in particular, a number of factors make it difficult to draw any evolutionary conclusions from the available data. The main problems are as follows:

* Comparisons over time: Differences between the two surveys make comparisons over time problematic. There are differences in survey design, in the procedures used to collect the consumption data, and in the recall periods. For example, the definitions of urban and rural differ between the 1988 and 1995 surveys. The surveys were also conducted under rather different economic and social conditions, and some results suggest that the 1995 ENMNV may not have sampled very accurately in rural areas as a result. It is difficult to ascertain which survey is more accurate.

* Measuring welfare and ranking individuals: Neither survey collected information on food consumption from own-production. This is a potentially serious problem since such consumption will tend to vary across the distribution of welfare and across sectors and time. For example, consumption from own-production is usually a greater percentage of total food consumption for poorer households, particularly in rural areas. Lack of information on food consumption from own- production can lead to an underestimation of food expenditures for certain groups and affect the ranking of households. Other sources of data can be used to test the potential sensitivity of the results to this omission. The household survey for Tunisia, a country with an income level similar to that of Algeria, found that consumption from own-production by the poorest 13% of the population was around 10-15% of total consumption (food plus non-food). The agriculture section of the Algerian 1995 survey, contains information on the use of food crops harvested for household consumption. Annex A.1 Page 8 of 12 This data suggest that omitting consumption from own production will underestimate total consumptionby 5- 10% amongthe poorestrural households.

Given the problems of comparability between the surveys and problems underlying the measurementof living standards,it is importantthat the poverty lines results discussed in this annex be treated carefullyand as indicatorsof the generalstructure of the povertyprofile.

Implications of the Data Problems

One interestingresult in Table A.2 and A.3 is that the generalpoverty lines (lower and upper) are highestfor rural areas and lowestfor urbanareas, includingAlgiers. This result is somewhatunexpected but extensivechecks of the data showedthat it is indeedtrue that rural residentswhose food expendituresare approximatelyequal to the food poverty line do spend more on non-food items than do urban households whose food expendituresare equal to the food povertyline. This probablyreflects the fact that some rural householdsconsume food that they grow themselves,so that explicitfood expendituresalone do not reflect food consumed. For such householdsfood consumptionis, in fact, above the food poverty line, so one would also expect them to spend more on non-food items (relative to a householdwhose true food expenditureis equal to the food poverty line). There is no simpleway to correctthis, but note that this would tend to overestimatethe generalpoverty line in rural areas. This in turn impliesoverestimation of the extentof povertyin rural areas, for two reasons:1) the generalpoverty line is "too high"; and 2) actual food expendituresare underestimated.On the basis of other sources of data, as mentionedabove, the Tunisian data as well as agriculturaldata for Algeria, the underestimationof total consumptionis probably5-10%, whichis roughlysimilar to the differencebetween the urbanand rural povertylines.

Poverty lines for 1995 are also higher than the respectivepoverty lines for 1988 due to inflation. Note that Algeria is divided into only two regions,urban and rural. This is because the OfficeNational de Statistique(ONS) in Algeria could not match the 1995 survey to the four "regions" identifiedin the 1988 survey. As with the 1988 poverty lines, the food poverty lines are almost all identical,but the general povertylines are 2-6% higher in rural areas. The reasonis probablysimilar to the 1988 data:the lack of data on consumptionfrom own-productionoverestimates the non-food componentof general poverty lines in rural areas. Annex A.1 Page 9 of 12

Table A.1: Poverty Line Food Basket in 1988

Meankg/lit/ Calories Scaled Caloriesderived Food Items piecesper perkg/piece kg/lit/piecesper per person per personper year personper year day Bread 29.61 2930 32.15 237.69 Flour 3.87 3670 4.20 38.91 Semolina 84.87 3580 92.15 832.42 Couscous semolina 0.45 3580 0.49 4.41 Split wheat 0.25 3430 0.27 2.35 Rice 0.72 3630 0.78 7.16 Pasta 4.44 3700 4.82 45.01 Whole chicken 3.33 1270 3.62 11.59 Cookies 0.22 4640 0.24 2.80 Cantaloupe melon 0.29 270 0.31 0.21 Western pastries 0.10 4000 0.11 1.10 Oriental pastries 0.55 4500 0.60 6.78 Wheat, barley, corn 2.34 3500 2.54 22.44 Whole Lamb slaughtered 0.04 2630 0.04 0.29 Leg, shoulder & chops 1.46 2500 1.59 10.00 Lamb head and legs 0.22 1400 0.24 0.84 Lamb lungs, liver, heart, tripes 0.08 1400 0.09 0.31 Regular tripe (lamb) 0.20 1400 0.22 0.77 Hamburger 0.11 2500 0.12 0.75 Meat and bones, ribs included beef) 0.16 2670 0.17 1.17 Clean chicken 2.30 1270 2.50 8.00 Eggs 29.72 p 70/p 32.27 5.70 Sardines 1.57 2730 1.70 11.74 Fresh cow milk 4.86 L 780/kg 5.28 10.39 Boxed milk 14.93 L 780/kg 16.21 31.91 Small milk 3.81L 780/kg 4.14 8.14 Curdled milk 1.16 L 780/kg 1.26 2.48 Powdered milk 3.79 5070 4.12 52.64 Yogurt 0.09 590 0.10 0.15 Butter 0.57 6930 0.62 10.82 Soumaa 0.13 6930 0.14 2.47 Margarine 0.16 6930 0.17 3.04 Mixed oil 10.71 8044.4 11.63 236.04 Olive oil 0.63 8044.4 0.68 13.88 Annex A.1 Page 10 of 12

Table A.1: Poverty Line Food Basket in 1988 (continued)

Mean kg/lit/ Calories Scaled Calories derived Food Items pieces per per kg/piece kg/lit/piecesper per person per person per year person per year day Chinesecabbage and spinach 0.40 250 0.43 0.27 Potatoes 26.32 750 28.58 54.08 Beets 0.17 460 0.18 0.21 Carrots 4.83 370 5.24 4.90 Turnips 2.70 230 2.93 1.70 Onions 5.48 420 5.95 6.31 Green onions 2.33 360 2.53 2.30 Garlic 0.31 1110 0.34 0.94 Tomatoes 6.55 180 7.11 3.23 Hot peppers 1.09 290 1.18 0.87 Peppers 1.70 210 1.85 0.98 Artichoke 0.32 170 0.35 0.15 Eggplant 1.21 330 1.31 1.09 Cauliflower 1.51 150 1.64 0.62 Cucumber 0.40 200 0.43 0.22 Pumpkin 1.07 270 I .16 0.79 Zucchini .1.53 200 1.66 0.84 Fennel 0.25 550 0.27 0.38 Chard 0.59 190 0.64 0.31 Cabbage 0.45 160 0.49 0.20 Green beans 0.93 250 1.01 0.64 Salad 3.26 150 3.54 1.34 Parsley, coriander, mint 0.30 290 0.33 0.24 Broad beans 0.95 210 1.03 0.55 Green peas 0.65 430 0.71 0.77 Chickpeas, dried or cooked 1.07 2500 1.16 7.33 Split peas to green peas, dried 0.16 3400 0.17 1.49 Lentils 1.54 3540 1.67 14.94 Fresh olives 0.13 1530 0.14 0.54 Beans 1.13 3500 1.23 10.84 Dried beans 0.28 3470 0.30 2.66 Tomato paste 2.66 800 2.89 5.83 Annex A.1 Page 11 of 12

Table A.1: Poverty Line Food Basket in 1988 (continued)

Meankg/litV Calories Scaled Caloriesderived FoodItems piecesper perkg/piece kg/lit/piecesper perperson per personper year personper year day Canned olives 0.15 1530 0.16 0.63 Oranges 4.32 330 4.69 3.91 Clementines,mandarin oranges 1.42 330 1.54 1.28 Lemon 0.05 180 0.05 0.02 Grapes 0.53 670 0.58 0.97 Watermelon 0.78 130 0.85 0.28 Fresh figs 0.06 750 0.07 0.12 Pricklypears 0.13 220 0.14 0.08 Apples 0.22 460 0.24 0.28 Pears 0.07 560 0.08 0.11 Apricots 0.36 470 0.39 0.46 Medlar 0.10 560 0.11 0.15 Peaches 0.08 460 0.09 0.10 Dates 2.41 2330 2.62 15.38 Jams and fruitsauces 0.11 2700 0.12 0.81 Sugar lumps 0.44 3860 0.48 4.65 Crystallizedsugar 13.13 3860 14.26 138.85 Unknownsugar 0.08 3860 0.09 0.85 Candies 0.04 4000 0.04 0.44 Ice cream 0.08 1310 0.09 0.29 Coffeebeans 1.01 O 1.10 0.00 GroundCoffee 1.02 1.11 0.00 Tea 0.26 0 0.28 0.00 Herb Teas 0.01 0.01 0.00 Lemonade(soda) 11.18L 360/kg 12.14 11.03 Mineral water 0 L 0/kg 0.00 0.00 Salt 3.77 0 4.09 0.00 Vinegar 0.60 0 0.65 0.00 Source:ONS, 1988Household Consumption Survey (EDCM) Annex A.1 Page 12 of 12

TableA.2. PovertyLines in 1988 by Region

Region Food Poverty Lower Poverty Upper Poverty Line Line Line Algiers 2163 2719 2998 Metro Other 2266 2804 3017 Rural 2160 2870 3308 Urban Other 2170 2842 3223 All Algeria 2179 2835 3201 Source:Staff estimates

Table A.3. PovertyLines in 1995 forUrban and Rural Areas

Area Food Poverty Lower Poverty Upper Poverty

.. ______Line Line Line Urban 10,991 14,706 17,666 Rural 10,895 14,946 18,706 Source:Staff estimates

Figure 1 Construction of the Lower and Upper Poverty Lines for Algeria

food spending

total spending ZL Zu Annex A.2 Page 1 of 2

MEASURESOF POVERTY AND INEQUALITY

PovertyMeasures.

A.2.1. A widely used class of poverty measureswas introducedby Foster, Greer, and Thorbecke(1984). Letting yi denote the estimated consumptionof the ith person in a population of size n, for which q persons have yi

(a) The Head Count Index (obtainedwhen a=0) provides the proportion of the population with a standardof livingbelow the poverty line, but it does not indicate how far from the poverty line the expenditureof each poor person is: it does not indicate how poor the poor are, and it does not change if a poor person becomes poorer or better off, provided they are below the line.

(b) The Poverty Gap Index (obtainedwhen a=l) reflects changes in the degree of poverty among the poor. It indicatesthe amount of expenditurethat would be needed to raise every poor person up to the poverty line, thereby eliminatingpoverty. The poverty gap index has important implications for policymakers because it indicates the potential savings to the Governmentby targeting poverty alleviationtransfers. The poverty gap measure can be decomposed into the ratio between the maximum cost of getting everybodyout of poverty, that is, the value of the poverty line multiplied by the number of poor, and the sum of each person's poverty gap. The ratio of these two costs is the poverty gap measure. This measure providesa good indicationof the depth of poverty but does not indicatethe severity of poverty:it does not change if a transfer is made from a poor person to someonewho is poorer.

(c) The Poverty Severity Index (or squared poverty gap index of Foster, Greer, and Thorbecke obtained when a>O) reflects the severity of poverty and is sensitive to inequalityamong the poor. This index reflects the distributionof welfare of those below the poverty line by giving each of them a different weight accordingto their degree of deprivation. Thus, the index would showa decreasein aggregatepoverty when a transfer is made from a poor person to someonepoorer. The poverty severity index is simply a weighted sum of poverty gaps, where the weights are given by the poverty gaps as a proportionof the poverty line. The larger the value of the index, the greater the severity of poverty. The poverty severity index is very useful for evaluating the effect of differentpolicies: an increasein the povertyseverity index indicatesthat the distribution of income belowthe poverty line has worsened. Annex A.2 Page 2 of 2

Inequality Measure.

A.2.2. The most widely used measure of inequality is the Gini coefficient. It is derived from the cumulative distribution of expenditure across the population, or from the Lorenz curve. The Lorenz curve shows the cumulative fraction of expendituresas a function of the cumulative fraction of the population,arranged in order of increasingexpenditure. The closer the Lorenz curve is to the diagonal, the more equitable is the distribution.The Gini coefficientis the ratio of the area between the Lorenz curve and the 45 degree line to the whole area beneath the 45 degree line. A value of zero represents perfect equality and a value of one perfectinequality. Annex A.3 Page 1 of 19

POVERTY PROFILES IN 1988 AND 1995

Annex A. 1 described the methodology for constructing poverty lines for Algeria on a basis to provide a consistent profile of poverty. This annex, based on the poverty lines calculated for 1988 and 1995, illustrates the characteristics of the poor, including how they may have changed over time.

A. Poverty Profile for 1988

This subsection examines the characteristics of the poor in Algeria in 1988 using the EDCM data. The measure of poverty used is the headcount index: the proportion of people who are poor. For Algeria as a whole, 3.6 % of the population were poor in 1988 according to the food poverty line (they could not meet their minimum caloric requirements even if they spent all of their money on food). The lower general poverty line indicates that 8.1 % of the population was poor, while the upper poverty line classifies 12.2 % of the population as poor. In other words, between 8 % and 12 % of the population, depending on the poverty line, did not have enough money to meet their minimum caloric requirements after they allocate their budgets between food and non-food purchases. By themselves, these poverty figures are not very meaningful except that they indicate that most of the population (88 % or more) were not poor in 1988. What is more interesting is to examine differences in poverty across different geographic areas and socio- economic groups (Table 1).

Regional Profile of Poverty: The 1988 EDCM divides the total population of Algeria into the 71.8 % that live in urban areas (agglomeirations)and the 28.2 % that live in rural areas (dpars). The urban areas can be further divided into the population of Algiers (7.4 % of total population), the population of other large cities (mettropoles),which contain 6 % of the population, and the population of other urban areas, which account for 58.4 % of the population. The incidence of poverty in Algiers in 1988 was very small, 0.5 % for the food poverty line and about 2 % for the general poverty lines. Poverty was not much higher in other large cities, 1.1 % using the food poverty line and about 3 % using the general lines.

Smaller urban areas in 1988 had a substantially higher incidence of poverty, 2.4 % for the food poverty line and 6-9 % for the general poverty lines. Rural areas had the highest overall incidence of poverty, 8 % for the food poverty line and 15-22 % for the general lines. Note that these estimates of poverty in rural areas of Algeria may be overestimated, because the 1988 EDCM tends to overestimate the general poverty line in rural areas and also underestimates actual food expenditures. However, given that few households report that their heads are employed in agriculture, this overestimation is probably minor. Thus, it is still true that there was a much higher incidence of poverty in rural areas in 1988.

Poverty and Demographic Structure: Table 1 also provides the incidence of poverty according to the gender of the head of household. About 7 % of Algerians lived in female-headed households in 1988. Such households had a somewhat higher incidence of poverty, but the differences are not very large. Most women in female-headed households were married (80 %), while almost all of the rest were widows (16 %). Algerians living in households headed by a widow were more likely to be poor than those headed by a married woman. However, individuals living in households headed by widows constituted only 1.2% of the total population in 1988, of which 85-90 % were not poor.

Turning to the age distribution of household members, poorer households in 1988 tended to have more children than non-poor households, but the differences were not dramatic: in poor households about 57-58 % of family members were between the ages of 0 and 18, while in non-poor households about 50-51 % of family members were in this age range (Table 2). Annex A.3 Page 2 of 19

Poverty and Education: Human capital, particular as manifested in the form of education, is thought to be a key mechanism by which poverty can be reduced (Table 1). In 1988, about 52 % of Algerians lived in households where the head had no education at all, and another 12 % lived in households where the head had only Koranic education (Muslim religious education). Finally, about 3 % lived in households where the head has no education but claims to be literate. Overall, two-thirds of the population lived in households headed by someone without even a primary education, and the poverty incidence among these households was relatively high, about 4-5 % for the food poverty line, 10 % for the lower general poverty line and 15-16 % for the upper general poverty line. The incidence of poverty drops dramatically for the 21 % of the population who lived in households headed by someone with a primary education: only about 2 % were poor according to the food poverty line, or 4-7 % according to the general poverty lines. Higher levels of education are associated with even smaller levels of poverty. For the 6 % of the population that lived in a household where the head has a secondary education or higher, the poverty rate was only about 1 % for the food poverty line and about 1-3 % for the general poverty lines.

Given the possible role of education in reducing poverty, it is worthwhile to examine some characteristics of households pertaining to their school-age children. The 1988 EDCM identifies two kinds of students, those with scholarships (bourse) and those without scholarships (Table 2). The vast majority did not have scholarships. However, children living in non-poor households were about twice as likely to have scholarships compared to those in poor households (4 % vs. 2 %, respectively). This implies that scholarships were not well-targeted to the poor in 1988.

In Algeria as a whole, about 86 % of children aged 6-11 were in school in 1988 (Table 2). However, for the poor the enrollment rates were much lower: 68 % using the food poverty line and 75 % using the upper general poverty line. This difference was even larger among children of secondary school age; 66 % of all Algerians between the ages of 12 and 17 were enrolled in school in 1988, but only about 47- 50 % of poor Algerians of the same age were enrolled.

Poverty, Employment Types, Unemployment and Sources of Income: In 1988, about three fourths of the population (77 %) lived in households where the head was employed, and another 12 % lived in households where the head was retired. The remaining 11 % lived in households where the head fits in some other category. Only 1.9 % lived in households where the head was unemployed. Of the population in households where the head was employed, the incidence of poverty was slightly less than the national average, and the incidence of poverty in households where the head was retired is lower still. The 1.9 % of the population living in a household where the head was unemployed had a very high incidence of poverty, 17 % for the food poverty line and 24-27 % for the general poverty lines. Poverty was also higher for households headed by women who were either working part-time or were housewives, and for households where the head was invalid or ill. It is also higher for the 4.2 % of the population who lived in households where the employment status of the head was listed as "other", but the meaning of "other" is unclear from the data.

Overall, the vast majority of women, between the ages of 18 and 60, reported that they were housewives, so that when both genderes are pooled one finds that 48 % of Algerians between the ages of 18 and 60 were housewives in 1988 (Table 2). For the poor this figure was slightly higher, about 53-54 %. Other non-employment classifications were relatively rare, 2.8 % were retired or handicapped (a figure which was about the same for the poor and the non-poor) and 2.8 % were students another classification. Turning to labor force participation, the largest difference between the poor and the non-poor in 1988 was in the percentage of adults between 18 and 60 who were unemployed: these figures were 7 % for the non-poor and 10-12 % for the poor (with a national average of about 7 %). Unemployment rates, which exclude Annex A.3 Page 3 of 19 persons not in the labor force, are even more dramatic -- the national rate was 15.0% in 1988, with rates of 14-15 % for the non-poor and 22 % for the poor (28 % using the food poverty line). Clearly, this suggests that unemployment was an important cause of poverty in Algeria in 1988.

According to 1988 data, the poor were more likely to be unemployed than the non-poor (Table 2). First, the unemployed were predominantly young (Table 3). In particular, 41 % were age 20 or less, 75 % were age 24 or less, and 87 % were age 30 or less. This reflects the very high rates of unemployment among people in these age categories. The vast majority of the unemployed (about 95 %) were male, which is not surprising given that most women reported their primary activity as housework. Nearly 90% had some kind of formal education, and about 50 % had a middle school or higher level of education. The unemployment rate in Algiers was somewhat higher than elsewhere in Algeria, but the difference was not very large.

One aspect of unemployment in Algeria in 1988 is particularly troublesome - unemployment among individuals with a primary, middle or secondary education was quite high. This appears to contradict the finding in Table 1 that higher education leads to reduced poverty. The unemployment rates for people with this level of education, which ranged from about 17 % to 25 % in 1988, suggest that the labor market was not functioning very well. One possible cause is that government employment may be seen as more desirable than private sector employment, so that those leaving school tended to queue for government jobs.

One important characteristic of the unemployed is their position in the family.In 1988 only about 8 % were heads of households, while about 80 % were children of heads of household (Table 3). This suggests that long-term unemployment among the young persists because they live with their parents. However, this does not imply that unemployment is a luxury, since the unemployed are found disproportionately among poor households. Overall, it seems that labor markets do not function very well in Algeria, and an examination of the operation of labor markets would clarify an important aspect of poverty in that country.

In 1988, employers and professional workers were much more common among the non-poor than among the poor, and government employment was nearly four times as common among the non-poor relative to the poor (Table 2). Agricultural employment was relatively rare among Algerians in 1988; only 4.5 % of the total population aged 18-60 are employed in agriculture. While agricultural employment was more common among the poor than among the non-poor, the differences are not very large. Self-employed nonagricultural workers were also relatively rare, and they were less common among the poor than among the non-poor. The two most common occupations among adults aged 18-60 were skilled workers (ouvriers) and unskilled workers (manoeuvres). As one would expect, the former were relatively more common among the non-poor while the latter were more common among the poor.

Overall, there was very little difference in the income sources for poor and non-poor households (Table 4). The percent of total income of poor households that came from salaried employment was only slightly smaller than it was for non-poor households (58 % for the poor and 63 % for the non-poor), and the percentage from self-employment (non-salaried employment) was only slightly higher (28 % for the poor and 23 % for the non-poor). Even among other sources of income (primarily non-labor income) there was little difference. Although the percentage figures are small, one could say that aid in cash was more poorly targeted than aid in kind, and that scholarships were more important for the non-poor than for the poor, but these types of income amounted to only 1-2 % of total income in the 1988 EDCM.

Poverty and Housing Conditions: About 16 % of Algerians lived in apartment buildings in 1988, while 77 % lived in houses, 1 % lived in some structure not intended for residential purposes and 6 % lived Annex A.3 Page 4 of 19 in some kind of temporary structure (Table 5).' In general, poorer households were much less likely to live in apartments (3-4 %), more likely to live in houses (82-85 %), slightly more likely to live'in non-residential structures (1-2 %), and much more likely to live in temporary structures (12 %). These differences reflect the fact that poverty was higher in rural areas, where houses are much more common than apartnents, and that the poor were more likely to live in substandard dwellings (non-residential or temporary structures).

Overall, poverty is associated with lower levels of housing amenities. Poor Algerians in 1988were less likely to have piped water and electricity; about two-thirds of the non-poor population had piped water, compared to about one-third of the poor, and about 85 % of the non-poor population had electricity, compared to only about 60 % for the poor (Table 5). The poor were also less likely to use natural gas, to have a telephone, and to have access to a sewer; and more likely to use a septic tank (fosse) for waste disposal. Finally, the poor lived in more crowded housing conditions; they lived in dwellings with 4-5 occupants per room, compared to 3 occupants per room for the non-poor.

Finally, the poor in 1988 were more likely to own their own dwelling and less likely to rent one, whether from a private owner, a housing cooperative (organisme d'habitat) or the government (Table 5). Renting from a housing cooperative was particularly much more common among the non-poor (about 12-13 % of the non-poor population, compared with only 3-4 % of the poor). The poor were also less likely to receive housing free of charge, whether from a private owner, a housing cooperative or the government. As with renting, receipt of housing free of charge from a housing cooperative was much more common among the non-poor than among the poor.

B. Poverty Profile for 1995

This subsection provides a poverty profile using the 1995 ENMNV. Because of differences between this survey and the 1988 EDCM, some tables using the 1995 data are not exactly the same as those constructed from the 1988 data. On the other hand, some of the tables in the subsection cannot be constructed using the 1988 data, so the 1995 data provide a more complete picture of poverty in Algeria.

Regional Profile of Poverty: In 1995, as in 1988, poverty is much more common in rural areas; the rates in rural areas, 7.8 % using the food poverty line, 19.3 % using the lower general poverty line and 30.3 % using the upper poverty line, are more than double the rates in urban areas (3.6 %, 8.9 % and 14.7 %, respectively).2 In both 1988 and 1995, the incidence of poverty is lowest in the largest cities, particularly Algiers, somewhat higher in smaller urban areas, and highest in rural areas. When Algeria is divided into four regions, Algiers, Coastal, Plateau and Southern, Algiers has an unusually low incidence of poverty, Southern has a high incidence of poverty, and the other two regions have an incidence about the same as that for Algeria as a whole (see Table 6 & 7 for 1995 and Table t for 1988).

Poverty and Demographic Structure: Female-headed households remain uncommon in Algeria in 1995, and again there is not much difference in poverty between male and female-headed poor households (Tables 1 & 6 & 7). As in other countries with relatively high fertility rates, Algeria's population has a very young age structure, and as is common when using expenditures per capita as the welfare indicator, poorer households are found to be larger and younger. In 1995, average household size is 6.6, whereas poor urban households have 8.0 members each, and poor rural households have 8.8. As

I The figures for the lower generalpoverty line almostalways fell in betweenthe figures for the food poverty line and the upper general poverty line, as one would expect. To reduce clutter these figures are not shown. 2 Lack of autoconsumption data may exaggerate the extent to which rural poverty is higher than urban poverty, but even if autoconsumption data were available it is very unlikely that this finding would be reversed. Annex A.3 Page 5 of 19 in 1988, poor households tend to have more children than non-poor households; about 50-52 % of household members in poor households are children age 17 or less, compared to 42-44 % for non-poor households (Table 8 for 1995 and Table 2 for 1988). But these differences are still not very dramatic.

Poverty and Education: Both surveys suggest that poverty is negatively associated with the education of the head of household. Relative to 1988, there were decreases in the proportion of the population living in households with a relatively uneducated head (no education or only a primary education) and increases for higher levels of education. As in 1988, the incidence of poverty among households with uneducated heads (8.4 % using the food poverty line, 20.4 % using the lower general line and 30.6 % using the upper general line) is much higher than among other households. Among households headed by someone with a primary education the incidence of poverty is lower (6.0 %, 15.0 % and 24.4 %, respectively), and for households with secondary education or higher poverty ranges from 0-1 % (food poverty line) to 4-5 % (upper general poverty line). Thus it is clear that education is still negatively correlated with poverty in Algeria in 1995. More generally, poor households are more likely to contain illiterate adults, and the mean number of years of schooling of all adults are lower in poorer households. It should be noted that the education definitions are somewhat different from those in the 1988 survey, particularly for primary, middle, secondary and professional training.

Primary school enrollment rates do not differ significantly between poor and non-poor households, although they are slightly lower for girls in rural areas. In 1995, the rate of primary school enrollment was quite high overall, particularly in urban areas where the overall rate was 95 % (Table 9). In urban areas there are no appreciable differences between girls and boys and between the poor and the non-poor. In rural areas the rate was somewhat lower, at 89 %. Although there are no differences between the poor and the non-poor in rural areas, there are small differences by gender, so that the rate for rural boys is 92 % and for rural girls was 86 %. These primary school enrollnent rates show appreciable improvements since 1988, when the overall rate was 86 % and the poor were much less likely to enroll than the non-poor.

At the secondary level, however, school enrollment rates tend to be lower for the poor, lower in rural areas and lower for girls. Regarding the secondary school enrollment, there is a small improvement in 1995 (72 %) compared to 1988 (67 %) (Table 9 for 1995 and Table 2 for 1988). Although there is an improvement compared to the situation prevailing in 1988, sizable differences by area of residence, gender and poverty status continue to exist in 1995. Children in rural areas are less likely to be enrolled than those in urban areas (rates of 82 % and 64 %, respectively), girls are less likely to be enrolled than boys (about 70 % and 75 %, respectively), and the poor are less likely to be enrolled than the non-poor (68 % and 74 %, respectively). In 1995, among the poorest quintile, secondary rates are on 51 % for rural girls, compared to 66 % for rural boys.

Poverty, Employment Types, Unemployment, and Sources of Income: Activity rates (including employed and unemployed) are not significantly different between the poor and the non-poor with the exception of rural females, who face substantial barriers to paid employment.3 Most of the poor of working age (16-59 of age) are employed. However, poor households have a higher ratio of non- working members to working members. For example, in 1995, a poor working member typically supported 6 other people compared to fewer than 4 people supported by a non-poor worker.

3 Activity rates are low for rural women in general, which is partially due to the fact that women's participation in agricultural activities on a family farm is badly measured in the 1995 ENMNV. Annex A.3 Page 6 of 19

In both urban and rural areas, nearly half of the population lives in households where the head is a wage earner. Agricultural activities are quite rare, only 3-4 % of household heads. However, Algerians living in households headed by someone who is working in agriculture have higher than average rates of poverty, 6.5 % using the food poverty line, 18.6 % using the lower general poverty line and 27.3 % using the upper general poverty line (Table 6 & 7). About 12 % of the population lives in households where the head is self-employed in a non-agricultural occupation, and this does not vary by poverty status. Self-employment is less likely among the poor, as was the case in 1988. The poor are more likely to live in households where the head is unemployed, slightly less likely to live in households where the head is retired, and more likely to live in a household where the head is "other not in labor force". Households with unemployed heads, who in 1995 account for 6.1 % of the population (compared to 1.9 % in 1988), are much more likely to be poor, with a rate of 9.4 % for the food poverty line, 23.4 % for the lower general poverty line and 40.8 % for the upper general poverty line.

Regarding the sector of employment of the household head, the main findings for 1995 are that: (i) households headed by a private sector worker are slightly more likely to be poor; and (ii) households headed by a public sector worker have lower rates of poverty than the general population (Table 6 & 7).

In Algeria poverty appears to be correlated with unemployment. Both urban and rural unemployment are a matter of concern. Unemployment rates are somewhat higher in urban areas, but not by much; the rates is 31 % in urban areas and 27 % in rural areas. This even distribution across urban and rural areas was also found in 1988 (see Table 3). Finally, unemployment was higher among the poor than among the non-poor, as was the case in 1988, but the rate among the non-poor is not at all low at 27 %. In 1995 the unemployment rate among the poorest 20 % is 38 % compared to 27 % among the non- poor. Urban unemployment is about 44 % for the poorest 20 % of the population, compared to 35 % in rural areas.4 Furthermore, since unemployment levels are similar for both poor and non-poor new entrants, this suggests that unemployment in Algeria is involuntary. Available data for 1995 suggest that men, and particularly rural men, are more likely to engage in intermittent employment or to become unemployed due to job loss and less likely to be waiting for a first job. Although unemployment is very high for urban males, irrespective of poverty status, the highest unemployment rate (55 % in 1995) is observed among poor women in urban areas. Whereas rural poor women are not even actively searching for work because of social barriers to women's work outside the home.

Given the very high rates of unemployment in 1995, Table 10 examines their characteristics (Table 3 for 1988 data). As in 1988, unemployment is concentrated among the young, 56 % are age 24 or younger and 89 % are 34 or younger. Yet, unemployment rates are not trivial for older workers; the rate for workers between 35 and 59 years is 8.8 %. While unemployment is still concentrated among males, so that 77 % of the unemployed are male, this is less concentrated than in 1988, when 95 % of the unemployed were males. This change is quite large and may reflect differences in the definition of unemployment in the two surveys.

As in 1988, unemployment is concentrated among persons with primary and middle school education, who together constitute 68 % of the unemployed (Table 10). However, unemployment rates are 20 % or higher for almost all levels of education (except individuals with no education, for whom the rate is 14 %), which reflects disproportionately large increases in unemployment rates among people with no education.

4 This representsa shift in relative numbersfrom 1987, when officialstatistics indicatedunemployment was higher in the rural sectorthan in the nation overall (26 % and 22 %, respectively). 5 Overall,unemployment rates appearto be especiallyhigh for urban women,reaching over 80 % in some age groups. Annex A.3 Page 7 of 19

Underemployment, both visible and invisible, can potentially be an important determinant of poverty, particularly in rural areas and among women.f According to 1995 data, for males, the difference in the number of hours worked between the poor and the non-poor is very small, suggesting that visible underemployment is not an important cause of poverty for them. The situation is somewhat different for women, especially in rural areas, who face severe obstacles in achieving access to regular employment: very poor women in rural areas who are employed engage in less than 5 hours per week of market work, compared to 8 hours per week for the rural areas on average.

Among those who are inactive, poverty is most prevalent for those who are incapable of working and who do not possess any potential for employment: the highest incidence of poverty is found among the disabled, the elderly, and invalids in rural areas (38 %). In general, poor elderly men have a much higher incidence of poverty than poor elderly women.

Household heads working in agriculture have higher than average rates of poverty. However, the 1995 data appears to underestimate the proportion of rural population working in agriculture: only 1S % of the economically active population in rural areas (and about 14 % of the rural poor) considers its primary occupation to be in the agricultural sector, either as a farmer or as an agricultural worker.7 The majority of the rural population, as well as the rural poor, is involved in either crop or plantation agriculture (about 80 % of the rural population), and only about 6 % is involved in livestock production.8 With regard to particular crops, the poorest rural population is relatively more heavily involved in field crops (cereals) than in horticulture (tomatoes, potatoes, onions), while the non-poor population is more heavily represented in the latter.

Primary occupation data provide little information on households' livelihood strategies in both rural and urban areas. According to 1995 data, little is known about the income sources pursued by households, how many there are and what their relative importance is. The data does however indicate that about 15 % of households in Algeria have one or two independent sources of employment. The diversification of sources of income is somewhat more of an urban than rural phenomenon, for both poor and non-poor. Most of the secondary activities for urban poor tend to be concentrated in the commercial/services sector, although for the poorest households, employment in the construction and transport sectors is also important. Typically, rural households derive their income from multiple sources within the rural economy (agricultural own-production and production for the market, sale of labor in rural markets, rental of other productive assets such as land or capital goods, sale of crafts and other small-scale manufactures) and from the urban economy as well. Intra-household transfers between rural/urban areas are also important. For instance, one or more members of the household may migrate

6 Data from the 1995 ENMNV does not allow for an adequate measurementof invisible underemployment,i.e. employmentat levelsof productivityand earningsbelow a certainnorm. But, it providessome information on hours of work, whichcan be used to assessvisible underemployment. 7 The 1995 survey appears to underestimatethe percentageof the rural populationthat is involved in agriculture. OfficialAlgerian statistics show that 25 % of the labor force works in agriculture.This compareswith 28 % cited for the economicallyactive rural population in northwest Algeria (see World Bank 1997). But according to the 1995 ENMNV survey, only 7.5 % of the entire economicallyactive population or 15.4 % of the rural population (economicallyactive includesemployed and unemployed,but excludesretired, other, and not determinedcategories) considertheir primaryoccupation to be in the agriculturalsector (farmer or agriculturalworker). In contrast,over 50 % of the population(or 48 % of rural population)count themselves as wageworkers. 8 The preliminaryinformation on 1995ENMNV survey resultsdoes not provide any informationabout the livestock subsector. Annex A.3 Page 8 of 19 casually, seasonally, or semi-permanently to urban areas (or foreign destinations) and remit income back to the rural homestead.

Physical Assets. 9 While the urban poor often have only their labor as an asset, some of the rural poor (25 %) also have landholdings. '° The land-owning poor have small holdings which are primarily non-irrigated. Among those who own land, almost two-thirds of the poor do not have access to irrigation, about 30 % have partial irrigation, and finally, only about 10 % have fully irrigated holdings. According to 1995 data, the size of cultivated land is more than 10 hectares, which appears to be high according to other existing sources of information."

Poverty and Housing Conditions: Four-fifths of the poor live in "traditional" houses (haouch), which is only true of about 62 to 66 % of non-poor households (Table 11). 12 The biggest difference in dwelling is apartments, where 21 to 24 % of the non-poor live but only 7 % of the poor live. The differences in traditional housing and apartments reflect the finding above that the poor are more likely to live in rural areas. These findings are generally similar to those for 1988 (Table 5). The one exception is that it appears that the poor are now more likely to live in apartments. This probably reflects both the increase in the total population living in apartments and the fact that increases in poverty have caused more long-term apartment dwellers to become poor.

Poor Algerians lived in dwellings with fewer personal amenities in 1995 (Table 11). Only 40-44 % of the poor have their garbage collected by garbage trucks, while 63-67 % of the non-poor have this service. About 16-17 % of the poor do not have toilet facilities, compared to 9-10 % of the non-poor. While nearly four-fifths of the non-poor get their water from a municipal water supply, this is only true for about three-fifths of the poor. The poor are more likely to get their water from public fountains, streams, springs and cisterns. In contrast, electricity is quite equitably distributed; virtually every Algerian household has electricity, 96-97 % of both poor and non-poor households. The clearest difference between the 1988 and the 1995 data are that electrification in Algeria appears to have become virtually complete by 1995; in 1988 13 % of households, including over 30 % of the poor had neither electricity (nor an electric generator). Other comparisons with the 1988 figures are less clear because of differences in questionnaire design between the two surveys.13

As one would expect, the number of occupants per room is higher in poor households, about 3.6 to 3.8 for the poor compared to 2.8 to 2.9 for non-poor households (Table 11). What is surprising is that the number of occupants per room seems to have declined since 1988; it is not clear whether this is a real

9 This sectiononly focuses on landbecause the 1995 ENMNVdata on other productiveassets have not been treatedto date. Also, we have little informationregarding access of rural householdsto improved infrastructure, except for irrigatedland. 10 This informationcompares with a figure of 9 % landlessnessamong the farming households of rural northwest Algeria,see "RuralEmployment Projecf', WorldBank (1997). 11 This figure seems high and there is a contrast with Rural EmploymentProject Appraisal Document,op.cit., which cites 49 % of farmersowning less than 5 ha., and only 4.5 % with more than 15 ha. 12 As with the 1988 data, the figuresfor the lower generalpoverty line almost always fell in betweenthe figures for the food poverty line and the upper generalpoverty line, as one would expect. To clarifythe report, ,these figures are not shown. 13 The classificationof watersource, sewage and toiletvariables differ in the two surveysand it is not clear how to match them. Annex A.3 Page 9 of 19 change (which would be quite large for only seven years) or an artifact of differencesin the 1988 and 1995 questionnaires.

Regardinghousing ownershipin Algeria,in general,there are no major differencesbetween poor and non-poorhouseholds. The one sizable differenceis that 16-18 % of the non-poorlive in government- provided housing, but this figure is only 4-6 % for the poor. Clearly, the vast majority of publicly- provided housing is occupied by non-poor households. This appears to be similar to the situation that prevailed in 1988 (Table 5), but again differencesin questionnairedesign betweenthe two surveysmake comparisonsdifficult.

Poverty and Health Conditions. Regarding the use of health services by poor and non-poor households,it seems that the poor are much less likely to report being ill or injured in the last month (Table 12). It is very doubtfulthat they are in fact less ill; rather, they probably have a different concept of what good health is and thus consider "normal" what a non-poor person would consider as illness. About 22-26 % of the poor report that they obtain no treatment at all, which is true of only 19-20 % of non-poor households. The poor are more likely to use hospitals and less likely to use private doctors or clinics. About one half of the non-poorwho report an illness use private doctorsor clinics, but this is true for about one third of the poor. There is virtually no difference in coverage among poor and non-poor households,regarding vaccinationcoverage for major childhooddiseases (Table 12). This indicatesthat basic health service is quite equitablydistributed. Annex A.3 Page 10 of 19

Table 1: Incidence of Poverty in 1988 by Area of Residence and Characteristics of Head of Household

Food General %of total Poverty( YO) Poverty( %) Population Lower Upper Line Line All Algeria 3.6 8.1 12.2 100.0 Area of Residence Algiers 0.5 1.5 2.4 7.4 Other large cities 1.1 2.7 3.2 6.0 Other urban 2.4 6.2 9.5 58.4 Rural 7.6 15.1 22.1 28.2 GenderofHead Male 3.5 8.0 12.2 92.6 Female 4.8 8.5 11.8 7.3 EducationalLevel of Head None 4.7 10.4 15.5 51.7 Koranic 4.6 10.1 15.7 11.9 Literate 3.0 8.4 11.8 2.9 Primary 2.0 4.4 6.8 21.0 Middle 1.4 4.3 6.5 6.3 Secondary 0.6 0.6 1.2 3.8 University 1.0 1.9 1.9 1.5 Professionaltraining 0.6 1.4 3.2 0.9 EmploymentStatus of Head Employed 3.2 7.6 11.6 77.1 Retired 2.6 6.1 9.3 12.4 Womanpart-time empl 10.2 10.2 13.1 0.3 Livesfrom rental inco. 0.0 0.0 0.0 0.1 Unemployed 17.0 23.9 27.1 1.9 Housewife 6.7 11.8 15.4 3.5 Invalid/III 3.9 15.5 35.1 0.4 Other 5.7 10.9 19.7 4.2 % Source: ONS, 1988 Household Consumption Survey (EDCM) & Staff estimates Annex A.3 Page 11 of 19

Table 2: Household Characteristics by Poor and Non-poor Households in 1988

Food PovertyLine GeneralPoverty Line Poor Non-poor Poor Non-Poor For All Households Households Households Households Algerians Age Distribution ( X) .D Age 0-5 21.9 18.4 21.4 18.1 18.5 Age 6-17 36.2 32.2 36.0 31.9 32.4 Age 18 and older 41.8 49.4 42.6 50.1 49.1 Employment Status of Adults ______=___ Employeror Professional 1.5 3.5 1.2 3.7 3.5 GovernmentWorker 2.7 8.8 2.7 9.3 8.6 AgriculturalEmployment 5.5 4.5 5.8 4.2 4.5 Self-employed(non-agric.) 1.3 3.4 2.3 3.5 3.4 SkilledWorkers 6.3 10.7 7.5 11.0 10.6 UnskilledWorkers 12.4 8.6 12.3 8.3 8.7 Unemployed 12.3 6.9 9.6 6.7 7.0 Retired/Handicapped 2.8 2.8 3.1 2.7 2.8 Housewife 53.7 48.1 52.8 47.7 48.2 Student/Other 1.6 2.8 1.7 2.9 2.8 Education Status of Children %of studentsw/scholarship 2.1 4.2 1.9 4.4 4.1 School enrollmentrates: Age 6-Il 68.4 86.5 74.7 87.5 85.7 Age 12-17 46.6 66.9 49.5 68.6 66.2 Source:ONS, 1988Household Consumption Survey (EDCM) & Staff estimates Annex A.3 Page 12 of 19

Table 3: Characteristics of Unemployed in Algeria in 1988

Characteristics Characteristic of SpecificUnemployment Unemployed( %) Rates ( -l) Age Range 14-20 41.3 58.6 21-25 33.7 28.7 26-30 12.3 11.5 31-40 6.6 4.2 41-60 5.2 3.0 61 & older 0.3 1.1 Gender Male 94.9 15.8 Female 5.1 7.3 EducationLevel None 12.3 6.3 Literate 0.5 5.5 Primary 38.8 20.4 Middle 29.7 25.3 Secondary 12.3 16.6 University 1.3 6.5 Professional 3.0 20.1 Training 2.0 5.5 Koranic Region Algiers 11.2 17.9 Other Cities 7.1 14.8 Towns 55.0 14.2 Rural Areas 26.6 15.6 FamilyPosition Head of household 8.2 2.4 Spouse of head of household 0.2 0.7 Child of head of household 80.2 37.5 Other 11.4 12.4 Poverty Poor 14.8 22.3 Non-Poor 85.2 14.2 Source: ONS, 1988 Household Consumption Survey (EDCM) & Staff estimates Annex A.3 Page 13 of 19 Table4: IncomeSources of Poor and Non-Poor Householdsin 1988

Food Poverty Line General Poverty Line

Poor Non-poor Poor Non-Poor. For all Households Households Households Households Algerians Income Sources % of income that comes from 57.5 62.8 57.5 62.8 62.6 salaried employment % of income that comes from 27.5 23.2 27.5 23.2 23.3 non-salaried employment % of income from other sources: Pension 6.0 6.9 6.0 6.9 6.9 Reimbursement 0.0 0.1 0.0 0.1 0.1 Aid in Cash 1.4 1.3 1.4 1.3 1.3 Aid in Kind 2.9 0.3 2.9 0.3 0.4 Scholarship 0.4 1.1 0.4 1.1 1.0 Sale of goods 0.8 1.0 0.8 1.0 1.0 Part-time female income 1.0 0.8 1.0 0.8 0.8 Other services 2.4 2.6 2.4 2.6 2.6 Total other income 15.1 14.1 15.1 14.1 14.1 Source:ONS, 1988 HouseholdConsumption Survey (EDCM) & Staffestimates

Table 5: DwellingCharacteristics of Poor and Non-Poor Households in 1988

Food Upper General All Poverty Line Poverty Line Algerians Poor Non-Poor Poor Non-Poor Type of Dwelling Apartment 2.8 16.2 4.4 17.3 15.7 House 84.4 77.1 81.8 76.8 77.4 Permanent Building 1.2 1.0 1.6 0.9 0.9 Temporary Building 11.7 5.8 12.2 5.1 6.0 Amenities Piped Water 29.0 63.1 37.7 65.3 61.9 Well 16.7 12.4 16.7 12.0 12.5 Electricity 55.8 84.0 63.0 85.8 83.0 Generator 6.9 3.7 5.3 3.6 3.8 Gas 4.3 20.9 6.6 22.2 20.3 Sewer 21.5 55.8 30.2 57.9 54.5 Septic Tank 59.8 35.6 52.6 34.3 36.5 Phone 3.1 17.1 4.5 18.2 16.6 Occupants per room 4.84 3.30 4.35 3.22 3.36 Housing Ownership _ X__=_ Own house 85.5 70.2 83.2 69.0 70.7 Rent from private owner 2.9 3.8 2.5 4.0 3.8 Rent from housing co-op 3.3 12.2 4.4 12.9 11.9 Rent from GovntlState Enterprise 1.7 2.2 1.0 2.3 2.1 Free provided by private owner 4.3 5.0 5.0 5.0 5.0 Free provided by housing co-op 0.3 2.4 1.0 2.5 2.3 Free provid. by Gvt/State-own.ent. 2.1 4.3 2.9 4.4 4.2 Source:ONS, 1988,Household Consumption Survey (EDCM) & Staff estimates Annex A.3 Page 14 of 19

Table 6: Incidence of Poverty in 1995 by Area of Residence and Characteristics of Head of Household

Food GeneralPoverty of total Poverty Population( ( %) ______%) LowerLine ( UpperLine ( %) ~~~~%) All Algeria 5.7 14.1 22.6 100.0 Locationof Residence Urban 3.6 8.9 14.7 49.7 Rural 7.8 19.3 30.3 50.3 Genderof Head Male 5.7 14.2 22.9 91.4 Female 5.6 12.9 18.9 8.6 Education of Head None 8.4 20.4 30.6 41.4 Koranic 5.4 14.5 25.5 11.3 Literate 4.9 8.2 14.3 3.0 Primary 6.0 15.0 24.4 10.3 Middle 3.3 8.4 15.1 23.7 Secondary 0.0 3.7 3.7 0.5 University 0.0 2.4 3.6 2.2 Professional training 1.2 1.2 5.1 7.5 Occupationof Head Farmer/Agricultural Laborer 6.5 18.6 27.3 2.9 Employer (non-agriculture) 3.9 9.2 13.9 2.3 Self-Employed (non-agriculture) 5.9 14.0 20.6 12.0 Wage earner (non-agriculture) 5.0 13.0 20.9 49.5 Unemployed 9.4 23.4 40.8 6.1 Retired 4.6 11.0 20.8 15.4 Other not in Labor Force 8.2 18.0 25.0 11.7 Sector of Employment of Head Private (non-agricultural) 6.3 16.5 24.0 41.1 Public 4.5 11.2 18.8 22.8 Private Agriculture 6.1 17.4 27.4 2.9 Unemployed 9.4 23.4 40.8 6.1 Retired 4.6 11.0 20.8 15.4 Other/Not in Labor Force 8.2 18.0 25.0 11.7 Source: 1995LSMS (ENMNV), ONS & Staff estimates Annex A.3 Page 15 of 19

Table 7: Characteristics of the Poor and Head of Household in 1995 (distribution)

Food GeneralPoverty of total Poverty Non Poor Population (%) (%) (%) LowerLine UpperLine

______(% ) (% ) All Algeria 100 100 100 100 100.0 Locationof Residence Urban 31 31 32 55 49.7 Rural 69 69 68 45 50.3 Genderof Head Male 92 92 93 91 91.4 Female 8 8 7 9 8.6 Educationof Head None 61 60 56 37 41.4 Koranic 11 12 13 11 11.3 Literate 3 2 2 3 3.0 Primary 1 11 11 10 10.3 Middle 14 14 16 26 23.7 Secondary 0 0 0 1 0.5 University 0 0 0 3 2.2 Professionaltraining 2 1 2 9 7.5 Occupationof Head Farmer/AgriculturalLaborer 3 4 4 3 2.9 Employer(non-agriculture) 2 2 i 3 2.3 Self-Employed(non-agriculture) 12 12 11 12 12.0 Wageearner (non-agriculture) 43 46 46 51 49.5 Unemployed 10 10 11 5 6.1 Retired 12 12 14 16 15.4 Other/Not in Labor Force 17 15 13 11 11.7 Sectorof Employmentof Head Private(non-agricultural) 43 45 42 41 41.1 Public 17 17 18 24 22.8 PrivateAgriculture 3 3 3 3 2.9 Unemployed 10 10 11 5 6.1 Retired 12 12 14 16 15.4 Other/Notin Labor Force 16 14 12 11.7 Source:1995 LSMS(ENMNV), ONS, & Staff estimates Annex A.3 Page 16 of 19

Table 8: Other Household Characteristics by Poor and Non-Poor - Households in 1995

UpperGeneral Poverty Food PovertyLine Line All Poor Non-Poor Poor Non- Algerians Poor Age Distribution( %) 0-1 4.8 4.3 4.2 4.4 4.4 2-5 10.6 9.3 9.9 9.2 9.3 6-12 20.5 17.6 20.9 16.8 17.8 13-17 16.0 12.5 15.3 11.9 12.6 18-99 48.2 56.4 49.7 57.7 55.9 EmploymentStatus of Adults(

Farmer 1.5 1.4 1.5 1.4 1.4 AgriculturalLabor 0.9 0.8 0.9 0.8 0.8 Employer(non-agric.) 0.2 0.5 0.2 0.5 0.5 Self-Employed(non-agric.) 1.6 2.4 1.4 2.6 2.4 WageEarner (non-agric) 10.5 16.4 11.6 16.8 15.8 Unemployed 9.8 8..8 9.9 8.6 8.9 Retired 1.7 2.7 1.7 2.9 2.6 Other/NoData 73.9 67.0 72.8 66.4 67.7 Source:1995 LSMS (ENMNV), ONS, & Staffestimates

Table 9: School Enrollment Rates in Algeria in 1995

Food UpperGeneral PovertyLine PovertyLine Poor Non- Poor Non- All (V) Poor Poor Algerians Primary AllAlgeria 91 92 91 92 92 Urban Areas: All 95 95 96 95 95 Boys 93 95 96 95 95 Girls 97 95 95 96 96 Rural Areas: All 90 89 89 89 89 Boys 91 92 93 92 92 Girls 88 85 86 85 86 Secondary ____X All Algeria 65 73 65 74 72 Urban Areas: All 79 82 77 82 82 Boys 81 81 78 81 81 Girls 76 83 76 84 82 RuralAreas: All 59 65 59 66 64 Boys 69 70 66 71 70 Girls 50 60 51 61 58 Source:1995 LSMS (ENMNV), ONS, & Staffestimates Annex A.3 Page 17 of 19

Table 10: Characteristics of Unemployed in Algeria in 1995

Characteristics Characteristic of the Specific Unemployed UnemploymentRate Age Range % (%) 16-24 56.3 58.6 24-34 32.5 26.9 35-59 11.8 8.8 Gender _ Male 77.3 27.0 Female 22.7 39.5 Education Level None 6.5 14.6 Literate 11.5 24.0 Primary 42.6 36.1 Middle 27.0 33.8 Secondary 7.7 24.6 Post-Secondary 4.6 20.6 No Data 0.1 53.6 Area of Residence Urban 58.8 31.0 Rural 41.2 26.7 Poverty Status Poorest 10 % 10.9 38.7 Poorest 20 % 22.3 38.0 Non-Poor 80 % 77.7 27.2 Source: 1995LSMS (ENMNV), ONS, & Staffestimates Annex A.3 Page 18 of 19

Table 11: Dwelling Characteristics of Poor and Non-Poor Households in 1995

Food UpperGeneral All PovertyLine PovertyLine Algerians Poor ( %) Non-poor( Poor ( %) Non-poor( V.)

Type of Dwelling Apartment 6.7 20.9 7.0 23.9 20.1 ModemHouse (villa) 9.4 12.0 9.2 12.6 11.9 TraditionalHouse 80.8 65.7 81.4 62.2 66.5 Other Building 0.3 0.5 0.4 0.6 0.5 TemporaryStructure 2.8 0.9 2.0 0.7 1.0 GarbageDisposal Truck 40.4 63.2 43.7 67.2 61.9 Thrown 56.5 35.0 54.4 31.0 36.3 Other 3.1 1.8 2.0 1.8 1.8 Toilet = _ ____X Yes 82.5 _ 89.7_ 83.7 90.9 89.2 No 17.5 10.4 16.3 9.2 10.8 Sourceof Water Public Service 59 79 =_62 79 76 Well (Individual) 5 3 4 Well (Collective) 8 _ _8 5 5 PublicFountain 16 7 15 6 8 Stream/Spring 7 3 6 3 4 Cistern 9 2 7 2 2 Electricity _ Yes 96.4 97.3 96.8 97.4 97.2 No 3.5 2.7 3.2 2.6 2.8 MeanOccupants per Room 3.8 2.9 3.6 2.8 3.0 OwnershipStatus Own House 69.3 62.7 68.9 61.3 63.0 PrivateAccess 1.5 2.6 1.7 2.8 2.5 Rent fromPrivate Owner 3.8 5.5 4.1 5.8 5.4 Rent from Govt./Stateent. 3.9 15.6 5.8 17.6 15.0 ProvidedFree 21.6 13.6 19.5 12.5 14.1 Source:1995 LSMS (ENMNV), ONS, & Staffestimates Annex A.3 Page 19 of 19

Table 12: Use of Health Servicesin 1995

Food Upper General All Poverty Line Poverty Line Algerians Poor(?I) Non-poor() Ye Poor( %) Non-poor( O) Report Illness/Injury in last month 10.2 20.4 13.2 21.7 19.8 Health FacilitiesUsed, If III_ . Hospital 29.6 15.2 22.0 14.5 15.6 Public Clinic 7.5 9.1 9.4 9.0 9.1 PrivateClinic 1.9 6.6 4.2 6.9 6.5 Dispensary 6.2 4.2 6.2 3.9 4.2 PrivateDoctor 32.2 43.0 30.8 44.8 42.7 Other 0.9 2.1 1.2 2.3 2.1 No treatment 21.7 19.8 26.4 18.7 19.8 VaccinationCoverage _____ BCG 99.0 99.0 98.9 99.0 99.0 Polio 93.5 95.7 95.3 95.6 95.5 VTD 60.8 62.8 59.1 62.7 62.7 Measles 77.0 81.0 79.7 81.1 80.7 Source:1995 LSMS (ENMNV), ONS, & Staffestimates AnnexA4 Page 1 of 2

RECOMMENDATIONSTO IMPROVE SOCIAL DATA

A.4. 1. As discussed in this report, the 1988 EDCM and the 1995 ENMNV surveys provide useful information. However, the analysis also shows that the statistical base required to measure poverty accurately, to develop a detailed and policy relevant poverty profile, and to assess changes over time is incomplete. Looking ahead, the key suggestions for improving this situation are: (i) the institutionalization of a single, integrated and improved household informational base at the national level; and (ii) the establishment of a monitoring system of key socio-economic indicators by region and other relevant disaggregations, such as gender. The first should allow collection of a comprehensive welfare indicator such as based on consumption expenditures. Consumption at the household level provides the single most important and feasible indicator for both identifying the poor and for tracking trends in poverty. In addition, social indicators provide important supplementary information which identify access to and effectiveness of social services and often indicate changes in living standards that will not necessarily be captured by the income measure. They are also easier and cheaper to collect and hence provide a means of monitoring policy effects between household surveys.

A.4.2. The usefulness of poverty analysis for policy prescriptions relies greatly on the type of data collected and the up-to-datedness of the underlying data.' The economic situation in Algeria has rapidly changed in the last few years. There have been significant changes in consumer prices due to high inflation and the elimination of consumer food subsidies. Unemployment too has been on the rise. The Government needs to establish a regular monitoring system designed to obtain a timely and clear picture of how its economic policies are performing and affecting the level and depth of income and non-income poverty in the country.

A.4.3. The main recommendations for improving the statistical base for poverty analysis are as follows:

* In order to minimize problems of comparability over time, a standardized survey methodology and instrument are required. The 1995 ENMNV provides a good basis for building Algeria's household survey capacity. It contains a lot of details on a variety of aspects of living standards and can easily be expanded and improved.

* It will be important for the chosen household survey to ensure collection of a comprehensive welfare measure. If consumption expenditures are chosen (as it is recommended), then all components of consumption must be accounted for, for example, the value of home-produced food that is consumed by the household and any items consumed outside the home.

* There is also a need to collect better data on social and labor market conditions, sources of income and access to social services. More information is also required on the availability of government programs and services at the community level. Better social data would help to understand why some households are poor and others are not. Information on the availability of government programs and services, such as health facilities, schools, employment programs, as well as basic economic data such as local wages, are particularly useful in understanding who has access and benefits from public programs.

An IDF grant has been approved in March 1997 for improving the Social Data of Algeria. Annex A.4 Page 2 of 2

* There is a need to collect better data to understand who are the rural poor. Rural household models should be developed to profile the productive activities to which all members of the rural household contribute and detail their capital, human, and land asset bases. The variety of sources of rural household income (agricultural, wage, and off-farm) should be enumerated and ranked by value. The value and content of food and non-food own-consumption contributed by the household must be assessed, and compared with purchased consumption. The models should. consider whether agriculture (as farmer and as agricultural wage worker) is a year-round possibility for rural households, or whether the seasonality of production causes high income variability or leads households to seek to diversify their sources of income. Finally, the models must reflect the degree of importance of non-agricultural activities to rural households.

* The collection of regional price data for major food and non-food commodities is also recommended for the purpose of correcting for spatial price differentials across Algeria. This is useful for welfare rankings and poverty comparisons.

* Data on the height and weight of household members, especially children age five and under, is particularly useful for monitoring intra-household issues in distribution which are otherwise difficult to determine through common consumption measures.

3 It will be important to streamline data collection efforts and analytical capacity. Prior to designing the standardized survey questionnaire the Government, including the line ministries, should decide what the results of the survey would be used for in Annex B.1 Page 1 of 11

LABOR MARKETS IN ALGERIA

B. 1.1. Algerian labor markets have been characterized during the 1990s by the suspension and even reversal of employment growth in the dominant public sector coupled with an attempt to protect wage levels, at least at the bottom of the wage distribution. As a result, the brunt of adjustment fell on the new entrants to the labor market in the form of sharply rising unemployment. While.unemployment was concentrated among young people with intermediate levels of education, recent evidence suggests that it is spreading to older workers and workers with little to no education. Since these workers are much more likely to be vulnerable to poverty and to have dependents who are equally vulnerable, this recent trend is of special concern for poverty alleviation efforts.

B. 1.2. Although no data are available on informal and agricultural sector wages, the data on formal sector wages suggests that access to productive employment rather than higher wages should be the primary concern of poverty alleviation efforts at the moment.

Demographic Pressures on the Labor Market

B. 1.3. Rapid population growth rates in recent decades indicate that Algeria will continue to experience severe supply side pressures in the labor market for the foreseeable future. Population growth rates, which were as high as 3.1 % p.a. between 1977 and 1987 and 2.8 % in the late 1980s, have translated into rates of growth in the young adult population (ages 15-34) in excess of 3.8 % p.a. in the 1980s. These rates of growth are extremely high by international standards. According to UN estimates, the comparable rates for the 1990s were 3.1 % for the MENA region and 2.8 % for all developing countries.

B. 1.4. These very high rates of growth in the working age population were compounded by increasing activity rates. According to data from the population censuses, crude activity rates increased from 18 % to 23.2 % from 1977 to 1987. Combined with the rapid population growth, this growth in participation has translated into rapid labor force growth of 2.8 % p.a. between 1985 and 1990. This means that there were approximately 240,000 new entrants into the labor force every year in the early 1990s; a number that is expected to increase to 300,000 in the late 1990s.

B. 1.5. The female labor force appears to be growing especially fast. According to census data, female employment grew at a rate of about 6.2 % p.a. from 1977 to 1987 compared to 4.8 % for males.' Female labor force participation has been comparatively low in Algeria but appears to be increasing rapidly. Although, comparable data sources are hard find by because of changing data collection techniques and reporting practices, the female labor force participation rate for those 15-59 appears to have been around 9 % in 1991 and on a rising trend.2 As shown in Figure 1, rates of female participation have increased at all ages from 1989 to 1991 except for those 55 and older. The largest increases were for women in the prime working ages of 25-29 and 30-34. Among males the increase was confined to those under 25 years of age.

These rates of growthappear to be too high comparedto those obtainedfrom the MOD data.

2 The long-termtrend is hard to establishfrom the sources available. The 1987population census give a rate of 8.4 percent. The 1989 MOD gives a significantlylower rate of 7.1 percent, whereasthe 1991 MOD gives a rate of 9.4 percent. Estimatesfor other yearsbetween 1987 and 1991and since 1991are not available. Since 1989and 1991 data are run the same source,however, they are likelyto be morecomparable. Annex B.1 Page 2 of 11

Figure 1 LaborForce Participation Rates By Age and Sex 100.0

90.0 /

80.0 -*-males. 1989 -)K-males, 1 991 70.0 -, fem ales .1989 -X-females, 1991 60.0

.e 50.0

400

30.0

20.0

10.0

20.0 1 5-1 9 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60+ Age Group

B.1.6. Although the demographic pressure on the Algerian labor market will not abate for some time, it appears that the 1980s were the peak pressure years. According to UN estimates, the growth rate of the young adult population is expected to decline to 3.3 % p.a. in the 1990s and 2 % in the first decade of the next century as the fertility declines that began in the late 1970s begin to affect the age structure of the population.

Labor Absorption

B.1.7. As long as oil income was flowing into state budget, the government responded to the exploding growth in job seekers by substantially expanding public sector employment. Between 1977 and 1984, public sector employment grew at a rate of 6.4 % per year and absorbed 57 % of the overall increase in employment during that period. The fiscal crisis brought about by the collapse of oil prices in 1986 made that strategy clearly unsustainable. As shown in Table 1, the growth in public sector employment slowed abruptly to 0.5 % p.a. in 1985-90, which is a fraction of the rate at which the labor force was growing (2.8 % p.a.). In fact, employment in public enterprise declined by nearly 2 percent, so that most of the growth was attributable to the growth of the administrative branch of the public sector. At the same time, agriculture, which employs about one fifth of the labor force continued to shed workers at a rate of 2 % per year. The non-agricultural private sector was quite dynamic during that period, growing at nearly 10 % p.a., but its relatively small size meant that it could not make up for the decline in public enterprise and agricultural employment. The end result was that employment growth was significantly below labor force growth and unemployment soared. The number of unemployed grew at a rate of 6.7 % p.a. from 1985 to 1990 and the unemployment rate increased from 17 to 21 percent.3

3 These estimates are based on adjusted figures for unemploymernt in 1985. See note d under Table 1. Annex B.1 Page 3 of 11

Table 1: Structure of the Algerian Labor Market 1985-1994

Av. Ann. Number of Employees Rate of Growth ______(%/0) 1985 1989 1990 1991 1992 1993 1994 85-90 90-94 85-94 Agriculture 1,000 975 908 1,027 763 1,000 1,023 -1.9 3.0 0.3 Public Sector Employment 2,181 2,280 2,240 2,210 0.5 n.a n.a Public enterprises 1,281 1;243 1,164 1,134 -1.9 n.a n.a national a 764C 844 836 846 827 2.2 n.a n.a Administrationb 900 1,037 1,076 1,076 1,135 1,171 1,212 3.6 3.0 3.3 Central administration 452 669 693 737 7.9 2.4 5.4 Local government 141 166 194 222 3.3 7.3 5.1 Administrative Public 147 241 248 253 9.9 1.2 6.1 Enterprise Non Agr. Private Sector 697 905 1,136 1,144 9.8 n.a n.a Employmentb Total Non-Agricultural 2,878 3,184 3,375 3,354 3,642 3,562 3,302 3.2 -0.6 1.5 Employment Total Employment excl. TD 3,878 4,180 4,283 4,381 4,403 4,562 4,325 2.0 0.2 1.2 Home Workers (T.D.) 180 108 181 158 164 163 163 0.2 -2.7 -1.1 Total Employment incl. 4,058 4,288 4,465 4,346 4,567 4,725 4,488 1.9 0.1 1.1 TDb Unemployed 825 d 922 1,156 1,261 1,482 1,550 1,660 6.7 9.0 7.8 Labor Forceb 4,883 5,210 5,621 5,607 6,049 6,275 6,148 2.8 2.2 2.6

Unemployment Rate: 16 .9d 17.7 20.6 22.5 24.5 24.7 27.0 Memo Item Service National 291 234 194 173 174 200

Source: ONS, Enquete sur la Main d'Oeuvre 1985-1992. WorldBank, 1993-1994. a From ONS, Enquete sur l'EmploiPublic National b Excluding Service National c 1986 d The numberof unemployedand the unemploymentrate in 1985 was adjustedaccording to informationprovided in ONS BulletinNo. 48. The 1985MOD reported a rate of 9.7 percent,which is not consistentwith unemployment rates either immediatelybefore or after 1985.

B. 1.8. The trend since 1990 is less clear because of the paucity of data.4 It appears however, that the situation worsened. Total employment growth slowed further to an anemic rate of 0.2 % p.a., while the number of unemployed continued to soar, driving the unemployment rate to 27 % in 1994. Agriculture seems to have recovered somewhat between 1990 and 1994 and employment in administration was still growing at the respectable rate of 3 % p.a.. Although data on non-agricultural private sector employment and on local public sector employment are not available after 1991, it appears to have slowed down significantly from the rate prevailing in the late 1980s.

We refrain from including data from the 1995 ENMNV in this time-series analysis because of comparability problems with previous surveys (See Annex). Annex B.1 Page 4 of 11

B. 1.9. By far the most abundant employment data is available for the national public enterprise sector, which employs about 75 % of public enterprise workers. Although the overall sector giew by 2.2 % p.a. from 1986-91, this growth rate masks considerable variations within the sector (Table 2). While employment in the industrial sector stagnated, employment in trade, and to a lesser extent services, boomed. After 1991, the predominant trend is one of decline in all sub-sectors, with the sharpest declines occurring in transport and construction.5

Table 2: Employment in National Public Enterprise by Branch of Economic Activity, 1986-1995

AnnualAverage Rate of Growth(%)

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1986- 1991-1986- ______91 95 95 Industry all ('OO0s) 420 421 415 426 423 426 422 0.30 permanent 387 388 381 390 390 391 387 374 360 373 0.24 -1.69 -0.60 (0OOs) % permanent 92 92 92 92 92 92 92 Constructionall ('000s) 159 162 181 186 180 183 173 3.05 permanent 134 134 132 133 133 135 126 130 127 113 0.00 -3.40 -1.30 ('OOOs) % permanent 84 83 73 72 74 73 73 Transport all ('000s) 80 80 75 78 76 78 72 -0.72 perrnanent 72 72 71 74 72 70 69 68 59 60 -0.33 -4.49 -2.09 ('OOOs) % permanent 89 90 95 95 95 89 96 Commerce all ('OOOs) 46 48 83 84 86 86 85 13.98 permanent 41 44 74 75 76 77 76 76 73 72 13.89 -1.69 5.36 ('OOOs) % permanent 89 91 90 90 89 89 90 Services all (0OOOs) 59 63 70 71 72 72 75 4.22 permnanent 55 59 64 66 67 68 71 70 69 67 4.09 -0.52 2.09 ('OOOs) % permanent 95 94 92 94 94 93 94 All all ('00Os) 764 774 823 844 836 846 827 2.20 permanent 689 697 723 739 737 740 729 718 687 686 1.57 -2.13 -0.14 ('OODs) % permanent 90 90 88 88 88 87 88_ Source:Enquete sur 1'Emploi Public National,ONS

The Trend in Real Wages

B.1.10. Despite the external shocks experienced by the Algerian economy, real wages in the formal sector seem to have increased from 1988 to 1992 (Table 3). Gross wages of permanent workers in the national public sector increased by 2 % per year from 1988 to 1992 and the real minimum wage increased by as much as 10 per year from 1990 to 1992.6 This seeming increase in real wages in the face of sharply

5 Thedata available after 1992 is onlyfor permanentworkers and may therefore exaggerate the decliningtrend as firms movetoward hiring more temporary workers. However, the proportion of temporaryworkers in prioryears does not seemto be changingsufficiently to substantiallyalter the general trend.

6 Gross wages includesbase wage plus premiaand allowances,such as premia for individualand collective performance,compensation for hardshipor priorityareas and sectorsand familyallowances. They also includethe worker'sportion of socialinsurance charges. Annex B.1 Page 5 of 11 deteriorating economic conditions is probably the main explanation for the sharp increase in open unemployment during that period.

B. 1.11. After 1992, as the crisis deepened, real wages began to decline. From 1992 to 1994, real wages of permanent public enterprises workers declined by 8-9 % per year, but the decline slowed to 5-7 % from 1994 to 1995. By 1995, they were at 80 % of their 1992 level. The rate of decline of the minimum wage much slower at first (2 % p.a.) but accelerated to 26 % from 1994 to 1995. Wage trends in the formal private sector are less clear because of the presence of significant fluctuations, which are probably due to problems in the data. The overall pattern appears to be one of relative constancy over the period 1991 to 1994.

Table 3: RealWage Trendsin Non-AgriculturalSectors - All Workers- Constant1985 DA

Jun-| Jun-891 Dec-89 Jun-90 Jun-91 Dec-91 Mar- Jun-92 Dec-92 Jun-93 Mar- Jun-94 Sep-941 Mar. Jun-95 Sep-95 88 l 92 94 _ 95 Public National Petroleum 5,949 5,945 5,506 5,044 Industry 3,937 4,120 4,210 4,232 4,309 3,527 3,383 3,106 3,466 Construction 3,854 3,887 3,706 4,139 4,233 3,967 2,688 2,670 2,865 Transport 4,151 4,326 4,701 3,788 3,944 3,938 3,780 3,676 4,074 Trade 3,775 4,142 4,517 3,744 3,657 3,079 3,244 3,027 3,242 Services 4,564 4,229 4,497 5,041 4,779 5,542 3,345 3,459 3,582 All 3,985 4,1101 4,224 4,247 4,273 3,829 1 3,482 3,275 3,525

Public Local

Industry 3,249 3,408 2,948 2,740 2,427 2,653 Construction 2,826 2,809 3,238 2,152 2,172 2,223 Transport 3,491 3,541 2,442 2,470 2,439 2,355 Trade 3,530 3,353 2,871 2,690 2,799 2,703 Services 2,946 3,099 2,628 2,616 2,582 2,911 All 3,014 3,0131 | | 2,6501 | 2,3381 2,335 | 2,417

Private

Industry 2,660 2,492 2,809 3,665 2,322 Construction 2,650 2,477 2,120 2,053 2,684 Transport 2,961 2,785 1,927 2,534 Trade 2,556 2,568 2,913 1,772 Services 2,896 2,711 2,335 2,673 1,910 All l 2,6641 | 2,5601 2,5831 3,0181 2,2991 | 2,5451 SNMG* 7401 6881 1,253 1,2001 1,4041 1,3191 1,4341 1,3121 1,2571 1,35 1,262 1,108 1,0 1,111 SMA*- I 1,3881 1,2911 1,4611 1,5001 1,6841 1,5821 1,6731 1,5301 1,4361 1,525 1,419 1,2461 1,1751 1,235 * Minimum pension (Salaire National Minimum Garanti) ** Basic Gross Minimum Wage (Salaire Minimum d'Activite) Source: Enquete Nationale des Salaires, ONS

B. 1.12. To conclude, wages in the formal sector appear to have been inflexible downward through 1992 despite the substantial decline in GDP per capita during that period. However, after 1992, some downward flexibility is observed. The minimum wage, which is most likely to affect the employment prospects of unskilled workers, remained relatively stable through 1994. No data are available on wages in the informal sector and in agriculture.

Unemployment Patterns

B. 1.13. As expected in a situation where the youth population is growing very rapidly, unemployment in Algeria is highly concentrated among young age groups. As shown in Figure 2, unemployment rates for youth aged 15 to 24 increased from 46 % in 1989 to 58 % in 1995. Youth in that age group constitute about two-thirds of the unemployed from 1989 to 1992, but their proportion declines to 56 % in 1995 as Annex B.1 Page 6 of 11 unemployment spreads to older adults. The substantial increase in unemployment among those 25-34 in 1995 is quite alarming from a poverty perspective because that is the age where young adults are in the prime working years and begin to form their own households. Moderate increases in unemployment seem to be also occurring among older adults.

Figure2 UnemploymentRates by Age Group,1989-1995 60.0

50.0

400- 1989 .1990 E 30.0 -U- 1991 o \*.. -- o-.1992. 0. E 20.0 D 1995

0._

0.0 15-24 25-34 35-59 AgeGroup Source:MOD 1989,1990,1991,1992,ENMVM 1995. B.1.14. Like other countries in the MENA region, unemployment in Algeria seems to be concentrated among groups with intermediate levels of education (Figure 3). Middle school graduates had the highest rates of unemployment in 1990 and 1991 followed by secondary school graduates. However, the pattern in 1995 appears to have shifted towards increasing unemployment at lower levels of education. Unemployment appears to have increased substantially among illiterates, those with basic literacy skills, and those with a primary level of education. This is also somewhat alarming from a poverty perspective because illiterates have relatively low employment expectations and their unemployment may therefore indicate an absolute absence of job opportunities.

Figure3 UnemploymentRates by EducationalAttainment nemployment Rate% 40.0 35.0 30.0 25.0 + v _+1990~

20.0 *-,-- - 1991

15.0 / X .-h--- 1995 105.0 ...... ; 10.0 .

5.0 -

0.0J none quranic/rd primary middle secondary superior & write

EducationalAttainment Annex B.1 Page 7 of 11

Statisticsfor Labor MarketAnalysis

B.1.15. Main Sources. The main source of labor market data in Algeria is the Office Nationale des Statistiques(ONS), which has a series of publicationsthat compileinformation from several sources:

(i) The Population and Housing Census (Recensement General de la Population et de l 'Habitat, RGPH), which is carried out every ten years or so. Three censuses have been conducted since independence:1966, 1977, and 1987. Collects data on population,employment, unemployment by basic demographiccharacteristics, and sector.

(ii) Labor Force Sample Surveys (Enquete sur la Main d'Oeuvre et la Demographie, MOD) These have been carried out once a year from 1982 to 1985. No surveys were conductedfrom 1986 to 1988 to allow for the census and the householdconsumption survey conducted in 1988. The latest results available are for 1989, 1990, 1991, 1992. Collects data on employment and unemploymentby individualcharacteristics and sector.

(iii) Living Standards MeasurementStudy (EnqueteNiveau de Vie), which was carried out in March 1995. Collected data on labor market characteristics as well as other household characteristicsand consumptionbehavior.

(iv) Quarterly Survey of National Public Sector (Enquete Trimestrielle sur 1'Emploi Public National). Collectsemployment data for the 448 nationalpublic sector firms. Starts 1986

(v) National Survey of Wages in National Public Enterprise(Enquete Nationale sur les Salaires aupres des Entreprises Publiques Nationales). Starts June 1990. Frequency semi-annual.

(vi) National Survey of Wages in Local Public Sector (Enquete Nationale Sur les Salaires aupres du Secteur Public Local).

(vii) National Survey of Wages in the Private Sector (Enquete Nationale sur les Salaires aupres du Secteur Prive). Collected data on private firms with more than 10 wage workers (was conductedfor firms with 20 workers or more in 1994). No surveys were conductedin 1993 and the first half of 1994.

B.1.16. ComparabilityIssues. Since the 1995survey has some problems,we refrain from making any times-series comparisons using the 1995 data. However, data from previous years appear to be reasonably comparable.

B.1.17. Because of the conditionsunder which the field work for the 1995 LSMS were conducted,there appear to be serious problems associatedwith the representativenessof its sample. Comparisonswith preceding rounds of the Enquete Main d'Oeuvre (MOD) and the 1987 populationcensus (RGPH 1987) reveal some large discrepancies, which are impossible to reconcile with changes in the underlying phenomena. The most significantdiscrepancy is in the size of agriculturalemployment. Whereas the MOD90 and MOD91 indicate that agriculturalemployment is close to 1 million, the LSMS produces a figure that is half as large (577,000).7Another significantdiscrepancy is in the estimates of the size of public employmentin services. The RGPH 1987 and MOD 90 reveal that the size of public employment in services, which includes administrationis about 1.1 million. The 1995 LSMS gives a figure of 1.7

There appearsto be a problemin that respectwith the MOD92as well, which producesa figure of 763,000. Annex B.1 Page 8 of 11 million at a time where government hiring has been very limited. Smaller, but equally unrealistic increases can be seen in public employmentin industry,which appears to be increasingfrom 500,000to 630,000, at a time when the general trend in public enterprise employmentis unmistakablydownward (see Tables 4, 5, 6 and 7). All these discrepanciescan be reconciledwith an over-samplingof urban and metropolitan areas, which have significantly less agricultural employment and more public sector employment.

B.1.18. Since urban areas also have higher unemploymentrates that rural areas, this casts some doubt on the overall unemploymentestimate obtained from the 1995LSMS. The overallunemployment rate of 29 % may therefore be somewhatexaggerated.

Attachment

Participationand EmploymentRates Unemploymentby Age Group Labor Demand UnemploymentRate by EducationAttainment Annex B.1 Table 4: Participation and Employment Rates Page 9 of 11

Employment rate 1 19851 19871 19891 19911 1992 Employment rate 1 19851 19871 19891 1991 1992 Ma e . Male -14 0.2 0.1 0.2 -14 0.2 0.1 0.2 15-19 39.2 3 1.5 36.2 15-19 13.5 12.3 14.7 20-24 84.4 59.4 67.7 20-24 55.9 35.8 33.9 25-29 95.7 91.0 91.4 25-29 77.3 74.1 67.8 30-34 97.4 96.3 96.1 30-34 84.1 87.6 84.3 35-39 97.7 97.1 96.7 35-39 87.3 91.8 90.4 40-44 96.6 96.5 97.0 40-44 87.5 92.0 92.0 45-49 95.1 92.9 94.1 45-49 85.6 89.7 89 . 50-54 92.0 89.2 85.8 50-54 82.1 86.2 83.0 55-59 92.3 79.3 78.3 55-59 75.1 76.9 75.5 60+ 33 .5 27.9 29.4 60+ 33.5 27.9 29.4 Total 42.4 38.0 39.4 Total 33.0 31.2 30.6 Fern ale Fem ale -14 0.0 0.0 0.0 -14 0.0 0.0 0.0 15-19 3.9 2.1 2.5 15-19 1.4 0.4 0.6 20-24 13.0 11.1 12.8 20-24 9.4 6.1 5.8 25-29 12.9 10.9 16.4 25-29 10.7 8.0 11.9 30-34 8.9 8.9 12.2 30-34 7.3 5.9 8.5 35-39 7.8 7.5 9.7 35-39 6.2 4.1 5.5 40-44 6.8 6.1 8.9 40-44 5.2 3.8 4.8 45-49 6.8 4.7 7.5 45-49 5.6 2.S 4.3 50-54 5.6 4.6 6.1 50-54 4.4 3.3 3.4 55-59 5.2 4.5 4.6 55-59 4.0 2.7 2.8 60+ 2.1 1.6 1.7 60+ 1.9 1.0 0.9 Total 4.4 3.7 4.8 Total 3.3 2.2 2.8 All All -14 0.1 0.1 0.1 -14 0.1 0.1 0.1 15-19 21.7 16.9 19.6 15-19 7.5 6.4 7.7 20-24 49.1 35.5 40.6 20-24 32.9 21.1 20.1 25-29 55,0 51.6 54.1 25-29 44.6 41.6 39.9 30-34 54.7 54.1 54.2 30-34 47.4 48.2 46.5 35-39 53.4 52.9 52.6 35-39 47.3 48.6 47.3 40-44 50.6 50.1 52.6 40-44 45.3 46.8 48.1 45-49 49.3 47.1 49.7 45-49 44.1 44.6 46.0 50-54 46.8 45.0 44.4 50-54 41.5 42.9 41.7 55-59 47.5 40.9 40.1 55-59 38.6 38.8 37.9 60+ 17.5 14.5 15.3 60+ 17.4 14.2 14.9 Total 23.6 21.0 22.3 Total IS.3 16.9 16.8 |

Table 5: Unemployment by Age Group

Employment Rate | 19851 19871 19891 1991 1992 Male I -14 15-19 41.5 65.6 60.8 59.5 66.6 20-24 21.4 33.7 39.7 49.9 44.3 25-29 7.7 19.2 18.5 25.8 25.2 30-34 3.9 12.9 9.0 12.3 13.9 35-39 3.5 10.7 5.5 6.5 8.8 40-44 2.4 9.5 4.6 5.1 7.7 45-49 2.8 10.1 3.4 4.6 5.8 50-54 3.0 10.81 3.4 3.2 5.6 55+ 0.6 2.91 0.5 0.5 0.6 Total 11.8 22.2 17.8 22.5 24.2 Female -14 15-19 19.0 46.8 49.9 50.7 58.0 20-24 6.1 18.7 30.9 39.7 44.7 25-29 0.7 9.0 8.7 11.7 14.8 30-34 0.0 4.9 5.3 1.7 5.5 35-39 0.0 3.9 11.0 3.0 3.9 40-44 0.0 2.8 2.4 3.3 4.7 45-49 0.0 2.3 2.9 4.1 0.0 50-54 0.0 3.3 0.0 0.0 0.0 55+ 0.0 0.8 0.0 0.0 0.0 Total 3.3 13.3 16.1 17.1 20.2 All -14 15-19 39.5 63.9 60.1 58.9 65.9 20-24 18.5 31.8 38.3 48.3 44.3 25-29 6.7 18.0 17.5 23.7 23.7 30-34 3.6 12.3 8.7 11.1 13.0 35-39 3.2 10.2 5.9 6.2 8.3 40-44 2.3 9.0 4.5 4.9 7.4 45-49 2.6 9.5 3.3 4.5 5.4 50-54 2.8 10.3 3.2 3.1 5.2 55+ 0.7 2.8 0.5 0.5 0.5 Total 9.7 21.4 17.7 21.9 23.8 Annex B.1 Page 10 of 11

Table 6: Labour Demand

Sector 1987 1990 1995 AGRICULTURE Male 715 892 Public 30 39 Private 511 653 EAC/EAI 174 200 Female 10 13 Public 1 I Private 6 10 EAC/EAI 2 2 All 725 905 577 Public 31 40 55 Private 517 663 362 EAC/EAI 176 202 160 INDUSTRY Male 506 665 Public 329 466 Private 177 199 Female 47 38 Public 32 28 Private 14 10 Total 553 702 853 Public 361 494 631 Private 192 209 223 BTP Male 648 640 Public 420 367 Private 228 272 Female 11 12 Public 9 9 Private 2 3 Total 659 652 646 Public 429 376 337 Private 230 275 309 TRANSPORT & COMM. Male 207 243 Public 125 126 Private 82 117 Female 9 9 Public 8 9 Private I 0 Total 216 253 289 Public 134 135 165 Private 83 117 124 COMMERCEl Male 336 430 Public 83 104 Private 253 325 Female 13 15 Public 9 8 Private 4 8 Total 348 446 568 Public 92 112 127 Private 257 333 441 ALL SERVICES Male 1112 1079 Public 991 894 Private 121 185 Female 255 247 Public 245 230 Private 10 17 Total 1367 1326 2055 Public 1236 1124 1717 Private 131 202 338 OF WHICH PUBLIC SERVICES Male Female 235 225 Total 1181 1086] 1649 Source: 1987 Census, 1990, 1991: MOD Annex B.1 Page 11 of 11

Table 7: Unemployment Rate By Educational Attainment

1990 1991 1992 None 10.0 9.1 14.5 Koranic 8.2 7.9 23.9 Primary 27.4 25.1 36.1 Middle 36.1 35.9 33.7 Secondary 32.7 32.5 24.7 Superior 8.4 19.4 20.5 All 21.2 22.7 29.0 Source: MOD for 1990and 1991/ENMNV1995 Annex C.A Page 1 of 7 EDUCATION AND TRAINING

C.1.1 The Algerian educational system is entirely public and managed by the Ministries of Education and Higher Education. Since 1976, it has consisted of nine years of compulsory basic education (six years of primary school and three years of junior secondary school), followed by three years of senior secondary education focusing either on general training or specialized programs in technical fields. Secondary level graduates have access to higher education which is organized into disciplinary cycles (university, schools, institutes). In addition, the system is complemented by a highly diversified vocational training system catering to students unable to go on to the senior cycle of secondary education. Managed mostly by the Ministry of Vocational Training, the system focuses on the training of specialized workers and technicians.

C. 1.2 Algeria has achieved much progress in broadening access to education. Public spending on education (by the Ministries of Education, Higher Education and Vocational Training) has historically been high, representing about 7% of GDP in 1995, of which almost nine-tenths went to recurrent expenditures. As in most countries with similar income, Algeria spends a higher share on primary and secondary education and a much lower share on higher education. About 80% of recurrent expenditures are focused on primary and secondary education. Higher education claims around 16% while the share of vocational training averages about 5%. In 1994, the per-student cost in higher education was about six times that of primary and secondary education.! Moreover, the unit cost of vocational training is about twice the cost of general schooling (see Table 1).

Table 1. EducationGeneral Government Expenditure (% Ratiosto GDP and % Allocationper Program) and AverageCost per Pupilper Program(in DZD)

| Sectors Years Ratiosto GDP(/6): 1975 1980 1985 1990 1994 • Recurrentexpenditure 4.1 4.7 5.7 6.0 6.4 . Capitalexpenditure 0.2 0.1 2.3 I .5 I .I * Total 4.3 4.8 8.0 7.5 7.5 |Allocationper Prograrn (0/6)_ =L _ Recurrentexpenditure: _ . Primaryand secondaryeducation - 75 9 74.3 77.2 79.1 . Highereducation _ 19.2 17.5 16.9 16.1 . Vocationaltraining - 4.9 8.2 5.9 4.7 * Total _ _ < T- 100.0 100.0 100.0 100.0 Capitalexpenditure = . Primaryand secondaryeducation - - - 58.7 65.7 . Highereducation 24.5 15.1 . Vocationaltraining 16.8 19.3 . Total - - 100.0 100.0 Recurrent Unit Cost per Program

(DZD): ___ __ . Primaryand secondaryeducation 690 708 1,224 900 844 • Highereducation 13,478 14,826 11,656 7,841 5,151 Notes: (i) %`denotes data not available, (ii) dataon vocationaltraining refer to trainingcenters run by the Ministryof ProfessionalTraining. Source:World Bank, from official data.

1 In 1994,the recurrentunit costs varied from about DZD 840 per year in theprimary school to about DZD5,150 peryear in highereducation. Annex C.1 Page 2 of 7

Figure 1: Female Enrollment Rates

Fe m a l E niro lm en I 0 ,-.------'- 5 0

66 o.,0 o 7 ------

l 7 D 0 0

$5 00 _,- 7...... ~ .. a 4r ra ...... S o 4ai Rr

1 * lQ1 2bd q.l.fll. 3,4 q.ltilo 4Sh 4-W.il $1h q.IFiW.

ILOD | _ _^ _ _~~~~S -es 1 Udlb-U D_ 5*¢n _,,._._Y ._.__,_R-*F1 , _,,______~_ _,...... _ ,__...._ ,_~...... __......

L

C. 1.3 Progress in Education Indicators. Algeria has assigned high priority to education and achieved a level of school enrollment that compares favorably with countries at similar levels of development. The overall illiteracy rate declined from 75% in 1966 to about 35% in 1995 and is projected to decline further. The illiteracy rate of adult males is 26%, but it increases to about 50% for adult females. The illiteracy rate of the 15-19 age group, an indicator of the effectiveness of primary education, is about 12% (13% for boys and 11% for girls), compared with 13% in Tunisia, 21% in Morocco, and 36% in Egypt. Primary enrollment is virtually universal and reaches about 99% for the total population and 92% for women on a gross basis (compared to 76% and 72% respectively in 1970). Enrollments are relatively equal in urban and rural areas and across income groups: about 96% for the urban and about 89% for the rural primary-school age population in the lowest expenditure deciles. Beyond the primary level, however, there are considerable differences among the regions and income groups: secondary gross enrollment rates are about 82% for the urban population, compared to about 77% for the urban poor; in rural areas it is about 64% in aggregate, compared to about 59% for the rural poor (see Figure 1).

C. 1.4 Education, which is compulsory until the age of 15, is technically accessible to all individuals at all levels of learning. The average distance to the nearest primary school, as derived from 1995 ENMNV, is not large (not exceeding 1 km) and suggests that primary schools are well located with respect to population groups. In rural areas the average distance to the nearest school exceeded 1 km for about 3 0% of the enrolled population.

C.1.5 The extent to which the education and training sector benefits the poor depends on their access but also on the effectiveness of the system. Measuring school quality is, however, not straightforward. One admittedly rough indicator of the quality of teaching at the primary level of education (the level of success of students in the competition for admission to the first year of secondary education), suggests that equitable access to good quality in primary education exists Annex C.1 Page 3 of 7 even in the poorest areas of the country. However, this could simply reflect the standard "pass rates", whereby a quota is applied to pass.2

C.1.6 Despite solid educational achievements, the system suffers from a number of inefficiencies that have been discussed in the recent "Public Expenditure Review".3 Among the existing problems, a number of issues have relevance from a poverty standpoint. First, many students never complete their education. High repetition and drop-out rates occur within and between cycles and increase substantially at the end of each secondary cycle. It can be assumed that poor children are much more likely to drop out than pupils who are better off. The incidence of drop-outs and repeaters is likely to reflect the highly selective nature of the system, which is influenced by unrealistic standards for passing from one grade to the next and availability of the spaces in the next grade, as well as the system of quotas aimed at narrowing regional disparities in education through fixing the number of students who can have access to secondary schools. For example, over 3% of children who attend primary school drop out before completing the primary level; the drop-out rate rises to about 15% (22%) at the junior (senior) secondary level and reaches over 40% for vocational training.4 Overall, out of 100 pupils, 87 enter the junior secondary school, only 40 enter the senior secondary school, 9 complete grade 12 and only 5 obtain the baccalaureate. The high drop-out rates in vocational training, mainly due to the weak link with the labor market needs, should also be a matter of concern.

C.1.7 A second and related issue concerns low quality. The educational and training system is relatively ineffective in meeting the evolving needs of the economy, and therefore the returns to secondary and higher education, as well as to vocational training, tend to be low. As a result of poor links between labor market needs and all aspects of the educational and training system, unemployment in Algeria is concentrated among the young with intermediate levels of education. This problem stems not only from the educational system but also from the dysfunctional nature of the labor market under central planning. At present, the state-run training system is characterized by a lack of coherence among its various sub-sectors, and a widespread rigidity of functioning. This introduces serious obstacles in the relation between the training system and production sectors while disproportionately increasing the operational cost of the former.5

2 It is sometimes assumed that smaller class sizes yield greater teacher input per pupil and, thus, greater time-at- task of the pupil, and better learning, for small to medium-class sizes. In this respect, at the primary level, class size ranges from 24.1 in the Wilaya of Illizi to 52.5 in the Wilaya of El Oued, with no systematic relationship to the standard of living of the Wilaya.

The World Bank, Democratic and Popular Republic of Algeria. Public Expenditures: Toward Greater Efficiency and Effectiveness (1996) and Etude des depenses publiques d'education et de formation professionnelle en Algerie (May 1995).

4 Repetition rates vary between 8-10% in primary school and about 25% in junior secondary school, reaching around 45% in senior secondary school.

5 The World Bank, Democratic and Popular Republic of Algeria. A Framneworkfor Private Sector Development (January 26, 1996). Annex C.1 Page 4 of 7

C. 1.8 Distribution of Education Subsidies. Overall, the distribution of primary and secondary education subsidies is pro-poor, with the absolute subsidy amounts decreasing with total household per capita expenditures.6 In 1995, the subsidy per capita and per year for the richest 10% of the population (about DZD 160 or DZD 760 per household) was less than the correspondingsubsidy for the poorest 10% (about DZD 240 or DZD 2010 per household).7 These differentials reflect differencesbetween the better-off urban and poorer rural areas as well as differences among the different regions of the country. The subsidy averaged DZD 215 per capita per year for rural people (DZD 1490 per household),compared to DZD 206 per capita in urban areas (DZD 1290 per household)(Figure 2). The subsidy expressed as a proportion of householdexpenditure is also larger for the poor than for the better-off (Figure3). On average, as a share of per capita expenditure,the poorest 10% receive about ten times more (about 2 to 3% of total household per capita expenditure)in absolute amounts as the richest 10% (about 0.3% of total household per capita expenditure). The key factors underlying the pro-poor pattern of primary and secondaryeducation spendingare the high enrollment rates at those levels, and the fact that primary and secondary school-age children represent a much larger fraction of the populationin the poorest deciles.

Figure 2: Per household subsidies in primary and secondary education (in DA per year)

2500 _ Urban

2000 _3 RRural

500

1 2 3 4 5 6 7 8 9 10 Expenditure decile

Note: World Bank estimates based on the 1995 ENMNV.

C.1.9 Lack of data prevents us from analyzingthe subsidy incidence patterns underlying the provision of higher education and training. In many countries, a pro-rich bias of higher education is driven mainly by the fact that only the rich continue to attend school at those levels. This is likely to be the case here as well.

6 The beneficiaries of the public spending are identified on the basis of enrollment data generated by the 1995 ENMNV household budget survey. To derive the incidence of public subsidies at each level, public sector enrollments are multiplied by the average subsidy per student (defined as average recurrent cost per program).

7 In 1995, the yearly subsidy for all (primary and junior secondary) education programs averaged DZD 210 per capita (DZD 1,380 per household). Annex C.1 Page 5 of 7

Figure 3: Subsidies in primary and secondary education as % of H ousehold Expenditures

3 2.5 MU rban 2 Ru r a I % 1 .5 1 0.5 0 1 2 3 4 5 6 7 8 9 10 Expenditure decile

Note: WorldBank estimatesbased on the 1995ENMNV.

C. 1.10 The Algerian education system has aimed to narrow regional disparities through a quota system limiting the pass rate of students to secondary education for each public school to 25% (an additional pass rate of 25% being applied to sets of schools geographically defined). This system, lacking the link between resources and performance, may prevent outstanding pupils from entering secondary school while inflating secondary education with pupils with low motivation. Enrollment in senior secondary school ranges from 55 to 70% of eligible students in some regions (such as the wilayas of Saida, Naama and Oran) and falls to 12-15% in others (the wilayas of Medda, Tebessa and Souk Ahras).

C. 1.11 Education Costs and their impact on the poor. Although education in Algeria is fully provided publicly, the 1995 ENMNV household budget survey confirms that families incur non- negligible costs (for books, writing materials and food in school) even in fully-subsidized public schools.8 The hidden costs of schooling (the non-fee out-of-pocket expenditures by the family and the value of time in school) are often large enough to keep poor youths out of school, as dropout rates suggest. Moreover, the private costs of attending school are far from evenly distributed. Excluding clothing expenditures, pupils in urban public schools spent on average DZD 1,500 compared to DZD 1,700 spent by pupils in rural areas. Part of this differential can be imputed to specific cost differences between urban and rural areas, mostly transportation.

C.1.12 Notwithstanding the absence of detailed information on the opportunity cost of schooling, the 1995 ENMNV survey indicates that the out-of-pocket costs of schooling (including clothing) account for over 4% of total expenditure at low total expenditure levels and for 1% in the higher expenditure brackets in urban areas (see Figure 4). Similarly, in rural areas, the private costs exceeds 5% in the lower expenditures and less than 1% in the higher bracket.

8 The full cost of educationto the familyincludes the shareof schoolcosts that is passedon in termsof tuition and other fees, plus the cost of learning materials,uniforms, and transportation,plus the opportunitycost of time associatedwith schoolattendance. Annex C.1 Page 6 of 7

Figure 4: Cost of schooling in primary and secondary education (in % of household average total expend itu re)

6 m Urban S r CIR u ra I 4

2 % 3 t l. | I l l l l l

1 2 3 4 5 6 7 8 9 10

Expenditure d ecile

Note: WorldBank estimatesbased on the 1995 ENMNV.

C. 1.13 It should be underlined that the above indicators of public education affordability underestimate the potential hardship of poor households as long as they take into account the existing special programs designed to assist students who come from disadvantaged socio- economic environments. These programs provide (i) free food in schools; (ii) scholarships. In 1995 scholarships amounted to MDA 200 for as many as 130,000 beneficiaries (as opposed to MDA 635 and 635,000 beneficiaries in 1984). Full-time and part-time grants amount to DZD 1,296 and DZD 648 a year. Free food and accommodation in basic education accounted for MDA 1,540 (MDA 821 in 1984) of which MDA 300 devoted to school refectories (MDA 428 in 1984). About 800,000 pupils (that is, some 12% of the total), largely concentrated in the most needy areas of the country, benefited from the latter program.

C. 1.14 In addition to high private costs, the perceived returns to education are likely to be low. Although estimates of the economic and financial returns are not available, characteristics of the economy and labor markets, and particularly the high unemployment even among the educated population are likely to dissuade households from investing in education. This may also help explain high dropout rates. As has been explained in earlier sections, a high proportion of unemployment occurs for those with a primary education, regardless of income. This suggests that the population, and particularly the poor, may have little incentive to get an education, unless it is beyond the primary level.

Recommendations:

Algeria has invested heavily in human resources, particularly through education and training, and progress is visible in many areas -- from literacy rates to school attendance -- and they have succeeded in reaching many of the poor. Despite remarkable quantitative achievements in education, serious shortcomings remain. It may be that achieving sustainable economic growth and labor market flexibility are among the best way to reduce drop-out rates and ensure higher education attainments at all levels of education. The design of strategic guidelines in the education and training sector are prevented by a serious lack of information on distributional, Annex C.1 Page 7 of 7

quantitative, and qualitative outcomes. Pending further research on these topics, policy recommendationsare necessarilygeneral in nature.

C. 1.15 Focusing on increasing enrollments at the basic level. attention should be given to reducing the observedlarge urban-ruraland gender disparities in enrollmentrates. Specifically, hard-to-reachrural girls shouldbe the target. This would require:(i) abolitionof the quota system at the secondarylevel; (ii) use of cost recovery and alternativesources of financingfor higher education levels in order to reconcile basic education(primary and junior secondary)enrollment ambitions and the constraints of the public budget; and (iii) further analysis of constraints to female school attendance in order to better understand how to design appropriate policy to increase female enrollments. Additional measures should also improve the distribution of resourcesat the general education level, particularlyteaching staff, and possiblypromote private participationin secondaryand higher education.

C. 1.16 Increasing access to educationfor rural poor. One of the major expenses for the poor are the out-of-pocketcosts of schooling.Further inquirieson the determinantsof drop-outrates in primary andjunior secondaryschool are needed in order to understandhow importantthese costs are in explainingdrop-out rates and low female enrollments.Pending further research, one cannot rule out the possibilitythat drop-outs are determinedto a large extent by the indirect charges associatedwith education (clothing,transportation, etc.) and the opportunitycost. Improvingthe educationalprofile of the poor needs to take into accountthe financial capacitiesof poor families to take advantageof governmentuniversal education provision.

C.1.17 Improving quality of education and vocational training to better prepare graduates for labor market opportunities. Improving quality and increasingenrollments at the basic education levels would not only provide greater equity, but would also increase economic efficiency.This would require introductionof a detailed systemof quality assessment.Improving student performance, rationalizing national education objectives, and achieving satisfactory rankings on international education standards will raise labor-force quality and improve competitiveness in the global market. Besides improving the access of the poor to basic education, vocational training and apprenticeshipschemes to improve the skills of unemployed youth need to be more relevantto the needs of the enterprises.The serious malfunctioningof the state-run vocational training system calls for a far-reaching reform based on economic consideration, more than on the social consideration on which the present system mostly concentrates.Increasing the efficiency of the vocationaltraining system to meet the needs of the market will help enable the poor to keep up with economic and structuralchanges and adapt to the new economicsystem. Furtherresearch is neededto understandthe relevance,and the returns to vocationaltraining and their impacton the poor. Annex C.2 Page 1 of 7

HEALTH CARE SYSTEM

C.2.1 Over the last decades Algeria has developed a health care system that compares favorably with that of other countries at comparable levels of development.1 The public sector providesalmost all health care facilitiesand programsunder the responsibilityof the Ministry of Health which provides development guidelines,coordinates sector agencies and supervises the implementationof sector activities.Public health facilitiesare classified accordingto five levels of care: the first level, about 3,800 health rooms and free-standingmaternities, provides basic ambulatoryhealth care; the second level, over 1,100 basic health centers which are responsible for family planning activities, provides elementary health services; the third level, about 450 polyclinics,provides some specializedcare and hospitalservices; the fourth level, approximately 180 general hospitals, provides some specialized care; the fifth level involves teaching and general hospitals, as well as specializedcare institutes.The public health care facilities supply over 98% of all hospitalbeds and employthe vast majorityof health workers.Their structure and orientation,providing a disproportionalamount of care at the higher level hospitals, seems to be mainly biased toward curative rather than preventive health care. The private health facilities, comprised of 71 private clinics, are mainly concentratedin urban areas. They offer health care services on a very modest scale (supplyingonly 2% of hospitalbeds), but play an importantrole in outpatient care and for ambulatory services (48 free-standingmatemities) and account for as much as 80% of all pharmacies.

Table 1. Health Total Expenditures (Ratiosto GDP% andAllocation % by Provider)

Sectors Years Ratiosto GDP (%): 1988 1990 1993 1994 1995 * Government 1.5 1.0 1.6 1.6 1.3 * Social Security 3.4 2.1 1.7 1.5 1.1 * Households 1.2 1.2 1.3 * Total 6.1 4.3 4.6 Allocationby Provider(%/o): _ X X _= _ _ _ * Government 24.9 22.0 36.0 * Social Security 55.6 49.4 36.6 * Households 19.5 28.6 27.5 * Total 100.0 100.0 100.0 Note: (i) "-" denotesdata not available;(ii) health expendituresby Ministriesother than the Ministryof Health, by Local Bodies, financed by foreign sourcesor, finally, connected to other programns (nutrition,water supply,sewerage, etc) are not accountedfor in this Table. Source:World Banlk, from official data.

C.2.2 Total health expenditureswere estimatedat 4.6% of GDP in 1993 (or about DZD 980 per capita per year). Budgetary health care expenditures represented 36% of total health expenditures,compulsory health insurance funds accounted for about 37%, and private sector financing(direct out-of-pocketpayments from the households)accounted for the remaining28%. Overall the share of public sector health spendinghas been declining from about 80% in 1988 to about 73% in 1993, while the share of private spendinghas been increasing,from about 20% to about 28% over the same period, and the household per capita expenditures has reached

World Bank, Democraticand Popular Republicof Algeria.Public Expenditures: Toward GreaterEfficiency and Effectiveness, Report no. 16171-AL(Dec. 11, 1996) and The World Bank,RfpubfiqueAlgerienne Democratique et Populaire.Depenses publiques et resultats dans le domairnede la sante en Algerie. Bilan etperspectves (June 1995). Annex C.2 Page 2 of 7

DZD 270 in 1993. Detailed health care issues in Algeria are discussed in the recent "Public Expenditure Review" (see Tables I & 2).

Table 2. HealthAllocation of Public Expenditures by Program and Type (%)

Sectors 1989 1990 1991 1992 1993 Allocationby Program: - Recurrentexpenditure: 73.4 - 85.8 85.2 86.2 Public hospitals 66.6 - 78.3 73.2 79.8 of which:University Hospitals - - - - 23.0 SpecializedHospitals - 1.9 GeneralHospitals - - - - 52.4 Administration 6.8 - 7.5 12.0 6.4 - Capitalexpenditure 26.6 - 14.2 14.8 13.8 - Total 100.0 - 100.0 100.0 100.0 Allocationof Recurrent Expenditure(Public Hospitals): - Wages and salaries 72.7 76.0 75.0 75.3 74.5 - Maintenance 2.5 2.2 1.3 1.1 1.1 - Training 5.5 5.2 4.5 3.7 3.3 - Pharmaceuticals 6.7 6.3 8.7 10.0 9.8 - Small medicalequipment & instru. 1.7 1.6 1.5 1.5 1.5 - Other 10.9 8.7 9.0 8.4 9.8 - Total 100.0 100.0 100.0 100.0 100.0 Source:Ministry of Health.

C.2.3 The predominance of public sector spending is derived from a system of compulsory insurance.2 Health insurance is compulsory for all employees and their dependents in the public and private sectors. At present, about 80% of the total population is in theory covered by mandatory schemes managed by the public sector and financed by contributions. The insurance system finances the free public health care which is available to social security contributors (along with their dependents) and non-contributors alike, without distinction. The free health care coverage and lack of cost controls present major challenges to the financial viability of the social insurance system. Since the late 1980s, the share of health expenditure by the Ministry of Health has been constantly increasing (from 25% of total health expenditures in 1988 to 36% in 1993) partially to counterbalance the fall in the share of insurance contributions to total health expenditure (from about 56% in 1988 to about 37% in 1993). This decline in the compulsory health insurance share is mainly attributed to the shrinking share of wages and salaries in the national product (that is to the diminishing fraction of salaried workers in the labor force as well as to falling real wages) and to public enterprises failing to pay their obligations to the system. The social insurance system is not actuarially sound; it relies heavily on government subsidies to maintain financial solvency.

C.2.4 Trends in National Health Indicators and Outcomes. Since the 1980s, the health status of the Algerian population has improved though there has been recent regression. The improvement in the last few decades is the result of better living conditions, greater access to education, improved nutrition, the development of both preventive and curative health care services, and lower birth rates. Life expectancy has increased from less than 62, in 1981, to over

2 See"Algeria Country Economic Memorandum: The Transition to a MarketEconomy"; World Bank report No. 12048-AL,May 25, 1994. Annex C.2 Page 3 of 7

68 years (69 for females) in 1993 and the crude death rate has decreased from about 13 per 1000 population in 1977 to about 5 in 1995, as a result of determined Government action and improved economic conditions. According to 1995 data, childhood vaccination rates were also high and equitably distributed across income groups.

C.2.5 The population of Algeria, which was 27,7 million in 1994, continues to grow at a rate of 2.2% per year, despite a decline in the total fertility rate from an average of 7 children per woman in 1979 to slightly more than 4 children per woman in 1993. Factors contributing to these improvements include an increased marriage age and family planning efforts. The infant mortality rate decreased from 141 deaths per 1,000 live births in the 1970s to less than 60 per 1,000 in 1993. The decline of infant mortality appears to have tapered off and remained static since the early 1990s. Moreover, long-term improvements have not occurred uniformly over the country, and disparities between urban and rural areas are significant. The Enquete Statistique Nationale suggests that regional disparities in infant mortality have increased over time: in 1992, infant mortality rates in rural areas were about 170% of the corresponding rate in urban areas, compared to 20% in 1970.

C.2.6 Communicable (infectious) diseases have also been increasing. The morbidity patterns in Algeria reflect a mixture of communicable diseases usually found in developing countries and an increasing prevalence of degenerative diseases and chronic conditions, such as cancer and cardio- vascular diseases. Since the early 1990s, Algeria has experienced a "negative epidemiological transition" with the re-emergence of communicable diseases. Progress made in the 1980s in reducing communicable diseases has now halted completely or even reversed. (see Figure 1)

Figure 1: Cases of infectious diseases

m1988 20000 01990

15000 0 1991 1992 1 000 0oI

5000

0 Typhoid Dysentery M easles M eningitis Total

Note: Annual Statisticsof Algeria, 1994. World Bank estimatesbased on the 1995ENMNV.

C.2.7 Health Care and the Poor. Basic health care services are, in principle, available to the entire Algerian population regardless of income. As explained earlier, most health care services are provided free of charge through the public sector, and are financed in large part by the social security system. Uninsured populations in Algeria are, in principle, eligible for free or subsidized care from public providers financed through subsidies from the social insurance system. As a result, the compulsory health insurance scheme is subsidizing the state by providing free health care to the lowest-income groups (e.g., veterans, invalids, and beneficiaries of the social safety net programs). Annex C.2 Page 4 of 7

C.2.8 But, the reduction in public funding is causing increased private financing (out-of pocket) and increased use of private sector medical care providers. This may lead to a two-,tiered system of care, whereby there are low quality public services for the poor, and high quality private services for the rich who can pay. At present, many of the uninsured population in fact have no access to effective public care because of poor quality and unequal geographic distribution of public delivery systems. Instead, they are increasingly relying on private services for which they must pay. Meanwhile a substantial proportion of general revenues go into subsidizing health services for middle and upper income groups, either through subsidies to the public health system or indirectly through subsidies to the social insurance schemes.

C.2.9 While the Algerian five-level public health care system claims to evenly distribute health care facilities across social groups, health care infrastructure and personnel are far from being uniformly distributed over the country. Average distance to place of consultation more than doubles from urban to rural areas (see Figure 2). Urban-rural disparities are also evident in the geographical distribution of health care personnel, who are mainly concentrated in Algiers and other large coastal cities with the lowest poverty incidence.3 To reduce this urban bias, the Government is taking measures to make it more attractive for doctors to work in the 4 southern wilayas.

C.2.10 There are also regional disparities in the number of health facility visits and number of illnesses reported across income groups. The 1995 survey shows that the poor, particularly in rural areas, are much less likely to report being ill or injured. Among those who report they are sick, about 22-26% of the poor report that they obtain no treatment at all, which is true of only 19-20% of non-poor households. Furthermore, the poor are more likely to use hospitals and less likely to use private doctors or clinics (about one half of the non-poor use private doctors or clinics, compared to about one third of the poor). Overall, the ratio of visits to sick people, suggests that: (i) the existing health care infrastructure falls short of providing equal access across the population; and (ii) that there is a higher utilization of the system in urban areas and by the richest sections of the population.

Distribution of Health Subsidies

C.2.11 In the absence of detailed information on the evolution of average recurrent unit costs, the implied relative subsidies for financing and delivery as well as their distribution remain unknown. However, there are reasons to believe that the present pricing structure may not necessarily be cost effective, efficient and equitable. User fees for outpatient and inpatient visits are very uniformnregardless of the level of health care. As a result the implied subsidy structure often provides no incentives for patients to enter the system through primary health care facilities or lower level hospitals rather than going directly to higher level hospitals.4 The available evidence suggests that patients often bypass basic care centers and regard hospitals as first point of entry into the health care system thereby adding to the inefficiencies already in place.

In 1994, the 11 most populatedwilayas, accounting for over 40% of total population and over 41% of total declared deaths, had about 60% of doctors. While, the 11 least populatedwilayas, with about 8% of both total population and total deaths, had less then 5% of available doctors. Moreover, in 1994, while 38% of specialized doctors worked in university hospitals (Centres Hospitaliers Universitaires), half of them were located in Algiers. 4 In 1995, regular user fees for outpatient visits, defined by health care level, reached on average DZD 50 for normal visits and DZD 100 for specialized services. Regular user fee for inpatient visits reached DZD 100 for hospitalization day, which is about 3% of the daily price charged by private insurance companies. Annex C.2 Page 5 of 7

C.2.12 Apart from user fees, individuals across all income groups face different travel times (transportation costs) and different physical access to medical care. While no data on expected travel time to available facilities are available, the geographical distribution of health infrastructures and personnel suggest that there is scope to improve the targeting of the public health care system toward the poor.

C.2.13 Health Care Costs and their impact on the poor. Further doubts about whether the present public health care system is pro-poor arise from the analysis of private out-of-pocket health expenditures (see Figure 3). An analysis of household health budgets by expenditure group shows that, according to 1995 data, the share of the household budget devoted to health care decreases with income denoting an income elasticity lower than unity. Health expenditures budget share is positive even at very low expenditure levels and greater in urban areas at all income levels. For the poorest 10% of the urban population, health expenditures account for about 2% of total household expenditure, while for the poorest 10% of the rural population, the household expenditure share falls to about 1.4%. Household (private) health expenditure for the poorest 10% of the urban (rural) population turns out to be three (two) times as large as the one observed for the richest 10% of the same population.

Recommendations:

Despite Government efforts and sizable public expenditures on health care, the Algerian public health care system suffers from an inefficient use of resources and faces a serious challenge: to provide more efficient and more equitable health care services of better quality, with limited increase in the resources available. As in other sectors, this translates into attempting to improve equity and efficiency of health sector operations, while reexamining the current financial burden-sharing arrangements to alleviate the Government's responsibilities. Since improving both the accessibility and the quality of the health sector continues to be an important goal in Algeria, policies to achieve that goal need to be carefully tailored to ensure that more of the benefits accrue to the poor. The Government can effectively help the poor by: improving access and quality of basic public health services, and rationalizing the role of the public and private sector in the delivery of health services. The implementation strategy should give particular attention to the role of the Government in the health sector, the private sector, and how their activities can complement one another. The Government's health policy should: (i) define a package of essential services to be delivered to the population, particularly the poor; (ii) determine how the services will be delivered to rural populations and the poor through clarifying the roles of public and private providers and addressing cost recovery; and (iii) assure that the quality is maintained. Detailed recommendations are prevented by the lack of basic information on the actual working structure of the heath care system, on its cost and revenue structure, and on its quantitative and qualitative outcomes.

C.2.14 Formulating a health policy which provides good quality basic public health services to low income groups and rural areas: Since basic public health activities generally disproportionately benefit the poor and also have the most direct impact on the population's health status, the quality and targeting of basic health care services need to be improved. The negative epidemiological transition suggests that greater emphasis should be given to primary health care, preventive care, and to the para-health sector (from immunization to sewage, from sanitation to maternal education and family planning), particularly for lower income groups and in rural and urban areas. These issues will also need to be linked to improvements in health Annex C.2 Page 6 of 7 education, especially women in rural areas in increasing the acceptance of family planning activities.

C.2.15 Improving Equity and expanding health coverage: The present system constitutes, in most respects, direct financial support to the Algerian middle and upper classes and urban population, who could afford to increase their contributions. From the distributional point of view, the existing bias against poorer regions and between rural and urban areas should be reversed. This would allow scarce budgetary resources to be targeted towards poorer groups or regions, who are more vulnerable and for whom the marginal benefit of increased health care is higher. Extending services and coverage to the poor and the marginal groups may require the Government to seek partnerships with non-governmental organizations and local communities. Strategies for expanding coverage will involve a balance among different sources of financing, i.e., combination of general revenues, social insurance and private contributions.

C.2.16 Revising the Pricing Structure: Increases in user fees andlor changes of the fee structure seem likely in the near future. However, prospects for a better pricing structure are strictly conditional on the presence of a proper and better managerial environment and hence on the design and implementation of a detailed monitoring system. To address cost recovery, a large-scale evaluation of the impact of fee increases requires knowledge of price elasticities across different expenditure groups and of willingness to pay measures. Such estimates are prevented by the quality and quantity of the available information. Pending further work in that respect, a few practical options are open for price discrimination as a method of targeting subsidies to the poor. In particular, geographical price-discrimination, disease targeting, and appropriate use of lower levels of the system will need to be closely examined. The latter entails lower fees (or higher subsidies) at health sub-centers and higher fees at health centers and hospital outpatient clinics. This pricing structure could provide an affordable entry into the health care system through the health sub-center (e.g., incentives to enter the health care system through primary health care facilities rather than hospitals). The geographical price targeting aims, instead, to tailor the fee structure to the socio-economic makeup of the population served by each facility: facilities that serve primarily poorer households would charge lower fees while facilities in wealthier areas could charge regular user fees equal to or in excess of unit costs. All these options should be closely assessed.

C.2. 17 Involving the private sector: It is sensible to separate the financing from the provision of health services. To make the best use of combined public and private resources, the Government may opt to reduce their role as a direct provider but expand their capacity as the purchaser of private health services as well as the regulator of that sector (i.e. planning, pricing and quality). This step offers an alternative strategy to expanding a publicly managed delivery system. With an increase in the role of the private sector as a provider of health care, the public savings should be reinvested in the public sector to ensure quality of care for the poor. Different options should be closely assessed. Annex C.2 Page 7 of 7

Fig. 2: Average distance from the place of consultation (in km)

MU rban nRura I 20

km :1 _____

1 2 3 4 5 6 7 8 9 10 Expenditure decile

Note: World Bank estimatesbased on the 1995 ENMNV.

Fig. 3: Private health expenditures (in % of household average total expenditure, includes medication)

2.5 2,5 IMU eb..,,a

1 .5

0.5

0 1 2 3 4 5 6 7 8 9 10 Expenditure dedle

Note: World Bank estimatesbased on the 1995 ENMNV.

Fig. 4: Private health expenditures (in % of household average total expenditure, excludes medication)

1.4 *U b.a 1.2 OR-1e~ I %0.8 0.6°°-E- 1 E,l1,nLElK K u-

1 2 3 4 5 6 7 8 9 10

Expenditure decile

Note: World Bank estimatesbased on the 1995ENMNV. Annex C.3 Page 1 of 3 HOUSINGSECTOR

About 36 % of Algeria's population lives in the main urban areas and slightly less than 50 % lives in all the areas classified as urban. The surveys for 1988 and 1995 show that a large majority of Algeria's population (about 80 % ), as well as most of the poor in both urban and rural areas, live in mainly traditional houses (Haouch)', and fewer in apartments (about 20 % ). In urban areas, however, the proportion of poor living in apartments (about 15 % ) is much higher than in rural areas (about 3 % ). These differences reflect the fact that in rural areas houses are much more common than apartments, and that the poor were more likely to live in sub-standard dwellings (non-residential or temporary structures): a sizable fraction of the rural population lives in mud and straw houses (habitationsprecaires). By 1995, most of the population and the poor (about 55 % in urban areas and over 70 % in rural areas) owned their dwellings. Renting was much more common among the non-poor (10 % of the poor were renters compared to 23 % of the non-poor), and they mainly benefit from government-provided housing programs (17 % of the non-poor compared to 4 % of the poor). Among renters, both in urban and rural areas, the poor pay a higher share of their expenditures on rent than the non-poor. The poor are also more likely to live in more crowded housing conditions: in 1995 the occupancy rate was on average as high as 8.5 persons/unit (among the highest in middle income countries) and much higher in the poorest strata of the population poor (about 4 occupants per room, compared to 3 for the non- poor).

The Algerian government has historically played a major role in providing housing, particularly in urban areas. Overall the Government's commitment in the housing sector averaged 6.4 % of GDP in 1995 (see Table 1).2 But it has been unable to meet housing demands. In recent years, Algeria has been experiencing increasingly pervasive housing shortages and construction delays which are the direct consequence of the Government's control over the housing market.3 Given the critical situation of the public housing sector, and limited access to housing credits, the gap in housing demand has been filled by the self-help construction sector either officially - with building permits - or illegally. According to Bank estimates,4reducing the Algerian occupancy ratio to international standards would call for an increase of about a quarter of the current housing stock (that is, about 1.1 million additional units).

On the current expenditure side, large implicit subsidies, attached to urban housing programs for rent, are inefficient and very costly. The amount of implicit or explicit rent subsidies are slightly lower than 1 % of GDP. Rents (averaging DA 310 per month) do not cover depreciation costs, financial costs or even maintenance expenditures and in four cases out of ten, they are not even collected.

I Traditional houses are open air courtyards lined by rooms on the inside. 2 The World Bank, Democratic and Popular Republic of Algeria: Public Expenditures: Toward greater efficiency and effectiveness; yellow cover, report No. 16171-AL, December 1996. 3 The existing housing stock is also in need of upgrading, as 55 % of existing dwellings were built before independence. 4 The World Bank, Democratic and Popular Republic of Algeria. Housing Sector Adjustment Loan (HSAL). Initiating Memorandum (October 1996). Annex C.3 Page 2 of 3 Several housing programsare operatedby the Government.These include: (i) provision of serviced lots at below-marketprices; (ii) rehabilitationof slums or standard dwellings;(iii) constructionof low-incomehousing; (iv) developmentand maintenanceof social housing rental units; and (v) provision of dwellings for selected groups of civil servants. Do these programs actually reach and benefitthe poor?

Table 1. GovernmentExpenditure in the HousingSector (1995 Allocationin BillionsDA and % Composition)

Allocation Composition Capitalexpenditure 58.3 100.0 - Rural housing 3.6 6.2 - Civil servant housing 1.6 2.7 - Serviced land 3.2 5.5 - Low-income housing 1.4 2.4 - Publichousing programnfor rent 48.5 83.2 Currentexpenditure 41.4 100.0 - Interestrate subsidieson Publichousing program for rent 8.0 19.3 - Implicitrent subsidieson Publichousing program for rent 20.0 48.3 - Subsidieson sale of public stock 0.2 0.5 - Pilot program Caisse Nationale du Logement 0.2 0.5 - Interestrate subsidieson HPS 0.2 0.5 - Subsidieson land sale 13.0 31.6 Total expenditure 99.7 Source: Ministere de l 'Habitat and World Bank estimates

A large portion of social rental housing projects is allocated to middle-income households and Government employees at very low rent levels. This is almost a direct consequenceof the institutionalsetting prevailing in the public rental sector. According to the 1995 householdbudget survey, the poorest 20 % of the urban populationuses less than 8 % of the public housing stock for rental while the richest 20 % (40 % ) have access to about a quarter (more than a half) of the same stock. In rural areas, the evidence is more mixed since public rental is concentratedin the right and left ends of the distributionwith 60 % of the population, located between deciles II and VII, renting less than 48 % of the public stock. Finally, since interest rate subsidies going to buyers of public housing disproportionatelybenefit the middle- income class, the Government needs to carefully revise its program. Interest rate subsidies are granted by CNEP conditionallyon a previous deposit at the same-savings institutions. This condition is likely to rule out any impact of the interest rate subsidy programs on the poor. Unfortunately,the available information does not provide evidence on effectiveness of other housingprograms in addressingthe needs of the poor.

Conclusions and Recommendations:

The upcoming Housing operation(HSAL) will assist the Algerian authorities in shifting from a supply-driven, public-dominated,housing sector to a demand-driven market-oriented sector.5 In particular,among the main goals of this operationis the reductionof housing subsidies

5 On the demand side, the HSAL aims at reformingthe housing finance system and developing the mortgage market,reforming the urban land market and the developmentof property rights,reforming the housing subsidy system and targeting the poor. On the supply side, it aims at restructuringand privatizingthe construction enterprisesand developingprivate contractors. AnnexC.3 Page 3 of 3 from the current 5 % to about 2.5 % of GDP, and better targeting by introductionof more transparent up-front grants for the neediest. The housing subsidy reform should include: (i) stopping the launchingof new rental housingprograms, 6 (ii) selling the public housing stock to current tenants (with exceptionsmade for the pooresttenants), and (iii) graduallymoving rents toward market rates. There is no economic or social rationale for the public sector to be responsiblefor providing housing.Provision should increasingly be the role of the private sector. Since it is typically difficult to target housingsubsidies to the poor, and given the evidencethat it is primarily the non-poor who benefit from the current system, it is strongiy advisable to gradually eliminate the housing subsidy schemes. Promotionof private sector developmentand appropriateregulation should eventually be the only areas of public sector involvement.

6 The 1995 public housing program recently scaled down to 95,000 units over the 1996-1998 period should be completed. Annex C.4 Page 1 of 10

OVERVIEW OF THE FOOD SUBSIDY PROGRAM

C.4.1. Food consumptionhas been subsidizedin Algeria since 1973. Subsidies have been both explicit (via Government payments) and implicit (via exchange rate overvaluation and fixed prices and margins). The share of explicit subsidies in total subsidies, however, grew in the 1980s.

C.4.2. Subsidies have been injected on a wide range of products including: dunum-wheat products (semolina, pasta, couscous); bread-wheat products (flour, bread); various types of milk (pasteurized, powdered milk, infant formula); sugar (granulated, cube); cooking oil (vegetable and olive oil); dried vegetables (chick peas, lentils, beans, peas); tomato concentrate; and household yeast.'

C.4.3. Explicit subsidies were originally funded entirely by budget support. This proved to be unsustainable, and, in 1982, subsidies were taken over by the Compensation Fund (Fonds de Compensation, FC). The FC2 is an extrabudgetary account at the Treasury that is funded by (i) the earmarked taxe compensatoire (TC) (which was levied on "non-essential" food items); (ii) direct budgetary contributions; and (iii) remittances on "profitable" importers.

C.4.4. As part of its adjustment program, the Algerian Government began reducing food subsidies in 1992, and most subsidies were phased out by 1996 (as discussed in more detail below). This note is divided into two parts: (i) an analysis of the pre-reform subsidy program; and (ii) an assessment of subsidy reforms, with particular attention to their impact on the poor.

PART I. THE PRE-REFORM FOOD SUBSIDY PROGRAM (UNTIL 1992)

Institutional Arrangements & Subsidy Mechanisms (Until 1992)

C.4.5. Through the Compensation Fund, subsidies for most products were injected at upstream levels on the marketing chain, usually on the raw material (e.g., on durum wheat or semolina, which is transformed into pasta and couscous). These explicit, but indirect, subsidies were transmitted to consumers via strict price and margin controls at all stages. Upstream payments were administratively simpler than direct retail subsidies, which would have required documentation of sales and payments to many more agents (e.g., bakeries).

C.4.6. Food subsidies were unrestricted, granting effective income transfers to anyone who chose to purchase the subsidized commodities. The magnitude of these transfers to any individual was limited only by the amount of subsidized products he or she chose to consume. Subsidies were extra-marginal and had an impact on consumer welfare and nutritional intake via both price and income effects.

C.4.7. Although the Ministry of Economy's Direction Gen&raledes Prix et de la Concurrence managedthe food subsidy program through the FC account, many other agencies were involved in the subsidy program and the distribution of subsidized products. In most subsectors, the subsidy program perpetuated an elaborate array of monopolistic marketing boards and state-controlled distribution networks. These arrangements are discussed in more detail for the specific subsectors below.

Algeria has also maintainedagricultural producer subsidies(inputs, outputs) as well as energy and service subsidies(including subsidieson education,housing, health, hotel and restaurants,press, and merchandiserail transport). See World Bank (October1991).

2 The FC is overseen by the Direction Generale des Prixet de la Concurrence (DGDP), a branch of the Ministry of Economy. Annex C.4 Page 2 of 10

C.4.8. Cereals Subsidies. Cereals (primarily durum and bread wheat) absorbed the largest share of consumer food subsidies in Algeria (as shown in Figure 1 below). The marketing board OAIC (Office

Algerien Interprofessionnel des Ceriales) monopolizes3 the cereals subsector, controlling the supply (domestic and imported), collection, storage and distribution of all cereals products. Processed semolina and flour is, however, directly imported by ENIAL. Processing is conducted by regional parastatals, theERIADs (Entreprises Regionales d'Industries Alimentaires), which process bread wheat into flour and durum wheat into semolina, which is then further transformed into pasta and couscous.

C.4.9. Subsidies were injected at the top of the marketing chain rather than at retail levels to simplify the number of payment points. The FC paid the OAIC a subsidy to reimburse the difference between the producer and import prices and the fixed sales prices. The ENIAL also received a subsidy to compensate for the difference between imported prices and sales prices. These upstream subsidies (on durum and bread wheat) were passed down the chain to consumers of the final products (semolina, couscous and pasta in the case of durum-wheat subsidies; and bread and flour for bread-wheat subsidies) via a system of controlled prices and margins at all stages of the marketing chain.

C.4.10. Milk Subsidies. Various varieties of milk also accounted for a substantial share of food subsidy outlays in Algeria (as shown in Figure 1 below). Milk subsidies were injected on pasteurized milk (reconstituted from imported powder), powdered milk (sold directly to consumers), and infant formula.

C.4. 11. Two parastatals control the import of milk powder: the Office du Lait (which maintains three regional offices) and ENAPAL.4 Pasteurized milk is processed from imported powder (with some local fresh milk mixed in) by the three regional offices of the Office du Lait. Ex-factory and retail prices were controlled, and the FC paid the Office a subsidy to cover the difference between the cost-price and the ex- factory price (adjusting for transformation costs).

C.4.12. ENAPAL (Entreprise nationale des produits alimentaires) is charged with importing, commercializing and distributing (to retailers) powdered milk (lait lahda).5 Powdered milk is imported and sold mainly in 500-gram boxes. Hospitals also purchase powdered milk in 10-kilogram sacks. ENAPAL is also responsible for importing small quantities of concentrated infant formula. Until milk subsidies were eliminated in 1996 (as discussed below), the FC reimbursed ENAPAL the difference between unit cost prices and the fixed wholesale price of powdered milk.

C.4.13. Sugar Subsidies. Sugar subsidies absorbed about one-fifth of subsidies in Algeria (as shown in Figure 1 below). Like for other subsectors, the sugar subsector is dominated by parastatal marketing boards. ENAPAL is the sole importer of raw and refined sugar. Imported raw sugar is processed and refined by ENASUCRE and then distributed. The FC paid ENAPAL and ENASUCRE a subsidy to cover the difference between their cost prices and their sales prices. Prior to reforms, sugar was subsidized in three forms: granulated sugar, cube sugar, and sugar loaf.

C.4.14. Subsidies on Other Products. Subsidies on other products (cooking oil, dried vegetables, tomato concentrate) accounted for only 5 % of total subsidy outlays in Algeria, as shown in Figure 1 below (in 1991). They were injected in a similar manner to those for cereals, milk, and sugar.

3 Verify current status with IMF.

4 Verify current status with IMF There is no further processing of powdered milk prior to retail sales. AnnexC.4 Page 3 of 10

Magnitudeand Fiscal Cost of FoodSubsidies

C.4.15. Explicit food subsidies accounted for a substantial share of the value of most products in the FC program. For cereals products, subsidies on semolina and couscous/pasta accounted for 50 % and 85 % of their unsubsidizedvalue 6 respectively (in 1991), while those for flour and bread contributed roughly one- third and two-thirds. With respect to milk, subsidies on pasteurized and powdered milk accounted for roughly half and three-quarters of their unsubsidized value respectively. Sugar subsidies ranged from roughly 50 % for granulated sugar to two-thirds of the product value for cube sugar. Subsidies on cooking oil and dried vegetables accounted for half of the unsubsidized product value, while those for tomato concentrate represented roughly two-thirds of its value.

C.4. 16. Explicit outlays on food subsidies in Algeria have been quite substantial, reaching close to five % of GDP and 17 % of total government expenditures in 1991 (as shown in Table 1) below.

C.4.17. As shown in Figure 1 below, the bulk of these subsidies was allocated to cereals products (39 %), milk (38 %) and sugar (18 %) in 1991.

Table 1: Algeria: Fiscal Cost of ExplicitConsumer Food Subsidies, 1989-95

Subsidies Pre-Reformss Reforms *as%of 1989 1990 1991 1992 1993 1994 1995 GDP 2.9 4.3 4.7 3.3 1.8 2.1 1.2 Total Gov' tExp. 9.8 16.8 16.9 11.6 5.5 6.6 4.0 Source:Conseil National de la Planification(CNP), Algeria

Figure 1 - Algeria: Product Shares in Total Consumer Food Subsidies, 1991

Other Cereals 5% 39%

Sugar 18% Milk 38%

Note: "Other" includes subsidyoutlays on cooking oil (1.4%) dried vegetables(2%); tomato concentrate (1.4%) and yeast(0.5%).

6 Calculatedas: unsubsidizedprice = subsidizedprice + unit subsidyfor each good. Annex C.4 Page 4 of 10

Distributional Incidence of Food Subsidies (Pre-Reforms: 1991)

C.4.18. Absolute Incidence. Food subsidies in Algeria were poorly targeted to the poor. As shown in Table 2 below, in 1991,7 individuals in the poorest decile only received 6 % of total food subsidies, as compared with those in the richest decile, who received close to three times more (16 %). The poorest quintile of the population received only 13 % of the subsidies, while leakages to the top two quintiles were substantial (the top two quintiles received over half of total subsidy transfers).

C.4.19. Overall, durum-wheat subsidies -- particularly those for semolina -- had the least leakages, though the rich still benefited more in absolute terms from these transfers (as shown in Table 2 below). Bread- wheat subsidies were poorly targeted, with the richest decile receiving over three and five times more from bread and flour subsidies respectively than the poorest. Although the disparities in absolute benefits were particularly evident for cube sugar subsidies, which were the most regressive in absolute terms, subsidies on granulated sugar resulted in less leakage to the rich. Similarly, incidence patterns for subsidies on the two varieties of milk, pasteurized and powdered, differed substantially, with the latter resulting in smaller leakages than the former. Subsidies on all other products (cooking oil, dried vegetables and tomato concentrate) were poorly targeted.

C.4.20. Relative Incidence. Despite granting larger absolute benefits to the rich than to the poor, consumption patterns reveal that the program was progressive in relative terms. Table 2 below shows food subsidies constituted a meaningful source of income for the poor, amounting to over one-fourth of total expenditures for the poorest decile, and were five times more important for the poor than the rich as a share of total expenditures (Figure A).

C.4.21. Semolina subsidies had the largest impact on the purchasing power of the poor, contributing to close to seven % of total expenditures of individuals in the lowest decile. Subsidies on bread, powdered milk, granulated sugar, tomato concentrate, cooking oil, and pasta were also important to the poor, while those for couscous, flour, cube sugar and dried vegetables had little impact on the purchasing power of the poor. Cube sugar was the only product for which subsidies were regressive in relative terms, contributing more as a share of total expenditures of the rich than the poor.

Nutritional Importance of Food Subsidies (1991)

C.4.22. Table 2 below reveals that the contribution of food subsidies to caloric intake was substantial in 1991. On average, over one-third of total calorie consumption was derived from food subsidies. Food subsidies were even more important to the nutritional intake of the poor, contributing over 43 % of caloric intake for individuals in the lowest decile in 1991. Subsidies on semolina were particularly important, contributing 22 % of total caloric intake of the poorest decile. The nutritional contribution of food subsidies is crucial to those individuals in the lowest decile and quintile, whose overall caloric consumption falls below the estimated average human energy requirement for Algeria (of 2165 calories per day) (Figure B).

The incidence of food subsidies is analyzed for 1991, the year just prior to the implementation of most reforms, using data on consumption patterns from the 1988 household expenditure survey and policy data (unit subsidies, consumer prices) from 1991 (which were not available for 1988). Annex C.4 Page 5 of 10

PART II. TLE REFORM PROGRAM: FROM FOOD SUBSIDIES TO DIRECT TRANSFERS (1992-PRESENT)

C.4.23. Under the adjustment and liberalization program initiated in 1989, the Algerian Government developed plans to phase out food subsidies and replace them with a system of direct transfers. Implementation of these reforms gained momentum by 1992, and many food subsidies were slashed in June of that year. THE NEED FOR REFORMS

C.4.24. The primary impetus for food subsidy reforms was the high and rising costs of the program. As discussed above, by 1991, food subsidy outlays had reached unsustainable levels at close to 5 % of GDP and 17 % of total government expenditures.

Table 2: Algeria: Distributional Incidence of Food Subsidies, 1991

Dl Ql I Q2 Q3 I Q4 I Q5 I DIO I Average | D1O/Di Absolute Incidence of Food Subsidies, DA/Capita Semolina 154 164 177 183 192 197 201 182 1.3 Pasta 51 58 68 74 81 94 97 75 1.9 Couscous 6 6 6 13 10 14 15 10 2.6 Flour 3 4 6 7 11 15 17 8 5.5 Bread 98 123 174 207 248 306 329 212 3.4 Pasteurized milk 23 27 46 56 77 101 108 61 4.6 Powdered milk 70 81 86 94 96 106 III 92 1.6 Granulated sugar 67 75 93 97 99 121 126 97 1.9 Cube sugar 1 2 6 9 10 23 30 10 19.8 Cooking oil 53 59 74 83 96 114 122 85 2.3 Chick peas 5 6 10 12 13 18 21 12 3.9 Lentils 8 9 12 13 14 18 20 13 2.6 Driedbeans 6 7 9 11 12 14 15 10 2.4 Tomato concentrate 63 71 105 117 178 373 461 169 7.4 Total subsidies 609 691.9 871.2 975.0 1137.4 1513.5 1670.8 1037.8 2.7 % of food subsidies 5.9 13.3 16.8 18.8 21.9 29.2 16.1 100.0 2.7 Relative Incidence of Food Subsidies, % of Total Expenditures per Capita Semolina 6.7 5.9 3.7 2.8 2.1 1.1 0.7 3.1 0.1 Pasta 2.2 2.0 1.4 1.1 0.9 0.5 0.3 1.2 0.1 Couscous 0.2 0.2 0.1 0.2 0.1 0.1 0.1 0.1 0.2 Flour 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.4 Bread 4.3 4.3 3.6 3.1 2.7 1.7 1.1 3.1 0.3 Pasteurized milk 1.0 0.9 0.9 0.8 0.8 0.6 l 0.4 | 1.5 0.1 Powdered milk 3.1 2.8 1.8 1.4 1.1 0.6 0.4 r__1.5 0.1 Granulated sugar 2.9 2.7 1.9 1.5 1.1 0.7 0.4 1.6 0.1 Cube sugar 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 1.6 Cooking oil 2.3 2.1 1.5 1.3 1.1 0.6 0.4 1.3 0.2 Chickpeas 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.2 0.3 Lentils 0.3 0.3 0.2 0.2 0.2 0.1 0.1 0.2 0.2 Dried beans 0.3 0.2 0.2 0.2 0.1 0.1 0.1 0.2 0.2 Tomato concentrate 2.7 2.5 2.2 1.8 2.0 1.9 1.6 2.1 0.6 Total subsidies 26.7 24.4 18.2 1.8 2.0 1.9 1.6 2.1 0.6 Note: Basedon consumptiondata fromthe 1988household survey. Annex C.4 Page 6 of 10

C.4.25. Inefficiencies in the food subsidy program also made it a prime candidate for reforms. Despite their importance to the poor, substantial leakages to the non-poor made it clear that food subsidies had not proven to be a cost-effective way of transferring income to the poor (as discussed above). In addition, the extensive system of universal food subsidies had perpetuated inefficient, centralized distribution networks and the persistence of price controls on such a large share of GDP hampered the relative price adjustments expected from on-going liberalization. Finally, anecdotal evidence supported claims that subsidized consumer prices had encouraged over-consumption, waste, and smuggling.

The Phasing of Food Subsidy Reforms

C.4.26. The basic strategy for food subsidy reforms was to gradually increase prices and phase out subsidies while reducing the degree of intervention in product pricing. Since 1989, products have been grouped into three categories: (i) those with administratively fixed prices (subject to ceilings at all stages of the marketing chain);8 (ii) those with controlled profit margins; and (iii) those with free prices which still need to be declared to authorities. Most subsidized food products were initially subject to control in the first category, i.e., at all stages of production and could only be changed by decree (which is the case of cereals and dried vegetables) or administrative decision (which is the case of bread, flour, pasta, couscous, milk, sugar, cooking oil, tomato concentrate, etc.).9 The liberalization program sought to gradually move products from the first category (with the most stringent controls) to the second and third categories, which were less interventionist.10

[9xi 1-i_ to*ilr-_F W7.__oodi riala otheraspec_o(~w _ gram !infieriawasaseries ofattMpts to improvethe tagtng of foodsubsidies 8 by 4igentiating bet thev lvd jIity of subsidizeditems and that of freeprice varieties. For bread-whet subsidies,oreamriple, reoms involveddistinguishing betwee the qualityof subsidizedand nononubidiedproductse f wereto be madefrom . 'superoe"flour iade with a lowerextaion rate. Subsdizedbread and flour(pai etfArbieordiaire) were to be madefrom a higher-extractionrate flour,u whil Is perceivedby Algeria consumersto} be o a lowerquality due to its darkercolor and roughertexture, despite its ighernutritional vaue (dueto higher brancontet). For durwu.whatsubsidies, direct subsidies were eliminated on pastaand couscousmore quickly than thoseon semoia(whchwsbtteta . Italian pasta was also introducedat marketprices to divertthe demandof the rih *a'fmte ubidze arieties. V 00 d\ Althoughsurvey data in Algeriadoes not allow for a detailedanalysis of consumptionpatterns and the impactof theseself4argetingattempts, experience i othercountries (Tunisia, Morocco) indicates that suchreforms can indeed uisi; T. k adLint sidiesWeduc a)nd .asfer. thd fiBakl cost of these However,this experienceaso Sefareig isdifclt:in situationsin whicbSthe 'superioe' items are madefrom the same mwa material as + y r ~or'infer' prducts as was the case in Algeria (pasta ansdcouscous are made from subsidized ;ta g X b~ ~ ~~~edierte,toun:u,ses suchas 'isupeioeJ'bread, biscutts etc.). FSi2F~sow tutiNeb hd i idgth uibimbe,IMF (Il 1l, JournalOjrfiel No. 02, 1"2, No. 9 I, Adsninistrativeiksion, June 17, 1992.

8 There are two types of price ceilings:those which can only be changedby a ministerialdecree (prixplafonnes par decret)and those which can be changedby an administrativedecision (prix plafonn&spar arrete).

9 See, for example,Journal Officielde la RepubliqueAlgerienne No. 53 du 30 octobre 1991. For example, in 1992,when many reforms began, tomatoconcentrate, granulated sugar, cookingoil, superior flour and semolina, pasta and couscous,and specific milk products were moved from the restrictivecontrols at all stages (category 1) to the less-interventionistmargin- controlledcategory 2. Source:Journal Officiel de la Republique Algerienne No. 31 du 26 avril 1992. Annex C.4 Page 7 of 10

C.4.27. Table 3 below presents the phasing of these reforms for items in the food subsidy program. Subsidies on products clearly consumed disproportionately by the rich were phased out more quickly. For example, subsidies on cube sugar were eliminated early in the program (in 1991). The first broader wave of subsidy reductions occurred in June 1992, and explicit subsidies were eliminated for sugar, cooking oil, dried vegetables and tomato concentrate (though implicit subsidies for these products remained due to the persistence of controls on profit margins). Subsidies on three basic staples (semolina, flour and milk) 1I were maintained until 1996.12 Price increases for these three products are the most politically sensitive in Algeria. 13

Tabl3~-he PSbg of Subs1idioon P~Ftd et f r F (

Product Price Ceilings Margin Controls Explicit subsidies (Category 1) (Category 2) eliminated Durum-Wheat * Semolina 1990d, 1991&92a Late 1996* * Pasta 1990d, 1991a 1992 Direct-1992, indirect * Couscous 1990d, 1991a 1992 1996 Direct-1992, indirect 1996 Bread-Wheat * Flour 1990d, 1991&92a Late 1996* * Bread 1990d, 1991&92a Late 1996* Milk * Pasteurized 1991&92a 1992 (unsubsidized Late 1996* * Powdered (Lahda) 1991&92a varieties) Late 1996* * Infant formula 1991&92a Late 1996* Sugar * Granulated 1990&91a 1992 June 1992 * Loaf, Cube 1990a 1991 1991 Cooking Oil 1990&91a 1992 June 1992 Dried Vegetables 1990&91&92d June 1992 Tomato Concentrate 1990&91a 1992 June 1992 Household Yeast 1990d,1991a 1992 1991 a = Category I - price ceilingscan be modifiedby administerialdecision (arrete) d = Category I - price ceilingscan be modifiedonly by decree (decret) * = Need to verify thiswith Government (obtain decrees). Sources: Journal Officiel:No. 11 (1990);No. 53 (1991);No. 31 (1992),IMF documents

Impact of Food Subsidy Reforms

C.4.28. Table 1 above shows that these reforms indeed had a quick and substantial impact in reducing the fiscal burden of food subsidies. The cost of food subsidies was sharply reduced from close to 5 % of GDP and 17 % of total government expenditures in 1991 to under 2 % of GDP and roughly 5 % of total government outlays in 1993 and to I % of GDP and 4 % of total government spending by 1995. With the final elimination of subsidies on the remaining staples (semolina, flour and milk), the subsidy bill was presumably driven to zero by 1997 (Figure C).

Note that although direct subsidieson pasta andcouscouswere eliminatedin 1992, these products remained indirectlysubsidized via the subsidy on semolina, since pasta andcouscousare made from processedsemolina. Similarlyfor bread, althoughreports indicatethat bread subsidieswere eliminatedin 1992,bread remainedsubsidized via the subsidyon its raw material(flour).

12 There is a need to verify the eliminationof subsidieson semolina,flour and milk in 1996with the Govemmentand to obtain decreeson these reforms.

13 In June 1995,for example,general strikes in responseto price increasesfor these foodsthreatened to jeopardizethe liberalizationprogram. Annex C.4 Page 8 of 10

C.4.29. An analysis of survey data, however, shows that these savings have come with a substantial cost in terms of the adverse impact of these reforms on the poor. As shown in Tables 4 and 5 below, food subsidies still constituted an important share of the poor's purchasing power (roughly 20 %) and calorie consumption (over one-third of total intake) in 1995. In that year, individuals in the poorest decile received an average of DZD 2082 per person per year in Algeria. Per capita transfers were slightly higher for the poorest individuals in rural areas than their counterparts in urban areas (individuals in the poorestdecile received an average of DZD 2174 and DZD 1838 in rural and urban areas respectively in 1995), largely due to high consumption of heavily subsidized semolina in rural areas.

C.4.30. Moreover, available data indicate that the total caloric intake of the poorest groups had fallen to extremely low levels (1237 calories per person per day as compared with the recommended minimum of 2165). Semolina subsidies in particular made an important contribution to the welfare and nutritional status of the poor.

C.4.3 1. The elimination of these remaining subsidies by 1996 clearly had an important adverse impact on the poor. Assuming zero own- and cross-price elasticities,14 Tables 4 and 5 provide an estimate of the welfare and nutritional losses associated with such an elimination.15 It is thus estimated that the elimination of these subsidies by 1996 cost the poor about one-fifth of their purchasing power and one-third of their total caloric intake (which had already fallen to critically low levels, as shown in Table 5 below). The elimination of semolina subsidies had the largest adverse effect, reducing the purchasing power and caloric consumption of the poorest decile by about 11 % and 24 % respectively.

Table 4: Algeria: Distributional Incidence of Food Subsidies, 1995

Dl I Ql I Q2 Q3 Q4 Q5 D10 I Average DIO/DI Absolute Incidenceof Food Subsidies, DA/Capita Semolina 1043 1142 1318 1444 1526 1644 1688 1415 1.6 Pasta 100 110 164 215 275 460 497 245 5.0 Couscous 84 96 117 154 197 298 365 172 4.3 Flour 135 148 149 158 164 179 194 159 1.4 Bread 212 278 476 551 672 822 825 560 3.9 Pasteurized milk 203 306 576 807 1079 1550 1728 864 8.5 Powdered milk 306 1 335 468 545 707 894 1014 590 - 3.3 Relative Incidence of Food subsidies, % of Total Expenditures Per Capita Semolina 11.2 9.9 6.7 5.2 3.9 2.3 1.7 5.6 0.2 Pasta 1.1 1.0 0.8 0.8 0.7 0.6 0.5 0.8 0.5 Couscous 0.9 0.8 0.6 0.6 0.5 0.4 0.4 0.6 0.4 Flour 1.4 1.3 0.7 0.6 0.4 0.2 0.2 0.7 0.1 Bread 2.3 2.3 2.4 2.0 1.7 1.2 0.8 1.9 0.4 Pasteurized milk 2.2 2.5 2.9 2.9 2.7 2.1 1.7 2.6 0.8 Powdered milk 3.3 2.9 2.4 2.0 1.8 1.2 1.0 2.0 0.3 Total subsidies 22.3 20.8 16.5 14.0 11.7 8.1 6.4 14.2 0.3 Note: Indirect subsidies on pasta, couscous and bread. Source: 1995 ENMNV and Staff estimates.

14 These elasticities assume that the quantities consumed remain constant at their 1995 levels. This calculation also assumes that the quantities produced and imported remain, as do international and producer prices. It further assumes that the distribution of total expenditures and expenditures on subsidized products remains constant. is The cost to consumers of an elimination of food subsidies and a liberalization of prices could actually be higher than the above calculation, which only takes into account the removal of explicit subsidies. Annex C.4 Page 9 of 10

Table 5: Algeria:Nutritional Importance of Food Subsidies,1995

1 Di Q I Q2 Q3 Q4 Q5 DIO IAverage DIOIDl Caloric Intake From Food Subsidies, as 5 of Total Intake i Semolina 23.6 21.6 16.9 15.3 13.5 11.2 10.5 15.7 0.4 Pasta 0.9 0.8 0.8 0.9 0.9 1.2 1.2 0.9 1.4 Couscous 0.7 0.7 0.6 0.6 0.7 0.8 0.9 0.7 1.2 Flour 2.8 2.5 1.7 1.5 1.3 1.1 1.1 1.6 0.4 Bread 5.3 5.6 6.7 6.4 6.5 6.2 5.6 6.3 1.1 Pasteurized milk 1.7 2.0 2.7 3.1 3.4 3.8 3.9 3.0 2.3 Powdered milk 3.3 2.9 2.4 2.0 1.8 1.2 1.0 2.0 0.3 Total Subsidies 36.3 34.5 30.5 28.9 27.6 25.4 24.4 9.4 0.7 Total Caloric Intake 1237 1505 2194 2657 3181 4143 4510 2736 3.6 Note: Indirect subsidies on pasta, couscous and bread.

C.4.32. To compensate for the losses associated from the gradual elimination of food subsidies, the Algerian Government introduced a number of direct cash transfers beginning in 1992 (and later modified in 1994). The LSMS did not gather information on the receipt of these transfers, which would have allowed for a calculation of the net effect of the elimination of food subsidies and the introduction of direct cash transfers. Average transfers from the two main programs, however, indicate that those who received the direct transfers were indeed compensated for the removal of food subsidies and the net effect for beneficiaries of these programs was essentially neutral. Indeed, those receiving benefits under the AFS program (the elderly and the handicapped) received an average transfer of DZD 2291 per person per year'6 while beneficiaries of the IAIG public works program received and average transfer of DZD 5091 per person per year, as compared with the average food subsidy benefit of DZD 2082 per person per year in 1995 for individuals in the lowest decile. While the average level of transfers under these direct transfer programs appears to adequately compensate the poor for the loss of food subsidies, it is unclear whether the scope of these programs, in terms of their coverage of the poor, was broad enough to prevent an increase in poverty arising from the removal of food subsidies.

Figure A - Algeria: Importance of Food Subsidies to the Poor, 1991 Subsidy Contribution to Total Per Capita Expenditures and Total Caloric Intake

50.0% -- 43.4% 42.2% 386 369 353 30.0% 26. 242 38% 36.9% 311% 2930/ 01%ofPerCapitaExpenditures

320.0%~ 18. *% ofCaloric Intake from Subsidies % 20. 0% - 14.2 2 8; 10.0% '.U 8 0.0% Dl Q1 Q2 Q3 Q4 Q5 DIO Deciles, Quintiles

Note: Based on consumption data from the 1988 household survey.

16 Based on an average household size of 6.6 persons. Annex C.4 Page 10 of 10

Figure B - Algeria: Total Outlays on Explicit Consumer Food Subsidies 20.0 18.0 16.8 16.9 16.0 -1 %ofGDP 14.0 11.6 1I %ofGovtExp 12.0 9.8% 10.0 8.0% -. __ 6.6% 6.0% 4. 4.7 4.0% 4.0%/ 2. 3.3 4.0%2. 2.0%0.8 21o. 0.0% 1989 1990 1991 1992 1993 1994 1995

Source: Conseil National de la Planification (CNP), Algeria

Figure C - Algeria: Absolute Incidence of Food Subsidies, 1991

2500 2000 1514 1671

1000 871 975 1137 *Absolute Subsidies (DA/cap.) 500~f l 0! Dinar Per Capita Dl Q1 Q2 Q3 Q4 Q5 D1O

Deciles, Quintiles

Note: Based on consumption data from the 1988 household survey. Annex C.5 Page 1 of 6

SOCIALASSISTANCE PROGRAMS

C.5.1. There are three types of budgetary social assistance programs in Algeria. The first is the long- standing system of social programs for vulnerable groups such as veterans, the handicapped, etc. The second is the family allowance programs for salaried workers affiliated with the social security system. The third consists of a number of cash transfer programs introduced in 1992 and revised in 1994 to compensate for the gradual elimination of subsidies on basic food articles of consumption' (Table 1).

Traditional Social Programs

C.5.2. There are numerous social programs which provide in-kind and cash transfers to special vulnerable groups. These programs are for the most part targeted via indicators. They include: (i) financial aid to the severely handicapped without income;2 (ii) pension benefits to war veterans (moujahidines), separate from the insurance schemes; (iii) scholarships for children of less wealthy families; and (iv) food aid to all children in schools located in geographically disadvantaged areas (i.e., the south). The budgetary expenditures for these programs amounted to about 2% of GDP in 1995. There is little clear evidence on coverage of the poor by these transfer schemes. The 1995 survey does not provide detailed information on these transfers. However, according to the 1988 survey, the scholarships were mainly benefiting the non-poor (about 1-2% of income source for the non-poor compared to 0.4% for the poor). In addition, the eligibility criteria for certain programs do not appear to correspond closely to the characteristics of the neediest groups. For example, the scholarship program is open to children of families with incomes of up to eight times the minimum wage (SNMG).

Family Allowances

C.5.3. The family allowance scheme redistributes income to salaried and pensioned workers affiliated with the social insurance system and who have children. Thus coverage is limited to the families of wage-earners in the formal sector. In 1995, about 6 million individuals received these benefits. This program since 1994 has been financed entirely by the budget, and the total budgetary cost in 1995 was about 1% of GDP. Family allowances have averaged DZD 300 per month and per child up to a maximum of DZD 900 per month. These benefits are not targeted but provided regardless of income levels. The families of self-employed heads of household, and those working in the informal sector are excluded. It is fair to assume that the poor do not benefit from family allowances.

A number of cash transfer programs were introduced in 1992 to compensate for the reduction of food subsidies. These programs included: 1) indemnite complementaire d'allocationfamiliale or ICAF; 2) indemnite pour salaire unique or IPSU; 3) indemnite complementaire de pension et de rente or ICPR; and 4) indemnite des categories sociales sans revenu or ICSR. By late 1994, some of these (IPSU and ICPR) had been integrated into the existing social insurance system; the supplementary family allowances scheme (ICAF) had merged with the existing system of family allowances (allocationfamiliale or AF)'; and finally the cash payment scheme (ICSR), which proved to be expensive and difficult to manage, was replaced by two new programs. For more details see: "The Democratic Popular Republic of Algeria: CEM: Transition to a Market Economy"; World Bank, report #12048-AL; May 25, 1994.

2 Severely (100%) handicapped (aged 19 and above) receive cash transfers. At present about 230,000 people receive on average DZD 2,500 per month.

3 In 1995 scholarships amounted to DZD 200 million for as many as 130,000 beneficiaries (as opposed to DZD 635 million and 635,000 beneficiaries in 1984). Full-time and part-time grants amount to DZD 1,296 and DZD 648 a year. Free food and accommodation in basic education accounted for DZD 1,540 million (DZD 821 million in 1984) of which DZD 300 million devoted to school refectories (DZD 428 million in 1984). About 800,000 pupils (that is, some 12% of the total), largely concentrated in the most needy areas of the country, benefited from food aids. Annex C.5 Page 2 of 6

New Cash-transfer Programs.4

C.5.4. A new system introduced in 1994 includes two schemes: (i) the solidarity transfer (allocation forfaitaire de solidariti or AFS), which provides assistance to the elderly (age 60 and over) and the handicapped who are missed by other social assistance programs, the elderly without pensions or other major sources of income, and the handicapped who are not totally incapacitated but who are unable to work and have little or no savings; and (ii) the social-employment program (indemnite pour activite d'interet gineral or IAIG), which provides employment - normally of limited duration - on a self- targeted basis to those who are willing to work at half the minimum wage.5 In 1996, a semi-independent agency (Agence de Developpement Social), under the Ministry of Labor and Social Protection, was established to foster the understanding of poverty in Algeria and to improve targeting of these safety net programs.

C.5.5. AIS. The program of aid to the elderly and handicapped (AFS) covered, as of the end of 1996, about 410,000 heads of households (430,000 in 1995), or about 840,000 people. Each beneficiary received DZD 900 (DZD 600 in 1995) per month, plus DZD 120 per month for each dependent up to a maximum of three. Transfers were paid on a monthly basis to beneficiaries. Among the heads of benefiting households, in 1996, 77% were elderly and 23% handicapped. In particular, the program reached over 20% of the elderly population and 25% of the handicapped population aged 18 and over. For 1997, beneficiaries are expected to average about 420,000. In principle, the screening of the handicapped, and elderly poor is located at the municipal level by committees responsible for verifying and implementing the eligibility assessment.

C.5.6. Recent work on a small sample of beneficiaries6 sheds additional light on the characteristics of AFS recipients and on the design of the eligibility criteria to identify them. The typical beneficiary family is headed by a married male of over 70 years of age with very limited education, with children (more than five) living in an urban area with limited access to basic infrastructure (in particular water supply and telephone). The typical budget structure of such a family is mainly characterized by food requirements -- AFS recipients tend to spend their transfer on food. Finally, handicapped AFS recipients tend to be over 43 years of age and 80% are invalids. (Table 2)

C.5.7. Unfortunately, the 1995 survey cannot be used to check this profile or compare AFS recipients with other households. Still, there are reasons to believe that the targeting of the AFS program is not entirely satisfactory and could be improved. The 1995 poverty profile, discussed in Chapter I, indicated that poverty is considerably higher for elderly and disabled men in rural areas than in urban areas, suggesting that strategies to alleviate poverty should also target this group. The existing AFS program clearly excludes the rural handicapped and elderly for whom either this should be expanded or some other transfers should be designed. Measures to avoid overlapping between programs and to strengthen the AFS program have already been taken under the SAL and will be carried on into 1997 (introduction of a new payment system, through agreement with the PTT, has allowed to make payments monthly, rather than quarterly; and to reduce the risk of overlaps, measures to integrate the AFS transfers with other existing social programs will continue to be implemented).

4 See "Algeria:Structural Adjustment Loan", 1996. In addition,a contributoryscheme of protectionfor workerslaid off for economicreasons was recentlyintroduced. Benefits,covering from a I to up to 3 year period,decline over time.

6 The survey (Enqueted'evaluation du dispositifdefilet social) covers 78 AFS beneficiariesand 209 IAIG recipients and may be hardly considered as representativeof the populationof AFS and IAIG recipients.The following informationshould therefore be treated with great care. See: 'Programmesdu Filet Sociar', F. Tebbal & S. Belghazi, October1995. Annex C.5 Page 3 of 6

C.5.8. LAIG. The employment program (IAIG) provided jobs of relatively short duration to 190,000 participants (430,000 in 1995) at over 16,000 work sites in both rural and urban areas in 1996. The program's key feature is its self-targeting to the able-bodied poor without alternative employment: it is designed to benefit only those willing to work for about half the minimum wage (or DZD 2,800 per month in 1996) for an 8 hour work day. Participation in the program is restricted to no more than one member of a given household. This is mainly because the budget cost of the program is fixed and the objective of the program is not to provide as many jobs as possible for those who are willing to participate. Among the beneficiaries, in 1996, 30% were female and 37% were under 25 years of age (Figure 1). The program appears to have reached about one quarter of the unemployed. For 1997, beneficiaries are expected to average at about 150,000.

C.5.9. On the basis of a small sample of direct transfers beneficiaries, IAIG recipients are found to be mostly married males (aged about 31) living in urban areas whose standard of living crucially depends on the money transfer. Interestingly, a substantial fraction of IAIG recipients show surprisingly high levels of education. Over 50% of the participants have completed their secondary or higher education, while only 40% are illiterate or have primary level education. The poverty profile discussed earlier (see Chapter I & Annex A3), provides information which could improve the targeting of the IAIG programs. According to the 1995 poverty profile, if the objective of assistance to the unemployed is poverty alleviation, such assistance should be mainly targeted to the more mature unemployed (over 30 years of age), especially in urban areas, with up to a primary education. (Table 3).

Figure 1: Age distribution of IAIG beneficiaries (%, 1996, 3rd quarter)

50 M ale 40 4.rFem ale 30

10

18-25 26-30 31-40 41-50 51-60 >60

Age brackets

C.5.10. As in the case of AFS, measures to achieve better targeting of the program are being designed under the SAL. The Government is implementing measures to enhance the self-targeting features, such as enforcing a full day's work for a full day's pay at about half of the minimum wage, and launching the preparation of a poverty map in order to target public work sites more closely to geographical areas identified as having a high concentration of poor and unemployed people. Under the Social Safety Net I Project and the upcoming Social Safety Net II Project, it is envisaged that existing IAIG schemes will be Annex C.5 Page 4 of 6 accompanied by a labor intensive public works scheme designed to increase the income of the unemployedpoor and improvethe qualityof life in poor communities.7

Conclusionsand Recommendations:

C.5.11 The social assistance and safety net programs in Algeria are targeted to various groups. Unfortunately,little is known with certainty about the impact of these programs on poverty. The new safety net programs (AFS & IAIG) are expected to be pro-poor, and could have already played an important role in poverty alleviationefforts. But the targeting of these programscould be improved. In some cases it is clear that the schemesdo not always reach the poorest. This does not mean that they are not cost-effective schemes. Given political and economy constraints and the administrative and other costs of targeting, the transfer programsmay be having reasonableimpacts on the living standardsof the population.However, it does implythat additionalalternative schemes may be needed to help those that are currentlyby-passed. In the short term, strategiesthat seekto enhancethe employmentprospects of the poor should continue to be complementedby safety nets targeted to the unemployedand vulnerable in both urban and rural areas. Because of the strong association between poverty and lack of formal schooling, a fairly effective indicator to identify the poor is the lack of formal schooling among household heads. Targeting the illiterateunemployed and possiblythose with up to a primary education would thereforebe an effective way to reach the poor. Evidenceon unemploymentand poverty indicates that to improve the targeting, existing public works programs for the able-bodied poor should aim to reach older (25-34 years), more experienced, and less educated workers among the unemployed. Furthermore,to improvethe targeting of the safety net programs,it is necessaryto identifya well-focused set of objectives. Better socioeconomicindicators at the household level are needed to identify the characteristicsof poverty groups and refine a set of indicators for monitoring living conditions.These indicatorscould in turn form the basis for improvingthe targeting of the poverty alleviationstrategy.

7 The upcomingSocial SafetyNet II would targetthe low skilledsection of the unemployed(or about 900,000people in 1997)as well as low income groupsin selectedcommunities with poor accessto basicsocial servicesand withhigh unemploymentrates. Annex C.5 Page 5 of 6

Table 1. Social Assistance Programs General Government Expenditure (Ratios % to GDP and Allocation % per Program) and Beneficiaries (in '000)

1985 1990 1992 1993 1994 1995 Beneficiaries (year) Ratios % to GDP: . . Wage supplement (IPSU) to Government workers - - - - 0.1 0.1 Moudjahidin's pensions 1.3 0.8 0.6 0.9 0.9 0.8 Income support programs: - - 5.8 5.7 4.2 3.2 of which: farnily allowances (AF, ICAF) - 0.9 0.8 1.0 1.2 6,400 (1993) Cash transfer (ICSR, ICPR, IPSU, HE) - - 1.9 1.9 0.8 0.7 7,100 (1993) AFS - - - - ? 840 (1996) PAIG - - - - '? 420 (1996) Price support - - 3.1 3.1 2.4 1.3 Housing and youth employment - 0.1 0.2 0.2 0.3 0.4 Other transfers 3.1 3.1 0.1 0.4 0.9 1.1 Total 4.4 4.0 6.7 7.2 6.4 5.6

Allocation % per Program. __

Table 2. Distribution of AFS beneficiaries by socio-economic characteristics (%, 1995)

Sectors % Status % By area: By employmentstatus: * Urban areas 71,8 * Employed 37,2 * Rural areas 28,2 * Unemployed 12,8 By gender: * Pensioner 9,0 * Male 74,4 * Handicapped 19,2 * Female 25,6 * Student 2,6 By people: * Housewife 10,3 * Single 12,8 * Other 9,0 * Married 50,0 By first use of AFS: * Widower 30,8 * Buy food 73,1 * Separatedor divorced 6,4 * Buy medicine 11,5 By housingtitle: * Buy other goods and services 15,4 * Ownership 76,9 By seconduse of AFS: a Rent 15,4 * Buy food 7,7 * Free rent 7,7 * Buy medicine 30,8 * Buy other goods and services 61,5 Source: FaroukTebbal and Saad Belghazi, Social Safety Net Programs in Algeria. Mid-term Evaluation (October1995).

Table 3. Distributionof LTIGbeneficiaries by socio-economic characteristics (%, 1995)

Sectors __Status % By area: By employmentstatus (beforeLAIG): * Urban areas 79,9 Employed 55,0 * Rural areas 20,1 * Unemployed 37,3 By gender: * Pensioner 1,0 * Male 58,4 * Handicapped __ _ * Female 41,6 * Student 3,8 By people: * Housewife 1,9 * Single 53,1 * Other 1,0 * Married 33,5 By firstuse of IAIG: * Widower 4,3 * Buy food 24,9 * Separatedor divorced 9,1 * Buy medicine 2,9 By housingtitle: * Buy other goods and services 72,2 * Ownership 65,6 By numberof incomerecipients in the household: * Rent 19,6 * One (recipient) 90,4 * Free rent 12,9 * Two (recipientand spouse) 2,9 By educationlevel: * Two (recipientand other relative) 6,8 * Illiterate 19,1I * Coranic school 3,3 * Primary school 22,5 * Junior secondaryschool 21,1 * Senior secondaryschool 31,1, * Higher education 2,9 Source: FaroukTebbal and SaadBelghazi, Social Safety Net Programs in Algeria. Mid-termEvaluation (October 1995). STATISTICAL ANNEX Table 1. DISTRIBUTIONOF POPULATIONBY REGION

ExpenditureGroup Algiers Coastal Plateau Southern Total 1stdecile 2.57 54.30 26.99 16.14 100 1st quintile 1.85 57.78 24.72 15.65 100 2ndquintile 2.16 60.88 24.92 12.04 100 3rd quintile 5.17 60.88 26.29 7.66 100 4th quintile 10.84 55.34 28.71 5.12 100 5th quintile 14.10 49.92 29.62 6.37 100 All Algeria 6.84 56.97 26.86 9.32 100

Table 2. AGE COMPOSITIONOF POPULATION

ExpenditureGroup 0-15 16-24 25-34 35-59 60+ Total N % N % N % N % N % I st decile 1339919 47.4 562280 19.9 328071 11.6 449033 15.9 148157 5.2 2827460 Ist quintile 2674223 47.3 1098441 19.4 666549 11.8 935707 16.6 276595 4.9 5651515 2nd quintile 2505963 44.3 1127548 19.9 771173 13.6 984286 17.4 264136 4.7 5653106 3rd quintile 2323018 41.3 1095853 19.5 844921 15.0 1022648 18.2 342879 6.1 5629319 4th quintile 2226949 39.4 1042966 18.4 988570 17.5 1043276 18.4 356117 6.3 5657878 5th quintile 2012302 35.6 944585 16.7 1126876 19.9 1141302 20.2 427926 7.6 5652991 All Algeria 11742455 37.8 5309393 17.1 4398089 14.2 5127219 16.5 1667653 5.4 31072269

Source: 1995 ENMVM,ONS Table 3: INCIDENCE OF POVERTY BY AGE GROUP

Poorest10% Poorest20% Nonpoor Pop. (%) Incid. Dist. Incid. Dist. Incid. Dist. All Male 9.9 50.3 19.8 50.3 80.2 50.8 50.7 Female 10.1 49.7 20.2 49.7 79.8 49.2 49.3

0-15 11.4 47.4 22.8 47.3 77.2 40.1 41.6 16-24 10.6 19.9 20.7 19.4 79.3 18.6 18.8 25-34 7.5 11.6 15.2 11.8 84.8 16.5 15.6 35-59 8.8 15.9 18.2 16.6 81.8 18.6 18.2 60+ 8.9 5.2 16.6 4.9 83.4 6.2 5.9

Urban 6.4 31.5 13.6 33.6 86.4 53.5 49.6 Rural 13.6 68.5 26.3 66.4 73.7 46.5 50.4 Urban 0-15 7.0 42.2 15.0 42.3 85.0 37.8 38.4 16-24 7.0 20.9 14.6 20.4 85.4 18.8 19.1 25-34 5.0 13.1 11.1 13.6 88.9 17.2 16.7 35-59 5.7 17.4 12.4 17.8 87.6 19.7 19.4 60+ 6.4 6.4 12.4 5.8 87.6 6.4 6.4 Rural 0-15 15.2 49.8 29.4 49.8 70.6 42.8 44.7 16-24 14.2 19.4 26.9 18.9 73.1 18.4 18.5 25-34 10.3 10.9 19.8 10.9 80.2 15.7 14.4 35-59 12.2 15.2 24.8 15.9 75.2 17.2 16.9 60+ 11.7 4.7 21.4 4.4 78.6 5.8 5.5

Table 4. Average Household Size

X______FUrban Rural TOt Ist decile 8.0 8.8 8.5 1st quintile 7.8 8.5 8.2 2nd quintile 7.3 7.7 7.5 3rd quintile 6.7 7.0 6.8 4th quintile 6.1 6.2 6.1 5th quintile 5.0 5.1 5.1 All Algeria 6.2 6.9 6.6

TableS: Age Dependency Ratio ((pop<16 + pop>59)/pop 16-59))

Poorest10% Poorest 20% Nonpoor All Urban 0.9 0.9 0.8 0.8 Rural 1.2 1.2 0.9 1.0 All 1.1 1.1 0.9 0.9

Source:1995 ENMNV, ONS Table6. Percentof Female-HeadedHouseholds

ExpenditureGroup Urban Rural National

1st decile 11.4 6.7 8.2 1st quintile 12.1 5.0 7.4 2nd quintile 10.0 6.8 8.3 3rd quintile 8.8 6.1 7.5 4th quintile 10.4 6.1 8.5 5th quintile 13.0 6.5 10.5 All Algeria 10.9 6.0 8.4

Table 7. Marital Status of Women Age 15 and Older

Urban Expenditure Group Celibate Married Divorced Separated Widowed No data

Ist decile 46.0 38.5 5.3 0.9 9.1 0.2 Ist quintile 46.1 40.5 4.1 0.6 8.6 0.1 2nd quintile 44.0 45.2 2.6 0.4 7.9 0.0 3rd quintile 42.6 45.0 2.9 0.3 9.3 0.0 4th quintile 40.5 46.2 3.7 0.4 9.2 0.0 5th quintile 34.4 49.9 3.0 0.5 12.2 0.0 All Algeria 40.7 46.0 3.2 0.4 9.7 0.0

Table 8. Born in Current Place of Residence

ExpenditureGroup Urban Rural

Ist decile 85.0 91.5 Ist quintile 84.9 90.7 2nd quintile 82.2 88.2 3rd quintile 75.1 86.8 4th quintile 66.7 83.5 5th quintile 61.7 81.1 Total 74.2 87.3

Source: 1995 ENMNV,ONS Table 9. Type of Dwelling

Urban Rural

Modern Traditional Other Temporary Modern Traditional Other Temporary Apartment House House Building Structure Apartment House House Building Structure

Ist decile 15.4 1.5 82.2 0.5 0.4 2.6 14.2 79.4 0 3.8 Ist quintile 15.6 2.8 80.9 0.4 0.4 3.5 13.2 79.9 0.4 3.0 2nd quintile 27.6 4.2 67.3 0.6 0.3 4.9 17.6 75.0 0.7 1.8 3rd quintile 34.2 6.4 58.7 0.4 0.2 6.2 21.1 71.5 0.5 0.7 4th quintile 48.7 6.0 45.0 0.3 0.0 6.8 21.2 70.2 0.7 1.1 5th quintile 47.8 10.5 41.1 0.6 0.0 9.2 20.7 67.7 1.0 1.5

Total 34.9 5.9 58.5 0.5 0.2 5.4 17.7 74.4 0.6 1.8

Table 10. Ownership Status of Dwelling

Own Private Rent from Rent from Provided House Access Private Govt. or Free Expenditure Group Owner State

Ist decile 68.5 1.4 4.2 4.5 21.4 1 st quintile 69.6 1.5 4.3 5.6 18.9 2nd quintile 65.3 2.7 6.2 11.7 14.1 3rd quintile 62.7 2.3 6.3 17.0 11.7 4th quintile 59.9 3.0 5.1 21.6 10.5 5th quintile 52.8 3.9 4.9 25.1 13.3

Total 63.0 2.5 5.4 15.0 1 14.1

Table 11. Distribution of Population by number of Rooms in Dwelling

Expenditure Group Urban Rural One Two 3 to 4 5 to 6 6+ One Two 3 to 4 5 to 6 6+ I st decile 15.0 28.2 46.9 5.5 4.3 11.0 31.9 45.9 8.3 2.8 Ist quintile 14.0 31.7 45.6 5.5 3.2 10.6 32.0 46.7 8.6 2.1 2nd quintile 15.8 28.5 48.4 5.3 2.0 9.0 27.6 50.9 10.5 2.0 3rd quintile 13.9 27.7 49.3 6.8 2.3 8.9 22.4 56.0 8.9 3.7 4th quintile 12.8 22.5 56.5 7.6 0.6 14.2 19.0 55.8 8.6 2.4 5th quintile 14.6 17.0 57.6 9.5 1.3 9.9 21.1 56.6 10.0 2.4

Total 14.2 25.6 51.4 6.9 1.9 10.4 26.1 51.8 9.3 2.4

Source: 1995 ENMNV, ONS Table 12. Availability of Electricity

Expenditure group Urban Rural National

Ist decile 99.2 96.5 97.3 1st quintile 99.6 95.9 97.2 2nd quintile 100.0 95.3 97.5 3rd quintile 100.0 94.2 97.3 4th quintile 100.0 95.6 98.1 5th quintile 99.8 96.8 98.6 All Algeria 99.9 95.5 97.7

Table 13. Water Source

Urban

Public W ell W ell Public Stream/ Cistern Expenditure Group Service (Individual) (Collective) Fountain Spring

Ist decile 96.4 0.6 0.0 2.6 0.0 0.4 Ist quintile 96.5 0.5 1.3 1.5 0.0 0.2 2nd quintile 97.3 0.4 1.5 0.6 0.2 0.0 3rd quintile 97.8 0.5 1.0 0.7 0.0 0.0 4th quintile 99.2 0.4 0.4 0.0 0.0 0.0 5th quintile 98.3 1.0 0.4 0.0 0.3 0.0

Total 97.8 0.6 0.9 0.5 0.1 0.0

Rural

Public Well Well Public Stream/ Cistern Expenditure Group Service (Individual) (Collective) Fountain Spring

I st decile 39.1 2.2 11.3 23.6 10.9 12.9 Ist quintile 44.6 5.6 9.7 20.9 9.6 9.6 2nd quintile 55.7 10.2 9.9 15.8 5.4 3.0 3rd quintile 58.0 9.6 9.1 12.3 5.9 5.0 4th quintile 60.6 11.6 8.9 10.5 5.6 2.9 5th quintile 62.7 5.8 10.0 9.9 6.8 4.8

Total 54.0 8.3 9.6 15.4 7.0 5.7

Source: 1995 ENMNV, ONS Table 14. Availability of Toilets

Expenditure Group Urban Rural National

1st decile 98.1 74.4 81.5 1st quintile 98.6 75.7 83.7 2nd quintile 98.9 78.7 88.4 3rd quintile 98.3 81.2 90.4 4th quintile 98.5 84.0 92.4 5th quintile 98.6 88.3 94.7 All Algeria 98.6 80.0 89.3

Table 15. Garbage Disposal

Expenditure Group Urban Rural Truck Thrown Other Truck Thrown Other 1st decile 95.8 4.1 0.2 14.3 82.4 3.3 1stquintile 96.9 3.0 0.1 17.8 79.2 3.0 2nd quintile 97.2 2.6 0.1 28.2 68.8 2.9 3rd quintile 96.8 3.2 0.0 30.7 67.0 2.2 4th quintile 97.8 1.7 0.5 36.5 59.5 4.0 5th quintile 93.7 5.2 1.1 38.9 55.0 6.1 |Total 96.6 | 3.1 | 0.3 27.7 68.9 3.3

Source:1995 ENMNV,ONS Table 16. Illiteracy of IndividualsAge 10 and over

ExpenditureGroup National Urban Rural | Total Males Females Total Males Females Total Males Females I st decile 35.6 23.5 47.5 29.1 20.2 37.3 38.7 25.0 52.7 I st quintile 33.3 22.9 43.8 27.9 19.8 35.6 36.2 24.5 48.3 2nd quintile 29.0 20.1 38.3 23.5 16.4 30.6 34.0 23.3 45.4 3rd quintile 26.5 17.2 35.8 20.6 13.9 26.9 32.7 20.5 45.4 4thquintile 24.9 15.0 35.1 19.7 11.9 27.5 32.1 19.2 46.0 th quintile 22.6 12.5 33.0 17.4 8.9 25.9 31.1 18.2 44.9 All Algeria 27.2 17.5 37.1 21.1 13.4 28.6 33.5 21.5 46.2

Table 17. Mean Years of Schoolingof all Individuals

Urban Rural ExpenditureGroup Male Female Total Male Female Total 1st decile 4.87 4.31 4.59 4.18 2.61 3.40 1st quintile 4.96 4.33 4.64 4.21 2.86 3.54 2nd quintile 5.34 4.53 4.94 4.44 3.13 3.80 3rd quintile 5.81 5.15 5.48 4.90 3.35 4.14 4th quintile 6.18 5.17 5.67 4.98 3.30 4.18 5th quintile 6.78 5.73 6.27 5.46 3.67 4.59 All Algeria 5.93 5.07 5.50 4.72 3.21 3.99

Table 18. Primary SchoolGross EnrollmentRate

Urban Rural National ExpenditureGroup Male Female Male Female Male Female 1st decile 92.78 97.32 91.39 88.21 91.77 90.92 1st quintile 96.23 95.13 92.60 86.24 93.64 89.01 2nd quintile 93.82 96.91 89.04 83.59 91.09 89.36 3rd quintile 94.55 95.19 94.45 83.43 94.50 88.91 4th quintile 95.97 95.90 91.93 86.82 94.07 91.41 5th quintile 94.09 94.27 92.61 91.05 93.47 92.96 All Algeria 94.85 95.51 92.01 85.71 93.28 90.09

Source:1995 ENMNV, ONS Table 19. Secondary School Gross Enrollment Rate

Urban Rural National Expenditure Group Male Female Male Female Male Female Ist decile 81.4 76.0 68.9 50.1 72.4 57.5 1st quintile 78.2 76.0 66.2 51.4 69.9 58.6 2nd quintile 78.9 82.7 68.9 57.4 73.2 69.1 3rd quintile 83.5 85.4 75.2 60.2 79.2 72.6 4th quintile 80.1 80.0 70.9 61.5 75.6 71.8 5th quintile 82.4 86.5 68.6 68.5 76.7 79.0 All Algeria 80.7 82.4 69.6 58.0 74.6 69.3

Table 20. Mean Distance to Primary School attended (km)

Expenditure Group Urban Rural

Ist decile 0.25 0.86 Ist quintile 0.33 0.81 2nd quintile 0.27 1.31 3rd quintile 0.10 0.75 4th quintile 0.60 1.42 5th quintile 0.17 0.79 All Algeria 0.20 1.01

Table 21. Per Capita Expenditures on Education (in DZD)

Expenditure Group Urban Rural Total

1st decile 438.4 529.3 500.5 1st quintile 522.2 587.8 565.7 2nd quintile 734.0 688.7 709.9 3rd quintile 889.8 790.1 839.9 4th quintile 806.0 756.7 784.6 5th quintile 915.2 878.6 901.0

Total 797.7 723.3 760.3

Source:1995 ENMNV,ONS Table22. Percentof Childrenvaccinated against basles

ExpenditureGroup Urban Rural Total Mle Female

Ist decile 80.6 74.0 75.9 77.2 74.5 Ist quintile 81.9 77.1 78.6 79.8 77.4 2nd quintile 79.5 71.7 75.4 73.9 77.0 3rd quintile 80.7 78.4 79.5 78.8 80.2 4th quintile 83.0 78.7 80.9 81.2 80.7 5thquintile 82.5 73.5 78.8 78.6 79.1

All Algeria 81.6 76.0 78.7 78.5 78.8

Table23. Placeof Consultationof Illnessor Injury

Public Private Dispensary Private Faith Taleb lhouafa Home Sur Others ExpenditureGroup Hospital Polyc aiaic md Healer Place Ist decile 29.9 11.4 5.0 6.4 45.6 0.3 0.3 0.0 0.8 0.0 0.3 Ist quntile 29.6 11.4 6.3 7.9 43.5 0.3 0.2 0.0 0.7 0.0 0.1 2ndquintile 22.3 12.1 8.6 5.5 49.1 0.5 1.5 0.0 0.3 0.0 0.3 3rdqintile 18.9 125 8.6 6.1 50.3 0.1 0.9 0.0 1.1 0.3 1.3 4thquintile 15.9 123 7.9 6.1 55.1 0.3 0.5 0.1 0.5 0.7 0.6 h quintile 16.1 9.6 8.3 3.2 60.1 0.1 0.4 0.0 1.1 0.4 0.8 0.7 AllAlgeria 19.2 11.4 8.1 5.4 53.2 0.2 0.7 0.0 0.8 0.4

Source: 1995 ENMNV, MS Table24. MeanDistance to placeof HelathConsultation

ExpenditureGroup Urban Rural 1st decile 6.10 13.32 Ist quintile 5.31 14.24 2nd quintile 9.38 14.81 3rd quintile 9.01 14.28 4th quintile 5.71 17.53 5th quintile 7.66 17.59 All Algeria 7.49 15.83

Table 25. Mean Expenditureson Medicineson per Person (in DZD)

ExpenditureGroup Urban Rural 1st decile 710.1 845.1 1st quintile 733.4 820.2 2nd quintile 867.7 836.8 3rd quintile 946.8 821.7 4th quintile 1011.4 866.4 5th quintile 1059.5 971.4 All Algeria 973.6 868.6

Table26. Mean Expenditureson HealthCare per Person(in DZD)

ExpenditureGroup Urban Rural Total lstdecile 161.2 120.3 133.2 1st quintile 167.6 136.1 146.7 2nd quintile 224.6 190.4 206.4 3rd quintile 279.9 220.1 249.9 4th quintile 381.1 282.3 337.9 5th quintile 543.7 409.6 491.7 All Algeria 342.4 231.7 286.6

Source:1995 ENMNV, ONS Table 27. Activity Rates Population 16-59

Poorest 10% Poorest 20% Nonpoor All Urban Male 75.9 78.0 80.9 80.6 Female 20.3 21.8 22.8 22.6 Total 46.5 48.4 52.1 51.6 Rural Male 78.9 78.6 80.7 80.2 Female 5.7 7.1 10.4 9.6 Total 43.1 43.9 46.4 45.8 All Male 77.9 78.4 80.8 80.4 Female 11.0 12.7 17.3 16.5 Total 44.3 45.6 49.5 48.8

Table 28. Employment Rates, Population 16-59

Poorest 10% Poorest 20% Nonpoor All Urban Male 44.6 46.8 59.4 57.9 Female 9.6 9.8 13.9 13.3 Total 26.1 27.4 36.8 35.6 Rural Male 50.6 51.8 62.0 59.6 Female 3.8 4.2 6.9 6.2 Total 27.7 28.7 35.1 33.6 All Male 48.7 50.1 60.6 58.7 Female 5.9 6.3 10.8 10.0 Total 27.2 28.2 36.1 34.6

Table 29: Employment Dependency Ratio: [(Unemployed + Inactive)/Employed]

Poorest 10% Poorest 20% Nonpoor All Urban 6.1 5.7 3.7 3.9 Rural 6.5 6.2 4.2 4.6 All 6.4 6.0 3.9 4.2

Source:1995 ENMNV, ONS Table30. Work Status:Population 16-59

Poorest 10% Poorest 20% Nonpoor Pop. (%) Incid. Dist. Incid. Dist. Incid. Dist. Urban Employed 4.3 26.1 9.8 27.4 90.2 36.8 35.6 Unemployed 7.6 20.4 16.8 21.1 83.2 15.3 16.0 Inactive 6.5 53.5 13.6 51.6 86.4 47.9 48.4

All 5.9 51.4 12.7 51.9 87.3 55.7 55.2 Other Urban 6.9 48.6 14.6 48.1 85.4 44.3 44.8

Rural Employed 10.2 27.7 20.7 28.7 79.3 35.1 33.6 Unernployed 15.7 15.4 30.1 15.2 69.9 11.3 12.2 Inactive 13.0 56.9 25.0 56.1 75.0 53.6 54.2

All 12.4 45.5 24.1 45.7 75.9 51.4 49.9 OtherRural 14.8 54.5 28.5 54.3 71.5 48.6 50.1

All Employed 7.1 27.2 14.8 28.2 85.2 36.1 34.6 Unemployed 10.9 17.1 22.3 17.3 77.7 13.5 14.2 Inactive 9.8 55.7 19.4 54.4 80.6 50.5 51.2

Distrib All 16-59 9.0 47.4 18.2 47.8 81.8 53.7 52.5 All Others 11.1 52.6 22.0 52.2 78.0 46.3 47.5

Table 31. UnemploymentRate, Age 16-59

Poorest 10% Poorest 20% Nonpoor All Urban Male 41.3 40.0 26.6 28.1 Female 52.9 54.9 39.2 41.2 Total 43.9 43.5 29.3 31.0 Rural Male 35.8 34.0 23.1 25.7 Female 34.3 41.1 33.9 35.2 Total 35.7 34.6 24.3 26.7 All Male 37.5 36.1 25.0 27.0 Female 46.7 50.2 37.8 39.5 Total 38.7 38.0 27.2 29.1

Source:1995 ENN4V, ONS Table 32: Type of Unemployment by Frequency: Unemployed

Poorest 10% Poorest 20% Nonpoor Pop. (%) Incid. Dist. Incid. Dist. lucid. Dist. All Male Previously Worked 14.1 36.4 24.5 32.2 75.5 30.6 31.0 Never Worked 11.1 63.6 23.1 67.8 76.9 69.4 69.0

Female Previously Worked 4.5 7.3 12.4 8.1 87.6 12.6 11.8 Never Worked 7.6 92.7 18.8 91.9 81.2 87.4 88.2

Total Previously Worked 13.1 32.0 23.2 27.8 76.8 26.3 26.6 Never Worked 10.1 68.0 21.9 72.2 78.1 73.7 73.4

Distrib Unemployed 10.9 8.1 22.3 8.3 77.7 7.2 7.4 All Others 9.9 91.9 19.8 91.7 80.2 92.8 92.6

Urban Male Previously Worked 9.4 33.0 16.9 27.7 83.1 27.2 27.3 Never Worked 7.1 67.0 16.5 72.3 83.5 72.8 72.7

Female Previously Worked 6.2 9.6 13.9 9.0 86.1 11.7 11.2 Never Worked 7.3 90.4 17.7 91.0 82.3 88.3 88.8

Total Previously Worked 8.9 26.5 16.5 22.1 83.5 22.7 22.6 Never Worked 7.2 73.5 16.9 77.9 83.1 77.3 77.4

Distrib Unemp. Urban 7.6 10.5 16.8 10.9 83.2 8.5 8.8 Other Urban 6.2 89.5 13.3 89.1 86.7 91.5 91.2

Rural Male Previously Worked 18.3 38.1 31.2 35.0 68.8 35.6 35.4 Never Worked 16.3 61.9 31.8 65.0 68.2 64.4 64.6

Female Previously Worked 0.0 0.0 8.7 5.7 91.3 15.5 13.5 Never Worked 8.4 100.0 22.4 94.3 77.6 84.5 86.5

Total Previously Worked 17.3 35.7 30.0 32.3 70.0 32.5 32.4 Never Worked 14.9 64.3 30.1 67.7 69.9 67.5 67.6

Distrib Unemp. Rural 15.7 7.0 30.1 7.0 69.9 5.8 6.1 Other Rural 13.5 93.0 26.1 93.0 73.9 94.2 93.9 Source:1995 ENMNV,ONS Table 33. Unemployment Rate, Age 16-59, By Age Group

Poorest 10% Poorest 20% Nonpoor All Urban Male 16-24 67.5 70.5 58.7 60.3 25-34 43.7 43.2 26.3 28.1 35-59 19.2 15.8 6.9 8.0 Female 16-24 75.0 81.3 71.4 73.1 25-34 50.8 40.9 32.3 33.2 35-59 29.4 25.0 12.0 13.4 Total 16-24 69.5 74.0 62.0 63.7 25-34 45.5 42.6 27.8 29.4 35-59 21.1 17.1 7.7 8.8 Rural Male 16-24 61.6 59.5 48.4 51.7 25-34 34.7 33.2 21.2 23.5 35-59 11.2 12.3 7.9 8.9 Female 16-24 53.0 57.8 61.1 60.4 25-34 23.0 31.1 23.5 24.8 35-59 0.0 0.0 7.5 6.8 Total 16-24 60.9 59.3 50.4 52.9 25-34 33.7 33.0 21.5 23.6 35-59 10.9 12.0 7.8 8.8 All Male 16-24 63.2 62.8 54.0 55.9 25-34 37.9 37.1 24.0 25.9 35-59 13.8 13.5 7.3 8.4 Female 16-24 65.9 72.4 68.3 69.0 25-34 41.3 37.5 30.2 31.1 35-59 23.6 19.5 10.8 11.7 Total 16-24 63.6 64.6 57.1 58.6 25-34 38.5 37.2 25.2 26.9 35-59 14.6 13.9 7.8 8.8

Source:1995 ENMNV,ONS Table 34. Educational Attainment by Sex: Unemployed, Age 16-59

Poorest 10% Poorest 20% Nonpoor Pop. (%) Incid. Dist. Incid. Dist. Incid. Dist. Male Illiterate 22.1 12.5 41.8 12.1 58.2 5.2 6.8 Read & Write 11.1 12.2 22.5 12.6 77.5 13.3 13.1 Primary 13.1 51.5 25.4 50.8 74.6 45.8 47.0 Intermediate 9.4 18.6 19.4 19.5 80.6 24.9 23.6 Secondary 6.6 3.2 12.6 3.1 87.4 6.6 5.8 University 6.8 2.1 12.3 1.9 87.7 4.2 3.6 NA 0.0 0.0 0.0 0.0 100.0 0.1 0.1

Distrib Male Unemployed, 16-59 12.0 13.7 23.5 13.4 76.5 10.8 11.4 All Others 9.7 86.3 19.4 86.6 80.6 89.2 88.6

Female Illiterate 7.5 5.8 15.5 4.8 84.5 5.8 5.6 Read & Write 10.9 9.2 13.1 4.4 86.9 6.5 6.1 Primary 10.1 38.4 26.8 40.7 73.2 24.6 27.5 Intermediate 5.3 28.3 17.2 36.8 82.8 39.0 38.6 Secondary 7.4 14.3 12.1 9.4 87.9 15.1 14.0 University 3.5 3.9 8.9 3.9 91.1 8.9 8.0 NA 0.0 0.0 0.0 0.0 100.0 0.2 0.2

Distrib Female Unemployed, 16-59 7.2 2.5 18.1 3.1 81.9 3.5 3.4 All Others 10.2 97.5 20.3 96.9 79.7 96.5 96.6

Total Illiterate 19.2 11.5 36.7 10.7 63.3 5.3 6.5 Read & Write 11.1 11.7 21.4 11.1 78.6 11.7 11.5 Primary 12.7 49.5 25.6 49.0 74.4 40.7 42.6 Intermediate 8.1 20.1 18.7 22.7 81.3 28.2 27.0 Secondary 6.9 4.9 12.4 4.3 87.6 8.6 7.7 University 5.5 2.3 11.0 2.3 89.0 5.3 4.6 NA 0.0 0.0 0.0 0.0 100.0 0.1 0.1

Distrib Unemployed, 16-59 10.9 8.1 22.3 8.3 77.7 7.2 7.5 All Others 9.9 91.9 19.8 91.7 80.2 92.8 92.5 Source: 1995 ENMNV, ONS Table 35. Employment Status, Age 6+

Poorest 10% Poorest 20% Nonpoor Pop. (%) Incid. Dist. Incid. Dist. Incid. Dist. Urban Farmer 0.0 0.0 6.2 0.4 93.8 0.7 0.7 Ag Worker 11.0 2.1 35.3 3.0 64.7 0.6 0.8 Employer 0.0 0.0 2.7 0.7 97.3 2.6 2.4 Self-Emp'd 3.8 9.5 7.4 8.2 92.6 11.4 11.1 Wage Worker 4.3 76.5 10.2 78.8 89.8 77.2 77.4 Unpaid Family Labor, etc. 6.8 11.8 11.9 9.0 88.1 7.5 7.6

Distrib Urban Employed 6+ 4.4 14.1 10.0 15.0 90.0 21.2 20.4 Other Urban 6.9 85.9 14.5 85.0 85.5 78.8 79.6

Rural Fanner 11.2 13.6 21.8 13.0 78.2 12.1 12.3 Ag Worker 10.1 6.9 18.4 6.2 81.6 7.1 6.9 Employer 14.3 2.1 22.5 1.6 77.5 1.5 1.5 Self-Emp'd 10.3 9.6 17.1 7.9 82.9 10.0 9.6 Wage Worker 9.6 57.3 21.0 61.7 79.0 60.6 60.9 Unpaid Family Labor, etc. 12.2 10.6 22.3 9.5 77.7 8.6 8.8

Distrib Rural Employed 6+ 10.2 13.4 20.7 14.0 79.3 19.2 17.8 Other Rural 14.3 86.6 27.6 86.0 72.4 80.8 82.2

All Farmer 10.6 1.5 20.9 1.5 79.1 1.4 1.4 Ag Worker 10.2 5.3 20.4 5.0 79.6 3.5 3.7 Employer 5.1 1.4 9.7 1.3 90.3 2.1 2.0 Self-Emp'd 6.6 9.6 11.6 8.0 88.4 10.8 10.4 Wage Worker 6.5 63.6 14.6 67.7 85.4 69.9 69.6 Unpaid Family Labor, etc. 9.6 11.0 17.1 9.3 82.9 8.0 8.2

Distrib Employed 6+ 7.1 13.6 15.0 14.3 85.0 20.3 19.1 All Others 10.7 86.4 21.2 85.7 78.8 79.7 80.9 Source:1995 ENMNV,ONS Table 36. Employment Status of Household Head

Poorest 10% Poorest 20% Nonpoor Pop. (%) Incid. Dist. Incid. Dist. Incid. Dist. Urban Farner 0.0 0.0 5.2 0.6 94.8 1.2 1.1 Ag Worker 21.2 4.8 56.2 5.2 43.8 0.4 0.9 Employer 0.0 0.0 4.6 1.5 95.4 3.2 3.0 Self-Emp'd 3.6 12.9 8.4 12.3 91.6 14.2 14.0 Wage Worker 4.0 82.2 9.6 80.0 90.4 79.7 79.7 Unpaid Family Labor, etc. 0.0 0.0 4.0 0.5 96.0 1.2 1.2

Distrib Urban Employed Head 4.0 6.5 9.8 7.5 90.2 10.8 10.4 Other Urban 6.6 93.5 14.0 92.5 86.0 89.2 89.6

Rural Farmer 11.3 19.8 20.8 18.4 79.2 17.6 17.7 Ag Worker 12.3 5.1 18.8 3.9 81.2 4.2 4.2 Employer 14.0 2.3 24.5 2.0 75.5 1.5 1.6 Self-Emp'd 7.4 7.4 15.4 7.8 84.6 10.7 10.1 Wage Worker 9.9 63.1 20.5 66.0 79.5 64.3 64.6 Unpaid Farnily Labor, etc. 13.5 2.3 22.1 1.9 77.9 1.7 1.7

Distrib Employed Rural Heads 10.1 7.3 20.1 7.5 79.9 10.7 10.0 Other Rural 14.0 92.7 27.0 92.5 73.0 89.3 90.0

All Farmer 10.6 14.2 19.8 12.5 80.2 8.8 9.3 Ag Worker 13.9 5.0 25.5 4.3 74.5 2.2 2.5 Employer 4.8 1.6 11.5 1.8 88.5 2.4 2.3 Self-Emp'd 5.2 9.0 11.3 9.2 88.7 12.6 12.1 Wage Worker 6.6 68.6 14.4 70.6 85.6 72.6 72.3 Unpaid Family Labor, etc. 7.9 1.6 14.6 1.4 85.4 1.4 1.4

Distrib Employed Heads 6.9 7.0 14.8 7.4 85.2 10.8 10.1 All Others 10.4 93.0 20.6 92.6 79.4 89.2 89.9 Source: 1995 ENMNV,ONS Table 37. EMPLOYMENT STATUS OF HOUSEHOLD HEAD

Poorest 10% Poorest 20% Nonpoor Pop. % Incid. Dist. Incid. Dist. Incid. Dist. Urban Farmer 0 0 5.2 0.4 94.8 0.8 0.7 Age Worker 21.2 2.4 56.2 3 43.8 0.3 0.6 Employer 0 0 4.6 0.8 95.4 2.1 1.9 Self-Employ 3.6 6.5 8.4 7 91.6 9.3 9 Wage Worke - 4 41.3 9.6 45.5 90.4 52 51.3 Unemployed 12.3 12.2 20.8 9.4 79.2 4.4 4.9 Retired 5.4 18.3 11 17.1 89 17 17 Other 7 19.3 13.1 16.6 86.9 13.4 13.7 Not Defined 0 0 4 0.3 96 0.8 0.8

Distribution This Group 5 12.6 10.9 12.9 89.1 16.6 16.1 All Others 6.6 87.4 14.1 87.1 85.9 83.4 83.9

Rural Farmer 11.3 12.8 20.8 11.8 79.2 12.2 12.1 Age Worker 12.3 3.3 18.8 2.5 81.2 2.9 2.9 Employer 14 1.5 24.5 1.3 75.5 1.1 1.1 Self-Employ 7.4 4.8 15.4 5 84.6 6.9 6.9 Wage Worke 9.9 40.7 20.5 42.3 79.5 44.2 44.2 Unemployed 13.7 7.5 33 9.1 67 5.9 5.9 Retired 7.7 9.2 16.3 9.8 83.7 12.9 12.9 Other 15.5 18.8 28.4 17.2 71.6 13 13 NotDefined 13.5 1.5 22.1 1.2 77.9 1.2 1.2

Distribution ThisGroup 10.7 11.4 21.4 11.7 78.6 15.4 14.7 All Others 14.1 88.6 27.2 88.3 72.8 84.6 85.3

All Farmer 10.6 8.5 19.8 7.7 80.2 5.9 6.2 Age Worker 13.9 3 25.5 2.7 74.5 1.5 1.7 Employer 4.8 1 11.5 1.1 88.5 1.6 1.5 Self-Employ 5.2 5.4 11.3 5.7 88.7 8.5 8 Wage Worke 6.6 40.9 14.4 43.4 85.6 48.7 47.9 Unemployed 13.1 9.1 27.2 9.2 72.8 4.7 5.4 Retired 6.3 12.3 13.1 12.4 86.9 15.5 15 Other 10.9 18.9 20.2 17 79.8 12.7 13.4 Not Defined 7.9 1 14.6 0.9 85.4 1 1

Distribution ThisGroup 7.7 11.7 15.9 12.1 84.1 16 15.2 All Others 10.4 88.3 20.7 87.9 79.3 84 84.8 Table 38. Distributionof Workers by Sector of Employment

Expenditure Agri Self- Wage- Un- Group Farmer Worker Employer employed worker employed Retired Other No data

Ist decile M 2.9 1.7 0.5 2.3 18.3 16.7 2.7 52.7 2.1 F 0.1 0.0 0.0 0.8 2.6 2.9 0.7 92.7 0.1 Ist quintile M 2.7 1.7 0.4 2.2 20.0 16.1 2.9 52.2 1.7 F 0.2 0.0 0.0 0.6 3.2 3.7 0.6 91.7 0.1 2ndquintile M 2.4 1.7 0.3 3.2 23.1 15.6 3.7 48.1 1.8 F 0.3 0.0 0.0 0.6 4.0 4.2 0.8 90.0 0.1 3rd quintile M 2.5 1.4 0.7 4.1 27.2 12.5 4.5 45.5 1.7 F 0.3 0.0 0.0 0.8 4.4 4.3 1.0 89.0 0.1 4th quintile M 2.5 1.8 1.4 3.9 28.5 12.6 4.8 42.5 2.1 F 0.2 0.1 0.0 0.7 5.7 4.2 1.1 87.8 0.2 Sthquintile M 2.2 1.5 1.6 6.3 31.8 11.0 5.1 39.0 1.5 F 0.5 0.1 0.1 0.9 8.9 4.0 1.6 83.7 0.2 All Algeria M 2.5 1.6 0.9 3.9 26.1 13.5 4.2 45.5 1.7 F 0.3 0.0 0.0 0.7 5.2 4.1 1.0 88.5 0.1

Table 39. Distributionof Household Heads by Sector of Employment

ExpenditureGroup Agri Self- Wage- Un- Farmer Worker Employer employed worker employed Retired Other No data

Ist decile M 9.3 3.4 1.1 5.6 44.6 10.0 12.7 12.2 1.1 F 1.7 0.0 3.7 11.5 129.1 8.9 72.3 0.0 Ist quintile M 8.4 2.9 1.2 6.0 46.3 9.7 12.5 12.0 1.0 F 1.0 0.0 3.1 16.7 4.0 11.9 63.3 0.0 2nd quintile M 7.1 1.9 0.7 8.0 51.2 7.6 15.0 7.5 0.9 F 1.9 0.0 1.0 23.9 5.6 17.0 50.6 0.0 3rd quintile M 7.2 1.3 1.2 9.3 53.8 4.9 15.7 5.8 0.7 F 3.3 0.0 3.2 15.4 3.3 13.1 61.7 0.0 4th quintile M 6.7 1.9 2.4 8.5 52.3 4.0 16.3 6.5 1.3 F 0.6 0.0 1.9 22.2 2.6 17.6 54.5 0.7 5th quintile M 4.7 1.6 2.6 11.1 53.6 3.8 14.9 6.4 1.3 F 4.0 0.4 2.3 18.8 1.6 15.7 57.3 0.0 All Algeria M 6.7 1.9 1.7 8.8 51.7 5.7 15.0 7.4 1.1 F 2.5 0.1 2.3 19.4 3.0 15.4 57.2 0.2

Source:1995 ENMNV, ONS Table 40. Institutional Sectoral Employment: Employed, Age 6+

Poorest 10% Poorest 20% Nonpoor Pop. (%) Incid. Dist. Incid. Dist. Incid. Dist. Urban Undetermined 9.9 11.8 14.5 7.6 85.5 5.0 5.2 Public 4.4 64.3 10.1 65.6 89.9 64.7 64.7 Private 3.5 23.0 8.9 26.0 91.1 29.6 29.2 Mixed/Coop 4.9 0.9 10.1 0.8 89.9 0.8 0.8

Distrib Urban Employed 4.4 14.1 10.0 15.0 90.0 21.2 20.4 All Others 6.9 85.9 14.5 85.0 85.5 78.8 79.6

Rural Undetermined 12.0 8.1 20.8 7.0 79.2 6.9 6.9 Public 8.3 38.7 18.2 41.9 81.8 49.3 47.8 Private 12.4 47.5 23.6 44.6 76.4 37.6 39.1 Mixed/Coop 9.2 5.6 21.3 6.4 78.7 6.2 6.2

Distrib This group 10.2 13.4 20.7 14.0 79.3 19.2 18.1 All Others 14.3 86.6 27.6 86.0 72.4 80.8 81.9

All Undetermined 11.0 9.3 17.9 7.2 82.1 5.8 6.0 Public 5.9 47.1 13.3 50.3 86.7 57.9 56.8 Private 8.3 39.5 16.9 38.1 83.1 33.1 33.9 Mixed/Coop 8.7 4.1 19.9 4.4 80.1 3.2 3.3

Distrib All Employed 7.1 13.6 15.0 14.3 85.0 20.3 19.1 All Others 10.7 86.4 21.2 85.7 78.8 79.7 80.9 Source:1995 ENMNV,ONS Table41. InstitutionalSectoral Employment: Wage Workers

Poorest 10% Poorest 20% Nonpoor Pop. (%) Incid. Dist. Incid. Dist. Incid. Dist. Urban Undeterrnined 5.0 32.0 11.4 30.1 88.6 27.6 27.9 Public 4.1 53.9 9.5 52.6 90.5 59.2 58.5 Private 4.7 14.1 13.6 17.1 86.4 12.7 13.2 Mixed/Coop 0.0 0.0 4.7 0.2 95.3 0.5 0.5

Distrib Urban Wage Workers 4.4 10.9 10.5 12.3 89.5 16.4 15.8 Other Urban 6.7 89.1 14.1 87.7 85.9 83.6 84.2

Rural Undetermined 9.9 22.5 22.3 23.3 77.7 21.7 22.0 Public 8.2 47.5 17.9 47.9 82.1 58.6 56.3 Private 14.4 29.0 28.6 26.7 71.4 17.7 19.6 Mixed/Coop 5.1 1.1 21.5 2.1 78.5 2.0 2.0

Distrib Rural Wage Workers 9.7 8.2 21.1 9.2 78.9 12.4 11.5 Other Rural 14.1 91.8 27.0 90.8 73.0 87.6 88.5

All Undetermined 6.9 26.1 15.4 26.0 84.6 25.2 25.4 Public 5.8 49.9 13.0 49.8 87.0 58.9 57.6 Private 9.8 23.4 21.5 22.8 78.5 14.7 15.9 Mixed/Coop 3.9 0.7 17.6 1.3 82.4 1.1 1.1

Distrib Wage Workers 6.7 9.1 15.0 10.2 85.0 14.5 13.6 All Others 10.5 90.9 20.8 89.8 79.2 85.5 86.4 Source: 1995ENMNV, ONS Table 42. Distribution of Employed Household Head by Institutional Sector

Poorest 10% Poorest 20% Nonpoor Pop. (%) Incid. Dist. Incid. Dist. Incid. Dist. Urban Undetermined 0.0 0.0 10.8 0.5 89.2 0.4 0.4 Public 4.0 70.9 9.2 66.5 90.8 69.7 69.4 Private 3.9 29.1 10.7 32.4 89.3 28.8 29.1 Mixed/Coop 0.0 0.0 5.7 0.6 94.3 1.1 1.0

Distrib Urban Employed Heads 3.9 6.3 9.6 7.3 90.4 10.8 10.3 All Others 6.6 93.7 14.0 92.7 86.0 89.2 89.7

Rural Undetermined 7.1 0.6 11.3 0.4 88.7 0.9 0.8 Public 8.8 46.5 18.3 48.6 81.7 54.6 53.4 Private 12.0 44.6 22.4 41.7 77.6 36.3 37.4 Mixed/Coop 10.2 8.4 22.1 9.2 77.9 8.2 8.4

Distrib Rural Employed Heads 10.1 7.3 20.1 7.5 79.9 10.7 9.8 All Others 14.0 92.7 27.0 92.5 73.0 89.3 90.2

All Undetermined 4.6 0.4 11.1 0.5 88.9 0.6 0.6 Public 6.0 53.4 13.1 54.5 86.9 62.7 61.5 Private 8.4 40.2 17.2 38.6 82.8 32.3 33.2 Mixed/Coop 9.0 6.0 20.2 6.4 79.8 4.4 4.7

Distrib All Employed Heads 6.9 7.0 14.8 7.4 85.2 10.8 10.1 All Others 10.4 93.0 20.6 92.6 79.4 89.2 89.9 Source:1995 ENMNV, ONS Table 43. Institutional Sectoral Employment: Household Head Wage Workers

Poorest 10% Poorest 20% Nonpoor Pop. (%) Incid. Dist. Incid. Dist. Incid. Dist. Urban Undetermined 0.0 0.0 0.0 0.0 100.0 0.1 0.1 Public 3.9 81.1 8.9 77.5 91.1 86.1 85.2 Private 5.3 18.9 15.2 22.5 84.8 13.6 14.5 Mixed/Coop 0.0 0.0 0.0 0.0 100.0 0.3 0.3

Distrib Urban HH Wage Workers 4.1 5.3 9.8 5.9 90.2 8.6 8.2 Other Urban 6.6 94.7 13.9 94.1 86.1 91.4 91.8

Rural Undetermined 0.0 0.0 0.0 0.0 100.0 0.2 0.2 Public 8.7 67.5 18.1 68.9 81.9 79.4 77.3 Private 15.0 32.5 28.0 29.8 72.0 19.5 21.6 Mixed/Coop 0.0 0.0 26.4 1.3 73.6 0.9 1.0

Distrib Rural HH Wage Workers 10.0 5.0 20.3 5.2 79.7 7.3 6.8 Other Rural 13.9 95.0 26.8 94.8 73.2 92.7 93.2

All Undetermined 0.0 0.0 0.0 0.0 100.0 0.1 0.1 Public 5.9 72.0 12.9 72.1 87.1 83.2 81.6 Private 10.7 28.0 22.3 27.1 77.7 16.1 17.7 Mixed/Coop 0.0 0.0 20.3 0.8 79.7 0.6 0.6

Distrib HH Wage Workers 6.7 5.1 14.6 5.5 85.4 8.0 7.5 All Others 10.3 94.9 20.5 94.5 79.5 92.0 92.5 Source: 1995ENMNV, ONS Table 44. Average Number of Hours Worked: Employed, Age 6+

Poorest 10% Poorest 20% Nonpoor All Urban Male 43 44 44 44 Female 35 35 38 38 Total 41 42 43 43

Rural Male 43 42 43 43 Female 27 30 35 34 Total 42 41 42 42

All Male 43 43 44 44 Female 32 33 37 37 Total 42 43 44 43

Table 45. Educational Attainment: Household Heads

Poorest 10% Poorest 20% Nonpoor Pop. (%) Incid. Dist. Incid. Dist. Incid. Dist Illiterate 11.7 60.7 22.3 55.9 77.7 36.9 40.0 Read & Write 7.8 22.0 17.9 24.6 82.1 21.3 21.8 Primary 5.3 14.0 11.5 14.7 88.5 21.3 20.3 Intermediate 2.5 3.0 5.7 3.4 94.3 10.5 9.4 Secondary 0.4 0.2 3.6 1.0 96.4 5.0 4.3 University 0.0 0.0 1.7 0.4 98.3 4.8 4.1 NA 0.0 0.0 0.0 0.0 100.0 0.1 0.1

Distrib Household Heads 7.7 11.7 15.9 12.1 84.1 16.0 15.2 All Others 10.4 88.3 20.7 87.9 79.3 84.0 84.8

Source:1995 ENMNV,ONS Table 46. Educational Attainment by Sex: Employed, Age 16-59

Poorest 10% Poorest 20% Nonpoor Pop. (%) Incid. Dist. Incid. Dist. Incid. Dist. Men Illiterate 12.8 26.6 26.4 26.3 73.6 13.3 15.3 Read & Write 9.8 21.8 20.9 22.3 79.1 15.3 16.4 Primary 7.6 34.0 15.4 33.1 84.6 32.9 33.0 Intermediate 5.3 14.9 10.1 13.5 89.9 21.9 20.6 Secondary 2.3 2.7 7.7 4.2 92.3 9.1 8.4 University 0.0 0.0 1.6 0.7 98.4 7.4 6.4 NA 0.0 0.0 0.0 0.0 100.0 0.0 0.0

Distrib Employed Men 16-59 7.4 22.8 15.4 23.8 84.6 32.5 30.8 All Others 11.1 77.2 21.8 76.2 78.2 67.5 69.2

Women Illiterate 9.5 30.2 17.0 24.7 83.0 16.1 17.1 Read & Write 9.6 11.4 17.7 9.7 82.3 6.0 6.4 Primary 9.4 31.0 18.6 28.1 81.4 16.4 17.8 Intermediate 2.2 11.4 8.8 21.0 91.2 29.0 28.1 Secondary 2.4 7.9 4.5 6.7 95.5 18.8 17.4 University 2.2 5.4 7.6 8.5 92.4 13.7 13.1 NA 100.0 2.7 100.0 1.3 0.0 0.0 0.1

Distrib Employed Women 16-59 5.4 2.8 11.7 3.1 88.3 5.8 5.2 All Others 10.3 97.2 20.6 96.9 79.4 94.2 94.8

Total Illiterate 12.3 27.0 24.9 26.1 75.1 13.7 15.6 Read & Write 9.8 20.7 20.7 20.9 79.3 14.0 15.0 Primary 7.7 33.7 15.7 32.5 84.3 30.5 30.8 Intermediate 4.7 14.5 9.8 14.4 90.2 23.0 21.7 Secondary 2.4 3.2 6.9 4.5 93.1 10.5 9.6 University 0.6 0.6 3.1 1.5 96.9 8.3 7.3 NA 56.7 0.3 56.7 0.1 43.3 0.0 0.0

Distrib Employed 16-59 7.1 12.9 14.8 13.5 85.2 19.4 18.2 All Others 10.7 87.1 21.2 86.5 78.8 80.6 81.8 Source: 1995 ENMNV,ONS Table 47. Distribution of Urban Non-Agricultural Businesses by Type of Business,

Expenditure Group No Data Fishery Energy/Mines Industry BTP Transportation Comm/Serv Total & Comm. I st decile 0.00 0.00 0.00 0.00 23.35 5.84 70.82 100.00 I st quintile 0.00 0.00 0.00 2.48 17.38 4.97 75.16 100.00 2nd quintile 2.46 1.23 0.00 3.68 9.82 4.91 77.90 100.00 3rd quintile 0.00 0.00 0.00 7.78 6.79 6.47 78.97 100.00 4th quintile 0.71 0.00 0.00 7.82 5.59 4.00 81.88 100.00 5th quintile 0.96 0.48 0.48 3.86 4.99 13.36 75.86 100.00 All Algeria 0.87 0.35 0.17 5.44 7.02 8.02 78.15 100.00

Table 48. Location of Urban Non-Agricultural Businesses

No fixed Expenditure Group No Data Home Fixed Locale Locale Ambulant Total

Ist decile 5.84 17.51 41.63 29.18 5.84 100.00 I st quintile 4.97 20.92 35.10 29.08 9.93 100.00 2nd quintile 9.82 19.71 31.19 23.32 15.96 100.00 3rd quintile 8.31 14.12 40.36 16.50 20.71 100.00 4th quintile 5.23 14.52 46.88 21.89 11.48 100.00 5th quintile 5.65 8.34 56.60 16.39 13.02 100.00 ITotal 1 6.58 r 13.41 46.11 19.61 14.29 100.00

Table 49. Distribution of Rural Non-Agricultural Businesses by type of Business

ExpenditureGroup No Data Fishery Energy/Mines Industry BTP Transportation Comm/Senr Total

1st decile 0.00 0.00 0.00 0.00 15.08 10.46 74.46 100.00 I st quintile 0.00 1.87 0.00 5.14 24.42 16.14 52.42 100.00 2nd quintile 1.60 0.00 1.60 7.26 22.31 11.80 55.42 100.00 3rd quintile 0.00 2.46 0.00 9.06 12.58 5.63 70.27 100.00 4th quintile 0.00 3.12 0.00 2.83 15.61 23.38 55.05 100.00 5th quintile 0.00 1.87 0.00 7.71 7.74 13.39 69.29 100.00 All Algeria 0.23 1.97 0.23 6.65 15.07 13.62 62.22 100.00

Table 50. Location of Rural Non-Agricultural Businesses

No fixed Expenditure Group No Data Home Fixed Locale Locale Ambulant Total

Ist decile 6.86 20.84 19.31 32.40 20.58 100.00 Ist quintile 5.48 16.19 17.63 38.11 22.59 100.00 2nd quintile 0.00 10.89 29.10 27.27 32.73 100.00 3rd quintile 3.43 23.75 37.85 15.30 19.67 100.00 4th quintile 7.81 11.87 30.77 28.68 20.87 100.00 5th quintile 3.13 16.81 39.82 19.05 21.20 100.00 All Algeria 3.99 16.59 32.63 24.15 22.64 100.00

Source: 1995 ENMNV, ONS Table 51: SOCIAL AND ECONOMIC INDICATORS OF DEVELOPMENT, SELECTED YEARS, 1975-1995

Indicators 1975 1980 1985 1990 1995 95 Middle Incomes countries Income and Population GNP per capita (US$) 2,080 2,490 2,400 1600 Population growth rate (%) Urban population (% of total) Health Life expectancy at birth 52 58 n.a. 66 68 67 * female 54 60 n.a. 69 71 71 Fertility Rate 7.4 6.8 n.a. 4.6 3.6 3.0 Mortality rates (per 1000 live births) * infant 141 100 78.3 56.9 57.9 39.0 * under five 192 139 n.a. n.a. 72.0 53.0 Other indicators * population per physician 1,100.0 2230.0 * population per nurse 314.0 817.0 * population per hospital bed * child malnutrition (% children 9.2 10.0 16.0 under 5) * immunization (dpt) (% children 86 88 82 86 under 12 months) * immunization (measles) (% 73 74 69 86 children under 12 months) Education Adult illiteracy (%) 75 n.a. 51 43 35 * female 90 n.a. 75 65 51 Primary education Gross enrollment rate (%) 94 94 99 99 104 * female 87 87 92 92 104 Pupil/teacher rate (%) 35 28 28 27 Repeater rate (%) 12 12 10 10 Secondaryeducation Gross enrollment rate (%) 33 51 61 60 54 * female 28 48 52 53 63 Pupil/teacher rate (%) 25 22 17 17 Tertiaryeducation Gross enrollment rate (%) 6 8 11 12 19 Access to basic infrastructure Access to piped water (% population) * urban 95 97.6 * rural 50 53.3 Access to electricity * urban 99 99.9 * rural 770 95.5 Note: (i ) n.a. denotes not available; (ii) when necessary, data refer to the preceding or following year; (iii) most data for 1995 refer to 1993. Source: Conseil National de la Planification 1995, and World Bank. Table 52. NATIONALACCOUNTS-EXPENDITURE SIDE (in current millionsof Dinars)

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995

Gross DomesticProduct 291597 296551 312706 347717 418016 554518 855311 1072496 1161700 1474700 1974900 ResourceBalance 9280 -12087 5948 -690 1414 -9891 48178 25055 -15800 -69200 -63400 Exports of GNFS 68630 38714 45834 49898 77792 129220 246533 266290 254000 349400 527300 Imports of GNFS (incl ISP 1984-93) 59350 50801 39886 50588 76378 139110 198354 241235 269800 418600 590700 Total Resources 350947 347352 352592 398305 494394 693629 1053665 1313731 1431500 1893300 2565600 Total Absorption 350947 347352 352592 398305 494394 693629 1053665 1313731 1431500 1893300 2565600 DomesticAbsorption 282317 308638 306758 348407 416602 564409 807133 1047441 1177500 1543900 2038300 Total Consumption 185552 209305 212878 253702 295502 402211 541786 725269 838300 1076000 1406100 Private Consumption 139719 156413 154882 188563 224887 312320 413551 540727 636300 828900 1096400 GeneralGovemrnent 45832 52891 57996 65139 70615 89890 128236 184543 202000 247100 309700 o/w Govt Services 38761 46085 51952 57678 62832 78450 106464 153164 157000 187000 230300 o/w Other 7071 6806 6044 7461 7783 11440 21772 31379 45000 60100 79400 Total Gross Investment 96765 99333 93880 94706 121100 162198 265346 322172 339200 467900 632200 Goverment Inv. 44300 40600 37300 42300 42500 45600 52000 72600 101600 117200 144700 Non Gov't Inv. 52465 58733 56580 52406 78600 116598 213346 249572 237600 350700 487500 Fixed Investment 92765 101333 92880 88644 108520 143344 214391 280335 314900 426200 566000 Change in stocks 4000 -2000 1000 6061 12580 18854 50955 41837 24300 41700 66200 GrossDomesticIncome 291597 296551 312706 347717 418016 554518 855311 1072496 1161700 1474700 1974900 GrossNational Income 283701 287011 306248 335828 403613 535792 813599 1025374 1120869 1414370 1870070 Gross DomesticSavings 106046 87247 99828 94015 122514 152308 313525 347227 323400 398700 568800 Net Factor Services -7896 -9540 -6458 -11889 -14403 -18726 41712 -47122 -40831 -60330 -104830 NetcurrentTransfer 20126 21976 21929 29416 48218 44015 44468 48640 48705 60307 53831 GrossNational Savings 118276 99682 115299 111543 156329 177596 316281 348745 331274 398678 517801 GrossNational Product 283701 287011 306248 335828 403613 535792 813599 1025374 1120869 1414370 1870070 Source:Conseil National de laPlanification,Algeria Table 53. NATIONAL ACCOUNTS-EXECUTIVE SIDE (in 1980 constant millions of Dinars)

1995 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 213086 GDPinMP 209382 208982 207519 203576 213551 210775 208246 211578 206923 204647 52837 Resource Balance 6137 20202 38979 38053 37812 44852 51132 52901 53516 48703 Exports of GNFS 71036 70823 75072 75373 81402 84170 83412 86666 85019 82128 86563 33726 Imports of GNFS 64899 50621 36093 37320 43590 39318 32280 33765 31503 33425 Total Resource 274281 259603 243612 240896 257141 250093 240526 245343 238426 238072 246812 Total Absorption 274281 259603 243612 240896 257141 250093 240526 245343 238426 238072 246812 160249 Domestic Absorption 203245 188780 168540 165523 175739 165923 157114 158677 153407 155944 Total Consumption 129755 126314 117317 111841 117065 110476 109540 113767 112270 113984 116820 88141 Private Consumption 92175 92544 89490 82868 88586 86371 83090 87575 85736 85907 45883 General Government(a&b) 30214 31459 31737 33475 34318 35484 38855 42469 42299 43991 36614 o/w Govt Services (Residual VA) 26390 27830 28365 29877 31019 32129 32994 34048 34541 35653 9269 o/wOther 3824 3629 3372 3598 3299 3355 5861 8421 7758 8338 -17204 Consumption Discrepancy 7366 2311 -3910 -4502 -5839 -11380 -12406 -16277 -15765 -15915 Total Gross Investment (target) 73490 62466 51223 53682 58674 55447 47574 44910 41137 41960 43429 40771 Fixed Investment 63476 59604 50008 47408 49683 46901 40007 40847 39540 39738 2222 2658 Change in stocks (Residual GDFI) 10014 2862 1215 6274 8991 8546 7567 4063 1597 Import Capacity 75047 38577 41476 36811 44397 36523 40120 37272 29658 27899 30106 -56457 Terms of Trade adjust. 4011 -32246 -33596 -38562 -37005 -47647 -43292 -49394 -55361 -54229 156630 GrossDomesticIncome 213393 176736 173923 165014 176546 163127 164954 162184 151562 150418 145319 GrossNational Income 207723 170012 169637 158053 169188 156009 154798 152888 144289 142046 39809 GrossDomestic Savings 83638 50422 56606 53173 59481 52652 55414 48417 39292 36434 -11311 Net Factor Income -5670 -6723 -4286 -6960 -7358 -7118 -10156 -9296 -7273 -8372 5808 Net Current Transfers 14452 15487 14553 17222 24633 16730 10827 9596 8675 8369 GrossNational Savings 92420 59186 66872 63434 76756 62264 56085 48716 40695 36431 34306 GDP (fc) 171831 173960 172876 169097 175279 169627 166132 171251 171613 170841 Gross National product 203712 202258 203233 196616 206193 203657 198090 202282 199650 196274 201776 27713 28351 Population-mid-year 21879 22506 23150 23776 24389 25010 25633 26273 26935 GNPpercapita 9.311 8.987 8.779 8.269 8.454 8.143 7.728 7.699 7.412 7.082 7.117 3.109 Private cons. per capita 4.213 4.112 3.866 3.485 3.632 3.453 3,242 3.333 3.183 3.100 Source:ONS for historicaldata (74-87);CNP for 88-92. 11Use privatecons. as residualto equateGDP on prodn and expend.sides. Tab 54. NATIONAI. ACCOUNTS-PRODlICTION SIDE (AT PRODUCER PRICES) (in current nmilliois of Diu.rs)

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995

AGRICULTURE 24,084 26,27S 31,7S7 38,785 51,633 62,725 87,307 128,416 126,400 140,500 204,000 INDUSTRY 143,838 132,172 135,492 145,173 174,950 253,925 414,569 483,749 525,100 670,300 912,900 Hydro & Mining 66,733 40,071 46,528 53,989 75,447 126,405 232,101 246,988 252,300 341,700 513,200 Hydrocarbons 65,545 39,053 45,537 52,703 74,288 125,194 230,075 244,402 250,100 334,200 504,200 Mining and Quarrying 1,188 1,018 991 1,286 1,159 1,212 2,026 2,586 2,200 7,500 9,000

MANUFACTURING 32,759 39,541 38,423 42,793 40,845 61,196 91,006 113,763 121,800 146,100 182,000 Food processing and tobacco 6,014 8,086 9,245 10,194 9,020 17,408 24,478 30,891 34,000 41,600 51,822 Steel,Mechanical&Electrical 11,942 14,786 13,817 14,142 12,478 18,267 30,795 37,716 28,000 36,000 44,846 Chemicals 2,434 2,819 2,179 2,601 2,984 4,976 8,865 9,157 3,300 4,600 5,730 Textiles 4,798 4,743 4,442 4,693 6,422 6,699 8,446 7,060 5,300 5,300 6,602 Leather 975 1,090 1,111 1,073 1,314 1,760 1,988 1,957 900 1,000 1,246 Wood and paper 2,385 2,608 2,556 4,465 3,304 3,898 4,883 5,120 5,100 6,000 7,474 othermanufacturing I/ 824 1,280 1,203 1,261 1,157 1,939 2,223 8,033 36,600 41,600 51,822 Construction materials 3,387 4,130 3,872 4,364 4,168 6,250 9,328 13,831 8,600 10,000 12,457 Otherlndustry 44,346 52,559 50,541 48,392 58,657 66,323 91,463 122,999 151,000 182,500 217,700 Water& Energy 3,019 3,161 3,449 3,464 3,886 4,514 6,506 10,813 14,500 15,600 17,000 Construction 41,327 49,399 47,092 44,928 54,772 61,809 84,957 112,186 136,500 166,900 200,700 BTP 37,023 44,316 42,600 41,708 50,153 57,185 78,528 102,150 133,200 166,900 200,700 BTP Hydrocarbons 4,304 5,082 4,492 3,220 4,619 4,624 6,429 10,037 3,300

SERVICES (non-Gov.) 61,590 67,762 67,526 78,381 95,601 115,918 174,171 227,166 266,900 354,500 454,600 Transportation & comm 14,585 16,245 16,466 18,357 21,688 27,485 41,890 57,480 266,900 354,500 454,600 Commerce 36,714 40,030 38,392 44,497 55,807 63,834 102,728 127,520 - - Other services 10,291 11,487 12,668 15,527 18,106 24,599 29,552 42,167 Hotels &Restaurants 3,450 3,935 4,511 5,211 6,070 7,666 7,627 10,503 Services to Enterprises 2,534 2,702 2,857 3,898 4,262 7,926 10,725 16,704 Services to Households 4,308 4,851 5,300 6,419 7,774 9,007 11,201 14,960 -

TOT. NON-GOV. GDP 229,512 226,212 234,805 262,339 322,184 432,568 676,047 839,332 918,400 1,165,300 1,571,500 Indirect taxes 23,324 24,254 25,949 27,700 33,000 43,500 72,800 80,000 86,300 122,400 173,100 Im portDuties 5,000 5,083 7,036 6,100 8,400 19,000 42,000 36,300 28,800 47,900 73,300 Dom.lndirect.Taxes 18,324 19,173 18,913 21,600 24,600 24,500 30,800 43,700 57,500 74,500 99.800 TOTNON-GOV GDP 252,836 250,466 260,754 290,039 355,184 476,068 748,847 919,332 1,004,700 1,287,700 1,744,600

GOVT SERVICES 38,761 46,085 51,952 57,678 62,832 78,450 106,464 153,164 157,000 187,000 230,300 Administration 35,761 42,360 47,355 52,872 57,701 74,130 101,908 148,563 157,000 387,000 230,300 Financiallnstitutions 9,821 12,843 13,155 13,666 15,691 20,715 18,711 37,755 - - Housing Services 3,808 4,378 4,922 5,312 5,725 6,113 6,524 6,944 Housing Rents Financial Services Payments 2,396 3,33 1 4,122 4,076 4,577 (7,209) (6,572) (10,340) OtherFinancial Adjustment (13,025) (16,827) (17,601) (18,248) (20,862) (I5,298) (14,107) (29,757)

TotalServices 100,351 113,847 119,478 136,058 158,433 194,368 280,634 380,331 423,900 541,500 684,900 GDPatPP 268,273 272,297 286,757 320,017 385,016 511,018 782,511 992,496 1,075,400 1,352,300 1,801,800 GDP at Market Prices 291,597 296,551 312,706 347,717 418,016 554,518 855,311 1,072,496 1,161,700 1,474,700 1,974,900 Notes: I/ Residual to balance Somme V.A,; Includes Private Sector Industry. Source: Conseil National de Ia Planification, Algeria Tab 55.NAThXALAC0XJ lNB-P(JC(MNSIDE (ATCOTANFIR(UCERPRKES (n 1980 tantmillions of Dinar)

1985 1986 197 1988 19W 1990 1991 1992 1993 19 995

20066 17839 21407 AGCUILTURE 15840 15539 18227 16605 19660 17832 20578 20990 102299 104929 INDUSIRY 108086 110033 109282 104834 108292 108510 106315 106502 104416 71886 70075 72488 Hy Ining'&D 59561 60319 64509 63262 68273 71193 71744 72553 69403 71832.105 IHy&omboms 58732 59437 63657 62448 67443 70343 70976 71757 71183 703 672 655.872 Mningaid qultg 829 882 852 814 830 850 768 796

9990 9750 MANIFACURNG 20909 21877 19117 17644 15657 13454 12110 11305 10449 5753 I.AA(FooTobacco,4c.) 5280 5829 5998 6082 5912 6054 6102 5809 6018 4415 3687 IS9E(Steel,MrlBec) 6425 6740 6504 6140 5249 5160 4855 4438 2171 Chearicals 1963 2234 2276 2215 2419 2378 2295 1868 1930 3170.5 ToalTextile&Lealher 4529 4413 4171.1 4184.4 4257 4523.5 4344 4116.5 3549 2780 Texiles 3628 3520 3333 3410 3492 3705 3705 3664 3166 383 391 Lther 901 893 838 774 765 819 639 453 -8390 0M0fwuing1/ -1618 -1862 -4344 -5488 -6706 -9364 -9958 -8941 -9522 1914 1680 Wood&Pper 2100 2224 2086 2124 2194 2431 2198 1721 2145 1918 Cojtuction1NWeria1s 2230 2299 2426 2387 2332 2271 2274 2294 22081 22234 22691 OdCerlndntry 27616 27837 25656 23928 24362 23863 22461 22644 3503 3454 FwErW&Water 2156 2300 2468 2665 2780 2950 3200 3306 3517 18564 18731 19237 BTPCa ncm 25460 25537 23188 21263 21582 20913 19261 19338

37102 37733 38902723 SERVMCES(Nn-Gov.) 43041 41061 39624 40179 41424 39477 37661 38527

161584 157871 165238 TOT. NLGOV.G[P 166967 166633 167133 161618 169376 165819 164554 166019 31412 32552 ToWaNet ihxrctTaces 36581 35022 36054 35941 36082 35983 29772 30337 31543 10798 11123 11234 1ndiridTaes 16025 14519 12021 12081 13156 12827 10698 11511 3104 2912 2996 3026 kq)mtDuties 4322 3916 3242 3258 3548 3459 2885 7886 8127 8208 DwesticIndir.Taxes 11703 10603 8779 8823 9608 9368 7813 8407 21318 TOTALPRCD.INDIRfTAXES 20556 20503 24033 23860 22926 23156 19074 18826 20745 20289 168994 176472 TCTNONGCVDP2/ 182992 181152 179154 173699 182532 178646 175252 177530 172382

35653 36614 GOVTSERVICES 26390 27830 28365 29877 31019 32129 32994 34048 34541 75517 T(OT-SERVICES(PP) 69431 68891 67989 70056 72443 71606 70655 72575 71643 73386 180534 C[P(F() 172802 173959 171465 167635 177469 174792 178473 181241 175379 173235 140838 137582 143920 NGGI)'fc 146412 146129 143100 137758 146450 142663 145479 147193 213086 lI2aF(nm ) 209382 2082 27519 203576 213551 210775 20246 211578 206923 204647

1i/ dsprivate sector y, Ngvevahiustoget SmmVA 2VtllBtmtgeP] nm smt Tab 56. CENTMALGOVERNMENT EXPENDITURESIN SOCIALSECIORS (in current millionsof Dinars)

1980 1985 1987 1988 1989 1990 1991 1992 1993 1994 1995 199 Bud.exp. 45515 98600 103100 118900 125570 142500 239630 308624 390484 461900 589100 7176 Tot.soc. 15118 32656 38915 38728 40923 39489 65373 96953 129026 149153 181196 210043 Education 11854 24712 29828 28786 32307 37803 53543 77430 97403 111972 138553 15473 Health 1616 4534 5441 5051 4959 1082 10851 18744 17969 22541 24221 32494 Socialsec. 1648 3410 3646 4891 3657 604 979 779 13654 14640 18422 2281

% Tot.exp. Bud.exp. 100 100 100 100 100 100 100 100 100 100 100 100 Tot.soc. 33.2 33.1 37.7 32.6 32.6 27.7 27.3 31A 33.0 32.3 30,8 29.3 Education 26.0 25.1 28.9 24.2 25.7 26.5 22.3 25.1 24.9 24.2 23,5 21.6 Health 3.6 4.6 5.3 4.2 3.9 0.8 4.5 6.1 4.6 4.9 4.1 4.5 Socialsec. 3.6 3.5 3.5 4.1 2.9 0.4 0.4 0.3 3.5 3.2 3.1 3.2

GDP 162507 291597 312706 347717 418016 536600 844500 1045491 1161541 1473995 1974900 235850

% GDP Bud.exp. 28.0 33.8 33.0 34.2 30.0 26.6 28.4 29.5 33.6 31.3 29.8 30.4 Tot.soc. 9.3 11.2 12.4 11.1 9.8 7.4 7.7 9.3 11.1 10.1 9.2 8.9 Education 7.3 8.5 9.5 8.3 7.7 7.0 6.3 7.4 8.4 7.6 7.0 6.6 Health 1.0 1.6 1.7 1.5 1.2 0.2 1.3 1.8 1.5 1.5 1.2 1.4 Socialsec. 1.0 1.2 1.2 1.4 0.9 0.1 0.1 0.1 1.2 1.0 0.9 1.0 Source:Conseil National de la Planification,Algeria Table 57. CentralGovernment Expenditures (% Sharesof GDP)

Sectors Years Total Expenditures 1980 1985 1992 1993 1994 1995 1996 * Current 28.0 33.8 29.5 33.6 31.3 29.8 30.4 * Capital 17.0 18.6 22.6 24.9 23.4 22.5 23.2 Social Sectors 11.0 15.2 6.9 8.7 7.9 7.3 7.2 * Current 9.3 11.3 9.3 11.2 10.1 9.1 9.0 * Capital 6.7 7.8 8.2 9.7 8.8 8.0 7.7 Education and Training 2.6 3.5 1.1 1.5 1.3 1.1 1.3 * Current 7.3 8.5 7.4 8.4 7.6 7.0 6.6 * Capital 4.7 5.7 6.4 7.1 6.4 6.0 5.6 Health 2.6 2.7 1.0 1.3 1.2 1.0 1.0 * Current 1.0 1.6 1.8 1.5 1.5 1.2 1.4 * Capital 0.0 0.9 1.7 1.4 1.4 1.1 1.2 Social Security, Welfare, Moudjahidin 1.0 1.2 0.1 1.3 1.0 0.9 1.0 * Current 1.0 1.2 0.1 1.2 1.0 0.9 0.9 * Capital 0.0 0.0 0.0 0.1 0.0 0.0 0.1 Source: Conseil National de la Planifcation

Table 58. General Government Expenditure in Education (%R1atios to GDP and % Allocation per Program) and Average Cost per Pupil per Program (in DA)

Sectors Years Ratios to GDP (%/o): 1975 1980 1985 1990 1994 * Recurrent expenditure 4.1 4.7 5.7 6.0 6.4 * Capital expenditure 0.2 0.1 2.3 1.5 1.1 * Total 4.3 4.8 8.0 7.5 7.5 Allocation per Program (%/o) Recurrent expenditure: * Primary and secondary education - 75.9 74.3 77.2 79.1 - Higher education - 19.2 17.5 16.9 16.1 * Vocational training - 4.9 8.2 5.9 4.7 * Total - 100.0 100.0 100.0 100.0 Capital expenditure * Primary and secondary education - - - 58.7 65.7 * Higher education - - - 24.5 15.1 * Vocational training - - - 16.8 19.3 * Total - - - 100.0 100.0 Recurrent Unit Cost per Prograin (DA): _ * Primary and secondary education 690 708 1,224 900 844 * Higher education 13,478 14,826 11,656 7,841 5,151 Notes: (i) "-" denotes not available data, (ii) data on vocational training refer to training centers run by the Ministry of Professional Training. Source: World Bank, from official data. Table 59. Total Expenditures in Health (Ratiosto GDP % and Allocation% by Provider)

Sectors Years RatiostoGDP(%/o): 1988 1990 1993 1994 1995 * Government * Social Security 1.5 1.0 1.6 1.6 1.3 * Households 3.4 2.1 1.7 1.5 1.1 * Total 1.2 1.2 1.3 - - Allocation by Provider (%) X * Government 24.9 22.0 36.0 - - * Social Security 24.9 22.0 36.0 - - * Households 55.6 49.4 36.6 - - * Total 19.5 28.6 27.5 - I ____100.0 100.0 100.0

Note: (i) "-" denotesnot availabledata; (ii) healthexpenditures by Ministriesother than the Ministryof Health,by Local Bodies, financedby foreign sourcesor, finally,connected to other programs(nutrition, water supply, sewerage and the like)are not accountedfor in this Table. Source:World Bank, from officialdata.

Table60. Allocationof PublicExpenditures in HealthSector by Programand Type (%)

Sectors 1989 1990 1991 1992 1993 Allocationby Program: - Recurrent expenditure: 73.4 - 85.8 85.2 86.2 Public hospitals 66.6 - 78.3 73.2 79.8 of which: University Hospitals - - - - 23.0 Specialized Hospitals 1.9 General Hospitals 52.4 Administration 6.8 - 7.5 12.0 6.4 - Capital expenditure 26.6 - 14.2 14.8 13.8 - Total 100.0 - 100.0 100.0 100.0 Allocationof Recurrent Expenditure(Public Hospitals): __ - Wages and salaries 72.7 76.0 75.0 75.3 74.5 - Maintenance 2.5 2.2 1.3 1.1 1.1 - Training 5.5 5.2 4.5 3.7 3.3 - Pharmaceuticals 6.7 6.3 8.7 10.0 9.8 - Smallmedical equipment & instru. 1.7 1.6 1.5 1.5 1.5 - Other 10.9 8.7 9.0 8.4 9.8 - Total 100.0 100.0 100.0 100.0 100.0 Source:Ministry of Health. Table61. GovernmentExpenditure in the HousingSector (1995Allocation in BillionsDA and% Composition)

Allocation Composition Capitalexpenditure 58.3 100.0 - Rural housing 3.6 6.2 - Civil servanthousing 1.6 2.7 - Serviced land 3.2 5.5 - Low-income housing 1.4 2.4 - Public housingprogram for rent 48.5 83.2 Currentexpenditure 41.4 100.0 - Interest rate subsidieson Public housingprogram for rent 8.0 19.3 - Implicitrent subsidieson Public housingprogram for rent 20.0 48.3 - Subsidieson sale of public stock 0.2 0.5 - Pilot programnCaisse National du Logement 0.2 0.5 - Interest rate subsidieson HPS 0.2 0.5 - Subsidieson land sale 13.0 31.6 Total expenditure 99.7 _ Source: Ministere de I 'Habitat and World Bank estimates Table 62. General Government Expenditure in Social Assistance Programs (Ratios % to GDP and Allocation % per Program)and Beneficiaries (in '000)

1985 1990 1992 1993 1994 1995 Beneficiaries (year) Ratios % to GDP: Wage supplement (IPSU) to Government workers - - - - 0.1 0.1 Moudjahidin's pensions 1.3 0.8 0.6 0.9 0.9 0.8 Income support programs: - - 5.8 5.7 4.2 3.2 of which: family allowances (AF, ICAF) - - 0.9 0.8 1.0 1.2 6,400 (1993) cash transfer (ICSR, ICPR, IPSU, BE) - - 1.9 1.9 0.8 0.7 7,100 (1993) AFS - - - - 840 (1996) PAIG - - - - 420 (1996) Price support - - 3.1 3.1 2.4 1.3 Housing and youth employment - 0.1 0,2 0.2 0.3 0.4 Other transfers 3.1 3.1 0.1 0.4 0.9 1.1 Total 4.4 4.0 6.7 7.2 6.4 5.6

Allocation % per Program: _ Wage supplement (IPSU)to Government workers - - - 1.6 1.8 Moudjahidin's pensions 29.5 20.0 9.0 12.5 14.1 14.3 Income support programs: - - 86.6 79.2 65.6 57.1 of which: family allowances (AF, ICAF) - - 13.4 11.1 15.6 21.4 Cash transfer (ICSR, ICPR, IPSU, HE) - - 28.4 26.4 12.5 12.5 AFS - - - -? PAIG - - - - ? ? Price support - - 46.3 43.1 37.5 23.2 __ = Housing and youth employment - 2.5 3.0 2.8 4.7 7.1 Other transfers 70.5 77.5 1.5 5.6 14.1 19.6 ___ Total 100.0 100.0 100.0 100.0 100.0 100.0

Note:family allowances include the allocation familiale (AF) aswell as theindemnite compldmentaire d 'alloaction familiale (ICAF);cash tranfers up to 1994include the indemnitedes categoriessociales sans revenue(CSR), the indemnitecomplementaire de pension et de rente (ICPR),the indemnit pour salaireunique (IPSU and the }E); price supportprograms include the Fond de Compensationdes Prix andthe Fond de Garantiedes Prix (agricole). Source:World Bank from officialdata Table 63. Distributionof AFS beneficiariesby socio-economic characteristics(%, 1995)

Sectors % Status % By area: By employmentstatus: * Urban areas 71,8 * Employed 37,2 * Rural areas 28,2 * Unemployed 12,8 By sex: * Pensionef 9,0 * Male 74,4 * Handicapped 19,2 * Female 25,6 * Student 2,6 By people: * Housewife 10,3 * Single 12,8 * Other 9,0 * Married 50,0 By first use of AFS: * Widower 30,8 * Buy food 73,1 * Separatedor divorced 6,4 * Buy medicine 11,5 By housingtitle: * Buy other goods and services 15,4 * Ownership 76,9 By second use of AFS: * Rent 15,4 * Buy food 7,7 * Free rent 7,7 * Buy medicine 30,8 _ * Buy other goods and services 61,5 Source: FaroukTebbal and Saad Beighazi, Social Safety Net Programs in Algeria. Mid-term Evaluation (October1995).

Table64. Distributionof IAIG beneficiariesby socio-economic characteristics (%, 1995) Sectors % Status % By area: By employment status (before IAIG): * Urban areas 79,9 * Employed 55,0 * Rural areas 20,1 * Unemployed 37,3 By sex: * Pensioner 1,0

* Male 58,4 * Handicapped _ __ * Female 41,6 * Student 3,8

By people: _ l Housewife 1,9 * Single 53,1 * Otier 1,0 * Married 33,5 By first use of IAIG: r Widower 4,3 o Buy food 24,9 * Separatedor divorced 9,1 * Buy medicine 2,9 By housingtitle: * Buy other goods and services 72,2 * Ownership 65,6 By numberof incomerecipients in the household: * Rent 19,6 * One (recipient) 90,4 * Free rent 12,9 * Two (recipientand spouse) 2,9 By educationlevel: * Two (recipientand other relative) 6,8 * Illiterate 19,1 * Coranic school 3,3 * Primary school 22,5 _1_ * Junior secondaryschool 21,1 * Senior secondary school 31,1 ___ * Higher education 2,9 L Source: FaroukTebbal and Saad Belghazi, Social Safety Net Programs in Algeria. Mid-termEvaluation (October 1995). Figure 1: Selected Macroeconomic Indicators

80 70 60 50- : 40 30 - TotalConsunption/GDP 20 G Gross Investment/GDP 10

to co r- co CY) 0) - % c') LOU co co c c o *co 0) a) 0) aD 0a 0 0 )) 0 0C 0 0) 0) 0 0)

1000 800 600 : NominalExchange Rate 400 .REER(MF) 200

U) c)o - CD co 0 - C1 C) V LO CD co co co co CD a) a) a) a) 0) 0) ) a) a) 0 CD a a) 0) a) a 0) 0)

5

& i A:.~ |+CurrentAccountDeficit/GDP r FiscaldeficitGDPP -10

-15

180 160 140 120 100 80 * PublicNational Wage 60 40 . :-_ SNMGWage 20

1988 1989 1990 1991 1992 1993 1994 1995