On the linkages of formal and informal social protection

In his important work, Migdal (Reference Migdal2001) argues that the relationship between states and societies goes beyond hierarchical dominance and involves a dynamic interplay of social norms, practices, and collective action. According to Migdal (Reference Migdal2001), societies are not passive recipients of state power; instead, they actively participate in shaping the state and its policies. This dynamic relationship, he asserts, significantly influences the processes of public policy. As a result, policies cannot be seen as simple technical solutions but rather as influenced by various social factors, including social norms, practices, power dynamics, and the roles of networks, interest groups, and bureaucratic politics. In their empirical research in India, Pellissery (Reference Pellissery2006) emphasises the importance of examining informal institutions, local practices, and social norms that extend beyond the formal state institutions. They argue that understanding the complexities of the state-society relationship requires exploring the interplay between formal and informal institutions. By doing so, we can gain a deeper understanding of how the state-society relationship shapes the outcomes of social policies.

Esping-Andersen (Reference Esping-Andersen1990), in his welfare regime typology, identified the state, market, and family as the primary providers of welfare in high-income industrialised countries. However, social policies in developing and less developed countries are implemented through different institutional formal and informal arrangements. To account for this diversity, Gough and Wood (Reference Gough and Wood2004) expanded the welfare mix of developing and less developed nations to include the community as a provider of informal benefits and services, in addition to the state, market, and family. The concept of the community encompasses a wide range of entities, including religious organisations, kin and non-kin relations, landlords, and non-governmental organisations (NGOs) (Wood & Gough, Reference Wood and Gough2006). Roumpakis and Sumarto (Reference Roumpakis and Sumarto2020) argue that the institutional arrangements in the Global South necessitate heavy reliance on community and family relationships to meet security needs, often resulting in informal support becoming the predominant form of welfare provision. This is not to say that informal welfare is a phenomenon relevant only to the countries of the global south but is also important for developed countries.

The discussion of the relevance of informal welfare is equally important for developing and developed countries because informality is where all welfare originates, and it continues to inform how we engage – or don’t – with formal welfare. Nordensvärd and Ketola (Reference Nordensvärd and Ketola2022) argue that informal welfare is not merely an add-on or a helping hand for formal welfare. Instead, they are integral to each other and constitute a system of social rights and duties. However, the preoccupation with the state as a duty-bearer for delivering welfare overlooks the role of informal networks, and the positive or negative relationship between formal and informal social protection remains inadequately understood (Institute of Development Studies, 2011). Motel-Klingebiel et al. (Reference Motel-Klingebiel, Tesch-Roemer and Von Kondratowitz2005) argue that informal support provided by family and other informal networks needs to be considered in the discussion of a welfare state because individuals and their families differ in their preferences as well as their normative beliefs – some prefer informal and some formal help. Therefore, a holistic understanding of the whole system of social protection – formal and informal – and how everything works together within that system is warranted. This can be achieved by examining the interaction between formal and informal social protection.

A different set of values and logic underpin the provision of formal and informal welfare. In their institutional logic framework, Thornton et al. (Reference Thornton, Ocasio and Lounsbury2012) stipulated seven institutional orders – state, markets, professions, corporations, communities, families, and religion – that regularise behaviour and provide services and benefits within society. For parsimony, I will focus on state, market, family, and community as they are more relevant to our discussion. The practices, values, beliefs, and rules of the institutional orders manifest their institutional logic (Fuertes et al., Reference Fuertes, McQuaid and Heidenreich2021). For example, fulfilling people’s basic needs for creating a just society embodies the state logic of providing welfare (Blau & Abramovitz, Reference Blau and Abramovitz2010). Profit maximisation and competition between self-interested agencies or other actors epitomise the market logic of providing welfare. The family logic for informal welfare may include cohesiveness, ownership, care, and solidarity (Coomans, Reference Coomans2001; Bettio & Plantenga, Reference Bettio and Plantenga2004; Lyberaki & Tinios, 2014). Solidarity, reciprocity, norms, rules, and willingness to protect the interests of the socially excluded, weakest, and most vulnerable groups in society may underlie the community’s logic of assisting others in times of need through informal welfare (Scott, Reference Scott1976; Ter Meulen & Wright, Reference Ter Meulen and Wright2012).

Formal social protection provided by the state is widely recognised as an effective measure for improving the welfare of the poor in many countries (Deacon, Reference Deacon2013; Fiszbein et al., Reference Fiszbein, Kanbur and Yemtsov2014). The fundamental concept of social protection is rooted in the management of social risks, aiming to implement interventions that help individuals, households, and communities in poverty to mitigate their vulnerabilities (Holzmann & Jørgensen, Reference Holzmann and Jørgensen2001). However, scholars and international organisations have conceptualised social protection as comprising three key dimensions: social assistance, social insurance, and labour market measures (Devereux and Sabates-Wheeler, Reference Devereux and Sabates-Wheeler2004; World Bank, 2015). This broad conceptualisation extends beyond social risk management to encompass investment in human capital through labour market measures. In contrast, Mumtaz (Reference Mumtaz2022) argues that informal social protection entails private interventions by informal networks to support families and individuals in meeting their basic needs, improving their risk management, and enhancing their human capital. According to this conceptualisation, informal social protection encompasses three main attributes: informal assistance, informal insurance, and informal labour market measures.Footnote ²

Social cash transfers (SCTs) have had a transformative impact on global social policy since the early 2000s, leading to their widespread adoption in the Global South countries and by international organisations. They are recognised as an important measure for achieving social protection policy objectives (Leisering, Reference Leisering2018; Schüring, Reference Schüring2021). Several factors have contributed to the increasing prominence of SCTs in the Global South. These factors encompass shifts in global poverty discourses, such as the transition from universal to targeted approaches in the 1990s, the recognition of poverty as a global issue in the 2000s, and the redefinition of poverty as a human rights problem (Von Gliszczynski & Leisering, Reference Von Gliszczynski and Leisering2016). The primary goal of SCTs is to provide support to individuals living in poverty and vulnerability, including those in the informal sector, who were previously excluded from formal income security systems (Barrientos, Reference Barrientos2013). Different models of SCTs are implemented in the developing and less developed countries, encompassing social pensions, family allowances, conditional cash transfers, general household assistance, as well as social assistance and employment programs.

The evidence shows that SCTs have spread across the low- and middle-income countries since the early 2000s, resulting in a reduction of extreme poverty in many countries (Barrientos, Reference Barrientos2023). Almost every developing country now has a SCT program. For instance, Mexico’s Oportunidades, Brazil’s Bolsa Escola/Familia, South Africa’s Child Support Grant, Ethiopia’s Productive Safety Net Programme, India’s National Rural Employment Guarantee Scheme, China’s Minimum Living Standard System (Dibao), and Pakistan’s Benazir Income Support Program (BISP) are examples of large-scale flagship anti-poverty programs that have emerged in developing and transitional countries (Leisering & Barrientos, Reference Leisering and Barrientos2013). However, despite the expansion of SCTs, challenges related to achieving adequate coverage persist due to limited financial and administrative capacity, effective targeting, and weak organisational ability in many low-income countries (see for example, Ferguson, Reference Ferguson2015; Barca & Hebbar, Reference Barca and Hebbar2021; Schüring, Reference Schüring2021; Banerjee et al., Reference Banerjee, Hanna, Olken and Sverdlin-Lisker2022).

It is essential to elaborate on one caveat when discussing formal cash transfers, particularly the presence of large informal sectors in the developing world. The welfare provided by these informal sectors, in some cases, blurs the boundaries between formal and informal social protection. For instance, in many Muslim countries, Zakat serves as both a formal and informal welfare system. When the government collects and manages Zakat, it becomes formalised (Leisering, Reference Leisering2009). However, in cases where affluent individuals give Zakat directly to the needy without depositing it to the government, Zakat serves as an informal source of social protection (Evans et al., Reference Evans, Khan and Salomon2022). Thus, understanding the nuances of formal and informal social protection is crucial when analysing cash transfer systems.

Various studies have discussed the relationship and comparisons between formal and informal social protection, and the literature on the topic can be categorised into two broad themes. The first strand of literature focuses on the differences and comparisons between formal and informal social protection and has focused on both developing and developed countries (see, for example, Camacho et al., Reference Camacho, Conover and Hoyos2009; Ashraf, Reference Ashraf2014). Admassie (Reference Admassie2002) argue that formal social protection is guided by economic and social principles, financed from public revenues, and includes institutional arrangements, rules and regulations, and accountability mechanisms, whereas informal social protection is guided by religious and cultural practices and financed by individuals, families, or communities with in-built accountability mechanisms based on certain norms. Some scholars argue that informal social protection effectively manages idiosyncratic risk, whereas formal social protection can be useful against covariate shocks (Alderman & Haque, Reference Alderman and Haque2007; Stavropoulou et al., Reference Stavropoulou, Holmes and Jones2017). In another study, Mumtaz and Whiteford (Reference Mumtaz and Whiteford2021) compared the informal social protection provided by informal networks with formal social protection by the government. They found that in a low-income country such as Pakistan, households consider informal social protection more useful than formal social protection and is better targeted and provided resources, which are sufficient to manage the shocks faced by households.

The second theme of scholarship has discussed the relationship between formal and informal social protection in the context of the Global South and North (see for example, de Freitas & Johnson, Reference de Freitas and Johnson2012; Visser et al., Reference Visser, Gesthuizen and Scheepers2018). Bilecen & Barglowski (Reference Bilecen and Barglowski2015) argue that the boundaries between the formal and the informal are somewhat blurred, and there is a need to approach social protection as a composition of formal and informal protection. Attias-Donfut and Wolff (Reference Attias-Donfut, Wolff, Arber and Attias-Donfut2000) argue that formal financial benefits act as an incentive for family solidarities, and in turn, operate a redistributing process within kinship relations. Brooks (Reference Brooks2000) found that government support may stimulate informal welfare – private giving at low levels of subsidies – whereas, at high levels, it could have just the opposite effect. Daatland and Lowenstein (Reference Daatland and Lowenstein2005) in a comparative study of different countries found that the welfare state has not crowded out the family in elder care. In an aggregate country-level study, Van Oorschot and Arts (Reference Van Oorschot and Arts2005) found no evidence of the welfare state crowding out private obligations, weakening voluntary, familial, and communal support. As apparent from the above discussion, there is less empirical evidence that investigates the relation between formal and informal social protection in the situation when both forms of social protection are either effective or ineffective or one form of social protection is more effective than the other. This article extends this line of inquiry and examines the relation between formal social protection in conditions mentioned above.

A case study of Pakistan

Pakistan serves as a unique case study due to its classification as a low-income country characterised by diverse and distinct welfare arrangements. Mumtaz (Reference Mumtaz2022a) argues that while a small portion of the Pakistani population successfully integrates into formal welfare structures, akin to Western welfare states, and reduces their reliance on informal support, other segments depend more on informal welfare with limited access to formal benefits. Additionally, some individuals receive both types of welfare, while others encounter conflicts resulting in breakdowns in both formal and informal welfare arrangements. This diverse welfare landscape presents a unique opportunity for conducting an in-depth study focused on understanding the interplay between different welfare arrangements.

Pakistan’s Social Protection Index (SPI) of 0.047 falls below the averages of lower-middle-income countries (0.096), low-income countries (0.061), and the overall South Asian average of 0.061 (ADB, 2013). With only 9.2 per cent of the population covered by formal social protection benefits, a significant portion of the population relies on informal arrangements such as immediate and extended family, religious organisations, kin and non-kin relations, etc. (Mumtaz & Whiteford, Reference Mumtaz and Whiteford2021). Among these arrangements, religious organisations, commonly known as madrassas, are one of the most prominent providers of informal welfare in Pakistan. They offer diverse support, including cash assistance, shelter, clothing, stipends, and address healthcare and educational needs, benefiting a large portion of the population.

Pakistan exhibits a gender gap across various domains (Ali et al., Reference Ali, Ali, Nadeem, Memon, Soofi, Madhani, Karim, Mohammad and Bhutta2022), with a low ranking of 145 out of 146 countries in terms of gender parity, as reported by the World Economic Forum (2022). The Benazir Income Support Program (BISP), initiated in 2008, aims to provide monthly grants to married women who serve as household heads (Barber & Shahzad, Reference Barber and Shahzad2022). However, the program’s eligibility criteria overlook the financial constraints that women face due to societal barriers. Furthermore, the program fails to address gender dynamics, such as low literacy rates and limited mobility, which hinder women’s participation in public life. In addition to BISP, Pakistan has several other social protection programs, including the Sehat Card (a health insurance scheme), public and private pensions, national and rural vocational training programs, as well as the public program of Zakat and Bait-ul-Mal (Mumtaz & Whiteford, Reference Mumtaz and Whiteford2017; Ministry of Finance, 2022). These programs are often criticised for inadequate cash transfers and low coverage.

Research methods

The research presented in this article was specifically designed to explore the interaction of formal and informal social protection based on the effects of such welfare as experienced by the households. Through semi-structured interviews, I asked households about the nature of social protection they received from formal and informal sources. I also asked what the effect was on the household when one form of social protection was more effective than the other or if both forms of social protection were effective or ineffective. I intentionally explored these themes in general terms rather than seeking households’ views on specific forms of formal or informal social protection, as already done elsewhere (e.g. Mumtaz & Whiteford, Reference Mumtaz and Whiteford2021). I adopted a bottom-up interpretive approach, which produced rich and nuanced insights into the effects faced by the households when the efficacy of formal or informal social protection received by them changed.

The study utilised a unique methodology to select households for semi-structured interviews. Initially, all cities in Pakistan were categorised into four clusters based on the Multidimensional Poverty Index (MPI). A higher MPI indicates a higher level of poverty and deprivation, and vice versa. Cluster one comprised cities with an MPI score ranging from one to twenty five, Cluster two included cities with an MPI score of twenty six to fifty, Cluster three consisted of cities with an MPI score of fifty one to seventy five, and Cluster four encompassed cities with an MPI score of seventy six and above. These clusters were carefully designed to represent various types of locations, such as urbanised areas (Cluster one), semi-urbanised areas (Cluster two), rural areas (Cluster three), and remote/tribal areas (Cluster four). Between 2019 and 2020, a total of ninety semi-structured interviews were conducted, involving households from fourteen cities within these clusters. Although a city in Pakistan includes both rural and urban area, however, the level of urbanisation varies across cities, and some cities have a higher proportion of rural population compared to others. Moreover, certain cities may encompass tribal areas as well. Figure 1 presents the names of the cities along with their corresponding MPIs and the number of households interviewed in each city.

Figure 1. City names, MPI, and household interviews.

Due to the patriarchal nature of Pakistani society, male members usually hold the position of household head. Therefore, the majority of the households that were interviewed for this study were headed by men. However, there were some cases where the head of the family was female, mostly widows or divorced women. A total of ten out of ninety households, where the head of the family was female, were interviewed. Furthermore, prior to initiating the fieldwork, ethical clearance was obtained from the university ethics committee, ensuring that the study was conducted in compliance with ethical principles.

For the study, households that received both forms of social protection were chosen. The semi-structured interviews included questions related to various forms of formal social protection, such as the BISP, retirement pensions (public or private), national or vocational training, subsidies, assistance from the Government Zakat and Bait-ul-Mal department, and health insurance (Sehat Card) received by households. Similarly, the interview questions regarding informal social protection focused on assistance received from family, friends, kin/non-kin relations in the form of Zakat or charity, religious organisations, employers, landlords, and non-governmental organization (NGOs). The interviews also encompassed questions about the effectiveness, ineffectiveness, and relationship between both forms of protection. By capturing the experiences and perspectives of households, the interview questions shed light not only on the two forms of social protection individually but also on their interplay within households. This approach allowed for a comprehensive understanding of how formal and informal social protection systems interact and impact the lives of people.

In Pakistan and many other developing countries, individuals facing poverty cope with uncertainty and socio-economic risks by relying on economic subsistence activities, such as small-scale farming and livestock. These activities hold economic value, but they were not specifically calculated by the household. Prior to the interviews, respondents were informed that this economic subsistence should not be considered as a source of informal social protection when providing their responses. The data collection was conducted as part of a larger research project that aimed to compare the effectiveness of formal and informal social protection. For the purpose of this article, the focus is on questions related to the relationship between formal and informal social protection.

The sample was divided into four clusters, each representing approximately 25 per cent of the total sample. Cluster one included households that received significant formal social protection benefits and required or received minimal support from informal sources. Cluster two comprised households that received nearly equal support from both formal and informal sources. Cluster three consisted of households that received significant support from informal sources but little support from formal sources. Cluster four included households that received very little support from both formal and informal sources. While not exhaustive, this household selection technique allowed me to capture various crucial scenarios where formal and informal social protection interact.

All interviews were transcribed, and the text data were analysed inductively to explore households’ perspectives on the effects of formal and informal social protection. As a part of the inductive analysis, emerging themes were identified, classified, and grouped, and then the data were reorganised and synthesised into the different perspectives identified from the data concerning households’ views on the effects of formal and informal welfare and preferences. Interview quotes were also colour-coded by the city to enable consideration of any cross-national differences. While this was a qualitative and not a quantitative analysis, it made it possible to discern if, for example, specific points made were supported mainly by quotes from one city/colour in particular.

To be clear, the empirical research presented here examines the perspectives of households on how formal and informal social protection interact in different circumstances based on their provision as received by them. I did not examine if and how households become eligible for formal and informal social protection and why they do or do not receive such welfare. While I acknowledge that the households may prefer receiving one form of support over the other, I argue that there is significant value in understanding how both forms of social protection interact with each other.

Empirical findings on the relationship between formal and informal social protection

Before presenting the detailed findings, I reiterate that the interpretations emerged inductively through the data. This process generated some surprising results, especially in conditions where informal social protection was more effective, and both forms of welfare were effective and ineffective. However, I did hear comments that affirmed the crowding out of informal social protection where formal social protection was more effective consistent with existing literature (Visser et al., Reference Visser, Gesthuizen and Scheepers2018).Footnote ³ In presenting the findings, I used relevant quotes to bring forward the voices and exact expressions of the interviewed households. It is also highlighted that the interviewees of the project were anonymous, and their names and identities remained undisclosed.

In terms of comparative findings, the analysis revealed distinguishable variations across the data regarding geographic locations within studied country. For example, in urban areas, formal and informal social protection provision was much better than in semi-urbanised, rural, and remote locations. The remote locations had almost little to no sources of formal or informal welfare. As a result, variations in the views of the households were observed in different parts of the country. However, as the purpose of this study is not to draw cross-national comparisons, the households’ views presented henceforth are only limited to exploring the relationship between formal and informal social protection regardless of their geographic locations. The relationship based on the interaction of both forms of social protection from households’ perspectives is presented in Table 1.

Table 1. Relationship between formal and informal social protection

Complementary relation between formal and informal social protection

The first theme that emerged from the data signified the complementary nature of the relationship between formal and informal social protection. This relationship was observed when households received adequate support from both forms of social protection. For example, the support a household received from the government through BISP, and pensions was used for consumption. Simultaneously a religious organisation such as madrassa catered for the education expenses of the same household. This complementary relation of formal and informal social protection not only helped households manage their risks but also assisted in building their human capital. As narrated by one of the participants:

Some households informed that they received pension and health insurance from the government and relied on remittances from family members working overseas for consumption and investing in education. This arrangement met their consumption needs, and they were able to invest substantially in education and health. As narrated by one of the interviewees:

Some households mentioned that they use the money from formal pensions to contribute to informal insurance such as Rotating Savings and Credit Association (ROSCA) – commonly known as ‘committee’ in Pakistan. The amount deposited in ROSCA is an investment that can be used later in times of need. As described by one of the participants:

Overall, the views of the households highlight the fact that when both forms of social protection are sufficient in dealing with consumption, risks, or human capital investment, they appear to complement each other because different options are available to the households to manage the risks or invest in human capital and they can use welfare mechanism of their choice. Such a complementary arrangement also helps households limit their dependency on one form of welfare that can lead to asymmetrical relations and, at times, exploitation, especially in informal support systems (Wood & Gough, Reference Wood and Gough2006). This complementary arrangement had an overall positive effect on the household’s welfare as they had better living conditions, less incidence of infectious diseases, and a high literacy rate. Based on this, the complementary relationship between formal and informal social protection can be conceptualised as a relationship between both form of social protection in which they are effectively and adequately meeting the consumption needs, managing risks, and building the human capital of the beneficiaries.

Substitutive relation between formal and informal social protection

The second theme from the interview data suggested substituting formal social protection with informal social protection by the households. Some households informed that they received minimal support from formal sources, which was insufficient for purchasing weekly consumption items. In contrast, they received substantial support from informal sources such as extended family and madrassas. This included receiving cash support to purchase household items, free education from a madrassa, and support during illness and unemployment from family and madrassas, which allowed them to forgo their reliance on formal social protection and become more dependent on informal welfare. One of the participants explained:

The case illustrated that if formal support was negligible or insufficient, it was likely to be substituted by informal social protection. Some households mentioned that they got excluded from receiving the benefits of formal welfare because the relevant government authorities deemed them ineligible to receive such benefits, although they were poor and vulnerable. As a result, their friends and community started helping them.

Some interviewees informed that they lived in a natural disaster-prone area. During natural calamity, government support became non-existent, so they had to rely on informal support systems. Informal social protection sources such as NGOs and religious organisations provided the bulk of the support during such times. The assistance received included shelter, clothing, food, utensils, temporary school education, and health facilities. As explained by one of the participants of the study:

The discussion explained three situations in which households were inclined to substitute formal with informal social protection as follows: (a) households received formal social protection that was insufficient to manage the risks vis-a-vis informal social protection; (b) households did not receive government support because of administrative issues; and (c) households did not receive any support from the government, as a result, had to rely on informal social protection. In all these three circumstances, informal social protection was adequate and effective in meeting the welfare needs of households, and formal social protection was ineffective. Therefore, it is theorised that the substitution of informal social protection for formal social protection can occur under such circumstances.

Compliant and crowding out relation between formal and informal social protection

The third theme, which emerged from the data, showed compliance, and crowding out of informal social protection under conditions when households received sufficient formal social protection and informal social protection was inadequate. Compliance with formal social protection refers to the phenomenon that targeting mechanisms of informal networks providing informal social protection were contingent upon the extent of support received by individuals or households through formal social protection. This implies that if the support received by a household through formal sources was more effective, the informal networks stopped providing benefits to that individual or household. This is similar to the eligibility mechanism of some formal social protection programmes, where a beneficiary becomes ineligible to receive benefits if they reach a certain threshold (Hopkins et al., Reference Hopkins, Bastagli and Hagen-Zanker2016). Some households informed that the criteria of formal support received by the government were observed for the provision of informal welfare by the community, religious organisations, and NGOs. As mentioned by one of the participants:

The example indicates that the fact that informal networks may not provide benefits to households already receiving sufficient benefits from formal sources, making informal social protection complying with the eligibility criteria of formal social protection. In some cases, when formal social protection received by a household was sufficient to manage the risks and invest in building human capital, crowding out of informal social protection was observed. Some households informed that they stopped receiving help from family and community because of personal preference when the received government support was adequate. As explained by one of the participants:

The finding is consistent with the crowding out hypothesis of informal welfare by formal welfare. In addition, the finding also informs about households’ preference for different forms of social protection – households are willing to forgo the benefits received through informal welfare, if formal social protection is sufficient to meet their needs. Based on the discussion, it is hypothesised that if the benefits of formal social protection are effective and adequate and benefits of informal social protection are inadequate or ineffective, formal social protection can crowd out or make informal social protection compliant with formal social protection.

Conflicting relation between formal and informal social protection

The study’s most surprising result showed a conflicting relationship between formal and informal social protection in conditions when both forms of social protection were inadequate and ineffective in meeting the welfare needs of individuals and households. This conflicting relationship occurred when an individual or household got socially excluded and experienced conditions such as national or tribal conflict, bonded/forced labour, and peasantry, which limited their decision-making. Therefore, they were forced to rely on the meagre support their patrons or landlord provided. Some households informed that their patrons allowed limited access to formal support systems. As a result, the benefits they received from the formal welfare mechanisms were of little to no use to them. This created a sense of resentment towards the government because of the conditions in which they were trapped. The precarious conditions of dependence on informal support provided by the landlord or patron created a sense of anger towards formal support systems. As explained by one of the interviewees:

Another participant informed:

The discussion shows that the landlord or patrons restrict the access to formal welfare of households or individuals dependent on informal welfare using various means. As observed in the above examples, the national identity card was kept by the landlord and owner of the brick kiln, which is a basic requirement to access most social welfare benefits in Pakistan. The other way of restricting access to formal welfare is by not providing them with education or employment in hard labour so that they do not get the time or understanding to access any formal welfare benefits. In such a conflicting situation, women were disproportionately affected among the interviewed households. This was manifested in various ways, such as women being the first to experience food shortages, being pulled out of school due to lack of resources or having to bear the burden of caring for sick family members without access to proper healthcare. They were forced to take on additional domestic work to make ends meet, which further limited their opportunities for education or paid employment. Additionally, cultural norms prevented women from seeking out alternative sources of income or support outside of their immediate family, which left them in a vulnerable position. Based on the discussion, it is hypothesised that by providing inadequate informal social protection to the clients, the patrons or landlords limit the access to formal social protection of households and individuals, making formal social protection ineffective, resulting in their resentment towards formal welfare, indicating a conflicting relationship between the two forms of welfare.

Significance and policy implications

The insights from the study can inform scholars, policymakers, and practitioners working in the field of social protection, assisting them in designing policies and interventions that harness the advantages of both formal and informal social protection. By leveraging these findings, they can develop strategies that maximise the benefits and potentials offered by both formal and informal social protection mechanisms. This will enable them to create more comprehensive and effective approaches to address the diverse social protection needs of the population.

Finding ways to improve the living conditions of people through providing welfare has long been an aspiration of scholars and practitioners (for example, Gallie, Reference Gallie2002; Lilford, Reference Lilford, Oyebode, Satterthwaite, Melendez-Torres, Chen, Mberu, Watson, Sartori, Ndugwa, Caiaffa and Haregu2017). According to de Haan (Reference de Haan2014), the rise of social protection on the development agenda is now a fact. Scholars and practitioners of development studies and social policy spend considerable effort on improving the delivery and targeting mechanism of social protection programmes for the welfare of the poor (Barron et al., Reference Barron, Laryea-Adjei, Vike-Freiberga, Abubakar, Dakkak, Devakumar, Johnsson, Karabey, Labonté, Legido-Quigley and Lloyd-Sherlock2021; Abdullah et al., Reference Abdullah, Cudjoe and Manful2020). The study findings elaborate on the conditions in which formal and informal social protection can be more effective, thereby contributing to the better effectiveness of social protection in a country. These findings are imperative for countries that lack the financial capacity to fund large-scale social protection programmes. Such countries can use informal social protection to improve their formal welfare policies.

Social protection is considered an important tool for addressing inequality and social exclusion. However, the involvement of donor agencies in financing social protection programs in developing and less developed countries has sparked debates on the design and implementation of such programs. While these agencies provide significant funding and technical assistance (Dodlova, Reference Dodlova2020), concerns arise regarding their control over policy agendas and the exclusion of local actors, including informal ones, in policymaking. Hujo (Reference Hujo2021) highlights that donor agencies often rely on their own experts and consultants to design and implement social protection programs in the global south. These consultants are criticised for offering standardised solutions that fail to consider country-specific needs and nuances (Mazzucato & Collington, Reference Mazzucato and Collington2023). Their limited knowledge of the local context and disregard for the role of informal actors in delivering social protection services can result in policies that inadequately address the needs of local populations. This study has demonstrated the complementary relationship between formal and informal social protection systems, which can improve overall household well-being. To reduce inequality and social exclusion, the involvement and roles for informal actors in social protection policymaking and implementation could be increased. Policymakers and donor agencies consultants can recognise the importance of informal social protection and integrate it into formal policies and programs. Collaboration with informal networks can be instrumental in designing and implementing such interventions.

The study shows how ineffective formal and informal social protection systems with patron-client relationships negatively impact the poor especially gender through asymmetrical and exploitative informal relations. This corresponds with Küehner and Nakray (Reference Kühner and Nakray2017) and Nakray (Reference Nakray2021), who underscore the limitations of informal social protection, particularly for marginalised groups like women, lower castes, and ethnic minorities, as it neither brings about significant economic nor social transformation and restricts opportunities for social mobility. One possible area of intervention in such situations could be improving targeting mechanisms for vulnerable individuals or households and scaling up formal social protection mechanisms to extricate them from such exploitative relations. As argued by Oduro (Reference Oduro2010), scaling up formal social protection can have a net positive effect on the welfare of the poor. Another area of policy intervention can be to direct the focus of welfare policies on de-clientelisation (Swamy, Reference Swamy2016), which refers to the process of reducing or eliminating nepotism, bias, and other forms of corruption in the delivery of social benefits and services, making them more inclusive. This can involve a range of measures to ensure that social policies are designed and implemented in a transparent, inclusive, and accountable manner, rather than being influenced by political connections or personal relationships. Therefore, de-clientelisation can serve as a basis for improving the quality of life of people including gender living in such conditions through social protection benefits.

The study provides valuable insights for Pakistan to enhance its social protection efforts. It reveals that individuals residing in remote areas of the country face limited access to formal social protection benefits compared to their urban counterparts, who enjoy better opportunities and access to formal resources. Building upon these findings, the government can strategically reallocate its resources to address the pressing welfare needs in rural areas. Through the implementation of policy interventions, the delivery of social protection services to the intended beneficiaries can be made more effective and efficient.

Conclusion, limitations, and future research

This study investigated the relationship between formal and informal social protection by analysing four significant modes of interaction between them. Specifically, the research examined scenarios where (a) both formal and informal social protection were either adequate or ineffective, (b) informal social protection was more effective than formal social protection, (c) formal social protection was more effective than informal social protection, and (d) informal social protection was more effective than formal social protection. Using semi-structured interviews, the study employed an interpretive approach to conceptualise five distinct forms of interaction between two forms of protections: complementary, substitutive, compliant, crowding out, and conflicting. By exploring these interactions, the study contributed to the existing research on formal and informal social protection, which predominantly focused on the crowding-in or crowding-out of informal social protection by formal social protection as the primary means of explaining their intersection (see, for example, Scheepers et al., Reference Scheepers, Te Grotenhuis and Gelissen2002; Van der Meer et al., Reference Van der Meer, Scheepers and Te Grotenhuis2009; Ellwardt et al., Reference Ellwardt, Präg and Steverink2014) and theorised a broader range of interactions between them. By doing so, the study emphasises the significance of the interaction of formal and informal social protection mechanisms in strengthening the overall system of social protection to meet the welfare needs of people in Pakistan. The theoretical understanding developed in this study can guide evidence-based policymaking in social protection and governance systems, ultimately leading to improved outcomes for households in Pakistan and other Global South countries of similar contexts.

The article does not claim to present an exhaustive conceptualisation of the relationship between formal and informal social protection. However, it highlights significant ways in which these two forms of protections interact and provides a theoretical framework that can guide future research on this topic, serving as an important reference point for researchers investigating the relationship between formal and informal social protection. However, since this is one of the few attempts to theorise such relationship, the study has several limitations. Firstly, the study did not focus on examining the variations in the provision of formal and informal welfare within a country, such as why some parts of a country have better welfare mechanisms than others. Secondly, the article did not analyse the significance of formal or informal welfare received by households, which has been extensively studied elsewhere. Thirdly, the study did not investigate the causes of the effectiveness or ineffectiveness of formal or informal social protection, which would warrant a separate project. Lastly, the study did not explore whether one form of protection is superior to the other.

Further research can be conducted in different contexts to examine the complementary nature of formal and informal social protection, and to investigate whether this complementary mix can offer a possible solution for the poor to transition out of poverty. The substitution of formal social protection by informal social protection can occur due to several factors, and this study only highlights a few such sources. Therefore, further research needs to be undertaken in various contexts to explore the causes and conditions responsible for the substitution of informal social protection with formal social protection. Pakistan is an ethnically diverse country, and a significant amount of informal welfare is provided on ethnic dimensions. This area of research can be explored in future studies to gain a better understanding of the relationship between ethnic dimensions and informal social protection.