Jobs are back on the policy agenda in a big way. The World Bank is proposing to move Jobs to the Center Stage for its 2013 World Development Report. The ILO has created a “Decent work agenda” which includes creating jobs, guaranteeing rights at work, extending social protection and promoting social dialogue. The last is defined as “involving strong and independent workers’ and employers’ organizations” which the ILO argues is “central to increasing productivity, avoiding disputes at work, and building cohesive societies”.
The motivation for this new concern is obvious: OECD unemployment rates have been rising and rates of unemployment amongst the young in some countries are now extraordinarily high. The Arab Spring has focused attention on the problem of joblessness for the relatively-educated young. It would seem rather obvious that an agenda focused on jobs is what the world needs now if these pressing social and economic problems are to be alleviated.
However, will an agenda focused on jobs and the need to create decent ones help us understand the causes of poverty in Africa, where an increasing proportion of the world’s poor live? Is it true that if more decent jobs were to be created in Africa the problem of poverty would be alleviated?
I want to argue that the evidence we have suggests the answer to both those questions is no. Labour markets are very different across the world and, in understanding the causes of poverty in Africa, the enormous diversity in employment outcomes within the continent needs to be understood [see this paper for an overview].1
In poor African countries people overwhelmingly want jobs because of the incomes that they provide. Everyone can get a job – working in the home is a job in the sense that it generates output – it’s the meagre income from those sorts of jobs that is problematic. So the answer to my first question is clearly no: unless we know more about the incomes that these jobs provide, focusing solely on employment itself is irrelevant for understanding the problems of poverty.
Does this imply that the ILO agenda, which seeks to create decent jobs with better pay, is what is needed? Exactly the opposite is true: it is the creation of these kinds of jobs which increases poverty, precisely because such jobs are so scarce. Decent jobs, as defined by the ILO, require a lot of capital. You either use that capital to benefit the lucky (well-educated) few who get these good jobs or you use it to create more `bad’ jobs for the many. The ILO agenda could aggravate poverty rather than reduce it. For example, while South Africa has by far the largest number of decent jobs in sub-Saharan Africa, it also has one of the highest employment rates in the world. It is also, uniquely in sub-Saharan Africa, a place where poverty is associated with being unemployed.2
A good example of a country that has succeeded in dramatically reducing poverty by creating lots of bad jobs is Ghana [see here]3. These jobs were bad by the ILO’s standard in that they paid poorly, had no security, weren’t unionised (unlike those in South Africa) and provided a very volatile income stream. However, they were still very good at reducing poverty as they were still an improvement on what was previously available to the poor.
Poverty could be reduced if bad jobs, by the ILO’s definition, are actually better at providing the poorly-educated with higher incomes. Understanding what actually generates those higher incomes should be the focus if we are to come up with better tools for reducing poverty (see here for some more detail).
[1] G. Kingdon, J. Sandefur and F. Teal (2006) “Labour market flexibility, wages and incomes in sub-Saharan Africa in the 1990s”, African Development Review, 18(3): December, 392-427.
[2] G. Kingdon and J. Knight (2004). “Unemployment in South Africa: the nature of the beast.” World Development, 32(3): 391-408.]
[3] N. Nsowah-Nuamah, F. Teal and M. Awoonor-Williams (2012) Jobs, skills and incomes in Ghana: how was poverty halved?, Comparative Education, 1-12.
[4] F. Teal “The price of labour and understanding the causes of poverty”, Labour Economics Volume 18, Supplement 1, December 2011, Pages S7–S15.
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It is one thing to argue that labour should not price itself out of the market, but quite another to argue that we should not be trying to create decent jobs in Africa.
Francis Teal`s argument assumes there is a fixed pot of capital, and that you can either create a few `good` jobs or many `bad` ones.
No one interested in reducing poverty should be urging that we create fewer decent jobs in Africa, even if the idea is to free up capital to create a few more bad ones. Rather, we should push for an approach that would see an increase in both quantity and quality. Quantity, as the author admits, is in any case not the problem. Indeed there are fewer unemployed people in Africa than in Europe. The problem is that the bulk of capital is invested there in such a way as to maximize the return to the global North, and for no other reason. That is, the employees in Africa are not seen as stakeholders, or fellow citizens, but as a cheap input. The `pot` of capital is not a fixed amount within the borders of Africa; it is decided upon in the boardrooms of Europe, the US and, increasingly, in the Ministries of China. The pot is global.
The goal of the sort of campaigns Teal mentions (the ILO and World Bank) should be to increase the African share in this economy, to see and treat the African workforce as part of the team, rather than a variable in a formula designed to maximize `our` profits.
Better to encourage the creation of innovative, good quality businesses whereby a better proportion of the wealth created remains in the local community, having knock on benefits, stimulating the local economy, providing African examples of good, decent job creation. The `trickle out` effect.
In short, we should be pushing not to create more bad jobs, but to create more and better jobs. Not necessarily immediately up to the high standards expected by the ILO or by every ordinary citizen in Europe; but to say to a corporation `it doesn’t matter how badly you treat your African workers or how little you pay them` is an invitation to abuse, with the excuse that your hands are tied by the iron laws of economics.
Well, even iron can be worked, where there`s a will.
Links to ungated papers would be nice please!
It is easy to claim that Africa needs more bad jobs than good ones when we ignore the consequences of the former on poverty or deprivation. Bad jobs or vulnerable jobs is a leading cause of poverty; increasing the number of working poor in the world. I know some countries like Ghana have succeeded in obtaining some commendable results with increasing bad jobs, but whether bad jobs should be promoted or not is highly country specific. Each country, in cognisance, of her labour situation and with an indepth knowledge on her employment vulnerability situation can make an option. I am convince that the problem most developing countries are facing is more likely that of bad or vulnerable jobs than employment per se. More than 50 percent of the global labour force work in highly insecure working conditions with majority of these vulnerable workers in SSA. I still insist each country, especially in SSA, takes the challenge to investigate her employment situation before choosing to operate bad or decent jobs, given the persistent stubornness of poverty. Thanks