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«Jobs and Labour Markets in Developing Countries Policy Issues and Priorities Steven Miller 1. Introduction The challenge of providing productive ...»

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April 2012

Jobs and Labour Markets in

Developing Countries

Policy Issues and Priorities

Steven Miller

1. Introduction The challenge of providing

productive employment

The paper discusses a range of issues associated with job creation and quality in the

and livelihood security for

context of labour markets in developing countries.

all who need them has

become one of the top

It begins with an overview of international and regional mandates on job creation, issues in international because this provides a useful starting point by illustrating both the political development -- and not commitments and values that underpin employment policy and their evolution over before time. The increased time.

status of the subject was expressed in the World Section 3 then goes on to address a number of key issues and challenges for Bank making it the subject

employment policy, namely:

of its 2013 World

• Decent work: quality versus quantity of employment Development Report, Jobs.

• Some non-governmental Job creation: direct or indirect strategies?

organisations are also

• Roles of the public and private sectors focusing increasingly on • job creation and decent Supply or demand-driven strategies?

work. Indeed, this paper is

• Informal and precarious employment an

–  –  –

Employment creation and the quality of work have been major preoccupations of the international community since the founding of the United Nations. The Universal Declaration of Human Rights endorsed by the United Nations member states in 1948 states that “everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment”. Within the PUBLIC WORLD / Jobs and Labour Markets in Developing Countries / Steven Miller 1 framework of the ILO’s 1964 Employment Policy Convention (no.122) member states agree to “declare and pursue, as a major goal, an active policy designed to promote full, productive and freely chosen employment.” The stated purpose of such a goal is “to stimulate economic growth and development, raise levels of living, meet manpower requirements and overcome unemployment and underemployment”.

It is worth noting that the ILO Employment Policy Convention viewed job creation as a direct policy goal, and held that job creation can stimulate economic growth rather than being only an indirect result of growth. This is in contrast to the dominant development paradigm of the 1970s and 1980s, which held that sound macro-economic policies would enable growth and lead to job creation, and that, therefore, job creation would be a consequence of following the correct policies rather than their focused aim. In accordance with the latter approach, development policy has until recently been largely dominated by structural adjustment programmes under the overall leadership of the Bretton Woods institutions and the so-called ‘Washington Consensus’. This doctrine held that fiscal restraint, devaluation to stimulate exports and reduction of inflation would stimulate economic growth, which in turn would lead to job creation. Full employment was not seen as a policy goal and the public sector’s role in job creation was largely limited to providing a good business environment for the private sector.

The 1995 World Summit for Social Development marked the beginning of the end of the domination of the Washington Consensus over the international development agenda. The Social Summit focused on three interrelated priorities: poverty eradication, employment creation and social inclusion. Drawing on language taken from the ILO’s Employment Policy Convention, Heads of State and Government committed themselves to “promoting the goal of full employment as a basic priority of our economic and social policies, and to enabling all men and women to attain secure and sustainable livelihoods through freely chosen productive employment and work” (UN 1995). The Copenhagen Declaration agreed at the Summit furthermore contained a commitment to “pursue the goal of ensuring quality jobs, and safeguard the basic rights and interests of workers and to this end, freely promote respect for relevant International Labour Organization conventions, including those on the prohibition of forced and child labour, the freedom of association, the right to organize and bargain collectively, and the principle of nondiscrimination”.

This commitment on the part of Heads of State and Government provided the basis for the adoption by the ILO in 1998 of the Declaration on Fundamental Principles and Rights at Work (ILO 1998) and for the notion of ‘core labour standards.’ Respect for labour standards falling within the four key areas outlined above, namely, prohibition of forced and child labour, commitment to freedom of association and the right to organize and bargain collectively and the principle of non-discrimination, are now held to be conditions of ILO membership, whether or not a country has ratified the conventions concerned. However, they have also been seen by some developing countries at times as standards imposed on poor countries by rich ones, and as protectionist in effect. This perception needs to be borne in mind to understand sensitivities involved in development cooperation between industrialized and developing countries.

The 1998 Declaration did not address the issue of job creation. However, within the framework of the Decent Work Agenda (ILO 2002), the ILO has linked employment creation to employment quality. Indeed, the concept of ‘decent work’ can be seen as an attempt to reconcile the quantity (full employment) with the quality (productive, remunerative and respect for core labour standards) of employment.

During the five year review of the Social Summit (WSSD +5), governments reported on progress in achieving these goals and raised a number of social and economic issues which posed PUBLIC WORLD / Jobs and Labour Markets in Developing Countries / Steven Miller 2 particular challenges and required innovative solutions. The following were raised by several


• Importance of rehabilitating the public sector

• Growth of inequality

• Informalization of employment

• The working poor

• Making economic growth more employment-intensive

• Conflict, crises and social development

• Financing social protection

• Reversing the decline of official development assistance

• Debt reduction

• Globalization and liberalization

• Local development and values in the global economy Just three months after the five year review of the Social Summit, Heads of State and Government met in New York at the opening of the UN General Assembly for the Millennium Summit (September 2000). The call, contained in the Millennium Declaration, for developing and implementing strategies that give young people everywhere a real chance to find decent and productive work (UN 2000) is the only commitment on job creation contained in this key framework document which gave rise to the Millennium Development Goals and which has guided the international development community over the past decade.

Following up on this Millennium goal on youth employment, the UN Secretary-General’s Youth Employment Network, set up together with the ILO Director-General and the President of the World Bank, which acted and continues to act as a catalyst for a number of initiatives within the UN system focusing on youth employment. The United Nations General Assembly passed a resolution on “promoting youth employment”4 which encourages member states to prepare national reviews and action plans on youth employment and called for the UN Secretary-General to prepare a “global analysis and evaluation” of these action plans, which could form the basis of an international peer review mechanism to develop policy coherence around the issue of youth employment (UN 2005b).

As important as the Millennium Commitment on youth employment was, it nevertheless confined employment policy to a target group issue within the context of MDG 8 (Develop a global partnership for development). However, due to growing international concern that employment had

been overlooked in the Millennium Declaration, the 2005 World Summit agreed (UN 2005a):

We strongly support fair globalization and resolve to make the goals of full and productive employment and decent work for all, including for women and young people, a central objective of our relevant national and international policies as well as our national development strategies, including poverty reduction strategies, as part of our efforts to achieve the Millennium Development Goals. These measures should also encompass the elimination of the worst forms of child labour, as defined in International Labour Organization Convention No. 182, and forced labour. We also resolve to ensure full respect for the fundamental principles and rights at work.

This strong language on employment led the international community to strengthen the place of poverty eradication within the MDGs by introducing a new employment target - ‘Achieve full and PUBLIC WORLD / Jobs and Labour Markets in Developing Countries / Steven Miller 3 productive employment and decent work for all, including women and young people’ - with specific indicators that go beyond job creation to address the policy dimensions of this commitment. This is done by taking on issues such as the relationship between economic growth and job creation, labour market participation, and working poverty and informal employment, including self-employment.

Another important framework for coordinating the international community’s development cooperation efforts is the Poverty Reduction Strategy (PRS) process launched in the 1990s as part of the Highly Indebted Poor Countries (HIPC) initiative. Employment creation as a specific direct goal was largely missing from a large majority of first generation PRSPs, but, as a result of dialogue between the World Bank and the ILO as well as a series of country advisory missions, succeeding generations of PRSPs have placed a much stronger emphasis on job creation as a national priority.

The above global commitments and mandates on job creation are underpinned by a number of regional commitments, such as those made at the 2004 Extraordinary Summit of the African Union (AU) Heads of State and Government on Employment and Poverty Alleviation in Africa and its Ouagadougou Declaration. With respect to the issues discussed in this paper, the following

commitments are particularly important:

WE, the Heads of State and Government of the African Union, COMMIT OURSELVES TO:

PLACE employment creation as an explicit and central objective of our economic and social policies at national, regional and continental levels, for sustainable poverty alleviation and with a view to improving the living conditions of our people;

URGE the UN, international financial institutions, bilateral and multilateral institutions, regional and continental development banks to adopt greater policy coherence and increased support to the employment agenda within the context of our national PRSPs and other development strategies.

These commitments were followed up by the Conference of African Ministers of Finance, Planning and Economic Development held in Abuja in 2005 underlining the need "to develop strategies for generating decent and productive work for men and women as well as youth in Africa, and to explicitly address employment generation issues in national poverty reduction strategies." This was followed in 2006 by a declaration from the African Ministers of Finance, Planning and Economic Development “that the way forward in creating decent jobs in Africa lies in mainstreaming employment in the development agenda”. Their declaration was particularly significant in highlighting the need to further integrate employment creation into poverty reduction strategies and investment policy.

In conclusion, beginning with the Social Summit in 1995, there has been a strong resurgence of job creation within the international development policy agenda. The rationale for this has been strengthened by the economic crisis since 2008, which has further undermined expectations that economic growth will pave the way to job creation, and by growing concerns that unemployment, particularly among young people, is contributing to loss of social cohesion and growth of unrest.

3. The policy environment

This section will raise key policy issues relating to job creation and put them in the context of countries at different levels of development and in different regions. While it is beyond the scope of this paper to enter into the details, an attempt will be made to highlight the different sides of the debates, even dilemmas, which surround the different policy issues in order to better inform the policy options, choices and strategies for job creation raised in the following section PUBLIC WORLD / Jobs and Labour Markets in Developing Countries / Steven Miller 4

3.1 Decent work: Quality versus quantity of employment It is sometimes assumed that there is a trade-off between the quality and quantity of employment and that developing countries should focus first on job creation and address the quality of those jobs as a second priority. Some developing country governments and international institutions fear that labour standards and labour market regulations are drags on job creation, and that promoting employment involves decreasing regulatory burdens.

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