Stubborn persistence of poverty, unemployment, and underemployment is a problem that development practitioners and policy makers continue to face even after more than half a century of development efforts. While 1.3 billion people of the world (which is around a third of the world's population) are living on incomes of less than one US dollar a day, 1 billion of the world's workforce of 3 billion are either underemployed or unemployed. On top of 160 million unemployed and 850 million underemployed workers, some 50 million new job-seekers are entering the labour market every year. And prospects are not very bright for many of them. On the other hand, the only (or major) resource available to the poor is often their own labour. Employment, therefore, is still the best route out of poverty. In order to get out of the vicious circle of poverty, the poor (especially in developing countries) require access to decent employment capable of generating decent incomes.
It is possible to think of different strategies for job creation. One would be to focus on economic growth and to expect that employment will be created as a result of such growth. A second strategy could be to add a social component to economic policy in the form of social safety net programmes. Such programmes of short-term relief and assistance may help the poor temporarily, but they often do little to improve their situation on a permanent basis. A third strategy could be to link employment programmes explicitly to economic growth, particularly by introducing employment concerns into mainstream investment policy. Adoption of labour-based methods in infrastructure can provide this link, as investment in basic services like roads, irrigation, markets, housing, and schools can contribute to growth while creating jobs for the poor. Such an investment and growth strategy would thus be pro-poor as it would create poverty-reducing jobs as well as provide much needed services. Public investment (in infrastructure) could play a lead role in this approach.
The choice of the infrastructure and construction sector as a strategic point of entry and a catalyser for pro-poor growth is grounded on several factors. First, infrastructure is crucial for investment and economic growth in other sectors. Second, the relative weight of this sector in the overall economy is quite high, especially in developing countries. For example, infrastructure construction accounts for three to eight per cent of GDP. A large proportion of public investment (sometimes up to 70 per cent) goes to this sector. The World Bank estimates that every year, US$200 billion is spent on new infrastructure. Third, the range of technological options available for this sector is quite large. For example, the share of the cost of equipment in total costs of unpaved road construction could vary from 30 to 80 per cent, while that of labour could range from 10 to 60 per cent.
The employment potential of these infrastructure projects is vast, but is often not realized. Many projects are equipment-intensive, frequently using foreign contractors. This means money flows back outside the country and little use is made of readily available local workers.
While equipment intensive technologies may be necessary for airports, motorways or heavy bridges, for more basic infrastructure, employment-intensive alternatives are available and offer major advantages.
The term "Employment-Intensive Approach" is used by ILO to describe a competitive technology where an optimal use is made of labour as the predominant resource in infrastructure projects, while ensuring cost-effectiveness and safeguarding quality.
Comparative studies of employment-intensive versus equipment-intensive projects have shown that the employment-intensive approach:
- contributes to an increase in household income and consumption, thereby leading to an increase in national income;
- saves foreign exchange by around 30% since money is being spent in local currency rather than on foreign expertise, equipment, spare parts and fuel, all of which typically cost scarce foreign exchange. A positive spin-off in this respect is a contribution to improvement in balance of payment and reduction of debt;
- is based on demand from the community level, and thus enhances democratic participation;
- is up to 80% more cost-effective in low-wage labour surplus economies;
- is more environmentally friendly, as the use of heavy machinery can be avoided;
Using a macro-economic simulation model to measure the impact of a given amount of incremental investment on the economy of Madagascar, an ILO study estimated the differential effects of employment versus equipment-intensive approaches on the principal economic variables, i.e. production, consumption, employment, public finance, foreign trade.
The analysis clearly shows the poverty reduction advantages of the employment-based approach, which is 30 to 80% less costly. The projected additional employment that could be created by a public investment of 50 billion Fmg in labour-based infrastructure is 2.5 times that of similar investment in equipment-based infrastructure. The increase in income and consumption could also be 2.5 times under the labour-based case. The direct positive impact on balance of payment would be about 30 per cent more with labour-based approach.
In 1995, the employment-based projects actually created 12,000 direct and 23,000 indirect (full-time equivalent) jobs. These figures should be compared with the 17,000 jobs that exist in the free trade zone and the total of 77,000 jobs in the formal sector.
Working closely with governments, the private sector, employers' and workers' organizations, and community associations, the ILO's EIIP tries to orient infrastructure investments towards the creation of higher levels of productive employment through the use of labour-based technologies. Most projects are executed by local private enterprises tendering for public contracts. Increasingly, a community approach is also being promoted, under which community associations are promoted to take charge of projects. In order to achieve the objective of job creation through the adoption of labour-based technologies in infrastructure, the ILO's EIIP undertakes activities of different types and at different levels. Some examples:
- training programmes in labour-based techniques offered to interested small and medium enterprises / contractors;
- training given to line agency staff and consulting engineers to enable them to reorient their functions in line with the adoption of labour-based methods.
Over the past decade, the EIIP has helped more than 40 member States of the ILO develop sustainable employment through infrastructure investments. Approximately 1 million direct jobs and close to 2 million indirect jobs have been generated by investment programmes in which the ILO has been directly involved through demonstration and capacity-building activities.
These projects have helped improve the basic infrastructure in many countries, particularly in sub-Saharan Africa, where 80 per cent of the activities are located. At the same time, the ILO is increasing its initiatives in Asia and Latin America.
The potential for the approach in countries emerging from crisis are very apparent, ranging from rebuilding damaged infrastructure and creating jobs for the displaced and ex-combatants to creating jobs in the wake of the massive job losses caused by economic crisis. Cambodia provides a good example of how investment in labour-based infrastructure can contribute to job creation as well as longer term reconstruction and development. In the wake of the recent economic crisis in East and South-East Asia, a number of countries used this as a tool for job creation.
In 1997, the employment-intensive Feeder Roads Programme (FRP) employed some 6,500 workers, of which 20 per cent were women. Since 1989, the programme has rehabilitated 2,396 km of feeder roads and created additional employment for maintenance operations. The work is carried out through 29 labour-based "brigades" established in all provinces of the country. Each brigade employs 150 to 250 workers, is managed at the local level and works with a set of essential light equipment to safeguard quality.
For further information:
Mr.Rizwanul Islam,
Director, Reovery and Reconstruction Department ILO,
4 route des Morillons
CH-1211 Geneva 22.
E-mail:
islam@ilo.org,
tel: +41 22 799 75 39,
fax: + 41 22 799 64 89