Employment, Basic needs, Structural Adjustment, Human Development, Poverty.… And Employment A Jolly wheel of time.docx

employment, basic needs, structural adjustment, human development, poverty. and employment: a jolly wheel of time? rolph van der hoeven, iss, eurfrom structural adjustment to human development: impact on poverty and inequality.conference in honour of sir richard jolly ids, sussex, 17-18 november 2011preamble richardss name came first up when i was browsing books at the dusty attics of a canal house in amsterdam, where the library of the institute of the studies of the lesser developed countries (ismog in dutch) was established. i had landed there in the early seventies, as i wanted to combine my somewhat boring study of econometrics with more policy-oriented issues of development and macro economic policy. i had therefore decided to do my master thesis on income inequality and growth. i started with a dynamic input-output model with different sectors, different capital intensities and different savings rates for different socio economic groups. it remained all a bit abstract, until i discovered the reports of the employment missions of the ilo led by seers and jolly, where a good deal of common sense was pared with more rigorous analysis. with that i had my niche and applied to the ministry of development cooperation to be placed at the ilo as associate expert, also to legally avoid conscription for the army, which was still compulsory. i went to zambia, where to my great delight in about a years time zeam the zambian employment advisory mission took place, led not in name (we had at that time in the ilo already a more bureaucratic system than at the earlier larger ilo employment missions) but in principle by nobody else than richard jolly. richard had worked earlier in zambia as a manpower planning expert (.does somebody still know what this is.). our report, just a year before the major ilo conference on basic needs in 1976, was entitled, after long and liquid deliberations: narrowing the gaps, planning for basic needs and productive employment in zambia. i collaborated a lot with richard; we travelled through the country and were even put an afternoon in jail for trespassing the chinese building site of the tanzam railways. i dont know whether is was the buddying experience of being in jail together or not, but since that zambia experience richard and i have been close contact. he even became for some time my boss in new york. with this paper i want to argue that at this stage in richards career and given the challenges the world and the poor in the world are facing, it might be good to go back to richards first love, not allison, because she always has been there, but the concern for employment. just now as well as then, we need a good mix of academic rigor, practical application and political will to make employment an important if not the number one goal of development and of development aid.i introductionemployment and especially decent and productive employment has become recently more topical in in the worlds of development and development cooperation. a recent indication of this are the events related to the so-called arab spring. in a couple of only a few months various arab regimes have been toppled by a population, not only wanting more democracy, as ad inifinitum argued by the western press, but perhaps even more importantly, especially by educated youth, wanting good jobs and the prospects of advancement in life. yet this turmoil took place in countries which scored well on progress in the by aid donors much hailed millennium development goals. see table 1 table i.1: mdg progress ranks and other indicators, selected countriescountrymdg progress rank 2010youth unemployment 2009gdp pc 2008pc. gdp growth 1970-2008inequalityegypt 624.7 (2007)19912.532.1tunisia 130.6 (2005)39033.140.8jordan 626.935961.637.7brazil515.582052.255.0vietnam64.6 (2004)10514.237.8chili1319.7100842.852.0source: gcd (2011), ilo (2011)tunisia and egypt, as well as jordan, are among the 8 best performing countries with respect to progress in the millennium development goals. their leaders belonged to the socialist international and many researchers hailed the progress in human development in the arab world (see for example the blog of dani rodrik the unsung development miracles of our time nov.13 2010 which commends the educational policies and access to health which also empowered women). youth unemployment was lower in other countries, such as brazil, vietnam and chile, with different levels of development but similar achievement in mdg progress as these mediterranean countries.after the change in regimes in various arab countries, the leaders of undp and other development agencies quickly retorted that something must be done about employment. the administrator of the undp, helen clark declared in an article entitled jobs, equity and voice: why both economic and political inclusion matter in the arab world (huffington post, 7 april 2011) that inclusive growth in the middle income countries in the arab states region must also include strategies to generate decent jobs in higher value-added sectors, for which revamped tertiary education and skills training can educate people. the mismatch between the supply of university graduates and the type of jobs available is deeply dispiriting for those who cannot find suitable work .however not only in the context of the events unraveling in the arab world, voices became louder that employment had to become one of the major aims of development, if not the major aim. the recent events in haiti after the devastating earthquake engendered a massive increase in development in haiti. yet in a review of developments in haiti, fukada-parr argues that in delivery of aid to haiti all efforts are concentrated on humanitarian aid and longer term provision of social services, but that the aid donors had little or no understanding of stimulating jobs and growth as a means for the population in general to advance. while social investments are important, they are not sustainable without investment in the productive base of the economy. social services are essential for the fulfillment of human rights to education, to healthcare, and social security and a massive investment in these sectors is still needed. but the current allocations are unbalanced; economic growth is needed for the fulfillment of the human rights to housing, to food, and productive work. the growth pillar of the national poverty reduction strategy (dsncrp or prsp) is only financed by 20% and is not included in the programs of major donors such as the un system.it should be recalled that employment issues were notable absent from the mdgs when these were formulated in 2000. in a recent volume on employment, inequality and globalization: a continuous concern, which i edited, mkandiwire (2011) and amsden (2011) argue that the neglect of attention to employment issues resulted from too much focus on poverty alleviation.amsden remarks that to slay the dragon of poverty, deliberate and determined investments in jobs above starvation wages must play a central role, whether for self-employment or paid-employment. the grass roots approach to solving poverty doesnt go far enough, because it aims only at improving the supply side of the labor market, making job seekers more capable, and not the demand side, making new jobs available for them. it acts as though new ways of earning a living emerge (at a positive wage) simply because the supply of job seekers is better clothed, housed, and fed, or enjoys more human rights-which is the same fallacious reasoning behind says lawemployment generation is different from poverty alleviation because it has a concept behind it, “capital.” this means that the labor market is influenced by, and influences, all flows through the savings-investment nexus, including accumulation, distribution and innovation. it is at the heart of political conflict. multi-faceted policies, therefore, are required to promote employment growth, from fiscal and monetary, to industrial and trade. poverty alleviation has its policy rages, too, but theyre more confined, outside the capital accumulation process. still, the coordination of policies to create employment in the third worlds most impoverished regions is not impossible even if it is multifaceted. excellent work in the 1970s was produced on the subject, only to be shelved in the 1980s for political reasons.mkandiwire concurs in observing that politically underpinning this has been the social differentiation since independence and the accompanying ideological shifts that have contributed to the shift in focus of state policies away from social and employment policies. amsden proposes therefore to revolutionize foreign aid by tying it to jobs. for every dollar spent on poverty alleviation, a dollar should be spent in the poorest regions on employment creation, following the lead in rural employment generation established by china and taiwan. some aid donors could concentrate on the investment part of the project and other donors, with hands on experience in business, could provide technical assistance on what is likely to work. instead of buying a $100 laptop computer, developing countries could start competing with a $95 dollar one! however 5 years after the formulation of the millenium development goals, the world summit 2005 outcome document contains a reference (paragraph 47) to employment issues: 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 paragraph in the 2005 summit outcome document led in 2007 to the inclusion of a new sub-goal under mdg1: achieve full and productive employment and decent work for all, including women and young people, with four indicators: 1 growth rate of gdp per person employed 2 employment-to-population ratio 3 proportion of employed people living below $1 (ppp) per day and 4 proportion of own-account and contributing family workers in total employment.this addition has been welcomed by organizations like the ilo, ngos, trade unions and various governments as it could give them a handle to bring employment issues into the discussion of development, development goals and aid delivery. however some criticize the inclusion of a goal for full employment, as it is not very well measurable. (vandemoortele, 2011). such criticism though reflects the somewhat ambivalent role the mdgs have been, and are playing, in the current development discourse, namely that the mdgs were designed to measure and set goals for some important aspects of development without proscribing a concomitant development trajectory, so that all countries could agree with the goals without being obliged to proscribe the same policy prescriptions; something to which developing countries had become very wary of since the introduction of the structural adjustment policies in the 80s and 90s.yet, despite the intention of not having an underlying prescribing development theory, the mdgs have paradoxically led to a situation where those issues that were not explicitly mentioned in the mdgs, like employment, received less attention from the development aid community. a recent example is for example the way dfid has been analyzing the effectiveness of different un organizations. so in that respect it understandable and in my eyes justifiable that full employment has been added as one of the (sub) goals of the mdgs.but this leaves many questions open as how to implement the goal. in recent meetings there is a growing consensus that that although the goal has now been established too little coordinated effort has been undertaken. for example a recent review of the mdgs, (undg, 2010) five years after the inclusion of the (sub) goal of employment in the mdgs, reports indeed on the progress or regress in employment issues globally as well as in some countries by means of a number of employment indicators. it also gives 18 narratives of how certain development projects have contributed to more or better employment in individual countries. the varieties of examples mention successes of employment schemes, training schemes for entrepreneurs, training schemes for unemployed youth, improved collective bargaining, social security etc. however looking at the different examples chosen in this 2010 review, it is not at always clear how development aid in general has contributed to more and or better employment. most of the examples dont make use of any counterfactual analysis or even mention whether other schemes mutatis mutandis have been contributing to employment creation also. notably absent is any macro analysis of total volumes of aid on growth and its possible impact on employment. it remains thus difficult to distil from the 2010 outcome how successful development and development aid efforts have been in respect of creating more and better employment.furthermore it remains also difficult to distill from the dac statistics how aid flows in general have contributed to employment creation.what statistics( oecd dac online consulted 13-09-2011) have made clear is that the share of oda commitments for the social sector (3 year moving averages) has drastically and steadily increased, from 16 percent in 1990 to 34 percent at the introduction of the mdgs in the year 2000 to over 40 percent in 2008. the increased share of social sector oda was mainly driven by substantial increases in the share of oda commitments on government and civil society and to a lesser extent on health, education and population programs commitments on the economic, production and multisector all declined over the same period. in 2009 oda commitments on social sectors was 42 percent or higher in all major developing countries groupings. figures i.1 to i.4source: oecd dac secretariat online database although these changes in sector allocation have resulted in a debate on the effectiveness and nature of development aid, they can a prima facie not be taken as an indication whether more or less attention is paid to employment in development aid, as aid programs on the social sector could by, increasing human capital and governance very well indirectly contribute to more employment but also by shifting resources away from investment in infrastructure and capital reduced expansion of production.hence we have to decompose the question of development aid efforts for employment into the following string of questions. does aid contribute to growth and poverty alleviation, does growth contributes to employment creation and can aid interventions while contributing to growth, be made more specific to contribute to employment creation. related to this there is currently a debate whether aid in general does contribute to growth or whether changes in national and international policies have a far greater effect on growth in developing countries than the some $ 150 billion in development aid. furthermore, in the current context of integrated markets and globalization, it is not possible, nor helpful, to discuss the effectiveness of aid in absence of related issues of international governance and coherence in development policies (the examples of the negative effects of cotton subsidies in us on cotton farmers and workers in mali and of the deindustrializing effects in developing countries of the economic partnership programs (epa) proposed by the eu are well-known and dont need further elaboration here) . in order to frame the discussion on these interrelated issues of aid and employment, we will give first, in the next section, an overview of some major employment trends over the last 20 years we will therefore not look at the effects on employment of development aid in developed or development aid giving countries themselves , although this may be an important issue in the political discourse on development aid followed by a discussion which (national and international) employment policies seem to be warranted in the light of these current trends. ii employment trends this section draws on: van der hoeven , 2010,this section provides by delineating several trends, an overview of employment trends in developing countries first we notice a decline in the employment to population rate for most regions in the world. for the world as a whole, the employment-to-population ratio seems to have remained rather constant, but there are important regional differences. all three asian regions (73.8, 67.5, 58.7 per cent, respectively) and sub-saharan africa had the highest employment-to-population ratio at the beginning of the 1990s, but experienced declines by several percentage points. figure ii.1source: ilo, trends econometric models, july 2010in contrast, the ratio increased slightly from much lower levels in the middle east, north africa and latin america. the lower employment-to-population level in these regions can be explained by very low female participation in labour force at the beginning of the 1990s. at the global level, we notice two opposite trends, namely an increased ratio for female labour f