Spending on infrastructure represents about 20 per cent of total investment in developing countries, and from 40 to 60 per cent of public investment, according to the World Bank. A reorientation of policies on infrastructure investment to ensure that technically viable and cost-effective employment-intensive options are used speeds the reduction of poverty by generating productive and decent employment. The challenge is to develop the appropriate mix of capital- and employment-intensive investment techniques according to each country’s needs and resources.
The employment-creating and poverty-reducing impacts of employment1intensive infrastructure investment depend to a great extent on the design of the programmes and local conditions. A distinction needs to be drawn between employment-based safety nets, sometimes termed workfare, and labour-based productive and cost-effective infrastructure programmes aimed at offering fair work.
The ILO is increasingly focusing on programmes aimed at developing poor regions and communities in a sustained fashion. But safety net projects, often run in collaboration with the World Food Programme, are also useful as an emergency mechanism for counteracting food shortages, as was the case during the drought in southern Africa in 2002, and following disasters like the floods in Mozambique in 2000 and Hurricane Mitch in Central America in 1999.
Building on this work, the ILO emphasizes community-based approaches to infrastructure investment by developing the organizational and negotiating capacities of local communities, producers and service providers.
Community organizations formed around infrastructure projects remain in place for their management and maintenance and have often prompted other collective initiatives, such as health insurance.
The approach is particularly useful in addressing the needs of women in poverty. By promoting the objectives of equal pay for work of equal value and equal access to jobs and training, it combats discrimination. Involvement of women in the technical and supervisory functions of projects can help overcome biases against the recruitment of unskilled women workers. Special criteria for the selection of investment schemes target concerns of women, such as access to productive resources, land development, water, firewood, rehabilitation of health centres and schools. In this connection, emphasis is also placed on the inclusion of women on decision-making committees, such as those of community-based organizations, village development committees and economic interest groups.
Pilot and large-scale labour-based infrastructure programmes carried out in countries as varied as Cambodia, Ghana, Lao People’s Democratic Republic, Lesotho, Madagascar, Rwanda, Thailand and Zimbabwe show that labour-based approaches:
● are between 10 and 30 per cent less costly in financial terms than more equipment-intensive techniques; ● reduce foreign exchange requirements by between 50 and 60 per cent; and ● create between three and five times as much employment for the same investment.
The typical worker on a labour-based infrastructure programme is an underemployed casual labourer. Care is taken to ensure that the wage is set at a level to help lift workers’ families out of severe poverty but avoid attracting employed workers away from other income-generating activities. In this and other aspects of the design of the project, consultation with local communities has proved the most effective way of targeting the creation of job opportunities on those most in need, as well as ensuring that the infrastructure built meets local priorities. Embedding such projects in the community is vital to future maintenance, which can also be designed to use labourintensive techniques.
Poverty is reduced in the short term by the increased incomes of workers on the project and in the longer term through the provision of public goods vital to increasing income-earning prospects for the community as a whole. The average employment period is often around 100 days; with an estimated average daily wage level of US$1.50, this implies a transfer of $150
per participant. In rural areas during the “hungry” season, this is a sizeable income transfer to households on the poverty line.
By improving the infrastructure of communities, labour-intensive infrastructure investments boost the growth of the local economy and enhance access to social services. For example, the economic benefits of a rural road linking a village to a local market town are savings in transport time and costs, which translate directly into higher farm incomes. Water supply or drainage schemes, schools and health posts lead to an improvement in the health and skills of the whole area. An evaluation of the impact of upgrading drains in poor informal urban settlements in Uganda found that the completion of a main channel, in addition to the employment and income generated, brought about a reduction of waterborne diseases, an improvement in housing and latrines and important increases in land and rental values.
After 25 years of pioneering work in the promotion of employmentintensive infrastructure investment, the ILO has learnt a number of important lessons. First and foremost, a sustained impact on poverty depends on good policy design and local capacity building. The ILO concentrates on developing training systems for government ministries, project consultants, small contractors and communities. This has helped to spread knowledge and skills so that the large number of national and international agencies involved in infrastructure work are aware of the labour-based option and its developmental advantages. Second, a key phase is the drafting of procurement conditions. Such documents can determine whether or not small national contractors have a chance in competition with international companies. Third, the impact on poverty is enhanced when local communities are fully involved in deciding what is being built, how and by whom.
Fourth, a national strategy, involving the relevant departments and the social partners, and backed by international development agencies, is needed to garner the full potential for poverty reduction of the labourintensive approach to infrastructure investment. Fifth, labour-intensive investment can open doors for community development and provide a temporary boost to the incomes of people living in poverty, but sustaining progress requires linked action to promote longer term employment opportunities, for example in micro and small enterprises.
To learn more about this author, visit International Labour Organization's Website.
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