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3.2 Investing in jobs and the community: Working Out of Poverty

Written by: International Labour Organization

Article Overview: 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.

3.2 Investing in jobs and the community: Working Out of Poverty

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 employment-
intensive 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.

Related Articles
  2.9 Conclusions: Working Out of Poverty
  3.0 Community action for decent work and social inclusion: Working Out of Poverty
  1.4 Our experience: Working Out of Poverty
  1.19 Building trust: Working Out of Poverty
  Inhibitors to Success: Natural Disasters

Article Tags: community organizations, decent employment, developing countries, drought in southern africa, equal pay, floods in mozambique, food shortages, health insurance, hurricane mitch, ilo, infrastructure investment, infrastructure projects, intensive investment, investment techniques, poor regions, public investment, reorientation, safety net, workfare, world food programme



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