Employment and Investment Policies
The EIIP has over 25 years of experience with labour-based technologies and
local level planning over a ten year period, approximately 1 million direct jobs and
close to 2 million indirect jobs have been created in investment programmes in which the EIIP has
been directly involved through demonstration and capacity-building activities.
Add to this the experiences of partner organisations, and a sufficiently large
resource base is created to provide the evidence of the viability of employment
creation through infrastructure investments as a means of poverty alleviation.
Macro-economic studies in various countries have amply shown the positive effect
of labour-intensive investments on national employment.
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Madagascar
Using a macro-economic model to measure the impact of labour-intensive
investment projects on the economy of Madagascar, a 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 superiority of the
employment-intensive approach, which is 30 to 80% less costly, creates 2.5
times more jobs, increases national income and household consumption 2.5
times and saves 30% of foreign currency requirements.
In 1995, the employment-intensive sector actually created 12,000
direct and 23,000 indirect (equivalent full-time) jobs. These figures
should be compared with the 17,000 jobs that existed then in the free trade zone and
the total of 77,000 jobs in the formal sector.
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However, the experience gained over the years has shown that labour-based
infrastructure provision at a national scale requires a supportive policy
framework at the appropriate institutional level. Such a supportive policy
framework should be two-pronged, aiming firstly at the creation of an enabling
environment, which ensures the removal of barriers to the use of labour-based
technologies and the use of public investments in contracting small-scale
contractors and local communities. Secondly, such a supportive policy framework
should include a promotional policy
framework, which actively promotes the
use of labour-based technologies and local level planning as a general aspect of
infrastructure provision in the country. Apart from promoting the development of
a supportive policy framework, the EIIP is concerned
with the incorporation of the ILO's core values and the application of the Decent Work
principles.
An enabling environment refers to the creation of appropriate conditions which
allow small-scale contractors and local communities to enter into public
procurement contracts on a level playing field. The creation of such an
environment refers to the adaptation of specific legislation and contract
documentation designed for larger enterprises, as well as an attitude change of
public institutions.
Improving the access to information, training and credit, easing the
requirements for guarantees and simplifying the procedures for the formalisation
of a business, form examples of such adaptations. With respect to contract
documentation, its simplification is often necessary in order to make it more
understandable and appropriate for the average contract sum concerned in the
case of small-scale or community contracting.
Regarding the necessary attitude change, the EIIP focuses mainly on awareness
raising and the training of contracting agency staff. Capacity building among
present and future decision-makers is one of the priorities of the EIIP. The
Programme is therefore collaborating with learning institutions all over the
world to generate awareness of the employment-intensive approach by
incorporating components on labour-based methodologies in technical training
courses.
In order to ensure that upstream policy formulation is linked to employment and
investment policies and decisions, the EIIP promotes the reorientation of
government policy, to emphasize the employment potential of public investments.
This includes, among other things, raising awareness amongst governments and
other interested institutions of the nature and potential impact of
employment-intensive investment programmes. In some countries small technical
units (called Employment and Investment Policy Units) are being set up in
planning or finance ministries with EIIP support. These units are designed to
provide investment and employment data, analyses and options, to the government,
the social partners and other economic actors.
The objective is to influence employment and investment policies to promote
the realisation of the employment potential of public investments in
infrastructure, for instance by including employment as one of the criteria in
the evaluation of investments.
In its promotion of employment intensive investments, the EIIP is concerned
with the incorporation of the ILO's core values and principles as enshrined in
the various ILO Conventions, in order that the jobs created are good quality
jobs. The EIIP expands the framework of initiatives on Decent Work from advice
and guidance to a hands-on approach to the application of the Decent Work
principles.
Appropriate labour standards application is a must for a sustainable
construction industry. This is even more important if the industry is for a
larger part of its delivery dependent on a productive labour force, as in the
labour-based approach. This can be a win-win situation, where on the one side,
the workers get more and sustainable jobs and on the other side the employers
get a larger share of the market and a higher turnover.
Women are often over-represented among the poorest of the poor. They are also in
many cases the sole providers for their children. Nevertheless, women are seldom
offered remunerative employment. Therefore, the EIIP has given great attention
to the inclusion of women in employment-intensive infrastructure works, where in
the past men have tended to predominate. For example, women's participation has
reached 37 per cent in (road) programmes in Botswana, between 25 per cent (roads)
and 60 per cent (upgrading in peri-urban areas) in Madagascar and up
to 60 per cent (roads) in Lesotho.
The EIIP programme promotes the inclusion of fundamental labour standards in
relevant national legislation and contract documents. It has therefore
developed material guiding the application of labour standards in the
employment-intensive construction industry, the Labour Policies and Practices
Guide. As a result, EIIP projects constitute a very practical instrument for the
application of fundamental labour standards and the promotion of social
progress.
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Peru
In Peru legislation has been developed looking especially at the
win-win situation mentioned above, where micro and small enterprises are
given easier access to public procurement contracts, and in return they
have to guarantee the application of certain fundamental labour standards
for their workers. The Micro and Small Enterprise Promotion and
Formalisation Law recognises the employment potential of micro and small
enterprises using employment intensive methods, and promotes their access
to public procurement contracts.
Firstly, the law promotes an enabling environment for this to
happen. It stipulates that required guarantees for public contracts will
be eased both in terms of amounts, as well as forms in which these need to
be given, and that access to finance will be made easier. The law
furthermore specifies that information on public contracts be made
publicly available through PROMPYME using the internet, and that the
administrative procedures for the formalisation of micro and small
enterprises be simplified. The law also contains a training component for
micro and small enterprises, focusing on the administrative, legal and
financial aspects of business management.
Secondly, the law creates a promotional policy framework in the
sense that it stipulates that at least 40% of public procurement contracts
will be carried out with micro and small enterprises, as well as their
preferential treatment with respect to larger enterprises. This greatly
increases the market share available to micro and small enterprises.
Lastly, the law specifies certain fundamental labour standards that
micro and small enterprises need to observe when entering into a contract
with a public entity. These refer to remuneration, workdays and hours,
weekly rest, vacations, termination, health security, and pensions.
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Further reading
- Políticas de contratación pública y modalidades de organización legal en Perú, Bolivia y Ecuador - Acceso de las micro y pequeñas empresas a los contratos públicos para obras y servicios - PDF
264 Kb
José Yeng y Serge Cartier van Dissel, Oficina Subregional de la OIT para los Países Andinos, Lima, 2003
- Employment-Intensive
Infrastructure Programmes: Labour policies and practices- PDF
2,133 Kb
David Tajgman and Jan de Veen, 1998, ISBN
92-2-111034-630
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