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Employment-Intensive Growth and Poverty Reduction: The Role of Public Investment in Infrastructure

Employment-Intensive Growth and Poverty Reduction: The Role of Public Investment in Infrastructure. The term “Employment-intensive” EI/construction sector EI/comparative advantages. Link between investments and employment (PIP as policy tool) Influencing investment decisions Conclusions.

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Employment-Intensive Growth and Poverty Reduction: The Role of Public Investment in Infrastructure

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  1. Employment-Intensive Growth and Poverty Reduction:The Role of Public Investment in Infrastructure A3-2905, Turin, Feb. 2003

  2. The term “Employment-intensive” EI/construction sector EI/comparative advantages Link between investments and employment (PIP as policy tool) Influencing investment decisions Conclusions This presentation A3-2905, Turin, Feb. 2003

  3. “Employment-intensive” • This term indicates that an OPTIMUM use is made of labour as predominant resource, while cost-effectiveness and quality aspects are considered. • It entails a judicious combination of labour and other resources to ensure competitive and quality results. A3-2905, Turin, Feb. 2003

  4. Importance of construction sector • Lack or degradation of infrastructure retards economic development, and isolates and discriminates against the poor • Weight in the economy (40-70 % of public investment) • Variations in labour requirements for available technology options (10-15% ; 40-50%) A3-2905, Turin, Feb. 2003

  5. Comparative advantages of labour-based option • 10-30% less costly than equipement-based option • 50-60% less foreign exchange requirements • 3 to 5 times more employment (sustainable, decent jobs) A3-2905, Turin, Feb. 2003

  6. Employment potential • Ghana(1994): if 20% of public plus 10% of private investment go to L-B option: = 100 million $ per year = 50,000 direct plus 75,000 indirect jobs • Gvt. Empl. objective formal sector: 50,000 • Not the result of additional investments, but of different choices of technology within existing budgets • L-B option : Structural employment creation and poverty reduction A3-2905, Turin, Feb. 2003

  7. (Re-)Orienting national infrastructure investment policies towards employment A3-2905, Turin, Feb. 2003

  8. The public investment programme (PIP): a policy tool • One of the most powerful tools in the hands of Governments • However, PIP often no more than a financial and technical tool for construction output • Can it be more ? A3-2905, Turin, Feb. 2003

  9. …PIP, policy tool • State can use PIP to: • Generate employment and incomes • Increase the level of monetisation in rural economy • Direct investments towards needs of low-income groups A3-2905, Turin, Feb. 2003

  10. …PIP, policy tool • In addition, PIP can be used for addressing other social policy concerns: • Capacity-building • Public-private parnerships • Organisation and negotiation within formal sector and informal sector • Conditions of work, social dialogue • Institutional reforms (decentralisation, contract systems…) • Participation, ownwership A3-2905, Turin, Feb. 2003

  11. Objective • Incorporate employment, poverty and social policies into mainstream investment policy A3-2905, Turin, Feb. 2003

  12. So far • Poor impact on employment and poverty: responsibility to be shared between Gvts and funding agencies • EIIP : limited success in going to scale: technical agencies (ministries of PW, Agriculture, Rural Development etc.) and financing institutions must be brought on board A3-2905, Turin, Feb. 2003

  13. Institutionalise investment-employment linkages: how? Green Paper, White Paper : Namibia (2000) Presidential Decree : Philippines (1999) Employment and Investment Policy Units in Planning or Finance Ministry (Uganda, Senegal, Mali - promoted by ILO) PRSP units (?) A3-2905, Turin, Feb. 2003

  14. Influence policies: (1) Studies on potential and impact of EIIPs • Provide Gvts and donors with data and analytical studies on: • Technical,financial,economic viability of EI option • Macro-economic potential and impact of EI technology • Comparative studies ‘’employment-based’’ vs. equipment-based • Periodically assess situation with Gvt. and donors • Expected result: better informed decision-making A3-2905, Turin, Feb. 2003

  15. Influence policies:(2) Networking at design stage • Establish collaborative relations with: • Technical line ministries, local gvt., etc. • Donor agencies to assess technological options and adopt the most employment-generating approaches whenever this is technically feasible and economically cost-effective (before it is too late!) A3-2905, Turin, Feb. 2003

  16. Influence policies:(3) Identify constraints, initiate solutions • Identify potential constraints: technical, administrative, regulatory, institutional, capacity-related… • Ways and means for problem-solving, e.g.: • Training of SMEs and consulting engineers in alternative project design • Adjustment of contractual systems and procedures and technical specifications favouring L-B contractors and enforcing labour standards • Sensitization of technicians and decision-makers in line ministries and decentralised structures A3-2905, Turin, Feb. 2003

  17. Influence policies:(4) Networking • Establish contacts with all actors concerned: • Private sector: L-B SMEs, consulting engineers, employers’ and workers’ associations of the construction industry, CBOs, NGOs… • Public sector: Association of Mayors of Municipalities, Association of Rural Communes, Association of municipal planners and engineers,… • Disseminate information + promote dialogue on investment policy, employment and social policy, private sector development, etc. A3-2905, Turin, Feb. 2003

  18. Act on several fronts • Policy environment (not always favourable) • Certain functions can be fulfilled by: • An ad-hoc governmental instrument/institution (such as ‘’Employment and Investment Policy Units’’) • Specific national programmes (Social Funds, infrastructure development, education, capacity-building progr., etc.) • Consulting engineers + economists (design, monitoring, evaluations, training, etc.) • Such work can progressively test and demonstrate approaches, build up pressure or interest groups, widen a ‘’constituency’’ for the promotion + implementation of the policy A3-2905, Turin, Feb. 2003

  19. Conclusion • Public resource allocation criteria need to give (higher) priority to employment-generating and poverty-reducing options • Upstream policy decisions need to be based on well informed options • Ownership of all actors involved requires participatory processes • Mechanisms to ‘’institutionalise’’ the approach are required • Best practices can be referred to for future work A3-2905, Turin, Feb. 2003

  20. Thank you for your attention! A3-2905, Turin, Feb. 2003

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