Why rural wage labour matters - week 1 summary

Week 1 of the wage labour ediscussion focused on the core issues and practical implications of rural poverty and wage labour.

In May 2015, BEAM Exchange and USAID’s Leveraging Economic Opportunities (LEO) project launched an ediscussion on the links between wage work, poverty, and market development. The discussion included over 200 participants from 34 countries, drawing from market development practitioners, labour economists and researchers, technical representatives at donor agencies, and others. This blog synthesises the first week of the discussion. 

Core themes

Wage increases and their relationship to productivity and inflation – the role of people management, mechanisation, collective bargaining, etc.

Impact of structural transformation on rural non-farm wage labour – driven by migration, climate change, links to land consolidation, implications for agriculture.

Examples of what ‘labour aware’ interventions look like – tightening supply and demand, M4P framing of labour markets, how to translate strategies across contexts.

Weak labour market data quality – what it means for our understanding.

Size of enterprises in relation to demand creation for jobs – large vs. medium vs. micro.

Key agreements

There needs to be better integration of 'labour aware' interventions in market systems approaches, linking demand (anything that creates jobs) with supply (skills development, collective bargaining) interventions. Labour market tightening (reducing the gap between supply and demand) is a guiding principle, and reduction of 'undesired' labour supply (children, elderly) is an important means to this end. There are a range of intermediary actors playing supporting functions (temp agencies, jobs training) that can be leveraged depending on context.

Better understanding is needed on the 'poverty profile' of a given sector or community, because differences in the poverty level affect how much the poorest benefit from wage labour. Having capital and assets can mean more control of income, whereas lack of means of production means less power and more dependence on prevailing working conditions (including wages).

Agriculture in isolation is not a sufficient system frame for grappling with wage labour. We must extend our perspective to the non-farm economy, and uncover relationships between agricultural wage labour and other forms of income (both wage based and self-employment) outside of agriculture. Important issues that clearly relate to this are migration, the RNFE (Rural Non-Farm Economy), remittances, labour linkages across sectors and areas, and the wider notion of structural transformation. The model of beneficiary as solely smallholder (self-employed) farmer is insufficient for explaining and improving wage labour dynamics and reducing poverty in an inclusive and scalable manner.

We need to reject the assumption that business growth will 'trickle-down' to wage labourers in particular. Instead, we must improve data collection methods that will help enable us to understand the real effects of business change on labourers.

Current large-scale surveys and national statistics do a poor job of reflecting the reality of rural wage labour. Nuanced, localised approaches to data collection are needed to understand the wage labour current situation and any future changes.

Debates

• What is the role of microenterprise in large-scale growth and job creation? Microenterprises are recognised as having some role in complementing larger businesses, but can they be a driver themselves? How do power dynamics between large and small firms impact smallholders and wage labourers?
• How inevitable is the shift in wage labour from farming to other activities? Should we reframe agriculture as a source of productive supply to the non-farm economy, rather than a direct driver of growth and poverty reduction itself?
• What is driving landholding fragmentation and/or consolidation, and what are its implications? How does this differ across contexts?
• What are the relationships between agricultural yields and wage labour employment outcomes in commodity markets vs. high-value export markets?

Outstanding questions

• Are there examples of financial products specifically targeting wage labourers?
• How does specialisation of knowledge (economist, agronomist, M&E, sociologist, etc.) influence the way that wage labour has ‘slipped through the cracks’ to date?
• What can actually be done to improve wage labour data quality? 

Bernd Mueller is a labour economist and rural employment expert at the FAO's Decent Rural Employment team, where he focuses on support to sub-Saharan Africa. He was the facilitator of week one, and the summary is provided by Mike Klassen.

A report synthesising the full ediscussion will be available on the BEAM website in July.