Week 2 of the wage labour ediscussion focused on structural transformation.
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 second week of the discussion.
1. Structural transformation means wage employment growth in urban and rural areas
No doubt structural transformation and wage employment growth are linked, but most analysts focus on the growth of urban wage employment. In these two weeks, experts have highlighted a much richer set of interactions:
Increased commercialisation and productivity growth in rural areas supports urbanisation and increases demand for wage labour in rural areas. Farmers with small landholdings will supply this wage labour in order to earn cash.
Urbanisation and the creation of more wage jobs in urban areas increases demand for rural products, pulls rural workers into urban areas, and tightens up rural labour markets.
Urbanisation and income growth also increases demand for processed agricultural products, offering opportunities in rural areas for livelihood diversification.
2. The heterogeneity of households and their economic activities (farms and firms) is important for markets for the poor (M4P) projects
Especially in Sub-Saharan Africa, with its large youth population, increasing wage employment is critical. But so is supporting young farmers with the potential to commercialise and hire labour. Educated youth struggle to find their way. Programmes that encourage youth to become business managers in rural or urban areas may help, and these may have spillovers to less fortunate households.
Gender norms and practices, as well as inadequate infrastructure, may mean women are left behind ‒ stuck in low productivity agriculture when the men move to off-farm employment, or not able to develop a business or compete for a wage job. Gender-sensitive project identification and implementation remains important.
There will be low wage earners in both locations during the transformation process as well as households whose farms or businesses allow them to just get by, and there will be gainers: farmers with larger land holdings and assets/cash to invest, as well as owners of firms that can grow, use credit effectively, and develop markets for their products.
3. Strategies, investments or projects?
Wish lists from participants included all of the above. But I liked Bernd's final post [in the discussion], which talked about focusing results monitoring on a variety of livelihood outcomes (productivity, output and wages), and on a variety of size options.
I recall several years ago project colleagues were disappointed that an urban upgrading project had not led to more household businesses being created, and they asked me why. I pointed out that what had happened instead was that more adults in this community had wage jobs and higher incomes, and why was this so bad? The problem was not the outcome, it was the lack of imagination at project preparation leading to a narrow outcome focus.
A report synthesising the full ediscussion will be available on the BEAM website in July.
Louise Fox is Visiting Professor of Development Practice at University of California, Berkeley, and a consultant in development economics, specializing in employment, labour markets, social service delivery, and poverty reduction. Louise was the facilitator for week two of the discussion. The synthesis was produced by Mike Klassen.