The Industrial Development Policy Research Center at the Policy Studies Institute (PSI) hosted a two-day international conference on Jobs for Development at the Capital Hotel, Addis Ababa, Ethiopia in the presence of renowned researchers, Ethiopian government officials, staff of international organizations, and policymakers. The researchers from different countries and institutions presented their research findings at the Skyline Lounge at the Capital Hotel on February 22-23, 2023.
In the opening address of the conference, H.E. Professor Beyene Petros, Director General of the Policy Studies Institute, said poverty is a major problem in sub-Saharan Africa and South Asia, and it is important to find ways to help those struggling with it. Jobs can help reduce poverty first and foremost by providing people with a regular income. This income can be used to buy basic needs such as food, clothing, and shelter, which can help improve the quality of life.
Prof. Beyene added that a job can give people a sense of purpose and belonging, which can help them feel more secure and confident. Another way to fight poverty is that jobs to give people access to health care and education. Access to health care can help people stay healthy and avoid diseases that can lead to poverty. Similarly, access to education can help people gain the skills and knowledge they need to find better-paying jobs and increase their earning potential.
H.E. Prof. Beyene Petros
Overall, jobs are an important component of poverty reduction in poor countries. They can provide people with a regular income and give them access to health care and education, which can help them improve their quality of life. With the right strategies and investments, all stakeholders can help create more jobs and reduce poverty in the regions.
Espen Villanger, Director of the Christian Michelsen Institute (CMI), explained in his presentation "Job Creation: Examples from Ethiopia" that CMI is an independent development research institute in Bergen, Norway. Dr. Villanger explained that CMI generates and communicates research-based knowledge for poverty reduction, human rights promotion, conflict reduction, and sustainable social development. CMI's research focuses on local and global challenges and opportunities facing low- and middle-income countries and their citizens. Our geographic focus is on Africa, Asia, the Middle East, and Latin America. After this brief introduction about the CMI, he emphasized that the CMI examines the underlying social and market mechanisms that can explain why people remain poor, as well as the design and impact of poverty reduction programs. He further explained that jobs and access to finance are critical to poverty eradication and are at the heart of our research agenda. The institute combines in-depth knowledge of specific regions of the South with analytical and empirical methods to understand why people remain poor and to evaluate policies.
Dr. Espen Villanger
Dr. Villanger said the CMI has decades of experience in qualitative, quantitative, and contract research, with a focus on East Africa and South Asia. He said the Norwegian Research Council supports a workplace network coordinated by CMI, Norway that compiles and disseminates research findings on what works in job creation and skills development. The network includes researchers from Scandinavia and Norway's three main partner countries, such as Nepal, Tanzania, and Ethiopia. The network regularly organizes workshops between researchers and practitioners.
Dr. Villanger added that the two-day conference will promote mutual learning between policymakers and researchers. It will focus primarily on relevant policy issues of how we can create decent jobs for the poor. Discussions will be based on presentations of recent research findings as well as broader reviews of research on job creation, decent work, and capacity building. There will be presentations on the following three main policy areas covered by this network. He also explained that the first central theme of the network is job creation. Job creation is the process of introducing new employment opportunities into an economy by increasing the number of jobs related to the production of goods and services within a business organization. It is often the focus of stimulus packages proposed by governments to boost the economy and promote employment. Such initiatives may include taxes, subsidies, and other measures to increase consumer spending and business investment and to provide incentives for businesses to hire new employees.
The second key issue for the network is well-functioning markets. By well-functioning markets, he meant markets that operate efficiently and transparently, allowing employers and workers to make informed decisions about available labor markets and enabling efficient allocation of resources to the benefit of both parties. This includes complete information about jobs, competitive prices, and minimal outside interference from governments, organizations, or individuals. Well-functioning markets create an environment that benefits both employers and employees and allows for fair competition and equitable exchange.
The third critical point of the network is improved worker competence. Improved competence for workers means having the skills and knowledge needed to perform a particular job. It is about the ability to do something well and with confidence, the aptitude that comes with good training and information. It is not limited to the technical skills required for a particular job, but also includes the ability to solve problems, collaborate, think critically, and use technology. In conclusion, he emphasized that the main objectives of the two-day workshop revolved around the three key themes mentioned above to better link research to policy processes and to disseminate research findings and key recommendations to stakeholders. In addition, he mentioned that the conference will create a space for policy dialog and discussions on actionable guidelines to improve job creation policies for development in Sub-Saharan Africa and Southeast Asia.
Dr. Tigabu Getahun of the Policy Studies Institute presented his research findings titled "Triple Challenges of Jobs: Quality, Quantity and Inclusiveness" Dr. Tigabu said that unemployment rates are high in sub-Saharan Africa, including Ethiopia, and that unemployment is an urgent problem in Ethiopia. He said that Ethiopia is the second most populous country and produces more than 150,000 college graduates every year, but less education for vocational transformation. Dr. Tigabu also said that job quality refers to remuneration, contractual arrangements, prospects and career development, occupational health and safety, working conditions, and labor relations. Poor quality employment is an even greater challenge to the labor market in SSA than the problem of unemployment. He explained the unique characteristics of African labor markets: informality, underdevelopment, low labor productivity, low wages, and high levels of working poverty. He pointed out the high turnover in the manufacturing sector due to low wages and rigid and unhealthy working conditions. Every year 40-77% of workers leave companies. The lack of quality jobs in SSA is a key factor in people's decision to migrate. In terms of equal opportunities, the problem is even greater for women and youth. Inclusion in employment means giving workers equal opportunities in the workplace, regardless of gender, age, race, disability, status, etc. Creating more, better, and inclusive jobs are an integral part of Sustainable Development Goal 8 of the 2030 Agenda.
Dr.Tigabu Getahun
Dr. Tigabu's study sought to identify the determinants of job quality and quantity, examine the relationship between job quality and firm productivity, assess well-being and the gender effect of quality jobs, and finally examine net job effects (direct, indirect, induced, and substitution). He then presented the determinants of job quality and quantity: Evidence from the Ethiopian Leather and Agro-Processing Sectors. Dr. Tigabu identified the key research questions: what types of firms (size, sector, ownership, etc.) create better and more jobs? what determines the potential of firms to create more and better jobs? is there a trade-off between increasing job quality and quantity? He said that low wages and high staff turnover can lead to a vicious cycle of low quality and low productivity. However, there was also concern that improving job quality comes at a significant cost to companies.
Regarding methodology, Dr. Tigabu said the study used panel data from 400 firms in the agricultural and leather processing sectors in Ethiopia. Administrative lists of firms obtained from the Institute for the Development of the Leather Industry, the Institute for the Development of the Food, Beverage, and Pharmaceutical Industry, and the Ministry of Industry served as the sampling frame. . In 2017, they conducted a baseline survey of 460 enterprises. In 2020, they conducted a follow-up survey of 400 enterprises. The main reason for the attrition is that 32 companies closed, 24 companies relocated and some others refused. The study used various measures of job quantity and quality.
The descriptive results show that at startups, about 29% of the enterprises were microenterprises, 49% were small enterprises, 19% were medium enterprises, and the remaining 7% were large enterprises. In the survey year, about 8% were microenterprises, 45% were small enterprises, 24% were medium enterprises, and 24% were large enterprises, indicating a general growth in size. On average, micro-enterprises were the youngest (17 years old), followed by small enterprises (21 years old) and medium enterprises (22 years old), while large enterprises were the oldest (33 years old). The study broke down the analysis by nationality of owners, type of sector, and size. The study also conducted an econometric analysis. In this regard, the study highlighted that a number of factors affect the quantity of jobs. These include the age of firms, the location of firms in industrial parks, firms actively engaging with customers through advertising, and leather processing firms, which create about 37% more jobs and are expected to create 51% more jobs than agro-technical firms within 12 months.
The determinants of job quality are experience or firm age, firms within industrial parks, exporting firms, and firms that have websites and advertise pay higher wages. . Foreign-owned firms and public companies pay lower wages than domestic public companies. He established the correlation between job quality and job quantity. The results show that the higher the job quality index, the higher the employment quantity (i.e., total employment) and the number of workers that firms plan to hire in the near future. On the other hand, the higher the daily wage rate, the lower the number of workers firms plan to hire in the near future.
The study concluded that large firms pay lower wages to low-skilled workers than small firms; however, nonwage job qualities improve with firm size. The study also found that foreign-owned firms employ a relatively large number of workers and that they are growing faster in terms of the number of employees than domestically owned-firms. However, they rely mainly on imported inputs and create fewer indirect jobs than domestically owned firms. The study also found that employment growth is inversely proportional to firm size at startup. However, the employment growth rate of small businesses is still high after 21 years of average operation. Overall, the results show that there is no trade-off between the quantity of jobs and the quality of jobs; rather, the majority of these two factors are complementary when the characteristics of the firm, managers, and workers are taken into account.
In Ethiopia, the government has implemented several job creation initiatives over the years. This plan aimed to create thousands of new jobs in the industrial and service sectors by providing access to finance, promoting entrepreneurship, increasing productivity, and improving the quality of life. The government also established the Ethiopian Investment Agency to promote domestic and foreign investment and provide incentives to potential investors. This has led to a significant increase in the number of jobs created in Ethiopia in recent years, particularly in manufacturing, tourism, and agriculture. The government has also undertaken a number of job creation initiatives to address high unemployment in rural areas, such as the Rural Development Fund and the Special Job Creation Program. These initiatives have resulted in increased agricultural productivity, improved access to credit and other financial services, and the expansion of small businesses in rural areas.
Research has shown that jobs can provide a direct pathway out of poverty for poor people, and job creation is therefore key to achieving several of the Sustainable Development Goals (SDGs). However, many jobs in developing countries do not provide decent wages and working conditions that would enable productivity growth and poverty reduction. With the SDGs in mind, these jobs are not sustainable. One indicator of this is the high turnover often seen in the manufacturing sector. For example, in Ethiopia's rapidly expanding manufacturing sector, most workers who start in new factories quit their jobs within the first year. This is very costly for workers, as they have to spend a lot of time looking for a job they did not really want, and because they are paid low wages during the initial phase of learning the job. Extreme turnover is also very costly to companies in that it affects productivity when new workers are being trained to take over the job and in the early stages when the new workers are less productive than more experienced workers. Reducing these costs for factories should make them more profitable and increase demand for labor, thus creating new jobs.
Dr. Tigabu explained that although work can be hard, dangerous, and unattractive for many people, it provides income opportunities that are highly valued by others. At the same time, workers appear to lack both the technical and social skills necessary to keep a job. Policies to promote business growth for job creation tend to focus on either business/managerial support or worker training. However, research has found only modest effects of such interventions. Business training programs have relatively small effects on profitability and job creation, while the outcomes of vocational and no cognitive training for the unemployed show some, albeit modest, positive effects on employment and wages. The impact of on-the-job training for workers appears to be more positive, especially in developing countries. However, there may be important complementarities in employer-worker relationships. For example, there is reason to believe that employer training in human resource management may be of limited value if workers do not appreciate the importance of time management. Similarly, training workers to take a long-term view may be of limited value if employers focus only on the present. To date, no research has addressed such complementarities, and this study provided important new insights.
The other research presented on the first day of the conference was titled Cash against COVID: Evidence from Uganda: sustaining business activities during the pandemic. The speaker was Arne Nasgowitz from NHH in Norway. He said the main research questions for the study were how access to free child care affects labor supply, income, and child development, how it compares to a cash subsidy, and whether the two are complementary. He said that before the pandemic in Uganda, access to child care increased the use of full-time child care and improved child development. Again, cash and child care significantly increase household income by increasing the father's labor supply (child care) and increasing the mother's income from self-employment (cash). He also found large effects of cash transfers on business start-ups. Finally, his study attempted to intervene for two years, but this was interrupted by COVID and a freeze. In 2020, only cash grants could be disbursed.
Arne Nasgowitz
The presenter also said that he reviewed the literature on COVID and business development, cash transfers during COVID, and cash transfers and resilience to shocks. His study was conducted in an experimental design. He concluded that a sharp decline in household income was partially offset by an increase in livestock and crop sales. He also concluded that cash transfers during the COVID led to an increase in income and food security with no evidence of a backlash. Cash transfers during the COVID prevent business closures, lead to new business creation and higher incomes after the COVID, and there is little evidence of impacts on resilience. By and large, treatment effects recover, enrollment rates increase, and men take paid employment, but the composition of jobs changes. His findings are also homologs with stronger regions with more restrictive gender norms.
In Uganda, it is important to conduct cashless transactions during the pandemic COVID -19. This reduces the risk of spreading the virus through the physical exchange of money. Technologies such as mobile payments, contactless debit cards, and online payments can help reduce the potential spread of the virus. COVID-19, cash transfer programs were used to support households affected by the pandemic in Ethiopia. The Ethiopian government sent cash transfers to low-income households to help them cope with the economic hardship caused by the pandemic. These transfers were processed through regional offices and commercial banks. In addition, various international and local organizations, such as the World Food Program and Save the Children, have implemented cash transfer programs to assist needy households in Ethiopia.
The other speaker of the day at the conference was Dr. Gebeyehu. M. Fetene. His title was Well-being and Gender Impacts of Quality Jobs: Evidence from the Leather and Agro-Processing Industries. He said that job quality is an increasingly important policy issue that is attracting the attention of policymakers, practitioners, and researchers. This is because job quality affects worker productivity and health. Poor jobs lead to high turnover, shrinkage, strikes, injuries, and ill health, which affect productivity and slow growth. He also said it is well-documented that women have earned low wages for centuries. He attributed the gender pay gap to differences in human capital endowments, women's dual responsibilities, differences in risk preference, and discrimination including occupational segregation.
Dr. Gebeyehu M. Manie
He said various stakeholders have made efforts to reduce the gender wage gap and improve overall working conditions. Gender equality in the labor market has improved over time in many countries, he said. The motivation for the study, he said, was that there is little empirical evidence on quality jobs in developing countries and to examine whether there is a trade-off between the wage and nonwage characteristics of jobs, whether quality jobs are inclusive, and whether there is a paucity of literature on the well-being and gender effects of quality jobs in developing countries. He said the studies primarily examined gender differences in earnings and paid little attention to gender differences in the nonwage characteristics of jobs.
The study examined the gender income gap in Ethiopia, gender differences in uncompensated work skills, and whether employers offer higher salaries at the expense of stress and adverse working conditions. The data used for the study were surveys conducted by PSI, a three-item assessment of two sectors, namely the agricultural sector and the leather sector in Ethiopia. The variables used for the study were gender differences in income, gender differences in fringe benefits and other non-pay amenities in quality of work, the proportion of female employees as owners, managers, and supervisors, adequacy of income, well-being, and overall quality of work. The study used descriptive statistics and econometric models as methods of analysis. Finally, the study found that female workers in the two sectors are mainly young (average age 32 years), have lower levels of education with an average of nine years of schooling, and have limited computer skills. Overall, women working in the leather and agribusiness sectors are younger, less educated, and less skilled than men. Women are also disadvantaged in terms of their share of employment, business ownership, principal management, and other managerial and supervisory positions. Overall, the study found that women earn less than men with comparable skill levels, with the gender income gap increasing with the skill level of the workforce. Not only do women have lower earnings, but they also receive fewer fringe benefits and opportunities than men. However, some of men's higher income and fringe benefits appear to be bought by stressful work and relatively poor working conditions, and men are less happy and work in relatively poor working conditions than women. The results also show that the jobs created in the agro-industry and leather sectors are not decent for most workers.
Concluding on the various issues discussed, the researcher said, "This study is about gender equality and social change.” We are at the forefront of both conceptual and empirical research, combining a wide range of quantitative and qualitative methods. We communicate our research findings to stakeholders to increase their reach and impact. A steady job with a decent wage is an effective pathway out of poverty. The question of how to spur growth in the labor market should therefore be central to policymakers' concerns. Existing research and evidence can help policymakers determine the best way forward. Working closely with our partners in Ethiopia, Nepal, and Tanzania, we have created this platform to highlight key policy challenges and how research can best be used to address them.
Dr. Gebeyehu said that well-being is an important factor when it comes to having quality jobs in Ethiopia. Gender plays a role in accessing and succeeding in these jobs. Women are more likely to be discriminated against when it comes to accessing jobs and their ability to succeed in the workplace. This can lead to men being more likely to enjoy better-paying jobs and associated opportunities. In addition, cultural gender norms continue to contribute to this inequality, as women often have fewer educational opportunities and are discouraged from pursuing certain occupations. This gender inequality is associated with higher levels of poverty and limited access to essential services. Overall, gender discrimination limits individuals' ability to reach their full potential, which impacts the well-being of both men and women.
The other paper presented on Day 2 of the conference was titled "Labor Markets in Poor Countries: Interventions to Promote Decent Work in the Formal and Informal Sectors" the speaker was Magnus Hatlebakk from CMI. He said that labor markets in poor countries struggle with high levels of informal employment and low wages. To address this problem, labor markets in poor countries have focused on interventions to promote decent work in both the formal and informal sectors. These interventions include job creation measures, labor market regulations, social protection measures, financial and investment measures, education and training opportunities, and public works programs. These measures aim to create more and better jobs in the formal sector and improve working conditions in the informal sector. There are also initiatives to reduce informality, promote entrepreneurship and improve the functioning of labor markets.
Magnus Hatlebakk
Jamal Msami of REPOA, Tanzania, also gave a presentation on "The monetary cost of employment compliance in Tanzania: A case study of the hotel Industry". He said that the monetary cost of employment compliance in Tanzania can vary greatly depending on the size of the business. In the hotel industry, employers must comply with minimum wage regulations and other employment regulations, such as those governing overtime pay. The cost of noncompliance with labor regulations can be significant, ranging from fines to loss of business. According to a study by the International Labor Organization (ILO), the minimum wage in Tanzania was set per month and is increasing every year. This is the minimum wage for all hotel workers, regardless of their qualifications or experience. Other legal costs include payment for overtime, provision of basic personal protective equipment, compliance with health and safety standards, and provision of adequate accommodation and sanitation. The hotel industry must also comply with the Fair Employment Act, which prevents discrimination based on race, gender, religion, or disability. All of these costs make it difficult for many employers in the hotel industry to comply with employment regulations.
Espen Villanger of CMI also gave a presentation on “Does wealth reduce support for redistributive policies? Evidence from an Ethiopian Housing Lottery". Dr. Villanger said that redistributive policies are an essential component of strategies to reduce inequality and promote sustainable development in its three dimensions - economic, social, and environmental. They are an effective policy tool to improve equality of outcomes through the redistribution of income and to increase equity by improving the distribution of income-generating assets such as human capital and wealth (including land and industrial and financial capital) among individuals and between the private and public sectors. He said there is evidence that higher levels of wealth can reduce support for redistributive policies. A study conducted in Ethiopia found that wealthier households showed significantly less support for redistributive policies than poorer households. This was especially true for the government's policy of allocating housing through a lottery system. Richer households were far less likely than poorer households to support the lottery, believing that they deserved to obtain housing through other means. Moreover, this gap in support widened as the size of the housing lottery increased. Ultimately, this shows that wealth can have a strong influence on how people view redistributive policies. He said that the housing lottery system in Ethiopia increases competition among people to accumulate resources equitably.
Dr. Espen Villanger
Dr. Girum Abebe of the World Bank's Ethiopian office presented a paper on Inventiveness, Persuasion, Retention, and the Distribution of Talent: Evidence from Ethiopia. Dr. Girum explained that incentives are financial and non-financial rewards given in return for performance or achievement. They are used to motivate employees and influence their behavior. Beliefs are also values, attitudes, and perceptions that shape our thoughts and actions. Beliefs influence the way people interpret events, explain their experiences, and make decisions. Employee retention is the process of keeping employees on the job and preventing them from leaving. Companies use a variety of strategies and tactics to retain their employees, including competitive salaries and benefits, training and development opportunities, and a positive work environment. Finally, Dr. Girum also explained that talent assignment is the process of matching qualified individuals with jobs and tasks to maximize their potential. This process involves assessing individual skills, abilities, and interests to ensure that the right people are placed in the right positions. Dr. Girum said that in Ethiopia, talent allocation is based on individual skills and the needs of the organization.
Dr. Girum Abebe
Hailegebriel Yirdaw from Ethiopia also gave a presentation on the "Distribution of Labor and Human Capital in Manufacturing." He said that the allocation of labor and human capital in manufacturing is an important part of the production process. Workers in manufacturing are generally hired to assemble test and package products and perform other tasks related to the production of goods. The manufacturing sector relies heavily on the expertise, experience, and hard work of its employees to ensure that products are of the highest quality and delivered on time. Allocating labor and human capital is about properly assigning workers to the tasks at hand and ensuring that the most qualified workers are performing the most important tasks. It also involves allocating appropriate resources, such as training and technology, to ensure workers have the tools and knowledge to do the job correctly. In addition, effective use of labor and human capital helps ensure that employees are motivated and that the work environment is safe and productive.
Hailegebriel Yirdaw
Finally, Deepak Thapa of Social Science Baha, Nepal, presented a paper on "Employment Programs in Nepal." He explained that there are several employment programs in Nepal. The first is the National Employment Program, which helps citizens find jobs with employers of their choice. The program also provides vocational training, apprenticeships, and job search assistance. The second program is the Self-Employment Program, which aims to help people develop income-generating activities in Nepal. Under this program, entrepreneurs in the country receive grants and training in business management. Finally, the Youth Employment Program provides employment and training opportunities for unemployed youth in Nepal. This program focuses on creating sustainable employment opportunities and provides technical and financial assistance to individuals and groups in Nepal.
Deepak Thapa
Overall, the two-day conference provided an opportunity for researchers to share their research findings and ideas and build collaborations with governmental and non-governmental organizations as well as the private sector. Participants also raised various critical questions, comments, and suggestions about each paper. The researchers also welcomed the questions, comments, and suggestions and shared their responses to some of the questions. During the two days, both the researchers and the participants had fruitful discussions, a lively exchange of ideas, and many valuable insights on job creation for development.