THROUGH PUBLIC WORKS: WHAT WORKS Benefits, wages and other - - PowerPoint PPT Presentation

BOOSTING YOUTH EMPLOYMENT THROUGH PUBLIC WORKS: WHAT WORKS

Benefits, wages and other conditions of work on PWPs: Lessons for youth-targeted programmes Kirit Vaidya Aston Business School

29-30 June 2015 Addis Ababa, Ethiopia

Presentation overview:  Public works programme (PWP) objectives, wage rates and issues related to youth participation  Conducting systematic wage rate studies and review

• f some evidence

 Some questions and lessons for youth targeted programmes on wage rates and other benefits

PWPs are defined by three primary objectives:

• Employment (work for participants – unemployed or

underemployed)

• Social Protection through work (income/cash transfers for

participants)

• Public infrastructure investment (or providing social goods

and services) The balance between these objectives influences programme design, the wage rate and benefits

Plus enhancing employment and livelihood prospects (important for all but especially for youth)

Employment & social protection But the output of work objective cannot be ignored (infrastructure, social, environmental). (Technical and management) How much employment & social protection? (wage related) Targeting the beneficiaries (wage related) Are participants protected in other ways? (conditions) How different from

• ther social

protection? (conditions)

The PEP wage rate and work conditions dimensions to be considered

The statutory minimum wage issue

The PWP wage rate and work conditions dimensions to be considered

No of days of work (effect of wage rate and rationing) Labour supply (number of persons or days of work)

Wage rate Size and scope of PWP Planning &

• perations

Wage bill & programme costs Social protection type &level Wage rate, labour supply, programme costs and social protection

Adequate income

Distorting labour market & Budgets

Targeting youth?

Role for youth?

Implications for wage rates of different types of PWPs

Employment & social protection emphasis (labour intensive) Asset creation or maintenance (labour-based, LB) Employment guarantee Brief description Maximum employment for a given level of resources. Combine labour and light equipment for efficient work. Employment guarantee of a given number of days. Wage rate implications Lower or comparable with market wage

• rates. Timing and

amount of work reduce impact on labour market. Less social protection if too low. A floor if market wage rates “too low”. Needs to be set in relation to prevailing wage rates. Efficiency wage premium (higher pay for higher productivity) may be required. Lower or comparable with market wage

• rates. Timing and

amount of work reduce impact on labour market. Less social protection if too low. A floor if market wage rates “too low”.

6

All types can target youth. But who benefits and how?

What are PWP workers paid for? Getting the right balance

Daily paid Task rate Piece rate Individual Group

Planning, supervision and management are key. But different approaches needed for different payment systems

Formality of work for youth. Role in planning, supervision and management?

The wage rate and social protection - 1

• Usually limited number of days in an year at a given wage rate
• So how much social protection, of what type and when:
• MGNREGA objective “Enhancing livelihood security of

rural households who need such support.” Household level. Whether participating youth benefit depends on household decision making. Young households have equal access.

The wage rate and social protection - 2

• Support in seasons when there is income and food

deficiency (consumption smoothing). Employment Generation Programme for the Poorest (EGPP) in Bangladesh. Seasonal paid work of 80 days in two phases, first 40 days between October and December and the second 40 days between March and April. Benefits for youth – similar issues to MGNREGA

Situation analysis Programme type

Labour market and poverty context

Data requirement and availability appraisal Data collection Data collection If required data are not available If required data are available Data analysis Data analysis Presenting and using the results Presenting and using the results

A systematic approach to conducting wage rate studies

The reservation wage: A key concept for wage rate studies What is the minimum pay I will accept for this kind of work? How to discover reservation wage rates Stated preference: Asking respondents with careful design of questions Comparing with actual earnings – upper limit of the reservation wage rate for the individual Comparing and combining the evidence for robust results

How to discover reservation wage rates

(Comparing and combining alternative approaches)

Household and labour force survey (economic activity and earnings) data Dedicated surveys: Economic activity and earnings data Focus group discussions Reservation wage estimate Respondent statements Distribution of wage rates and earnings Comparing, combining and synthesising

5000 10000 15000 20000 25000 30000 35000 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0 Wages / earnings (riel per day) Labour supply response as % of population in 15 + age range Labour supply response, stated and revealed - Cambodia Stated

• Earnings distribution

Earnings distribution scaled up

US$1 = 4215 Riel

Comparing reservation wage rate distribution by age group - Cambodia Per cent Reservation wage (Riel / day)

Timor Leste evidence on the reservation wage for public works

15+ age groups $2.00 per day acceptable for public works Total Yes No 15 to 24 age group Number 232 103 335 % response to $2.00 per day wage rate 69.3 30.7 100.0 25 to 55 age group Number 467 197 664 % response to $2.00 per day wage rate 70.3 29.7 100.0

Does a low wage rate target the poor?

Acceptable pay for public works by household expenditure quintiles and targeting Willingness to work at a given wage rate (Riel) Quintiles of consumption per head ranked across whole sample

US$1 = Riel 4215 at study time.

Bottom 20% 2nd Quintile Middle Quintile 4th Quintile Top 20% 5000 9.0 10.4 9.8 10.7 19.6 9000 5.1 11.3 15.6 24.9 8.9 10000 23.9 17.6 15.6 25.4 8.9 12000 35.7 29.0 18.3 8.3 26.8 15000 and higher 26.3 31.5 40.6 30.7 35.7 Total 100.0 100.0 100.0 100.0 100.0 9,000 riel or less - % of total 14.1 9.8 11.4 17.4 17.0 10,000 riel or less - % of total 38.0 17.8 18.3 29.7 22.3 Evidence from a study in Cambodia

Youth from less poor households

Evidence of high reservation wage rates and unemployment for youth in S Africa and MENA (Middle East & North Africa)  Expectations based on high formal sector wage rates (including public sector)  Lack of labour market experience  Aspirations

Conducting wage rate and participation studies for youth Similar format to approach described above Specific study for youth or part of a wider study But studies to include investigation of:

• Whether of benefit to participating youth or

their households (and does it matter?)

• Use of PWP earnings and wider benefits
• Engaging educated / trained youth
• Enhancing the capacities of youth lacking

education and educated / trained youth

Should the wage rate for youth on PWPs be lower? Minimum wages for youth in formal employment are sometimes lower and there are wage subsidies  Incentives to employ youth  Compensation for lack of experience But not appropriate for PWPs with income support / social protection objectives (also see earlier evidence on reservation wage rates of youth).

What do PWP workers want to know about the work and how it affects them?

• Are participants workers or

beneficiaries?

• Equal opportunity
• Welfare and conditions at work
• Health and safety
• Treatment / compensation for

injuries

PWPs as a tool to extend social protection for youth: Wage rate related issues  Support for individuals or households?  The rural / urban difference  The wider benefits of PWP work for youth

The rural / urban difference

• PWPs relevant for rural and urban
• Rural target – predominantly underemployed,

unpaid or low-paid family workers

• Urban target – predominantly unemployed, low

paid vulnerable workers

• Relevance for educated unemployed?

The wider benefits of PWP work for youth

• The work experience
• The value of reward for work
• Gaining “skills” on the job
• Developing and using supervisory and technical skills

 Rural Access Programme (RAP) in Nepal has internships for young graduates with training and progression through levels of certification.  Karnali Employment Programme developing a training programme for community level supervisors and social development personnel.