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How many jobs? We have no bloody idea.

This afternoon a few staff and I were in the boardroom with the newest member of the team, Sal Loxley, who just joined PDT and is en route to Haiti to become our Deputy Country Director (you’ll be glad to know he’s neither a Mercenary, Missionary, or Madman).   As part of a conversation about how do we measure the impact of our Peace Dividend Marketplace project, Sal asked “How do we measure job’s created?”  I leapt up and shouted “Great question! We have no idea.”  As I reached for the whiteboard markers, the other staff groaned and dropped their heads into their hands.  (They’ve heard my ramblings on this before.)

I think this is one of the most important and fascinating problems facing us and other aid agencies trying to generate economic growth in post-disaster or post-conflict economies.  As I’ve mentioned on this blog, we put a very high priority on metrics here, but in the case of jobs reliable measurements totally elude us.  Here’s why.

More bike jobs, right?

Imagine a donor needs to buy $5m worth of bicycles, and $1m in gravel, both of which are produced locally.  At very first glance, it seems clear that the bike contract will have a bigger economic impact than the gravel.  It’s bigger, it involves skilled jobs, it’s a no-brainer.

But consider that the owner of the bike factory did not need to hire anyone extra to meet the contract; he just paid for some overtime.  Meanwhile the farmer who owns the gravel pit hired 100 local laborers to shovel the gravel.  So on a second consideration, it seems that the gravel contract, though smaller, created more jobs.

But the factory owner immediately invested the profit from the bike contract to expand his production line and hired 5 new employees, and the farmer only hired his laborers for a two week contract.  So clearly, we are back to where we started, the bike contract created more jobs.

Or is it more gravel jobs?

But then looking past the job numbers, we see that the gravel pit is located in the poorest district which has been largely bypassed by aid.  The people there are barely surviving on subsistence farming.  Whereas the employees of the bike factory are relatively well off and will spend their wages on imported goods like electronics and liquor.  In this light it would seem that the gravel pit may create the biggest relative impact in terms of GDP and poverty reduction.

But wait, the bike factory is a politically sensitive area and the donors are anxious to provide a “peace dividend” to that ethnic group in order to secure their support for a fragile ceasefire.  So, we’re back to the bike factory.

Ad nauseum.

By this point, the staff had dozed off and Sal’s attempts to look engaged were failing.  So I stepped away from the whiteboard and sat down, summing up with “So, we have no bloody idea. But we’re working on it.”

Some of our projects have injected hundreds of millions of dollars into the local economy, and we can track almost every penny.  But we still cannot say, within a factor of 10, how many jobs we created.  And this is a huge problem faced by more important people than us.  From Afghanistan to Timor to Liberia, the national governments and international donors are united in agreeing that the most pressing issue is unemployment.   Aid conferences around the world sound the same call to action: Job creation.  All the donor propaganda rattles off everything they are doing to support employment creation.  But none of them (at least the honest ones) know how to accurately tell if they are making progress at the micro level.

And neither do we.  But we’re working on it.  Any suggestions?

9 Comments

  1. Edward Rees says:

    I have an idea. And its not just about measuring jobs. Which we are going to test in Timor-Leste (ie Ilidio Ximenes, Brigida Soares and Eduardo da Costa). That we pick a region in which we conducted alot of matchmaking and tender distribution activity. Then we do a retrospective analysis of all business transactions over $5,000 created by PDT. We interview the business owners and ask them, “Did the increase in business allow you to…”

    1. Hire extra staff, and if so how many of what type (temporary, part time or full time/ skilled or unskilled)?
    2. Invest in new equipment so as to expand your business capacity, and thus hire new people?
    3. Invest in skills training for existing staff, so as to expand business and thus hire new people?
    4 Pay for additional benefits for staff?
    5. Pay for personal home reconstruction, education of children, improved food supply, improved healthcare – all of which are arguably just as good as “jobs”.

  2. Giovanni Jules says:

    I think the best way is to conduct surveys like those described by Rees. This makes me think. Is that aid really help creating sustainable jobs? Suppliers are investing in the long term if only there are chances to increase their sales in the future. The bike factory will only invest if it expects to increase its sales. So what does it really take to create sustainable jobs. Isnt it necessary to redefine international assistance.

  3. Scott Gilmore says:

    Giovanni, You are right. My example presupposes that the donor is buying these goods for another development objective, not just to create jobs. We’ve been trying to get donors to realize that if they are going to build a road, they need to pay attention to where they buy the gravel (to use a very simplistic example). We would never argue that if you want to create sustainable jobs, then go buy gravel.

    As for the bike example, I can’t really see the scenario where the donor needs to buy bikes, Tour de Timor maybe? (http://www.tourdetimor.com/). Bad analogy on my part.

  4. Giovanni Jules says:

    Right, I understand your point. What i really want to know is, is there any way to effectively support an economy through aid or to redefine the plans of implementations like to coordinate various projects to improve effectiveness and by the way, maybe actually support economic development? At the end this would generate jobs.

  5. Initial point , A large thanks to you to open my eyes….

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