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.
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.
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.
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?