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 of 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)

The PWP wage rate and work conditions dimensions to be considered The PEP wage rate and work conditions dimensions to be considered How much Targeting the But the output of employment & beneficiaries work objective social protection? (wage related) cannot be ignored (wage related) (infrastructure, social, environmental). Employment & (Technical and social protection management) Are participants The statutory How different from protected in other minimum wage other social ways? issue protection? (conditions) (conditions)

Wage rate, labour supply, programme costs and social protection Role for youth? Labour supply (number of persons or Planning & days of work) operations Wage rate Size and Wage bill & scope of programme PWP costs No of days of work (effect of wage rate Social and rationing) protection type &level Distorting Adequate labour income market & Budgets Targeting youth?

Implications for wage rates of different types of PWPs Employment Employment & social Asset creation or guarantee protection emphasis maintenance (labour intensive) (labour-based, LB) Employment Maximum Combine labour Brief guarantee of a given employment for a and light equipment description number of days. given level of for efficient work. resources. Lower or comparable Lower or comparable Needs to be set in Wage rate with market wage with market wage relation to implications rates. Timing and rates. Timing and prevailing wage amount of work amount of work rates. reduce impact on reduce impact on Efficiency wage labour market. labour market. premium (higher Less social Less social pay for higher protection if too low. protection if too low. productivity) may be required. A floor if market A floor if market wage rates “too wage rates “too low”. low”. All types can target youth. But who benefits and how? 6

What are PWP workers paid for? Getting the right balance Daily paid Piece rate Task 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

A systematic approach to conducting wage rate studies Programme Labour Data market and type requirement Situation poverty and analysis context availability appraisal Data If required collection data are Data not collection available If required data are available Data analysis Data analysis Presenting and using Presenting the results and using the results

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

Wages / earnings (riel per day) Labour supply response, stated and revealed - Cambodia 35000 30000 25000 20000 15000 10000 5000 0 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0 Labour supply response as % of population in 15 + age range 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 $2.00 per day Total groups acceptable for public works Yes No 15 to 24 age Number 232 103 335 group % response to $2.00 per 69.3 30.7 100.0 day wage rate 25 to 55 age Number 467 197 664 group % response to $2.00 per 70.3 29.7 100.0 day wage rate

Evidence from a Does a low wage rate target the poor? study in Cambodia Acceptable pay for public works by household expenditure quintiles and targeting Willingness to work at a Quintiles of consumption per head ranked given wage rate (Riel) across whole sample US$1 = Riel 4215 at study time. Bottom 2nd Middle 4th Top 20% 20% Quintile Quintile Quintile 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 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.