Ending the Vicious Cycle:Development goals must now foster inclusive growth in a meaningful way

By Vagisha I Gunasekera

On 19 June 2015

Work is one of the most defining aspects of our lives. We participate in and contribute to society through our capacity to work. However, the stark reality that one experiences in most developing countries is that large sections of their populations are forced to live without consistent or adequate means of income due to the exclusion from mainstream market activities. As Sri Lankans, we pride ourselves in graduating to “Middle-Income-Country” status and are hopeful of unlocking the spending power of our expanding middleclass. However, it is premature to celebrate the growth of this “middle,” as a significant proportion of this group may hover just above the poverty line, and engage in informal and precarious work that exacerbate their multiple vulnerabilities.

A class-based analysis of labour market characteristics in Sri Lanka, published by Centre for Poverty Analysis in 2014,  shows concern about labour market inequality in Sri Lanka. The study finds that individuals from relatively affluent economic classes engage in employment at higher rates in comparison to their counterparts from underprivileged segments. The highest level of unemployment is recorded among the poorest, living under $1.25/day, which indicates their exclusion from the labour market.

There is ample empirical evidence to support the claim that educational attainment is a key driver of secure employment. Low educational attainment is strongly linked with employment in the informal sector in Sri Lanka. This study finds that educational attainment is positively related to economic class with tertiary education being elusive for many living under or just above the poverty line. Additionally, young, poor workers have significant difficulties in accessing higher education opportunities and gainful employment options. In the Sri Lankan context, access to primary and secondary education is less of an obstacle than access to higher education, particularly for low-income groups, although it is the quality of public education that is the matter of greater concern. The diminishing quality of public education is invariably associated with the marketisation of education and the lack of government spending on higher education. This trend leaves behind students from low-income groups who are unable to afford the extra help that is offered by the market.

The lack of formal employment opportunities for youth is generally explained by the slow rate of job creation, skills mismatch and competition. There is intense competition for a limited number of desirable jobs and most vacancies are in low-skill occupational categories. Vulnerable employment – jobs in the agricultural sector, casual wage labour, own-account work and contributions to family activities – is significantly linked to lower economic classes. In South Asia, the poor and the near poor vis-à-vis middle-class workers face notable disadvantages in accessing better quality jobs

This situation must be addressed in a systematic manner with investment in infrastructure and by striking a balance during transition from agriculture to the production of value-added goods and services (in a way that does not compromise the production of food).

As “ending poverty” ranks high in the proposed post-2015 global development agenda that will replace the Millennium Development Goals (MDGs), as well as our national policy agenda, it is important to reinforce the well-established link between poverty reduction and gainful employment and push for development goals and targets that foster inclusive growth in a meaningful way.

The findings presented above advocate targeted assistance to retrenched workers in lower economic classes that would allow them to access stable and well paid jobs. Context-specific Job Guarantee Programmes (JGP) (such as India’s National Rural Employment Guarantee Act and Argentina’s Plan Jefas y Jefas ) can widen the access to better employment. Any attempt to achieve full, productive and decent employment must acknowledge the crucial fact that the informal economy provides means of livelihood to those who are excluded from the formal labour market. Although precarious in nature, informal employment is a survival and coping strategy of a majority of workers in developing nations who are cut off from regular wage employment (due to the lack of productive characteristics and discriminatory social and institutional norms). This demands action (public, private or mixed) that enables informal workers to acquire secure and adequate livelihoods that provide a level of reward for work that is adequate to fulfill basic needs such as food, shelter and education. This minimum standard however, should be reevaluated to reflect realistic and current standards of living rather than expecting people to survive on a paltry sum in subhuman conditions.

Originaly published in the LMD July issue