Can the Poor Have Decent Work?

Count me among those convinced by the recent evidence review on rural wage labor: poor people in rural regions are not all farmers. In fact, many work for wages.  

As the report puts it, “[T]he implicit assumption that most rural poor women and men (especially the poorest) are self-employed farmers has repeatedly led to ill-devised interventions.” The report does an excellent job of pointing out the many reasons why labor market research fails to capture or count wage labor in rural regions of many developing countries, leading to the false belief that such labor markets are “thin.” But now the difficult work begins: how do we start to recognize the jobs that may exist, and equally importantly, how do we make those jobs better?

The ILO’s concept of “decent work” has been a tricky and controversial one when it comes to jobs that aren’t considered “formal” (or in other words, most things people do to earn a living around the world). The big catch-all category of “informality” does not begin to do justice to the various types of employment relationships. Our first challenge is that we need to capture who “counts” as a worker. Working women and men in the informal economy — among them, day laborers, domestic workers, preschool teachers, sugarcane cutters, taxi drivers, and call center workers — comprise the majority of the workforce in many countries. Although informal economy workers can create up to half of a country’s gross national product, most fall outside the legal framework for formal workers and have little power to advocate for living wages or safe and secure work. Many informal workers are in scattered, individualized workplaces (such as street vendors) or are mobile (drivers in transportation sectors).  

The LEO paper also provides some helpful distinctions between self-employment, wage employment, and unpaid work. These are all forms of labor that, as the paper points out, determine the fundamental structure of incentives and constraints faced by the worker. The paper reminds us of something we might remember from graduate school: it is important to identify who owns the means of production.

When it comes to analyzing labor markets in a way that has any meaning for the majority of the world’s workers, we fail to capture the vast amount of economic activity. We get around this deficit by defining an enormous number of wage earners worldwide as “self-employed.” A construction firm or a line of fishing vessels may “employ” thousands of workers, but it may rely on several levels of labor brokers to supply these workers and thus lack any direct employment relationship to workers. A farm producing fruit or vegetables for export may be a subcontractor to a global distributor, who in turn receives established prices from the supermarket chains who are the final buyers for this produce. Thus the farm employer’s fungible resources for negotiations with workers may be limited unless the farm owner, in turn, is able to negotiate with global distributors. Even in services, as a recent high-profile case involving McDonald’s has illustrated, small business “owners” who are part of a global franchise may have limited ability to determine terms and conditions of employment for their workers. Who really has control over terms and conditions of employment in all these scenarios?

Once we begin to get our head around actual employment relationships for these hundreds of millions of workers worldwide, will they be entitled to aspire to decent work?

The concept of decent work captures four basic principles: access to employment, protection for core labor rights, extension of social protection, and access to social dialogue. The inclusion of decent work as a proposed goal in the post-2015 Development Goals framework indicates the extent to which economic development has come to include the promotion of not only employment but also of rights, social protections, and social dialogue for workers.  

The challenge is clear even if we only stick to promoting employment, the first of these four principles. We need approaches that move the so-called “self-employed” more firmly either in the direction of genuine ownership and control of the means of production or toward a clear recognition that they are working for someone else. Once we can define these employment relationships, we can also improve our analysis regarding what would be needed to transition these workers from informal to formal labor markets, an important first step toward fulfilling the promise of decent work.