International Development CommitteeWritten evidence submitted by the TUC
About the TUC
1. The TUC is the voice of Britain at work, with 54 member trade unions together representing some six million members. The TUC works with a broad range of sister organisations across the developing world and is an active member of the International Trade Union Confederation (ITUC) which represents 175 million workers in 308 national trade union organisations across 308 organisations.
Summary of Findings and Recommendations
2. The main findings of this submission are:
(a)
(b)
(c)
(d)
(e)
3. To address these findings, the TUC recommends that DFID should:
DFID’s Results Framework
(a)
(b)
(c)
(d)
(e)
(f)
Whether DFID’s staffing levels are adequate
(g)
DFID’s use of Consultants and whether they offer Value for Money
(h)
DFID’s Results Framework
DFID’s Results Framework does not contain any employment targets or indicators.
4. Given the strong international consensus on the need to provide decent work for all in the fight against poverty the following Millennium Development Goal (MDG) target 1.B was adopted in 2008: “Achieve full and productive employment and decent work for all, including women and young people”. Yet unlike nearly every other MDG, DFID’s Results Framework does not include this target or its indicators.
5. This is especially disappointing given that the Decent Work MDG is arguably the most off track, facing a “very large deficit” across all of Africa and in six out of nine of the listed world regions (AR p 17). The global economic crisis has also meant that an extra 50 million workers are living on less than US$1.25 a day than would otherwise be the case.1 There were 456 million workers in the world living below the $1.25 a day poverty line in 2011. And as the World Bank has recently reaffirmed a decent job is undoubtedly the main factor allowing someone and their family to escape poverty.2 And as Prime Minister David Cameron recently wrote in the Wall Street Journal: “It is only when people can get a job and a voice that they can take control of their own destiny and a build a future free from poverty.”3
6. DFID also does not report on any work to increase women’s share of paid employment, a key indicator under MDG 3 on promoting gender equality and empowering women. This is disappointing given that, as the latest UN MDG report (“UN”) shows, women are far more likely than men to be engaged in vulnerable forms of employment (UN p 10) and equal access to job opportunities remains a “distant target” for women in many regions of the world (UN p 22).
Recommendation: DFID should include an ambitious employment target and indicators from the MDGs in its Results Framework.
DFID reports on some work on employment creation which could be improved to form the basis of a department-wide target.
7. While DFID has no overarching goal around job creation, it does support job creation programmes in at least eight countries which, if successful, would create just over one million jobs (465,000 for women) by 2015.4 In Somalia for example, it aims to create 45,000 jobs (15,000 for women) to explicitly help achieve the Decent Work MDG (AR p.63). It also supports work aiming to raise incomes in at least four countries.5
8. DFID could also report on, and step up support for public sector job creation, especially in health, education and infrastructure. Quality public services play a vital role not only in generating jobs, but also contributing to key human development outcomes and underpinning strategies to support the private sector to expand into areas where workers can secure better paid and more productive jobs.
9. Further, despite DFID’s extensive support to the private sector6 the TUC could only find three instances where private sector support is measured by employment outcomes. This includes the CDC group, which reports that businesses in the developing world using its funds employed close to one million people in 20117, and the Zimbabwe DFID office—possibly the only DFID country office to do so—has set a job creation target of 125,000 based on the support it provides to the private sector.8 Finally, one of the seven indicators in the results table for multilateral organisations has a job creation target for the Private Infrastructure Development Group (AR p 26).
10. DFID could therefore capture its existing work on job creation to form the basis of a department-wide target and indicators on employment. However such a target needs to be more ambitious, and be based on the generation of quality jobs.
But employment targets need to measure decent jobs, not just any jobs
11. Even in cases where DFID is reporting on job creation, the data has significant limitations. Firstly, they do not say if the jobs were created because of DFID support or if those jobs already existed. Secondly, even if DFID support has created a job, it is unclear if these are net gains, or simply jobs displaced from elsewhere. Thirdly, job creation or income data is not always disaggregated by gender. Finally, and most importantly, it is not clear if the jobs being created are decent ones.
12. By and large, the poor already have jobs, but they are not decent ones. Half the world’s labour force—some 1.52 billion people—are now in vulnerable forms of employment, up by 136 million since 2000.9 Workers in these jobs, “typically lack adequate social protection and suffer from low pay and difficult working conditions in which their fundamental rights may be violated or undermined” (UN p 10). The World Bank recently went even further in arguing in its recent World Development Report on Jobs that jobs that violate core labour standards “should not be considered jobs”.10
13. These jobs also have very low levels of productivity. As the UN MDG report shows, there are very limited gains in labour productivity in the developing world outside of Asia, and this “is one key factor in explaining the persistence of working poverty” (UN p 9). Africa—DFID’s priority region—has a massive private sector which provides about 90% of total employment but which is mostly “informal and characterised by low productivity”.11
Recommendation: DFID should set an ambitious target based on the number of quality jobs created, drawing on indicators measuring incomes, respect for internationally-recognised core labour standards and labour productivity. In doing so, DFID can draw on the existing Decent Work MDG Indicators12 as well as the new ILO manual on Decent Work Indicators.13
Work with developing countries and the ILO to set ambitious country-level plans to create decent and green jobs and promote responsible business.
14. To deliver on such a commitment DFID needs to work with developing country governments to give them the technical and financial support to put decent and green jobs at the heart of their national development plans. These should be based on industrial policies that support employment-intensive businesses, skills, quality public services and strong labour market institutions.
Recommendation: DFID should provide technical and financial support to a pilot group of Low Income Countries to enable them to put decent and green jobs at the heart of their national development strategies.
15. For private sector job creation, DFID can draw on the new G20 indicators on private sector investment to focus support to sectors and firms with the highest impact on sustainable job creation, especially for vulnerable people.14 It can also promote respect for core labour standards. In this regard, DFID can learn from the Dutch Government which now requires all companies using its development funds to sign a declaration that they will adhere to the OECD Guidelines on Multinational Enterprises—a set of international standards for responsible business behaviour.15 Best practice in this field is also moving beyond checking for compliance with codes of conduct towards capacity building with trade unions and companies to drive sustainable improvements in labour standards.
16. Recommendation: ensure that all support it provides to the private sector is linked to adherence to the OECD Guidelines for Multinational Enterprises and capacity building work to promote mature systems of industrial relations.
17. DFID should also draw on the expertise and experience of the International Labour Organisation (ILO), the authoritative UN body addressing the world of work, which runs 70 Decent Work Country Programmes including in the countries that DFID operates in.16 Unfortunately DFID decided not to renew funding arrangements with the ILO based on the results of the Multilateral Aid Review (MAR) in early 2011.17 This was partly because it ranked the ILO as “weak” in relation to its “contribution to UK development objectives”. However, as this submission makes clear, it is DFID that needs to realign its development objectives towards providing decent work. The full extent of the realignment needed is spelled out in detail in the TUC’s recently released report “A Decent Job?” which gave DFID only 25 points out of 56 against a set of 14 Decent Work criteria.18
Recommendation: DFID should establish a strategic partnership with the ILO based on delivering Decent Work in DFID’s priority countries.
DFID’s current targets and indicators on wealth creation are not clearly linked to pro-poor outcomes
18. DFID’s key targets for eradicating poverty come under the pillar of “helping people prosper” (AR p 11) also referred to elsewhere as “wealth creation” (AR p 22 Bilateral Aid, and AR p 26 Multilateral Organisations). This includes a commitment to: “Provide more than 50 million people with the means to work their way out of poverty” (AR p 11), which is measured by the, “Number of people with access to financial services as a result of DFID support”.
19. The TUC has two concerns with this target and indicator: firstly having access to financial services does not necessarily mean that a person is no longer poor. The target is not measuring an outcome demonstrating the eradication of poverty. Secondly, the link between accessing financial services (usually microcredit under DFID supported-programmes), and poverty eradication is weak. Even DFID-supported research from last year concludes that: “no clear evidence yet exists that microfinance programmes have positive impacts”.19
Recommendation: realign its current support for wealth creation activities towards those with demonstrably better pro-poor outcomes.
Whether DFID’s Current Staffing Levels are Adequate
20. DFID has slightly increased its staff over the last two years to help deliver the increased aid budget. However, there has been a significant reduction, around 10%, of administrative staff which is impacting upon DFID’s ability to deliver aid effectively. With DFID due to increase its budget significantly, continuing to maintain arbitrary restrictions on staffing levels, or indeed any further cuts to staffing levels, will exacerbate this problem.
Recommendation: Increase DFID’s staffing levels so that it can effectively deliver its growing budget.
DFID’s use of Consultants and whether they offer Value for Money
21. The TUC cautions against the overuse of consultants by DFID for two reasons. Firstly there needs to be more transparency by commercial operators to assess whether or not they are providing value for money. Secondly, DFID’s use of consultants may be driven more by getting around arbitrary restrictions on staffing levels, than on delivering effective aid and value for money. It may be more effective for DFID to invest in strengthening in-house capacity, especially once the costs of contracting out are taken into account. These include the transaction costs and reduced levels of accountability related to contracting out, and its negative impact on institutional knowledge. Improving aid effectiveness along these lines will help with maintaining political and public support for international development spending commitments.
Recommendation: where possible invest in strengthening in-house capacity to deliver aid, rather than excessively relying on commercial contractors and consultants, and require the latter to release open data conforming to the International Aid Transparency Initiative (IAIT) by the end of 2013.
November 2012
1 UN (2012), The Millennium Development Goals Report 2012, p 10 at www.un.org/millenniumgoals/pdf/MDG%20Report%202012.pdf
2 World Bank (2012), World Development Report 2013: Jobs, Overview p 9–10
3 Wall Street Journal, 31 October 2012.
4 They are Afghanistan, Ethiopia, Nepal, Sierra Leone, Somalia, South Africa, Vietnam, and Zimbabwe.
5 They are Bangladesh, Kenya, Nigeria, and Tanzania.
6 DFID aims to increase the ‘proportion of DFID projects by value working with or on the private sector,’ from 4.1% in 2011 up to 8% by 2014/15 according to the Operational Plan of the DFID Private Sector Department at www.dfid.gov.uk/Documents/publications1/op/priv-sect-dept-2011.pdf
7 CDC (2011) Annual Review 2012, p 38 at www.cdcgroup.com/uploads/cdcannualreview2012.pdf
8 DFID Zimbabwe (May 2012) Operational Plan 2011–2015 p 4 at www.dfid.gov.uk/Documents/publications1/op/zimbabwe-2011.pdf
9 UN (2012), p 10
10 World Bank (2012) World Development Report 2013: Jobs p 153
11 Marco Stampini, Ron Leung, Setou M. Diarra and Lauréline Pla (December 2011) “How Large Is the Private Sector in Africa? Evidence from National Accounts and Labor Markets” Discussion Paper No. 6267 IZA at http://ftp.iza.org/dp6267.pdf
12 Those indicators include: growth rate of labour productivity, employment to population ratio, employed people below the poverty line, and vulnerable employment with a particular focus on women and youth.
13 ILO (May 2012) Decent Work Indicators: Concepts and definitions at www.ilo.org/stat/Publications/WCMS_183859/lang--en/index.htm
14 UNCTAD et al (September 2011) “Indicators for measuring and maximising economic value added and job creation arising from private sector investment in value chains”, Report to the G20 Development Working Group, at http://archive.unctad.org/sections/dite_dir/docs//diae_G20_Indicators_Report_en.pdf
15 Government of the Netherlands (2012), Contribution by the Government of the Netherlands to the renewed EU-strategy for CSR, at www.rijksoverheid.nl/onderwerpen/maatschappelijk-verantwoord-ondernemen/documenten-en-publicaties/richtlijnen/2012/07/05/contribution-by-the-government-of-the-netherlands-to-the-renewed.html
16 For more information on ILO Decent Work Country Programmes see www.ilo.org/public/english/bureau/program/dwcp/countries/index.htm
17 For a more detailed TUC response to the DFID’s decision to cut its ILO funding see TUC General Secretary Brendan Barber’s letter to DFID SOS Andrew Mitchell of 9 May 2011, at www.tuc.org.uk/international/tuc-19553-f0.cfm
18 TUC (October 2012) A Decent Job? Assessing DFID’s contribution to achieving Decent Work at www.tuc.org.uk/tucfiles/394/A_Decent_Job.pdf
19 M Duvendack et al (2011), “What is the evidence of the impact of micro-finance on the well-being of poor people?”, London, EPPI-Centre, Social Science Research Unit, Institute of Education, University of London), p 2.