How can public works programmes deliver longer-lasting development impact? This paper notes that few Public Employment Programmes (PEPs) have been implemented on a scale large enough to address structural poverty. However, large-scale PEPs were able to respond quickly to and mitigate the effects of the economic crisis, suggesting their relevance for inclusive growth strategies. Reconceiving PEPs as Employment Guarantee (EG) schemes could provide a more permanent complement to market-driven employment creation and to other types of social protection. In addition, the jobs created by governments through EGs could provide critical public goods and services, further enhancing the livelihood strategies of the poor.
Public works and employment programmes have largely been designed as short-term safety nets. However, large-scale programmes such as India’s National Rural Employment Guarantee Scheme, initiated before the economic crisis, have been able to respond speedily to it and to mitigate its effects. There is therefore new interest in such policies as a component of inclusive growth.
This approach calls for evolving PEPs into Employment Guarantee (EG) schemes and for the state to take on a role of Employer of Last Resort (ELR). The state thus serves as a ‘buffer’ by providing a range of useful jobs to be filled during periods of high unemployment, and vacated when labour market opportunities improve. ELR and EG policies have:
- Political advantages: Unemployment figures are political, and EG schemes can be presented as political achievements because they can quickly reduce voluntary unemployment to almost zero
- Social advantages: They help to meet basic needs at household levels through income earned, and provision of services
- Local, regional and national advantages: They reduce the negative impact of economic and natural shocks, improve infrastructure, and stimulate demand at local levels which has a multiplier effect
- Economic and social stabilising effects: They help to integrate socially excluded groups on more equal terms as well as to provide employment.
In order for a PEP to evolve into a more universally accessible employment guarantee, it should offer adequate employment opportunities that affect various dimensions of the labour market. Policies must ensure that there is a ‘floor’ in the wage rates of unskilled and informal workers in order help stabilise wages and the demand for labour, particularly in rural economies. Significant service delivery and infrastructure deficits often coexist with labour market concerns. There is a need to focus on creating better work conditions. Other policy considerations are that:
- PEPs can be complementary to other types of social protection and assistance programmes such as cash transfers that seek to smooth consumption, foster investment in human capital, and help to mitigate inequality and vulnerability.
- There has been a tendency to mix ideology into a discussion over private sector versus public sector roles in job creation. Both have a role to play in developing countries, and PEPs can be designed to stimulate private sector investment.
- Integrated planning and strong accountability mechanisms are crucial to success. Designing PEPs as EG schemes means moving from supply-driven employment creation to demand-driven programmes.
