Labour markets and paid work are widely recognised as central transmission mechanisms through which the working poor contribute to, and benefit from, economic growth.
However, despite the significance attached to paid work as the primary means through which the poor can secure and advance their own interests, employment generation as a policy variable has not featured significantly in the macroeconomic agenda. It has been assumed that opening up economies to global competition and the promotion of flexible labour markets would generate the labour-intensive growth trajectories necessary for poverty reduction. It has also been assumed that the jobs generated will offer basic security of livelihoods as well as enable workers to insure themselves and their dependants against a variety of threats to their livelihoods. Public measures for social protection could then be restricted to those unable, for reasons beyond their control, to earn their own living, thereby restricting potential distortions to the labour market.
These predictions have not been borne out in practice. As Terry McKinley (this IDS Bulletin) and others have pointed out, growth rates in developing countries have generally been lower in the era of neoliberalised economies than they were in the earlier era of post-colonial policymaking (between 1950s to the mid-1970s). Poverty rates have declined in many countries but globalisation has brought new forms of insecurity. The pursuit of labour market flexibility has led to rising levels of labour force participation across the world but the increasingly informal nature of these jobs means that they are generally precarious and often badly paid, trapping large sections of the working poor in chronic forms of poverty. Current thinking about social protection continues to be dominated by concerns about possible distortions of the labour market and has done little to stem the apparently inexorable spread of informality of employment relationships. Despite the policy commitment to poverty reduction through the promotion of labour-intensive growth, the gains for the poor have been ambiguous.
There is clearly a need to explore in greater detail the processes of informalisation as they play out in different contexts, to consider what forms of policy support might help to protect and promote the livelihoods of informal workers and to ask about the extent to which such policy support can be accommodated within current macroeconomic thinking. This was the aim of a workshop that was jointly convened in October 2007, by the Vulnerability and Poverty Reduction Team at IDS and members of the global research policy network Women in Informal Employment: Globalizing and Organizing (WIEGO). The workshop brought together researchers, practitioners and policymakers with overlapping interests in pro-poor macroeconomic policy, in informal labour markets and in social protection for the working poor. Their contributions make up the three clusters of themes covered in this IDS Bulletin.
This article comes from the IDS Bulletin 39.2 (2008) Economic Growth, Social Protection and ‘Real’ Labour Markets: Linking Theory and Policy