Journal Article

IDS Bulletin Vol. 39 Nos. 2

Social Protection and the Labour Market: Towards a Research Agenda

Published on 1 May 2008

Social policies can be viewed as ways of addressing basic human rights; as ways of remediating and compensating for the inequalities associated with the capitalist organisation of production relationships; as a way of proactively redistributing wealth; and as an investment in human resources.

Although there is some evidence of increasing acceptance of the idea of social protection being an investment in human resources, the mainstream of macroeconomics still largely sees labour as just another factor in production, or labour costs as a factor getting in the way of optimising economic growth.

In the WIEGO approach, we see social protection as an inalienable right of work. Informal employment is a permanent phenomenon (Chen et al. 2005 and this IDS Bulletin). As such, economic and social policies need to deal with it, rather than only present ways of how to escape from it. There is a stark mismatch between social policy and the realities of the labour market.

A number of conceptual frameworks have influenced recent policy thinking about social protections for informal workers. First, the Social Risk Management (SRM) approach (Holzmann and Jorgensen 1999) has had the advantage of allowing into the World Bank’s neoliberal framework, the idea that some workers are vulnerable and that work itself can be a source of risk. Nevertheless, SRM has major conceptual problems. It takes the worker, the adult, as already a fully formed being, whose development was ‘costless’. It then presents working people as being equally able to make rational choices to prevent or mitigate risks. It does not take into account the dynamics of exclusion from access to risk coverage, outlined in Martha Chen’s contribution in this IDS Bulletin, which systematically and differentially disadvantage poorer people, and especially those in already vulnerable work situations.

Second, from the industrial development arena comes value chain analysis, which tries to understand how different industries can be made more competitive, through tracing the chain of activities involved in the design, production and marketing of products. Although there are variations in approach, they have in common with the SRM approach the key limitation that they take the worker at the point of production as ‘ready-made’. There is little emphasis on the process of human development that it took to get her or him there, nor what it would take to assist him or her have a healthy and productive working life in the present, or in the future after retirement, or to transmit the possibility of improved life chances to children. An attempt was made to integrate an understanding of needs for and provision of social protection for informal workers into value chain analysis (Lund and Nicholson 2003), and this needs to be taken further.

Third, the International Labour Organization (ILO) has promoted the idea of ‘Decent work for all’ within the last decade, with ‘for all’ signifying its growing acceptance of informal employment. The associated campaign of ‘extending social protection to all’ also signals a more inclusive approach to ‘work’ and ‘employment’, an acceptance that there are workers who will not get access to work-related social protection through the implementation of ILO conventions on social protection. This ILO campaign on extension of social protection has, however, detracted attention from the process of informalisation that is underway, from the fact that on a daily basis, thousands of formal workers are losing access to existing measure of social protection.

Fourth, it is common to have support for small enterprises as part of programmes of poverty reduction, and indeed most international donors have this as a wing of their work. Commonly, however, there is a lack of understanding of the reality of the tiny size of the operation of most informal workers, and little emphasis on linking the formal and informal sectors. Insofar as the idea of small enterprise is so mistaken, being both genderblind and poverty-blind, then donor money is being used directly to bolster emerging elites, under the guise of poverty reduction interventions.

Fifth, a great deal of policy space in developing countries is currently being dedicated to promoting cash transfers as a form of poverty alleviation. Cash transfer programmes usually focus on women and children, and do not generally have any worker focus. Debates surround whether these should be universal or targeted, and whether they should be conditional (as in most of the Latin American programmes) or not (as in the child Support Grant in South Africa). The evidence for the benefits of cash transfers is widespread and convincing, but they are taking up a good deal of the available social policy space. The danger exists that, the better the evidence is that they are ‘a good thing’, the more that evidence can be used, opportunistically or not, to bolster the emerging idea emanating from the World Bank that the provision of core measures of social protection, such as health insurance and retirement provision, should be ‘de-linked’ from the labour contract. This approach has been advocated for the Latin American region specifically by the World Bank’s Perry et al. (2007). Such ‘de-linking’ at a stroke removes direct employer responsibility for those who produce for them.

An outcome of the above combination of policy approaches is the witting or unwitting reinforcement of the invisibility of informal workers, as well as unrealistic estimations in social policy approaches and debates of poorer workers’ ability to provide for themselves. It also detracts from the responsibilities of capital, and focuses on (unorganised) individuals, rather than organised workers; on the central state, rather than different levels of the state; and on citizens, rather than workers.

James Heintz in this IDS Bulletin argues that labour should be reconceptualised as a produced factor of production, and social protection as contributing to the macroeconomics of long-run economic growth. He holds that:

In short, social policies and social protections can contribute to macroeconomic performance, but it requires a change of mindset in which the production of human resources becomes integral to the functioning of the economy.

This opens the conceptual door to a longer-term view of the production, development and fulfilment of human beings, and this article seeks to contribute towards sketching elements of a research agenda that could hold the door open.

A conceptual theme that runs throughout is that of diversity and differentiation. The article by Martha Chen outlines various theoretical approaches to informal employment, and she points to the dangers that arise from simplistic, dichotomous analyses of formality vs. informality. She focuses on employment status as a key indicator for considering the risks faced by workers, and for social protection coverage of employment-related risks. This nuanced analysis is necessary if we are to pursue the conditions under which different kinds of workers – and especially poorer women – can get access to what core measures of provision.

Related Content

This article comes from the IDS Bulletin 39.2 (2008) Social Protection and the Labour Market: Towards a Research Agenda

Cite this publication

Lund, F. (2008) Social Protection and the Labour Market: Towards a Research Agenda. IDS Bulletin 39(2): 87-92

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Francie Lund

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Institute of Development Studies
Lund, Francie