Business Labour Matters

It’s possible to break the working poverty vicious circle

By ILO Desk

Put yourselves in the shoes of a vulnerable worker in a developing or emerging country: You have a job but you don’t earn much, so you struggle to make ends meet. You know that if you had the chance to improve your skills you could get a better job, but you simply can’t take time off work because you need the money.

This vicious circle is the reality for the 630 million people worldwide who work but fail to pull themselves and their families out of poverty.

Governments around the world have for decades sought to develop and implement policies that both protect workers’ incomes while helping them move into better jobs. The task of balancing these two objectives has, however, proven to be complex. One of the problems governments have faced is that helping people make ends meet today may not enable them to benefit from future opportunities and escape poverty in the longer-term. To achieve these two objectives, governments have traditionally developed distinct programmes, which were often the responsibility of different ministries. This type of approach has not been effective.

In 2014, our team launched a research project to find answers to this conundrum. We began by studying employment promotion policies in Latin American countries, such as training, start-up incentives or job search assistance. At the time these policies were criticized in the region as being too expensive and not particularly effective. However, our research found evidence that these policies had helped workers find jobs quickly and upgrade their skills.

Yet, our research also identified one important challenge: Many people who should have benefited from these programmes did not take part, often because they were not receiving enough income support to cover their basic needs. Some workers, for instance, could not take up the offer of free training because they could not afford to leave their jobs without accompanying income support. At the same time we know that if vulnerable workers receive income support only, with no means of improving their skills, they cannot improve their longer-term prospects either. Income protection and employment promotion therefore need to go hand-in-hand if governments are to foster pathways to decent work.

This motivated us to work on a second project, between 2016 and 2019, that focused on understanding how income protection and employment promotion can come together to improve livelihoods, rather than being addressed separately. We found that, despite implementation challenges, there are indeed successful and innovative examples in the emerging and developing world.

Take Uruguay. During the recession of the early 2000s, the poorest and most vulnerable were in danger of falling into further hardship. The Government came up with a creative solution whereby beneficiaries received immediate cash support, as well as the option of taking part in a range of poverty-alleviating programmes giving access to housing, education, healthcare and food assistance. In addition, beneficiaries could take part in a public works scheme for five months to improve their prospects of finding a better job. Those who took part in the scheme were given temporary jobs in community projects, double the normal income support, 20 hours of training per month and job search assistance.

Mauritius has also taken a particularly innovative approach to this problem. Its unemployment benefit system is designed to support jobless people who were previously working, both formally and informally. Few countries in the world support informal workers in this way. Significantly, in addition to income support, the Mauritius unemployment benefit scheme provides job placement support and assistance with starting a business, so beneficiaries can improve their employment prospects and find a job quickly.

Looking back at our work over the last six years, it’s clear that supporting incomes while promoting better jobs is indeed possible. There are countries outside the developed world already showing the way.

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