Sustainable development goals (SDGs) and child labour

Until the advent of the SDGs at the beginning of 2016, there was a discrepancy between the monitoring framework on global poverty and the international community’s quest to eradicate – or at least ameliorate – the incidence of child labour. On the one hand, the international community ratified the ‘elimination of the worst forms of child labour’ as one of the eight fundamental principles and rights at work (or core conventions) under the auspices of the ILO. On the other hand, the MDGs, which preceded the SDGs, did not specifically express any commitment to the eventual elimination of child labour, especially in the developing world. The Millennium Development Goals (MDGs) were certainly committed to improving the welfare of children, but it took the form primarily of improving the health and educational status of children, not their status and vulnerability in the world of work. The employment indicators of the MDGs that were subsumed under goal 1 (eradication of poverty and hunger) were, by default, focused on adults.

This lacuna in the MDGs has now been overcome with the advent of the SDGs. As is well known, the SDGs grew out of a meeting at the United Nations Headquarters in New York from 25-27 September 2015 that coincided with the celebration of the seventieth anniversary of the UN. This historic meeting of all member states of the UN decided on new global Sustainable Development Goals (SDGs). There are now 17 goals, 169 targets and 230 indicators under these targets – all to be accomplished by 2030!These goals, targets and indicators range across the themes of poverty, hunger, health and education, gender inequality, inequality in general, sustainability, industry and innovation, economic growth and decent work, peace, justice and institutions and development partnership. Of course, most of these themes are also present in the MDGs. This is to be expected as the SDGs build on the MDGs.

An explicit commitment to deal with challenge of child labour is now embodied under goal 8 of the SDGs which seeks to ‘promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all’. Target 8.7 under this goal states that member states of the UN should :

Take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its forms.

What are the global trends pertaining to child labour as monitored within the framework of the SDGs? The progress report, as compiled by the UN, notes that:

While the number of children from 5 to 17 years of age who are working has declined from 246 million in 2000 to 168 million in 2012, child labour remains a serious concern. More than half of child labourers (85 million children) participate in hazardous work and 59 per cent of them work in the agricultural sector. Girls have made greater progress than boys, with the number of girls engaged in child labour declining by 40 per cent during the period 2000-2012, compared to a decline of 25 per cent for boys.

Under current and prospective trends, what are the chances of eliminating child labour by 2025? In a recent evaluation, the ILO has suggested that, under current trends and despite commendable progress, the elimination of child labour by 2025 is unlikely to be achieved. It thus called on the international community to ‘dramatically’ accelerate its efforts to cope with the challenge of child labour.







Who benefits from One Nation?

With the declaration of all of the 93 seats in  Queensland’s recent election, the sensation over One Nation Party is over. At least, for now. The question now is not why One Nation failed to live up to its expectations; instead, the question is why the LNP was unable to get a majority. While political pundits and party strategists will, no doubt, offer many reasons, one thing is clear. While premier Palasczuk distanced herself from One Nation and ruled out any alliance with it, the LNP leader Tim Nicholls kept the door open. Did it help the LNP? Did it improve the LNP’s chances of winning the election?

From Labor’s campaign strategy and Palasczuk’s unequivocal position on One Nation, Labor supporters clearly knew a vote for One Nation was not a vote for Labor. It may have been not so clear for the LNP supporters. The conservative voters who traditionally remain faithful to the LNP may have found a more conservative party in One Nation to hand over their precious ballots.  Moreover, mandatory preferential voting did not necessarily deliver the primary votes of One Nation to the LNP candidates.  In the end, both the LNP and One Nation lost while the ALP snatched a decisive victory.

So did the rise of One Nation really benefit the LNP?  ABC’s election analyst Antony Green could not be more precise.  In a  radio interview  with Steve Austin, Green said, “Whenever One Nation is in the field and polling well, the Coalition loses.”   Thus, the rise of One Nation is not a threat to the ALP or the Greens, it is a threat to the LNP and the Coalition.

The ‘gig’ economy and developing countries: beyond hype and false hopes

A sizeable literature has grown up trying to understand how digital technology has enabled relatively new forms of work and employment to emerge. There are various terms used to describe this evolving feature of the labour market. Examples include: the ‘sharing economy’, the ‘gig economy’, the ‘platform economy’, ‘digitally-enabled independent work’, ‘digital labour’ and ‘online labour’. In the discussion that follows, these terms will be used interchangeably while recognizing that the common tie that binds these terms is the ILO’s notion of ‘non-standard form of employment’ (NSFE).

Sundararajan is probably among the most influential scholars making the case that the ‘sharing economy’ propelled by a community of ‘micro-entrepreneurs’ and working through digital platforms has transformed – and will continue to transform – the world of work as we know it. He even suggests that one might be witnessing the ‘end of (formal) employment’.

One can readily think of iconic examples of the digital economy that ‘commercialize’ personal assets, whether they pertain to transportation (Uber), short-term accommodation (Airbnb), buying and selling of goods (Amazon) or freelance labour platforms (Upwork). The absolute numbers are impressive. Airbnb, for example, has more than two million users; Upwork has 12 million registered free lancers.

Sundararajan argues that the ‘sharing economy’ holds a great deal of promise for developing countries where ‘full-time institutional employment is not yet dominant and traditional economic institutions vary in effectiveness’. In such situations, economic exchange through credible and reputable digital platforms can ‘stimulate a self-employed and entrepreneurial population…and raise …living standards’.

There are, it appears, governments in the developing world that have embraced digital labour as an innovative strategy of employment creation. As one analyst puts it: ‘For policy makers in the Global South, the digital labour market is seen as an infinite source of employment that should be tapped rather than restricted or regulated.’

Some studies that have evaluated the market for digital labour in developing countries based on surveys of online workers and transactions in leading online platforms find a mixed picture. An OECD study concludes that:

(Much) work in the platform economy is carried out in small units and irregularly. Platform workers may therefore have multiple jobs, work long hours and under high stress…In addition, such work frequently has no social security coverage, can be terminated at will, and wages are low due to a high level of competition. While platform work has created many opportunities for workers in emerging economies, it has also risked engendering a “race to the bottom” in both pay and working conditions. Moreover, it is likely that a great deal of work remains undeclared, fomenting the informal economy.

Media reports do not seem to paint a positive picture of the conditions faced by some types of workers that form part of this new wave of ‘micro-entrepreneurs’.  Consider, for example, the case of the 900,000 ‘driver-partners’ for Uber and Ola in India. For Uber in particular India has turned out to be the biggest market in Asia. However, expansion of this kind of business is constrained by the low level of car ownership in India. Not surprisingly, both Uber and Ola have instituted car loan programmes for their driver-partners as a means of increasing car ownership which then can be converted into a commercial asset. However, loan repayments form a major part of the expenses of maintaining a car. This drives down the income of Ula and Ola drivers. Discontent has broken out among Uber driver-partners leading to temporary stoppages of the ride-hailing service.

The idea of large numbers of flourishing micro-entrepreneurs enabled by digital technology seems to ignore a well-established literature that document disappointing labour market outcomes of the self-employed in developing countries as revealed by rigorous evaluations of interventions intended to stimulate self-employment and entrepreneurship. Banerjee and Duflo have coined the term ‘reluctant entrepreneurs’ to depict this situation. They draw on a survey of poor people’s attitude to self-employment in a number of developing countries. Their conclusion? ‘The poor don’t see becoming an entrepreneur as something to aspire to’ and overwhelmingly prefer stable jobs in the formal sector and that too in public services.

One should not, of course, downplay the tangible benefits that flow from the evolution of new work opportunities enabled by digital technology. On the other hand, it is essential to engage more critically with the future of the platform economy and the way it will shape the world of work. Systematic evaluations of wages and working conditions in the digital economy are required. This will enable policy-makers and regulatory authorities to devise appropriate policy interventions, such as amending labour laws to cover wages and working conditions in the platform economy. The challenge is to reduce the incidence of precarious work in the digital economy while preserving the benefits that flow to consumers in the form of lower prices and wider options.



Revisiting the ‘GFC’: what went wrong?

One of my favourite bloggers, Oxford economist Simon Wren-Lewis, has drawn attention to a new book that revisits the ‘global financial crisis’ or GFC as it is widely known. There is, of course, a voluminous literature on the topic, but this contribution by Tamim Bayoumi – a senior IMF official – offers some fresh insights. A summary of his arguments can be found here, while a succinct review is available here.

To start with, Bayoumi gives the GFC a new name with a strong geographic complexion. Instead of the GFC, we now have ‘NAC’ – or the North Atlantic crisis. The idea is that the financial crisis that eventually paved the way for the Great Recession of 2008-2009 was not merely US-centric. Europe also played a significant role – a view that is not widely noted.

Bayoumi traces the NAC to ‘…serial but different regulatory mistakes in Europe and the US starting in 1980. By 2002 …the elements that drove the crisis were already in place.’ It appears that a crisis that erupts seemingly out of nowhere can actually germinate and fester for decades. It is indeed noteworthy that the roots of the NAC lie in the much-noted era of the Great Moderation.

One of the culprits behind the NAC was the rapid expansion of Northern European ‘universal’ banks that grew out of ‘(r)egulatory changes in the mid-1980s’. Such changes ‘…merged commercial banking (loans to clients) with investment banking (buying and selling of assets)’. These merged entities also relied heavily on ‘internal risk models’ that were paradoxically enabled by ill-thought changes to international rules. These internal models encouraged rather risky expansions beyond national borders at the expense of prudent commercial decisions.

In the US, similar developments took place in the mid-1980s.  Regulatory changes encouraged switching of deposits and loans from ‘…sound commercial banks to more fragile investment banks that formed the core of the shadow banking system’. Further regulatory changes in 2003 and 2005 ‘helped to parasitically intertwine the…fragile US and European banking booms’.

Bayoumi goes on to highlight the collective follies – or ‘intellectual blinkers’ as he calls them – of regulators and policy-makers on both sides of the Atlantic that constrained them from identifying the dire consequences that would follow from unsustainable banking booms. These included: (a) the Basle Committee’s switch to internal risk models; (b) the undue faith of central bankers on monetary policy that led them to focus primarily on inflation rather than financial stability; (c) the belief that international spill overs were insignificant in scope and scale; (d) the inadequate mechanisms of the Eurozone to support member states when they encounter difficulties with respect to debt servicing.

What I liked most about Bayoumi’s analysis is his concern that the ‘macroeconomics profession is …slowly adapting to the lessons of the crisis’. There is still a lingering commitment in ‘standard macroeconomic models’ to the efficacy of financial markets, an enduring confidence in the ability of central bankers to cope with business cycles and the persistence of the view that international spill overs are not significant. Only time will tell whether Bayoumi’s concerns are valid.

Doing Business 2018: Modi celebrates, but what about Georgia?

The much-noted flagship publication of the World Bank Doing Business (DB) was publicly unveiled recently. This became cause for celebration for The Indian Prime Minister Narendra Modi. Why? Well, after languishing for some time, India jumped 30 places to reach a rank of 100 (the lower the rank the better in terms of the ease of doing business). It was given the accolade of the 10 ‘top improvers’ for implementing more than 50 regulatory reforms over the past year which ‘make it easier to do business’ – a distinction that India shares with Brunei Darussalam, Thailand, Malawi, Kosovo, Uzbekistan, Zambia, Nigeria, Djibouti and El Salvador. This is not exactly an inspiring list of countries. Nevertheless, the Indian Prime Minister tweeted that it was a ‘historic jump’. This is quite different from last year when the Indian government was disappointed that the World Bank did not adequately capture the reform measures that were underway. Prime Minister Modi’s ambition is to catapult India to the top 50 nations in the DB ranking scheme.

As is well known, the DB Report 2018 is the 15th in a series of annual reports that seek to measure regulations that enhance ‘business activity and those that constrain it’. The theme of this year’s report is ‘Reforming to create jobs’. Its authors claim that there is a significant association between improvements in DB rankings and growth, employment and poverty reduction. I am not going to quibble over this empirical proposition, but I do worry that the cheerleaders of good news emanating from the DB reports do not read the fine print.

As a thoughtful analyst has pointed out, one should take time to understand what exactly is being measured. He points out that ‘in India’s case, the business environment in only Delhi and Mumbai are used to compile the national ranking’. Furthermore, the emphasis is on tracking business regulations that, while welcome, are often disconnected from the daily experiences of millions of Indians.

The DB report is itself rather frank about the narrow nature of its remit. As it says, ‘the focus is deliberately narrow…’  It concedes, for example, that it does not ‘…address the extent to which inadequate roads, rail, ports, and communications may add to a firm’s costs and undermine competitiveness’.

What struck me about DB Report 2018 is the attention given to tiny Georgia which, far more than India, is a glaring example of what is revealed and what is not. Georgia is the only lower-middle income country to be part of the ‘top 20 group’ which is dominated by OECD economies. Furthermore, ‘among the top 20 economies, Georgia, with a ranking of 9, has implemented the highest number of business reforms since the launch of Doing Business in 2003’.

Does this rare distinction make Georgia the envy of the developing world? Certainly, there has been a commendable reduction in poverty. George is also classified as a ‘high human development’ country by the UNDP (with a rank of 70 out of 188 countries). It is a very attractive tourist destination. Yet, there is a lot that one should be worried about. As the Deputy Managing Director of the IMF pointed out in a recent speech, Georgia faces considerable development challenges. The country’s export base is too narrow; unemployment and underemployment remains at high levels, with a preponderance of those in long-term unemployed; almost half of the country’s labour force is employed in agriculture. If ‘reforming to create jobs’ is what Georgia has been doing since 2003, it still has a long way to go.

Perhaps, the biggest development challenge that Georgia is facing is a rapid shrinking of its population with a concomitant decline in the work-force. The last (2014) census revealed that Georgia’s population was 3.7 million whereas it was 4.3 million in 2002. Such a rapid decline in the size of the population has been driven by a variety of factors, with the most proximate ones being unattractive economic conditions, a declining birth rate and rapid emigration. If current trends persist, Georgia’s population will shrink to a little over 1 million by 2050. Georgia might be a star performer in the DB reports, but it faces a fundamental demographic challenge that it is unable to meet.