Economy,  Work

Why we need to start measuring quality of work and how to do it

Global inequality has become more pressing in recent decades as social unrest has become ever prevalent and writers on the subject more vocal. The predominant focus of the inequality debate has been on the differences between rich and poor countries; African countries being consistently cited as disadvantaged in this relationship. However, this focus has tended to overlook the inequalities which exist on the continent itself.

It is in this area that this special issue of the African Review of Economics and Finance is dedicated as well as studies on stratification economics which look at the multiple identities (gender, race, age, class etc.) of individuals and how these shape social and economic relations between them. Given the detail which this theory recommends, microanalyses of inequalities within institutions and between individuals become important tools of enquiry. One such institution which can either be used as a tool for the reduction of inequalities or serve to maintain them is the labour market.

When we think about the labour market and the state thereof, many people can easily quote the unemployment rate in their country and have a relatively good understanding of what it means. However, labour markets have undergone drastic changes in the last few decades.

These changes have emerged in the manifestation of the gig economy, growing informalisation of work, and the growing incidence of the working poor in some countries (where people are employed, but still live in poverty). These changes have also highlighted the need to be as concerned with the conditions under which those who are employed labour, as we are with the livelihoods of the unemployed.

The International Labour Organisation (ILO) has been a champion for this cause through the development of the Decent Work Agenda. ‘Decent Work’ has been defined by researchers, Tamara Cohen and Luendree Moodley as a “source of personal dignity, family stability, [and] peace in community”. Work, in the Agenda, is thus about more than earning a living, but a core part of our identities as human beings as well.

Although researchers, policymakers, and civil society organisations have expressed their support for viewing work more broadly, as advocated by the ILO, the Agenda does present one challenge: measurement.

The ability to ‘measure’ is an important part of being able to design and implement appropriate public policies. This is clearly evident in the many policy prescriptions aimed at increasing gross domestic product (GDP) growth rates, decreasing the unemployment rate, the inequality rate (commonly measured using the Gini Coefficient), and so forth.

Another notable feature of useful indicators is that they allow us to compare similar items. Countries around the world, for instance, have an agreed-upon methodology for measuring their GDP growth rates; allowing researchers and policymakers to determine whether their countries are performing relatively well or poorly, based on the GDP growth rates of other countries.

However, collecting data with which to measure these various statistics often requires a lot of funding. This type of funding tends to be available to National Statistical Offices, through government funding, or large donor-funded organisations such as the World Bank or the International Monetary Fund. Even within these organisations, however, funding tends to be geared towards high priority areas.

Given the ill-developed nature of the ILO’s Decent Work Agenda (and its accompanying Decent Work Index), it has not yet received the resources and attention afforded to other high priority areas, despite being included as a United Nations Sustainable Development Goal.

In my research, I have attempted to circumvent the need for large capital outlays and found a way to use existing data to build a Decent Work Index, using the guidelines provided by the ILO. I do so, using labour force surveys.

Labour Force Surveys (which help countries determine their unemployment rate) are undertaken regularly and made publicly available in most countries around the world. Furthermore, many of the questionnaires used in the collection of such data are standardised across countries, using guidelines provided by the ILO. As such, the variables used in the Decent Work Index I built are likely to be available to allow for the replication of the Index across national contexts. Variables in the Index include capturing whether a worker receives a pension contribution, whether they work in the formal or informal sector, and whether they receive paid vacation leave, amongst others.

Some of the findings, documented in my article, include the fact that many high paid jobs often make it difficult for workers to balance their work and their personal commitments. Furthermore, when considering all the available indicators as a measure of good work (not just the wage rate), associate professionals (e.g. nurses) often score better in the Index than professionals (e.g. doctors).

The Index, however, has a number of shortcomings:

(1) The Index limits measurement to variables that are objectively measurable. For instance, some workers may prefer the contractual nature of work in the gig economy, as it provides them with more freedom in relation to working time and location. Although in the Index, having a permanent contract is interpreted as more desirable than being employed on a temporary basis. It thus does not reflect the preferences different groups of workers may have in relation to their work.

(2) The variables are limited to what is available in the Labour Force Survey. Although the Decent Work Agenda is novel in its approach to more broadly defining work, some variables cannot be easily measured in Labour Force Surveys, such as the child labour rate which is difficult to observe during the data collection process.

(3) Given the difficulty in enumerating certain groups of workers, their working conditions may not be accurately captured in a labour force survey. An example includes agricultural workers who are generally under-represented in labour force surveys due to their geographical dispersion and the seasonal nature of their work.

This Index, however, is just a methodological starting point and provides a foundation on which other researchers can build. Despite its shortcomings, which can be addressed through similar studies, reporting on the quality of work should become as commonplace as considering the unemployment rate or Gini Coefficient. By doing so, we will be able to challenge the notion that consistently reporting low unemployment rates is a good indicator of work and labour market conditions in a country.

This post was originally published on the AREF blog.