Understanding value chains to drive job growth

Let’s Work, a global partnership of over 30 organizations, is piloting tools that can help Development Finance Institutions (DFIs) measure the impact of private sector investments on jobs. The aim is for partners to not only measure jobs in the same consistent way, but also along the same nuanced dimensions: number of jobs gained, the quality of those jobs, and who gets those jobs (inclusiveness).  One of the measurement methods being developed by the Partnership is the Jobs in Value Chains Survey tool.

The objective of the tool is to understand the dynamics within a chain and to be able to measure the impact of specific investments and interventions on job creation. A finished product is most often a result of processing, manufacturing and distribution by multiple firms, where each node of the chain is adding value to the end-product. Currently, this quantitative survey is the only tool available to measure the impact of value chain interventions on jobs.

The survey has been developed to understand relationships among actors in the chain and the level of integration of small employers with established links within the value chain markets. The results and analysis aim to stimulate systematic policy dialogue on the business environment and to help shape the agenda for reform. Ultimately, a better understanding of value chains can drive growth by empowering small farms or firms to capture more value, increase job productivity, improve employment for marginalized groups, and raise overall living standards. 

A qualitative tool has also been designed to focus on constraints firms face in setting up their business such as access to finance, day-to-day challenges in operations, constraints to productivity-profitability, and identifying jobs or periods of particular vulnerability.

Let’s Work has launched 11 case studies globally, chosen from a pool of projects across partner organizations. In some situations, the priority value chains were pre-defined as part of a national development strategy or as part of an ongoing program led by government, donors, or other stakeholders. Selection was also based on:  

1. Scale, sustainability and competitiveness of the sector in question

2. Jobs impact, especially on target groups such as the poor, rural populations, women, youth, or specific locations within the region; and

3. Readiness and additionality i.e. the likelihood that efforts focused on the particular sector will have the desired impact on the target population due to the existence of an organized, mobilized, and motivated set of stakeholders.

To allow a more in-depth understanding of where jobs are concentrated within a sector, modules have been designed to capture responses from both large and small sized-firms, with formal or informal structures, and encompasses both permanent and temporary employees. Questions on the measurement of female and youth employment in the firm are also included in the survey, allowing users to draw results based on the current skills-demand for employment. For example, in North Lebanon we evaluated a potato value chain and results indicated that the vast majority of demand across all parts of the current value chain is for low-skilled labor. Within the ‘input supplier’ and ‘processing’ nodes, there is significant employment of Lebanese females in permanent low-skill positions (more than 40 percent).

From this and other data gathered during the analysis, we are able to make policy recommendations that could help create more and better jobs that raise both worker incomes and firm productivity. For instance, building targeted programs that support female business start-ups can allow more women to participate in the labor force. Increasing ICT skills support for medium and small sized business through rapid training programs can increase firm efficiency. Building infrastructure that connects the northern region to the rest of the country can broaden growth opportunities.  Overall, in the long run, aligning the labor market supply with private sector demand will be valuable in Northern Lebanon. The final report will be published on Let’s Work.

Upon completion of the work, standardized tools such as value chain mapping and selection guidelines as well as learnings from each study will be shared to promote further learning and collaboration amongst partners.

Current partners of Let’s Work include:

• African Development Bank Group (AFDB)
• Asian Development Bank Group (ADB)
• Austrian Federal Ministry of Finance (BMF)
• Department for International Development (DFID)
• European Investment Bank (EIB)
• 15 European development finance institutions (CDC, DEG, etc.)
• Inter-American Development Bank (IADB)
• International Finance Corporation (IFC)
• International Labor Organization (ILO)
• Islamic Corporation for the Development of the Private Sector (ICD) 
• International Youth Foundation (IYF)
• Ministry of Foreign Affairs of Netherlands
• Overseas Development Institute (ODI)
• Private Infrastructure Development Group (PIDG)
• Swiss Secretariat for Economic Affairs (SECO)
• World Bank (WB)
• World Business Council for Sustainable Development (WBCSD)