STRENGTHEN2 workshop on measuring non-direct employment impacts

On May 21, 2024, the International Labour Organization (ILO) hosted an online workshop on "Measuring Non-direct Employment Impacts: Fallback Breakdowns for Ex-ante Estimations." The forum was the fourth event organized by the STRENGTHEN2 project, which aims to assist the European Commission and Development Finance Institutions (DFIs) to better measure the employment impact of investment projects to promote the creation of more and better jobs in sub-Saharan African countries. The 3-hour workshop focused on developing generic expenditure breakdowns to be used when project-specific data is unavailable, a critical tool for ex-ante assessments that significantly reduces the complexity and time required for project evaluation.

The workshop brought together 48 participants from leading development institutions, including the African Development Bank (AfDB), the European Investment Bank (EIB), and the African Union Development Agency - New Partnership for Africa's Development (AUDA-NEPAD). These institutions shared insights and strategies on the challenges of using fallback measures, with discussions centred around limited data for establishing expenditure breakdowns and categorizing expenditures according to commonly used Input-Output (I-O) models. 

The development of reliable fallback expenditure assumptions was highlighted as essential to assessing employment impacts. When specific project data is not available, these assumptions serve as a foundation for estimating the employment effects of investments. However, a significant challenge lies in aligning the expenditure categories of diverse projects to standard I-O models, such as those used by the Global Trade Analysis Project (GTAP) and the Joint Impact Model (JIM).

Representatives from various institutions presented their current approaches to developing fallback breakdowns:

• Georg Weiers from the EIB emphasized the importance of creating detailed and reliable fallback assumptions. He shared the example of a wind farm project, where accurate assumptions resulted in more realistic job creation estimates. Mr. Weiers highlighted the necessity of disaggregating aggregated procurement data into more detailed categories to better capture sectoral nuances.
• Rudolphe Petras from AfDB discussed how the AfDB uses the JIM to measure indirect jobs generated by its operations. He pointed out the difficulty in obtaining detailed expenditure data for new projects and explained AfDB’s approach of using generic expenditure breakdowns based on past operations. This method, while cost-effective and reliable, may not always reflect the nuances of future projects or capture geographical and sub-sectoral differences.
• Mc Neil Mhango from AUDA-NEPAD presented the Program for Infrastructure Development in Africa (PIDA) Job Creation Toolkit, which allows users to estimate job creation potential for infrastructure projects across Africa. The toolkit leverages I-O tables and scenario-building capabilities to provide comprehensive reports on direct, indirect, and induced jobs created by a project. However, Mhango also acknowledged the challenges of updating data and training users.

Throughout the workshop, participants expressed strong interest in further collaboration with the ILO and other institutions to refine the methodologies for fallback breakdowns. One of the key takeaways was the importance of ensuring that methodologies are adaptable across various project types and regions. To enhance accuracy, participants agreed that country-specific variations, such as local content and expenditure patterns, should be considered in future assessments.

In the concluding remarks, Gabriel Michelena (ILO) underscored the need for ongoing collaboration and suggested establishing a formal network or working group to facilitate the exchange of data and methodologies. This initiative could evolve into a more unified approach for data sharing and analysis, benefiting all participating institutions.

Looking ahead, the forum participants showed strong interest in continuing the discussion on Measuring Green Jobs, which emerged as the most popular topic for future events. With a solid foundation established, the ILO and its partners are well-positioned to develop more robust methodologies for measuring the employment impacts of investment projects, contributing to more accurate and meaningful assessments that drive sustainable job creation.