1963-2018 - 55 years of Research for Social Change

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Combating Poverty and Inequality: Structural Change, Social Policy and Politics

From Chapter 1 – Towards Employment-Centred Structural Change

This chapter outlines elements of a framework for incorporating employment more centrally in development policy. It highlights the potential and limits of different growth paths in generating employment, and argues that economic growth or industrialization per se will not necessarily lead to sustained improvements in employment, income and well-being. The classic pattern of structural change found in today’s high-income countries, in which economic growth fuelled a shift from agriculture to industry and from industry to services, as well as a shift from self-employment to formal wage employment, is difficult to replicate in the context of open economies without deliberate policies. Labour still moves out of agriculture in the vast majority of countries, but it is absorbed into low-value services and the informal sector where the scope for sustained growth in productivity and incomes is limited. Poverty in most parts of the developing world is in large part accounted for by this pattern of structural change. The free-market orientation of development policy in the last few decades is associated with expanding labour market inequalities, persistent informalization and the emergence of precarious forms of employment in many countries.

The chapter is organized as follows
  • Section 1 explores the relationship between structural change and employment. It examines why the traditional model of industrialization is difficult to replicate in the setting of an open economy, the implications for employment outcomes and the role of policy.
  • Section 2 discusses significant global changes in the supply of labour: urbanization, growing participation of women in the labour force, integration of the global workforce and migration.
  • Section 3 uses country case studies to illustrate five different development paths, including the structure and evolution of employment and development strategies, and implications for poverty and living standards.
  • Section 4 discusses the relationship between employment and poverty, focusing on the working poor.
  • Section 5 concludes with a discussion of policy issues for promoting employment-centred structural change.

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