Eliminating child labour: The costs and benefits

A just-released study by the ILO International Programme on the Elimination of Child Labour (IPEC), "Investing in Every Child: An Economic Study of the Costs and Benefits of Eliminating Child Labour", argues that the benefits of eliminating child labour will far outweigh the costs. Peter Dorman, the author of the report, explains the costs and benefits of eliminating child labour and how the proposal may be applied.

Article | 06 February 2004

Question: What are the costs and benefits of eliminating child labour?

Answer: Our study says that the costs would be in the area of US$760 billion, while the benefits would be nearly seven times that - an estimated US$ 5.1 trillion in the developing and transitional economies, where most child labourers are found. Though this commitment may seem huge, the annual cost of replacing child labour with universal education by 2020 pales in comparison to other costs borne by developing countries. Average annual costs would amount to about 20 per cent of current military spending, or 9.5 per cent of debt service.

Q: How many child labourers are there in the world today, and can we say how many children might benefit from this?

A: The ILO estimates that some 246 million children are currently involved in child labour. Of these, 179 million - or one in every eight children worldwide - are exposed to the worst forms of child labour, which endanger their physical, mental or moral well being. It is impossible to calculate exactly how many children would benefit over the next decade or so, but it would most certainly be in the hundreds of millions.

Q: What are the main costs involved?

A: We divided the costs into a few major categories. The first was the cost of increasing the quantity and quality of education to accommodate all the world's children. This entails the cost of building new schools, training and hiring new teachers, and supplying additional educational materials. Education forms a large part of the costs, nearly two-thirds of the total. Yet there are regional variations. In Asia, education costs are relatively low. And in the transitional economies, there is already a very developed education infrastructure. Simply put, they won't have to spend a lot of money on bricks and mortar.

Q: Still, child labourers provide vital income to their families. What happens when they stop working?

A: Another cost we considered was the "opportunity cost of eliminating child labour", that is to say the cost to families who lose the income provided by their children's labour. As a result we had to consider the cost of setting up an income transfer program in every country to compensate these poor families when their children are removed from work and sent to school. Finally, we also costed for intervention programmes to urgently eliminate the worst forms of child labour and address the needs of special populations.

Q: And how did you calculate the benefits?

A: There are two major benefits: Improved education and improved health. Both translate into economic gains. Incomplete or inadequate education manifests itself in reduced future productivity, but with universal education for children to the age of 14 we calculated that each child would benefit from 11 per cent more income for every extra year of schooling. We also estimated that by eliminating the worst forms of child labour, and the toll it takes on human health and productivity, many countries would experience tangible economic gains.

Q: How can this be implemented?

A: The study calculated the costs and benefits of implementing an ideal, standardized program around the world. In the real world, country-specific programmes, like those already set into motion by the ILO, are required to effectively eliminate child labour. Such an effort is demanding, but we believe that it can be done. The study has asked the right questions: what are the costs to households when children stop working? What are the long-term benefits? What will be the costs for governments of supplying education or financing transfer programs? Now we have these answers, there is a strong economic case behind the campaign to eliminate child labour.

Note 1 - Investing in Every Child, An Economic Study of the Costs and Benefits of Eliminating Child Labour, ILO Geneva, December 2003. ISBN 92-2-115419-X. For more information on the International Programme on the Elimination of Child Labour, please visit: /ipec. The press release is available at /communication.