Analytical framework for employment diagnostics

ILO’s employment diagnostic analyses aim to understand the underlying causes of decent work deficits and identify policies and interventions to achieve full and productive employment for all. Employment diagnostics are often the first step in an employment policy formulation process, bringing together social partners and other stakeholders to create evidence leading to the development of concrete policy actions and prioritization. In times of continuous change and multiple crises, employment diagnostics help to understand the changes in the labour market to ensure employment policies can be adapted to the ever-changing world of work.

Underlying principles for ILO’s approach to employment diagnostics

The Employment diagnostic analysis, as understood by the ILO, takes a participatory approach to ensure that the interests of all concerned stakeholders are reflected. The approach leads policy proposals that consider the needs of all socio-economic, ethnic and disadvantaged groups. The diagnostics puts emphasis on the agency of all people, and the analysis focuses on “human resources as a creator of growth through productive employment and decent work, rather than productive employment as an outcome of growth” (ILO 2012). Thus, the analytical framework covers both the structural factors that create the context in which women and men seek for work, as well as an analysis of the resources that workers have in order to contribute to their own and society’s development through productive work.

Employment diagnostics in times of continuous change

The analytical framework for employment diagnostics encompasses different while interrelated areas of study, and can employ different tools and approaches. The main parts of the study include analysing: (i) economic dynamics, (ii) labour market dynamics, and, as a cross-cutting element, the (iii) resulting poverty and inequality dynamics. The focus is on understanding the environment in which economically active women and men operate. The economic environment has been under constant change in recent years, and thus the employment diagnostics need to relate to the economic impacts of crises, as well as their consequences on the labour market and workers in it.

Figure: Analytical framework for employment diagnostics in change

When analysing the economic dynamics, it is important to understand the underlying characteristics of the labour force, population dynamics, current macroeconomic policy, legal framework, and development challenges that frame the environment and possibilities for job creation, although they are beyond the control of individual actors. In addition, in times of economic shocks such as a pandemic, climate shocks, conflict, or other crisis, the economic implications of such crisis need to be analysed to get an understanding of the overall context. How are the production and supply chains impacted? Are there changes in productivity by sector? Any disruptions in the financial or trade flows?

Changes in the economic environment result in changes in the labour dynamics. Depending on the characteristics of the change, the impact on different sectors of the economy is uneven, and a detailed employment analysis by sector is essential. Changes in the production and employment affect different workers based on their gender, sector, level of education, region, and other characteristics. Two distinguishing features of the Covid-19 crisis have been that women were disproportionally hit in terms of employment given the sectoral structure of their employment and their proportionally greater informality compared to men; and that the loss of working hours that went down disproportionally compared to the loss of jobs or trends in employment. Thus, understanding what is driving the change in the different indicators is at the heart of the labour market analysis.

The interplay of economic changes (such as inflation) and labour market impacts (such as decreased real wages) translate into welfare effects at the household level. Disaggregated analysis of the effects on both economic and labour market changes is thus needed as a cross-cutting element of the analysis. Disentangling the consequences of economic and labour market trends on different population groups by gender, age and other characteristics is of outmost importance to design gender-responsive employment policies. The overarching analysis of the combined effects on the poverty and inequality dynamics helps to formulate policy priorities for a more human-centred recovery.

Assessing gender differentiated employment impacts at country level

Assessing gender differentiated employment effects requires analysing interactions between the paid and unpaid economy and understanding the structural drivers that produce unequal labour market outcomes for women and men. More specifically, this entails (i) mapping the gender structure of a particular economy with emphasis on underlying gender inequalities and segregation in labour markets, (ii) tracing the impact of a given economic policy or crisis, such as the COVID-19 pandemic, on women’s employment and working conditions relative to men, differentiating by types of risk, (iii) identifying policy options to support gender equitable employment outcomes distinguished between short-term measures and medium-term measures, and (iv) tailoring policy responses to specific gender employment structures and socio-economic contexts.

Drawing operational conclusions

The main aim of employment diagnostics is to support policy action for job creation, improve the quality of employment, and improve the functioning of the labour market so that people can find the jobs they need. The analysis should thus go beyond the mere description of the current deficits of productive employment to identifying and analysing the underlying reasons for them. These constraints can be different for different groups of population depending on region, gender, age, and other characteristics. The objective of employment diagnostic analysis is to inform, through a structured knowledge building process, policies and interventions with a view to enhancing productive employment through inclusive and job-rich growth. The identification of policy options should follow a participatory approach, one that involves not only ILO constituents, but other national counterparts and experts.

Employment diagnostics for Covid-19 recovery – and beyond

In the rapidly changing world of work there is a dire need to understand the nature and causes of change. The recent Covid-19 pandemic was a crisis that sent shockwaves across the global economic landscape. This crisis has been compounded by the accelerating impacts of climate change and the aggressions in Ukraine which have led not only to human tragedies but also rising energy and food costs throwing the global economy into another economic downturn.

Employment diagnostics and the questions asked, and the analysis undertaken need to be adjusted to fit the country context. While the employment diagnostics framework described above provides a rigorous analytic basis for understanding the dynamics in the labour market, responding to a crisis may requires a rapid approach for how a crisis impacts the economic dynamics in the country, and how these economic challenges translate into changes in the labour market. Throughout such analysis one should pay attention to the different impacts the crisis may have on different population groups, especially the vulnerable groups.