United Nations Economic and Social Council
High-Level Segment: Promoting an Integrated Approach to Rural Development in Developing Countries for Poverty Eradication and Sustainable Development

Geneva, 30 June-25 July 2003   [Link]

Statement by John Langmore, Director, ILO Liaison Office with the United Nations, New York,
Wednesday, 2 July 2003

Productive employment is the route out of rural poverty, as shown in the excellent statement by Mr Figueroa, Vice-Chair of the Committee on Development Policy. Focusing on employment generates insights that are vital to successful policies for rural development.

The opportunity for productive work is as vital to human survival, security and dignity as food, water and shelter. The achievement of decent work has become one of the central priorities for national and international economic and social policy.  Mr Somavia has articulated this primary goal as being "to promote opportunities for women and men to obtain decent and productive work, in conditions of freedom, equity, security and human dignity."

Yet some PRSPs, for example, still describe the goals of macroeconomic policy in terms of price stability and balance of payments equilibrium and do not mention either employment growth or poverty reduction. For more than a quarter of a century the macroeconomic strategy required by the international public and private financial institutions as a condition for lending involved relegating employment growth to a subsidiary place. The superficial mantra that inflation was most damaging to the poor was ritually repeated to justify policies that tightly constrained the provision of education, health services and infrastructure and so retarded economic and employment growth.

Since the mid-nineties a broader view has gathered strength giving greater attention to the importance of poverty reduction, as exemplified in the Millennium Declaration and MDGs. Two examples will illustrate ways of strengthening the focus on employment.

A faster pace of saving and investment in rural areas is an essential component of swifter rural development, as emphasised by many speakers, and this is crucial to employment growth. Historically, it is through the growth of agricultural productivity, the production of a surplus, and the transfer of people to other types of work that human societies have grown and livelihoods improved. Policies that promote both agricultural productivity and rural off-farm employment such as education, training and health services, equipment repair, small-scale building and construction and maintenance, agro-processing, small-scale mining, forestry, furniture making and retailing are of key importance.

Yet small entrepreneurs in many places continue to face difficulties in borrowing and high interest rates. It is scarcely possible to overestimate the importance of the availability of credit at manageable interest rates to both farmers and non-farm entrepreneurs in micro, small and medium enterprises. One of the public policies that can do most to stimulate the private sector is ease of access to credit and low interest rates.

The value of micro-finance schemes in mobilizing savings and providing small loans, especially to women, is now generally recognized, though the extent to which subsidies are continued after the establishment phase continues to be debated. Micro-finance interest rates deserve more attention, for the lower the interest rate, the more entrepreneurs can borrow and the quicker they can repay. Cooperative financial as well as marketing and supply organizations can play a valuable role by increasing the availability of credit.

So national monetary policy has crucial implications for rural development. Fiscal policy too is vital, because of its role in facilitating the expansion of education, training, health services, infrastructure, extension services and research.

A second example is the use of employment-intensive rather than capital-intensive techniques of infrastructure construction. There are many types of infrastructure where the use of locally available labour and materials offers efficiencies. Feeder roads, drainage, sewerage and water supply systems, forestry, soil and water conservation, land development, small-scale building and irrigation can all be examples. ILO experience shows that employment-based approaches –

• are between 10 and 30 per cent less costly than more equipment-intensive techniques;
• reduce foreign exchange requirements by between 50 and 60 per cent;
• create between three and five times as much employment for the same investment.

Amongst crucial elements of an employment-intensive approach to infrastructure construction are: a tendering and contracting system that favours local, small enterprise; and the provision of training for the government officials concerned and for small enterprises wishing to tender for contracts and to work safely.

There is significantly greater scope than is generally recognized for employment generating policies and practices through action by governments, companies, communities and international institutions. The principal requirement is determined, sustained commitment to the goal of employment for all who want it.