Creating more and better jobs in global value chains

M. Maertens & A. Fabry

The Future of Work in Agriculture Conference World Bank, Washington DCMarch 19-20 , 2019

Introduction

High-value export

expansion

Labor markets

Rural develop

ment

Dual economy framework

Literature review

3 original case-studies

Overview

High-value export

expansion

Labor markets

Rural develop

ment

Horticultural export expansion • Horticultural exports from developing countries

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curr

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SD

A. Export value

Africa America Asia

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tonn

es

B. Export volume

Africa America Asia

Horticultural export expansion • Share of horticultural exports in total agri-food exports

Latin America 26 % Asia 27 % Africa 34 %

Mexico 58 % Philippines 56 % Egypt 67 %Peru 45 % China 40 % Morocco 48 %Chile 45 % Viet Nam 26 % South Africa 54 %Ecuador 39 % Thailand 21 % Ethiopia 34 %Brazil 7 % India 13 % Senegal 18 %

Ghana 16 %

Data • Senegal

o Export company surveys (2003 → 2019)

o Farm household surveys (2005 → 2018)

• Peru, Ghanao Export company surveys

(2012 - 2015)o Worker surveys

(2013 – 2015)

Data, evidence, articles

Horticultural export expansion • Horticultural exports from Senegal, Ghana & Peru

0102030405060708090

100

1995

1998

2001

2004

2007

2010

2013

2016

Expo

rt v

alue

(mill

ion

US$

)

Senegal

Beans, green Tomatoes

(Water)melons Fruits

Processed Vegetables

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20

40

60

80

100

120

140

1995

1998

2001

2004

2007

2010

2013

Expo

rt v

alue

(mill

ion

US$

)

Ghana

Mango Fruits

Processed Vegetables

Bananas Pineapples

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500

1000

1500

2000

2500

3000

1995

1998

2001

2004

2007

2010

2013

2016

Expo

rt v

alue

(mill

ion

US$

)

Peru

Asparagus Avocados

Grapes Fruits

Processed Vegetables

Agro-industrialization

Smallholder contract-farming → Large-scale vertically integration Product market participation → Labor market participation

Research on contract-farming → Research on labor market effects

→

Agro-industrialization • Supply chain characteristics

Senegal horticulture

Peruhorticulture

Ghana pineapple

Sourcing from smallholders Green beans 60% (1990’s) 35% (2011)

Asparagus95% (2000)29% (2018)

Pineapple45% (2006) 5% (2015)

Mango < 5% (2015)

Grapes 85% (2007)22% (2018)

Approx. # companies 25 100 15Average company size 380 ha 270 haAverage share of FDI 33% 40% 47%GlobalGAP companies 95% 88% 100%

Agro-industrialization• Impact of standards in asparagus sector in Peru

A dual economy (Lewis) model

Lt2

Overview

High-value export

expansion

Labor markets

Rural develop

ment

More jobs • Employment dynamics

Country Sector Year Approx. # employees

Female employees

Senegal Horticulture 2018 27,200 57 %Ghana Pineapples 2015 3,450 62 %Kenya Green beans 2011 66 %

Flowers 2019 100,000 75 %Zambia Horticulture 2010 10,000 65 % Ethiopia Cut flowers 2013 200,000 80 %Peru Asparagus 2013 100,000 50 %

Grapes 2015 210,000 40 %Chile Fruits 700,000 50 %Mexico Horticulture 2000 94,000 11 %

Better jobs • Wage dynamics

Year of observation 2003 2006 2013 2016 2018Av. nominal wage (FCFA/day)

All employees 2,537 2,550 2,750Casual employees 2,240 2,423 2,620Permanent employees 3,484 3,748

Av. real wage (FCFA/day)

All employees 2,537 2,443 2,239Casual employees 1,824 1,975 2,044Permanent employees 2,837 3,055

Months employed per yearCasual employees 6.8 6.96 7.03

Permanent contracts 15% 12%

Better jobs • Private standards and decent work

Country Year Item Wage Peru 2013 Certified to labor standards 4.74 PEN per hour

Not certified to labor standards 4.58 PEN per hourSenegal 2010 GlobalGAP certified 1,940 FCFA per day

Not GlobalGAP certified 1,638 FCFA per dayGhana 2015 Fairtrade certified 10.10 Cedi per day

Not Fairtrade certified 9.22 Cedi per day

Better jobs • Private standards and decent work

Country Year Item Period of employmentPeru 2013 Certified to labor standards ± 85 days

Not certified to labor standards ± 70 daysSenegal 2010 GlobalGAP certified ± 100 days (beans)

± 60 days (mango)Not GlobalGAP certified ± 75 days (beans)

± 45 days (mango)Ghana 2015 Fairtrade certified 244 days

Not Fairtrade certified 244 days

Better jobs • Private standards and decent work

Country Year Item ContractPeru 2013 Certified to labor standards 93% written contract

Not certified to labor standards 33% written contractSenegal 2010 GlobalGAP certified

Not GlobalGAP certifiedGhana 2015 Fairtrade certified 87% permanent contract

Not Fairtrade certified 53% permanent contract

Overview

High-value export

expansion

Labor markets

Rural develop

ment

Income mobility and well-being• Income, poverty and inequality

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2006 2013 2005 2011Senegal River Delta Senegal

Pove

rty

inci

denc

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Poverty Extreme poverty

0.36

0.37

0.38

0.39

0.40

0.41

0.42

0.43

0.44

2006 2013 2005 2011Senegal River Delta Senegal

Gin

i coe

ffici

ent

Income mobility and well-being• Subjective wellbeing or happiness Employed (poor) women happier than non-employed

women

Linkages & spillover effects• Technology & managerial spillovers ?

• Investment linkageso Agro-industry employees investing in household farm (input

expenditures)o Agro-industry employees investing in off-farm businesses

• Consumption linkages ?o Purchasing power and demand expansion for domestic goods

and services

Indirect and long-term gender effects • Female employment and child schooling

0%10%20%30%40%50%60%70%80%

boys girls boys girls

primary schoolenrolement

secondary schoolenrolment

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101520253035404550

total per child

school expenditures (1,000 CFA)

Indirect and long-term gender effects • Female employment and fertility

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Num

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Age cohort (years)

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18-24 25-29 30-34 35-40Ag

e at

mar

riage

Age cohort (years)

Conclusion• Agro-industrialization

Employment dynamics: more jobs

Wage dynamics: better jobs

• Linkages agro-industry & smallholders More AND better jobs

High-value export

expansion

Labor markets

Rural develop

ment

Future perspectives• International market demand for fresh produce → further

expansion of horticultural export sectors

• Existing producing regions: slowdown in expansion, increasing wages and incomes, long-term

development effects, decreasing inequality

• New producing regions ?

Policy perspectives• Regional development processes (cfr Justin Yifu Lin & Célestin Monga)

• Government strategies: more AND better jobs Labor market regulations, internal migration policy, location of export

activity

• Corporate strategies: high wages AND high profits Higher-value products, higher-value (demanding) markets, year-round

production

Research perspectives• Research attention to agro-industrialization and labor market

dynamics in global value chains

• Particular gaps Long-term development effects, role of rural-to-rural migration, linkages

between agro-industry and smallholder sector, …