Jobs and Livelihoods: Government Response to the Committee's Twelfth Report of Session 2014-15 Second Special Report of Session - International Development Contents


Government response


Introduction

The UK is committed to economic development and job creation which are both key to improving the lives of poor people. The Government therefore welcomes the opportunity to respond to this timely report on Jobs and Livelihoods from the International Development Committee.

DFID is delivering an ambitious economic development strategy. In addition to country team resources this includes a dedicated directorate and over 80 private sector development advisers, who are bringing new skills to all parts of the organisation. We are working with companies to support them doing what they do best - investing, creating jobs, producing goods and services and supporting income opportunities for local entrepreneurs.

This work is achieving results across Africa and South Asia. Recent findings show that CDC-backed businesses contributed to the creation of nearly 1.3 million new direct and indirect jobs in 2014 alone.

No country can achieve sustained economic development if half its population is locked out of economic opportunities. DFID's Strategic Vision for Women and Girls includes ambitious targets to improve women's ownership of land and access to finance in the countries we work in.

DFID is undertaking Inclusive Growth Diagnostics so that we know what activities will have the biggest impact on focus countries' inclusive economic growth. It will also identify constraints to growth, and DFID's role in supporting countries to change their inclusive growth approach. The diagnostic will also help country offices identify the barriers to private sector investment and set out how DFID can address these barriers.



DFID recognises that most work in the poorest countries is in the informal sector. We will continue to engage with the informal economy through support to establishing small and medium-sized enterprises and by strengthening the general business environment. We support policies that ensure marginalised groups can access markets, services and opportunities so no one gets left behind.

Youth unemployment or underemployment reflects the wider jobs problem - there are too few jobs and inadequate earning opportunities in developing economies for people entering the workforce. We are improving the chances of young people to access these jobs, making sure they are better equipped to increase their earning potential and empowering them to create their own economic opportunities. The relevance and quality of education and skills to economic opportunities available is central to this.

DFID is continuing work to improve reporting of achievements to better reflect its economic development portfolio, and is looking at how best to do this in the context of the overall DFID approach to reporting results, and the evolving post-2015 agenda. Response to conclusions and recommendations

DFID policy

1.  We urge DFID to publish regularly a list of achievements from the money spent on its economic development programmes. A £1.8billion budget needs to demonstrate year on year outcomes and results. (para 3). We agree with ICAI that DFID should be clearer about the areas in which it has a comparative advantage relative to other stakeholders and where it can actually make a difference.

Agree

DFID's economic development programmes contribute to a range of achievements that are regularly reported in DFID's Annual Report and Operational Plans. This includes a number of economic development related results (access to financial services, land and property rights and access to clean energy). The inclusive growth diagnostic undertaken at the country, regional and international level will help identify where DFID can have the greatest potential impact vis-à-vis other donors and actors.

Project level results are monitored regularly through logical frameworks, annual reviews, and project completion reports. These are published on the UK Development tracker (http://devtracker.dfid.gov.uk/). DFID is continuing work to improve reporting of achievements to better reflect its economic development portfolio, and is looking at how best to do this in the context of the overall DFID approach to reporting results, and the evolving post-2015 agenda.

2.  Economic development work can and should be done in fragile and conflict affected states. We recommend that DFID continues the difficult challenge of creating jobs and improving livelihoods in fragile and conflict affected states as it is successfully doing in the DRC. (para. 5)

Agree

We agree that creating much-needed jobs and improving livelihoods, as part of broader economic development work, are important elements of creating stability and rebuilding fragile and conflict-affected states. Where economic development leads to inclusive growth it can play a central role in poverty reduction, helping create jobs, markets and opportunities for people.

Creating space for the Private Sector to invest

3.  DFID should not do everything and investment in some areas such as infrastructure is best undertaken by its partners which have a comparative advantage in this area. However, as we saw in both Dar es Salam and Kathmandu poor urban planning is a serious obstacle to development and is relatively neglected by donors. We recommend that DFID reassess the priority it gives to urban planning. (para. 6)

Partially agree.

a)  DFID has a significant portfolio of bilateral infrastructure programming, achieving impressive results. For example, DFID support to the Nigerian government on power infrastructure through the Nigeria Infrastructure Advisory Facility has supported a large scale power sector privatisation which has generated around $2.5 billion for the government. DFID is on track to meet its commitment of reaching 60 million people with our water, sanitation and hygiene programmes by 2015, and has committed to reaching another 60 million by 2020.

DFID's Infrastructure Policy Framework, approved by the Secretary of State in January 2015, sets out our comparative advantage in infrastructure including assisting governments reform regulatory frameworks in ways that make a difference far beyond one individual project.

Improving infrastructure service delivery in DFID focus countries is central to achieving both our economic and human development goals, and there is high demand from our partner governments for the flexible, community-focused support we can offer, and for UK expertise in mobilising private finance.

We agree that urbanisation is a key issue in DFID partner countries and urban planning is one of many urban issues that DFID is addressing. In particular we are developing urban planning programmes in South Asia and Tanzania with a focus on urban resilience and climate change - for example we are working with the Government of Tanzania on flood risk management in urban areas.

We have also recently developed a new programme, which will enable DFID country offices to scale up their support to urban economic development in partner countries to create growth and jobs, and reduce poverty in urban areas. DFID will continue to develop and build on this work.

4.  It is important for DFID to use its influence with recipient governments to encourage them to focus on the investment climate especially to reduce corruption. We recommend that DFID maintain its focus on improving the enabling environment in the areas where it has its competitive advantage. (para. 7)

Agree

DFID is expanding work to improve the enabling environment for private sector investment as part of our scaled-up focus on economic development and in response to the findings of ongoing inclusive growth diagnostics exercise. Corruption considerations are closely integrated, including tackling the problem of poor economic and political governance which can disproportionately benefit elites and leave little room for the wider population to prosper.

DFID is well positioned to support investment climate reform. For example, we have our network of overseas country offices; extensive engagement with developing country governments and other partners; and close knowledge of local economic and political contexts. We are also able to draw on technical expertise from across HMG. In March 2015, we extended our support through the Investment Facility for Utilising UK Specialist Expertise (IFUSE) to fund short term deployments from over 20 other UK government departments and agencies to respond to demand from our development partners.

Engaging with business

5.  DFID has recognised that if it is to spend large sums on economic development and engage with the private sector, it needs to recruit people who have worked in that sector. We welcome the progress made, but recommend that DFID recruit people who have set up businesses themselves or have run businesses in developing countries to work in the private sector department. (para. 9)

Partially agree

DFID now has over 80 Private Sector Development Advisers. From the last (2013) skills audit of DFID's private sector development advisory cadre, over 80% of the cadre had worked directly for the private sector, bringing with them extensive business thinking and ways of working. One third of the cadre are "Staff Appointed in Country" to one of our Country Offices, who bring with them detailed understanding and experience of the business environments we operate in.

We have expanded the number of staff in our Private Sector Department from 18 in January 2011 to over 40. DFID has proportionately increased its staff intake of Private Sector Advisers with risk, finance and investment backgrounds, both within the Private Sector Department (PSD) and DFID more widely. A recent capability audit by Ernst and Young confirmed that we possess, or have access to, the appropriate and sufficient skills and capabilities.

In addition to direct recruitment from the private sector, we use a range of approaches to supplement our internal capability by drawing on external expertise. This includes contracting in, pro bono advice, inward and outward secondments, and drawing on our many business partnerships, including sector round tables, a CEO-level External Advisory Group and a corporate relationship management system with 23 key private sector partners.

6.  DFID must ensure it has put sufficient emphasis on economic growth which creates jobs and improves livelihoods. It needs to be open to working in a wide range of economic sectors which have the potential to create large numbers of jobs. This should include tourism and the creative industries. We recommend that DFID and the FCO make tourism a greater focus of its work, both in programmes which support the industry and in engaging with governments; this might include in Tanzania encouraging the Government to increase efforts to combat poaching. (para. 10)

Partially Agree

DFID's economic development framework includes prioritising growth in sectors that can generate quality jobs and transform the economy. The sectors to be supported and DFID's interventions will be informed by country-specific analysis.

In Tanzania, anti-poaching continues to be a DEFRA/FCO lead, and proposals to engage in tourism programmes will be shared with DEFRA/FCO to ensure alignment with their anti-poaching efforts. At the request of the Tanzania Natural Resources and Tourism Minister, the UK's CPS Criminal Justice Adviser is building capacity with prosecutors and the judiciary to combat Illegal Wildlife Trade (IWT). 

7.  The creation of decent jobs is important; working conditions can be improved without losing jobs, as the experience of the Bangladesh garment industry shows. We recommend that DFID insist that any multinational company receiving its funds respect international standards set out in the OECD Guidelines for Multinational Enterprises and that other companies fully respects local standards. (para. 11)

Partially agree

The UK adheres to the OECD Guidelines. The Guidelines align with DFID priorities in engaging with companies, including combating bribery; being diligent about employment conditions in their supply chains; respecting human rights; and protecting the environment.

DFID expects any multinational company we fund to act in line with the guidelines, but there is no channel through which we can insist on such behaviour. We do play a key role, by funding the operation of the UK National Contact Point (NCP), which promotes the Guidelines and provides access to remedy to those who may be adversely affected. It is recognised as a world leading NCP.

8.  We welcome the Secretary of State's commitment to review DFID's relationship with the International Labour Organisation as part of its reconsideration of the Multilateral Aid Review. In light of the much greater involvement of DFID in jobs we recommend that it should reinstate its core funding to the International Labour Organisation. (para. 11)

Partially agree

DFID recognises the importance of the international standards set out in the OECD Guidelines for Multinational Enterprises and agrees that multinational companies should be held accountable for compliance. The Secretary of State, Justine Greening, has agreed to assess whether ILO should be included in the Multilateral Aid Review.

9.  We recommend that as part of DFID's growth diagnostic consideration should be given to the presence or potential for forced labour, debt bondage and slavery in its priority countries. An explicit part of DFID's economic development programme in a country should be working to ensure labour contracts are freely entered into and the end of forced or bonded labour, on the understanding that this is a condition for economic development in the same way as secure property rights or access to capital. (para. 12)

Partially agree

The inclusive growth diagnostic sets out the context specific high level opportunities and constraints to inclusive growth across our partner countries. This will include consideration of forced labour, debt bondage and modern slavery issues where relevant, but these issues will also be addressed through DFID's broader country planning exercises (such as the country poverty reduction diagnostic).

DFID's work covers a broad range of activities that have a direct effect in making poor people less vulnerable to modern slavery - whether promoting responsible business and working with the private sector to improve labour standards, to promoting economic growth, and lifting poor people out of extreme poverty or making it possible for more children to go to school. Our 'Work in Freedom' Asia Anti-Trafficking programme, run in partnership with ILO, aims to prevent trafficking of women from South Asia in the domestic service and garment-manufacturing sectors.

10.  On our visits we saw several examples of DFID's productive involvement with private companies. However, our concerns from previous reports persist. DFID has to be careful not to distort the market by favouring one company over another. We welcome the Secretary of State's support for new forms of finance along the lines we recommended in our report on Development Finance. We look forward to seeing greater use of returnable and recyclable capital alongside more traditional grant aid develop further. (para. 13)

Agree

DFID's Economic Development Strategic Framework sets out DFID's intention to increase the use of investment instruments to stimulate private investment that benefits poor people. The Government welcomes the Committee's continued interest in investment instruments.

DFID recognises within this the risk of distorting the efficient functioning of markets. The Department has strengthened its approach by setting out the conditions when it is appropriate to provide public funding to the private sector to ensure public funds achieve maximum value for money and reduce the risk of distorting private markets.

11.  The majority of people working in developing countries are not in formal waged employment but are eking out a living in the informal economy. As one of our witnesses told us 'informal is now normal'. We recommend that DFID make working with those in the informal economy a priority. Social security funding should be extended to those in the informal economy along the lines of the National Social Security Fund in Tanzania. (para. 14)

Partially agree

The UK will continue to engage with the informal economy for example through support to small and medium-sized enterprises and the business environment and our work to improve access to land, finance and skills.

DFID already supports non-contributory social safety nets for the informal sector in a number of countries. We expect the expansion of contributory social safety nets to be considered by governments as they move from individual programmes to develop comprehensive social safety net systems. This expansion will depend on local resources and capacity and may require subsidisation to reach a significant number of informal sector households.

12.  We support DFID's focus on agriculture as the most likely sector to help raise people out of extreme poverty. It is a job intensive industry and the sector that most poor people currently work in. Agricultural processing and the food industry has the greatest potential for many African countries as the raw materials and market are local. We look forward to the publication of DFID's agricultural strategy and recommend that our successor Committee inquire into this new agricultural strategy in the next Parliament. (para. 15)

Agree

We are pleased to see the Committee endorse the focus on agriculture, recognising its potential at lifting people out of poverty, alongside other sectors. DFID intends to publish a summary policy framework on agriculture by the beginning of next year. We look forward to engaging with the Committee on it.

Marginalised groups

13.  We recommend that DFID think more creatively how it can support small organisations and charities doing exceptional work especially with marginalised groups such as women and girls in Lower Income Countries. (para. 16)

Agree

UK Aid Direct was launched in September 2014, recognising the important contribution that small organisations make to reducing poverty. They are able to reach poor and vulnerable people due to their unique ability to build relationships, trust and legitimacy, through their grassroots knowledge of needs in developing countries. £150m has been committed to UK Aid Direct to be allocated in funding rounds over 5 years, with grants continuing until at least 2022. UK Aid Direct has been designed to be more flexible and responsive in order to extend its impact and reach CSOs that have previously not received DFID funding.

14.  DFID needs specific interventions for marginalised groups if these groups are to benefit from wider economic growth. We welcome DFID's positive response to our report on disability. We recommend that DFID should help raise awareness of disability issues and the rights of people with disabilities within work as well as broader society. It should also work with national partners to share learning and expertise on creating inclusive work environments; accessible training and working facilities. (para. 17)

Agree

DFID supports a range of organisations that help businesses perform better on social and environmental contributions, such as ETI, Global Reporting Initiative (GRI) and Fairtrade. These organisations work with businesses to build and implement non-discrimination approaches, including disability. Last year DFID published a Disability Strategy for the first time. We will map and review these approaches, and survey the literature in order to summarise successful examples of disability inclusion in the workplace, which we will disseminate across DFID and with key stakeholders.

15.  Older people are increasingly the agricultural workers and decision makers in smallholder farming. DFID must ensure that its agricultural livelihoods programmes properly engage with all age groups and does not exclude older farmers. (para.18)

Agree

The Government is grateful to the Committee for their insights and observations of how DFID can improve the inclusivity of its agriculture programmes. DFID's focus is on helping meet the needs of all smallholder farmers, including women, younger and older farmers, and marginalised groups. Our agriculture policy framework identifies the constraints faced by these groups, and recommends that we address a range of discriminatory barriers - both formal and informal - such as legislation including land and property rights and social norms. This is in line with the principles set out under DFID's SMART rules. DFID' safety nets work also supports older people complementing livelihoods interventions.

16.  Women and girls carry a greater burden of unpaid domestic and care work than men, limiting their education and employment opportunities. We recommend that DFID take further steps to help lift this barrier. We recommend that DFID stress the importance of supporting women in business and giving them the same access to land and business rights as men.

Agree

Supporting women to own and control economic assets and run businesses are core objectives in DFID's work on economic empowerment of women and girls. Since 2010, our programmes in Rwanda, India and other countries have helped more than 2.5 million women to achieve secure land tenure.  We have funded the development of the Women, Business and Law database, which to raise awareness about laws and regulations that discriminate against women and prevent them from doing business. 

Key interventions through which we aim to tackle the issue of unpaid work include investment in time and labour saving infrastructure and technology, and supporting legislative reform to reduce and redistribute the burden of unpaid care work that falls on girls and women.  DFID is also investing in research to better understand the 'care economy' and the policy interventions that are likely to have the greatest impact on more productive participation of women in wage employment or profitable self-employment.

17.  Women are very reliable with money and returning money they have borrowed through micro-finance. We believe the key to micro-credit is to provide it alongside livelihood programmes as BRAC does. (para. 19)

Partially Agree

Access to affordable and responsible financial services is one of the ways to improve the employment opportunities and economic empowerment of women and girls.

The evidence on the impact of microcredit in reducing poverty is unclear. However, providing microcredit alongside livelihood programmes can be effective. For instance, it can mitigate the risk of partner violence that microcredit causes in some situations, at least in the short-term. This is because livelihood programmes are based on thorough assessments of social norms and support systems and can better address women's vulnerability around microcredit and income earnings. 

18.  Fertility rates remain high in many parts of Africa, exacerbating the problem on un- and under-employment. We are, therefore, surprised that DFID has reduced its spending on reproductive health. We recommend that expenditure in this area be significantly increased and that DFID assess whether the main problem is access to or attitudes towards contraception (para. 20)

Partially agree

We are on track to deliver on our commitments on reproductive health by the end of 2015. DFID invested almost £1.5 billion on population and reproductive health between 2010 and 2013. Our general spending on health increased from around £650 million in 2012 to nearly £1 billion in 2013, and this funding also contributed to reproductive health services.

Youth unemployment

[Given the importance of DFID's International Citizen Service programmes, we believe it is justified for them to be the subject of an inquiry either by ICAI or our successor Committee in the new Parliament so that their full effects can be evaluated.

The government is not expected to respond to this statement.]

19.  Youth unemployment is a great challenge and is a potential cause of social and political unrest. We recommend that DFID more explicitly target youth unemployment. We have seen examples of effective interventions, but have also received evidence about the need for improvement. Currently, donors, the private sector and developing country governments are not working together on a scale to even approach meeting the challenge. The work needs to be scaled up and a sense of urgency injected into the thinking and planning. (para 22).

Agree

Given the demographic profile of our countries, much of what DFID does is for young people. This is especially the case in fragile and conflict-affected states. In part, youth unemployment or underemployment reflects the wider jobs problems that developing countries face. But youth fare even worse against most employment indicators. We agree it is important to address the specific obstacles that youth face in transitioning from education to employment, thereby increasing economic opportunities.

We are grateful for the Committee in recognising the effective programmes that DFID has in this area. DFID's contribution to the World Bank Jobs Multi Donor Trust Fund will contribute to our understanding on youth employment and fragile and conflict-affected states.

20.  The majority of young people entering the labour market in developing countries will be self-employed and in informal employment. They need to be supported in this position as young entrepreneurs. DFID needs to ensure the education in schools is focused on creating the skills young people will need to enter the world of work especially self-employment. In rural areas schools should focus especially on agricultural skills for example animal husbandry. DFID should encourage recipient developing country governments to introduce sandwich courses in higher education institutions. (para. 23)



Agree

DFID is placing learning at the heart its education programmes.   We are working with Ministries of Education, international partners and non-state players to ensure that children who go to school learn basic foundation skills in literacy and numeracy.   These basic skills are the building blocks for future learning.   We are also promoting a stronger focus on developing "soft skills" at school (including team- working, communication and critical thinking).  In addition, we are expanding programmes on skills for work many of which include a component of "catch up learning in foundation skills, financial literacy and soft skills". .

We agree that the introduction of sandwich courses in higher education institutions is an effective way to improve their relevance and enhance graduate readiness for employment. DFID is scaling up support to higher education as an enabler for growth and development in low income countries.  We are launching a new Partnerships for Higher Education programme in 2015/16.  The programme will actively support the development of degrees and curricula, including the introduction of sandwich courses and better engagement from employers.

21.   In our Beyond Aid inquiry we stressed the importance of better policy coherence and in particular UK government departments working together. We again highlight the need for DFID to work with BIS on expanding its support to further and higher education in its priority countries. (para. 23). We also recommend a number of small, immediate, practical actions. We recommend that DFID officials meet with BIS officials to discuss which of the BIS youth programmes could be transferred to developing countries. (para. 24)

Agree

We agree with the importance of cross-HMG working and engage closely with BIS officials to deliver a joined up approach to improving higher education. DFID takes an active role in the Cross-Whitehall International Education group.   We also meet regularly with BIS officials from the International Knowledge and Innovation Unit and officials from UKTI Education to discuss areas of mutual interest and develop ideas for joint working. We will explore the possibility of transferring certain BIS youth programmes to developing countries and schedule meetings with relevant officials.

22.  To ensure it gives greater priority to youth unemployment, we recommend DFID creates the position of a senior adviser on youth employment. (para. 24)

Partially agree

DFID has established a Youth Task Team within the department to propose how DFID scales up its ambition on youth. Over 15 years, 600 million jobs are needed for people transitioning from education to working age. Youth employment is an important part of this work. The Youth Task Team works closely with other teams that lead on jobs and incomes including for young people, skills and fragile and conflict affected states. DFID will continue to check its staffing configuration on jobs including youth employment is effective, but without committing to a specific youth employment adviser.

23.  As the focus on this area becomes more acute there is an urgent need for far more data to be collected and examined to fully understand the problem and solutions so that targeted programs can be developed. We encourage DFID to work with organisations such as Peace Child International and Youth Business International to create and pilot innovative ways of collecting and measuring youth job creation data. (para. 24)

Partially agree

DFID appreciates that NGOs such as these have expertise in reaching the poorest. Generating better evidence on the impact of policies and interventions is also essential for understanding 'what works' in tackling youth employment.

DFID supports the Solutions for Youth Employment via the World Bank Jobs Multi Donor Trust Fund; this coalition of donors, NGOs and other partners develops evidence on innovative approaches to tackling youth employment. This work includes efforts to evaluate the impact of youth employment programmes such as the Nepal Employment Fund that provides an innovative solution to training with a special focus on young women.

[Jobs and livelihoods is such an important issue we recommend that our successor Committee takes it up in the next Parliament to assess what progress has been made.

The government is not expected to respond to this statement.]





 
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