South Africa’s municipal elections: A referendum on political parties and local democracy
On November 1, South Africans will go to the polls in the sixth round of local government elections since the country’s democratic transition in 1994. Voters will be able to choose among 60,000 candidates and more than 300 political parties to elect councilors for 257 municipalities.
Typically, local elections in sub-Saharan Africa rarely receive much attention. South Africa, however is an exception: Not only is it the region’s most decentralized country, so that local governments have substantive autonomy over services citizens care about, but it’s also a place where local elections are seen as a bellwether for party performance in the general elections. Notably, this electoral contest will be the first since the deadly riots that rocked the country back in July when supporters of the former president, Jacob Zuma, rebelled against his conviction for contempt of court when he failed to attend a corruption inquiry. In addition, with more than 60 percent of South Africa’s population classified as urban, control of the country’s eight large metropolitan areas (known as metros) provides both political leverage and economic clout.
How do the elections work?
South Africa operates a mixed member electoral system for municipal elections, meaning that half the seats on the councils are chosen through proportional representation—whereby the parties receive seats in proportion to the share of votes they receive—and half are chosen through a single-member constituency-based system so that individual candidates who receive the most votes in their ward gain their ward’s seat. In the metros, voters receive two ballots: one for a party and one for a ward councilor. In smaller cities and rural areas, voters also receive a third ballot to choose a party for a district municipality, which encompasses about four to six local municipalities and coordinates cross-boundary development issues. According to the Municipal Structures Act, the newly elected council then chooses an executive committee among their members, which in turn selects the mayor and deputy for the municipality. Compared to a system of direct elections for mayor by voters, this approach encourages more upward accountability to the party, causing the local elections to strongly reflect parties’ organizational capabilities and coherence.
Importance of the 2021 elections to South Africa’s political parties
In the 2016 elections, the African National Congress (ANC)—the leading political party since the end of apartheid in 1994—experienced massive local election losses for the first time ever. Some of the countries’ largest economic centers, including Johannesburg, Tshwane, and Nelson Mandela Bay, went to the opposition because the ANC could not obtain outright majorities and had to enter coalitions with other parties. Much of this shift could be attributed to the low popularity of then-President Jacob Zuma in the aftermath of the “State Capture” controversy and the “Fees Must Fall” protests across universities, as well as to the growing attraction of both the Democratic Alliance (DA) under the leadership at that time of Mmusi Maimane and the surprising endurance of the Economic Freedom Fighters (EFF) under the populist Julius Malema. For the 2021 elections, a poll by the public opinion company Ipsos showed that 49 percent of respondents intend to support the ANC on November 1, falling from the 53.9 percent the party obtained in the 2016 contest. This number is still massively higher than the DA and EFF—which respondents claim to support at 17.9 and 14.5 percent, respectively—but depending on the distribution of those votes and seat allocations, could leave the ANC again scrambling to gain majorities in the coveted metros.
Will this contest largely amount to a referendum on the ruling ANC and more importantly, for Cyril Ramaphosa’s presidency? The ruling party has intense competing factions, including a divide between pro-Zuma loyalists who could be implicated for corruption, and pro-Ramaphosa supporters who believe internal party reform is critical for regaining citizen support. Already, such rivalries have affected the ability of the ANC to agree on candidates to represent the party across more than 90 wards. More worryingly, they’ve contributed to large-scale political violence and several killings, mostly concentrated in Zuma’s stronghold of Kwa-Zulu Natal province.
The anti-Ramaphosa faction may be hoping that a poor showing will hurt the sitting president and allow others in the party to justify competing against him in the party’s national conference next December. His deputy vice president, David Mabuza, already has announced his intentions to compete against Ramaphosa at that conference. However, control of municipal councils provides the ANC with a huge source of patronage—particularly via access to municipal jobs for local-level party branch members. Therefore, if rivalries among party elites cost the ANC control of major councils, especially the metros, it could affect the party’s ability to retain support among the rank and file in the 2024 general elections.
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The electoral outcome will be equally consequential for the other two main opposition parties, the DA and EFF. The DA recently has faced a series of defections, including in 2019 by Maimane who created the Movement for One South Africa, and Herman Mashaba, the former mayor of Johannesburg, who established the Action South Africa party. Now under the leadership of John Steenhuisen, the party may not be able to break perceptions that it is mostly representative of white privilege and may not gain much ground beyond its traditional stronghold of Cape Town and the Western Province.
The EFF, which took away black votes from the ANC in 2016, could pose a bigger threat for the ruling party in Limpopo—Malema’s home province—and in Gauteng and Northwest. Reports indicate the EFF has gained much more financing for advertisements and handouts than were available in the previous local contest. However, the party’s growing popularity creates a challenge: Unlikely to win outright majorities in most councils, the EFF’s path to governing will rely on entering coalitions with one of the other two big parties. On the one hand, the party’s left-wing, nationalist platform contrasts sharply with the pro-market position of the DA. In fact, DA-EFF coalitions established after the 2016 elections ultimately crumbled in several councils because the two parties operate at opposite sides of the ideological spectrum. By the same token, Malema, who relishes attacking the ANC with his combative rhetoric and populist style, would be wary that a compromise with the ANC would alienate EFF supporters. On the other hand, without more substantive experience governing at the local level through such coalitions, it will be difficult for the EFF to gain widespread voter confidence in national elections.
Reinvigorating faith in local government
Perhaps more substantively than foreshadowing political parties’ electoral fortunes in 2024, the elections on November 1 are critical to strengthening local democracy and serve as a mechanism to encourage municipal governments to improve their performance. Based on recently released data from Afrobarometer that was collected in May-June of this year, close to 45 percent of South Africans claim they do “not at all” trust their local government council, and more than 60 percent disapprove or strongly disapprove of the performance of their elected local government councilor. Trust has declined over the last six years while disapproval rates remain stubbornly high (Figure 1). Moreover, South Africa continues to have the highest rates of distrust in local government across the continent, rivaling only more politically restricted regimes like Gabon, Morocco, and Sudan (Figure 2). This trend may paradoxically be due to the range of powers devolved to local governments combined with high expectations that voters have about their ability to deliver.
Figure 1. South Africans’ views on local government
Source: Afrobarometer, Rounds 8 (2021) and Round 6 (2015). Shares do not always total to 100 due to a small percentage of “don’t knows” or “refused to answer.”
Figure 2. Distribution of distrust of local government across Africa
Source: Author. Calculated from Round 7 of Afrobarometer (2018).Note: Countries in grey are those where Afrobarometer did not collect the data for the corresponding round.
Unfortunately, in the last several years, many of the municipal councils have become financially insolvent due to poor budgeting practices and substandard revenue collection. In fact, a report by the country’s auditor general revealed that the situation of one-quarter of municipalities was so dire that it was not clear how they could continue operating. Overall, the report gave only 27 of the country’s 257 councils a clean bill of health. Moreover, the electricity utility, Eskom, recently claimed that the municipalities owed it approximately $2.5 billion and accounted for 10 percent of its total debt. These dynamics, in turn, help explain why service delivery remains one of South Africans’ major grievances: In fact, there have been close to 100 protests and demonstrations over local service delivery in South Africa just since the start of 2021.
Conclusions
Globally, local elections do not lead to high turnout, especially nonconcurrent ones—an often-surprising trend given that most citizens’ engagement with their government is most directly at the local level. Encouragingly, again, South Africa contradicts common trends as it historically has had turnout rates of close to 60 percent in the last two local elections, and the assessment by Ipsos also confirms high levels of voter intentions despite the pandemic.
If the reality matches projections, November 1 will surely be a turning point for all the political parties: solidifying allies and enemies for Ramaphosa’s faction of the ANC, testing the DA’s ability to become a national party without a black leader, and signaling the EFF’s willingness to govern rather than simply oppose. Perhaps more importantly, however, it will serve as a warning sign from South Africans that on the local issues that most affect their everyday lives, they will continue to demand and expect better from their politicians.
What to expect around education at COP26
For the first two weeks of November, all eyes will be on Glasgow as the much-anticipated COP26—the 26th Conference of the Parties to the U.N. Convention on Climate Change—unfolds. While climate experts vary on their outlook for an optimistic outcome, one thing is clear: COP26 will be a deciding moment in our collective efforts to draw down greenhouse gas emissions and to adapt to the impacts of climate change.
World leaders still trying to recover from COVID-19-related setbacks will be looking for bold, transformative climate solutions that put countries on a more equitable path to sustainability.
One such solution that deserves more political attention is education, especially quality education that grounds discussions about climate change in science, transforms harmful social norms and power dynamics that increase the climate vulnerabilities of marginalized groups like women and girls, and connects learning outcomes with climate action and the achievement of climate justice.
As COP26 unfolds, what can we expect from Glasgow when it comes to advancing such education? Here are three things to keep your eyes on and to help amplify.
1. Expect a lot of (good) “noise” from the education sector.
Without a dedicated “day” for education on the COP26 agenda, civil society actors will attempt to draw attention to the important role of education for climate action through an impressive, decentralized roster of side events in the green and blue zones and other sidelines.
These events will add to an unprecedented surge this year in publications and advocacy by global education leaders highlighting the impact of climate change on children (especially girls), the role that education plays in increasing society’s adaptive capacity and climate resilience, and the lackluster progress being made by countries on education for climate action. These include reports published by EarthDay.org, Education International, Malala Fund (and a complementary report by Brookings), Plan International, Save the Children, UNESCO, and UNICEF, among others.
A positive outcome of this increased attention to climate change by the education sector will be the reverse mobilization, that is, increased attention to education by the climate sector.
2. Watch out for a “Glasgow Work Program” for action for climate empowerment.
2020 marked the end of the Doha Work Program, which aimed to guide countries’ implementation of education and training activities as laid out in Article 6 of the United Nations Framework Convention on Climate Change and Article 12 of the Paris Agreement on Action for Climate Empowerment (ACE). However, a lack of financing commitment by countries to support and implement the development of national ACE strategies means the Doha Work Program—the second ACE work program, running from 2012-2020—was less than effective. This has left ACE a little understood entry point for climate action and a low priority item for negotiations among world leaders.
On top of this, the COVID-19 pandemic sidetracked important momentum-building multilateral and bilateral dialogues that could have helped to create a critical mass of world leaders committed to a more ambitious and fully financed ACE work program. Such missed opportunities mean many ACE negotiators are heading to COP26 without clear incentives, mandates, and goals. Although ACE stakeholders have proposed options for a future work program (delegates are not coming to Glasgow to build the next ACE work program from scratch), the lack of political will around education for climate action threatens to set the new work program on a course to fail.
At this critical juncture in the climate crisis, cooperation rather than competition is needed to ensure our mutual survival—not just as a nascent education and climate sector, but also as present and future generations on this planet.
What we can hope for with the ACE negotiations is that delegates will reach a decision on a 10-year Glasgow Work Program that leans into the recommendations and calls to action by civil society; provides for sufficient funding and technical support, especially to developing countries; centers intergenerational equity, climate justice, and the rights of children and youth, girls and women, and indigenous peoples; aims for societywide empowerment and systemwide transformations; and holds governments accountable through data disaggregated by gender, age, and other relevant social and economic identifiers.
3. Lift up and connect with champions of education for climate action.
We may be witnessing the birth of a global climate and education sector—if not a tipping point in a global movement to strengthen the education sector’s role in climate action. The increasing number of “new” global education organizations arriving at the climate and education agenda, together with the unwavering energy of “older” environmental education and climate change education organizations, feels notably different than just under two years ago. But with few high-level champions at the helm, the possibilities for action seem both endless—unencumbered by political agendas and timelines—but also uncertain and temporary—without political weight. Will the fire fizzle out if financing to education for climate action does not materialize, or if world leaders continue to deprioritize education in favor of “climate-relevant” sectors like energy and transportation?
Short of high-level champions and without an Earth Fund centered solely on education, the sector must work together to lift itself up, identify ways to “do the work” regardless, and resist the internalized institutional urge for its members to compete against each other for resources. At this critical juncture in the climate crisis, cooperation rather than competition is needed to ensure our mutual survival—not just as a nascent education and climate sector, but also as present and future generations on this planet.
COP26 offers us an opportunity to identify and invite new education champions for climate action into “the tent.” We have two weeks to configure new connections among local and global actors, and a rapidly closing window thereafter to make a difference through our collective work. What are you waiting for? Let’s get started.
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What to expect around education at COP26
For the first two weeks of November, all eyes will be on Glasgow as the much-anticipated COP26—the 26th Conference of the Parties to the U.N. Convention on Climate Change—unfolds. While climate experts vary on their outlook for an optimistic outcome, one thing is clear: COP26 will be a deciding moment in our collective efforts to draw down greenhouse gas emissions and to adapt to the impacts of climate change.
World leaders still trying to recover from COVID-19-related setbacks will be looking for bold, transformative climate solutions that put countries on a more equitable path to sustainability.
One such solution that deserves more political attention is education, especially quality education that grounds discussions about climate change in science, transforms harmful social norms and power dynamics that increase the climate vulnerabilities of marginalized groups like women and girls, and connects learning outcomes with climate action and the achievement of climate justice.
As COP26 unfolds, what can we expect from Glasgow when it comes to advancing such education? Here are three things to keep your eyes on and to help amplify.
1. Expect a lot of (good) “noise” from the education sector.
Without a dedicated “day” for education on the COP26 agenda, civil society actors will attempt to draw attention to the important role of education for climate action through an impressive, decentralized roster of side events in the green and blue zones and other sidelines.
These events will add to an unprecedented surge this year in publications and advocacy by global education leaders highlighting the impact of climate change on children (especially girls), the role that education plays in increasing society’s adaptive capacity and climate resilience, and the lackluster progress being made by countries on education for climate action. These include reports published by EarthDay.org, Education International, Malala Fund (and a complementary report by Brookings), Plan International, Save the Children, UNESCO, and UNICEF, among others.
A positive outcome of this increased attention to climate change by the education sector will be the reverse mobilization, that is, increased attention to education by the climate sector.
2. Watch out for a “Glasgow Work Program” for action for climate empowerment.
2020 marked the end of the Doha Work Program, which aimed to guide countries’ implementation of education and training activities as laid out in Article 6 of the United Nations Framework Convention on Climate Change and Article 12 of the Paris Agreement on Action for Climate Empowerment (ACE). However, a lack of financing commitment by countries to support and implement the development of national ACE strategies means the Doha Work Program—the second ACE work program, running from 2012-2020—was less than effective. This has left ACE a little understood entry point for climate action and a low priority item for negotiations among world leaders.
On top of this, the COVID-19 pandemic sidetracked important momentum-building multilateral and bilateral dialogues that could have helped to create a critical mass of world leaders committed to a more ambitious and fully financed ACE work program. Such missed opportunities mean many ACE negotiators are heading to COP26 without clear incentives, mandates, and goals. Although ACE stakeholders have proposed options for a future work program (delegates are not coming to Glasgow to build the next ACE work program from scratch), the lack of political will around education for climate action threatens to set the new work program on a course to fail.
At this critical juncture in the climate crisis, cooperation rather than competition is needed to ensure our mutual survival—not just as a nascent education and climate sector, but also as present and future generations on this planet.
What we can hope for with the ACE negotiations is that delegates will reach a decision on a 10-year Glasgow Work Program that leans into the recommendations and calls to action by civil society; provides for sufficient funding and technical support, especially to developing countries; centers intergenerational equity, climate justice, and the rights of children and youth, girls and women, and indigenous peoples; aims for societywide empowerment and systemwide transformations; and holds governments accountable through data disaggregated by gender, age, and other relevant social and economic identifiers.
3. Lift up and connect with champions of education for climate action.
We may be witnessing the birth of a global climate and education sector—if not a tipping point in a global movement to strengthen the education sector’s role in climate action. The increasing number of “new” global education organizations arriving at the climate and education agenda, together with the unwavering energy of “older” environmental education and climate change education organizations, feels notably different than just under two years ago. But with few high-level champions at the helm, the possibilities for action seem both endless—unencumbered by political agendas and timelines—but also uncertain and temporary—without political weight. Will the fire fizzle out if financing to education for climate action does not materialize, or if world leaders continue to deprioritize education in favor of “climate-relevant” sectors like energy and transportation?
Short of high-level champions and without an Earth Fund centered solely on education, the sector must work together to lift itself up, identify ways to “do the work” regardless, and resist the internalized institutional urge for its members to compete against each other for resources. At this critical juncture in the climate crisis, cooperation rather than competition is needed to ensure our mutual survival—not just as a nascent education and climate sector, but also as present and future generations on this planet.
COP26 offers us an opportunity to identify and invite new education champions for climate action into “the tent.” We have two weeks to configure new connections among local and global actors, and a rapidly closing window thereafter to make a difference through our collective work. What are you waiting for? Let’s get started.
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Figure of the week: Education participation rates in Africa increase, with some caveats
On September 18, the African Union, in collaboration with the United Nations Children’s Fund (UNICEF) released the report, “Transforming Education in Africa,” an evidence-based overview of education in the region. The report highlights progress the continent has made on education indicators, such as participation rates, while also illustrating challenges that remain. As Africa has the youngest population in the world—nearly 800 million Africans are under the age of 25, with 677 million between ages 3 and 24—accelerating investment in education is vital for countries to take full benefit of their human capital.
Overall, the report reveals both progress and regression when it comes to education in the region. For example, although Africa has made progress in increasing children’s participation in school (Figure 1), the authors speculate that the absolute number of out-of-school children has actually increased since 2010, given rapid population growth.
Figure 1. Share of out-of-school children in Africa, by age group
Source: “Transforming Education in Africa,” African Union, 2021.
More specifically, according to the report, approximately 42 million children of primary and secondary school age are not enrolled in school. Regionally, western Africa accounts for the highest number of out-of-school children: 2 out of 5 out-of-school children in sub-Saharan Africa live in western Africa (Figure 2). Eastern Africa follows with 34 percent of Africa’s out-of-school children.
Figure 2. Distribution of out-of-school children of primary and secondary school age in Africa by region
Source: “Transforming Education in Africa,” African Union, 2021.
More specifically, in western Africa, 27 percent of primary school-age children, 37 percent of lower-secondary school-age children, and 56 percent of upper-secondary school-age children were not enrolled in school in 2019.
The report states that bottlenecks and barriers to improving education include broader educational policies and legal frameworks and conflict and security. Specifically, within policies and legal frameworks, the authors state that, although basic education is usually compulsory, legal measures for implementation are lacking, which creates a disconnect between expected learning outcomes and effective implementation of cost-effective interventions. Demand barriers, such as the imbalance between education and labor needs can prevent children attending school on a regular basis, hindering education improvement. On the supply side, teacher shortages can lead to large class sizes where child-centered learning is difficult. Finally, conflict and insecurity situations, especially when learning institutions are targeted, inhibit children from having access to learning.
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To combat these barriers the authors recommend, among other actions, investigating the underlying reasons individuals fail to participate in education to design policy, investing in development of more resilient education systems, and improving education data and management information systems. The authors state that a substantial number of students drop out of school. Investigating the reasoning behind this could aid in policy creation that motivates students to stay in school. To address lack of resiliency in education systems, the authors say that taking a well-rounded approach that includes assessment, management, and monitoring and evaluation tools will aid in making sure that education systems function continuously. Finally, the authors state that evidenced-based information is key to education systems making progress, and so encourage further research.
For the full report, see here. Also check out “Improving learning and life skills for marginalized children: Scaling the Learner Guide Program in Tanzania” by the Brookings Institution’s Center for Universal Education for more on innovations in education in the region.
Figure of the week: Education participation rates in Africa increase, with some caveats
On September 18, the African Union, in collaboration with the United Nations Children’s Fund (UNICEF) released the report, “Transforming Education in Africa,” an evidence-based overview of education in the region. The report highlights progress the continent has made on education indicators, such as participation rates, while also illustrating challenges that remain. As Africa has the youngest population in the world—nearly 800 million Africans are under the age of 25, with 677 million between ages 3 and 24—accelerating investment in education is vital for countries to take full benefit of their human capital.
Overall, the report reveals both progress and regression when it comes to education in the region. For example, although Africa has made progress in increasing children’s participation in school (Figure 1), the authors speculate that the absolute number of out-of-school children has actually increased since 2010, given rapid population growth.
Figure 1. Share of out-of-school children in Africa, by age group
Source: “Transforming Education in Africa,” African Union, 2021.
More specifically, according to the report, approximately 42 million children of primary and secondary school age are not enrolled in school. Regionally, western Africa accounts for the highest number of out-of-school children: 2 out of 5 out-of-school children in sub-Saharan Africa live in western Africa (Figure 2). Eastern Africa follows with 34 percent of Africa’s out-of-school children.
Figure 2. Distribution of out-of-school children of primary and secondary school age in Africa by region
Source: “Transforming Education in Africa,” African Union, 2021.
More specifically, in western Africa, 27 percent of primary school-age children, 37 percent of lower-secondary school-age children, and 56 percent of upper-secondary school-age children were not enrolled in school in 2019.
The report states that bottlenecks and barriers to improving education include broader educational policies and legal frameworks and conflict and security. Specifically, within policies and legal frameworks, the authors state that, although basic education is usually compulsory, legal measures for implementation are lacking, which creates a disconnect between expected learning outcomes and effective implementation of cost-effective interventions. Demand barriers, such as the imbalance between education and labor needs can prevent children attending school on a regular basis, hindering education improvement. On the supply side, teacher shortages can lead to large class sizes where child-centered learning is difficult. Finally, conflict and insecurity situations, especially when learning institutions are targeted, inhibit children from having access to learning.
Related Content
To combat these barriers the authors recommend, among other actions, investigating the underlying reasons individuals fail to participate in education to design policy, investing in development of more resilient education systems, and improving education data and management information systems. The authors state that a substantial number of students drop out of school. Investigating the reasoning behind this could aid in policy creation that motivates students to stay in school. To address lack of resiliency in education systems, the authors say that taking a well-rounded approach that includes assessment, management, and monitoring and evaluation tools will aid in making sure that education systems function continuously. Finally, the authors state that evidenced-based information is key to education systems making progress, and so encourage further research.
For the full report, see here. Also check out “Improving learning and life skills for marginalized children: Scaling the Learner Guide Program in Tanzania” by the Brookings Institution’s Center for Universal Education for more on innovations in education in the region.
6 job quality metrics every company should know
Today’s labor shortages make it an auspicious moment for companies ready to measure and improve labor conditions. To do so, corporate boards and management need a clear way to manage retention by understanding its link to job quality.
The economic recovery from the COVID-19 pandemic has created a uniquely tight labor market with millions of unfilled job postings.1 Though shutdowns and business restrictions hit low-wage workers especially hard, evidence suggests that, in this recovery, they have options.2 Many low- and high-wage workers alike have seized the moment and quit their jobs in search of higher quality work and economic mobility.3
Employers who have seen workers leave and who have been unable to rehire feel the costs of attrition. For example, one large food distributor found the labor crunch reduced their ability to respond to customers’ demand, which led to cuts in production, distribution routes, and ultimately lost market share. Stories like this show how dramatic costs can explicitly result—in a short timeframe—from poor working conditions and high turnover.
As a result, many companies find they are playing catch-up to their competitors who made employee retention and well-being a priority years ago.4 Beyond the promise of higher returns to companies with positive culture and high rates of retention, forward-looking companies may benefit from taking steps now in anticipation of the growing call for SEC mandated human capital disclosures.5
Additional disclosures, by way of Environmental, Social and Governance (ESG) indicators, are meant to hold companies accountable toward socially beneficial goals—from reducing carbon footprints to promoting economic inclusion. The indicators proposed here are ideal contributors to the “S” in ESG, social impact, as they track companies’ progress in countering trends that have eroded workers’ well-being: a lack of good paying, stable jobs, and limited and inequitable mobility.
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This report provides simple, evidence-based outcome metrics that promote good quality jobs. Different companies will tackle the metrics differently depending on their industry structure and creativity of their management. Regardless, an important starting point is clarity about which metrics matter when it comes to improving job quality and how to measure progress against them.
In the U.S. labor market, many workers churn from one low-paid, low-quality job to the next.6 Despite their willingness to work hard, workers find it difficult or impossible to advance. And across all sectors of the economy, historical inequities continue to drive down wages and economic mobility of female, Black, and Hispanic workers.7
Data gathering can help determine whether progress toward these challenges, captured in these metrics, also leads to cost savings in hiring, retention, and overall performance. This way, progress at the firm level can also lead toward greater shared prosperity; the metrics below are a first step in that direction.
Key metrics: Job quality, mobility, and equity
Metrics overview and rationale
Job quality
In the last decades, low wage work has become increasingly pervasive and precarious, and at the same time stagnant wages have left many full-time workers unable to afford basic living expenses, forcing them to work multiple jobs. Many have little cushion for emergencies, leading to constant churn and short job tenures.
To track their social impact on job quality, companies can measure the share of their workforce paid living wages and with healthcare. The living wage depends on the cost of housing, health insurance, childcare, and other necessities. The national living wage is $16.54 an hour.8 We estimate that in 2019, 29 percent of workers earned a living wage, accounting for geographical differences in the cost of living.9
Likewise, unexpected health-related expenses can spell disaster for uninsured workers. Healthcare is an important component of job quality as it promotes stability and facilitates mobility. Nine percent of workers in 2019 did not have health insurance.10
Improving wages may seem like an intractable proposition in tight margin industries. However, some companies have made bold commitments, such as Bank of America, which last year raised its minimum wage to $20 an hour.11 The bank and other companies such as Google and Microsoft have also shown willingness to raise wages of workers employed by their vendors, allowing companies that provide food and janitorial services, for example, to pass on the cost of wage increases to their more community focused customers. Other companies are experimenting with profit sharing agreements for employees across the wage spectrum.12 Profit sharing strategies can increase worker engagement particularly when workers already earn more than a living wage. Whatever the strategy, and despite perceived limited flexibility when it comes to wages, measuring outcomes can help identify strategies for progress that also make business sense.
Job quality metrics
1. What percent of workers earn a living wage, as defined by their geographical location?13 How many have healthcare?
2. How many new jobs are created each year in each quintile with a living wage?
Economic mobility
Many low-wage workers churn from one low-wage job to the next, seeing little wage growth. Research shows that ‘stepping stone’ jobs that have historically helped workers transition from low to high wages are becoming a smaller share of all jobs.14 Companies that have more of these stepping stone jobs are not only contributing to a robust middle class and more stable workforce, but also can benefit from a more diverse pipeline of entry level workers and improved retention. Increasing internal mobility can also be good for a company’s bottom line, since internal hires are often less expensive and more productive than external hires.15
Internal promotions are not the only way workers move up. The organizational structure of a company may make it impractical to expect every frontline worker be able to move up internally. This will be increasingly the case as firms outsource low-wage work to contract firms that can offer little mobility to their workers. Companies that help low-wage workers transition to higher wages even when they leave the company can also make a company more attractive to prospective employees. Walmart’s recent program offering trade skills (among them plumbing certificates) is a bet in that direction.16
Companies can improve mobility rates by paying higher wages, offering training opportunities and unlocking barriers to more promising jobs.17 Doing so can attract talent, alleviate workers’ competing stressors and increase their skillsets; in turn, they can work more autonomously and be more productive.18
Rapidly churning through jobs makes it difficult for workers to accumulate the know-how required for experience to translate to better opportunities. Rapid churn also makes workers expensive to companies. Increasing a worker’s minimum tenure at a company can translate into upward economic mobility—though very long tenures can also result in stagnation. Mobility rates tend to grow over a low-wage worker’s first three years with a company before falling thereafter.19 In turn, lower turnover rates, decreased absenteeism, and lower replacement costs all help a company’s bottom line.20
Economic mobility metrics
3. What percentage of workers that started in the lowest paid quintile (those that make less than $12.31 an hour) moved to above living wage ($16.54 an hour) each year?21
4. What percentage of your lowest paid workers left before the one-year mark? How many left before the two year mark?
Job equity
Gender and racial inequities appear in both the share of workers in high-quality, high-paying jobs and in the share of workers who see economic mobility.
Research into “occupational segregation” has long shown that women, Black, and Hispanic workers are often disproportionately underrepresented in higher-paying occupations. Due to their underrepresentation in the highest quintile of occupations, we estimate that women, Black, and Hispanic workers annually underearn by $106 billion, $153 billion, and $310 billion, respectively.22
Many companies have set representation goals for themselves for diversity at the board and different levels of the organization. But they often find themselves competing for a small pool of diverse talent within their company. Using the right metrics can help by breaking down the problem to look at the talent building process.
For example, to unlock diversity at the top, managers may want to look at mobility rates in their company across demographics. Across the economy, we find race and gender mobility gaps hold some workers back. When female, Black, and Hispanic workers switch occupations, they move up less often than their male, white, and Asian counterparts. These mobility gaps are only partly explained by workers’ education levels, for the gaps persist even among highly educated workers.
This type of analysis can also help firms diversify their highest paid occupations, specifically if they can diversify the pipeline of entry-level positions and unlock bottlenecks to make sure all workers progress through the company. Our research shows that some barriers to economic mobility exist along specific pathways from one occupation to the next. Even well-traveled pathways from low- to mid- and high-wage work are marked by racial, ethnic, and gender disparities. Pinpointing exactly where these barriers exist within a company is the first step to alleviating them. (See example below.)
How companies can make mobility gaps actionable: Unlocking pathways to high-paying jobs in healthcare
Companies can measure the most frequent sources of promotion for their workforce. For example, a grocery retailer might examine the pathway from grocery bagger to cashier to assistant manager. They can look at the rates of promotion at each step and then compare the rates of different groups. The example below shows a common pathway in the healthcare sector. It shows how mobility rates vary between white, Black, and Hispanic workers as they transition from licensed practical nurses (LPNs) to registered nurses. White LPNs move up to nurses at twice the rate of Black and Hispanic LPNs.
Job equity metrics
5. What is the demographic composition in the company’s high-wage occupations? How does it compare to that of the labor force in your region?
6. What are the mobility gaps in each of the company’s wage quintiles?
The key metrics highlighted above are important for companies to track because they connect directly to labor market trends that affect workers’ access to good jobs, mobility, and equity. Managers that are able to measure and track progress across them are likely to see increased job quality and the engagement and loyalty it engenders. Broad adoption of the metrics will also add to the evidence base for successful practices and their impact on performance—ultimately contributing to an effective human capital disclosure scheme that constantly adapts and improves with the times.
The Job Quality Metrics project includes Ethan Rouen, Natalie Geismar, Jay Garg, and Ian Seyal. It is informed by a working group in 17 Rooms and part of Leadership Now’s Business for Racial Equity Pledge signed by more than 1,000 private sector leaders.
Expanded list of workforce composition questions and company metrics
To get started, below is a tailored set of practical and actionable metrics that most companies can realistically begin measuring and tracking. Compiling workforce metrics will allow firms to track metrics on job quality, mobility, and equity; assess their baseline, measure impact, and set goals accordingly.
Workforce composition metrics
Total number of workers (including full-time, part-time, and contract workers)
Percent of workers, by wage quintile, who are full-time employees, part-time employees, and contract workers
Gender and racial breakdown of employees at each wage quintile
Gender and racial breakdown of employees in each job title, occupation, or job level
Breakdown of educational attainment for each wage quintile
Corporate EBITDA and revenue (to assess impact of metrics on firm performance)
Job quality metrics
Percent of workers, by wage quintile, with a living wage, as defined by their geographical location, and employer-sponsored healthcare benefits
Number of new jobs created by wage quintile.
Number of new jobs created with a living wage and healthcare benefits by wage quintile
Median annual wage, by wage quintile
Median training expenditure per year per employee, by wage quintile
Median training expenditure per employee, excluding job-related trainings (e.g., compliance training), by wage quintile
Economic mobility and job equity metrics
What percentage of workers that started in the lowest paid quintile (those that make less than $12.31 an hour) moved to above living wage ($16.54 an hour) each year?
What percentage of your lowest paid workers crossed the one-year mark? How many crossed the two-year mark?
Internal promotion rate, by wage quintile, race, and gender
Horizontal job change rate, by wage quintile
Average wage gain per promotion, by wage quintile
Voluntary and involuntary turnover rate, by wage quintile, race, and gender
Number of jobs posted that do not require a bachelor’s degree (BA) and the percentage of those postings actually filled by workers without BAs
Qualitative practices
Presence of rotational or cross-training programs to promote learning new skills
Presence of internship, mentorship, and/or apprenticeship programs
Presence of career development programming, through HR or other sources
Does your company consider the work practices of contracted (B2B) companies and/or vendors? If so, how?
Are open positions promoted internally through internal job boards or other mechanisms?
Tracking common occupation pathways within the company (see the example above on unlocking pathways in healthcare)
Do senior employees participate in creating curricula with external reskilling organizations (community colleges, non-profits, vendors) for entry-level positions or mid-level roles?
Do you follow workers after they leave, did they receive a wage upgrade?
6 job quality metrics every company should know
Today’s labor shortages make it an auspicious moment for companies ready to measure and improve labor conditions. To do so, corporate boards and management need a clear way to manage retention by understanding its link to job quality.
The economic recovery from the COVID-19 pandemic has created a uniquely tight labor market with millions of unfilled job postings.1 Though shutdowns and business restrictions hit low-wage workers especially hard, evidence suggests that, in this recovery, they have options.2 Many low- and high-wage workers alike have seized the moment and quit their jobs in search of higher quality work and economic mobility.3
Employers who have seen workers leave and who have been unable to rehire feel the costs of attrition. For example, one large food distributor found the labor crunch reduced their ability to respond to customers’ demand, which led to cuts in production, distribution routes, and ultimately lost market share. Stories like this show how dramatic costs can explicitly result—in a short timeframe—from poor working conditions and high turnover.
As a result, many companies find they are playing catch-up to their competitors who made employee retention and well-being a priority years ago.4 Beyond the promise of higher returns to companies with positive culture and high rates of retention, forward-looking companies may benefit from taking steps now in anticipation of the growing call for SEC mandated human capital disclosures.5
Additional disclosures, by way of Environmental, Social and Governance (ESG) indicators, are meant to hold companies accountable toward socially beneficial goals—from reducing carbon footprints to promoting economic inclusion. The indicators proposed here are ideal contributors to the “S” in ESG, social impact, as they track companies’ progress in countering trends that have eroded workers’ well-being: a lack of good paying, stable jobs, and limited and inequitable mobility.
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This report provides simple, evidence-based outcome metrics that promote good quality jobs. Different companies will tackle the metrics differently depending on their industry structure and creativity of their management. Regardless, an important starting point is clarity about which metrics matter when it comes to improving job quality and how to measure progress against them.
In the U.S. labor market, many workers churn from one low-paid, low-quality job to the next.6 Despite their willingness to work hard, workers find it difficult or impossible to advance. And across all sectors of the economy, historical inequities continue to drive down wages and economic mobility of female, Black, and Hispanic workers.7
Data gathering can help determine whether progress toward these challenges, captured in these metrics, also leads to cost savings in hiring, retention, and overall performance. This way, progress at the firm level can also lead toward greater shared prosperity; the metrics below are a first step in that direction.
Key metrics: Job quality, mobility, and equity
Metrics overview and rationale
Job quality
In the last decades, low wage work has become increasingly pervasive and precarious, and at the same time stagnant wages have left many full-time workers unable to afford basic living expenses, forcing them to work multiple jobs. Many have little cushion for emergencies, leading to constant churn and short job tenures.
To track their social impact on job quality, companies can measure the share of their workforce paid living wages and with healthcare. The living wage depends on the cost of housing, health insurance, childcare, and other necessities. The national living wage is $16.54 an hour.8 We estimate that in 2019, 29 percent of workers earned a living wage, accounting for geographical differences in the cost of living.9
Likewise, unexpected health-related expenses can spell disaster for uninsured workers. Healthcare is an important component of job quality as it promotes stability and facilitates mobility. Nine percent of workers in 2019 did not have health insurance.10
Improving wages may seem like an intractable proposition in tight margin industries. However, some companies have made bold commitments, such as Bank of America, which last year raised its minimum wage to $20 an hour.11 The bank and other companies such as Google and Microsoft have also shown willingness to raise wages of workers employed by their vendors, allowing companies that provide food and janitorial services, for example, to pass on the cost of wage increases to their more community focused customers. Other companies are experimenting with profit sharing agreements for employees across the wage spectrum.12 Profit sharing strategies can increase worker engagement particularly when workers already earn more than a living wage. Whatever the strategy, and despite perceived limited flexibility when it comes to wages, measuring outcomes can help identify strategies for progress that also make business sense.
Job quality metrics
1. What percent of workers earn a living wage, as defined by their geographical location?13 How many have healthcare?
2. How many new jobs are created each year in each quintile with a living wage?
Economic mobility
Many low-wage workers churn from one low-wage job to the next, seeing little wage growth. Research shows that ‘stepping stone’ jobs that have historically helped workers transition from low to high wages are becoming a smaller share of all jobs.14 Companies that have more of these stepping stone jobs are not only contributing to a robust middle class and more stable workforce, but also can benefit from a more diverse pipeline of entry level workers and improved retention. Increasing internal mobility can also be good for a company’s bottom line, since internal hires are often less expensive and more productive than external hires.15
Internal promotions are not the only way workers move up. The organizational structure of a company may make it impractical to expect every frontline worker be able to move up internally. This will be increasingly the case as firms outsource low-wage work to contract firms that can offer little mobility to their workers. Companies that help low-wage workers transition to higher wages even when they leave the company can also make a company more attractive to prospective employees. Walmart’s recent program offering trade skills (among them plumbing certificates) is a bet in that direction.16
Companies can improve mobility rates by paying higher wages, offering training opportunities and unlocking barriers to more promising jobs.17 Doing so can attract talent, alleviate workers’ competing stressors and increase their skillsets; in turn, they can work more autonomously and be more productive.18
Rapidly churning through jobs makes it difficult for workers to accumulate the know-how required for experience to translate to better opportunities. Rapid churn also makes workers expensive to companies. Increasing a worker’s minimum tenure at a company can translate into upward economic mobility—though very long tenures can also result in stagnation. Mobility rates tend to grow over a low-wage worker’s first three years with a company before falling thereafter.19 In turn, lower turnover rates, decreased absenteeism, and lower replacement costs all help a company’s bottom line.20
Economic mobility metrics
3. What percentage of workers that started in the lowest paid quintile (those that make less than $12.31 an hour) moved to above living wage ($16.54 an hour) each year?21
4. What percentage of your lowest paid workers left before the one-year mark? How many left before the two year mark?
Job equity
Gender and racial inequities appear in both the share of workers in high-quality, high-paying jobs and in the share of workers who see economic mobility.
Research into “occupational segregation” has long shown that women, Black, and Hispanic workers are often disproportionately underrepresented in higher-paying occupations. Due to their underrepresentation in the highest quintile of occupations, we estimate that women, Black, and Hispanic workers annually underearn by $106 billion, $153 billion, and $310 billion, respectively.22
Many companies have set representation goals for themselves for diversity at the board and different levels of the organization. But they often find themselves competing for a small pool of diverse talent within their company. Using the right metrics can help by breaking down the problem to look at the talent building process.
For example, to unlock diversity at the top, managers may want to look at mobility rates in their company across demographics. Across the economy, we find race and gender mobility gaps hold some workers back. When female, Black, and Hispanic workers switch occupations, they move up less often than their male, white, and Asian counterparts. These mobility gaps are only partly explained by workers’ education levels, for the gaps persist even among highly educated workers.
This type of analysis can also help firms diversify their highest paid occupations, specifically if they can diversify the pipeline of entry-level positions and unlock bottlenecks to make sure all workers progress through the company. Our research shows that some barriers to economic mobility exist along specific pathways from one occupation to the next. Even well-traveled pathways from low- to mid- and high-wage work are marked by racial, ethnic, and gender disparities. Pinpointing exactly where these barriers exist within a company is the first step to alleviating them. (See example below.)
How companies can make mobility gaps actionable: Unlocking pathways to high-paying jobs in healthcare
Companies can measure the most frequent sources of promotion for their workforce. For example, a grocery retailer might examine the pathway from grocery bagger to cashier to assistant manager. They can look at the rates of promotion at each step and then compare the rates of different groups. The example below shows a common pathway in the healthcare sector. It shows how mobility rates vary between white, Black, and Hispanic workers as they transition from licensed practical nurses (LPNs) to registered nurses. White LPNs move up to nurses at twice the rate of Black and Hispanic LPNs.
Job equity metrics
5. What is the demographic composition in the company’s high-wage occupations? How does it compare to that of the labor force in your region?
6. What are the mobility gaps in each of the company’s wage quintiles?
The key metrics highlighted above are important for companies to track because they connect directly to labor market trends that affect workers’ access to good jobs, mobility, and equity. Managers that are able to measure and track progress across them are likely to see increased job quality and the engagement and loyalty it engenders. Broad adoption of the metrics will also add to the evidence base for successful practices and their impact on performance—ultimately contributing to an effective human capital disclosure scheme that constantly adapts and improves with the times.
The Job Quality Metrics project includes Ethan Rouen, Natalie Geismar, Jay Garg, and Ian Seyal. It is informed by a working group in 17 Rooms and part of Leadership Now’s Business for Racial Equity Pledge signed by more than 1,000 private sector leaders.
Expanded list of workforce composition questions and company metrics
To get started, below is a tailored set of practical and actionable metrics that most companies can realistically begin measuring and tracking. Compiling workforce metrics will allow firms to track metrics on job quality, mobility, and equity; assess their baseline, measure impact, and set goals accordingly.
Workforce composition metrics
Total number of workers (including full-time, part-time, and contract workers)
Percent of workers, by wage quintile, who are full-time employees, part-time employees, and contract workers
Gender and racial breakdown of employees at each wage quintile
Gender and racial breakdown of employees in each job title, occupation, or job level
Breakdown of educational attainment for each wage quintile
Corporate EBITDA and revenue (to assess impact of metrics on firm performance)
Job quality metrics
Percent of workers, by wage quintile, with a living wage, as defined by their geographical location, and employer-sponsored healthcare benefits
Number of new jobs created by wage quintile.
Number of new jobs created with a living wage and healthcare benefits by wage quintile
Median annual wage, by wage quintile
Median training expenditure per year per employee, by wage quintile
Median training expenditure per employee, excluding job-related trainings (e.g., compliance training), by wage quintile
Economic mobility and job equity metrics
What percentage of workers that started in the lowest paid quintile (those that make less than $12.31 an hour) moved to above living wage ($16.54 an hour) each year?
What percentage of your lowest paid workers crossed the one-year mark? How many crossed the two-year mark?
Internal promotion rate, by wage quintile, race, and gender
Horizontal job change rate, by wage quintile
Average wage gain per promotion, by wage quintile
Voluntary and involuntary turnover rate, by wage quintile, race, and gender
Number of jobs posted that do not require a bachelor’s degree (BA) and the percentage of those postings actually filled by workers without BAs
Qualitative practices
Presence of rotational or cross-training programs to promote learning new skills
Presence of internship, mentorship, and/or apprenticeship programs
Presence of career development programming, through HR or other sources
Does your company consider the work practices of contracted (B2B) companies and/or vendors? If so, how?
Are open positions promoted internally through internal job boards or other mechanisms?
Tracking common occupation pathways within the company (see the example above on unlocking pathways in healthcare)
Do senior employees participate in creating curricula with external reskilling organizations (community colleges, non-profits, vendors) for entry-level positions or mid-level roles?
Do you follow workers after they leave, did they receive a wage upgrade?
Why we need increased investment in food and agriculture in developing countries and international organizations that support them
The Sustainable Development Goals are off track. The prospects of the SDGs being realized by 2030 are bleak. The rapid pace of consistent decline in poverty and hunger until 2015 had slowed even before COVID-19. Often overlooked is the fact that much of that reduction in poverty and hunger occurred in China and Southeast Asia. A once-in-a-century global tragedy, COVID has been particularly hard on the world’s poor, compounded by severe impacts of climate change. Migrant labor has returned to rural areas and structural transformation has registered a big setback, particularly in countries in South Asia and sub-Saharan Africa already lagging in movements out of agriculture. The result is increasing dependence of vulnerable populations on agricultural and rural employment. Decline in child mortality and other indicators of child poverty have similarly slowed, concurrently with a slower dietary transition in the patterns of food consumption. Incidence of obesity is growing and is associated with consumption of cheap junk food. The consequence is increased incidence of noncommunicable diseases such as cancer, diabetes, and heart disease.
To address these complex challenges, strengthened international cooperation backed by financial resources is more urgent than ever. Since their establishment, five big international organizations have played key roles in contributing to food and agricultural development: The World Bank and International Development Organization have been the largest source of investment in food and agriculture; the Food and Agriculture Organization of the United Nations is the only organization with a holistic mandate for food, agriculture, natural resources, information, norms and standards; the World Food Program is the largest humanitarian organization for emergencies logistics, delivery of food or cash in a situation where the number of displaced people has skyrocketed to 75 million; CGIAR is the largest scientific organization for research on food security (lately including nutrition); the International Fund for Agricultural Development’s investment focus is on marginal populations and women.
But collectively their resources are now miniscule compared to the trillions of dollars needed annually in investments to achieve transformational change in food and agriculture to reduce poverty and hunger. While developing-countries’ own resources are increasingly important, they are also nowhere near sufficient for such transformational change.
Related Content
In a just issued, freely downloadable book, “Food for All: International Organizations and the Transformation of Agriculture” published by Oxford University Press (September 2021), Lele, Agarwal, Baldwin, and Goswami address food and nutrition security issues in two parts.
One part of the book is a historical account of when and how the “big five” major international organizations have contributed to world food needs since their establishment: the flow of their financial resources to developing countries, the evolution in the nature of their activities and impacts on outcomes—food security standards and norms, policy changes, institutions, human capital, and technology. The second part of the book examines how the concept of structural transformation has evolved since W. Arthur Lewis. It pays attention to the role that small/medium- and large-scale farmers are playing in the transformation process, and asks which of the 130 odd countries included in the transformation process have done well, and which have not.
Key findings
Developing countries now have the major responsibility to invest in food and agriculture and related growth-enhancing sectors, including education, health, infrastructure, and research and development. Increasingly a multi-sectoral strategy is needed. Absent such a strategy, in the face of climate change, many countries are facing gross underinvestment in growth-enhancing sectors, slowing agricultural productivity growth, and premature industrialization. Notable exceptions are China, and, for different reasons, Vietnam and Bangladesh. These three countries are also more export-oriented.
While incidence of hunger has increased, the shift to new highly processed forms of food through nutrition transition has reduced dietary quality. Transformative changes are needed in the food systems to achieve nutritious food for all. Current income levels are not sufficient to achieve nutritious food for 3 billion people. The role of international organizations has declined relative to the growing needs because their own resources have not grown commensurately with the needs.
The way forward
Get domestic policy strategy frameworks right and implement them consistently.
Increase domestic human and institutional capacity as the central focus.
Abandon autarchical policies.
Mobilize domestic and international capital in support of employment-oriented sectors.
Support international organizations by understanding their complex financing history.
Why we need increased investment in food and agriculture in developing countries and international organizations that support them
The Sustainable Development Goals are off track. The prospects of the SDGs being realized by 2030 are bleak. The rapid pace of consistent decline in poverty and hunger until 2015 had slowed even before COVID-19. Often overlooked is the fact that much of that reduction in poverty and hunger occurred in China and Southeast Asia. A once-in-a-century global tragedy, COVID has been particularly hard on the world’s poor, compounded by severe impacts of climate change. Migrant labor has returned to rural areas and structural transformation has registered a big setback, particularly in countries in South Asia and sub-Saharan Africa already lagging in movements out of agriculture. The result is increasing dependence of vulnerable populations on agricultural and rural employment. Decline in child mortality and other indicators of child poverty have similarly slowed, concurrently with a slower dietary transition in the patterns of food consumption. Incidence of obesity is growing and is associated with consumption of cheap junk food. The consequence is increased incidence of noncommunicable diseases such as cancer, diabetes, and heart disease.
To address these complex challenges, strengthened international cooperation backed by financial resources is more urgent than ever. Since their establishment, five big international organizations have played key roles in contributing to food and agricultural development: The World Bank and International Development Organization have been the largest source of investment in food and agriculture; the Food and Agriculture Organization of the United Nations is the only organization with a holistic mandate for food, agriculture, natural resources, information, norms and standards; the World Food Program is the largest humanitarian organization for emergencies logistics, delivery of food or cash in a situation where the number of displaced people has skyrocketed to 75 million; CGIAR is the largest scientific organization for research on food security (lately including nutrition); the International Fund for Agricultural Development’s investment focus is on marginal populations and women.
But collectively their resources are now miniscule compared to the trillions of dollars needed annually in investments to achieve transformational change in food and agriculture to reduce poverty and hunger. While developing-countries’ own resources are increasingly important, they are also nowhere near sufficient for such transformational change.
Related Content
In a just issued, freely downloadable book, “Food for All: International Organizations and the Transformation of Agriculture” published by Oxford University Press (September 2021), Lele, Agarwal, Baldwin, and Goswami address food and nutrition security issues in two parts.
One part of the book is a historical account of when and how the “big five” major international organizations have contributed to world food needs since their establishment: the flow of their financial resources to developing countries, the evolution in the nature of their activities and impacts on outcomes—food security standards and norms, policy changes, institutions, human capital, and technology. The second part of the book examines how the concept of structural transformation has evolved since W. Arthur Lewis. It pays attention to the role that small/medium- and large-scale farmers are playing in the transformation process, and asks which of the 130 odd countries included in the transformation process have done well, and which have not.
Key findings
Developing countries now have the major responsibility to invest in food and agriculture and related growth-enhancing sectors, including education, health, infrastructure, and research and development. Increasingly a multi-sectoral strategy is needed. Absent such a strategy, in the face of climate change, many countries are facing gross underinvestment in growth-enhancing sectors, slowing agricultural productivity growth, and premature deindustrialization. Notable exceptions are China, and, for different reasons, Vietnam and Bangladesh. These three countries are also more export-oriented.
While incidence of hunger has increased, the shift to new highly processed forms of food through nutrition transition has reduced dietary quality. Transformative changes are needed in the food systems to achieve nutritious food for all. Current income levels are not sufficient to achieve nutritious food for 3 billion people. The role of international organizations has declined relative to the growing needs because their own resources have not grown commensurately with the needs.
The way forward
Get domestic policy strategy frameworks right and implement them consistently.
Increase domestic human and institutional capacity as the central focus.
Abandon autarchical policies.
Mobilize domestic and international capital in support of employment-oriented sectors.
Support international organizations by understanding their complex financing history.
Key strategies to accelerate Africa’s post-COVID recovery
The COVID-19 pandemic brought unprecedented disruptions to Africa—reducing earnings and increasing poverty and food insecurity as well as leading the region into its first recession in 25 years. While the global economic effects of the pandemic have started to recede as Western and Asian countries recover, 2021 is still turning out to be a difficult year for Africa. Moreover, the region will face even riskier external and internal environments in the future.
Thus, African leaders must now adopt strategies for a resilient recovery post-COVID-19 as we discuss in our recent report. Resiliency—a country’s capability to recover from shocks and adapt flexibly to stressors—not only protects economic and social gains, but also facilitates economic transformation and sustainable employment. In a “resilient” country, fewer assets are lost when a shock occurs, so more sustained improvements in economic welfare occur for the same amount of investment. Post-COVID-19 African economic development policy needs, therefore, to be centered around both improving resiliency and accelerating transformation to realize sustained economic welfare gains. Strategies for resiliency should build on the COVID-19 experience, helping households, communities, and countries to strengthen coping measures that reduce losses thus allowing for a faster recovery, and investing to adapt to and mitigate the effects of future shocks. Adapting to a “new normal” can help resilient countries to grow and transform at a faster rate.
While successful policies will be context-specific, two key strategies for enhancing a country’s resiliency deserve consideration.
Deregulation for the growth of large firms
Since the entrance and growth of large firms increase a country’s resilient economic transformation—because large firms, with more assets, are inherently more resilient and are better equipped to endure economic storms—policymakers should prioritize policies for facilitating the entrance and growth of such firms, through domestic deregulation and encouraging foreign direct investment (FDI). Notably, large firms in Africa (employing more than 100 people) tend to start large and grow from there. Evidence shows that their use of newer technology, combined with the fact that they pay higher wages and are more likely to export, supports both transformation and resilience, which is why large firms are more likely to survive and grow. A company in a developing country that begins with fewer than 20 employees has a low chance of surviving its first five years, and a less than 1 percent chance of ever employing over 100 people if it does survive.
Related Content
Importantly, regulation can stifle innovation, productivity, good job creation, and resilience as a firm is unable to adapt to a changing world economy. Therefore, deregulation can encourage investment by helping large firms receive equal and impartial treatment from the government, which is necessary to grow, create good jobs, and take advantage of scale opportunities.
Support agricultural productivity-led growth and the development of the agro-food system
A second strategy leading to increased resilience and transformation is to improve agricultural productivity-led growth and the development of the agro-food system. African economic strategy and policy discourse have long underestimated the role that agriculture can play in a resilient and sustained transformation. Yet recent evidence shows that, in 2020, the agricultural sector outperformed the broader economy exactly because it was more resilient. This result continued a 20-year trend where the average annual growth rate of Africa’s agricultural production was faster than any other region in the world. Research has clearly demonstrated that, at lower income levels, agricultural sector growth and development is critical for poverty reduction, and less poor households are inherently more resilient.
If Africa can continue this trend, primarily by raising productivity on existing land and increasing climate resilience, the future for African agriculture is bright. As the world’s population grows, demand for food increases: In fact, the African continent will account for 80 percent of the world’s population growth between now and 2050. These new consumers are also expected to be richer, demanding higher-value food products (processed foods, fruits, and vegetables). At the same time, available farmland the world over is diminishing due to urbanization—offering an opportunity for Africa, with its vast quantity of arable land—to step in. Moreover, demand for food within Africa offers significant potential for intra-African trade. The importance of the agricultural sector in building a more resilient economy is clear.
Countries should move quickly to stay ahead of the risks, while building for a more resilient future. Achieving resilient, sustainable growth will not be easy, and will require the following: African food value chains becoming more internationally competitive; raising on-farm productivity; lowering the costs of production and distribution to cities and small towns; facilitating private investments in logistics and processing; reducing nontariff trade barriers between African countries; and, most importantly, successfully implementing appropriate adaptation policies for climate-vulnerable regions.
The African continent will face many challenges in the post-COVID-19 world. Past strategies focused on transformation as a main outcome, but COVID-19 has highlighted the role resilience plays as an equally important economic outcome. Therefore, African countries’ economic development goals need to strive to achieve these dual objectives. These goals can be further advanced by the two key strategies provided in this article. Importantly, success in both of these strategies would improve employment opportunities across Africa and strengthen poverty reduction at a time when progress on both has stagnated.