Almost all impact-oriented investment vehicles—development finance institutions, private equity funds, foundations and non-profit funds alike—track the quantity of jobs their investments create or preserve. While their definitions of employment generated may vary, these funds usually report their achievements in this area for individual investments and also for their portfolios as a whole.
However, few funds in either emerging economies or the Global North analyze or report on the quality of the jobs they create or save. But useful research is provided by PCV InSight on measuring job quality among investee companies of community development finance institutions (CDFIs) in the United States. For the US context, the consulting group PCV InSight proposes that a quality job must have at least three of the following five elements: a living wage, basic benefits (e.g., paid leave, health insurance, a retirement savings plan), career-building opportunities (i.e., support for in-house or external training and professional accreditation, opportunities for advancement), wealth-building opportunities (e.g., profit-sharing), and a fair and engaging workplace (e.g., scheduling, equal treatment, consultation, performance reviews).
While this definition is clearly context-specific, some of its principles and categories may in fact be relevant to jobs in African economies. Indeed, in the African context, a living wage, health and retirement benefits, training and advancement, profit-sharing, and fair and equal treatment in the workplace are all key indicators of job quality, as well. Added to this, perhaps, could be housing allowances, safe and healthy working conditions, freedom from sexual, ethnic or religious bias or harassment, and safe and affordable transport to and from work. Some employers, in the mining sector for example, may also provide low-cost or free medicines for specific diseases, notably HIV/AIDS.
In any case, as a World Bank study of Kenya underscores, the widespread informality of African SMEs relegates African workers to low-wage, low-productivity jobs. The Bank calls for increased public investment in education and innovation and the incorporation of more African SMEs in global value chains in order to increase the productivity of small businesses and the quality of jobs they offer.
In the years ahead, as efforts are made across the continent to address this issue, evaluators of impact investment funds and programs should be ready with cost-effective tools to measure job quality and to make their findings available not only to individual funds but to the impact investing ecosystem in their countries, to key industrial sectors and to government policymakers.
Framework to Measure the Number and Percentage of Quality Jobs
Source: InSight at Pacific Community Ventures 2016
Form small groups and choose a chair and rapporteur for each. Take ten minutes to review the InSight table above. Then answer the following questions: What for you are the key elements in a good quality job in your economy? How would you measure these elements? What indicators and data collection and analysis procedures would you use? Record your group’s responses on flip charts or slides. Your rapporteur will have five minutes to present your group’s responses to a facilitated plenary.
Commons Consultants. The Pitfalls of Innovative Private Sector Financing: Emerging Lessons From Benchmarking of Investment Funds Supported by Aid Agencies, Summary Report, Copenhagen, 2015. https://www.norfund.no/app/uploads/2020/02/Pitfalls-of-Innovative-Private-Sector-Financing-Commons-Consultants-PDF.
European Development Finance Institutions. Joint International Finance Institutions Communiqué: Contributing to Creating More and Better Jobs, Brussels, 2013.http://www.ifc.org/wps/wcm/connect/5588d5804e3463c6839dab7a9dd66321/Joint+IFI+Communique+-+Creating+More+and+Better+Jobs+With+Logos.pdf?MOD=AJPERES
Fowler, B. and E. Markel. Working Paper: Measuring Job Creation in Private Sector Development, Donor Committee for Enterprise Development (DCED), June 2014 (updated 2016). http://www.enterprise-development.org/wp-content/uploads/MeasuringJobCreation_WP_MarketShareAssociates_for_DCED_16June2014.pdf
InSight at Pacific Community Ventures. Moving Beyond Job Creation: Defining and Measuring the Creation of Quality Jobs, San Francisco, 2016. https://www.pacificcommunityventures.org/wp-content/uploads/sites/6/2016/04/Quality-Jobs_Moving-Beyond-Job-Creation.pdf
World Bank, Kenya Economic Update: Informal Should Not be Normal, Nairobi, March 2016. http://documents.worldbank.org/curated/pt/888091467988907587/pdf/104289-NWP-PUBLIC-Kenya-Economic-Update-Copy.pdf