Synthesis Documents

Study on Existing Models for Productive Employment and Possible Models for Funding, Sara Johansson de Silva and Mikael Söderbäck, 2013

    The purpose of this report is to provide an overview of interventions to support productive employment creation, investigate donor funding mechanisms in relation to these interventions, and propose a potential mechanism to be used by Sida in promoting employment for poverty reduction purposes. The report focuses on policies relevant for low income groups and potential avenues to leverage actors and resources outside governments.

    Summary of results
    Our review narrows in on policies and programs that can (i) stimulate more demand for labour in productive employment, including through profitable opportunities for self-employment (ii) help vulnerable workers acquire the necessary assets (skills, credit, etc.) to take up more productive jobs, or increase profitability in their firms, and (iii) improve information flows in the market. It focuses on funding mechanisms that are applicable to interventions focused on productive employment; those that stimulate innovation and competition, and build partnerships with private sector and civil society.

    The review of different types of interventions suggests that no single approach works everywhere, whether in raising demand for labour, in helping workers access labour markets and/or more productive employment opportunities, or in improving the flow of information in labour markets. Context, constraints, design and implementation matters. There is some evidence that supply side interventions, more particularly providing training and finance in comprehensive programs, can be successful. Nonetheless, stimulating labour demand through market systems must continue to be an important basis for employment promotion. Labour supply side interventions –e.g. increase the employability of workers - require some growth in labour demand or expansion of markets to be effective.

    Against these findings, we propose that Sida considers setting up a Challenge Fund mechanism - a Mechanism for Support for Productive Employment, or MSPE - as the main tool for initiating activities and allocating resources to various actors.