Sunday, May 9, 2021

Ipelegeng distorts Botswana’s employment figures

The sudden and rapid changes that are occurring within the national economy have rendered it unpredictable, which makes it difficult to forecast the economic landscape.

While the past economic structure produced permanent jobs with a pay structure that was on par with the cost of living, the present day economy has failed to create enough jobs, or even those that are able to maintain a decent standard of living. The economy is categorized into different sectors from which jobs are created.

In measuring employment creation over a period of time, Statistics Botswana compiles a formal sector employment brief that clearly reflects the number of jobs created in each sector. The figures generally show whether a specific sector is growing, deflating or stagnating.

According to the 2013 Statistics Botswana formal sector employment brief, overall employment increased by 2.5 percent (9865 persons) from 389 665 in September 2012 to 399 530 persons in September 2013. A closer look into the employment trend shows that local government dominates in terms of the most jobs created, recording the highest increase of 9.6 percent. However, unpacking the growing employment figures in the local government reveals a disturbing trend that shows that the main driver of such growth is Ipelegeng, the public works program.

In fact, Ipelegeng emerges as the main driver of overall growth in employment. In the face of cold and hardened unemployment, Ipelegeng, a public works program that serves as a social safety net to cushion against the rigours of youth unemployment, is lauded as Botswana’s engine of job creation. Without taking away the role of Ipelegeng in improving the livelihoods of the poor, the program is misplaced in terms of its inclusion in formal sector employment figures.

However, Statistics Botswana argues that its inclusion is within the defined parameters of employment of the International Labour Organization (ILO). According to the ILO, employment is described as the engagement of a person over a period exceeding seven days, which justifies Statistics Botswana’s inclusion of Ipelegeng under the formal sector. At face value, the argument against the inclusion of Ipelegeng in official employment figures appears null and void. But the intent of this public works program comes into question when Ipelegeng is put within the context of the local economic structure. So, from the first question that should be asked is: “What was the intent of Ipelegeng?”

What is Ipelegeng?

Ipelegeng is a labour intensive public works program centred mainly on projects that are financed by public funds for the benefit or use of the general public. The program was set up in 2008 with the intention of absorbing poor able-bodied adults (over 18 years old) without work opportunities into temporary and rotational employment in urban and rural settlements. It is as a result aimed at reducing poverty. Workers re-apply for enrolment every month and are engaged according to the availability of places. If applications exceed the number of places, priority is given to those who did not work the previous month.

Those who do not find placement are put on a waiting list. Due to excess demand in certain areas, a lottery system is used to select participants. The program currently pays P480 for six hours of work over a period of 20 or 22 days depending on the number of days in the month. A meal is supplied to workers at a cost of P5 per day, which adds P100 to the monthly pay and rounds of the total revenue to P580 per month. Ipelegeng falls among a mix of social safety net programs targeted at vulnerable groups in the country. A 2013 assessment by BIDPA and the World Bank estimated the number of people who worked in the program in 2013/14 at 56 274. Ipelegeng projects are identified by village or ward development committees according to the community’s pressing needs and reviewed by local authorities.

Why Ipelegeng is inappropriately placed

Contrary to the ILO’s definition of formal employment, Ipelegeng portrays characteristics that fall too close to the informal sector. The World Bank describes the informal sector in two-folds: “…as formed by the coping behaviour of individuals and families in an economic environment where earning opportunities are scarce….a product of rational behaviour of entrepreneurs that desire to escape state regulations.”

The coping strategies or survival tactics refer to casual jobs, temporary jobs, unpaid jobs, subsistence agriculture as well as multiple job holding.The jobs are considered a safety net for the poor, but with low pay and no job security. Similarly the ILO describes the informal sectors as jobs that lack social benefits such as pension, health insurance and sick pay.

In addition to social benefits, formal sector employment also has a permanent characteristic. While both the informal and formal sector provide jobs and reduce unemployment, the kind of jobs offered is what makes them different. Ipelegeng is in stark contrast to the characteristics of formal sector employment. The clear cut difference in classification compels the disqualification of Ipelegeng from official formal employment, particularly because the engagement of persons in Ipelegeng mirrors the seasonal and low income nature of the informal sector.

The value derived does not match the cost incurred

The BIDPA and World Bank report discloses that 2.6 percent of the population (55 000 beneficiaries) in Botswana was absorbed in Ipelegeng at a cost of P409 million in 2012/13. The share of Ipelegeng on the Gross Domestic Product (GDP) was estimated at 0.3 percent out of a total of 1.7 percent of GDP for all social assistance programs (example old age pension and destitute relief).

“Of total expenditure during the last five years, 68 percent was spent on labour, 21 percent on materials, and 11 percent on overheads, which included personnel emoluments, motor vehicle fuel and maintenance, and small tools,” states the report.

Years Number of Beneficiaries Income Payment Total Cost Labour Cost
2009/10 56,458 P360 P219 million P102.3
2010/11 91,759 P360 P277 million P118.5
2011/12 127,756 P400 P301 million P205.0
2012/13 55,000 P480+Food P100 P409 million P264.9

Source: BIDPA and World Bank social protection assessment in Botswana

Spending on Ipelegeng negates the commitment of government to achieving more with less. This is due to the fact that Ipelegeng produces modest targeting results because of poor regional allocation of its funding. Moreover, the program attracts the non-poor who compete for placement with the poor because of its high wage rate, which is more than the prevailing market rate for low skilled workers. The report warns that the use of the lottery system reduces the efficient targeting and further recommends reducing the income payment to P390 which would allow for extension of the duration of the program.

“For example, reducing the wage rate by one third to P390/month (in line with the minimum wage for agricultural work) would allow extending the duration and the number of beneficiaries served by a combined 50 percent under the same budget; and the targeting of the program would improve,” reads the report.

It also suggests that amount spent on the program needs to be determined based on the total number of poor adults (based on regional estimates of absolute poverty). Ipelegeng is wholly financed by public funds, which questions its sustainability. According to the report the program’s design does not expressively indicate how the participants can move into high income earning activities, especially because structured training does not take place.

“The fact that not many of these beneficiaries are combining participation in Ipelegeng with other income generating activities makes potential for graduation very much unlikely,”asserts the report.

Overall the report recommends that government must come into partnership with the private sector in the funding and implementing Ipelegeng so as to improve the usefulness of project activity selection.

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