decent work and human development

International Labour Review

, Vol. 142 (2003), No. 2

Copyright © International Labour Organization 2003

Decent work and human development

Iftikhar AHMED

*

he articles in this issue of the

Review

are largely concerned with the

T

formulation of statistical indicators and indexes for measuringinternational progress towards the ILO’s objective of decent work.However, an important question that remains to be examined in thelight of the proposed measures of decent work is the relationshipbetween decent work and human development.

1

Indeed, the entireUnited Nations system has adopted the Millennium DevelopmentGoals (MDGs) as a framework for its activities – and the ILO’s DecentWork Agenda is no exception (ILO, 2003, p. 5). Given the linkagebetween human development and the MDGs (see UNDP, 2003, p. 28),empirical evidence of a relationship between the ILO agenda andhuman development would demonstrate the relevance of decent work,however indirectly, to the attainment of the MDGs.

2

Against this general policy background, this short article examinesthe quantitative relationships between decent work and human devel-opment, on the one hand, and decent work and economic growth, onthe other. This latter avenue of investigation is partly intended toaddress the view that economic growth may lead to a worsening ofemployment conditions, which – as Gary Fields argues in this issue ofthe

Review

– is empirically absurd. In particular, this article considerswhether high incomes guarantee high levels of decent work and, con-versely, whether higher levels of decent work can be achieved withouthigher levels of income. Another section then looks at cross-country

12

* ILO, Geneva. The author is grateful to Sudip Ranjan Basu for the assistance provided inthe econometric analyses.

1

Only one of the articles in this issue of the

Review

– that by Bonnet, Figueiredo and Stand-ing – touches on this very briefly, without detailed elaboration on the methodology used to test therelationship between decent work and human development.

2

Significantly, two of the indicators proposed for measuring decent work are respectivelyidentical to Millennium Indicator No. 11 (share of women in non-agricultural wage employment),corresponding to MDG No. 3 (promote gender equality and empowering women), and Mil-lennium Indicator No. 45 (unemployment rate of 15-24 year olds), corresponding to MDG No. 8(developing a global partnership for development).

264


comparisons of levels of decent work to test whether country rankingsare sensitive to the methodology used for measuring decent work. Afinal section draws a few general conclusions from the analysis.

Methodology and data

The following section estimates the relationship between decentwork and human development by means of a regression analysis. Themeasure of decent work used in the analysis is the composite index ofdecent work deficit (DWD) compiled by Bescond, Châtaignier andMehran with data for the mid-1990s (see their table 9 on p. 207 of thisissue of the

Review

). This measure combines indicators of low hourlypay, excessive hours of work, unemployment, non-enrolment in school,youth unemployment, male-female gap in labour force participation,and old age without pension. These seven indicators are in fact a subsetof the 30 proposed by Anker et al., also in this issue of the

Review

. Thus,the DWD index is but a partial measure of decent work because it omitsthe crucial indicators of freedom of association and social dialoguealong with many others. Also important to bear in mind are theauthors’ own caveats regarding the comparability of the national datathey used to compile their DWD index.

The selected measure of human development is also a partial one,namely, the UNDP’s Human Development Index (HDI), compiled withdata for 2000. The HDI combines indicators of education, health andstandard of living but omits the broader and more complex dimensionsof human development that would also need to be measured in order tocapture the expansion of capabilities that widen people’s choices to livelives that they value (UNDP, 2002, pp. 34, 53 and 149-152).

In short, the concepts of both human development and decentwork are much broader than what the HDI and DWD index are able tomeasure. Yet it is certainly of significant policy interest to examine therelationship between these measures, however partial they may be.


Since decent work can reasonably be expected to contribute tohuman development, it is hypothesized that the HDI is inversely relatedto the DWD index. By applying ordinary least squares regression tech-niques to the data presented in table 1, the following parameter esti-mates were obtained:

Log HDI = 0.339 – 0.195 log DWD index(2.42) (–3.94)

R

2

= 0.301; degrees of freedom = 37The parameter estimates for both the constant term and the DWDindex are significant at the 1 per cent level (

t

-values in parentheses).


265

Table 1. Decent work, human development and economic growth

DWDindexranking

a

DWIranking

b

ODWIranking

c

Country DWD

a

Decent work deficit(mid-1990s)

Human DevelopmentIndex (HDI)

d

value 2000

GDP per capita

d

(PPP US$) 2000(GDP/CAP)

1 1 1 Sweden 5.1 .941 24 277

2 2 8 Denmark 6.2 .926 27 627

3 — — Iceland 7.3 .936 29 581

4 25 15 Switzerland 8.0 .928 28 769

5 4 18 France 8.9 .928 24 223

6 28 — Russian Federation 10.8 .781 8 377

7 3 2 Finland 11.0 .930 24 996

8 15 5 United Kingdom 11.1 .928 23 509

9 6 11 Germany 11.4 .925 25 103

10 7 16 Belgium 11.4 .939 27 178

11 21 4 United States 11.9 .939 34 142

12 39 — Korea, Republic of 12.0 .882 17 380

13 10 5 Canada 12.2 .940 27 840

14 15 10 Portugal 12.6 .880 17 290

15 16 13 Japan 13.7 .933 26 755

16 — — Lithuania 13.9 .808 7 106

17 17 8 Australia 14.5 .939 25 693

18 33 — Estonia 14.7 .826 10 066

19 64 — Thailand 14.8 .762 6 402

20 42 — Romania 14.9 .775 6 423

21 — — Slovakia 17.6 .831 11 243

22 81 — Nepal 17.6 .490 1 327

23 13 14 Ireland 18.1 .925 29 866

24 — — Jamaica 19.4 .742 3 639

25 73 — Indonesia 22.4 .684 3 043

26 14 19 Italy 22.8 .913 23 626

27 — — Poland 23.2 .833 9 051

28 29 21 Greece 23.6 .885 16 501

29 — — Yemen, Republic of 24.0 .479 893

30 — — Mauritius 24.1 .772 10 017

31 — — Hong Kong, China 24.1 .888 25 153

32 49 — Mexico 24.2 .796 9 023

33 11 — Spain 25.8 .913 19 472

34 48 — Costa Rica 32.3 .826 10 066

35 — — Jordan 33.5 .717 3 966

36 58 — Sri Lanka 33.6 .741 3 530

37 46 — Turkey 35.4 .742 6 974

38 80 — Bangladesh 51.4 .478 1 602

a

Source: Bescond, Châtaignier and Mehran, 2003, table 9.

b

Source: Bonnet, Figueiredo and Standing, 2003, figure 1; and IFP/SES databases.

c

Source: Ghai, 2003, table 15.

d

Source: UNDP, 2002, pp. 149-155.

Notes: (1) Decent work deficit (DWD): combines measures of low hourly pay, excessive hours of work, unemployment, children notat school (proxy for child labour), youth share of unemployment, male-female gap in labour force participation and old age withoutpension (does not include freedom of association and social dialogue); (2) decent work index (DWI): combines at the macro (aggre-gate) level indicators of national and international instruments and rules to protect workers, indicators of mechanisms and measuresthrough which legislated principles and rules are realized, and indicators showing whether or not the above are effective in ensuringworker protection; (3) overall decent work index (ODWI): combines indicators of gender disparities, employment, social protectionand social dialogue; (4) Human Development Index (HDI): combines indicators of education, health and living standards.

266

International Labour ReviewFi

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267

The cross-country differences in DWD indexes explain for 30 percent of the variations in the HDI among the 38 countries in the sam-ple. The estimation indicates that a percentage-point reduction in theDWD index boosts the HDI score by 0.20 percentage points. Thestatistically significant inverse relationship between the DWD indexand the HDI, as established by the regression analysis, is presentedgraphically in figure 1.

In their contribution to this issue of the

Review

, Bonnet, Figueiredoand Standing find a correlation coefficient of 85 per cent between theirown (different) macro-level Decent Work Index (DWI) and the HDI.

Decent work and income

The purpose of empirically estimating the relationship betweendecent work and income is to test the hypothesis that GDP per capita(GDP/CAP) is inversely related to decent work deficit. Once again, byapplying the least squares regression techniques to the data presentedin table 1, the following parameter estimates were obtained:

The parameter estimates for both the constant term and the DWDindex are significant at the 1 per cent level (

t

-values in parentheses).Here, the cross-country differences in DWD indexes explain for

35 per cent of the variations in GDP per capita among the 38 countriescompared. The estimation also suggests that a percentage-point reduc-tion in the DWD index can increase GDP per capita by 1.11 percentagepoints. The statistically significant inverse relationship between theDWD index and GDP per capita, as established by the regressionanalysis, is presented graphically in figure 2.

The correlation coefficient calculated between GDP per capitaand the alternative DWI compiled by Bonnet, Figueiredo and Standingis 86 per cent. Without actually deploying a composite index, the articleby Gary Fields in this issue of the

Review

also sets out theoretical andempirical arguments for the existence of a positive relationship be-tween decent work and economic growth.

With techniques similar to those used by UNDP to compare theHDI and GDP per capita (UNDP, 2003, pp. 60-61), it can thus be dem-onstrated that high levels of decent work can be achieved without highlevels of income. For instance, Turkey and Thailand have similar levelsof per capita income, but Thailand has a much smaller decent workdeficit (figure 3a). Similarly, Switzerland has achieved a much smallerdecent work deficit than Ireland with about the same level of income.

Log GDP/CAP = 12.457 – 1.112 log DWD index (17.46) (– 4.41)R2 = 0.351; degrees of freedom = 37

268

International Labour ReviewFi

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269

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270


Conversely, high incomes do not guarantee higher levels of decentwork. For instance, the Republic of Korea has roughly the same decentwork deficit as Belgium, but only two-thirds of its income level (fig-ure 3b). Similarly, Hong Kong (China) has a decent work deficit aslarge as Mexico’s, despite being almost three times richer.

Estimation bias

As is clear from table 1, the type of index used to measure decentwork influences the outcome of measurement. Therefore, rankingsbased on inter-country comparisons could be misleading, although sev-eral western European countries are among the top ten irrespective ofthe type of index used to rank them. However, monitoring decent worktrends with a given methodology would be as useful for national andinternational policy-making as it is to monitor HDI trends based onannual national estimates.

Concluding remarks

Given what work means to most people’s lives, the attainment ofdecent work is obviously a worthy policy objective in its own right. Butfrom the foregoing quantitative statistical analysis of data for a bal-anced mix of developing, industrialized and transition countries, it isalso clear that pursuit of that objective can contribute simultaneously tohuman development – as measured by the HDI – and to economicgrowth. The analysis makes it equally clear that high levels of decentwork can be achieved without high incomes and that high incomes donot guarantee high levels of decent work. Although the relative per-formance of a country is sensitive to the type of index used to measuredecent work, several European countries rank high irrespective of theindex used – presumably because of the sound and balanced social pol-icies they pursue (Kapstein and Milanovic, 2003).

References

Anker, Richard; Chernyshev, Igor; Egger, Philippe; Mehran, Farhad; Ritter, Joseph A. 2003.“Measuring decent work with statistical indicators”, in


(Geneva), Vol. 142, No. 2, pp. 147-177.Bescond, David; Châtaignier, Anne; Mehran, Farhad. 2003. “Seven indicators of decent

work: An international comparison”, in


(Geneva),Vol. 142, No. 2, pp. 179-211.

Bonnet, Florence; Figueiredo, José B.; Standing, Guy. 2003. “A family of decent workindexes”, in


(Geneva), Vol. 142, No. 2, pp. 213-238.Fields, Gary S. 2003. “Decent work and development policies”, in

International LabourReview

(Geneva), Vol. 142, No. 2, pp. 239-262.Ghai, Dharam. 2003. “Decent work: Concept and indicators”, in

International LabourReview

(Geneva), Vol. 142, No. 2, pp. 113-145.


271

ILO. 2003.

Working out of poverty

. Report of the Director-General to the 91st Session of theInternational Labour Conference. Geneva.

Kapstein, Ethan B.; Milanovic, Branko. 2003.

Income and influence: Social policy in emergingmarket economies

. Kalamazoo, MI, W. E. Upjohn Institute for Employment Research.UNDP. 2003.

Human Development Report 2003: Millennium Development Goals: A compactamong nations to end human poverty

. New York, NY, Oxford University Press.—. 2002.

Human Development Report 2002. Deepening democracy in a fragmented world

.New York, NY, Oxford University Press.

Elusive Protection, Uncertain Lands:

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Building on the nexus between human rights protection andmigration management, the study makes a strong plea for coalition building between human rights groups and migrant-serving associations. It also explains how developments in thewake of the September 11 attacks have emphasized the importance of such coalitions.

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