SETP No. 14 The Economic Value of Incremental Employment in the ...

FOREWORD
The macro-economic case for using labour-based, as opposed to equipmentintensive
technology in the infrastructure and construction sectors, has been made in
many developing countries on the ground of lower unit costs, increased employment
generation, higher contribution to GDP, higher multiplier effects, higher levels of
household income and consumption, reduced foreign exchange requirements and
hence, reduced import dependency. These conclusions apply to countries
characterised by surplus labour, low wages, weak local industrial capacity (in tools
and equipment production).
South Africa, obviously, is in a different situation, with higher wages and a
domestic industry producing equipment of various sizes. Hence, the challenge of this
study, which was to investigate whether the macro-economic outcomes of labourbased
vs. equipment-based construction would still be in favour of the labour-based
option, and if so, to what extent.
We are grateful to the author, Barry Standish, resident economist at the
Graduate School of Business at the University of Cape Town, to have taken up this
challenge and to have made an important contribution to the debate on the macroeconomic
potential of labour-based investment technology not only in South Africa,
but also more generally in the context of world-wide efforts to foster employmentintensive
growth wherever technically feasible and economically cost-effective, with a
view to combating poverty and reducing inequalities.
We also thank the National Department of Public Works, South Africa, for
taking the initiative in establishing the macro-economic benefit of labour-based
methods in the South African context. We believe the study will contribute towards
the Department's objective to mainstreaming the technology in the construction
sector where it will be appropriate and efficient. We are also grateful to the United
Nations Development Programme for providing the necessary financial assistance to
carrying out this study.
The ILO=s regional support team of the Employment-Intensive Investment
Programme for English-speaking African countries, the ASIST Africa programme
(Advisory Support, Information Services and Training) in Harare, who were
backstopping this work, and the Branch in Geneva would appreciate any comments
readers my have on this work.
Jean Majeres
Chief
Employment-Intensive Investment Branch
Geneva, October 2003