Design and Implementation of Redeployment Programs
Contracting out can favor redundant workers and offer opportunities for some to start their own small businesses.
In many transition and developing countries, a primary problem is the lack of demand for labor. Initiatives that help create jobs are valuable in many redeployment circumstances, but particularly in regions or monoindustrial towns with high levels of local unemployment. These initiatives include public works programs, support for small and medium-size enterprises, and local and community development planning and job-creation incentives for employers.
Labor-intensive public works programs are mainly thought of as safety net programs to deal temporarily with large numbers of poor people in crisis. Public works programs can, however, be appropriate in PPI labor programs in regions where there is a particular mix of high and chronic levels of unemployment, lack of formal social safety nets, and large numbers of vulnerable workers.
The pioneering Bolivian ESF had elements of public works programs within it and was initially intended to support redundant mine workers at a time when the economy was very weak (see box 5.21).
Well-integrated public works programs can combine safety net benefits with community action, productive investment, and a degree of encouragement for workers to engage in microenterprise (where elements of the public works are contracted out). Senegal's public works program, managed by AGETIP (Agence d'Exécution des Travaux d'Intérêt Public), is an example of a public works program that combines these objectives and has developed transparent, streamlined procedures (see box 5.26).
See http://www.worldbank.org/oed/.
Privatized service units can offer jobs to some redundant workers.
To make public works programs costeffective, the implementing agency can check to see that:
Source: Adapted from Ravallion 1998.
Support for small business includes technical advice (business development services), microfinance, and managed workspaces and business incubators.
Detailed consideration of these types of support is beyond the scope of this Toolkit, but further sources of information on each of them is provided at the end of this section on redeployment.
Managed workspaces and incubators deserve special mention, however, because the assets of the PPI enterprise can be used to help workers start up a business in a relatively low-risk way by providing workspace and facilities. The principal difference between managed workspaces and incubators is that incubators try to bring together both physical space and technical assistance to start-up entrepreneurs in one location:
Workspaces and incubators can be set up independent of labor programs and may be wholly private or public-private partnerships. The best incubators are themselves profitable businesses, making their incomes from tenant rentals. The implementing agency, however, will principally be interested in looking at the existing assets held by the utility and infrastructure company and seeing how these may be used to benefit displaced workers.
British Coal Enterprise (BCE) is one of the early examples of this approach (see box 5.27). The BCE experience illustrates the value of very simple and basic managed workspaces. BCE workspace sites were often not attractive new buildings but converted former mine operation buildings. Some national and regional governments have invested in more substantial incubator facilities-some even moving toward high-tech science parks-but normally they have done so as part of a wider employment and economic development policy rather than as a strategy to deal with redeployment.
Worldwide there is much experience on the design and implementation of managed workspaces and business incubators. One source of information is the National Business Incubator Association.
The NBIA Web site is a source of information on incubators: http://www.nbia.org/.
Where there is chronic unemployment, both community approaches and public works can provide elements of active and passive labor market support.
The coal-mining industry presents a challenge when mine closure or work force reduction is required. The geological dictates of the industry mean that the closure of mines leads to the concentration of redundancy in a few areas. In 1981 there were 211 collieries in the United Kingdom, but this had shrunk to 17 by 2001. Over the same period the number of workers employed in the industry fell from 279,000 to fewer than 10,000. In response, in 1984 through the National Coal Board, the government established a public sector job-creation agency for the mining areas, British Coal Enterprise. BCE's charge was to facilitate the economic regeneration of coal-mining communities.
BCE focused on the delivery of practical initiatives intended to stimulate regeneration of the coal field areas led by the private sector. The three main activities were outplacement services, business funding, and workspace provision. These activities were intended to expand the prospects for the labor market by lowering the threshold for business entry and growth, and by promoting the development and expansion of skills.
The outplacement program helped about 60,000 miners through one-to-one counseling with career consultants, and help with résumé preparation and proactive job-search techniques. Some funding for retraining was also available from British Coal.
The business-funding program aimed to support fast-track financing. Loans of up to £25,000 were made available to start-ups and new businesses within coal-mining communities, and larger startups or expanding businesses were able to apply for larger venture capital investments of up to £250,000. In all cases only business plans with considerable promise of growth were funded- not microenterprises employing one or two people. In many cases these start-ups or expanding businesses also made use of BCE's managed workspace programs. BCE also managed £3 million from other sources.
A central feature of BCE's approach was to unite outplacement and funding by introducing managed workspaces or small-business incubators. BCE offered workshops and offices of various sizes and types, as well as such shared services as secretarial support, photocopying, and facsimile facilities. "Easy-in/easy-out" lease terms were designed to remove barriers to growth and diversification for the nascent businesses. The workspaces made use of former British Coal premises, redeveloping the existing infrastructure and so keeping the costs of conversion low.
In many cases the regeneration of existing facilities in derelict areas was the catalyst for increased local economic growth. BCE invested a total of £101 million during its existence (1984-96) in more than 5,000 enterprises-thereby generating some 54,624 jobs (an average of 11 jobs created per business). Overall, BCE estimated the investment cost per job created to be £1,384. About 56 percent of the jobs created were derived from business start-ups, and 44 percent from business expansions. The managed workshops operation led directly to the creation of some 16,200 jobs in more than 1,121 units, and itself became a viable commercial enterprise (that was subsequently privatized).
Source: Gore, Dabinett, and Breeze 2000; Tawney and Levitsky 2000.
Community-based approaches are those where communities-including local and municipal governments- participate in identifying, selecting, implementing, or monitoring programs designed to create employment or protect those who have lost jobs and incomes. The approach aims to build community partnerships to improve the business environment, strengthen the local economy, and create jobs for displaced workers. It also helps in rebuilding the economic foundation and increases citizen participation in local economic development efforts.
Incubators can bring together workspace and business assistance in one location.
In some countries the employers remaining in the community have received incentives to create new jobs. For example, in Cape Verde vouchers were given to private employers to provide on-the-job training to employees retrenched as a result of privatization. The employers were reimbursed 40 percent of the salary of a retrenched worker for up to a period of six months (Kikeri 1998). In Poland loans at prevailing interest rates were made available to existing businesses to organize new employment places for at least 24 months. And in Hungary, the employment fund gave grant aid to enterprises making investments that would employ long-term employed workers. This was, however, the most costly form of active labor program- about six times more expensive than individualized training or self-employment assistance in terms of cost per person reemployed (O'Leary 1995).
Simple buildings and facilities can be used very effectively as workspaces.
Typically, the implementing agency or other government representatives or contractor will help organize a broad-based community task force to conduct an economic assessment and planning effort "owned" by the community. Community leaders are invited to participate in a structured economic renewal program designed specifically to strengthen the local economy and create more employment and livelihood opportunities. Workshops are conducted over, for example, a six-month period, and residents learn the principles of local economic development and are taught how to assess their community's needs, write a local strategic plan, select and design projects, and begin implementing them. Community approaches may be complemented and financed by other programs, such as regional development initiatives, social funds, or labor funds.
Those approaches are particularly relevant where: