Industrial Development, Construction and Employment in Africa (IDCEA): A comparative analysis
In recent years research on the effects of foreign direct investment on African economies and labour markets has gained a new focus with the re-emergence of concerns with broad structural transformation, and the development of industry and infrastructure in particular. In this context, the dramatic upsurge of activity by Chinese firms (both investors and contractors) in sub-Saharan African manufacturing and construction since the 2000s has sparked both discussion and controversy. However, despite some recent advances in research, empirically grounded and comparative evidence on the effects of foreign direct investment and contractors with regards to job creation, skill development, wages and working conditions has remained limited.
Our project focuses on gathering concrete information on the employment effects of firms investing in manufacturing and building infrastructure. The research concentrates on the two sectors in which the employment contributions of these firms are particularly important: industry and construction (for the latter, specifically in road infrastructure).
The contribution of both Chinese and non-Chinese investment, finance and construction companies to the development of infrastructure in much of Africa is well-known, but the specific employment linkages are hardly researched. This is important because a major challenge facing many low-income countries in Africa is the creation of much-needed jobs and the upgrading of skills in sectors that are likely to grow in future decades. A successful industrial policy hinges on the availability and development of a skilled and efficient workforce suitable to the needs of emerging non-primary sectors. What is also too often missing from these debates is the effect such newly-available jobs have on the lives and wellbeing of workers, many of whom have no previous work experience in these sectors.
In order to gauge the employment effects and dynamics of such initiatives, firm-level and worker-focused surveys were conducted in the construction and manufacturing sectors of two countries where the presence of such foreign direct investments, both Chinese and from other origins, has been substantial, for instance in Angola and Ethiopia.
Though Chinese firms have created more employment in construction in both countries, the recent increase in investment in manufacturing is particularly important because it could portend significant increases in higher-productivity jobs, which are in short supply throughout sub-Saharan Africa. Angola and Ethiopia also facilitate comparative analysis by providing two different contexts in relation to the relative degree of industrial development, the linkages between construction and manufacturing, existing policy frameworks, and the labour market settings.
We hope and intend for this research to help shape the ongoing debate on the development effects of Chinese and other foreign firms located in sub-Saharan Africa. In particular, we would like to see our results being of interest to governments, firms, trade unions, and regional and international development organizations in sub-Saharan Africa. Our other major objectives is to influence the broader debate within the international development community on the employment effects of development cooperation and investment, particularly within the context of the efforts to frame a new and more effective global post-2015 development agenda that puts decent employment, fair wages and worker empowerment at the centre of priorities.
What we have done so far
- February 2017: Background research, including key informant interviews and scoping for fieldwork, completed
- March 2017: Quantitative survey in Angola completed
- August 2017: Quantitative survey in Ethiopia completed
July 2015–July 2019
- Renmin University (Beijing)
- Universidade Agostinho Neto (Luanda)
- Ethiopian Economic Policy Research Institute at the Ethiopian Economics Association (Addis Ababa)
- Forum for Social Studies (Addis Ababa)
- various individual scholars from other institutions in China, USA and the United Kingdom.
We assess the effects and dynamics of firms in three specific areas: employment creation, working conditions and skill development of local workers (i.e. workers from the countries receiving these firms). Our project is centred around individual worker-level interviews as they will enable us to develop dynamic and comparative picture of the employment conditions of local workers. For example, the workers interviewed are asked about their previous employment so that comparisons can be drawn with their current conditions. We conduct both quantitative surveys and qualitatively focused in-depth interviews. The former are used to give us a detailed picture of the sectors in questions and let us draw direct comparisons between industries and ownership structures, while the latter give us insights into the effects of employment on individual workers’ lives. Of particular concern across all interviews is the effect of employment in manufacturing and construction on training and general skill development, especially for unskilled workers who come from rural areas and agricultural occupations.
The quantitative surveys targeted workers at leading manufacturing and construction companies in both Ethiopia and Angola. We carefully selected the firms in each sector based on size and reputation. Workers in each company were selected using stratified random sampling, and interviews were conducted by skilled and experienced interviewers, who underwent an intense training programme for this specific project. In total, we conducted over 680 workers’ interviews in Angola and 840 workers’ interviews in Ethiopia.
Qualitative research has proceeded in different stages, from an exhaustive scoping process preceding the quantitative surveys, to follow-up qualitative research focused on life histories of workers and in-depth interviews with a range of relevant respondents, including firm managers, site/factory supervisors, policy makers and implementers, relevant experts, trade union representatives, and other relevant stakeholders.
Background and comparative research
To provide background and context we conduct targeted desk-based research on labour practices and employment trends in similar firms and sectors in China. This comparative research is carried out both by researchers in China and by China specialists in the United Kingdom. In contrast to the field data collection, this part of the project is based on existing data and will not entail new field research in China. Instead we draw on the available material on labour conditions in China and especially their recent evolution, as well as targeted interviews with key informants and sector and labour specialists. Of particular concern is the effect of recent trends in employment conditions and any changes in the policy of the Chinese government that could have influenced the conduct of Chinese firms investing in sub-Saharan Africa.
One important research question we pursue is how foreign firms adapt to new national contexts with different legislation, institutions and labour practices. This is particularly important in the case of manufacturing, since the potential for a move of certain industrial sectors from more industrialised countries, especially in Asia, to low-income countries with good conditions for light labour-intensive manufacturing seems, for the moment at least, to be growing.
In addition to this desk work, more background research was conducted on broad foreign direct investment and infrastructure contracting trends in Africa, and specifically in Angola and Ethiopia, with a focus on the last ten years. Background papers on such trends as well as on the broad dynamics of ‘go out’ strategies of Chinese firms were drafted to inform the comparative framework of the primary research. The research team also undertook an exhaustive overview of research conducted on employment issues in Chinese firms in Africa, in order to identify key evidence gaps and to gather data and insights from research contributions on other countries and sectors in Africa. Finally, our research partners in Ethiopia and Angola also contributed with focused background research on the dynamics of the target sectors (manufacturing and construction), foreign direct investment trends and labour market contexts in these countries. This allows us to situate our primary research findings against the background of broad structures, trends and outcomes known from secondary data.