| March 28, 2017

From war to work

From war to work
There is one example of successful post-crisis employment policy: Nepal. Its government sought to expand opportunities in informal sector after the civil war
There is no denying that conflict has far-reaching negative effects, including on employment. But the prevailing understanding of the relationship between conflict and employment does not fully recognize the complexity of this relationship—a shortcoming that undermines effective employment policies in fragile states.

The conventional wisdom is that conflict destroys jobs. Moreover, because unemployment can spur more conflict, as unemployed young people find validation and economic rewards in violent movements, job creation should be a central part of post-conflict policy. But, while this certainly sounds logical, these assumptions, as I detailed in a 2015 paper, are not necessarily entirely accurate.

The first assumption—that violent conflicts destroy jobs—ignores the fact that every conflict is unique. Some, like the 2008-2009 Sri Lankan civil war, are concentrated in a relatively small area, leaving much of the country—and thus the economy—unaffected.

Even endemic conflicts, like the recurrent conflicts in the Congo, might not have a major impact on net employment. After all, the jobs that are lost in, say, the public sector or among commodity exporters may be largely offset by new jobs in government and rebel armed forces, informal production substituting for imports, and illegal activities like drug production and smuggling.

Likewise, the second assumption—that unemployment is a major cause of violent conflict—misses crucial nuances. For starters, the formal sector accounts for just a fraction of total employment in most conflict-affected countries. The majority of working people are in the informal sector, often engaged in low-status, low-productivity, and low-incomes activities that can, just like unemployment, generate dissatisfaction and potentially motivate young people to join violent movements.

Given this, simply expanding formal-sector employment is not enough, unless it also improves the situation of young people in low-income informal-sector jobs. Yet post-conflict employment policies almost invariably neglect the informal sector. Worse, new regulations—such as the ban on commercial biking in Freetown, Sierra Leone—sometimes block productive informal activities undertaken by youth.

But even a focus on the informal sector is insufficient, as research has shown that poverty and marginalization are not, on their own, enough to cause conflict. If they were, most poor countries would be in conflict most of the time. And that is not even remotely the case.

Violent conflict occurs when leaders are motivated to mobilize their followers for it. That motivation can stem from a variety of sources, among the most common being exclusion from power. In that case, leaders will appeal to a common identity—for example, religion in the case of contemporary conflicts in the Middle East, or ethnicity in many African conflicts—to mobilize followers.

Of course, more than a shared identity alone is needed for mobilization to occur. People will generally respond only if they already have grievances—in particular, if they feel that their group faces discrimination in access to resources and jobs. In this sense, employment is relevant, but what matters is not the absolute level of employment so much as the distribution of good jobs among religious or ethnic groups.

In other words, simply creating more jobs, without regard to their allocation, may not ease tensions; if imbalances persist, job creation may even make things worse. Yet post-conflict employment policies almost always neglect so-called “horizontal inequalities.” For example, employment policies did little to reduce the strong regional imbalances and discrimination within regions that persisted in Bosnia and Herzegovina after the war there in the 1990s.

Given these failings, it is not surprising that employment policies’ net effects are often very small relative to the size of the problem. In both Kosovo and Bosnia and Herzegovina, job creation was thought to be central to post-conflict peacekeeping efforts. Yet, in Kosovo, unemployment stood at 45 percent six years after its war ended. In Bosnia, new programs generated just 8,300 jobs, while 450,000 people were demobilized; 20 years after the end of the conflict, the unemployment rate stood at 44 percent.

There is one example of a successful post-crisis employment policy. Nepal’s government sought to expand opportunities in the informal sector after the country’s civil war, implementing programs focused on building infrastructure, issuing micro-credit, and providing technology assistance, targeting the most deprived regions and castes.

Recognizing the role that caste and ethnic tensions and discrimination played in fueling the conflict, the government designed employment schemes specifically for rural areas, along the same lines as India’s employment scheme, with 100 days of work per household guaranteed. The programs were supported by the Nepali government and external donors, and focused on poorer regions and villages (and, within them, on the poorest castes).

The period immediately following a conflict is a delicate one. Leaders must make the most of that time, ensuring that every policy they pursue is as effective as possible. When it comes to employment, that means designing programs that reflect how people actually spend their working lives, as well as addressing the real grievances generating tensions. Otherwise, they risk allowing, if not encouraging, a relapse into organized violence.

The author is Emeritus Professor of Development Economics at the University of Oxford