Contributing family workers and poverty. Shebo Nalishebo

Contributing family workers and poverty Shebo Nalishebo January 2013

Zambia Institute for Policy Analysis & Research 2013 Zambia Institute for Policy Analysis & Research (ZIPAR) CSO Annex Building Cnr John Mbita & Nationalist Roads PO Box 50062 Lusaka Zambia Tel: +260 211 252559 Fax: +260 211 252566 Email: info@zipar.org.zm Web: www.zipar.org.zm 2

Contents Executive summary... 6 1 Introduction... 7 1.1 Vulnerable employment... 7 2 Conceptual framework... 9 2.1 The economically active population... 9 2.2 Classification of the employed... 10 2.3 CFWs at work... 10 3 Characteristics of Contributing family workers... 12 4 Policy Implications... 17 References... 19 3

Tables Table 1. Economically active population by poverty status, Zambia 2010... 13 Table 2. Proportion of contributing family workers by sex and poverty status, Zambia 2010... 14 Table 3. Proportion of contributing family workers by highest educational attainment and poverty status, Zambia 2010... 14 Table 4. Proportion of contributing family workers by residence and poverty status, Zambia 2010... 15 Table 5. Proportion of contributing family workers by province and poverty status, Zambia 2010... 15 Table 6. Proportion of contributing family workers by industry and poverty status, Zambia 2010... 16 Figures Figure 1. Categorisation of the working age population... 9 4

Acronyms CFW ICSE ILO LCMS MDGs Contributing Family Worker International Classification of Status in Employment International Labour Organisation Living Conditions Monitoring Survey Millennium Development Goals 5

EXECUTIVE SUMMARY While there has recently been much debate about growth, poverty and youth unemployment in Zambia, one aspect that has received insufficient attention is the number of people who are technically in employment, but poor and vulnerable. This paper explores the characteristics of an oft-neglected category of vulnerable workers unpaid family workers, here called contributing family workers (CFWs) in relation to the persistent problem of poverty in Zambia. Data from the 2010 Living Conditions Monitoring Survey shows that CFWs are associated with both youth and poverty. While 26% of the economically active population is aged 15 24, among CFWs this rises to 47.4%. And while 15.5% of the economically active population are young and poor, 38.7% of CFWs are young and poor. In fact, more young poor people are CFWs than are unemployed: while 16.1% of the economically active population aged 15 24 are classified as unemployed, 42.2% are classified as CFWs. Further analysis of the data shows that high proportions of CFWs are female, have low educational attainment, live in rural areas, and work in agriculture. Based on the findings, the paper identifies six implications for policy, discussed in Section 4: Job creation strategies should have a gender focus Education and skills development is key There is need for productive agricultural employment opportunities There is a need for an institutionalised social security system to protect the vulnerable The key performance indicators for the Sixth National Development Plan should be adjusted to track vulnerable employment The Central Statistical Office needs more consistent definitions in order to measure vulnerable employment. 6

1 INTRODUCTION In recent years the Zambian economy has been growing rapidly, but the country continues to grapple with the problems of persistent poverty. 1 The problem is not just that there too many people out of work, but that many of the people counted among the employed do work that is likely to be insecure, badly paid and associated with low productivity levels. The 2010 Living Conditions Monitoring Survey (LCMS) shows that about 70% of workers in Zambia are working either as self-employed or unpaid family workers. The 2010 LCMS estimated the unemployment rate in Zambia at around 13% (CSO 2012). This figure is sometimes doubted: as unpaid work is often popularly equated with unemployment, it has been said that the unemployment rate is really much higher. But this notion is mostly due to the misunderstanding of what technically constitutes employment as defined by the International Labour Organisation (ILO). 1.1 Vulnerable employment Vulnerability is defined as the probability or risk of being in poverty today or falling into deeper poverty in the future (World Bank 2011). Vulnerable employment is a relatively new concept that refers to employment under relatively precarious circumstances. The ILO defines workers in vulnerable employment as the sum of own-account workers and contributing family workers (CFWs): Own-account workers are those workers who, working on their own account or with one or more partners, hold the type of jobs defined as self-employment (i.e. remuneration is directly dependent upon the profits derived from the goods and services produced), and have not engaged on a continuous basis any employees to work for them during the reference period. CFWs, also called unpaid family workers, are those workers who are self-employed as own-account workers in a market-oriented establishment operated by a related person living in the same household. Vulnerable employment is often characterised by inadequate earnings, low productivity and difficult conditions of work that undermine workers fundamental rights. The ILO Chief of Employment Trends Unit, Lawrence Jeffrey Johnson, contends that own-account and contributing family workers are less likely to have formal work arrangements, and are therefore more likely to lack decent working conditions, adequate social security and voice through effective representation by trade unions and similar organisations (ILO 2010). 1 Between 2006 and 2010, the Zambian economy grew at an annual average rate of over 6%, while the labour force grew by about 7% during this period. Headcount poverty ratios reduced marginally from 62.8% in 2006 to 60.5% in 2010. 7

Vulnerable employment is closely connected to poverty; a high rate of vulnerable employment may be an indication of widespread poverty. The move away from vulnerable employment into wage work can be a major step towards poverty reduction and higher economic growth. Pulling workers out of vulnerable employment is at the core of the global development challenge set out in the Millennium Declaration and its poverty-reducing goals. The ILO and the Millennium Development Goals (MDGs) Technical Working Group on Employment suggested the incidence of vulnerable employment as one of the four indicators for its target of making the goals of full and productive employment and decent work a central objective of national development strategies Target 1B agreed upon in 2008. Target 1B is set to Achieve full and productive employment and decent work for all, including women and young people and was included in MDG 1 ( Eradicate extreme poverty and hunger ) (UN 2008). The employment indicators in this MDG include: Growth rate of Gross Domestic Product per person employed (labour productivity) Employment-to-population ratio Proportion of employed people living below $1 (purchasing power parity) per day (working poor) Proportion of own-account and contributing family workers in total employment (vulnerable employment rate). However, a look at the MDGs Progress Report for 2011 (UN 2011) shows that this indicator is yet to be included among the indicators that are presently tracked in Zambia. This paper brings to the fore the statistics related to vulnerable employment gleaned from the 2010 LCMS report, focusing mainly on CFWs. 2 The analysis counts young people as those aged 15 24, reflecting the approach taken for the MDGs. The paper first discusses the concepts and definitions of economic activity by using the labour force framework, with particular emphasis on the concept of the economically active population and how CFWs fit into the employed population. Findings on contributing family workers are then presented, after which the policy implications are discussed. 2 The LCMS reports workers in agriculture, forestry and fishing separately from wage employment and own account workers. It is unclear if this category is exclusively own-account workers or it also includes wage employees in the agriculture, forestry and fishing industry. Due to this uncertainty, the analysis has left out ownaccount workers, and concentrated on contributing family workers only. 8

2 CONCEPTUAL FRAMEWORK 2.1 The economically active population The 2010 LCMS collected information on the economically active and inactive population in order to assess the extent of their participation in economic activities. In aligning this analysis with the definition of youth as those aged 15 24, this paper defines the working age population as those aged 15 and older. 3 The working age population is categorised into two groups: the economically active population (those in the labour force) and the economically inactive population (those not in the labour force). The economically active population is further grouped into the employed and the unemployed (without work but available for work). Figure 1 illustrates the categorisation of the working age population. Figure 1. Categorisation of the working age population Population (15+) Employed Economically active population (labour force) Unemployed Economically inactive population (full-time students, retired, full-time homemakers, etc) Paid employees Own-account workers Contributing family workers The ILO distinguishes between two measures of the economically active population: The currently active population (the labour force), measured in reference to a short reference period (the last 7 days is used in Zambia), and The usually active population, measured in relation to a long reference period, usually one year. The currently active population is more widely used for measuring the current employment and unemployment situation of a country and the current employment characteristics of its population. 3 The LCMS defines the working age population as those aged 12 and older, while the youth definition used in this report are those aged 15 24. The LCMS data was therefore re-analysed using 15 as the minimum age to conform to the youth definition. 9

2.2 Classification of the employed The international definition of employment is formulated with respect to a short reference period. The definition distinguishes between paid employment (employees including apprentices or trainees and members of the armed forces) and self-employment (employers, own-account workers including producers of goods for own final use, members of producers cooperatives, and contributing family workers). It provides separate criteria for the measurement of these two types of employment. According to the definition, the employed refers to all persons above the age specified for measuring the economically active population (e.g. 15 years) who, during a specified short period of either one week or one day, were in the following categories: (a) Paid employment: At work: persons who, during the reference period, performed some work (i.e. at least one hour) for wage or salary, in cash or in kind. With a job but not at work: persons who, having already worked in their present job, were temporarily not at work during the reference period and had a formal attachment to their job. (b) Self-employment: At work: persons who, during the reference period, performed some work (i.e. at least one hour) for profit or family gain, in cash or in kind. With an enterprise but not at work: persons with an enterprise (which may be a business enterprise, a farm or a service undertaking) who were temporarily not at work during the reference period for any specific reason. The concept of work for the measurement of employment corresponds to the concept of economic activity as derived from the production boundary of the System of National Accounts (SNA). This means that the notion of work for pay, profit or family gain in the definition of employment should be interpreted as referring to any activity falling within the SNA production boundary. The following groups of workers are to be included among the employed: contributing family workers at work; persons engaged in the production of goods for own final use by their household; paid apprentices; working students; and members of the armed forces. 2.3 CFWs at work The International Classification of Status in Employment (ICSE-93) defines a contributing family worker as a person who works for family gain in an unincorporated market enterprise operated by a related person living in the same household, but who cannot be regarded as a partner because the degree of his/her commitment to the operation of the enterprise, in terms of working time or other factors, is not at a level comparable to that of the head of the 10

enterprise. Where it is customary for young persons, in particular, to work without pay in an unincorporated market enterprise operated by a related person who does not live in the same household, the requirement of living in the same household may be eliminated. 11

3 CHARACTERISTICS OF CONTRIBUTING FAMILY WORKERS The tables in the subsequent pages, derived from the 2010 LCMS, show the following: CFWs are associated with both youth and poverty. While 26% of the economically active population is aged 15 24, among CFWs this rises to 47.4%. While 15.5% of the economically active population are young and poor, among CFWs the proportion is 38.7%. (See Table 1.) Young poor people are more likely to be unpaid family workers than waged workers or unemployed. CFWs account for 42.2% of Zambia s population of poor but economically active young people (aged 15 24), while the proportion of that population in waged employment is only 3.9%. (Among the non-poor economically active population, by contrast, CFWs are less prominent, comprising 14% of the young age group.) Further, young poor people are 2.6 times more likely to be CFWs than they are likely to be unemployed (16.1%). (See Table 1.) A higher proportion of CFWs are female than are male. Among the poor, females account for 58.9% of the young CFWs, and 84.6% of the older CFWs. Among the smaller population of non-poor CFWs, an even higher proportion are female. (See Table 2.) Most CFWs have limited education levels. Among poor CFWs, 56.1% of the young and 60.3% of the non-young have 60.3% of the non-young have only primary level education or lower. (The true figures may be rather higher but may be rather higher but around a fifth of respondents did not state their education levels). (See levels). (See Table 3.) The overwhelming majority of CFWs live in rural areas. Among poor CFWs, over 96% live in rural areas. Around 87% of non-poor CFWs live in rural areas too. (See Table 4.) High proportions live in poorer, rural provinces, like Eastern and Southern. CFWs are heavily concentrated in the agriculture, forestry and fishing industries, whatever their age or poverty status. 89.5% of young CFWs and 91.4% of poor young CFWs are CFWs are employed in those industries. For most, this means working in subsistence agriculture. (See 12

Table 6.) 13

Table 1. Economically active population by poverty status, Zambia 2010 Total poor Extremely poor Non-poor Total population 15+ (%) Total population 15+ Total econ. active population 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. 15+ In wage 3.9 6.7 2.6 4.9 18.3 36.4 9.7 18.8 126,126 694,069 820,195 employment Running a 4.7 8.1 4.1 6.4 9.9 20.0 6.8 12.9 88,468 478,182 566,650 business/self employed non farm Farming 29.7 59.8 29.9 63.3 14.7 23.3 23.6 45.0 306,736 1,661,380 1,968,116 Fishing 0.8 1.1 0.8 1.1 0.1 0.5 0.5 0.9 6,990 32,623 39,613 Forestry 0.2 0.4 0.2 0.5 0.0 0.1 0.1 0.3 1,581 9,897 11,478 Piece work 2.5 2.1 2.5 2.0 3.0 2.2 2.7 2.1 34,760 78,920 113,680 CFW 42.2 16.5 45.4 17.6 14.0 5.3 30.8 12.0 399,383 442,836 842,219 Total employed 83.9 94.8 85.6 95.8 60.0 87.9 74.3 92.0 964,043 3,397,907 4,361,950 Not working but 9.4 3.5 8.9 2.7 26.8 7.9 16.5 5.3 213,629 194,888 408,517 looking for work/ means to do business Not working & not 6.6 1.8 5.5 1.5 13.2 4.2 9.3 2.8 120,602 102,491 223,093 looking for work/ means to do business but available or wishing to do so Total unemployed 16.1 5.2 14.4 4.2 40.0 12.1 25.7 8.0 334,231 297,379 631,610 Total economically active (number) 773,247 2,195,859 531,251 1,532,397 525,026 1,499,427 1,298,273 3,695,286 1,298,273 3,695,286 4,993,559 * 14

* The total economically active population reported in the LCMS is 5,234,000. The difference is due to the definitions used: the LCMS defines the labour force as the population 12 years and older, while in this paper the labour force is defined as those aged 15 years and older, a definition consistent with international standards and the Labour Force Survey. Ret. = retirement Table 2. Proportion of contributing family workers by sex and poverty status, Zambia 2010 Total poor Extremely poor Moderately poor Non-poor Total (%) Total (n) 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. Male 41.1% 15.4% 43.7% 16% 33.5% 13.9% 28.5% 14.8% 38.7% 5.3% 154,757 67,814 Female 58.9% 84.6% 56.3% 84% 66.5% 86.1% 71.5% 85.2% 61.3% 84.7% 244,626 375,021 Total count 325,960 363,259 241,276 269,568 84,685 93,691 73,423 79,576 399,383 442,835 399,383 442,835 Table 3. Proportion of contributing family workers by highest educational attainment and poverty status, Zambia 2010 Total poor Extremely poor Moderately poor Non-poor Total (%) Total (n) 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. Primary or 56.1 60.3 56.0 60.6 56.5 59.3 46.0 52.8 54.3 58.9 216,673 260,984 lower Secondary 26.3 18.4 24.9 16.5 30.4 24.0 41.3 28.7 29.1 20.3 116,235 89,777 Tertiary 0.1 0.5 0.2 0.6 0.0 0.2 1.3 1.2 0.4 0.6 1,427 2,694 Not stated 17.4 20.8 18.9 22.4 13.2 16.5 11.3 17.2 16.3 20.2 65,048 89,380 Total count 325,960 363,259 241,276 269,568 84,685 93,691 73,423 79,576 399,383 442,835 399,383 442,835 15

Table 4. Proportion of contributing family workers by residence and poverty status, Zambia 2010 Total poor Extremely poor Moderately poor Non-poor Total (%) Total (n) 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. Rural 96.7% 96.2% 97.3% 97.3% 95.1% 92.9% 86.2% 87.6 94.8 94.7 378,514 419,194 Urban 3.3% 3.8% 2.7% 2.7% 4.9% 7.1% 13.8% 12.4 5.2 5.3 20,868 23,642 Total count 325,960 363,259 241,276 269,568 84,685 93,691 73,423 79,576 399,383 442,835 399,383 442,835 Table 5. Proportion of contributing family workers by province and poverty status, Zambia 2010 Total poor Extremely poor Moderately poor Non-poor Total (%) Total (n) 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. Central 10.8 12.2 10.2 10.9 12.5 15.9 15.6 16.2 11.7 12.9 46,581 57,311 Copperbelt 1.8 2.2 1.0 1.5 4.2 4.0 8.0 6.0 2.9 2.9 11,760 12,673 Eastern 31.1 30.6 32.0 33.2 28.3 23.1 21.3 20.7 29.3 28.8 116,885 127,669 Luapula 10.2 11.3 11.1 11.4 7.7 11.0 10.9 10.3 10.3 11.1 41,317 49,329 Lusaka 2.9 3.1 2.9 2.8 2.8 4.0 4.8 7.2 3.2 3.8 12,860 17,016 Northern 16.1 15.6 16.2 15.3 15.7 16.3 13.6 13.2 15.6 15.1 62,395 66,986 North- 3.4 3.1 2.3 2.2 6.6 5.7 5.2 8.7 3.7 4.1 14,930 18,198 Western Southern 17.4 17.4 17.5 17.0 17.3 18.5 16.7 16.6 17.3 17.3 69,011 76,408 Western 6.4 4.5 6.9 5.6 4.9 1.4 3.9 1.2 5.9 3.9 23,645 17,246 Total count 325,960 363,259 241,276 269,568 84,685 93,691 73,423 79,576 399,383 442,835 399,383 442,835 16

Table 6. Proportion of contributing family workers by industry and poverty status, Zambia 2010 Total poor Extremely poor Moderately poor Non-poor Total (%) Total (n) 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. 15 24 25 ret. Agriculture, 91.4 93.9 91.5 94.0 91.0 93.6 81.1 86.6 89.5 92.6 357,359 409,888 forestry & fishing Mining & 0.2 0.3 0.3 0.3 0.1 0.2 0.3 0.6 0.2 0.3 972 1,412 quarrying Manufacturing 0.7 0.4 0.9 0.4 0.1 0.4 0.1 0.6 0.6 0.4 2,264 1,919 Electricity & water - - - - - - - - - - - - supply Construction 0.1 0.0 0.1 - - 0.1-0.1 0.0 0.0 196 210 Wholesale & retail 1.4 0.7 0.5 0.5 3.8 1.1 7.9 4.9 2.6 1.4 10,238 6,344 trade; repair & sale of motor vehicles & parts Transport & 0.1 0.2 0.1 0.3 0.0 0.0 0.8 0.2 0.2 0.2 800 873 communication Accommodation & 0.1 0.0 0.1-0.1 0.1 1.3 0.4 0.3 0.1 1,158 408 food service activities Finance & - - - - - - 0.1 0.1 0.0 0.0 84 42 insurance; real estate & bus. services Community, social 0.1 0.1 0.0-0.3 0.2 1.7 0.8 0.4 0.2 1,631 815 & personal services Other 6.1 4.5 6.6 4.6 4.6 4.3 6.6 5.7 6.2 4.7 24,680 20,925 Total 325,960 363,259 241,276 269,568 84,685 93,691 73,423 79,576 399,383 442,835 399,383 442,835 17

4 POLICY IMPLICATIONS Mainstream reflections on employment and labour market policies, including the current focus on youth employment and unemployment, usually ignore young people who are involved in unpaid work. This is because unpaid work does not fit within the definitions of either unemployment or paid employment. The high poverty levels among the CFWs, especially the youth, warrant special attention. There are several implications for policy. First, job creation strategies should have a gender focus. The results from the LCMS show a higher proportion of female youth who are contributing family workers. This suggests that while men receive the lion s share of income and recognition for their economic contribution, the work of many young women remains unpaid, unrecognised and undervalued. The unequal distribution of unpaid work between women and men is substantially linked to the sexsegregated labour market and the prevailing sex discrimination and domination of men s values in society at large. Second, education and skills development is key. Most CFWs have low levels of education. Over half (56.1%) of the youths who are CFWs have only obtained primary school education or lower. And, according to the 2008 Labour Force Survey, the proportion of CFWs who were reported to have received skills training was 1.6% (compared to the 7.1% of the employed persons who received skills training country-wide). Improving education and skills levels in this group will boost future labour market quality and enhance productivity, which effectively fosters economic growth. Third, there is need for productive agricultural employment opportunities. Since poor young CFWs are mostly engaged in subsistence agriculture, and in agro-based provinces like Eastern and Southern, any approach to rural employment promotion needs to prioritise agriculture and the rural provinces. Because poor people rely for their living mainly on their labour whether wage-labour or self-employment more and better rural employment is central to achieving the MDGs, and MDG 1 in particular. Creating productive agriculture employment opportunities for the rural youth poor is therefore an essential driver for rural development and for more equitable and inclusive communities. Fourth, there is a need for an institutionalised social security system to protect the vulnerable. CFWs are at the mercy of their relatives who are their employers. They are therefore unlikely to have formal work arrangements, may not work under decent conditions, have no union representation, and do not have adequate social security, if any. The current social security schemes are targeted at the population in formal sector employment. Fifth, the key performance indicators for the Sixth National Development Plan should be adjusted to track vulnerable employment. This would mean introducing indicators for the proportion of own-account workers and CFWs in total employment. 18

Sixth, the Central Statistical Office needs more consistent definitions in order to measure vulnerable employment. The LCMS defines the employed population as those aged 12 and above, while the Labour Force Survey defines it as those aged 15 and above. Additionally, the LCMS singles out the self-employed in agriculture, forestry and fishing as separate categories. However, since it is not clear if these separate categories only apply to self-employed workers, data collectors may include those in paid employment. The two surveys should be made more easily comparable. In conclusion, it is imperative that policy makers are aware of the many people who are engaged in unpaid work so that the issue can be mainstreamed into policy-making process. While issues of youth unemployment are important, young people who are engaged in unpaid work also require attention. Growth and job creation policies targeted at different groups of the youth will help alleviate the high levels of poverty. Further unravelling the concepts and definitions of unpaid work could contribute to a broader recognition and understanding of work and employment. 19

REFERENCES CSO (Central Statistical Office) (2011) Labour Force Survey Report 2008. Lusaka: Central Statistical Office. CSO (2012) Living Conditions Monitoring Survey Report 2006 & 2010. Lusaka: Central Statistical Office. ILO (International Labour Organisation) (2010) 'Vulnerable employment and poverty on the rise, Interview with ILO chief of Employment Trends Unit', ILO Newsroom, 26 January. http://www.ilo.org/global/about-the-ilo/newsroom/features/wcms_120470/lang-- en/index.htm UN (United Nations) (2008) Millennium Development Goals Indicators. UN website. http://mdgs.un.org/unsd/mdg/host.aspx?content=indicators/officiallist.htm UN (2011) The Millennium Development Goals Report 2011. New York: UN. http://mdgs.un.org/unsd/mdg/host.aspx?content=products/progressreports.htm World Bank (2011) Measuring Vulnerability. World Bank website. http://go.worldbank.org/r048b34jf0 20