October 15

Sriram Gutta

Sustainable Employment: A Necessary Intervention for the Poor

“Poverty is not God-given. Poverty can be removed by collective action. The strategy must involve all sectors and levels of society – including state, market and civil society.”

Ela Bhatt, founder of the Self-Employed Women’s Association of India

This post is dedicated to the International Day for the Eradication of Poverty, recognized each Oct. 17 throughout the world for more than two decades. This day is a reminder for each of us to acknowledge the effort and struggle of people living in poverty, a chance for them to make their concerns heard, and a moment to recognize all the people and organizations working towards eradication of poverty. The theme for 2010 is “From Poverty to Decent Work: Bridging the Gap”.

Since the movement started in 1987, several NGOs, bilateral agencies, private organizations, and government policies have had a positive impact on poverty eradication. Government schemes like India’s National Rural Employment Guarantee Scheme (NREGS), which guarantees 100 days of employment to one member of every rural household, have arguably reduced rural underemployment and raised wages. Given the scale of poverty and the implementation issues, such government initiatives, although still considered successful, have not made a sizable dent on poverty.

Another critical poverty-fighting intervention, microfinance, has given millions of poor access to financial services for the first time, and moved many households toward economic stability. In aggregate, such interventions have helped to move the needle on poverty: the global rate for extreme poverty is projected to be 15% in 2015, down significantly from 42% in 1990.

Although microfinance has reached over 150 million individuals worldwide, it is unable to access and serve the poorest of the poor. These people are vulnerable – unable to find work or living in poverty despite a job, in poor health, recovering from a natural disaster or socially marginalized. Owing to their critical needs, lack of business skills and confidence – access to credit and entrepreneurship might not be the immediate solution. As Stuart Rutherford points out in his highly acclaimed book, Portfolios of the Poor, the poor have to deal with an income that is not only low, but also variable and unpredictable. The critical needs of these vulnerable groups are what threaten the small and erratic income streams; one medical emergency can plunge a household into a deep poverty trap. Ensuring more stable, predictable (and higher) income streams can help stabilize a household’s precarious position, allowing it to save up for unexpected costs and exert more control over the betterment of their lives.

Today’s most popular poverty alleviating interventions lead with financial services. For certain under-privileged populations that include the ultra poor, those living in remote and isolated regions – and groups within those populations that are especially disadvantaged by gender, caste, ethnic origin, age or disabilities –employment opportunities with steady cash flows are critical. There are very few organizations focused on providing sustainable employment to these segments, but one example is Mirakle Couriers, a for-profit venture that only employs low-income, deaf adults. Mirakle employees, who ordinarily are ostracized from the labor force, are empowered to improve their lives and lift their families out of chronic poverty. Another organization providing employment opportunities is Pipal Tree Ventures, which provides vocational training in the construction industry to unemployed youths in rural areas. The third and perhaps best-known example is FabIndia, a handloom and handicraft products marketing chain, which sources its products from thousands of rural weavers and craftspeople all over India. These organizations have managed to involve the poor in the value chain and made them stakeholders. The widespread perception that certain segments aren’t commercially viable hasn’t deterred these organizations from designing innovative business models and training to make these people employable. We are starting to see the emergence of these for-profit, scalable models that promise to be the social enterprises of tomorrow.

For a problem as complex as poverty, taking a one-dimensional approach will not properly service all segments of the poor. The poor are not uniform in profile – the target segment has many different facets, different needs, and requires different approaches. However, there is little doubt that provision of sustained income-generating activity will greatly help. There is evidence worldwide that a regular income leads to food security, higher levels of education, and an increased ability to deal with health crisis.

On the International Day for the Eradication of Poverty, let’s pledge to continue exploring all possible approaches to stabilize the volatile lives of the poor.

employment, microfinance, poverty alleviation, sustainability