The market in labour for agricultural smallholdings seems to be underdeveloped in Africa. This weakness has up till now been attributed to supply and demand factors. However, according to former Institute of Development Studies economist Alison Evans (now at the World Bank) this perspective is too limited. Rural labour market behaviour need to be analysed in terms of how local institutions work and the conventions that guide labour deals. Case studies in two Ugandan villages illustrate how these complex market 'rules' and 'norms' are of vital importance in areas where incomes are low and the economic future is uncertain.

Uganda's agricultural sector has great potential for success. As in most of Africa, its smallholder sector is of great importance as it provides the main income for the majority of the poor. One of the most important factors in determining success for smallholdings is the easy availability of labour.

Serious conflict in the 1960s and 1970s, changed the nature of institutions and the norms, rules and codes of behaviour according to which people and communities set up their networks of exchange. This shift resulted in decreased trust and decreased mobility of goods, services, labour and information. This decline was halted by the macro-economic reforms of 1987, and in the 1990s Uganda is reputed to have achieved remarkable economic progress. The study in hand sets out to inform national economic policies by clarifying the local context and content of labour market transactions for two villages in the Busoga region of Eastern Uganda. The fieldwork, dating from 1992 to 1993, included census surveys, labour diaries and participant observation, followed by quantitative and qualitative analysis. The resulting research findings in clude the following observations:

• Among smallholder households, 30 percent hired in and 20 percent hired out labour on a casual piece rate basis, while 15 percent participated in roving labour groups. In some cases the same households did both.
• In the larger village, the amount of cultivated land per household worker and the value of on-farm income were positive influences on the amount of extra-household labour hired in. In the smaller village the amount of non-farm income was important.
• All sizes of household appeared to be net importers of labour. The amount of labour increased with increased size of holding. This seemed to equalise land:labour ratios.
• Casual piece rate contracts predominated. Employees preferred the freedom from employers while employers preferred the lower costs of this arrangement.
• Employers preferred piece rate contracts, no matter what the type of crop
• Contracts between people who already knew each other were preferred to contracts with strangers. This allowed less supervison, more flexibility and less risk of broken deals and promises.

Policy lessons or implications that arise from these observations include the following:

• In low-income areas, rural markets seldom run smoothly. They operate according to complex sets of rules and norms. In order to design better macro-economic policies, the function and role of institutional arrangements in labour transactions need to be better understood.
• If laws and property rights are non-existent, weak or unenforced, markets will run less smoothly.
• Other rural infrastructure factors (such as poor roads or transport) can also affect labour markets by discouraging the exchange of labour and information. This can make it difficult for labourers and employers, as they try to locate one another and set wages.

Source(s):
1. Collier, P. & Lal, D. (1986) Labour and Poverty in Kenya 1900-80 Clarendon Press, Oxford >
2. Evans, A (1992) A Review of the Rural Labour Market in Uganda Prepared for the World Bank's Agricultural Sector Memorandum 1993, mimeo >
3. Sender,J & Smith, S (1990) Poverty, Class and Gender in Rural Africa: A Tanzanian Case Study. Routledge >

Funded by: National Research Council of Uganda, ESCOR/DFID, UK (1992-1994)

id21 Research Highlight: 1998-May-29

Further Information:
Alison Evans
World Bank
1818 H ST NW
Washington DC
20433
USA

Tel: +1 202 473 9182
Fax: +1 202 522 0056
Contact the contributor: aevans@worldbank.org

The World Bank