Creating jobs

In rural areas where non-farm employment opportunities are rare, road maintenance can provide much needed work.

Andean countries have adopted a policy of employing community microenterprises to carry out routine maintenance on national, secondary and rural roads.

Between 2004 and 2005 the International Labour Organization sub-regional office for the Andean countries, in collaboration with PROVIAS Departmental in Peru and Unidad de Caminos Vecinales in Ecuador, assessed the benefits and impacts of the microenterprises.

The objectives of the research were to:

• evaluate the impact of microenterprises on creating employment
• evaluate the impact of microenterprise workers' salaries on household and community economies
• identify lessons that could help other organisations create sustainable microenterprises
• find out if microenterprises in Peru have the capacity to maintain secondary roads
• find out if microenterprises, which operate as collectives, could be applicable in areas of Ecuador with no tradition of collective working.

Originally financed by the Inter-American Development Bank and the World Bank, microenterprises are now paid for out of national, regional and municipal budgets. Microenterprise workers recruit new members, identified through a selection process that includes skills tests. The socio-economic situation of potential members' families is also considered, with preference given to the poorest families and to female-headed households. The enterprises have low capital requirements and can employ up to 15 workers.

For rural roads, one job is generated for every 2.5 kilometres that needs maintaining, compared to one job per 3.5 to 5.5 kilometres on national roads. The evaluation also showed that with fixed monthly incomes microenterprise workers and their families clearly benefit:

• Communities with microenterprises earn higher average incomes than surrounding communities and have raised their purchasing power.
• They can plan their expenses and generate savings for investments.
• About 40 percent of workers surveyed used their added income to buy, refurbish or expand their homes, buy land or establish collective or private businesses.
• Minimum health requirements and working conditions are covered.

However, some communities have expressed jealousy or indifference towards microenterprises due to the lack of real opportunities they offer others to participate in the economic benefits they provide. This problem is emphasised where poverty levels are high. Microenterprises need to co-operate with their local communities through communal, sporting and/or civic activities.

Transport and economic planners need to be aware that:

• Road maintenance microenterprises are an effective way of maintaining roads, creating employment and reducing poverty.
• The extra cash improves purchasing power, generates savings and investments and builds capacity for local enterprise development.
• Contracting microenterprises to maintain secondary roads (with high traffic volumes) will require them to reinforce routine maintenance with machinery and more complicated technology.
• How a microenterprise is organised does not influence its technical performance - whether collective or private, it can perform satisfactorily.

Emilio Salomón
Av. Dos de Mayo No. 961 Apt. 901, San Isidro, Lima 27, Perú T +51 1 440 5982
salomonbalsamo@terra.com.pe

See also

International Labour Organization - Employment Intensive Investment Programme
www.ilo.org/public/english/employment/recon/eiip/index.htm

Resultados de la Evaluación del Modelo Piloto de Promocion de Microempresas de Mantenimiento Vial y Propuesta de Aplicación en el Ambito Nacional, Lima, Peru, Juan Contreras Sepúlveda, 2003

Evaluación del Modelo de Promocion de Microempresas de Mantenimiento Vial en el Peru: Provias Rural y Provias Nacional, Lima, Peru, Juan Contreras Sepúlveda, 2004
www.oitandina.org.pe

Views expressed on these pages are not necessarily those of DFID, IDS, id21 or other contributing institutions. Copyright remains with the original authors but (unless stated otherwise) any article may be copied or quoted without restriction, provided both source (id21, insights) and authors are properly acknowledged and informed. Copyright © 2006 id21. All rights reserved.