A New Approach to Labor Market Assessments
By: Rachel Shah and Sara Murray
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Did you know there’s a new approach to employment programming? One that leads to systemic and sustainable change?
Traditionally, employment programs deliver support directly to a target population disadvantaged by existing systems. But all too often, these programs fail to account for the many real-world constraints people face after receiving program support, not to mention how other people will access services after the program closes. For example, a young mother may have had childcare during donor-funded skills training, but if there aren’t enough jobs, or she doesn’t have access to subsidized childcare at work, or she can’t even get to work safely, she likely can’t translate her newly gained skills into a job. And even if she can, what about the other women in her community? How will they access gender-sensitive vocational skills training after the program closes?
Market Systems Development for Employment (MSD4E) takes a different approach to livelihoods and employment programming. Through Systems Labor Market Assessments (SLMAs), MSD4E programs analyze why existing systems aren’t working better, and then intervene to change the way those systems work. To ensure lasting change, MSD4E programs work entirely through existing system actors, such as governments and the private sector, rather than delivering services themselves.
What is a Systems Labor Market Assessment?
SLMAs are foundational to MSD4E programing as they chart a course for intervening to change the systems most affecting the target population. They identify the economic and supporting sectors with the highest potential to generate employment opportunities for members of the target population, and the systemic constraints that prevent them from gaining reliable, rewarding, and decent work. SLMAs dig deep to understand what causes these constraints, and how to permanently change them.
In contrast, standard livelihoods needs assessments or Labor Market Assessments (LMAs) focus primarily on workers — or labor supply. This produces findings on the experiences of members of the target population, including things like skills gaps and job matching challenges. These assessments rarely look in-depth at demand for labor, or at how the underperformance of specific economic sectors affects people’s access to and experience of work. By narrowing in on a limited number of systems — including those that affect both the demand and the supply of labor — SLMAs develop intervention ideas that go beyond filling existing vacancies.
The Implementer-Led Design, Evidence, Analysis and Learning (IDEAL) activity — funded by the United States Agency for International Development (USAID) Bureau of Humanitarian Assistance (BHA) — contracted DevLearn to pilot the SLMA methodology in Haiti and Zimbabwe, in partnership with Mercy Corps’ teams. These pilots were conducted between October 2021 and March 2022. Learning from these pilots helped to develop a five-step SLMA process:
- Understand and segment the target group. This critical first stage is focused on gaining an understanding of the capacities, needs, and employment preferences of workers and jobseekers. While a needs assessment is a necessary part of any program, SLMAs reveal deeper insights about subgroups by segmenting the target population based on shared capacities, aspirations, and opportunities. This ensures that their varying needs are addressed when designing systemic interventions. For instance, The Haiti and Zimbabwe SLMAs segmented the population based on gender (with a focus on women) and age (with a focus on youth). The team learned that more in-depth segmentation was needed and have since dedicated resources to this in MSD4E programs. For example, an MSD4E program that recently started in Zimbabwe identified differences between women with high or low proximity to economic growth centers, and between women with high or low access to financial and other resources, leading to four segments of women.
- Scan the labor market. The second stage involves working out which sectors offer the best opportunity for increased or improved work opportunities and gaining a preliminary understanding of key issues in the labor market for the target group. The outcome of this step is an initial long list of economic sectors to explore further. A literature-based market scan led the research team to identify 21 sectors in Zimbabwe and 12 in Haiti. They also noted the contextual and macroeconomic trends affecting employment in both countries.
- Understand and select economic sectors. The purpose of the third stage is to screen the long list of sectors developed in the previous stage for how relevant they are to the different target group segments (identified in the first stage), whether there is really an opportunity for sustainable, scalable change and whether capitalizing on that opportunity is feasible for the program. A shortlist of sectors is then produced. For example, after screening, solar energy, agro-processing, timber, tourism, and Information, Communication, and Technology (ICT) were shortlisted for investigation in Zimbabwe. This shortlist was based on assessment of the sectors against a series of criteria, including the sector’s relative potential for young women and men to find employment and increase their incomes, potential for green growth, potential to support food security, potential to increase resilience to shock, consumer demand, investment trends, potential for private and public sector partners to work with, alignment with government priorities, enabling infrastructure, and probability of impact.
- Understand and analyze market systems. This stage is about understanding system-level constraints and opportunities for each of the shortlisted systems. For example, the SLMA of Zimbabwe’s agro-processing sector found that most processors are operating at only 40–80% of full capacity due to poor access to raw material, such as grains and fruits. The analysis of Haiti’s transportation and distribution sector revealed that 30% of the country’s agricultural production is lost due to spoilage and a lack of access to markets. Transportation services are expensive and fragmented, with multiple small operators. In addition to poor road quality, high costs are driven by a low level of organization among transporters, and poor access to local maintenance services.
- Develop a vision and intervention proposals. Using the findings from the market system analyses, the implementation team develops a vision for how each system could function better to provide sustained employment opportunities for the target group even after donor funding ends. The team then develops implementation proposals to achieve this vision. For example, to address the constraints identified in Zimbabwe’s agro-processing sector, the SLMA proposed an intervention to improve the reliability and quality of domestic input supply, such as grains and fruits. This could reduce dependency on expensive food imports and generate employment opportunities not only at the processor level, but also for farmers producing those inputs and other market actors along the value chain (e.g., transporters and traders. Importantly, the intervention does not require engaging jobseekers directly. Rather, it works to change the system as a whole. In Haiti, an intervention was proposed to support the development of specialized transport services for fresh produce and to improve the capacity of local mechanics to complete more complex repairs. This could increase efficiency, improving work opportunities along the transportation value chain and beyond. Edryne Pepjy Michel, Mercy Corps Haiti’s Food Security and Resilience Program Manager, responded to the findings by noting, “[The transportation sector] is something I have not thought about before, but I think this is important because post-harvest losses are one of the biggest issues we face…I see the potential here, especially for youth, and for women who are not traditionally seen as mechanics…I think it is feasible.”
What’s next?
Conducting SLMAs in multiple contexts has generated a lot of learning about what works and what doesn’t. This learning is captured in IDEAL’s full report and summary brief on SLMAs in Zimbabwe and Haiti. These findings have also fed into the Rough Guide to Youth Employment and MSD in Sub-Saharan Africa, commissioned by the Donor Committee for Enterprise Development.
Building on the learning from this IDEAL-funded micro-grant, Mercy Corps is now focused on supporting programs with SLMA application. To do this, they are building on the learning from IDEAL, as well as experience running MSD4E programs. This will be captured in “How-to” guides covering each step in the SLMA process.
If you would like to find out more about the application of systems approaches to employment programming, or stay in the loop on the development of SLMA “How-to” guides, please contact youthemployment@mercycorps.org
