The course probes into the effects of changes in the access to finance on the demand for labour, whether unpaid family labour, child labour or wage labour, as well as on working conditions, informality and other decent work outcomes. The course examines the conditions for a business case as well as public policy incentives to induce MFIs to maximize decent work outcomes amongst their clients.
Prerequisites and target audience:
Exposure to microfinance with micro-enterpreneurs and other clients of MFIs. Practitioners and policy makers.
The first session will work out why the issue matters: unemployment and under employment despite growth, political expectations that microfinance help to create jobs quickly and massively; the increase in the number of activist governments, the exposure of many MFIs operating with cost-covering interest rates to charges of “anti-social” pricing. The session will discuss the implications of the fact that most MFIs have predominantly portfolios of self employed clients. The relation to social performance will be reviewed, illustrating it with a few MFI profiles. The aim is to enhance the understanding of key notions: what quality of employment are we talking about? What type of client enterprise is likely to generate what kind of employment? As a result of the provision of which financial services? How stable are these jobs?
The second session will examine what MFIs know about the employment effects of microfinance on their clients. What does it take? Why would an MFI care? This session will deal with client information and the costs to generate this information. The arguments in favour and against a more active role of microfinance institutions for decent work will be developed using concrete examples.
The third session will explore the different adjustments that MFIs can make for more decent work outcomes: product diversification, changes in delivery techniques, combining non-financial services with microfinance and so forth and whether this will yield a net benefit to the MFI.
The fourth session will look into implications for the promotion of MFIs: should governments or social investors provide incentives to MFIs that make efforts towards more decent work, at least by compensating for the incremental costs incurred? Should MFIs be given incentives to target the young, laid off workers, women, etc. Or any other target group? What is the experience of MFIs that have a policy of helping to formalize their clients? How can policy encourage such initiatives?
