ILO and development banks launch discussions on measuring the impact of investment projects on employment

News | 02 February 2022
(ILO News, 2 February). The ILO’s STRENGTHEN2 project hosted a workshop on “Financial institutions and employment impact assessments: the state of play”. The event was the first in a series to be held over the next two years that aims at understanding how development banks measure the impacts of their investment projects and providing a platform for coordination, identification of best practices, and learning between the banks on the reporting, monitoring and assessments of these impacts.

The virtual workshop was attended by more than 30 specialists from 17 financial institutions active in the development sphere, along with staff from the European Commission and the ILO. This first event had the objective to create an overall picture of employment impact measurement within development banks by providing an overview of the various definitions, methodologies and processes used to measure impacts of investment projects.

The first session focussed on the definitions and taxonomy used for employment effects and included a presentation from the World Bank on a recently developed taxonomy. This is an important topic as defining a clear terminology and having a better understanding of definitions and taxonomy that institutions use is a key step to better measuring employment impacts.

The presentation was followed by a panel discussion with representatives from various development banks who shared their practises regarding the topic. The ensuing discussion highlighted some of the criteria used when recommending the taxonomy and potential refinements and made it clear that for some institutions this topic is still a work in progress.  

The second session centred on the current state of play in measuring employment impacts. Three presentations were given from representatives from different working groups, particularly those related to the Harmonized Indicators for Private Sector Operations (HIPSO) initiative, the European Development Finance Institutions (EDFI), and Multilateral Development Banks (MDB). Presenters highlighted the existing landscape in measuring employment impacts within development banks, covering a range of employment effects including direct, indirect, induced and long-term (capacity). It highlighted how most of the conversation is currently advanced regarding direct and indirect effects, but for long-term effects and employment quality, there is still more work to be done. Presentations were followed by an open floor discussion to highlight the current state of play among other participants.  

The workshop set the landscape of measuring employment effects among development banks and provided a platform to bring together participants from a range of financial institutions to begin discussions. It also laid out the current state of play among these institutions and has set the foundation for the upcoming two events that can focus attention on specific topics. During the concluding part of the event, a range of topics were identified for further  discussion. These included the methodological and technical modelling work, data sharing and availability and estimating long-term employment effects. Based on the feedback received from participants and suggestions for future topics, a second event will be organised during 2022, to facilitate further exchanges among the development banks and increase the knowledge base on employment effects.