This working paper examines the cost and results of jobs support projects financed by the Foreign, Commonwealth and Development Office (FCDO), United Nations High Commissioner for Refugees (UNHCR), and the World Bank in six low- and middle-income countries, with a view to informing future project design and budget planning. The analysis considers the cost of projects in both forced displacement and conflict settings relative to the cost in other development settings.
Jobs are defined broadly as any legal activity that generates an income, including informal jobs and self-employment. Jobs support projects include interventions aimed at either creating jobs, increasing the quality of jobs (productivity, income, and working conditions), or improving access to jobs for disadvantaged groups. The unit of analysis for this study was the ‘intervention’ or the set of services a project provides to a distinct group of beneficiaries.
The analysis focused on two broad outcomes: (1) cost-efficiency, that is the cost per individual beneficiary or firm; and (2) cost effectiveness, that is the cost per job created, per additional employment day provided, or per additional unit of income reported. Interventions differ greatly in the additionality and sustainability of outcomes, for example job creation may be temporary or permanent.
The analysis was based on data collected from projects supporting individuals or businesses, funded by FCDO, UNHCR and the World Bank between 2009 and 2019 in Iraq, Jordan, Kenya, Lebanon, Mali, and South Sudan. Programs with very long-term potential jobs impacts (e.g. education programs) and programs focused on policy advocacy only were excluded. The sample captured 109 interventions (freestanding support modalities within projects) across 55 projects, but the analysis focused on 63 interventions that had available cost and output data and 42 interventions that had cost and outcome data.
Jobs interventions were grouped into six categories: (i) training; (ii) job matching and brokerage; (iii) graduation or economic inclusion, including consumption support, savings support, access to a productive asset or support in starting an income-generating activity, and technical and soft skills; (iv) capital support and access to finance; (v) short-term employment in public works; and (vi) market system approaches that aim to improve the functioning of a specific market or value chain, based on the assumption that productivity will rise if inefficiencies in a value chain are removed. Many interventions (roughly one-third) combine approaches, so that beneficiaries receive a package of support. Capital support and access to finance was the most common support modality in the sample, followed by training.
- Cost efficiency varies greatly across interventions. The cost per individual beneficiary varied from US$20 to more than US$3,200, while the cost per firm varied from US$3,300 to US$835,000. For interventions targeting firms, the median cost per firm was around US$35,000 which was 75 times the median amount of US$468 spent per individual in the same countries in interventions targeting individuals.
- The costs of the interventions varied considerably across different contexts. For example, for interventions targeting individuals, the median costs per beneficiary were US$135 for capital support and access to finance interventions, but ranging from $37 to US$834; the median cost for job matching and brokerage interventions was US$180, ranging from $35 to US$499
- Variation in costs reflect differences in the value of direct transfers to beneficiaries, complexity of support provided, ancillary objectives (such as the provision of infrastructure), and context. Interventions that include multiple forms of support cost more to deliver. Difficult implementing environments, particular needs of beneficiary groups, and other contextual factors can also increase costs.
- Forced displacement and conflict settings favor simple and modest capital support programs but drive complexity and cost of training programs, further widening differences in cost between these two types of interventions. Training programs are more costly to deliver in forced displacement and conflict settings, and job matching programs are more costly to deliver in forced displacement settings. Job matching and brokerage interventions for forcibly displaced persons and their host communities are more costly than interventions targeting local communities only. Overall, in conflict-afflicted economies, the context can drive up implementation costs but simple designs lower costs.
- Cost per job created varies across interventions, but there are important differences in the additionality and sustainability jobs created. Public works have the lowest median cost per job created (US$390), in line with the temporary and low-wage nature of the employment offered. Job matching can place beneficiaries in jobs at an intermediate level of cost (US$3,300 per job placement). The high cost per placement relative cost per beneficiary reflects the low proportion of beneficiaries who succeed in finding and retaining employment. In addition, matching only facilitates access to existing or temporary jobs, rather than creating new opportunities. Start-up-oriented support to access finance (median cost per job of about US$4,100) and training-based support (US$4,700 at the median) report a similar median cost, but capital-based support is more likely to provide additional jobs. At the median, programs working with firms report a cost per job of nearly US$14,000, about four times the median cost in individual-level support, and projects that offer larger grants do not necessarily create proportionally more jobs.
- Reported cost per unit of income is high in simple capital support projects that provide agriculture inputs. Interventions that provide in-kind support to smallholder farmers in Kenya and South Sudan spend between US$0.19 and US$0.40 per dollar of additional income. Value chain interventions with a more systemic ambition and additional objectives spend significantly more—about US$2 per dollar of additional income at the median.
The authors conclude with the following recommendations to improve the cost-efficiency and cost effectiveness of jobs support programs:
- Remove restrictions on labor market access for the displaced to raise cost-effectiveness of jobs interventions.
- In challenging FCV settings, consider simple designs to achieve cost-efficiency.
- Assess expected cost-effectiveness ex ante by considering the likely productivity, additionality, and sustainability of jobs and income improvements.
- Consider the cost implications of combining jobs support modalities and monitor and evaluate how different components contribute to costs and results.
- In capital support to business activities, consider the merits and cost implications of working with firms of different sizes and capacities. Programs have far higher cost per job when they work with larger firms, and even those directed toward small businesses spend more than those with individual beneficiaries.
- Closely scrutinize the case for jobs support through training. Training interventions spend more per beneficiary and per job than capital support interventions, with weaker evidence of additional job creation.
- Monitoring and evaluation systems should keep track of cost per beneficiary and cost per outcome.