Norfund contributes to creating jobs directly in the portfolio companies and indirectly through their value chains.
Results in 2020
New jobs created in portfolio companies*
Total jobs in portfolio companies
* In companies with two consecutive years of reporting
Jobs are vital to reducing poverty. They generate income, and when in formal sector, the jobs can generate a range of other benefits and help people to improve their knowledge and skills.
In 2019, the International Labour Organization noted that 190 million jobs were needed to address the current levels of unemployment, and that a further 340 million jobs would need to be created by 2030.
Norfund’s investments contribute both directly and indirectly to the achievement of SDG Target 8.5.
The COVID-19 pandemic has had a serious negative impact on global working hours and income in 2020, with the prospect of a slow, uneven and uncertain recovery in 2021. The International Labour Organization (ILO) surveys show that 8.8 per cent of global working hours were lost for the entirety of 2020, equivalent to 255 million full-time jobs.
Avoiding further job losses and creating a substantial number of new jobs in developing countries is as important as ever because these countries were in general struggling with high unemployment rates even before the pandemic.
In Africa, more than 80% of the jobs are within the informal sector*. This means that the workers are not registered, they have no insurance, sick leave schemes, limited training and health & security rights. Therefore, the rationale is not only about creating a large number of jobs, but also as many jobs as possible in the formal sector where workers are treated well.
377,000 jobs in Norfund portfolio companies
By the end of 2020, a total of 377,000 people were employed in the companies in which Norfund is invested, either directly or through funds.
From the end of 2019 to the end of 2020, Norfund’s portfolio companies (with two consecutive years of reporting) reported a net increase of new jobs by 2 per cent, or more than 5,700 jobs.
Approximately 34 per cent of the total people employed in Norfund’s investees were women, and 26 per cent were youth, defined as below 25 years.
Female employees in Norfund portfolio companies
Of employees in Norfund portfolio companies are youth
More than 180,000 people were employed in companies operating in Africa, or 48 per cent of total employees in Norfund’s investees.
39 per cent of the jobs are in Least Developed Countries (LDC).
Jobs per region
36 per cent were employed in companies in Asia, 13 per cent were employed in companies in Latin America and 3 per cent were employed in companies operating globally.
As there is currently no consensus on how to quantify investor contribution to company growth and development impact, Norfund attributes the impact reported solely to our portfolio companies.
Jobs indirectly supported
Norfund’s portfolio companies contribute indirectly to employment and job creation when they buy goods and services from other enterprises and when the employees or suppliers’ employees spend their salaries.
Portfolio companies also enable employment through energy production and access to finance. Finally, all the companies contribute to government revenues and spending ability by paying taxes, stimulating further job creation in public service sectors such as health and education.
In 2020, Norfund has for the first time applied the Joint Impact Model (JIM) to estimate the scope of such indirect employment impacts.
Promoting job quality
Norfund promotes job quality using the IFC Performance Standards (PS) on Environmental and Social Sustainability in our investment processes.
The IFC PS is the key tool used by development finance institutions, such as Norfund, to assess the environmental and social risks of investments. One of the PS focuses on Labour and Working conditions and includes provisions for issues such as workers’ rights, health and safety, anti-discrimination and equal opportunity. The standards are aligned with the ILO’s core conventions.
Harmonised indicators for private sector operations
Each year, Norfund collects data on development effects from our investees. Where available, we apply harmonised indicators for private sector operations (HIPSO), including on direct jobs.