The most important way to reduce poverty is to create jobs.
in Norfund portfolio companies (2018)
employees in portfolio companies (2018)
permanent jobs created in 2018
Norfund’s investments contribute both directly and indirectly to the achievement of the Sustainable Development Goal no. 8.
470 million jobs will be needed to absorb new entrants to the labour market between 2016 and 2030. (UNDP, 2018) The situation is most critical in Africa due to rapid population growth. 20% of unemployed people in Sub-Saharan Africa are youth. In Kenya alone, one million people join the work force every year. Only one in five are likely to find formal employment. Most will either be unemployed or engaged in non-wage-earning occupations. Generating jobs for the expanding youth population is essential.
“Getting a job is the best way to escape poverty”response given by 70% of the World Bank’s survey “Voices of the poor”
Norfund’s contribution to Job Creation
The private sector plays a critical role as nine out of ten jobs in low- and middle-income countries are created in the private sector.
Norfund investment companies contribute to job creation by hiring employees and by purchasing goods and services from local suppliers, thereby enabling these businesses to grow and expand.
Access to finance and electricity are preconditions for the development of enterprises and thereby also contribute indirectly to job creation. Finally, by paying taxes, all the companies contribute to government revenues and spending ability, stimulating further job creation in public service sectors such as health and education.
Promoting Job Quality
Norfund promotes job quality using the IFC Performance Standards on Environmental and Social Sustainability in our investment processes. One of the Performance Standards focuses on labor and working conditions and includes issues such as workers’ rights, health and safety, anti-discrimination and equal opportunity. The standards are aligned with the ILO’s core conventions.
Formal employment is defined by the ILO as “employment with a registered contract that commits the employer to pay relevant taxes and social security contributions on behalf of the employee, and that makes the employment relationship subject to standard labour regulation“.
Norfund requires adherence to these requirements from all its investees as part of our commitment to the fundamental rights of workers. This ensures that workers obtain legal rights and benefits such as worker injury insurance, pensions, health insurance and maternity leave where this exists.
As governments of developing countries look to establish or strengthen social security systems, they rely on formal employers for direct tax revenues. In addition, the registration and contribution of employees into social security systems is valuable and of high importance.
Through our requirements, Norfund works to ensure that our portfolio companies contribute both to direct government revenues and to social security membership. These are crucial factors for strengthening of the national social security systems.