 Just for the purpose of going forward, so we are all on the same employment stage, so to speak, we're gonna use this definition of employment. So if an individual has worked at least one hour or more for pay for the previous week, they are, or 15 hours without pay, but say on a family farm or in a family store where you don't actually take home a wage, you are employed. You are unemployed, or you can also be on leave, maternity leave, sick, whatever, but that means you're on a wage job. If you're unemployed, it means that you did not work in the last week, either of those ways above, and you did not at least once actively try to find work. So you add those two together and you get the labor force. You may all know that, but I didn't. So I thought we might as well clarify, because some of the terms today when we're talking about jobs and work tend to be counterintuitive. One other note before we start digging into our results, economists love methodology. It's part of their DNA. They have to have the methodology. Some of the rest of us maybe don't find it quite so riveting. We have very distinguished researchers with us today. For the purpose of this conference, we are taking the methodology. I hate to say for granted, but we are assuming that they got it right, and believe me, getting it right is very important, because if you get it wrong, you end up either in the right place for the wrong reasons, which is pretty bad, or you end up totally in the wrong place. However, today we're focusing on the results. There may be one or two brief asides about methodology, I mean brief gentlemen, but we are talking about results. And those of you who are interested in the methodology will be able to do so when you read the papers, which at very soon stage will be on the UNU wider Recom website. So I've got now one other question before we get to Gary Fields. Unemployment is a major problem in the developing world. If you strongly disagree, press one. If you strongly agree, press 10, or enter 10, and if it's somewhere in between, enter another number, and then the green square, please. Strongly agree. So Gary, you see the results. I do. What's the reality? I strongly disagree with the results. I do. And why is that? I'm going to throw out some numbers very quickly. There are three billion people in the world that is people who live on less than two and a half dollars a day. There are 200 million people in the world who are unemployed by the ILO definition which Hillary gave us earlier. In contrast to those 200 million people- But wait a minute, I'm going to interrupt you. Where are those 200 million people from? That's what I was going to say. 200 million people who are unemployed are disproportionately in the richer countries of the world and not in the poorer countries of the world. There are 900 million people in the world, four and a half times as many as are unemployed who are working poor, who themselves and their families earn, excuse me, less than $2 a person a day adjusted for what money will buy. So I'm going to come back to that because it is, I think, a concept that we all need to understand that it's people and not just numbers, but who are the working poor? They're just people who just can't. The working poor are people who are trying to get what we might call good jobs, jobs that pay wages and salaries where you go to work at the same place every day and you get paid every week, but they can't get such jobs and so typically they create their own. All right, and they're stuck kind of in rather than an employment growth. They're kind of stuck in a rut, aren't they? Yeah, they're in a low earnings trap typically from which they cannot escape. All right, so what should be the role of development aid in all of this? Development aid can, and there are different ways to cut into this. Part of it can be helping to get them out of where they are through creating more and better wage and salary employment opportunities, but more importantly, since very few such jobs typically can get created to enable them to earn more in the positions where they now are, as farmers, as small business people. Self-employed. Self-employed. Okay, and what about stimulating economic growth you mentioned? Stimulating economic growth is a very important means to achieving those objectives because to the extent that the country can advance, more people will be employed. All right. Not Gary, you've not just met and spoken with thousands of poor people around the world. You've actually gone further and lived with their families so that you could be with them, gain their trust and actually understand the challenges they face each day. I think what it would be important to do because baby, you were talking earlier about making sure that we remember that some of the aid workers are people. We have to also remember that a lot of the poor are not just statistics, but actually people. So what I'm gonna ask you to do is to use the examples of some of the stories you know to illustrate some of these points. And I think maybe to start with the Vazquez family in Mexico. All right, so the Vazquez family in Mexico, the Matriaca family ran a fireworks business and she was self-employed and sold fireworks that she manufactured herself in a workshop away from the home up the side of the mountain. She had four children, two of them at the time we lived with them were 24-year-old twins, a son and a daughter who had sneaked into the United States in order to earn more money there. And when Ángela, the matriarch got sick, they had to sneak back into Mexico and they had skills, I'll talk more about that in a minute. Okay, but Ángela basically wanted to expand. Right, so what she wanted to do was to narrowly speaking to expand her fireworks business. Broadly speaking what she wanted to do is to expand into the entertainment business and not only produce fireworks but also flowers and baked cakes and wedding dresses and all sorts of other kinds of things. She couldn't do it? She couldn't do it because the credit that was available to her cost 100% interest a year. And this was a very huge burden and from which she and others like her just completely couldn't get out. So one way to actually help the poor get more for what they do is to make micro-credit more affordable and accessible so that they can upgrade so to speak. Exactly, and there have been successes around the world, the state of Andhra Pradesh in India which has 80 million people in it makes credit available at 12% a year and furthermore if people repay on time the government pays nine of those 12% points of credit meaning that the borrowers themselves pay 3% interest a year as opposed to Anjala who's paying 100% a year or some of the other people I've lived with who typically pay 10% a month. Now Anjala is still making fireworks. She is. Her daughter who had to sneak back in who had worked in the states had a little trouble finding a job. She did, so her daughter had been cleaning hotel rooms in the United States in California for several years and had quite a lot of experience. She got back to the city of Oaxaca in Mexico. She was unable to find a job cleaning hotel rooms in part because lots of other people had the skills to clean hotel rooms and got hired and in part as she put it, I am not beautiful. So that's a skill? That is a kind of networking opportunity of a particular city of sort. Okay, so because we often talk about the fact that you hear so often that people say the jobs aren't there but the skills aren't there. So you're just saying that is a load of Codswall if I may be as polite as possible. There's some of that, but overwhelmingly my view is that labor markets are segmented and what that means is that for a person with a given skill level, there's such a thing as a good job and a bad job. For Mari, the daughter, a good job was cleaning hotel rooms, a bad job was what she ended up doing when she couldn't get a job cleaning hotel rooms and that was to sell used clothing door to door. Okay, now back to India and a more successful story, Kalawati. Okay, so Kalawati is a woman who hand rolled cigarettes. She hand rolled a thousand of these cigarettes. It took her about 11 hours of nonstop work to do that. She was paid peace rate, the peace rate translated into about $1.25 per 11 hour day. And? And this was not a good situation for her to be in. There was no way to increase her productivity within that job. What she needed to do was to get out of that kind of work and so she transitioned into getting a sewing machine and sewing handkerchiefs and other kinds of cloth that could then be so low quality merchandise that could be so locally in the market. So basically she actually managed to get a better return by kind of moving up and out. Yes, still within self employment. Yeah, I want to just go back to the BD rolling the cigarettes because she was earning how much a day for how many cigarettes? Okay, so she was earning 50 Indian rupees, which is about a little more than $1 US dollar per 11 hour day. When she had a thousand of them to sell, she sold them to a middle woman who lived in her neighborhood. If she couldn't work that day because she was sick, she had a cataract operation, for example, she couldn't see, she couldn't roll them. She didn't get any income. And it's a trial. How much did the middle middle woman in this case sell them on for? Well, it was then sold to a company that packaged them and sold them in the market. And if you just went into one of the local small shops to buy the brand that she rolled, it would cost about five times as much there as she was receiving for what she did. Now, she's moved on, but some of her fellow coworkers have actually managed to kind of, I don't know if unionize is the right word, but get a better deal. They belong to a union that's called the Self-Employed Women's Association of India. It's a million member union. And what the union does is that it bargains with the state government of India for what they call minimum wages, which are actually peace rates and small pension funds and a clinic and other kinds of recognition. So these are informal workers. Yeah. And they've managed somehow to unionize. That's right. Okay, because we're gonna hear more about that from the front row a little later. But Gary, let's now move on to Farmer Wang, who despite still using very traditional methods seems somehow to have made a better living for himself. Right, so Farmer Wang lives in China and he has three things going for him that has enabled him to escape from poverty. One is that he lives in China and China is such a rapidly growing economy that that has raised the returns to self-employment. He is still a farmer. That's one thing he had. Second thing is that when the communist allocated land to be cultivated by individual families, there were a lot of people in the household. So they were allocated a lot of land which meant that they could earn more money than many other families could. And the third thing that happened in his case was that one of his daughters married an American who had an MBA in finance and who was able to return to the United States and send back remittances. Yeah, but the thing that amazes me, and unfortunately we don't have that picture of Farmer Wang, but there was a, and by the way, Gary's book, you must all read. I sorry, I'll turn around for that one, but it's a very, very good book, working hard, working poor. But Farmer Wang, despite the fact that he's got a daughter who's married to an American with an MBA, and he's done quite a bit, you told me about how he irrigates. I mean, this guy seems stuck in the past in terms of his farming techniques. Farmer Wang is about 55 years old, a thin, wiry guy, and the way he irrigates is he has a can that's a bit bigger than a coffee can on a stick and he dips it into a little stream that runs by and he picks up water and he throws it on crops. So maybe if actually somebody taught Farmer Wang some more modern farming techniques and provided him with stuff, he could actually even earn more. But you see, he knows that, but this is the work he wants to do, and so he does it that way. Okay, so he's becoming a hobby farmer then. All right, I'm gonna actually take a couple of questions now from the audience. So what you have to do is to push your green button if you want to ask Gary a question or make a comment, don't be shy, people in the panel can do this too, by the way, you've all got the green button. So if you push your green button, if you have a question or a comment, then we will see, oh, come on, nobody's up on my list yet. Aha, a couple more, come on, okay, there we'll stop here. So Finn Tarp, you got your finger on the button pretty quickly. What does one say on the micro credit thing that when you're then told, but look, high interest rates is a natural function of a market. You shouldn't really subsidize interest rates. What's the answer? Question is, what is the binding constraint that these people face? And if the binding constraint they face is the inability to expand their businesses because they cannot get working capital in order to do so, then making this money available at rates that would be affordable would help. Just to tell Angela's story very briefly, if she got access to low level micro credit, what she could do in the first instance would be to buy the fireworks powder in bulk and therefore pay less per kilo and that would reduce her cost of operation. She could also sell the fireworks powder to other fireworks makers and that would be a way of earning extra income. And if she could borrow money in order to rent the vacant lot across the street so she could start growing flowers and other kinds of things, she might be able to make it into the entertainment business that is her dream. Thank you. Lotte Dahlman. Okay. Okay. Very intriguing debate here. I push that button on supporting self-employed people myself. But the question is what are the mechanisms and what kind of aid do they need from us? It seems like it's so little but the question is whether it should come from us or what? Are you talking about unions on one side or regulating an informal market? Intervention is difficult. It's politically sensitized. And in terms of credits, it was mentioned by Finn earlier. How do you do this? So what is the input from us? Okay, the input from you I think should be aimed at where most of the poor people are working. And most of the poor people are working in their own mini enterprises and self-employment activities. When you think of the private sector, we should not be thinking about firms that employ people as wage and salary employees. We should think of the private sector as people who have created their own jobs because of their own self-employment activities because of the lack of jobs that they can move into. And so there are lots of ways in which you can intervene. People typically know themselves what would help overcome the constraints they face. And by saying here's where you can go, where you can borrow, where you can learn about how to conduct businesses better, where you might be able to get help in accessing markets, other kinds of things. These are ways in which people's earning opportunities can be increased in self-employment. Okay, Louise Cork, I'm sorry. I'm not sure how to pronounce that. Yes, thank you. K-O-C-H, thank you. Okay, I'm on, yes. Actually, I would like to go back to the definition of employment. I'm new to the field of employment. I'm more working in the field of water. But having worked for one hour the past week, that's just a lucky coincidence. That's not employment in my view. So my question is aren't we disguising the problem by using this kind of definition? Okay, so the definition that we heard at the beginning, this was the ILO's official definition that has been adopted by most of the countries of the world. And I believe, Martin, you can tell us that that was the definition adopted by the World Bank in the report that he's about to discuss. Now, my wife tells me, you should tell everybody, so I'll tell everybody, that this is a bad definition. And so we should not understand at all that because the unemployment rate as such is low, that it means that the rest of the people are fully and gainfully employed because they're not. They are working hard, working poor. That's my title. All right, Ted Sushi, Sonobi. Yeah, my question, should I use this? Yeah, and then don't forget you only have 60 seconds, please. Oh, my question is about the microcredit. So microcredit can be borrowed not only by self-employed people, but also the owners of small businesses. In the case of self-employed people, they know the skills necessary for the trade businesses. But in the case of small business owners, they may not really know the basic management skills. So if they borrow money, then it's more dangerous for them to make the bad business and then the small businesses may collapse. So I think when we talk about microcredit, we have to be very careful about the distinction between self-employed and small businesses like employing 20 people. One of the studies that has been carried out has shown pretty conclusively that coupling microcredit with business training works better than just microcredit alone for people that don't have those kinds of skills. But it also is important to remember that one way of determining what is successful or not is the group lending model, the group lending model where groups of women typically meet with one another and they themselves assess the feasibility of one of the group members' ideas about how to do these things. Okay, we are running out of time, so I'm gonna take two more, but they've gotta be very, very short, and that means you two. So Siddharth Sareen. Is this on? Great. It's just about the comment on entrepreneurship and trade being available at 12%. The comment is that if you've heard of SKS Microfinance, there are a lot of complexities involved with corruption within that sort of system and not everybody has access, and perhaps you'd like to talk a little bit about that. And secondly, that one. Okay. Okay, I agree. That was a quick one. Okay, Jorgen Essens. Okay, can you restart the clock, please? Because we were actually still counting down. Yep, go ahead. Okay, I just wanted, with reference to your example from India with the SIVA, you basically say they are getting forward by organizing, so did I get your message clear? Organize. That is their message, and they would very much like to have that central to things. What I think they really succeeded in doing was raising the peace rate. And that helps that particular group. But that's so much of an exception that is having a union that actually negotiates on behalf of its members. That, I don't think that's the general answer.