Child Labor and Children’s Economic Contributions

Abstract

This chapter provides a brief overview of child labor and children’s economic contributions. The ILO estimates that there were some 153 million children aged 5–14 years in child labor in 2008, accounting for almost 13 % of this age group, underscoring the scale of the remaining challenge posed by child labor. Children’s involvement in household chores in their own homes, not reflected in these global estimates, is also commonplace in most countries. A growing body of evidence indicates that child labor is associated with negative health and educational consequences in childhood and later in life, exacting a heavy toll on the individuals concerned and on society as a whole. Fewer child laborers attend school than non-child laborers in almost all countries where data are available. Moreover, evidence from learning achievement tests indicates that child labor interferes with academic performance when school and work overlap. Compromised education, in turn, leaves child laborers more vulnerable to low-paid, insecure work and joblessness later in the life cycle. Most child laborers are found in nonwage informal work, primarily within a family context. The largest share works in the agriculture sector where children’s economic contribution is often substantial. Progress in expanding the knowledge base on child labor has improved understanding of the complexity of the phenomenon. It cuts across policy boundaries – schooling, health care, labor market conditions, social protection, basic services, income distribution, social norms, cultural practices, inter alia, all can play a role – and therefore requires a comprehensive and integrated policy response.

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1 Introduction

The most recent ILO global estimates underscore the scale of the remaining challenge posed by child labor. The ILO estimates that there were some 153 million children aged 5–14 years in child labor in 2008, accounting for almost 13 % of this age group. Children in hazardous forms of work threatening children’s health, safety, or morals made up over one-third of total child laborers.

Child labor constitutes not only a serious rights violation but also an important barrier to national development. A growing body of evidence indicates that it is associated with negative health and educational consequences in childhood and later in life, exacting a heavy toll on the individuals concerned and on society as a whole. While there is no specific Millennium Development Goal (MDG) on child labor, progress toward a range of other MDGs will be much more difficult in the absence of success in combating child labor.

The concept of child labor emerging from a long history of public debate was that of work activities that should not be performed by children out of concern not only for the children themselves but also for other workers. Debate on child labor was motivated by a desire to protect children from the physical and developmental threats they faced in the workplace, as well as by a desire to protect adult workers from being replaced by or from having their wages suppressed by child workers (Grimsrud 2007).

Both motivations played an important role in the process of defining child labor since the first regulations in the early nineteenth century. The first reports about children sweeping chimneys and working in mines raised concern about children’s heath. The introduction of compulsory education raised concern about children forgoing education because of work. But internationally, it was the concern for the labor market effects that drove the first standard-setting agreements on child labor: there was broad consensus that children should not take jobs from adults locally or abroad and hence international standards were set for minimum working age.

The negative labor market effects of child labor have been dealt with by several economists as well as historians. As noted by Jane Humphries (2002), the reduction of child labor in industrialized countries around 1900 was not primarily driven by technology, but rather by the social pact involving trade unions, employers, and others calling for limiting the labor market to adults. The aim was to improve adult wages and working conditions by reducing the supply of cheap child laborers. The work of Basu and Van (1998) describe in a theoretical manner the “added worker effect” that causes the negative social impacts of child labor.

Minimum age regulations were at the forefront of the international labor debates particularly during the days of liberal trade regimes and the birth of the labor movement in Europe in the last part of the nineteenth century. In 1890, Germany called the first international conference on minimum working age. These efforts led to the formation of the ILO in 1919 and the adoption of the first child labor convention (ILO Convention No. 5 on minimum age in industry). A number of ILO conventions followed and, in 1973, a general labor market minimum standard was adopted (ILO Convention No. 138) (C138). The age limits set forth in C138 still form the basis for national and international legal standards in this area.

The concern that child labor might hamper education created a link between child labor regulation and school attendance from the earliest legislation. National regulations on child labor are often linked historically to the introduction of compulsory education. For a number of European and non-European countries, the decline in child labor appears correlated in time with the introduction of compulsory education. In Norway, the first labor code of 1892 (fabrikkloven) included a ban on hiring children in factories and sweatshops who were under 14 years of age and had not completed compulsory education. This was directly linked to education by making the local school authorities responsible for overseeing that the ban on child labor was observed (Grimsrud and Melchior 1998).

It was in 1989, through the drafting of the UN Convention for the Rights of the Child (CRC), that child labor was clearly defined not according to the activity but according to the effect of the activity on the child. This laid the ground for a renewed understanding of child labor and a renewed fight against it. It is also through the adoption of the CRC that the international definition of child labor is clearly linked to the individual rights of the child. This new approach was influential in the adoption by the ILO of Convention No. 182 (C182) on the worst forms of child labor in 1999. This ILO convention prioritizes the subgroup of child laborers that is in the worst forms of child labor.

The remainder of this chapter provides a brief overview of child labor and children’s economic contributions. It first presents a statistical profile of child labor across a broad set of developing countries where data are available from representative household surveys. It next looks at evidence relating to children’s role and contribution in the measured economy. It then addresses how premature involvement in the labor market can impact on the economic contribution and employment outcomes during adolescence and early adulthood. The chapter concludes with a discussion of policy options for accelerating progress toward the elimination of child labor.

2 Statistical Profile of Child Labor

How widespread is child labor? The first graph (Fig. 51.1) presents country-specific estimates of children in economic activity from a broad set of countries where data are available from representative household surveys. Although differences in reference dates and survey methods mean that comparisons should be treated with caution, the graph nonetheless points to the important role that children continue to play in production in many countries.

Fig. 51.1

Children in economic activity, 7–14 years age group, most recent year by country. (Source: UCW calculations based on household survey datasets)

The general regional patterns evident from Fig. 51.1 are consistent with the broader regional and global estimates of child labor produced by the International Labour Organization (ILO 2010). ILO estimates show that rates of children’s involvement in economic activity are highest in sub-Saharan Africa followed by Asia and the Pacific and by Latin America and the Caribbean. The estimates indicate that it is in populous Asia, however, where the highest absolute numbers of children in economic activity are found. While the average level of child economic activity is lower in Latin America, the degree of variation is especially high in the region – from Fig. 51.1 it can be seen that Bolivia, Haiti, and Peru stand out as particular challenges.

Not captured by the static picture presented in Fig. 51.1 is the direction in which countries are moving in terms of children’s economic activity, that is, whether a higher or lower proportion of children are working over time. ILO global child labor estimates for the period 2004–2008 paint a mixed picture in this regard. They show a significant reduction in the proportion of children in economic activity in Asia and the Pacific, but only a slight reduction in Latin America and the Caribbean. In sub-Saharan Africa, children in economic activity actually increased in both relative and absolute terms from 2004 to 2008 (ILO 2010).

The few countries where comparable child labor estimates are available for a longer time period indicate that children’s role in production can fluctuate in accordance with changes in macroeconomic and social conditions (UCW 2010). This finding argues against complacency even where countries have succeeded in achieving low levels of child labor, and is particularly relevant in light of the recent global economic crisis and current period of global economic instability. Although few data are available to date on the impact of the crisis, theory and past experience suggests that it could affect child labor in a number of ways. A reduction in living standards, greater difficulties in obtaining loans, and reduced remittances from family members abroad are together likely to force more vulnerable households to send their children to work to help make ends meet. Reduced public spending and cutbacks in international aid flows are likely to limit social safety nets, also increasing families’ dependence on child labor for household survival (Koseleci and Rosati 2009).

How does child labor interact with children’s schooling? This question is one of the most important in determining the long-term impact of early work experience. Clearly, if the demands of work mean that children are denied schooling altogether or are less able to perform in the classroom, then these children will not acquire the education necessary for more gainful employment upon entering adulthood. This, in turn, means former child laborers as adults are more likely to be poor and more likely to have to depend on their own children’s labor, thus continuing the child labor-poverty cycle.

Figure 51.1 illustrates the fact that child laborers are commonly also students, particularly in countries outside the sub-Saharan Africa region. But the fact that many child laborers go to school does not mean that they are not disadvantaged relative to non-child laborers in terms of school attendance – indeed, fewer child laborers attend school than non-child laborers in almost all countries where data are available. Nor does it mean that child laborers in school are not disadvantaged educationally. There is a growing body of evidence indicating that work interferes with academic performance when school and work overlap, underscoring that merely getting child laborers into the classroom is insufficient to overcoming their educational disadvantage. (Student test scores from the first Comparative International Study of Language, Mathematics and Associated Factors (FCIS), for example, show a strong and consistent negative relationship between child labor and test scores across the nine countries and the two achievement tests included in the survey).

3 Children’s Economic Contribution

Detailed breakdowns of child labor by its various defining features are necessary to understanding the nature of child labor as well as to identifying the role of child laborers in the broader economy. A number of broad distinctions are useful in this context. Within economic activity, distinctions by industry based on the International Standard Industrial Classification of All Economic Activities (ISIC Rev. 3) provide a standardized picture of the nature of children’s involvement in the measured economy. A distinction by employment status (e.g., wage, self-employed, unpaid family work) can offer additional insight into how children’s economic production is carried out.

The second and third graphs in Fig. 51.1 disaggregate children’s economic activity by industrial sector and employment status, respectively. The second graph suggests that the sectoral composition of child labor varies somewhat across regions – agriculture accounts for the overwhelming majority of child laborers in the sub-Saharan Africa, whereas both agriculture and services are important components of child labor in Latin America. Manufacturing represents only a minor component of child labor in the two regions.

The third graph in Fig. 51.1 points to the overwhelming importance of nonwage informal work, primarily within a family context, across all countries and regions. This is significant because nonformal family work typically lies outside national legislation concerning child labor, is not covered by formal employment contracts, and is beyond the reach of most workplace inspection systems. It is also significant in attempting to estimate the value of children’s production: the fact that most do not work for a wage makes it much more difficult to measure their contribution to family income or their importance in the broader economy (see discussion below). Very few child laborers, on the other hand, are engaged in more formal waged work.

For a more complete picture of children’s role in production, additional information is needed on core work tasks or activities, beyond the framework of standardized international labor force classifications. This is because standardized classifications, designed primarily with the adult labor force in mind, may fail to adequately reflect the work actually performed by children in a specific setting, particularly when collected at only a general (3-digit) level. A child having to spend his or her day scavenging in a refuse disposal site, for example, might be categorized as in “recycling of nonmetal waste and scrap” (ISIC code no. 3720) or as a “garbage collector” (ISCO code no. 9161), both only very partial reflections of the child’s actual work activity. Better information on children in hazardous work and other worst forms of child labor is particularly needed, as this is the subgroup of child laborers whose rights are most compromised and whose well-being is most threatened.

Not addressed in the statistics presented in Fig. 51.1 is the relative importance of children’s economic contributions in a given sector. Descriptive evidence from sub-Saharan Africa suggests that child laborers are often a major component of the overall workforce in the agricultural sector in particular. In Cameroon, for instance, children constitute one-fourth of all agricultural workers and log almost one-fifth of total weekly working hours in the sector. In some agricultural subsectors in Cameroon, the role of children is even more important: in animal husbandry, children represent over half of the total workforce. What is more, evidence from Cameroon suggests that children’s role in agriculture is not limited to family-based subsistence farming. Indeed, Cameroonian children play an equally important role in commercial agricultural production (UCW 2011).

More robust evidence from Nepal also highlights the importance of children’s production in the agricultural sector. In a 2005 study making use of shadow wage estimates for children and adults in the agricultural sector, it was estimated that Nepalese children contribute about 11.5 % of the value of total agricultural production in the country. Considering that agriculture is responsible for 81 % of Nepalese GDP, over 9 % of Nepalese GDP is produced by children. The simulations in the same study on the poverty and inequality implications of children’s work show that working children significantly contribute to lowering poverty at the household level and, to a lesser extent, to reducing inequality (Menon et al. 2005).

Also not addressed in the statistics presented in Fig. 51.1 is children’s involvement in the performance of household chores without payment within their own homes. This form of children’s work falls outside the international System of National Accounts production boundary (System of National Accounts (Rev. 1993) is the conceptual framework that sets the international statistical standards for the measurement of the market economy) and is typically excluded from published estimates of child labor. Nonetheless, children’s involvement in household chores is commonplace in most societies and its economic significance is considerable. While this form of production is not directly reflected in the measured economy, the fact that children often shoulder much of the burden for household chores means that adult household members have more time for involvement in economic forms of production. This indirect economic value of children’s household chores has unfortunately been accorded very little research attention and therefore is not dealt with further in this chapter.

4 Child Labor and Youth Employment Outcomes

Child labor is not only an important policy concern in and of itself but also has important implications for the economic contributions of young persons in the 15–24 years range. How does child labor involvement affect employment outcomes later in the life cycle? The most obvious connection is through compromised education. Child labor impedes children’s access to school and their ability to learn effectively in the classroom. Compromised education, in turn, leaves young people more vulnerable to low-paid, insecure work and joblessness. But compromised education is not the only link between child labor and youth employment outcomes. Child labor can confer labor force disadvantage later in the life cycle even beyond its effect on education.

Workers who are more educated are much more likely to be in wage employment and less likely to be in self-employment or in unremunerated family work (Fig. 51.2). Although occupational type is of course only a very weak proxy for job quality, workers in wage employment are more likely to enjoy the protection of a legal work contract, social security, and other characteristics associated with quality employment. Less educated young persons, on the other hand, appear much more likely to be found in the informal economy in low-paid, insecure jobs offering limited opportunity for upward advancement. Very often, young people work within the informal economy, in intermittent and insecure arrangements, meaning low productivity, earnings, and employment protection, or they are simply underemployed.

Fig. 51.2

Wage employment as percentage of total employment, by level of education, 15–24-year-olds, selected countries. (Notes: Educational categories standardized for expositional purposes. As education systems and reference years differ, caution should be exercised in making cross-country comparisons. Source: UCW calculations based on Senegal, Enquête de suivi de la pauvreté au Sénégal, 2005/2006; Mali, Enquête permanente auprès des ménages, 2007; Tanzania, Integrated Labour Force Survey 2006, Mongolia Labour Force Survey 2006–07)

Compromised education also appears to lead to jobs that are more exposed to fluctuations in the labor market. In Mongolia (UCW 2009) and Ethiopia (UCW 2006), for example, a decrease in local labor demand generates a decrease in the probability of young persons finding employment, and this effect is stronger for youth who have low levels of education. In South Africa, education appears to entirely offset the effect of the recession on the likelihood of employment (Leung et al. 2009). Local labor market conditions therefore seem to be especially relevant for youth who have little or no education. Not surprisingly, supply and demand conditions are most relevant for the less qualified workforce that is more vulnerable to the economic cycle. Most of the factors that reduce the sensitivity of employment to the cycle are far less relevant for this group.

Child labor can also have an effect on later employment outcomes, beyond its detrimental effect on education, via other effects, such as lower productivity, stigma, and lower job aspirations. In Tanzania, for example, the productivity of work declines as a result of early labor market entry, underscoring potential medium-term negative consequences of child labor (Beegle et al. 2008). In Brazil, people who start work at a younger age end up with lower earnings as adults (Ilahi et al. 2000; Emerson and Souza 2007). Girls can be particularly adversely affected by early labor force entry (Gustafsson-Wright and Pyne 2002).

As a consequence of compromised labor market outcomes, an intergenerational persistence in child labor is likely to arise. Children are more likely to work the younger their parents were when they entered the labor force and the lower the educational attainment of their parents. More likely to be poor, former child laborers as adults are also more likely to have to depend on their children’s labor or productivity as a household survival strategy, thus perpetuating the child labor-poverty cycle (Emerson and Souza 2003).

The link between child labor and youth employment can also operate in the other direction: in other words, labor market conditions for young people can affect involvement in child labor. Again, the primary connection is through education. Poor youth employment prospects can serve as a disincentive to investment in children’s education. In situations where the child reaches the minimum working age facing few opportunities for productive and decent work, parents might have less incentive to forego child labor and invest instead in their children’s schooling.

Perceived returns from education (and resulting decisions concerning children’s school and work) depend both on the difficulties faced in the labor market and on expected wages. Concerning the latter, recent evidence indicates that expected wages are an important determinant of children’s decisions to stay in school and that children or their households might severely underestimate the returns from additional education. In Mexico, among 15–25-year-olds, the expected returns from schooling are substantially lower than the returns which are realized, particularly among children of fathers who have low education levels (Attanasio and Kaufmann 2009). In the Dominican Republic, a survey showed that boys who were given accurate information on the relatively high returns to a high school degree were 12 % more likely to attend school in the following school year relative to those who had not been given the information (and who underestimated these returns) (Jensen 2006).

5 Responding to Child Labor

This section presents policy priorities for accelerating progress against child labor, drawing on empirical evidence concerning its causes and on lessons learned from past policy efforts. (This section is adapted from: UCW 2010. Joining forces against child labour. Inter-agency report for 2010 The Hague global child labour conference, pre-publication draft, February 2010.) Progress in expanding the knowledge base on child labor has improved understanding of the complexity of the phenomenon. It cuts across policy boundaries – schooling, health care, labor market conditions, social protection, basic services access, income distribution, social norms, cultural practices, inter alia, all can play a role – and therefore requires a comprehensive policy response. Not amenable to being treated in isolation, child labor concerns should be mainstreamed into overall national development agendas and plans, including poverty reduction efforts, and into decisions concerning budgetary resource allocations.

Prevention measures constitute the most important component of a policy response to child labor. Clearly, sustainable reductions in child labor cannot be attained without addressing the factors causing children to enter work in the first place. As children are rarely responsible for their own choices, the design of preventive measures requires an understanding of factors influencing household decisions relating to schooling and work.

Some of the key factors determining household decisions regarding child labor are depicted in the left side of Fig. 51.3. More accessible and better quality schools are important because they affect the returns to schooling vis-à-vis child labor, making the former more attractive as an alternative to the latter. Households without adequate social protection may rely on their children’s work to make ends meet, rendering them unable to sacrifice the immediate returns to work for the future returns to schooling. In the absence of decent work opportunities upon graduation from school, there is little incentive for households to invest in their children’s education. Finally, if households are insufficiently aware of the benefits of schooling (or of the costs of child labor) or if prevailing sociocultural norms favor child labor, they are also less likely to choose the classroom over the workplace for their children.

Fig. 51.3

Key determinants of child labor and schooling and policy pillars to address them. (UCW Program. Joining forces against child labour. Inter-agency report for 2010 The Hague global child labour conference, pre-publication draft, February 2010)

The right side of Fig. 51.3 lists primary policy “pillars” addressing these economic and sociocultural determinants of child labor – education, social protection, labor markets, and strategic communication.

Education: There is a broad consensus that one of the most effective means of preventing children from entering child labor is to extend and strengthen schooling, so that families can have the opportunity to invest in their children’s education, and the returns to schooling make it worthwhile for them to do so. A range of empirical evidence points to the importance of school access in particular in reducing child labor and raising school attendance. Long travel distances to school can translate into high transport costs and a significant time burden, both raising the economic price of schooling. Families may also be reluctant to send their children, and especially their daughters, to schools far from home due to concerns around girls’ mobility in the public space. But access to schooling is only a part of the problem. Greater access needs to be complemented by supply-side policies to raise quality. Empirical evidence suggests that improved school quality makes households more willing to invest in their children’s education, presumably because quality influences the returns to such an investment.

Social protection: The need to reduce household vulnerability to prevent children from being used as a buffer against negative shocks is well established. The role of household vulnerability arising from credit constraints to child labor decisions is also well established. Since access to credit can assist families in adapting to unanticipated changes in income, it can diminish the incidence of child labor and improve school attendance. There is no single recipe for implementing social protection programs to reduce household vulnerability and child labor. Unconditional cash transfers, including various forms of child support grants, family allowances, needs-based social assistance, and social pensions, are relevant in easing household budget constraints and supplementing the incomes of the poor. Conditional cash transfers offer a means of both alleviating current income poverty and of addressing the underinvestment in children’s human capital that can underlie poverty. Public works schemes can be either a short-term or structural social protection intervention. Micro-loan schemes offer an important means of extending access to credit to poor households, in turn helping to ease household budget constraints and to mitigate social risk.

Labor markets: Even when equipped with a good skills base, young people can experience difficulties in finding gainful employment. And these difficulties can feed back on household decision concerning the investment in the education of their children and the age of their entry in the labor market. A number of policy options are available to help improve the functioning of the labor market for youth within the constraints of the macroeconomic environment. Offering micro-credit in conjunction with a broader range of enterprise support services is a means of helping young people start and develop small businesses. Establishing a legal framework to protect the growing number of young persons working in the informal sector is also important. Employment services, career guidance, and job counseling can all be helpful in addressing transition problems rooted in a lack of job search skills or a lack of labor market information.

Strategic communication: Policy responses to child labor are unlikely to be effective in the absence of a broad-based consensus for change. Building this consensus requires, firstly, strategic communication efforts aimed at providing households with better information concerning the costs of child labor and benefits of schooling. Such communication efforts need to be based on knowledge of the economic considerations as well as the social norms that underlie child labor and schooling decisions. Both national- and local-level strategic communication efforts are relevant in reaching households with required information. Use of a wide variety of conventional (e.g., radio, television, and print media) and nonconventional communication channels (e.g., religious and tribal leaders, schoolteachers, health-care workers) is important in achieving maximum outreach. Localized studies looking at the knowledge, awareness, and behavior on child labor are important to providing a baseline against which progress in bringing about attitudinal change can be assessed.

An adequate policy framework along the lines described above – in and of itself – is insufficient for national progress against child labor. Achieving sustainable reductions in child labor also requires a supportive national legal, political, and institutional environment and a society that is aware of the dangers of child labor and mobilized against it.

Political commitment is needed to ensure that child labor concerns are mainstreamed and prioritized in broader development plans and programs. This may include, for example, integrating child labor as an explicit concern in Millennium Development Goals, Education for All (EFA) plans, and Poverty Reduction Strategy Papers (PRSP). Labor legislation consistent with international child labor standards is necessary both as a statement of national intent and as legal and regulatory framework for efforts against child labor. Social mobilization is important to engaging a broad range of social actors in efforts against child labor. Religious organizations, NGOs, the mass media, and trade unions employers’ organizations can all play important roles in addressing child labor. Initiatives such as community-based child protection networks provide useful vehicles for bringing together a wide variety of stakeholders – governmental and nongovernmental – to combat child labor.

Strengthening institutional capacity at all levels of government is also needed for continued progress toward child labor reduction goals in many national contexts. While national plans of action, PRSPs, and other development plans provide solid bases for action, these frameworks are unlikely to be implemented effectively in the face of capacity constraints. As child labor is an issue that cuts across sectors and traditional areas of institution responsibility, the clear delineation of roles, and the strengthening of coordination and information sharing, is also critical to the effective functioning of government institutions and their social partners in efforts combating child labor. Assistance in the child labor field is often highly fragmented, with a large number of actors operating with little or no coordination or linkages. This leads to overlaps in assistance in some areas and to gaps in assistance in other priority areas.