Abstract
The article discusses the employment effects at the sub-national level of large-scale mining projects. It argues that the effect of employees’ expenditure is at least as important as production linkages to employment and at least potentially as important to diversification and economic development. It reviews some of the practical difficulties in estimating employment effects of this kind and uses three practical examples, from Chile, the Democratic Republic of Congo and Zambia, to illustrate both the challenge of estimating employment effects from employee spending and the magnitude of the effects themselves. Finally, the reasons for the relative neglect of the issue are discussed, as well as the implications for policy formulation.
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Notes
There exists no universally recognized definition of the terms, but definitions differ only very slightly between users.
For instance, the average monthly salary in the mines studied in Zambia (see “Northwest province, Zambia” section) was US$800, while at the same time, the minimum wage was US$128. Workers in the informal sector earned even less (data from companies).
TFM does not keep a file of employees’ addresses since there is no functioning postal system and wages are paid by automatic bank transfer to bank accounts. However, it is a tradition in Katanga that companies provide maize to employees’ families since this provides food security for the family. Over the years, shortages of maize, which is the staple food in Katanga, have been common. Accordingly, the addresses where maize sacks are delivered are known and provide a measure of the number of employees in each location.
The assumed wage is relatively high for Zambia, but given the level of qualifications necessary, it was assumed that the majority of the employees concerned were formally employed and earned more than the minimum wage.
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Östensson, O. The employment effect of mine employees’ local expenditure. Miner Econ 27, 135–142 (2014). https://doi.org/10.1007/s13563-014-0056-6
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DOI: https://doi.org/10.1007/s13563-014-0056-6