Assessing Employment Potential and Skills Gaps

At a Glance
  • Needs for jobs and skills may change in response to market trends, technological advances, and changing circumstances over the life cycles of extractive projects.

  • Potential employment generation by the extractive sector can be estimated using a variety of approaches, including bottom up estimates, proxy measures of employment generated by similar projects in other regions, and jobs multipliers.

  • Factors influencing the job creation potential of a mining investment include its ownership, size, life-cycle phase, operational type, and need for ancillary construction, as well as the commodity being extracted.

Case Studies

Key Resources

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Community Development Toolkit

This report updates the original Community Development Toolkit (CDT), and provides an overview of different assessment techniques used in ...

International Principles for Social Impact Assessment

This article explains the principles guiding Social Impact Assessments (SIA) and provides a deeper understanding of the guiding principles. ...

SEAT, Socio-Economic Assessment Toolbox

This resource is a corporate toolbox for socioeconomic assessment that is based on practical experiences of a large extractives company. The ...

Projects and People: A Handbook for Addressing Project-Induced In Migration

This is a helpful resource for practitioners dealing with the important issue of immigration resulting from large projects. A comprehensive ...

Simandou Social and Environmental Impact Assessments

This resource offers a very comprehensive set of social and environmental impact assessments for large projects, and looks specifically at ...

A Local Content Decision Tree for Emerging Producers

This document provides a basic roadmap to simplify the complex considerations that come into play when designing local content oil and gas ...

Topic Briefing

This section discusses how it is important for governments can to assess the jobs and skills that may be created by an extractive project, and the skills that may be required, and determine which types of employment can draw on are most relevant for local citizens.

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To estimate potential employment generation from the extractive sector, policy makers can use several approaches, from bottom-up estimates that collate project-level data gathered from industry sources, to proxy measures of employment generation from similar projects in other countries, to jobs multipliers such as the total number of jobs in an economy created per direct job. Multipliers should be interpreted with caution, as they can vary significantly depending on factors like management style, the capital intensity of a project, the business cycle, and the regional and country context. For example, the International Finance Corporation estimated a job multiplier of 7.5 for the oil and gas industry in the United States and a multiplier of 13.4 in Scotland.

Multipliers are difficult and complex to track, especially if the economy does not have an up-to-date input-output table. An “investment multiplier,” which assesses the total number of jobs per $1 million invested, can also be informative; this usually exhibits less variation than the standard employment multipliers that estimate indirect and induced jobs.

Estimating the type and scale of employment often involves the use of a modeling effort and the use of social impact assessments (SIAs) at the individual project level. Assessing skill gaps requires the identification of currently available skills available currently, as well as the design of educational curricula to determine foster future skills. These topics are covered in detail in the subtopic: Assessing the direct and indirect jobs and skills required by extractives.

In the mining industry, factors influencing the job creation potential of a mining operation include:

  • Its type of ownership, with publicly owned mines often employing more workers than market-driven companies;
  • Size of the mine;
  • The project’s life-cycle phase, as employment levels are much higher during the construction phase than during the production phase, with the types of jobs also changing as a project shifts phases;
  • Type of mining operation, as underground mining typically generates higher employment than open-pit mining;
  • Type of commodity being extracted, as well as the mineral grade; and
  • A mine’s need for the construction of ancillary infrastructure.

During the production phase of an extractives project governments can draw on employment figures reported by project developers in order to inform policy.