Indirect Jobs

At a Glance
  • Employment, procurement, and infrastructure typically account for 40 to 50 percent of total expenditure in oil and gas and 50 to 65 percent in mining, they are therefore important drivers of indirect employment if activities are localized.
  • Increasing local procurement of goods and services can be an effective way to increase indirect employment, and can lower procurement costs in the long run while improving the company’s social license to operate.
  • Governments need to identify where the most realistic chances to target supplying opportunities lie, as well as which types of goods and services will result in the most jobs.

Key Resources

See more resources

Creating Sustainable Businesses

This report aims to measure the scale of Zimele's economic impact in South Africa. The report explores how businesses nurtured by Zimele ...

Local Content Policy for the Simandou Integrated Mining and Infrastructure Project

This report looks specifically at the Simandou local content policy. Although the Simandou project has been shelved for the time being, the ...

Reverse the Curse: Maximizing the Potential of Resource-Driven Economies

This resource reviews strategies for local content management by examining how countries with large resource endowments can engage in more ...

Enterprise Development-Zimele

This resource presents Anglo American's Supplier Development Program, which is focused on creating shared value through identifying and ...

Topic Briefing

Strategies for indirect job creation from extractive industry mainly focus on ensuring local procurement of goods and services from host country suppliers. Employment, procurement, and infrastructure typically account for 40 to 50 percent of expenditure in oil and gas and 50 to 65 percent in mining (shown in figure 1), and can, therefore, become important drivers of indirect employment if those activities are localized. Important to remember however, is that procurement spending includes spend on goods imported, as well as services carried out by branches of international firms. This means that these large numbers can include spending that do not create many jobs, such as for example, when a local company sells imported fuel to a mine site for use in power generation.

Read more

 

Figure 1: Typical distribution of spending in extractive projects, reprinted from Olle Östensson, Local content, supply chains, and shared infrastructure, WIDER Working Paper 2017/96, (United Nations University-UNU WIDER, April 2017)

Increasing local procurement of goods and services by a mining or oil and gas company can be an effective way to increase indirect employment. From the company point of view, local procurement can lower procurement costs in the long run and improve the company’s social license to operate.

On the other hand, extractive industry companies often need to use many of their required goods provided by original equipment suppliers (OEM) whose products are known to meet all applicable standards. Governments need to identify where the most realistic chances to target supplying opportunities lie, and which types of goods and services will result in the most jobs.

For a full picture of government strategies for the creation of indirect jobs through local procurement, see the Supplying Extractives section.