Induced Jobs

At a Glance
  • Induced jobs are created when employees in the extractive industry value chain use their earnings to purchase local goods and services, so while it is difficult for both governments and companies to influence and promote induced employment directly, broad steps can be taken to ensure more money is spent locally.
  • Governments can take steps to improve the overall economic environment so businesses that offer goods and services consumed by employees within the value chain can operate competitively.
  • Infrastructure (both social and physical) plays a key role in affecting how employees in the extractive industry value chain consume goods and services. It can also provide incentive for employees to settle in areas close to the site and increase local demand for commercial goods and services.

Key Resources

Topic Briefing

Unlike in the case of direct or indirect employment, induced employment is difficult to influence and promote directly, both for governments and for companies. As induced jobs are created when employees in the extractive industry value chain use their earnings to purchase local goods and services, broad steps can be taken to help ensure more money is spent locally.

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In general, governments can, for example, improve the overall economic environment so that the businesses that offer goods and services consumed by employees in the extractive industry value chain can operate competitively. The World Bank’s Ease of Doing Business reports are a useful source for governments to gauge how conducive their policies are to business creation and smooth operation.

Infrastructure also plays a key role in affecting how employees in the extractive industry value chain consume goods and services. For example, the roads that are needed by the extractive industry company may also allow local farmers to bring their produce to markets and benefit from increased demand resulting from the company’s activities. Governments may also support induced employment creation by providing social infrastructure such as schools or health services, possibly in cooperation with companies. Such infrastructure provides incentives to extractive industry employees to settle in the area close to the site and adds to local demand for commercial goods and services. For information on how governments can work with extractive industry companies on Shared Infrastructure, see the Shared Use of Extractives Infrastructure and Resource Corridors section.