Jobs from Extractives
At a Glance
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Jobs boost living standards, raise productivity, foster social cohesion, and can provide a key path out of poverty.
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Extractive companies can generate significant local employment, considering both direct jobs at project sites and also the indirect and induced effects of company employees buying goods and services locally.
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To maximize extractive projects’ potential to create jobs, early planning is crucial, since projects often require specialized skills that can take time to acquire.
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Leveraging economic diversification through the extractive sector may require stable macroeconomic policies that attract foreign investment, provide more leverage in trade agreements, and improve the financial market.
Case Studies
Key Resources
- Flagship Report Paper Series, Paper 7: Leveraging Extractive Industries for Skills Development to Maximize Sustainable Growth and Employment (African Development Bank, Bill and Melinda Gates Foundation)
- Employment from Mining and Agricultural Investments: How Much Myth, How Much Reality? (Kaitlin Y. Cordes, Olle Ostensson, Perrine Toledano)
- Delivering on the Promise: Leveraging Natural Resources to Accelerate Human Development in Africa (African Development Bank, Bill and Melinda Gates Foundation)
- Unlocking Opportunities for Women and Business: A Toolkit of Actions and Strategies for Oil, Gas, and Mining Companies (International Finance Corporation)
- Local Content Policies: Stimulating Direct Local Employment (Tim Grice)
Topic Briefing
Increasing the quantity and quality of jobs within a country is a critical pathway for economic development. Jobs boost living standards, raise productivity, foster social cohesion, and provide a key path out of poverty. Policy fundamentals such as macroeconomic and fiscal stability, the investment climate, and the quality of infrastructure affect the demand side of job creation, while education and skills affect the supply side. Policies that promote innovation and human capital development can increase productivity and competitiveness in the economy.
Many people believe that extractive industries create fewer job opportunities than most other industries. While it is often true that these industries—which tend to include capital-intensive and low-labor projects—create relatively minimal levels of direct employment, the picture looks different when considering the indirect employment arising from goods and services that extractive companies buy locally, and the induced employment arising from goods and services that extractives companies’ employees buy locally. The net effect of an extractive project on employment—that is, accounting for job losses in competitors’ projects or industries (such as small and artisanal mining in the vicinity of a large mining project)—can be significant for the local economy as a whole.
Job creation in an extractive project typically varies over the project’s life cycle; it usually peaks during the development phase, when infrastructure and engineering work is most needed. Early planning is important to maximize local employment potential, since extractive projects often require specialized skills that may take time to acquire. Figure 1 provides a visual representation of the employment potential of a typical mining project. Oil and gas projects exhibit similar profiles but different life cycles.
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Figure 1: Mining lifecycle revenue and employment contributions, reprinted from International Council on Mining and Minerals, Role of Mining in National Economies, third edition (London: ICMM, 2016), 32.
An extractive project’s ability to create local employment is determined by factors beyond the project’s control. For example, availability of local staff with the requisite knowledge and experience may require improvements in education quality, changes in labor mobility, and improvements in infrastructure. Leveraging economic diversification through the extractive sector may require stable macroeconomic policies that attract foreign investment, provide more leverage in trade agreements, and improve the financial market (or similar but broader policy interventions).