A family of decent work indexes.

We first proposed a decent work index in late 1999, when the ILO's InFocus Programme on Socio-Economic Security was set up, and are delighted that so many others are taking up the idea as reflected in this special issue of the Review and in the ILO's Inter-Sectoral Task Force set up to promote the idea. (1) An index is indeed a useful tool. But it can be misused and is subject to certain failings that have to be taken into account. An index consists of a set of "indicators" of some underlying phenomena. In recent years, a plethora of indexes have been presented, most notably UNDP's Human Development Index. Often, they suffer from the lack of a theoretical model and from a tendency to consist of a "shopping list" of ad hoc "interesting" variables. It is essential that the proposed decent work index should avoid these pitfalls.

An index must be based on a theoretical model and should be transparent. If the variables and formula underlying are hard to understand, there will be a suspicion that the results have been "massaged" into supporting some preconceived view. To complicate matters, any index raises problems of "weighting" of various variables and of "scaling" its components. Since there are no perfect rules for index building, all one can state with conviction is that the methodology should be transparent and replicable.

In the model we set out in 1999, decent work was conceptualized as requiring basic security for all--in society, in the workplace and for individual workers. (2) We identified seven forms of security in the sphere of work (see International Labour Review, 2002). But for reasons elaborated elsewhere (Standing, 2002a), primacy should be given to basic income security and basic "voice" or representation security. Without reasonable income security, people lack real freedom to make rational choices and be socially responsible. Without collective and individual voice, the vulnerable will remain vulnerable.

At the aggregate (macro) level, the objective can be defined in terms of creating laws, regulations and institutions that enable a growing number of people in all societies to work without oppression, in reasonable security and with steadily improving opportunity for personal development, while having enough income to support themselves and their families. At the workplace (meso) level, a decent work environment is one that provides adequate security for workers while fostering the dynamic efficiency of their enterprises. At the individual worker's (micro) level, decent work consists in having good opportunity to work with adequate levels of all forms of work-related security.

Less abstractly, we may say that seven forms of labour-related security were pursued in the twentieth century, with varying degrees of success, namely: labour market security, employment security, job security, work security, skill reproduction security, income security and representation security. Governments have so far typically given priority to labour market security, employment security and, to some extent at least, work security. But if the Decent Work Agenda is to become reality, new forms of income security and representation security are required. Moreover, and this is a criticism of all the index building so far, we must move to measures of decent work rather than decent labour. (3)

The first section of this article presents the database and general methodology used to construct the proposed family of decent work indexes. The second section is devoted to the macro-level index, with a sequential presentation of the sub-indexes used for each of the seven forms of socio-economic security. The third section presents the meso-level index, and the fourth, the micro-level index. A short closing section offers some concluding remarks.

The model and database

From the outset, the approach has been to create indexes based on a combination of indicators of the various forms of security. This required a huge effort to create what we have called the Socio-Economic Security Global Database, which has been constructed over the past three years. This has five components--three at the macro level, one at the meso level and another at the micro level.

At the macro level, three databases provide indicators for ILO member countries, namely:

* SES Primary Database, consisting of information collected via a national questionnaire on laws, policies and outcomes relating to the seven forms of labour-related security;

* SES Secondary Database, consisting of information from other global and regional sources, such as the ILO Bureau of Statistics, EUROSTAT, the IMF, the OECD and the World Bank;

* SES Social Security Database, consisting of numerical data on the eight main branches of social security and other relevant social policy, mainly drawn from the compilation of legislation done by the International Social Security Association.

At the meso level:

* The Enterprise Labour Flexibility and Security Survey (ELFS), an instrument by which data are collected from firms around the world on work practices relating to worker security and enterprise performance. In 2000-02, data were collected from over 12,000 firms in 12 countries.

At the micro level:

* The People's Security Survey (PSS), a household survey instrument by which data on basic needs, the seven forms of socio-economic security and aspects of social justice are collected from individuals. In 2000-02, the PSS collected data from over 50,000 households in 15 countries.

The way the resultant data are used to create the family of decent work indexes is relatively straightforward. (4) First, indicators of each form of security are identified; these are then combined to create a specific security index by using the following normalization procedure pioneered by the UNDP with its Human Development Index:

Normalized value X = [Actual value - Minimum value]/[Maximum value - Minimum value]

where the actual value is the score attained by the country on a particular indicator, the minimum value is the lowest value attained by any country, and the maximum value is the maximum attained by any country.

Then, the average values of all normalized security indexes are calculated, and the result is normalized to give values of the decent work index ranging from 0 (lowest, or worst) to 1 (highest, or best). It is important to bear in mind that the result is a relative ranking and that the notion of "decent" is not the same as that of "ideal".

A macro-level decent work index

We set ourselves the task of identifying countries providing relatively good conditions for decent work and socio-economic security. For each form of security, one can think of three dimensions to be measured--the extent to which the government or constitution of the country is committed formally to its promotion, the extent to which its institutions give effect to that commitment, and the extent to which the observed outcomes correspond to reasonable expectations. Accordingly, three types of indicators were sought:

* Input indicators of national and international instruments and rules to protect workers, such as the enactment of basic laws or the ratification of ILO Conventions on work-related hazards, unfair dismissal, the right to organize, etc.

* Process indicators of mechanisms or resources through which legislated principles and rules are realized, such as public expenditure on a particular form of security, labour inspection services, labour-related tripartite boards, etc.

* Outcome indicators showing whether or not the inputs and processes are effective in ensuring worker protection. These indicators might include the unemployment rate, the percentage of workers covered by collective agreements or receiving benefits or pensions, etc.

For each of the seven forms of socio-economic security an index is thus created, consisting of the weighted average of the three normalized sub-indexes (input, process and outcome). The seven are then added up and normalized to produce the decent work index. What goes into each of the seven security indexes is summarized below. (5) Calculations were carried out for the year 1999, and the SES Global Database has been used to test the results.

Note that the input, process and outcome sub-indexes or components were combined to produce two variants of each security index--one based on an equal weighting of the three sub-indexes, the other on a double weighting of the outcome sub-index. Since the latter is more appropriate, in that it focuses on actual achievements, while the input and process indicators overlap to some extent, this article reports only those results in which the outcome sub-index was counted as double the weight of the other two. We also report only the indexes as applied to all countries for which there are usable data. Actually, more sophisticated indexes were estimated for OECD countries but, because of the large differences in data availability between these and the developing countries, they could not be extended to the latter.

Note too that countries are classified according to their scores on each of the sub-indexes. If a country's score is equal to or greater than the value of the sixth decile in one of the sub-indexes, the country is deemed satisfactory in that respect; if below, it is deemed unsatisfactory. (6) Using the combination of sub-indexes and their respective scores, four clusters of countries can be identified -pacesetters, those that have a high overall score and high scores on the input, process and outcome sub-indexes; pragmatists, those that have a satisfactory outcome but not particularly high scores on either of the input or process sub-indexes; "satisficers", those with an intermediate-to-low score on outcome but relatively high scores on input and/or process (i.e. those that do badly in spite of being relatively advanced in terms of laws and instruments "guaranteeing" security); and a much-to-be-done cluster, consisting of countries with low scores on input, process and outcome.

Labour market security index

Labour market security may be defined in terms of a high level of access to …