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sharing in governance of extractive industries

New report on Local content policies in the mining sector: Stimulating direct local employment

Executive summary from my new report on direct local employment in the mining sector. The report was commissioned by The International Institute for Sustainable Development (IISD) for The Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF). 

See local employment link on this page for full report https://www.igfmining.org/expert-papers/ or direct link here: https://www.iisd.org/sites/default/files/publications/local-content...

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When a mining company comes to town, the promise of local employment is central to public debate in least-developed, developing and developed countries alike. For local communities, decent mining company jobs that are safe, stable and fairly compensated, allow employees and their families to plan ahead to improve livelihoods and financial security. For host governments, local employment in the mining sector supports national priorities and political promises for job creation, human capital development and inclusive economic growth. For mining companies, employing local people drives cost efficiencies and helps in the ongoing process of gaining and maintaining a social licence to operate. Recognizing these opportunities for social and economic development, governments use a wide range of policies and strategies to promote direct local employment in the mining sector. This paper reviews these policies and strategies as part of a broader set of inputs on enhancing local content in the mining sector prepared in collaboration with the International Institute for Sustainable Development (IISD) for the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF).

GOVERNMENT OBJECTIVES FOR LOCAL EMPLOYMENT POLICIES

Government policies and strategies promoting local employment in the mining sector are generally seeking to achieve one or more of the following objectives:

  1. Respond to national priorities and political pressures for job creation from constituents
  2. Respond to national priorities and political pressures for job creation from constituents
  3. Gain and maintain a “social licence to operate” for mining projects
  4. Grow and develop the skills of the national labour force
  5. Support efforts to progress gender equality and social inclusion
  6. Minimize project costs (through localizing labour) in order to maximize company profits and fiscal revenues

DEVELOPING A LOCAL EMPLOYMENT POLICY

There is no “one-size-fits-all” approach to promoting direct local employment in the mining sector. Policy settings and strategies must be context-specific, reflecting the particular needs and capacities of a host country at a given stage of development. Accordingly, governments wishing to promote local employment in the mining sector should begin by assessing the role of the mining sector in national development strategies (Step 1, Figure ES1). This assessment should then be followed by a realistic evaluation of the capacity of the domestic labour force to meet the human capital requirements of the mining industry (Step 2). With labour supply and demand established, local content goals for employment in the mining sector can then be developed (Step 3), together with strategies to support these goals (Step 4). Finally, monitoring of local content employment targets in the mining sector is crucial for ongoing development of the domestic labour supply (Step 5).

There are two main approaches used by host governments to enhance local employment (see Figure ES2), namely:

  1. Regulatory approaches, which typically result in mandatory, “stick”-based policies that rely on strong compliance mechanisms with the prospect of financial sanctions or loss of licences.
  2. Facilitative approaches, which typically result in incentive-based, “carrot” policies that offer support and incentives for the development and employment of local workers.

Governments occupy a unique position in being able to influence both the supply and demand sides of local employment in the mining sector. As a regulator, a government can use the authority of the state to compel a company to comply with local content requirements. As a facilitator, it can also implement measures to prepare the local labour force to fulfill these requirements. Most mineral-rich countries adopt a combination of both regulatory and facilitative approaches, with a gradual transition from regulatory to facilitative strategies as a country builds capacity and global competitiveness.

GUIDING PRINCIPLES FOR PROMOTING LOCAL EMPLOYMENT IN THE MINING SECTOR

The following guiding principles will help governments and policy-makers create inclusive and well-informed local employment policies that are appropriate to their domestic context and stage of development:

  1. Situate local employment policies within the national development context.
  2. Situate local employment policies within the national development context.
  3. Communicate with the private sector and industry specialists.
  4. Create an employment-ready workforce so that supply matches demand.iv. Integrate local content policies into existing national policy frameworks.
  5. Make targets and expectations consistent and transparent.
  6. Collect data to inform ongoing development, including on evolving technological trends and innovations in mining investment (e.g., trends in automation technologies).
  7. Establish strong measurement and reporting processes.viii. Support the progression of gender equity goals.ix. Create opportunities for the direct participation of Indigenous Peoples.
  8. Facilitate economic diversification.
  9. Revisit policy choices amid a developing domestic environment and changing nature of mining investments.

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