Social Welfare Consequences of the Radius of Employment Decency

Abstract

The private sector in Cameroon employs close to 90% of the labour force, and about 80% of those employed in this sector are in a situation of precarious employment. This paper investigated the private sector social welfare shares and impacts of employment decency among other regressed-income sources in Cameroon. Specifically, it (1) investigated the role of decent employment in shaping private sector inequality; (2) evaluated the share of decent employment in total social welfare of private sector households; and (3) examined the effect of growth in the mean value of decent employment on private sector social welfare. It employed the Cameroon Household Consumption Survey (CHCS III) conducted in 2007 by the Government’s Institute of Statistics. Findings indicated that decent employments, human capital, and financial capital endowments have inequality-reducing effects. Our analysis further noted that good working conditions (decent employment), education and training facilities (human capital) as well as access to micro-credit (financial capital) accrue relatively more to the rich or privileged households than the poor or underprivileged households in the private sector. We found that a decision-maker who is absolutely equity seeking may lay more emphasis on micro-credit access, education and training programmes, and better working conditions, in that order, to obtain commendable social welfare outcomes. In addition, results indicated that if the decision-maker mediates 50:50 between efficiency and equity, then human capital endowments are ranked first followed by decent employment endowments in terms of social welfare enhancement. This order was maintained for more efficiency seeking policymakers. These findings indicated that policy measures focused on driving private sector working conditions, education and training facilities as well as improve micro-credit access should consider their relative disparities between the rich and the poor private sector households in order to better tap their inequality-reducing effects. (JEL D60, E24, D63)