A multidimensional quality of employment index proposal using a labour survey in Central America

Abstract

The quality of employment is a much-neglected issue in developing countries, especially in Latin America. However, the increased awareness on the importance of the qualitative dimensions of employment for well-being has pushed for a renewed attention on this issue in the Region. This new interest on a broader understanding of employment changing profiles faces the challenge of creating a conceptually accurate, empirically plausible and policy-relevant measurements. To addresses this challenge, this work builds on the Alkire and Foster's (2011) method to construct a composite Quality of Employment Index (QoE) and explore on its outcomes across six Central American countries based on a labour survey dataset. The dataset used for this empirical illustration is the Encuesta Centroamericana sobre Condiciones de Trabajo y Salud (ECCTS) a regional labour conditions and health survey applied in the selected countries in 2011. This paper aims to reflect the complex and multidimensional nature of the quality of employment by addressing key dimensions identified in the literature and promoted by different stakeholders. In particular, the index encompasses four dimensions considered to be crucial to this concept, and that can be measured based on the data available: quality of labour earnings, employment stability, employment security and employment conditions. The Index results allow ranking the countries according to their quality of index performance. The QoE Index results enable us to list the selected countries according to their different performance; with Guatemala and Honduras presenting poor results in the overall measurement, El Salvador and Nicaragua in the middle range of achievement, and Panama and Costa Rica with the highest performance. The QoE Index presents several advantages as it delivers a measure simple to estimate and easy to understand. This Index is also decomposable in subgroups and according to each dimension and indicator contributions to the overall quality of employment results. At the same time, this work comprises a discussion of the limitations regarding data availability to extend this methodology to other countries, and debate on the advantages of the index in comparison to other indicators.