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Agriculture Is Creating Higher Income Jobs in Half of EU Member States but Others Are Struggling

MD Staff

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Half of EU member states have leveraged the Common Agricultural Policy (CAP) to significantly reduce poverty and drive higher incomes in farming, while other countries are still lagging, according to the latest World Bank study.

The ‘Thinking CAP’ report details how new investments and services in farming, reinforced by the EU’s flagship agriculture policy, can drive down poverty and transform agriculture into a sector which can provide higher paying jobs for those who farm.

Hungary, Slovakia, Estonia, Denmark and the Netherlands are all examples of member states that have successfully modernized their agricultural sectors by providing advisory services, roads, secure property rights and access to education and health services in rural areas. Others, such as Bulgaria, Portugal, Romania, Slovenia and Greece, still have some way to go in reducing poverty and ensuring that agricultural work pays. They can do so by improving the basic conditions for a successful agricultural sector, which would improve the results of the financial investments available under the CAP. Other remaining member states fall in between these two categories – achieving a successful transformation or lagging behind.

“Agriculture and poverty in half of the member states of the EU no longer go hand-in-hand. It’s clear that the income gap between agriculture and other sectors is narrowing and in some countries, such as the Netherlands, agricultural work can pay more than jobs in other sectors,” says Arup Banerji, Regional Director for the European Union Countries at the World Bank. “Today, about half of EU member states recognize that farming can boost shared prosperity, while the other half still has some work to do to provide the basic conditions to bring about necessary structural changes.”

The World Bank report shows that the EU CAP is associated with improving employment conditions in farming. Decoupled payments – annual payments based on how much land a farmer uses – and the co-financing of on-farm investments do show clear links with improvements in agriculture. For instance, in the newer member states agricultural labor productivity growth increases from 3.1 percent to 4.7 percent per year with a 10 percent increase in this type of CAP spending. However, there are certain categories of subsidy – known as coupled payments, which reward farmers for producing a particular crop or livestock— for which the report could find no such association. In the past, these coupled payments also led to extreme overproduction and price distortion on global markets.

“Some countries are running before they can walk by issuing payments to farmers who don’t have the necessary infrastructure to effectively bring their products to market or to make the best use of their investment,” said Rogier van den Brink, Lead Economist at the World Bank. “However, the processes the CAP has put in place are impressive. The CAP casts a very wide net and reaches farmers in every far-flung corner of the EU. Because of this, improvements in the CAP along the lines of the recommendations outlined in our report will further strengthen its role as a powerful instrument of structural transformation.”

Going forward, the report says the monitoring of CAP funds should focus on delivering tangible results rather than confusing bureaucratic processes. This would also encourage the co-financing of private investment into CAP-supported projects which are in the public interest such as environmentally sound practices, organic farming and animal welfare.

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Immigrant integration policies have improved but challenges remain

MD Staff

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Many countries have made important improvements in integrating immigrants and their children into the labour market and day-to-day life of their country. However, many challenges remain and much of the potential that migrants bring with them remains unused, hampering both economic growth and social inclusion, according to a new joint OECD-EU report.

Settling In 2018: Indicators of Immigrant Integration finds that the proportion of highly educated immigrants has grown in virtually all OECD and EU countries, rising by 7 percentage points over the past decade in both areas. At the same time, in all countries, most immigrants express a strong sense of belonging to their host-country, with more than 80% reporting feeling close or very close to this country.

“Countries have made important improvements in their policies to foster the integration of immigrants and their children into education, the labour market and the social life of their country,” said OECD Secretary-General Angel Gurría. “Nevertheless, much remains to be done to maximise the still untapped potential of migrants to contribute economically and socially to their recipient countries.”

“Making immigrant integration work is absolutely vital for our economies and societies as a whole,” said European Commissioner for Migration, Home Affairs and Citizenship, Dimitris Avramopoulos. “We need to make sure that all those who have a right to stay and live in our societies, become full and equal participants. Not only on paper but also in reality.”

Despite some improvements, immigrants have often not managed to translate higher overall education levels into better labour market outcomes. Immigrants’ relative poverty is also today more widespread than a decade ago, further widening the gaps with the native-born. Around 14% of all foreign-born people in the EU report facing discrimination on the grounds of ethnicity, nationality or race. The report also notes that almost a third of non-EU migrants in Europe state that most inhabitants of their neighbourhoods share their ethnic background.

Educational attainment levels and outcomes of youth with immigrant parents have also increased in most countries over the past decade – both in absolute terms and relative to their peers with native-born parents. This is evident in better educational outcomes and higher resilience at age 15, in lower levels of school dropout rates and higher educational attainment. However, immigrant children continue to lag behind their peers with native-born parents, notably in Europe, while the reverse is the case in only a few non-EU OECD countries such as Canada.

While immigrant men have a 3 percentage points higher employment rate than native-born men across the OECD, immigrant women have a 1 percentage point lower rate than their native-born peers, amounting to a full 6 point gap in Europe. Gaps between immigrant and native-born women are especially wide in Belgium and France, at 14 percentage points, and in the Netherlands, at almost 17 points. When employed, immigrant women are also more often in part-time and low-skilled jobs – notably in Southern Europe (except Portugal), as well as in Chile, Korea and Slovenia, where over 30% of employed immigrant women are in low-skilled jobs.

Following an overall increase in their share over the past decade, women now account for the majority of immigrants living in OECD and EU countries. The report also finds that the widespread inactivity and part-time employment of immigrant women is often involuntary, more often than for their native-born peers.

Settling In 2018: Indicators of Immigrant Integration presents a detailed international comparison of the outcomes of immigrants and their children and their evolution over time, for all European Union and OECD countries as well as selected G20 countries. 74 indicators cover key dimensions of integration, including employment, education, housing, health, civic engagement and social inclusion. There is a special focus on young people with immigrant parents and on gender issues.

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World Sees Huge Uptake in Sustainable Energy Policies in Past Decade

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The number of countries with strong policy frameworks for sustainable energy more than tripled – from 17 to 59 – between 2010 and 2017, and many of the world’s largest energy-consuming countries have significantly improved their renewable energy regulations since 2010, according to RISE 2018, a new World Bank report charting global progress on sustainable energy policies.

Progress was even more marked in energy efficiency, with the percentage of countries establishing advanced policy frameworks growing more than ten-fold between 2010 and 2017.  And among countries with large populations living without electricity, 75 percent had by 2017 put in place the policies and regulations needed to expand energy access.

But as the report makes clear, there are significant barriers to global progress on sustainable energy. While countries continue to be focused on clean energy policies for electricity, policies to decarbonize heating and transportation – which account for 80 percent of global energy use – continue to be overlooked.

RISE 2018 measures policy progress in 133 countries on renewable energy, energy efficiency, electricity access, and access to clean cooking – the four target areas of Sustainable Development Goal 7 (SDG7), which calls for achieving access to affordable, reliable, sustainable and modern energy for all by 2030.

“Policy matters. RISE 2018 confirms the numbers that make it clear that policy is a leading indicator of the world’s sustainable energy transition,” said Riccardo Puliti, Senior Director for Energy and Extractives at the World Bank. “But the report also contains a warning: that without accelerated adoption of good policies, and strong enforcement, the world’s climate goals and SDG7 are at risk.”

This momentum was particularly marked in renewable energy. Among the countries covered by RISE, only 37 percent had a national renewable energy target in 2010.  By 2017, that had grown to 93 percent. By 2017, 84 percent of countries had a legal framework in place to support renewable energy deployment, while 95 percent allowed the private sector to own and operate renewable energy projects. Over the same period, the share of countries that had put in place national legislation on energy efficiency rose from 25 percent to 89 percent.

In countries with an electricity access deficit, policymakers are increasingly turning their attention to off-grid solutions to close the gap. The share of low-access countries adopting measures to support mini-grids and solar home systems has soared from around 15 percent in 2010 to 70 percent in 2017.

In the same countries, however, the deteriorating fiscal position of national utilities is putting progress at risk. Among countries with low access to energy, the number of utilities meeting basic creditworthiness criteria dropped from 63 percent in 2012 to 37 percent in 2016.

Among the four SDG7 target areas, clean cooking continues to be the most overlooked and underfunded by policymakers.  While the report finds some evolution in policy frameworks since 2010, there has been little progress on standard-setting for cookstoves or on consumer and producer incentives to stimulate adoption of clean technologies.

“There is a great opportunity now for countries to learn from each other to accelerate the uptake of good policies,” said Puliti. “For example, what has Kenya done to expand access to electricity so rapidly? How did India structure its renewable energy auctions to deliver record-setting low prices for solar? At the same time, we need urgent action to address critical gaps, such as failing utilities, clean cooking, and the slow progress on decarbonizing heating and transport.”

RISE 2018: “Policy Matters” is the second edition of RISE – Regulatory Indicators for Sustainable Energy. The report is published by the World Bank with funding from the Energy Sector Management Assistance Program (ESMAP).

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Report: Pakistan’s trade with South Asia can rise by eight-fold

MD Staff

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Regional trade can create many more jobs and make the country prosperous if trade barriers with South Asia are removed, says a new World Bank report. Pakistan’s trade with South Asia accounts for only 8 percent of its global trade, despite the region being the world’s fastest growing. However, intraregional trade in South Asia is among the lowest at about 5 percent of total trade, compared with 50 percent in East Asia and the Pacific.

The recently-launched Glass Half Full: The Promise of Regional Trade in South Asia report documents what needs to be done to realize the full trading potential in South Asia. It was launched at the 11th South Asia Economic Summit, hosted by the Sustainable Development Policy Institute in Islamabad. It identifies four critical barriers to regional trade: tariffs and para tariffs, real and perceived non­tariff barriers, connectivity costs, and a broader trust deficit.

Pakistan is sitting on huge trade potential that remains largely untapped,” said Illango Patchamuthu, World Bank Country Director for Pakistan. “A favorable trading regime that reduces the high costs and removes barriers could boost investment opportunities that is critically required for accelerating growth in the country.”

The report argues that the costs of trade are much higher within South Asia compared to other regions. The average tariff in South Asia is more than double the world average. South Asian countries have greater trade barriers for imports from within the region than from the rest of the world. These countries impose high para tariffs, which are extra fees or taxes on top of tariffs. More than one-third of the intraregional trade falls under sen­sitive lists, which are goods that are not offered concessional tariffs under the South Asian Free Trade Area (SAFTA). In Pakistan, nearly 20 percent of its imports from, and 39 percent of its exports to, South Asia fall under sensitive lists.

“Pakistan’s frequent use of tariffs to curb imports or protect local firms increase the prices of hundreds of consumer goods, such as eggs, paper and bicycles. They also raise the cost of production for firms, making it difficult for them to integrate in regional and global value chains,” said Caroline Freund, Director, Macroeconomics, Trade and Investment, World Bank.

South Asian countries are yet to reap the benefits of shared land borders, the report adds. While Pakistan and India collectively represent 88 percent of South Asia’s Gross Domestic Product, trade between the two countries is only valued at a little over $2 billion. This could be as high as $37 billion. “For example, it is cheaper for Pakistan to trade with Brazil than with India. Reducing policy barriers, such as eliminating the restrictions on trade at the Wagah-Attari border, or aiming for seamless, electronic data interchange at border crossings, will be major steps towards reducing the very high costs of trade between Pakistan and India,” said Sanjay Kathuria, World Bank Lead Economist and lead author of the report.

The report recommends ending sensitive lists and para tariffs to enable real progress on SAFTA and calls for a multi-pronged effort to address non-tariff barriers, focusing on information flows, procedures, and infrastructure. Policy makers may draw lessons from the India-Sri Lanka air services liberalization experience, the report suggests, where liberalization was gradual and incremental, but policy persistence paid off. Connectivity is a key enabler for robust regional cooperation in South Asia.

By reducing man-made trade barriers, trade within South Asia can grow roughly three times, from $23 billion to $67 billion,” Kathuria added.

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