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Worth the Effort: Eliminating Child Labor

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Reports Points to Long-term Economic Benefits

GENEVA, FEB. 28, 2004 (Zenit) - A recent International Labor Office report says the benefits of eliminating child labor outweigh the costs involved. The study, "Investing in Every Child, An Economic Study of the Costs and Benefits of Eliminating Child Labor," calculates that around 246 million children are currently involved in labor worldwide. Of these, 179 million are exposed to what the ILO terms the worst forms of work endangering their physical, mental or moral well-being.

Taking these children away from labor and educating them, in a gradual effort through 2020, would cost an estimated $760 billion. This would be far outweighed by the long-term benefits, which ILO reckons at $5.1 trillion.

The report defined child labor as all economically active children below the age of 12, all children ages 12 to 14 working more than 14 hours per week, and all children below age 18 in the worst forms of child labor.

"What's good social policy is also good economic policy," said ILO Director-General Juan Somavia in a Feb. 6 press release accompanying the report's release. "Eliminating child labor will yield an enormous return on investment -- and a priceless impact on the lives of children and families."

The report sets goals of universal primary education by 2015 and universal lower secondary education by 2020. The ILO said additional action would be needed to remove and rehabilitate children in the worst forms of labor, such as bonded labor and prostitution, as well as refugees and those from lower castes.

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Income transfers

The report considers a number of factors in totaling the costs of taking children away from labor. Families would be helped by a program of income transfers designed to defray the cost to households of transferring children from work to school. These programs would target all families with school-age children now living in poverty. They would provide benefits according to a formula taking into account the average value of children's work, the number of children per household, and the degree of the household's poverty.

The report did not, however, take into account the value of this income transfer, only allowing for costs associated with the administration of the program. But, even with the income transfer, the study notes additional costs borne by households due to the value of child labor forgone, which researchers put at $246.8 billion.

The study also estimated both the capital and recurrent costs of making education available to a greater number of children, as well as the need to reduce class sizes and improve standards. This accounts for a hefty $493.4 billion out of the total costs of $760 billion.

On the benefits side of the equation the ILO affirmed that the added productive capacity of a future generation of workers due to their increased education would be substantial, accounting for almost all the $5.1 trillion. As well, there would be economic gains anticipated from improved health due to the elimination of the worst forms of child labor.

The study does warn that the figures on costs and benefits are approximate and that there are "very large uncertainties in measurement that surround most aspects of this study. Another qualification to be taken into account is that reaping the economic value of expanded education depends on countries being able to create new jobs that take advantage of higher levels of human capital and can develop appropriate economic policies."

Nevertheless, the report backs up its claims by noting that other institutions, such as the World Bank, agree that increasing education levels of children will have a positive economic effect.

Funding the program will not be easy in the short-term, however. The report admits that until 2016, costs will outweigh benefits, which will not be reaped until the first generation of children completes the extra years of education.

But the report puts this cost into the wider context of public spending. Insofar as the cost to the state is concerned, "[t]he average annual amount during the first decade pales in comparison with the burdens currently borne to finance debt service or the military," argues the ILO.

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The ILO calculates that the child labor elimination program would represent "a noticeable but not exorbitant increase in current social expenditures." The study calculates that the average fiscal burden for governments in the first decade represents 11.1% of year 2000 military spending, with costs in the second decade rising to an equivalent of 27.5%. But "this is primarily a political rather than economic question" which can be dealt with in the wider context of discussions over development assistance and debt relief, the report states.

U.S. Labor report

February also saw the release of the 13th report on child labor prepared by the U.S. Labor Department's Bureau of International Labor Affairs. The congressionally mandated report compared military and basic education expenditures by governments in 73 developing countries.

The report, titled "Advancing the Campaign Against Child Labor: The Resource Allocations of National Governments and International Financial Institutions," assesses trends related to the amount of funding that governments, the World Bank and other international financial institutions have committed to preventing abusive child labor and improving access to basic education.

The study found that most countries dedicated a larger share of their central government expenditures to education than to the military. However, many multilateral development banks invested a relatively small portion of their resources in these countries to basic education and child labor.

In Africa, for example, most of the countries spend from 10% to 20% of their central government budget on education, with the greater number spending less than 10% on the military. Exceptions included Angola, Burundi, Ethiopia and Sudan, which spend more than 20% on the military, and have much higher allocations to the military compared with education. Angola spends no less than 40.1% of the government budget on military, versus 10.7% on education.

In Asia, education spending as a percentage of the government budget ranges from 7.4% in Vietnam to 25.2% in Malaysia. In this region a greater number of the countries spend more than 20% of the budget on the military. Burma is No. 1, dedicating 93.6% of its budget to this sector.

Most of the countries in Latin America and the Caribbean allocate 10% to 20% of their budget to education. Most spend less than 10% on the military.

In this region the U.S. report observed that of the $282.3 billion the World Bank lent to member countries in 1990-2002, about 4% funded basic education projects and about 1.6% funded child labor related aspects of social protection projects. Counting other funds from related projects the study estimated that about $6 out of every $100 in World Bank lending over this period went for either basic education or social protection projects with child labor related components.

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The report urged greater efforts to reduce child labor and improve education: "Regardless of any nation's current stage of development, education plays a crucial role in increasing the general opportunities that people have available to them, and in providing avenues away from impoverished futures."

This year's Lenten message by John Paul II urged greater attention to the needs and suffering of children. Moving millions of children away from labor and into the classroom will not be easy or cheap, but would go a long way to improving their situation.