Structural Adjustment, Labour Markets and Employment Policy

Since 1980, structural adjustment has changed from a policy of ‘quick fix’ aimed at correcting structural deficits in the balance of payments into a medium (or even long-term) process of economic and political reform in developing countries. What was originally designed as a swift and separable exercise of macroeconomic stabilisation has gradually become a persistent and diversified reform process which is hardly any longer distinguishable from development policy itself. It is not appropriate to give an account here of how this transformation took place (for this see Toye (1993)). But it is important to recognise it, because it has profound implications for those areas of development policy which are increasingly pervaded by the logic of structural adjustment. In the mid-1980s, the interface between structural adjustment and social welfare policies was raised as a major issue, in a wide-ranging debate on the ‘social costs’ of adjustment (Cornia, Jolly and Stewart, 1987). This paper discusses a particular aspect of this interface, between structural adjustment and employment policy, since it is now clear that for many developing countries employment policy must be adapted to the wider context of economic reform.