Agrifood value chain employment and compensation shift with structural transformation – Nature

Report on Labor Reallocation in Agrifood Value Chains and Implications for Sustainable Development Goals (SDGs)

1.0 Introduction and Scope

This report analyzes global labor reallocation patterns within the agrifood value chain from 1993 to 2021. Traditional economic narratives focus on labor moving out of the agricultural sector entirely. This analysis provides a more nuanced view, examining migration within the agrifood system, from primary production to downstream segments. The findings are critically assessed in the context of achieving the Sustainable Development Goals (SDGs), particularly those related to poverty, gender equality, and decent work.

2.0 Methodology

The analysis is based on a comprehensive dataset covering the majority of the global economy. The methodological approach involved:

• Decomposition of multiregional input-output table data to generate annual labor value-added estimates.
• Matching these estimates with industry-specific employment data.
• Calculation of average worker compensation across different segments of the agrifood value chain.

3.0 Key Findings

The study identified ten stylized facts regarding labor reallocation amid structural transformation. The most significant findings are summarized below:

1. As national incomes increase, labor exits primary agricultural production.
2. Despite the exit from farming, downstream segments of the agrifood value chain (e.g., processing, retail, food service) maintain a consistent share of total economy-wide employment.
3. Jobs in these downstream segments offer higher average compensation compared to primary farm work.
4. A distinct gender-based pattern emerges in this transition: women are disproportionately likely to move into consumer-facing retail and food service roles.
5. Men, in contrast, tend to migrate to better-paying midstream jobs within the value chain.
6. This gender-differentiated migration pattern contributes to an increase in gender pay inequality within the agrifood system.
7. Employment shifts are strongly correlated with growth in national per capita income.
8. Conversely, these shifts show no significant association with growth in agricultural total factor productivity.

4.0 Analysis of Findings in the Context of Sustainable Development Goals

The observed labor dynamics have direct and significant implications for several SDGs:

• SDG 8 (Decent Work and Economic Growth): The movement of labor from low-paying farm work to higher-compensated jobs in downstream agrifood segments supports economic growth and the goal of productive employment. The stability of employment in these downstream sectors suggests they are a durable source of jobs during economic development.
• SDG 1 (No Poverty) & SDG 10 (Reduced Inequalities): By offering better pay than farm work, the expansion of downstream agrifood employment presents a viable pathway out of poverty for many workers. This contributes to reducing income inequality between the agricultural sector and other parts of the economy.
• SDG 5 (Gender Equality): The findings present a significant challenge to this goal. While women are transitioning out of primary production, they are being segregated into lower-paying downstream roles compared to men. This trend actively increases the gender pay gap within the agrifood value chain, undermining progress towards women’s economic empowerment and gender equality.

5.0 Conclusion

The structural transformation of the global economy involves a significant reallocation of labor within the agrifood value chain, not just out of it. While this shift creates opportunities for higher incomes and contributes to SDG 8 (Decent Work and Economic Growth), it also creates new challenges. The widening gender pay gap is a critical issue that directly conflicts with SDG 5 (Gender Equality). Therefore, policy interventions must look beyond simple productivity metrics and focus on ensuring that the benefits of structural transformation are equitable, creating decent work opportunities for all and actively closing the gender gap within the evolving agrifood system.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

The article’s abstract on structural transformation within the agrifood value chain connects to several Sustainable Development Goals (SDGs). The primary SDGs addressed are:

• SDG 8: Decent Work and Economic Growth: The core theme of the article is the reallocation of labor from lower-paying agricultural work to better-paying jobs in other segments of the agrifood value chain. This directly relates to promoting sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all. The article analyzes “labour reallocation,” “employment share,” and “average worker compensation,” which are central to SDG 8.
• SDG 5: Gender Equality: The article explicitly highlights a gender dimension in labor migration, stating that “Women disproportionately move from primary production to downstream, consumer-facing retail and food service, whereas men migrate to better-paying midstream jobs, increasing gender pay inequality.” This finding directly addresses the challenges of achieving gender equality and empowering all women and girls, particularly in economic life.
• SDG 1: No Poverty: The transition of labor from low-paying “farm work” to “jobs that pay better” is a fundamental mechanism for poverty reduction. By analyzing how structural transformation impacts worker compensation and income, the article touches upon the goal of ending poverty in all its forms.
• SDG 2: Zero Hunger: The article focuses on the agrifood value chain, which is central to achieving food security. While it notes that employment shifts are not strongly associated with “agricultural total factor productivity growth,” the analysis of labor dynamics within the entire system—from “primary production” to consumer—is relevant to creating sustainable food systems and improving the livelihoods of those who depend on them.

2. What specific targets under those SDGs can be identified based on the article’s content?

Based on the analysis of labor reallocation, compensation, and gender disparities, the following specific SDG targets can be identified:

1. Under SDG 8 (Decent Work and Economic Growth):
   • Target 8.2: “Achieve higher levels of economic productivity through diversification, technological upgrading and innovation…” The article’s focus on “structural transformation” and “intersectoral labour reallocation” reflects the process of economic diversification away from primary agriculture.
   • Target 8.3: “Promote development-oriented policies that support productive activities, decent job creation…” The article identifies that “downstream agrifood value chain segments maintain a steady economy-wide employment share—offering jobs that pay better than farm work,” which points directly to the creation of more decent jobs.
   • Target 8.5: “By 2030, achieve full and productive employment and decent work for all women and men… and equal pay for work of equal value.” This target is strongly connected, as the article analyzes “employment data,” “average worker compensation,” and explicitly finds an increase in “gender pay inequality.”
2. Under SDG 5 (Gender Equality):
   • Target 5.1: “End all forms of discrimination against all women and girls everywhere.” The finding that women and men migrate to different sectors with unequal pay suggests a form of economic discrimination in labor market opportunities.
   • Target 5.5: “Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic and public life.” The article’s evidence that men move into “better-paying midstream jobs” while women move into other roles points to unequal economic opportunities within the agrifood value chain.
3. Under SDG 1 (No Poverty):
   • Target 1.2: “By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty…” The shift to jobs that “pay better than farm work” is a direct pathway to increasing incomes and reducing poverty.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Yes, the article’s methodology and findings mention or imply several indicators that align with official SDG indicators for measuring progress:

• Average Worker Compensation and Gender Pay Gap: The article’s estimation of “average worker compensation” and its finding of “increasing gender pay inequality” directly correspond to Indicator 8.5.1: Average hourly earnings of female and male employees, by occupation, age and persons with disabilities. The analysis provides a clear measure of the economic disparity between genders in the agrifood value chain.
• Employment Share by Sector: The study decomposes data into “industry- and country-specific annual labour value-added estimates” and matches them with “industry-specific employment data.” This analysis of labor shifts between “primary production,” “downstream,” and “midstream” segments is a practical application for measuring structural economic transformation, relevant to targets under SDG 8.
• National Per Capita Income Growth: The article states that “Employment shifts are strongly associated with changes in national per capita income.” This aligns with Indicator 8.1.1: Annual growth rate of real GDP per capita, which is a primary measure of economic growth.
• Proportion of Labor in Agriculture: The analysis of labor exiting “primary production” (agriculture) is a key indicator of structural transformation and is relevant to targets under SDG 1, SDG 2, and SDG 8.

4. Summary Table of SDGs, Targets, and Indicators

Source: nature.com