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close this bookHabitat Debate - Vol. 5 - No. 2 - 1999 - Construction and Architecture (HABITAT, 1999, 60 p.)
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View the documentSustainable Architecture: A Definition
View the documentBuilding Homes to Build Local Economies
View the documentAffordable Housing: The Kenyan Experience
View the documentTowards Gender-sensitive Architecture
View the documentHow Urban Design Can Support Children's Rights
View the documentA Cross-Sectoral Approach to Housing for Older People

Building Homes to Build Local Economies

by Graham Tipple

There is a great need for housing in the world today, matched by the need for gainful employment as unprecedented numbers of children grow up into adulthood. Both of these needs represent major challenges to governments in countries where resources are already stretched to the limit.

Can both challenges be dealt with at once? Yes, they can. It is now understood that the construction sector as a whole is as effective in generating employment as manufacturing or any other so-called “productive” sector work. What is more, it is particularly good for unskilled and semi-skilled workers. House construction is even more effective in development than construction in general as it tends to be relatively simple and does not need heavy equipment and complex engineering procedures.

However, even though the potential exists to create employment in house construction, many projects use capital-intensive technologies which minimise labour and give what jobs there are to skilled people. The most extreme example of this is heavy-panel prefabricated construction where there is very little site labour and comparatively high machinery, import and energy costs.

Using Traditional Technologies

Lower-cost housing creates more employment than high-cost housing. It has been found that labour-intensive conventionally-built housing can create twice as many jobs per unit of expenditure as luxury housing. Unexpectedly, perhaps, even self-help housing creates many construction jobs. This is surprising because self-help enshrines within it the idea of “sweat equity” (creating property value by the owner's own labours) almost as a moral imperative. In Dandora, Nairobi, for example, low-income residents employed an average of 8-9 construction workers, 76 per cent of whom were paid).1

Extremely labour-intensive methods, such as traditional and modified earth construction, can be particularly helpful for job creation locally and for unskilled people. Pise terre (rammed earth), for example, has been shown not only to be extremely durable, and strong under live and dead loading, but also to create large amounts of employment per unit of currency spent. Pilot projects in Malawi, Kenya, Sierra Leone and Ghana have demonstrated that large scale commercial developments are possible. PisI> consists of good quality soil pounded in a series of thin layers between metal shutters. The skill involved in pounding is familiar to most people and can be perfected for pisI> applications in a few hours. In the recent innovations, the metal shutters are bolted approximately 300mm apart, they are of new light construction and are faced with renewable plywood, and the panel ends are tongued and grooved to restrict lateral displacement. Window and door openings are simply blanked off with removable boxes.

The technique has considerable commercial potential as the technology is extremely simple with a very basic skill (pounding) at its centre. Very little mechanical equipment is required, greatly reducing front-end costs and overheads. Thus, a company using the technique can maintain very low overheads while employing large numbers of people and transferring technology in a very effective way. In pisI> construction, there are nine unskilled pounders and one supervisor in every gang, and one skilled mason-equivalent can control two gangs. This is a huge increase in productivity per skilled worker over the mason-plus-mate team in conventional contracting.2

Employment or Exploitation?

It can be argued that if local economic development is achieved through keeping low-paid workers low-paid, this is exploitative. One of the remedies is to improve promotion and skill-enhancing opportunities through appropriate on-the-job training targeted at unskilled and semi-skilled workers. In this, techniques such as pisI>, that are very easy to learn, are especially useful. There remains the dilemma, however, that informal sector operators gain much of their trading advantages by cutting corners on safety, wages, benefits, training, etc. If these, arguably exploitative, practices were removed through regulation, low-income workers might have fewer opportunities as there might be fewer successful informal sector businesses.3

Construction work is not only effective in redistributing income to poorer households, it is also very effective in increasing benefits to the local economy. Most houses are built by small-scale enterprises operating on a local scale. They employ mostly semi-skilled or unskilled workers who do not demand a high wage. They tend to employ local people so the wages go directly into the local area. Low-income workers tend to spend their earnings on locally produced food and other goods rather than saving it, paying taxes or buying imported items. Thus, the money circulates in the local economy very effectively (with an income multiplier of at least two).

On the other hand, larger companies tend to employ larger proportions of skilled and administrative staff, and spend capital on replacing labour with machinery, partly because their managers are not trained to deal with a large labour force and would rather face the problems of machinery breakdown than labour disputes. At the other extreme, all workers and materials may be brought in from outside the area or even from another country, hardly benefiting the local economy at all. It follows, therefore, that the more capital-intensive types of construction are less useful in providing employment and even less effective in generating local income multipliers. As a “rule of thumb” the more labour-intensive the work, the higher the local income multiplier.

Backward Linkages

Activity in construction is also very good for promoting other parts of the economy. Many sectors of the economy are needed to supply the construction site with materials, transport, and services. These activities are known as backward linkages and are likely to be as large as the direct investment in the construction. So, for every $1,000 spent in construction, another $1,000 will be spent on materials, transport, etc. to allow the construction to go ahead. The multipliers from backward linkages are particularly high for lower cost housing and for housing constructed in depressed economies. The benefits of backward linkages are also likely to be local as raw materials and services are gained from local suppliers.

Self-help housing and settlement upgrading activities are particularly effective for generating backward linkages. Conversely, backward linkages are lower per dollar spent for capital intensive construction as materials or their constituents are more likely to be purchased from abroad. The (usually imported) energy consumed, both in manufacture and transport, is also likely to be higher in higher cost housing. Thus, the benefits to the economy are inversely related to the cost of the average dwelling constructed, the cheaper the dwelling, the higher per dollar will be the benefit to the local economy and the employment created. As a rule of thumb, therefore, it is better for a country to encourage low-cost, labour-intensive housing built with local technology by small-scale enterprises.

There is great potential to increase backward linkages and, therefore, the benefit to the local economy by adopting technologies that are effective in job creation. The manufacture of bricks in an automated, capital intensive factory can generate about 8 person-years-work per ten million bricks. At the other end of the scale, a small-scale, traditional manual plant can generate 160 person-years work for the same number of bricks.4 The small-scale plant can make the bricks more cheaply - for one-third of the cost5 and 95 per cent of the costs are raised locally compared to only 25 per cent for the large automated plant.6 In addition, local small-scale manufacturing allows for short journeys to the site whereas large plants must be geographically centralised, entailing long-distance transport.


© UNCHS/P. Wambu

Forward linkages can also be important. They include the range of maintenance activities and production of the fittings and furnishings which people buy to turn their dwelling into a home. However, they are particularly important with respect to the use of home as a workplace. Informal sector activities carried out in the home involve a wide range of skills and resources, and may use small or considerable parts of the living quarters, despite the small space available for all activities. The ability to use space for both living and working is a major attraction of home based economic activities.

The distinction between production (economic activities) and reproduction (domestic activities) are not clearly drawn in developing country households. Thus, there is believed to be a symbiotic relationship between housing and home-based enterprises. Owners may be enabled to consolidate their dwellings through the income earned in a home-based enterprise. Many households would not have their dwelling without the enterprise and many enterprises would not exist without the use of the dwelling.7

The link between housing and employment, through construction and linkages to other parts of the economy is, therefore, well established. It is important that governments understand this so that housing is not treated as simply a welfare good on which investment is foregone in hard times. Instead it should be recognised as a potential engine of the economy.

Graham Tipple is Director of the Centre for Architectural Research and Development Overseas (CARDO) at the University of Newcastle upon Tyne, U.K.


1. Laquian, A.A. (1983b). “Sites, Services and Shelter - an Evaluation”, Habitat International, 7, 5/6.

2. Tipple, A. G. (1993). “The pisuilding method in low cost housing provision”, Paper presented to the XXIst IAHS World Housing Congress, Cape Town, South Africa, 10-14th May.

3. ILO (1991). The Dilemma of the Informal Sector, Report of the Director-General, International Labour Organisation, Geneva.

UNCHS/ILO (1995). “Shelter provision and employment generation”, Nairobi and Geneva: UNCHS (Habitat) and ILO.

4. CNC, (1976). “Diagnosis of the economic and technological State of the Colombian brickmaking industry”, Doc. No. CEN 10-76 (Bogota), Centro Nacional de la Construccion.

5. Keddie, J and Cleghorn, W. (1978). “Least-cost Brickmaking”, Appropriate Technology, 5, 3.

6. Parry, J.P.M. (1983). “Technical options in brick and tile production”, Paper presented to an Intermediate Technology Workshop, Birmingham.

7. Strassmann, W.P. (1987). “Home-based Enterprises in Cities of Developing Countries.” Economic Development and Cultural Change 36, 1: 121.