What Is Direct Employment?

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Government and nonprofit agencies undertake projects designed to promote economic growth and create jobs in specific areas. “Direct employment” is the term used for the workers employed by these projects. By contrast, indirect employment refers to job creation and business growth in the local economy as a result of demand created by the project and its direct employees.

Characteristics of Direct Employment

When a development project hires people, jobs are created directly. Initial employment may be in construction or installation. Permanent positions are created as the project moves forward, such as jobs in manufacturing, operations, administration and maintenance. For example, the International Finance Corporation found that a milk processing plant it funded in Bangladesh starting in 2008 directly employed 300 workers after three years. The impact of such projects can go far beyond the jobs directly created. The IFC also found that the project stimulated local businesses and the creation of 2,200 indirect jobs for agricultural workers, milk collectors and distributors over the same period, multiplying the project’s impact on the local economy and employment.