Good jobs are the surest pathway out of poverty. They are central to ending extreme poverty and boosting shared prosperity. The developing world faces a global jobs crisis that hampers efforts to end extreme poverty and boost shared prosperity. For the poor and vulnerable, jobs are the main way to improve their standard of living and climb out of poverty. Research shows that rising wages account for 30 to 50% of the drop in poverty over the last decade. However, over two billion people of working age are not participating in the labor force. Most of these are women. Among those who do participate, around 200 million people are unemployed, including 75 million youth under the age of 25. Furthermore, 600 million new jobs are needed globally over the next fifteen years to keep employment rates stable and to keep up with population growth.
Creating more, better and more inclusive jobs is central to the development agenda.
Today, the developing world is confronted by a jobs challenge on three levels:
1. Creating around 40 million jobs per year over the next 15 years to increase employment rates and absorb a growing number of young people entering the labor force, particularly in Sub-Saharan African and South Asia. This, to a large extent, involves creating the conditions for the creation and growth of private sector business.
2. Increasing productivity of jobs across the spectrum of activities. This requires a focus on informal sector jobs which are the major source of income for the poor, and in low-income countries, the majority of the population. This might involve improving production technologies, investing in skills, and expanding access to markets. At the same time, this requires not tilting incentives to remain formal or harming formal businesses with unfair competition. It is therefore also important to facilitate the movement of jobs from low to higher productivity activities, from the informal to the formal sector, from rural to urban areas.
3. Helping connect people to jobs. Not all workers have the same opportunities in the labor market. We must ensure that those who are able to work have the incentives to do so, and that they have skills that are required in today’s modern job market. We must also make sure that they have information about the types of jobs available, and the ability to move to the regions where jobs are created.
But jobs are not all equally transformational. Some jobs are better at lifting the poor out of poverty or increasing the earnings of the bottom 40%. Some jobs also provide wider benefits than others. For instance, jobs for women can change the way households spend money and invest in the education and health of children. Jobs in cities support greater specialization and the exchange of ideas,making other jobs more productive. In turbulent environments, jobs for young men can provide alternatives to violence and help restore peace.
Just having a job is also not enough. What makes a difference in sustaining the escape from poverty is increasing the earnings from work; that is, having a more productive job. However, half of the world’s working population—two thirds of whom are poor—are farmers or self-employed. They work predominantly in low productivity activities such as working a small plot of land, selling vegetables on the street, sewing clothes or offering a range of services in urban areas that offer low earnings and little security.
Productivity-driven, private sector-led growth is the cornerstone of job creation in all countries. Expanding structural transformation; addressing the spatial mismatches of people and jobs; addressing, jobs for youth; and supporting women’s economic empowerment are needed to create more and better jobs, and to ensure job creation is inclusive.
The World Bank Group continues to support job creation in fragile and conflict-affected states through a wide variety of operational approaches, bringing a focus on private sector-led growth and ensuring incentives from short-term interventions do not distort long-term development.
Last Updated: Dec 02, 2016