The global movement to end poverty and boost share prosperity hinges in large part on the types of jobs that the working age population will have. For many countries, increasing labor force participation rates and ensuring that workers have access to good jobs will continue to be a challenge for years to come.
The International Labor Organization (ILO) estimates that in the next 10 years, the world will need more than 600 million more jobs to avoid a further increase in unemployment. In regions such as Africa and South Asia, countries face particular challenges to employ a growing number of youth who enter the labor market. Creating new jobs is not governments’ sole concern, however. Policymakers are also focused on low rates of participation in the labor market and high poverty rates among those who participate and have a job.
Employment rates in the developing world tend to be low because many individuals of working age, particularly women, do not participate in the labor market. Participation rates are the lowest in countries in the Middle East and North Africa region. At the same time, in parts of Eastern Europe and Central Asia, demographics are shrinking the size of the labor force, and there are fundamental questions about how to enable people to work longer. As worrisome, many of those who today have jobs are self-employed in very low productivity activities (often small family businesses) without pay. They lack access to core labor regulations and social insurance programs and are often poor. It is estimated that worldwide, around 60% of the self-employed live in poor households.
As outlined in the World Bank’s 2013 World Development Report, beyond policies that facilitate investments and growth, advancing the global jobs agenda requires the right investment in people – the right skills for people to secure good jobs, the right protection for people against risks arising from volatile economies, and the right mechanisms to help people transition smoothly out of inactivity and unemployment into jobs, and from low to higher productivity jobs.
Labor policies and programs can achieve these goals. Labor regulations and insurance programs protect workers from risks and, if well-designed, can facilitate labor market transitions thereby allowing individuals to engage in higher risk, higher return activities. Active labor market programs such as training, job-search assistance, or support to self-employment can also help workers acquire the skills they need and connect them to jobs.