The 2013 World Development Report (WDR) stresses that jobs are a cornerstone for development and that they serve as the linchpin connecting living standards, productivity, and social cohesion—all vital factors for achieving inclusive growth. Countries differ in the job-creation possibilities available to them at any particular point in time. For example, 30 years ago, Mexico and Korea were at roughly the same stage of development. Yet, based on differences in demographics, investments, policies, and a host of other factors, each country's outlook on jobs today is drastically different. In this sense, jobs agendas are country- and context-specific.
Despite sluggish growth in labor markets, developing countries continue their gradual recovery from the global financial crisis. Employment outcomes continued to improve in the second quarter of 2012, including in the countries more affected by the recession in Eastern Europe and Latin America. However, worldwide, more than 1 billion people were marginally employed in low-income or informal jobs.
Labor market outcomes are particularly worrisome for youth. Across countries, unemployment rates for youth are up to three times higher than adult workers’ unemployment rates and many young people—around 30 percent in the Middle East and North Africa—are out of the labor force and are not studying. Discouraged by high youth unemployment rates, many young people have given up the job search altogether, or have postponed it to continue in the education system (Source: ILO Global Employment Trends 2013). In addition, a demographic surge will soon make the job-creation challenge even more urgent: The WDR estimates that to keep employment rates constant, around 600 million new jobs will need to be created during a 15-year period.
Appropriate policies to create better jobs will differ from country to country but will usually involve interventions across sectors that aim to improve incentives to create new businesses or expand current ones; increase the productivity of small scale entrepreneurs; foster innovation and high-growth potential firms, build the skills of the labor force; expand the coverage of worker protection systems; and facilitate labor market transitions from school or inactivity to work, out of unemployment, or from low- to higher-productivity jobs.
Jobs are central to the World Bank Group’s core objective of ending poverty and boosting shared prosperity. To partner countries, the Bank Group brings a unique package of global development knowledge, evidence-based analysis, technical assistance and capacity-building, and financing for both the public and private sectors, by leveraging the comparative advantages of its International Bank for Reconstruction and Development (IBRD)/ International Development Association (IDA), International Finance Corporation (IFC), and Multilateral Investment Guarantee Agency (MIGA) branches. Following the launch of the WDR and the Social Protection and Labor Strategy 2012-2022, the Bank Group is focusing on operationalizing these strategies.
Demand for Bank Group support related to labor has been increasing. In response to the global financial crisis, the Bank Group increased its labor lending from an annual average of $477 million in 1998-2008 to an annual average of $634 million for 2009-2011. From 1998-2012, the Bank Group supported job creation and worker protection activities in 99 countries, with lending reaching $7.3 billion ($5.6 billion in IBRD, $1.7 billion in IDA, and $47 million in grants). Programs included unemployment benefits, public works, employment services, training, support to self-employment and entrepreneurship, and access to credit. During 1998-2012, the Bank Group’s Europe and Central Asia and Latin America and Caribbean regions were the largest borrowers, with $2.6 billion and $1.9 billion in labor market lending, respectively.
Because of the global nature of the jobs challenge, the Bank Group is collaborating with donors, partners, and international organizations to invest in three areas: adequate and timely data collection, cross-sectoral diagnostic tools, and a smooth flow of practical knowledge on country experience, which fully equips developing country policymakers to make the critical decisions they need to create good jobs for development. Examples of collaborative efforts include the Jobs Knowledge Platform and the Social Protection Inter-Agency Cooperation Board. These efforts help facilitate the global conversation on data collection on jobs and social protection. In 2012, the Bank Group also participated in the South-South Learning Forum, which focused on the theme of jobs, bringing together practitioners to better understand how countries were developing job strategies.
Reducing Youth Unemployment
- In Afghanistan, Jordan, Lao Peoples Democratic Republic, Liberia, Nepal, Rwanda, and South Sudan, projects are increasing young women’s economic opportunities by improving their skills and access to the labor market; agricultural land; and technology, credit, and infrastructure services
- The Dominican Republic is building technical skills, work experience, and life skills of 13,000 youth ages 16-29.
- The Liberian government is generating temporary employment for young people through a cash-for-work program, and is helping them develop job-appropriate skills.
- In Papua New Guinea, the government established a program to provide temporary employment and job training to thousands of disadvantaged youth in crime-ridden Port Moresby.
- Tunisia is reforming active labor market programs for youth through a comprehensive program (including training and life skills, wage subsidies, and internships), from which around 300,000 youths will be benefiting.
- In Uganda, 6,000 unemployed youth have started enterprises and have improved their economic livelihoods.
Reforming Policy to Better Protect Workers
- A new labor code in Bhutan is improving working conditions and labor relations.
- Brazil, Chile, and Colombia are developing unemployment benefit systems based on savings, which will provide better incentives to search for and keep jobs.
- In Malaysia, the Bank Group helped the government institute a national minimum wage for the first time.
Improving Employment and Training Systems
- Armenia, Azerbaijan, and Serbia are upgrading national employment services and labor inspectorates and are improving their employment protection legislation.
- In Bulgaria, more than 700,000 people are benefitting from improvements in employment services, training, small business support, and local economic development planning.
- In China, for rural migrants, provinces are training, improving labor market information and public employment services, improving employment conditions, increasing awareness of worker rights, and supporting legal services.
- El Salvador is guaranteeing a minimum level of income to poor urban families by funding people’s participation in projects submitted by municipalities, with an emphasis on social services and innovative training.
- India is offering business development and mentoring underprivileged entrepreneurs. More than 1,200 youth entrepreneurs have emerged, generating more than 11,700 new jobs.
- In Turkey, the government is launching projects that provide quality vocational training.
Improving Investment Climate for Sustained Job Creation
- In Turkey, a series of jobs-related Development Policy Loans are helping sustain job creation.
- Rwanda is improving the investment climate by supporting entrepreneurs and private investment.
- Colombia is creating new jobs through effective urbanization policies.
Supporting Tools for Better Market Diagnostics
- ADePT is a user-friendly software package that derives diagnostics on jobs and earnings