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.
Employment outcomes in developing countries continued to deteriorate in 2013: employment growth slowed and unemployment rates slightly increased. The weak global recovery, with wide regional disparities, along with uncertainties in financial markets and adjustment in monetary policies in developed countries may help explain such downturns. As economic growth slows, particularly in the developing world, countries are not producing enough quality jobs. Worldwide, more than 1 billion people are marginally employed in low-income or informal jobs. Earnings from these jobs are often too low to pull households out of poverty.
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. Close to 40 percent of youth in the developing world are unemployed or inactive and not studying and, among those who work, half are in low productivity activities often without pay. Discouraged by high youth unemployment rates, many young people have given up the job search altogether, or have postponed it to continue in their education. 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 actions 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 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 World Bank Group is focusing on operationalizing these strategies.
In FY13, the World Bank Group labor related lending totaled US$321 million, up from US$189 million in FY12 (comprising US$210 million through IBRD lending, US$110 million through IDA lending, and US$1.3 million in grants). In addition, the Bank delivered 34 economic and sector analyses and 22 technical assistance projects on labor markets topics. Programs included unemployment benefits, public works, employment services, training, support to self-employment and entrepreneurship, and access to credit. Regionally, FY13, the Bank’s Latin America and Caribbean and Africa units were the largest borrowers to support their jobs agendas, with US$11 million and US$9 million in labor market lending, respectively.
Because of the global nature of the jobs challenge, the Bank 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 Social Protection Inter-Agency Cooperation Board and the Jobs Knowledge Platform. In May 2013, the Jobs Knowledge Platform hosted the “Jobs and Shared Prosperity Day” learning conference to discuss challenges and innovative solutions for creating more and better jobs. The gathering served as an opportunity to recognize and award the winners of the Experiences from the Field Competition, which collected over 130 project submissions aiming at creating work and employment opportunities.
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 and agricultural land, as well as technology, credit, and infrastructure services.
- The Dominican Republic is building the technical skills, work experience, and life skills of almost 40,000 youth ages 16-29.
- The Liberian government is generating temporary employment for young people through a cash-for-work program, while 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.
- In Uganda, 6,000 unemployed youth have started enterprises, significantly improving 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 World 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 to improve their employment protection legislation.
- In Bulgaria, more than 700,000 people are benefiting 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
- The ADePT Labor module is a user-friendly software package that produces diagnostics of labor markets and highlights issues in developing countries - particularly how jobs, employment and earnings relate to the poor.