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Jobs Are a Cornerstone of Development, Says World Development Report 2013

March 8, 2013

Jobs with high development payoffs can transform societies and spur prosperity

KATHMANDU, March 08, 2013 -- In developing countries, jobs are a cornerstone of development, with a payoff far beyond income alone. They are critical for reducing poverty, making cities work, and providing youth with alternatives to violence, says the World Bank’s World Development Report 2013: Jobs.

The report stresses the role of strong private sector led growth in creating jobs and outlines how jobs that do the most for development can spur a virtuous cycle. The report finds that poverty falls as people work their way out of hardship and as jobs empower women to invest more in their children. Efficiency increases as workers get better at what they do, as more productive jobs appear, and as less productive ones disappear. Societies flourish as jobs foster diversity and provide alternatives to conflict.

The report highlights how jobs with the greatest development payoffs are those that raise incomes, make cities function better, connect the economy to global markets, protect the environment, and give people a stake in their societies.

Discussing the report here today, Co-Author and Deputy Director of the World Development Report 2013: Jobs, Jesko S. Hentschel stressed the need for governments to work well with the private sector, which accounts for 90 percent of all jobs and to find the best ways to help small firms and farms grow. Noting that over 70 percent of jobs in Nepal are in or linked to agriculture, he said extra emphasis must be placed on improving farming productivity for small landholders, given the close link between rural productivity and poverty.

Where farming and self-employment are prevalent and safety nets are modest at best, unemployment rates can be low. In those places, most poor people work long hours but cannot make ends meet. And the violation of basic rights is not uncommon. Therefore, the quality and not just the number of jobs is vitally important,” said Hentschel.

Attracting investment and enabling small urban firms to grow would be core for making urbanization work in a dynamic way, Hentschel said. He noted that over ninety percent of non-agricultural jobs in Nepal are in micro-firms.  Bringing more dynamism into this sector would involve an agenda of urban spatial policies, urban governance and urban infrastructure, he said.

Other particular features for Nepal, he noted, were the post-conflict situation and the role of jobs to re-connect the social fabric and the scope for strategic bilateral agreements to improve social protection for migrant Nepali workers.

The report offers many useful insights as Nepal prepares its next Three Year Plan and embarks on an ambitious agenda of inclusive, employment-centric growth,” said Tahseen Sayed, World Bank Country Manager for Nepal.

The report processed over 800 surveys and censuses to arrive at its findings and estimates that worldwide, more than 3 billion people are working, but nearly half work in farming, small household enterprises, or in casual or seasonal day labor, where safety nets are modest or sometimes non-existent and earnings are often meager.

The report advances a three-stage approach:

  • First, solid fundamentals – including macroeconomic stability, an enabling business environment, human capital, and the rule of law – have to be in place.
  • Second, labor policies should not become an obstacle to job creation, they should also provide access to voice and social protection to the most vulnerable.
  • Third, governments should identify which jobs would do the most for development given their specific country context, and remove or offset obstacles to private sector creation of such jobs.

The report says policy makers should tackle these challenges by answering such questions as: Should countries build their development strategies around growth, or should they focus on jobs?  Can entrepreneurship be fostered, especially among microenterprises in developing countries, or are entrepreneurs born?  Are greater investments in education and training a prerequisite for employability, or can skills be built through jobs?  Amidst crises and structural shifts, should jobs, not just workers, be protected?    

The discussion was organized by the Nepal Office of the World Bank in partnership with Samriddhi – The Prosperity Foundation.  Mr. Madhukar Shumsher J.B. Rana, former Finance Minister; Mr. Sanjib Subba, Chief Executive Officer, Nepal Bankers Training Institute; and Ms. Arpita Nepal, Economist with Samridhhi – the Prosperity Foundation, highlighted various aspects of the jobs challenge in Nepal and the need to focus on the fundamentals outlined in the report.

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