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

April 25, 2013

Jobs with high development payoffs
can transform societies and spur prosperity

COLOMBO, Sri Lanka – 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.  

Jesko Hentschel, co-author and deputy director of the World Development Report 2013: Jobs will present the main findings of this World Bank flagship report at the Faculty of Graduate Studies of the University of Colombo.

“One of the biggest challenges facing Sri Lanka is to improve women’s employment opportunities, especially for the young female population” he said. “Around the world, we find that more women working come with real developmental gains – much beyond the income they earn from their jobs. Investment in children rises, more girls and women attend education and training classes as aspirations increase, and the way decisions in societies are being made matures.”  In 2010, only 28% of young women aged 15-24 participated in the labor force in Sri Lanka (compared to 50% of young men). The participation rate among women aged 25-64 in the same year was 43%, compared to 90% of men in the same age group.

“Social skills are becoming more and more crucial for employers,” said Hentschel. Sri Lanka is an example of a country that needs to improve employable skills. “Different from literacy and numeracy cognitive skills, we are learning that social skills are often built on the job itself – and most importantly, the very first job somebody holds. This is why the transition from school to work is a crucial period in life,” Hentschel said. In 2010, Sri Lanka had a youth unemployment rate of people between 16 and 24 years of age more than four times as high as the average unemployment rates – one of the highest such ratios in the world.

Taking advantage of its geographic position and demographic transition, Sri Lanka has significant potential to create new – and improve the quality of – jobs. Core to this will be the urbanization agenda as well as continued access to foreign ideas and technology through trade and openness – these two effects can spur significant productivity improvement in firms.

Jobs are also core for the social functioning of communities and societies, the report argues. Here, the authors draw on an evaluation of the cash-for-work program in Sri Lanka that was initially designed to resettle 100,000 returnees following the conflict that ended in 2009. It supported more than 250,000 returnees and became the largest source of employment in the immediate aftermath of the conflict. A 36-year-old female returnee, reflecting on her experiences said that this program “helped to bring the community together.”

The report processed more than 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 policymakers 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?
  • Amid crises and structural shifts, should jobs, not just workers, be protected?
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