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BRIEF November 28, 2017

Growth and Job Creation

The Growth and Job Creation theme focuses on understanding the dynamics of economic growth and job creation.

Recently completed projects studied the creative destruction of micro and small enterprises (Micro and Small Firm Death in Developing Countries) and the investment climate (Doing Business) (Job Quality Framework, Getting Water and Sewerage Connections in 31 Mexican States and Mexico City). 

Project Highlight:

Highlight: Job Quality Framework

This project provides quantitative measures on the quality of employment, structured in a new Job Quality Framework as part of the Doing Business Report.

The flagship publication of the World Bank Group has been presenting data on labor market regulation for the past decade. For the first time, the report goes beyond the concept of efficiency and labor market flexibility and focuses on measuring the quality of employment. Through years of extensive consultations with experts and practitioners in the field, it became evident that a comprehensive data set should also provide information on job quality, given that both aspects of labor laws are important for private sector development, productivity, and social cohesion.

The new data provides information on the key aspects of job quality stipulated by labor laws in 190 economies. The data include the following job quality frameworks: hiring, working, social protection, and workplace relations.

The team produced a case study on the quality of jobs using new data from 190 economies in 2016. Some highlights include:

·         Regulation is essential for the efficient functioning of labor markets and worker protection. Labor market rules can potentially have an impact on economic outcomes. Doing Business data show that rigid employment regulation is associated with higher levels of informality. By contrast, weak labor market rules can result in discrimination and poor treatment of workers.

·         The challenge for governments in developing labor policies is to strike the right balance between worker protection and flexibility.

·         Regulation of labor markets differs significantly by income group. Low-income and lower-middle-income economies tend to have stricter employment protection regulation than more developed economies.

·         One reason for more rigid employment protection legislation in low-income and lower-middle-income economies is the lack of unemployment insurance. None of the low-income economies and only 23 percent of lower-middle-income economies have unemployment protection stipulated in the law.

The full case study entitled “Labor Market Regulation: What Can We Learn from Doing Business Data?” is published in the annex of the Doing Business Report 2017.

Since the introduction of the job quality data, the Doing Business team has had substantial engagements with representatives from Kuwait, the United Arab Emirates, Kazakhstan, the Arab Republic of Egypt, Jordan, and Guatemala. 

Last Updated: Dec 12, 2017


David McKenzie

Lead Economist