FAQ: Understanding Job Creation, Policy, Skills, and the Future of Work

The World Bank Group’s goal is to help countries build economies that convert growth into local jobs by unlocking opportunity where people live.

Jobs provide income, hope, and dignity, boosting global prosperity and stability.

Over the next 10 to 15 years, 1.2 billion young people in developing countries will reach working age.

To accelerate job creation, it is critical to:

• invest in foundational physical and human infrastructure, including healthcare and education;
• create a business-enabling environment;
• and mobilize private capital.

We are focusing on five job-rich sectors where the right set of policies can unlock jobs at scale:

• infrastructure and energy,
• smallholder agriculture and agribusiness,
• health,
• tourism,
• and value-added manufacturing.

These sectors tend to be resilient to global headwinds and contribute to building the foundational infrastructure for jobs.

Jobs in these sectors also stand to gain—not be displaced—by digital technologies, and they provide local employment that anchors stronger communities, rather than outsourcing jobs from advanced economies.

A new indicator was launched in April 2026 that will provide a consistent way to measure how the World Bank Group’s portfolio contributes to job creation.

Initial findings will be available later in 2026.

Nine out of ten jobs come from the private sector, so supporting businesses and entrepreneurs is a critically important part of the employment challenge.

Through IBRD and IDA, we help fund foundational infrastructure and support the creation of the enabling environment for the private sector to thrive and provide financing to SMEs and microentrepreneurs.

Through IFC and MIGA—the private-sector arms of the World Bank Group—we mobilize private capital to invest in firms that create local jobs.

Our strategy includes:

• Opening opportunities for institutional investors, which manage hundreds of trillions of dollars, to access emerging markets.
• Expanding equity investments to provide the long-term capital that businesses need to innovate and hire.
• Delivering more for MSMEs, which are the backbone of employment in emerging economies, but face a lack of financing.

Micro, small, and medium enterprises (MSMEs) are the backbone of employment in developing economies, yet an estimated 70% lack access to financing.

The World Bank Group is revamping how we support MSMEs to channel capital, skills development, and digital tools so these companies can grow and create jobs on a scale.

Through IFC, the World Bank Group has traditionally worked through financial intermediaries, such as domestic banks, to extend access to finance for millions of MSMEs, but is increasingly leveraging innovative platforms to reach MSMEs directly.

We also enable smaller businesses to integrate into global value chains and access new markets.

Example

In Latin America and the Caribbean, IFC’s Supplier Development Program is strengthening linkages between multinational enterprises and local SMEs in strategic export-oriented sectors, creating significant direct and indirect employment.

The informal economy includes unregistered firms (informal firms) and workers without formal contracts.

The exact numbers depend on the definition of informality that is used, but it is certain that a majority of firms and workers in the developing world are in the informal economy.

Many of the barriers that prevent firms from growing and creating more and better jobs are associated with informality, including:

• unpredictable regulation,
• costly registration,
• licensing and permitting,
• and lack of access to credit.

Historically, female labor force participation has tended to form a “U-shape” across economic development, starting high in low-income nations, dropping in middle-income countries, and rising again in high-income economies.

How participation changes across development

• In low-income nations, women participate heavily out of necessity, often in subsistence farming or informal labor.
• Middle-income countries often see a dip as workers transition away from agriculture into better-paid jobs in urban areas, where young adults also stay longer in school.
• High-income countries tend to have high participation rates driven by higher education levels among women and availability of childcare.

Underemployment, as technically defined by the ILO, occurs when workers are employed but do not utilize their full productive capacity.

Most commonly this is the case when they work fewer hours than desired.

How underemployment is measured

• Time-related underemployment is measured by counting part-time workers who are willing and available to work full-time.
• Economists and labor organizations measure these figures primarily through national labor force surveys that ask workers about their desired hours.

Governments can establish sustained, structured public-private dialogues that ensure that policies and regulatory reforms address the key bottlenecks to private sector expansion and hiring.

What this can look like in practice

• Co-designing reform agendas: Forming tiered coalitions of senior public officials and private sector leaders ensures that policies target real business constraints and have the necessary support to be implemented.
• Focusing on specific value chains: Engagements around the challenges of specific industries can bring concrete results when they focus on the fundamental drivers of growth and jobs: foundational infrastructure (including workforce skills), the enabling environment, and catalyzing private investments.

Businesses hire when government policies ensure three conditions are met:

• the physical and human infrastructure around them works,
• the rules governing them are clear and stable,
• and capital is available to fund growth.

The infrastructure is adequate

Reliable energy, transport, and a healthy, educated workforce are prerequisites.

There is an enabling environment for the private sector

Streamlined permitting, easy registration, and clear land and property rights remove the regulatory uncertainty that kills investment decisions before they are made.

Capital is available for businesses to grow and hire

Guarantees, political risk insurance, and co-financing through institutions like IFC and MIGA lower the barrier for private investors to enter new markets.

The guiding principle is “protect workers, not jobs” — cushioning people through disruption without discouraging hiring in the first place.

Strengthen adaptive social protection

The World Bank Group has set a target of reaching 500 million poor and vulnerable people with social protection coverage by 2030 — roughly double today’s reach.

The key word is adaptive: systems that can automatically expand when shocks hit, whether from automation, trade disruption, or extreme weather.

Invest in health systems

The World Bank Group’s target of delivering quality, affordable health services to 1.5 billion people by 2030 addresses a stark reality: 2.1 billion people currently struggle to access.

If employers report they can’t find workers, what is the binding constraint—skills mismatch, location mismatch, wage/conditions, information frictions, discrimination, or informality?

Employers often face hiring challenges due to skills mismatch and limited information, rather than unwilling workers.

In many low- and middle-income settings, informality, poor job-matching and career services, and inadequate wages or conditions are the main constraints, even when they are reported as “skills shortages.”

Education and skills form a key part of the foundational infrastructure for more and better jobs, the surest way out of poverty.

High-quality early childhood development and primary and secondary education lay the foundations for basic cognitive and socio-emotional skills to provide the best possible start in life and equip people with the foundation for life-long learning.

The World Bank Group is leveraging technical, knowledge, and financial partnerships to support countries to develop the foundational skills of students—literacy, numeracy, and socio-emotional skills—to create a sustainable pathway from learning to earning, and delivering private sector led skilling solutions to prepare young people for more and better jobs.

Example

The World Bank Group is helping African countries close the skills gap by equipping young people with the knowledge and training to thrive in fast-changing economies through the African Centers of Excellence (ACEs).

These programs have trained thousands of students in key fields such as health, agriculture, digital technology, energy, and the environment.

Earnings are a strong proxy for broader job quality.

Evidence shows that higher wages go hand in hand with better working conditions, more secure contracts, and access to benefits like health insurance and paid leave.

Having said that, we recognize that a “good job” is more than a job that pays well.

Every direct job supported by World Bank Group operations must meet the Environmental and Social Framework's requirements.

Our policy work has included support to reforms and investments that improve the quality of jobs beyond wages – for example, through extended maternity leave or investments that created safer workplaces.

Well-designed labor policies and regulations, when aligned with market forces and product-market rules, can protect workers and make firms more competitive.

What this means in practical terms

• Clear, enforceable minimum standards for safety, pay, and benefits improve job quality and reduce unfair treatment, while allowing flexibility for digital platforms and new business models.
• Allowing competition in product markets and curbing abuse of market power encourages firms to innovate and improve productivity.
• Using real-time labor market data and regularly reviewing policies allows governments to adjust protections and competition, supporting both worker resilience and long run firm growth.

Technology can play a meaningful role when three conditions are in place:

• quality education,
• sound regulations and policies,
• and solutions that serve local needs and empower communities.

Examples of technology supporting development

• Technology has enabled significant progress in the expansion of financial inclusion through mobile banking and fintech, which has helped reduce transaction and transportation costs, reaching rural and underserved communities more effectively.
• E-commerce platforms like Jumia and Lazada empower entrepreneurs of all sizes to grow their businesses and ideally expand their workforce.
• Lightweight, affordable AI tools — “small AI” — can run on a smartphone or basic laptop, even offline.

Examples in practice

• In Ghana, a WhatsApp math tutor costs $5 per student per year and delivers results equivalent to an extra year of schooling.
• In Kenya, a phone app diagnoses crop diseases without an internet connection.

The three things that policymakers can do to address skills gap when it comes to AI are:

Closing the digital infrastructure gap

In many developing countries, access to basic digital infrastructure necessary for utilizing AI and emerging technologies remains limited.

Addressing the skills gap

Research indicates that fewer than 10% of young people in developing countries have access to digital skills training, compared to over one-third in developed countries.

Addressing this disparity will be crucial moving forward.

Investing in high-quality basic education

Countries need education systems that teach children both technical skills as well as essential behaviors and soft skills.

The demographic dividend is the economic growth potential of countries where the working age population is large relative to those who depend on them (children and the elderly).

Over the next 10 to 15 years, more than 1 billion young people in developing countries will reach working age.

This creates a window of opportunity to convert this demographic surge of young people into an engine for growth, but that rests on three drivers:

• investing in health, education, and infrastructure;
• creating an enabling business environment;
• and mobilizing private capital at scale.