World Bank’s advice to govts on job creation

Generally, employment is viewed as the engagement by an employer and the resultant earning of a regular paycheque that then becomes the source of household livelihood and welfare. When the number of people outside the scope of an employer-employee relationship soars, it should worry concerned governments, as it did the World Bank Group.

Today, some 200 million people, including 75 million under the age of 25, are unemployed. Joblessness has become such a critical concern worldwide that it is the topic of World Bank’s latest global development report released recently.

In sub-Saharan Africa and Asia, 600 million new jobs must be created in the next 15 years to absorb “the burgeoning working-age populations”. This is World Bank’ prediction as captured in its World Development Report 2013. The report is simply titled, Jobs. The topic has caught the attention of the donor institution, especially the notable worldwide challenges in the employment sector, considered central to development.

According to the World Bank, jobs are more than just the earnings and the benefits they provide to the holders. They are also the output they generate and part of who we are and how we interact with others in society. Jobs can boost living standards, raise productivity and foster social cohesion.

In undertaking the study that led to the report, the bank sought to establish why some jobs did more for development than others.

“…The jobs with the greatest development payoffs are those that make cities function better, connect the economy to global markets, protect the environment, foster trust and civic engagement, or reduce poverty,” writes the president of the World Bank Group Jim Yong Kim in the report’s Foreword.

“Critically,” he continues, “these jobs are not only found in the formal sector. Depending on the country context, informal jobs can also be transformational.”

This is important for government policy direction.

In developing countries, the bank found that micro-enterprises and small businesses accounted for three-quarters of job markets. Kenya falls in this category. In this respect, the bank advances a three-stage approach to help governments uplift such jobs to achieve rewarding growth.

First, it proposes to governments to make policies that secure macroeconomic stability, promote the rule of law, foster investments in human capital, and create an enabling business environment.

Secondly, the World Bank stresses the importance of well thought out labour policies to “ensure that growth translates into employment opportunities”. These need to be complemented by an approach to job creation that looks beyond the formal labour market.

“Third, governments should strategically identify which jobs would do the most for development, given the specific country context, and remove or offset the obstacles that prevent the private sector from creating more of those jobs,” writes Kim.

Emphasis is on the private sector because it is the main engine of job creation and the source of every nine out of 10 jobs in the developing world, the report states.

A strong private sector led growth is therefore a key avenue in creating jobs for both individual and economic growth.

According to the World Bank report, jobs are moving very fast from primary and traditional manufacturing industries to services and knowledge intensive activities, and many manufacturers are now operating digitally instead of adopting a long chain marketing strategy that slows production.

But because jobs are vulnerable to economic downturns, especially those in the private sector compared to public sector jobs, the World Bank suggests that government in developing countries should frame policies that further cushion the private sector from impending economic blows caused by changing seasons and different market trends.

The suggestions include the establishment of strong financial support as well as the enactment of legislation that protects the rights of private sector job owners’. Such policies should bear in mind demography, urbanisation, globalisation, and technology.

In a study, the World Bank found that countries that failed to address issues in those sectors faced vicious cycles of slow growth in labour earnings and job dissatisfaction.

In those countries, youth unemployment tends to be high and women have few opportunities, leaving potential economic and social gains untapped.

In contrast, countries that took deliberate steps to address the job challenges experienced prosperous populations, growing middleclass and improved opportunities for women and youth.

The researchers from seven case study countries were led by former World Bank president Mr Robert Zoellick, current president Mr Kim, and managing directors Caroline Anstey and Mohieldin.

Some of the case study countries were Kenya, Ethiopia, Egypt, South Africa, China, France, Germany, and India.