Jobs and economic transformation for IDA countries

Policymakers the world over are concerned about jobs. It is often the first thing they talk about when World Bank delegations meet them, and the last message they leave us with on our way back to Washington. So it should come as no surprise that jobs has been chosen as one of the central themes of the IDA-18 replenishment round. This kicked off in Paris in March and continued in earnest during the recent Spring Meetings.
 
A bit of background on IDA Replenishment, which can seem a rather arcane process from the outside. The International Development Association (IDA) is the part of the World Bank that helps the world’s poorest countries (77 countries during the IDA-17 period) by providing grants and credits on concessional terms for a wide range of projects to support poverty elimination and growth. Funding for IDA comes from IDA member countries and needs to be replenished regularly. So every three years, we raise new funds – in IDA-17 FY (2015-18) this amounted to US$51.9 billion.
 
Of course, no one contributes to a fund of that magnitude without having a clear idea of how this money will be used. One of the key ways that we articulate how funds will be used are the so-called Special Themes papers. These papers outline priority issues and the approaches IDA proposes to address them. In IDA-17, these themes included ‘Gender’, ‘Climate Change’, ‘Fragility, Conflict, and Violence’, and ‘Inclusive Growth’. What’s new in IDA-18? Jobs – specifically the replacement of the ‘Inclusive Growth’ theme with one on ‘Jobs and Economic Transformation’.
 
But while the interest in jobs may seem obvious, it’s important to be clear about what exactly we mean by the jobs agenda in IDA countries. Sitting here in the Jobs Group, we think about jobs along three dimensions: it’s not just the number of jobs created (‘more’), but also the quality of new and existing jobs (‘more productive’ or ‘better’) and who gets access to them (‘inclusive’). In the IDA context, it turns out that ‘more jobs’ is just a small part of the story.
 
Unemployment in IDA countries is actually substantially lower than in middle income and high income countries (Figure 1). This is perhaps also not surprising – in the absence of significant safety nets, few people in most IDA countries can afford not to work. But the opportunities for earnings are often limited to local marketing of surplus farming outputs or ad hoc activities in the informal services sector, where earnings are low and volatile. So, the issue in IDA countries is really about ‘better’ jobs, with higher, more predictable earnings, and better working conditions.
 
         Figure 1

It is also about the inclusivity of jobs. Only 55 percent of women in IDA countries are active in the workforce versus more than 80 percent of men. In South Asia, for example, women are four times less likely to have access to full time employment than men. And youth are overwhelmingly reliant on self-employment and informal employment.
 
So, how do we move to better and more inclusive jobs (not to mention more of them) in IDA countries? The answer is far from simple. But one thing that is certain is that it needs to involve a process of economic transformation. As shown in Figure 2, the vast majority of jobs in IDA countries are in agriculture – mainly very small scale farming. Increasing earnings (‘better jobs’) starts with raising productivity in agriculture, a process which will eventually release workers into higher value added activities.
 
         Figure 2

Achieving this in a comprehensive way is likely to involve a range of interventions addressing issues such as skills, technology adoption, and access to finance as well as trade policy and governing institutions (including the thorny issue of land policy). Effective interventions to link small farmers to competitive domestic and global value chains – providing access not only to stable sources of demand but also to technology and knowledge – can also be a powerful part of the solution.
 
In the Let’s Work Program, for example, we are working to identify value chain based solutions to support earnings and productivity growth among small farmers in horticulture, poultry, dairy, and staple crops across countries as diverse as Mozambique, Tunisia, and Paraguay. Work is also underway, for example in Lebanon and Tanzania, to support value addition in agriculture through development at the processing end of agricultural value chains. Indeed, the World Bank’s Agricultural and Trade & Competitiveness GPs, along with the IFC, continue to pioneer new analytical and operational techniques to support agricultural productivity growth and economic transformation. Keeping an eye on jobs and earnings in this process will be key to delivering on the IDA-18 jobs challenge.