What can labor ministers in the developing world learn from the heated debate on minimum wages that Seattle’s dramatic reforms reignited? The answer may be confusion. After more than 6,000 scientific articles, the discussion on the costs and benefits of raising minimum wages is still one of those unresolved million-dollar questions: Many economists claim that it is a very effective way to guarantee decent jobs for workers and to reduce inequality, but other economists and policymakers seem convinced that it would do just the opposite. The recent experiment in Seattle, unfortunately, adds little clarity.
Dar es Salaam, Tanzania – one of the many cities in Africa that is expected to see sharp population increases – will need rapid job creation to keep pace with its swift population growth. The city’s new bus transit system – completed in 2015, with a $290 million credit from the International Development Association, the World Bank’s fund for the poorest countries – is now reducing transportation costs, easing traffic and promoting private sector development.
Photo: Hendri Lombard / World Bank
Africa’s working-age population is expected to grow by close to 70 percent, or by approximately 450 million people, between 2015 and 2035. Countries that are able to enact policies conducive to job creation are likely to reap significant benefits from this rapid population growth, according to the Africa Competitiveness Report 2017, co-produced by the World Bank Group, the African Development Bank, and the World Economic Forum. The report also warns that countries which fail to implement such policies are likely to suffer demographic vulnerabilities resulting from large numbers of unemployed and underemployed youth.
In 1950, the average working-age person in the world had almost three years of education, but in East Asia and Pacific (EAP), the average person had less than half that amount. Around this time, countries in the EAP region put themselves on a path that focused on growth driven by human capital. They made significant and steady investments in schooling to close the educational attainment gap with the rest of the world. While improving their school systems, they also put their human capital to work in labor markets. As a result, economic growth has been stellar: for four decades EAP has grown at roughly twice the pace of the global average. What is more, no slowdown is in sight for rising prosperity.
High economic growth and strong human capital accumulation are deeply intertwined. In a recent paper, Daron Acemoglu and David Autor explore the way skills and labor markets interact: Human capital is the central determinant of economic growth and is the main—and very likely the only—means to achieve shared growth when technology is changing quickly and raising the demand for skills. Skills promote productivity and growth, but if there are not enough skilled workers, growth soon chokes off. If, by contrast, skills are abundant and average skill-levels keep rising, technological change can drive productivity and growth without stoking inequality.
- boost prosperity
- Knowledge and Skills
- job market
- job creation
- Social Development
- Public Sector and Governance
- East Asia and Pacific
- Solomon Islands
- Papua New Guinea
- Micronesia, Federated States of
- Marshall Islands
- Lao People's Democratic Republic
- Korea, Republic of
Extreme poverty in the world has decreased considerably over the past three decades. In 1981, more than half of citizens in the developing world lived on less than $1.25 a day. This rate has dropped dramatically to 21% in 2010. Moreover, despite a 59% increase in the developing world’s population, there were significantly fewer people living on less than $1.25 a day in 2010 (1.2 billion) than there were three decades ago (1.9 billion). However, 1.2 billion people still live in extreme poverty—an extremely high figure, so the task ahead of us remains herculean.
There is no doubt that Bangladesh is a modern day success story—a far cry from Henry Kissinger’s label of a “basket case.” Its growth has been steady, even impressive in the context of feeble global growth, and it has now joined the ranks of a lower middle-income country. Its poverty reduction record is even more impressive, with over 20.5 million people escaping poverty between 1991 and 2010.
But the next phase of growth and poverty reduction becomes harder, since the more obvious sources of growth have largely been exploited.
Embracing cultural diversity, especially through the preservation of cultural heritage assets, also brings tangible economic benefits. Preserving or repurposing historic landmarks in downtown cores, for instance, can make cities more vibrant, attract new firms, and foster job creation. In addition, the preservation of cultural assets plays a key part in supporting sustainable tourism, a sector that has significant potential for reducing poverty in both urban and rural settings.
On this World Day for Cultural Diversity for Dialogue and Development, Ede Ijjasz and Guido Licciardi tell us more about the role of culture and its importance to the World Bank's mission.
If you want to learn more about this topic, we invite you to discover our latest Sustainable Communities podcast.
In recent years, China’s presence in sub-Saharan Africa has risen rapidly. Many fear that China spells doom for the Kenyan economy. Producers of manufactured goods, for example, face more competition from China in both foreign and domestic markets. Others argue that China will exploit Kenya’s resources and leave it unable to industrialize. If the manufacturing sector fails to take off, it will be harder to move people out of poverty.
Nevertheless, they are too small in size and quality to make the kind of dent in jobs and employment that is needed. Agriculture accounts for 32% of total employment globally, according to the ILO’s Global Employment Trends Report 2014. In 2013, 74.5 million youth – aged 15-24 - were unemployed, an increase of more than 700,000 over the previous year. That same year, the global youth unemployment rate reached 13.1%, which was almost three times as high as the adult unemployment rate. One contributing factor in these rates is the lack of interest in agriculture among youth cohorts. Simply put, agriculture is not a preferred job and livelihood option for young people.