Active labor market programs (ALMPs) like job matching, training, wage subsidies, start-up support, and public works for the unemployed have a less than stellar reputation. “Ineffective,” “a ”charade,” and “a waste of money” are common labels one hears when discussing ALMPs; and even when positive effects of ALMPs are acknowledged, the sizes of these effects are portrayed as too small to bother. At the same time, these programs are widely used, not only in high-income countries, but also in many developing countries—often with the hope that they solve many labor market problems, in particular, unemployment. Are policymakers wrong to pursue these programs?
It is widely accepted that investments in infrastructure can lead to direct and indirect jobs, and usually have spillover effects into other economic opportunities. For example, good transport systems and agro-logistics services help move freight from farms to locations where value can be added (like intermediate processing, packaging and sorting of agricultural produce) and ultimately to consumers. However, the anticipated benefits of these investments are not always fully realized, or sometimes they happen much later. How can investments in infrastructure have a multiplier effect in stimulating the economy and, eventually, facilitate job creation?
To maximize their impact, infrastructure projects should explicitly analyze and include complementary investments (e.g., industrial parks or processing facilities) and soft interventions (financial services, ICT, laws and regulations, etc.) needed to unlock the potential of new markets. As part of a broader effort to link investment in rural roads to economic opportunities, the Roads to Jobs study analyzed strategic value chains in the agriculture sector in Rajasthan, India, to better understand the challenges faced by farmers in accessing markets and provided recommendations to address constraints.
Creating more and better jobs is central to our work at the World Bank and a shared goal for virtually all countries —developed and developing alike. But oftentimes the policy debate turns to the cost and effectiveness of programs and projects in creating jobs.
As an example, I recently found myself in the middle of a discussion regarding a development project aimed at creating employment: one of the reviewers objected given that the cost per job created was too high. “More than $20,000 per job,” he said, comparing it to much lower numbers (between $500 and $3,000 per job) usually associated with active labor market programs such as training, job search assistance, wage subsidies, or public works.
But what is the rationale behind these numbers?
There is a well-known idiom saying that you can't compare apples and oranges. But this is precisely the challenge researchers often face when it comes to measuring the jobs impact of development projects. Having standardized impact evaluation tools and methods is a milestone for private sector-led job investments, and it allows international financial institutions, development practitioners, and governments to build on existing knowledge to develop solutions. And this is precisely one of the goals that Let's Work partnership, composed of 30 different institutions, is currently pursuing; to track the number of jobs generated from private sector-led interventions, the quality of those jobs, and how inclusive those jobs are in a standardized way, so apples are compared to apples and oranges to oranges.
If you are looking for a good reading list before the summer ends, we’ve compiled a selection of five recent papers and publications that touch on jobs and changing landscape of labor markets. These recommended readings have one thing in common: they analyze the challenges ahead through different lenses. How is the labor market recovering after the economic crisis? Can life-long learning become workers’ strategy for upskilling in a digital economy? Have countries improved in reducing gender gap at work? What policies can support job creation?
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.
Many African countries are striving to move up the global value chain in the footsteps of countries like China and (more recently) Bangladesh. We asked Paul Lister – Director of Legal Services and Company Secretary, Associated British Foods (ABF) – how ABF and its subsidiaries determine where it will source goods. He says that in the end, efficiency is key.
Bangladesh is now the world’s second largest apparel exporter after China. Its garment industry accounts for 80% of its overall exports and around 4 million jobs. Atiur Rahman, Governor of the Central Bank of Bangladesh, tells us that the government sees employment (both formal and informal) as the link between growth and poverty reduction, with an emphasis on inclusive growth policy and financial inclusion.