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Debunking three myths about Informality

Jamele Rigolini's picture
The perceived benefits of formalization include better access to credit, justice, large formal clients, and, for the government, higher tax revenues. But according to recent literature, most formalization efforts resulted in modest and short term increases in formality rates.
Photo credit: Peter Kapuscinski / World Bank

Since the concept of the “informal sector” was coined half a century ago, countries all over the world have promoted the formalization of small- and medium-size enterprises. The perceived benefits of formalization include better access to credit, justice, large formal clients, and, for the government, higher tax revenues. But according to recent literature, most formalization efforts resulted in modest and short term increases in formality rates.

Unveiling new paths to create more Jobs for the Poor

Maria Laura Sanchez Puerta's picture
Also available in: Français
Onion field in Northern Côte d’Ivoire - Photo by Raphaela Karlen / World Bank

One out of ten people in the world —around 766 million people— still lived below the extreme poverty line in 2013. Most of them, 80 percent, live in rural areas and have very low productivity jobs. Improving jobs and earnings opportunities for these poor and vulnerable workers is at the core of the World Bank Group agenda and it requires holistic economic inclusion initiatives to move them into sustainable livelihoods.

Simple strategies that work for job seekers

Rachel Coleman's picture
Also available in: Français
Action planning and the use of reference letters are two strategies that work for job seekers to improve their search effectiveness and employment outcomes. Moreover, reference letters have an important impact for women job seekers, who often face additional constraints stemming from differential access to key resources. (Photo: Dominic Chavez / World Bank)


Finding a job is a challenging process ---and it can be especially difficult and overwhelming for youth and people entering the labor market for the first time. Youth unemployment rates in Sub-Saharan Africa are double those of adult unemployment for both men and women. Estimates show that 11 million youth will enter the labor market in Sub-Saharan Africa each year for the coming decade. This offers the potential to dramatically reduce poverty. But to make the most of this opportunity, young people need to engage in productive employment that fuels economic growth. In this blog, we present two simple and effective strategies to support job seekers to find employment.

Can Ghana’s extreme poor be graduated?

Suleiman Namara's picture
A stronger focus on human capital investments of children from these households with a particular focus on skills for future jobs will be key. (Photo: Arne Hoel / World Bank)


Ghana was the first country in Sub-Saharan Africa to meet the Millennium Development Goal (MDG1) target of halving extreme poverty by 2015. A share of the population living in poverty decreased from 52% in 1991 to 24% in 2012. Ghana is eager to lead the way in Africa again, but this time to graduate extreme poor households, out of poverty. The current policy debates are around graduating in about three to four years some 8.4 % of households living in extreme poverty. But to what occupations?

How to create jobs fast: From public works and wage subsidies to social services and capital subsidies

David Robalino's picture
It is well-known that markets tend to neglect the provision of many social services. There is, therefore, a role for governments to subsidize the provision of these services. Photo: Sarah Farhat/ World Bank

Creating jobs is not cheap —as I discussed in this post— and it can also be a slow process. It takes time for an idea to become a business plan and eventually a new or larger business. At the same time, in many developing countries, macro and regulatory policies often discourage entrepreneurship and investments. Reforming these policies takes time and having results on the ground even longer.
 
In the meantime, in many countries, there is a sense of urgency to address important labor challenges.  It is not only youth unemployment or inactivity but also the fact that many of those who have a job are in very low productivity, very low-quality jobs. Citizens are becoming frustrated and impatient. What can be done in the short-run?

How can new infrastructure accelerate creation of more and better jobs?

Vismay Parikh's picture
The study analyzed four stages of the value chain —production; storage and logistics; processing; and marketing— to understand the potential for job creation stimulated by infrastructure projects. (Photo: Kubat Sydykov / World Bank)


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.

The invisible door: Three barriers limiting women’s access to work

Namita Datta's picture
Women’s labor force participation worldwide over the last two decades has stagnated, and women generally earn less than men. (Photo: Tom Perry / World Bank)
How can we Press For Progress —the theme of International Women's Day 2018— to improve women's opportunities at work? Despite progress on women’s health and education in the past few decades, the gender gap on access to jobs has remained a stubborn challenge.

Investing in Africa’s talent

Esteve Sala's picture
Africa will have more people joining the labor force over the next 20 years than the rest of the world combined. Photo credit: World Bank

For every software developer in the United States, there are five open jobs. Africa, meanwhile, has the youngest, fastest-growing population on earth, with more people joining the labor force over the next 20 years than the rest of the world combined.

With this idea in mind, and the powerful belief that "brilliance is evenly distributed, but opportunity is not," Andela, founded four years ago, began recruiting recent graduates in Africa with the mission of connecting them to job opportunities in high-tech companies. Today, about 650 developers in Lagos, Nairobi, and Kampala work full-time for over 100 firms spread across 45 cities worldwide.

How much does it cost to create a job?

David Robalino's picture
Also available in: Español | Français 
A $10 million investment can actually create just a couple hundred direct jobs. / Photo: Nugroho Nurdikiawan Sunjoyo / World Bank (Yogyakarta, Indonesia)

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?

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