The employment challenge is expected to become more acute as the world’s population — and the number of workers — grows, especially in developing countries. The International Labor Organization (ILO) estimates that in the next 10 years, the world will need more than 600 million more jobs to avoid a further increase in unemployment.
As outlined in the World Bank’s 2013 World Development Report, advancing the global jobs agenda requires the right investment in people – the right skills for people to secure good jobs, the right protection for people against risks arising from volatile economies, and the right mechanisms to help people transition smoothly and safely from one job to another.
Labor market policies can contribute to development and poverty reduction by enabling the creation of more and better jobs. Labor markets intermediate the supply and demand for different skills and their functioning determines the level of employment and wages. In each country, the right combination of labor market regulations and labor market programs can promote employment creation, facilitate labor market transitions, and help workers manage risk while ensuring proper working conditions.
The World Bank works with countries to design and implement labor regulations and income protection programs that can be extended to a majority of workers without creating distortions that reduce the creation of jobs. Flexible labor legislation is needed to promote the creation of new businesses and jobs while balancing worker protection.
Employment services, for instance, can be used to address information problems and connect individuals to jobs more suitable for their skills. Wage subsidies provide incentives to employers to hire workers with little or no work experience, including youth entering the labor market for the first time.
Other programs combine mentoring, advisory services, training in business management, and credit to support transitions into self-employment. During transitions from school or inactivity to work or between jobs, public works programs and services can provide a safety net that helps people stay afloat.
The World Bank supports countries in their efforts to develop the right solution for their unique social and economic circumstances, with a focus on expanding social protection and insurance coverage while also maintaining or providing incentives to create jobs.
The Bank Group increased its labor lending from an annual average of $477 million in 1998-2008 to an annual average of $634 million for 2009-2011. From 1998-2011, the Bank Group supported job creation and worker protection activities in 103 countries, with total lending reaching $7.14 billion ($5.46 billion through International Bank for Reconstruction and Development lending, $1.64 billion through International Development Association lending, and $38 million in grants).
- In Uganda, more than 6,000 unemployed youth have started enterprises and have improved their economic livelihoods.
- In Malaysia, the Bank helped the government institute a national minimum wage for the first time.
- The World Bank helped develop one-stop shops for employment services in Argentina, connecting almost 1.5 million workers with employers every year.
- In Bulgaria, more than 700,000 people are benefitting from improvements in employment services, training, small business support, and local economic development planning.
- In Turkey, the government subsidized the hiring of young people and female employees, creating some 200,000 jobs.
- In Tunisia, a program has worked with about 140,000 youth as they transition from school to work, offering stipends, training, counseling, job-search assistance, and wage subsidies.