Youth unemployment is at crisis levels in many developing countries, so job creation must move up donors' policy agendas
Job creation and retention is a central political strategy for most rich countries, but employment has been surprisingly absent from development thinking. Until now.
A recent survey in sub-Saharan Africa on development objectives found that providing jobs for young people was considered more important than reducing maternal mortality, providing universal primary education, or reducing the spread of malaria. The International Labour Organisation says that 440 million new jobs need to be created during the next 10 years, to keep pace with population growth (pdf).
The governments of developing countries have long been aware of this issue, but there are signs that donors are now waking up to it too.
The UK Department for International Development's recent bilateral aid review promised that British aid money would create more than 1 million jobs in 10 countries or regions – including 300,000 in South Africa, 200,000 in Afghanistan and 144,000 in Ghana (pdf). But thinking on how this might be done is hazy.
There is optimism that creating a better "investment climate" might help, and that interventions such as improving infrastructure or providing training would also play a role. But is this enough?
The Overseas Development Institute has pored over the evidence and distilled country studies into five lessons for policymakers trying to boost jobs in developing countries. The lessons are:
1. Don't assume that growth will automatically create jobs: The assumption is that policies like "improving the investment climate" would help economic growth, which would then generate jobs. If only it were that simple. In India, a magnet for foreign investment, each 1% increase in growth raises employment by a mere 0.15%. This phenomenon of "jobless growth" stalks countries in Africa, Asia and Latin America. So growth policy has to be more nuanced – how and where will growth actually increase jobs?
2. Don't assume that jobs will automatically reduce poverty: Even when people are in work, they're not necessarily earning enough to reduce poverty – four in 10 workers worldwide live on less than $2 a day. Again in India, it's the jobs that pay the least and are most insecure that have been increasing the fastest. So policymakers have to focus on numbers of jobs, but also on whether they offer the security and pay that allow people to escape poverty.
3. Don't fixate on manufacturers: There's a not-unreasonable assumption, based mainly on the experience of east Asia, that building up low-skilled manufacturing industries, such as clothing or electronics, would create jobs that reduce poverty. And the creation of export-processing zones have often been recommended by donors to attract investors to these sectors. But, to reduce poverty, jobs in agriculture or services are just as important. In China, it was agricultural growth that really kick-started poverty reduction; manufacturing jobs actually contributed less. In many countries it's the services sector – providing haircuts, selling food, cleaning houses – that is the real growth area for jobs. The potential for expansion in any sector is finite, and too much focus on any one sector is almost certain to reach a dead end before too long. The key is a mix of sectors and the ability to move people and money easily between them.
4. Don't assume that movement out of agriculture is all one way: Economic growth has always meant a one-way shift of jobs out of agriculture and into industry or services. Policies often reflect this – focussing on getting people into a single specific job with training schemes or apprenticeships. But policymakers need to think not just about getting people into one job but about social policies, including cash transfers, that would allow people to move between jobs. For example in 2009, during the financial crisis, global employment in industry fell while agricultural employment rose.
5. Worry about young people: Recent events in the Middle East provided, for many governments, a frightening illustration of the impact that a large number of unemployed young people can have. Almost everywhere unemployment among young people – who make up more than half the population of many developing countries – is higher than any in other group. In south-east Asia, under-25s are five times more likely than older people to be without a job. This is an appalling waste of resources as well as a personal tragedy for millions of people.
Jobs – and the urgent need to provide them – are rapidly moving up the development agenda. But policymakers must discard some of their cherished assumptions about how to create jobs. Better answers are needed, and fast, if the global employment crisis is to be fixed.
Source: www.guardian.co.uk
Job creation and retention is a central political strategy for most rich countries, but employment has been surprisingly absent from development thinking. Until now.
A recent survey in sub-Saharan Africa on development objectives found that providing jobs for young people was considered more important than reducing maternal mortality, providing universal primary education, or reducing the spread of malaria. The International Labour Organisation says that 440 million new jobs need to be created during the next 10 years, to keep pace with population growth (pdf).
The governments of developing countries have long been aware of this issue, but there are signs that donors are now waking up to it too.
The UK Department for International Development's recent bilateral aid review promised that British aid money would create more than 1 million jobs in 10 countries or regions – including 300,000 in South Africa, 200,000 in Afghanistan and 144,000 in Ghana (pdf). But thinking on how this might be done is hazy.
There is optimism that creating a better "investment climate" might help, and that interventions such as improving infrastructure or providing training would also play a role. But is this enough?
The Overseas Development Institute has pored over the evidence and distilled country studies into five lessons for policymakers trying to boost jobs in developing countries. The lessons are:
1. Don't assume that growth will automatically create jobs: The assumption is that policies like "improving the investment climate" would help economic growth, which would then generate jobs. If only it were that simple. In India, a magnet for foreign investment, each 1% increase in growth raises employment by a mere 0.15%. This phenomenon of "jobless growth" stalks countries in Africa, Asia and Latin America. So growth policy has to be more nuanced – how and where will growth actually increase jobs?
2. Don't assume that jobs will automatically reduce poverty: Even when people are in work, they're not necessarily earning enough to reduce poverty – four in 10 workers worldwide live on less than $2 a day. Again in India, it's the jobs that pay the least and are most insecure that have been increasing the fastest. So policymakers have to focus on numbers of jobs, but also on whether they offer the security and pay that allow people to escape poverty.
3. Don't fixate on manufacturers: There's a not-unreasonable assumption, based mainly on the experience of east Asia, that building up low-skilled manufacturing industries, such as clothing or electronics, would create jobs that reduce poverty. And the creation of export-processing zones have often been recommended by donors to attract investors to these sectors. But, to reduce poverty, jobs in agriculture or services are just as important. In China, it was agricultural growth that really kick-started poverty reduction; manufacturing jobs actually contributed less. In many countries it's the services sector – providing haircuts, selling food, cleaning houses – that is the real growth area for jobs. The potential for expansion in any sector is finite, and too much focus on any one sector is almost certain to reach a dead end before too long. The key is a mix of sectors and the ability to move people and money easily between them.
4. Don't assume that movement out of agriculture is all one way: Economic growth has always meant a one-way shift of jobs out of agriculture and into industry or services. Policies often reflect this – focussing on getting people into a single specific job with training schemes or apprenticeships. But policymakers need to think not just about getting people into one job but about social policies, including cash transfers, that would allow people to move between jobs. For example in 2009, during the financial crisis, global employment in industry fell while agricultural employment rose.
5. Worry about young people: Recent events in the Middle East provided, for many governments, a frightening illustration of the impact that a large number of unemployed young people can have. Almost everywhere unemployment among young people – who make up more than half the population of many developing countries – is higher than any in other group. In south-east Asia, under-25s are five times more likely than older people to be without a job. This is an appalling waste of resources as well as a personal tragedy for millions of people.
Jobs – and the urgent need to provide them – are rapidly moving up the development agenda. But policymakers must discard some of their cherished assumptions about how to create jobs. Better answers are needed, and fast, if the global employment crisis is to be fixed.
Source: www.guardian.co.uk
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