What Drives Job Creation? | World Bank Institute (WBI)

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STORY HIGHLIGHTS

  • Jobs, or the lack of them, is one of the most pressing issues of our time in both developed and developing countries.
  • This Annual Meetings plenary session brought in diverse perspectives from government, academia, and the private sector.
  • This debate, and other such discussions, aim to inform the Bank's forthcoming World Development Report 2013 on Jobs.
     

September 30, 2011― “India will be creating one million employees each month for the next 20 years.” “Informality is a job creation strategy by the poor for themselves.” “Labor laws and labor unions are job preservation not job creation.”

These and other insights were heard from panelists at the plenary session, “Global Development Debate on Jobs and Opportunities for All” during the Program of Seminars of the World Bank Annual Meetings.

The panelists were Saïd Aidi, Minister of Vocational Training and Employment from Tunisia; Stella Li, Senior Vice President, BYD Company Limited, the largest car maker in China and the largest rechargeable battery supplier in the world; Alia El Mahdi, Dean of the Faculty of Economics and Political Science, from Cairo University in Egypt, and Manish Sabharwal, CEO of TeamLease, a leading staffing company in India with 75,000 employees in more than 600 locations.

Jobs in the 2011 Landscape

Jobs, or the lack of them, is one of the most pressing issues of our time in both developed and developing countries for people and their governments, as well as policymakers and decision makers at all levels. 

Recent social unrest in a number of countries, especially in the Middle East, has captured global attention. While there are many contributing factors, high levels of unemployment, particularly among youth, are a major source of dissatisfaction. And high unemployment continues even in a number of countries that have experienced strong economic growth in the past decade.

“We had our economic revolution exactly 20 years ago. In 1991 we discarded a system in which the government employed 85 to 90% of the organized employers. Our GDP grew at 3 to 4% for 60 years. Since 1991 we have grown at 8%,” said Sabharwal of the situation in India.

He added that often jobs are created in a particular location or sector rather than where they are most needed. This is why 92% of India is still employed in the informal sector. “The informal sector is also cheaper for employees as the costs of formality become too expensive and the rules are often not clear,” he said.

El Mahdi noted that in Egypt the informal sector is a job creation strategy used by the poor when governments fail them. She added that informality is also cheaper for employers themselves as their burden in terms of payroll systems and taxes is reduced.
 

open-quotesRecent social unrest in a number of countries, especially in the Middle East, has captured global attention. While there are many contributing factors, high levels of unemployment, particularly among youth, are a major source of dissatisfaction. close-quotes

Role of the Government in Job Creation

“In our view, we always say the government should create a very easy environment for businesses so the company will automatically grow and create jobs,” said Stella Li. “Thirty years ago it was really hard to create a private company in China. But then China started to open its doors…now everyone has freedom to register their own private company,” she said.

“We need to open up our markets as much as we open up our minds,” said El Mahdi. “We can’t rely on the government to provide jobs. We have to rely on the private sector.” In many Middle Eastern countries governments have been the main employer and this has encouraged an expectation for many people of steady job security.

Panelists discussed the role of the government and concluded that governments should foster an enabling environment for jobs to be created and be in charge of large public works and infrastructure projects.

Li added that in China the government initially invested heavily in infrastructure. However, in 2008, many of these people lost their jobs due to the overall effects of the global economic slump.

Training and Improving the Quality of the Labor Supply

“In our economy in Tunisia today we have about 80,000 new graduates each year, and the economy is providing 25,000 jobs for those new graduates,” said Aidi. In Africa, the Middle East, and South Asia, the unemployment problem is exacerbated by the youthful demographic bulge that calls for the creation of millions of jobs a year for the next 20 years. Because many of the unemployed or underemployed are tertiary-level graduates, it is doubtful that employment creation alone will be enough.

“We should concentrate on two very important dimensions in talking about job creation,” suggested El Mahdi. “First the quality of education…up until now the quality of education has not been up to any acceptable standards especially in public sector schools. And second, training, especially vocational training activities, has been almost forgotten for a very long time.”

Li added that you have to be ahead of the market and see where the market is going. She noted the focus today, for example, is on renewable energy while a decade ago it was on dotcoms.

The panelists brought in diverse perspectives from government, academia, and the private sector. The audience included participants from country delegations attending the Annual Meetings as well as participants connected via videoconferencing from Jordan, Kenya, Mexico, and Uganda.

This session is also part of an ongoing series of Global and Regional Development Debates that provide a platform for capturing, distilling, and disseminating knowledge on current cross-cutting topics.

The World Bank wants to raise awareness about creating job opportunities for all and to stimulate debate about what actually drives job creation. This Global Development Debate and other such discussions aim to inform the Bank's forthcoming World Development Report 2013 on Jobs to be published next year after a series of global consultations and feedback. 

Related Content 

Jobs Debate information, webcasting, and speaker bios: "Global Development Debate: Jobs and Opportunities for All" (English)  (also available in ArabicFrench, and Spanish)

"Jobs, or more precisely, the lack of jobs is now a Global Issue" (posting on the Growth and Crisis blog)

Global and Regional Development Debates website