WASHINGTON (Reuters) – Creating jobs can help governments improve the lot of their citizens, but some jobs have more impact than others when it comes to helping societies move ahead, the World Bank said in a report yesterday.
As countries around the world struggle with high unemployment, especially among youth, the World Bank cautioned that economic growth alone cannot create jobs that improve people’s lives and reduce conflict, contrary to conventional wisdom.
“It is not just the number of jobs, it is also what people do,” said Martin Rama, the director of the World Bank’s annual World Development Report. This year, the report focused on how employment impacts overall well-being for societies, looking at examples culled from more than 800 surveys and censuses.
As an example, Rama pointed to Mozambique, where a commodities boom has fueled one of the highest growth rates in sub-Saharan Africa. But more than 80 percent of the country’s citizens work in agriculture, where poverty rates remain stubbornly high.
Governments should focus on boosting employment in areas that would have the most positive spillover effects on society as a whole. For example, more jobs for women has been tied to greater investment in education and health, while reducing employment barriers for young men could improve social cohesion.
“Jobs themselves are a driver of development,” said Kaushik Basu, who yesterday began his job as World Bank chief economist.
In Tunisia, a high growth rate did not translate into more jobs for young people, as bureaucratic red tape and unequal treatment limited the creation of new businesses. The country erupted into turmoil in 2010, which later sparked revolts across North Africa and the Middle East.
The World Bank said a prescription for job growth depended on the particular issues facing each country, and labor policies were not always the best way to help — particularly because 90 percent of all jobs in the developing world come from the private sector.
Agrarian societies like Mozambique would do well to focus on boosting agricultural productivity, which has kick-started poverty reduction in nearly every country in the world for the past 300 years. And high youth unemployment in places like Tunisia is often more about limited business competition rather than young people’s lack of skills. To foster the creation of more jobs, such countries should reduce the importance of political connections for business success.
Unemployment is a huge issue around the world, with 200 million people jobless and trying to find work. The World Bank estimates that another 621 million young people are unemployed and not looking for work.
Just to keep the same proportion of the population employed, the world will have to create 600 million jobs in the next 15 years, as populations balloon in Asia and Africa.
The pool of labor has also become more global, and macroeconomic, labour or migration policies in one country can spill over to its neighbors, the World Bank said. Governments should work together in setting policies and labor standards.
“The scope for a global cooperation is there in virtually every economic field,” said Basu, the chief economist. “The need is there. The world is a very, very open place.”
