Where Will the Jobs Come From in Developing Economies?

Where do jobs come from? The economic answer is relatively straightforward. Employers provide a desired good or service, and they hire workers with the range of skills they need to provide that good or service. But from a worker point of view, the answer looks much less straightforward. How do I find these employers who are hiring? In particular, where are the employers who want my skills and are willing to pay the compensation I would like to receive for those skills? If the employer wants someone with more experience, or additional skills, how can gain that experience or acquire those skills? It is historically quite unusual for most workers to feel more than modestly satisfied with their ability to access the jobs, pay, benefits, and working conditions they prefer. Even in the mighty US economy, with an unemployment rate under 4.5% since late 2021, the Gallup poll reports that more worker view themselves as “struggling” than as “thriving“; more than half of US workers say that they have their eyes open for a new job even though only 28% think it’s a good time to be looking for a new job; and and less than one-third of employees report that they are “engaged” at work. But the question of “where the jobs come from” may be even more pressing in developing countries where the number of young workers looking for jobs is on the rise. The World Bank has published The Global Jobs Challenge, edited by Tommy Chrimes, M. Ayhan Kose, and Kersten Stamm. From the “Executive summary”: Emerging market and developing economies (EMDEs) face a jobs challenge of historic proportions. Over the decade to 2035, around 1.2 billion young people in these economies are set to reach working age, the largest youth cohort the world will likely ever see. Yet global economic growth is at a multi-decade low, constraining job creation prospects. Many of these young people live in economies ill-equipped to confront the challenge. Although projections for employment over the next decade are highly sensitive to underlying assumptions, an illustrative extrapolation suggests that, of these 1.2 billion young women and men, just over 400 million would be employed in 2035, while about 300 million would not be in employment, education, or training. Jobs are at the heart of development: they provide income, purpose, hope, and dignity, while strengthening social cohesion and stability. Job creation underpins growth, poverty reduction, and shared prosperity. Creating sufficient job opportunities for this large wave of young working-age people is thus a pivotal development challenge and a potentially transformational opportunity. These demographic pressures are especially severe across Africa, the Middle East, and south Asia. One central fact here is that while governments will of course hire some workers, government employment is not likely to be the primary driving force behind additional jobs for the future. After all, government jobs are ultimately paid for by taxpayer revenue. The question is how government can encourage an expansion of high-quality private sector jobs. As the chapters of the report discuss in detail, three broad areas of policy are for the government to support “foundational infrastructure (spanning physical, human, digital, and natural capital), a business-enabling environment, and private capital mobilization—as central to efforts to boost job creation.” The report also emphasizes five industries with high potential for job creation in developing economies: “infrastructure (including energy), agribusiness and farming, health, tourism, and value-added manufacturing.” If the current US economy is a hotbed of worries over the number and quality of jobs, the parallel concerns in many developing economies can generate incandescent political heat. But as the report notes, “[g]rowth and job creation are both likely to be driven by the private sector, but they will be shaped by government policies. The public sector must play an enabling role …” But the forces of politics can make it hard for governments to focus on their important and irreplaceable role as enablers of job growth, rather than announcing heavy-handed interventions that overpromise what they can deliver.