Jobs as Pathways to Ending Poverty and Boosting Shared Prosperity

Arup Banerji World Bank Labor Core Course 2013

2

Renewed World Bank Group Goals

End extreme poverty: the percentage of people living with less than US$ 1.25 a day to fall to 3 percent by 2030

Promote shared prosperity: foster income growth of the bottom 40 percent of the population in every country

Sustainability, an overarching theme Achieving these goals require promoting environmental, social, and fiscal sustainability

3

The poverty target of 3% by 2030

0

5

10

15

20

25

30

35

40

45

50

1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020 2024 2028

4

Most household income is generated through jobs

70 68

46

59 67

73

49

79

39 37

58

38 36

50

36 29

35

10

26

23 24

35

31 21

17

30

17

41 45

29

47 38

35

49 53

32

35

54

self-employment wage employment transfers other

Source: Covarrubias and others (2012) for WDR 2013

5

Inclusive Growth

Job Creation

Poverty Reduction, Growth of Incomes

Infrastructure, Human Capital

Investments

Transfers Taxes

So jobs are critical for both the goals

6

But there are huge challenges …

1. Insufficient demand for formal labor, and low participation – especially for youth

2. Low productivity of self-employment

3. Inadequate skills

4. Fragmented programs

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1. A world at work, but not a world of wage earners

Work status:

farmers

self-employed

wage earners

Source: WDR 2013 Calculations

wage 43%

farmers 34%

self-employe

d 23%

wage 87%

farmers 5%

self-employe

d 8%

wage 66%

farmers 10%

self-employe

d 24%

wage 47%

farmers 26%

self-employe

d 27%

wage

50%

farmers

29%

self-

employe

d

21%

wage

19%

farmers

48%

self-

employe

d

33%

East Asia and the Pacific Europe and Central Asia Latin America and the Caribbean

Middle East and North Africa South Asia Sub-Saharan Africa

Source: WDR 2013

8

0 10 20 30 40 50 60 70 80

Tanzania

Thailand

Ukraine

Ghana

Brazil

Indonesia

India

Chile

Pakistan

Turkey

Egypt

Lebanon

percent of youth population

not in school or labor force unemployed

Source: WDR 2013

1. Unemployment but also idleness for youth

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2. Poverty and the prevalence of (low productivity) informal work

Source: OECD: Is Informal Normal? and World Bank Group (2007).

ARG

BEN

BFA

BOLBRA

CHL COLCRI DOM

DZA

ECU

EGY

GTMHND

HTI

IDN IND

IRN

KENMAR

MEX

MLI

MOZ

NERPAK

PAN

PERPHL

PRY

ROM

RUS

SLVTHA

TUN TUR

VEN YEMZAF

ZMB

0

20

40

60

80

100

0 10 20 30 40 50 60 70 80 90 100

Sh

are

o

f In

form

al

Em

plo

ym

en

t in

To

tal

No

n-A

gri

cult

ura

l E

mp

loy

me

nt

Share of Population Living Below 2 USD (PPP) a Day

10

2. Women often over-represented in informal employment

53.5

52.3

54.3

64.9

83.1

73.4

77.2

85.7

47.8

50.2

49.1

51

59.1

70.8

78

82.9

0 20 40 60 80 100

Mexico

Brazil

Thailand

South Africa

Kenya

Philippines

Indonesia

India

Men

Women

Share of informal employment in total non-agricultural employment (in %)

Source: OECD

Development Centre,

2009

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3. Employers complain about the lack of job-relevant skills

Sources: IFC Jobs Study, World Bank STEP study

12 (Source: World Bank 2010)

CCTs: Nutrition

Risk mitigation and innovation: Social Insurance

Active labor market programs: Training

CCTs: Education

Labor regula-tions

3. But ALMPs need complementary steps to build Skills

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Pregnancy, Early

childhood

School age

Youth Working

age

Old age

Employment services, entrepreneurship, training and skills Unemployment, disability insurance

CCTs for (girls’) education

Youth employment

programs, skills training

Old-age pensions, disability insurance

Nutrition/ECD, CCTs for pre-school, health

Example: SPL programs across the life cycle

4. Programs for labor opportunities need to work together across the life cycle

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Towards answers 1: Three distinct layers of policies are needed (WDR 2013)

14 Source: 2013 World Development Report on Jobs

15

Program

Program

Program

Program

Towards answers 2: Building social protection and labor systems (connected “portfolios” of programs to address various challenges

Administration level:

Aim: Building basic subsystems to support one or more programs for security, equity or opportunity

Admin. sub-

systems

Program level:

Aim: Improving design of existing programs and harmonizing across portfolio of programs

Policy Level:

Aim: Ensuring overall policy coherence across programs and levels of government

Source: Robalino, Rawlings and Walker (2012)

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Program

Program

Program

Program

Towards answers 2: Building social protection and labor systems: Examples

e.g., connect beneficiary databases across training and unemployment benefit programs

Admin. sub-

systems

e.g., ensure that there is a smooth connection from beneficiaries going from welfare to work

e.g., promote coherence between taxation incentives and employment objectives

Source: Robalino, Rawlings and Walker (2012)

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Towards answers 3: Different countries have different jobs challenges

Source: WDR

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www.worldbank.org/spstrategy go.worldbank.org/TM7GTEB8U0 (WDR on Jobs) www.jobsknowledge.org

For further information, visit