Unlocking Global Job Creation: Strategies for Economic Growth and Prosperity

The World Bank Group recently held a Spring Meetings event titled "Jobs: The Path to Prosperity" to address the critical challenge of job creation in developing and emerging markets. Over the next decade, 1.2 billion young people will reach working age across these regions, but only an estimated 420 million jobs are expected to be created during that period. This massive gap poses significant risks if not addressed, but also presents an opportunity to build strong economies and increase global prosperity if handled effectively.

The event brought together world leaders, policymakers, and experts to discuss strategies for unlocking job creation and economic growth. Key themes emerged around the importance of infrastructure development, leveraging the private sector, and focusing on high-potential industries.

The Scale of the Jobs Challenge

World Bank Group President Ajay Banga highlighted the enormity of the jobs challenge:

"Over the next decade, 1.2 billion young people will reach working age across developing and emerging markets. The problem is the World Bank believes that just 420 million jobs will be created during that period. So as you can see that is a huge gap."

He emphasized that failure to close this gap will have stark consequences, but addressing it effectively can help deliver jobs, build strong economies, increase demand for goods and services, and address root causes of conflict and fragility.

Key Strategies for Job Creation

Several key strategies emerged from the discussions for driving job creation and economic growth:

1. Developing Foundational Infrastructure

Multiple speakers highlighted the critical importance of infrastructure development as an enabler for job creation and economic growth. This includes both physical infrastructure like roads, bridges, and electricity grids, as well as digital infrastructure to connect people to opportunities.

Doug Peterson of S&P Global noted: "Infrastructure investment like you talked about has a multiplier effect. For every dollar that you spend on infrastructure, you get another $1.4 to $1.6 of additional investment."

He gave the example of how building an airport leads to additional investments in hotels, rental cars, refueling stations and other related businesses. Infrastructure investments like bridges can also reduce carbon footprints by shortening travel distances.

2. Leveraging the Private Sector

There was broad consensus on the need to leverage private sector investment and expertise to drive job creation at the necessary scale.

Nonkululeko Nyembezi, Chair of Standard Bank Group, shared an example from South Africa's renewable energy program:

"13 years later for this program, we've seen in excess of 13 billion dollars flow into the program from the private sector. We have now over 6,000 megawatts of green power and counting."

She noted this was achieved without taking funds from the national treasury, demonstrating how enabling private sector participation can unlock major investments.

Ajay Banga emphasized: "We cannot do it with our money alone. We cannot do it with the money of rich governments like Singapore or other middle and lower income countries because there is not enough money in fiscal budgets to do so by yourself. We need the private sector. We need its ingenuity. We need its capital. We need its innovation. We need its people. We need its orientation for urgency."

3. Focusing on High-Potential Sectors

The World Bank identified five key sectors with high potential for job creation:

1. Infrastructure (physical and digital)
2. Agribusiness
3. Primary healthcare
4. Tourism
5. Manufacturing

Banga explained these sectors were chosen because they "do not rely on the old model of only outsourcing OECD jobs to a developing country for growth" and can create locally relevant jobs.

For example, in agribusiness, connecting smallholder farmers to cooperatives and providing access to better inputs, techniques and markets can dramatically boost productivity. This prevents scenarios where young people sell family farmland and end up as urban poor.

In manufacturing, Banga emphasized moving beyond extraction to local value-added production, especially for minerals and metals needed for the energy transition.

4. Regional Integration and Trade

Tharman Shanmugaratnam, President of Singapore, highlighted the untapped potential of regional integration and trade, especially in Africa:

"We have the Africa free trade zone, which has been has barely taken off. The cost of transporting goods within Africa is much higher than it is within East Asia. And that's a huge potential."

He noted that regional integration allows countries to achieve the scale needed to invest in specialization and move up global value chains. Increased intra-regional trade can also help buffer against global economic uncertainties.

5. Investing in Human Capital

Speakers emphasized the importance of education, skills development and healthcare in creating a productive workforce. Michelle Bachelet, former President of Chile, highlighted the need for:

"Early childhood education and development because I think that will provide them all the possibilities all their own potential for the future. Second, we need to develop a lot of plans in terms of training, education, higher education, but also training on skills and abilities."

She stressed that education and skills development must match current and future labor market needs.

6. Empowering Women in the Workforce

Bachelet also highlighted the persistent barriers women face in the labor market and the economic costs of not fully leveraging women's talents:

"We know that women are half of the population. So we don't give women all the opportunities to thrive. Well, we are losing half of the potential of the world to thrive."

She called for bold actions including recognizing and supporting unpaid care work, ensuring equal pay for equal work, and increasing women's representation in leadership positions.

Addressing Key Challenges

The discussions also touched on some key challenges that need to be addressed:

Informality in Labor Markets

Bachelet noted that in many Latin American countries, 70% of jobs are in the informal sector, with women and young people overrepresented. This holds back growth and increases inequality. She called for strengthening social protection systems and making it easier for micro, small and medium enterprises to formalize.

Technological Disruption

Speakers addressed concerns about potential job displacement from artificial intelligence and automation. Shanmugaratnam emphasized focusing on how AI can be used to boost productivity across sectors, especially in developing countries:

"The main game is how do we use AI? Everything that was discussed in the last panel, what AJ just spoke about, small AI used to improve productivity in every sector has tremendous potential in the developing world."

Access and Inclusion

Bachelet highlighted that while new technologies offer great potential, many parts of the world still lack basic access:

"The big challenge is the lack of access in Africa and other parts of the world to AI to cell phones to so many so in theory is fantastic but how long it will take in some places it will take much longer than in others."

She emphasized the need to support countries in gaining access to these opportunities.

A Call to Action

Banga concluded with a powerful call to action, framing job creation as central to the World Bank's mission:

"Poverty is both a state of being and a state of mind. What they meant was you have to have a job, you have to earn, but the dignity you get from a job is what really lifts you from poverty. We must understand that, internalize it and care about jobs as the best northstar for this institution to make a difference for why it was created."

He emphasized that by focusing on job creation in partnership with governments and the private sector, "everybody wins. Governments win, political leaders win, the private sector wins, the World Bank and MDBs win. Most importantly, young people win."

The discussions at this event highlight the urgency of addressing the global jobs challenge, but also provide a roadmap of key strategies that can help unlock economic growth and prosperity. By focusing on infrastructure development, leveraging the private sector, investing in high-potential industries, and addressing key barriers, there is an opportunity to create meaningful economic opportunities for the next generation of workers in developing and emerging markets.

Article created from: https://www.youtube.com/watch?v=gEWSQ9hIuO8