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Tackling the jobs crisis: new thinking from the World Bank and UNESCO

October 17, 2012
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Oxfam’s head of research, Ricardo Fuentes (right) reviews two big reports on jobs from the World Bank and UNESCO Ricardo Fuentes-Nieva

Youth unemployment is making headlines everywhere – and with good reason. One in eight people between 15 and 24 are unemployed and the problem affects rich and poor countries alike. In Spain, almost half of young adults are unemployed; in the Middle East and North Africa is around one in four. The younger generation in many countries feel cheated: the past was truly a better time. Their perception, at least in some places, is that they will struggle to live as well as their parents.

Two recent flagship publications from large international organizations shed light on the problem of youth unemployment and propose solutions to policy makers. The Education for All Global Monitoring Report from UNESCO (full disclosure, I recently joined their Advisory Panel but didn’t participate in the preparation of this year’s EFA-GMR) and the World Development Report 2013 from the World Bank both tackle employment and employability. They are timely both for short term needs – the protracted global economic downturn has hit the young hard – and long term reasons – as UNESCO points out, the demographic pressures are here to stay since “young people are more numerous than ever; and their numbers are increasing rapidly in some parts of the world. In developing countries alone the population aged 15 to 24 reached over 1 billion in 2010.”

The GMR focuses on how to create useful skills for the young. It is a brave and comprehensive effort, especially because the GMR gives particular attention to the skills required by marginalized groups. The problems start with access to training: “All too often, access to skills is unequal, perpetuating and exacerbating the disadvantage that attends being poor, female or a member of a marginalized social group”. To back this argument, UNESCO recently launched a very comprehensive database on inequality on education that shows the extent of the disparities.

unesco jobs

So far, so good. The report is thorough and detailed and describes the types of skills young people need (basic skills such as literacy and numeracy; problem solving and communication abilities and technical know-how). The evidence presented is solid. The element missing in the picture is a thorough discussion on “soft skills” that cannot necessarily be learned in the formal system. These include issues around confidence, self-esteem, and aspirations. This is an important omission; evidence suggests that prejudices and social expectations have an important role in educational and cognitive outcomes. One of the most notable examples is the change in problem-solving results of children reminded of their caste in Uttar Pradesh – two otherwise identical exercises showed different outcomes when personal information of the participants (including caste) was announced at the beginning of the test – children from marginalised backgrounds did worse when their situation was made public as part of the experiment. The point is that providing technical skills to marginalized young people may not be enough to break entrenched patterns of external and self-imposed social exclusion.

In addition, economies around the world are struggling to create the jobs required to keep up with population growth and more young people. This is where the WDR 2013 contributes. The Report tackles that issue of job creation. The team working on the WDR went to great lengths to make explicit that the document is about jobs and development, not labour markets. Even more, in their analysis, jobs are an important element for personal achievement and better social interaction, not only as sources of income.

The Report poses some challenges to readers. I got frustrated during my first two readings of the WDR’s Overview. I couldn’t see heads or tails in the construction of the argument. It wasn’t until the third reading that I realized, to my surprise, that the Report is not following a formal economic model. Forget one size fits all recommendations, where typically, labour markets should be made more flexible and wages reflect labour supply and demand. The WDR 2013 instead suggests a taxonomy for policy makers: depending on the structure of the economy, different policies could create jobs that promote development. They even provide examples of countries that, in their view, have succeeded in the challenges.

wdr jobs

After I got over my initial frustration, I welcomed this innovation in the WDR. The authors decided to focus on the policy relevance of its recommendations and not on the internal consistency of whatever model. This is where the World Bank can put to use its vast knowledge and create room for policy debate – in suggesting different policies for different settings based on the latest evidence. The Report, however, falls short in failing to clarify what the Bank actually means by ‘development’ – a glaring omission given that they repeat  that jobs are ‘at the center of development’ again and again. Probably I am reading too much in this, but there are paragraphs in the WDR 2013 where the authors move away from the idea that economic growth is the best proxy for development (see, for instance, their box on “Growth Strategies or jobs strategies?”). They should make explicit the alternatives.

Both reports share something that is not quite evident in the first read: with different approaches, they both are concerned about social exclusion and their recommendations aim to change the structures that keep people out of jobs – either because they lack skills or because the economy does not create enough good jobs. The practical angle as well as the myriad of examples that both reports give will make a good initial step for policy makers when solving the youth employment conundrum. Now it’s the policy maker’s turn to do something.

More commentaries on the WDR by Martin Rama and Brendan Martin. Brendan and I both think it’s improved a lot since the first discussions – kudos to the Bank and WDR team on that.

3 comments

  1. Unions welcome this belated focus on the employment aspects of development. We’d be keen to see both the World Bank and the UK’s DFID shift away from promoting growth models based mostly on reducing the costs of doing business, towards decent job creation. Our recent report on DFID and decent work shows that it has a long way to go: http://www.tuc.org.uk/international/tuc-21502-f0.cfm

  2. This is a great piece. Especially, the part highlighting the importance of soft skills. I enjoyed seeing it being addressed. A rare thing, despite its importance. Moreover, I wonder if the focus on youth employment, now, is too late. The rise in population of unemployed youth didn’t happen overnight. Population growth forecasts saw it coming. But it didn’t seem to be a major concern to policy makers then. The problem of youth unemployment seems to have become popular after the youth, mainly in the Arab world, starting burning themselves to death and rebelling. Shifting from one policy topic to another seems to be worth loss of life and blood. This unemployed youth will soon need retirement benefits, pensions, health care, etc. Not jobs, really. This is if they are still alive, not in prison and still in their countries. By the time policy makers agree on a policy, address this issue and by the time the youth get these decent jobs (if they do), they may already be retirees (or not even that, if they never worked, maybe they’d just reach the status of “elderly”). They may also not even afford to start a family. This would solve the problem in a way. They may not afford to have children. So the next generation of policy makers may no longer have a problem of high youth unemployment. Maybe policy debates should move away from job creation debates and focus on deeper structural issues.

  3. Thanks for this, Ricardo. And sorry for being late in reading this. I’m especially intrigued by the WDR innovation of providing different policy recommendations depending on economic/development/government diagnostics. I think that is a very valuable concept and something I’ve been hoping to work on. Do you know of other good examples? I was thinking about this especially in developing policy recommendations around income inequality.

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