Joblessness is a global crisis, the head of the World Bank's private sector lender, the International Finance Corp, said on Monday, as the group examines ways its investments in developing countries can help generate more jobs.
"As the world's largest development institution focused on the private sector, we believe that job creation offers the surest path out of poverty," said Jin-Yong Cai, IFC's vice president. "Promoting it in developing countries is a top priority for us." The World Bank has estimated about 200 million people globally are unemployed and that 600 million jobs must be created in developing nations by 2020 to keep up with population growth.
The International Labor Organization warned in September that unemployment among young people is likely to rise globally as slow growth in the euro zone and a weak economic recovery in the United States hits emerging economies.
For years institutions like the World Bank and the International Monetary Fund focused on boosting economic growth as a way to spur jobs, but over the years evidence has shown the answer lies with the private sector, which provides nine out of every 10 jobs.
A new jobs study by IFC published on Monday, which looks at the experiences of more than 45,000 firms in over 100 countries in Asia, Africa and the Middle East, found that weak infrastructure, lack of financing for small and medium-sized enterprises, poor training and skills, and weak investment climates posed the biggest obstacles to companies and their efforts to generate more jobs.
It also found that small and medium-sized enterprises generate the most jobs but they are less productive and pay less, and do not offer as much training as bigger companies do. The largest number of jobs are created within companies' supply chains and their distribution networks, the study found.
Companies operating in Africa cited power shortages as their biggest constraint and the report said providing reliable electricity could boost annual job growth by at least four percent.
The study also found that 45 million people enter the workforce annually although more than one third of companies studied were unable to find enough people with skills they needed.
A two-day conference organized by IFC in Washington this week, involving 300 participants, hopes to shine the spotlight on what global development and financial institutions can do to help generate more jobs.
Nigel Twose, director of IFC's Development Impact Department,