–Middle East, North Africa Top List

By Peter OBIORA InvestAdvocate

Lagos (INVESTADVOCATE)-200 million people are reported to be currently unemployed globally according to a new study by the IFC, a member of the World Bank Group and made available to www.investadvocateng.com.

The study “Assessing Private Sector Contributions to Job Creation,” as a companion to the World Bank’s World Development Report 2013 on Jobs which was released last October says Middle East and North Africa are top on the list of the unemployed.

The Report affirmed that the nature of jobs challenges varies by region, due to different demographic, institutional, and socio-economic factors. “Unemployment, informality, working poverty, and underemployment are present in all regions; but at different levels of intensity” it said.

“Unemployment rates are the highest in the Middle East and North Africa (MENA) at about 10 percent (10%), more than double those of East Asia and South Asia, which have the lowest rates at about four percent (4.0%), in addition, youth unemployment rates in the MENA region are particularly high (higher than 20%)” it said.

Following this, the World Bank estimates that 600 million jobs must be created by year 2020, mainly in developing countries, just to keep up with population growth. “The answer lies with the private sector, which provides nine (9) out of every 10 jobs” the Report said.

It also examines how and under what conditions the private sector can best contribute to job creation and poverty reduction, drawing on a review of the literature and evaluations; surveys of more than 45,000 businesses in over 100 countries; a website, blog, and essay competition to solicit outside views; macro and micro case studies of IFC clients; and IFC’s own operational experience and lessons learned.

According to the IFC Report, there are findings that much-needed jobs in developing countries can be created at a faster rate; if policymakers and development institutions make it a priority to remove the key obstacles to growth that private-sector Companies face.

In the study, four (4) obstacles were identified that pose particular challenges to job creation in the private sector, these include, a weak investment climate, inadequate infrastructure, limited access to finance for micro, small, and medium enterprises; and insufficient training and skills. “Removing these obstacles can significantly increase job creation” the Report affirmed.

However, in a joint communiqué issued at the launch, 25 leading international finance institutions immediately pledged to work together to address job creation, and learn from each other’s experience.

On skill gap, the Report observed that approximately 45 million job seekers join the labour force every year in the current challenging macroeconomic environment, yet more than one-third (1/3) of companies in 41 countries around the world report an inability to find the workers they need.

“This dynamic suggests a global mismatch between the demand and supply of workers, and the availability of relevant job training. The world’s labour force is concentrated in developing economies, the majority of whose workers possess low levels of skills, while advanced skills and training are more prevalent among workers in developed economies. The mismatch has thus also become a cross-country challenge. In general, there are not enough jobs for low-skilled workers and not enough workers for high-skilled jobs” the Report said.

A message from Jin-Yong Cai, IFC Executive Vice President and Chief Executive Officer (CEO) said the 600 million new jobs the world needs by year 2020 just to keep up with the globe’s surging population is so large and almost incomprehensible.

“Getting there won’t be easy. It will be impossible without the private sector.

Joblessness, especially among the poor, is a global crisis. And for IFC, the world’s largest development institution focused exclusively on the private sector, it’s a top priority. Most of the world’s 200 million unemployed are women and young people living in developing countries. Without work, they can’t care for themselves or their families” he said.

The Report estimated that unemployment rate for youth is more than 2.5 times higher than that of adults.

Jin-Yong Cai in his message pointed out that the private sector, which provides nine (9) out of 10 jobs in developing countries, offers the best solution to the challenge of unemployment.

According to him, the IFC can play a critical role by targeting the private sector; “we complement the World Bank’s work with governments” he said.

The IFC Executive Vice President and CEO said in fiscal year 2012, the IFC invested more than $20 billion; including funds mobilised from other investors, and spent almost $200 million on more than 630 advisory projects in 105 countries.

“This investment and advice helps countries address factors that can be the most important obstacles to job growth: the investment climate, infrastructure, access to finance, and education and skills” he said.

The Study noted that employment trends vary by sector, it reported that when aggregate job creation across industries were examined in more than 100 countries, the share of employment in the services sector led that chart followed by manufacturing, while the agricultural sector shows a steady decline. Also, Enterprise Survey data show that services lead in terms of employment growth.

“However, the number of jobs created by each industry varies across countries, depending on the availability of natural resources, skills, institutions, and other country and regional characteristic” the Study said.

The study was closely coordinated with the World Bank’s World Development Report (WDR) 2013 on Jobs, and draws upon the experience of relevant departments within the World Bank and IFC as well as the expertise of World Bank Group’s external consultants, partners and clients.

The report was prepared by a team led by Roland Michelitsch under the overall guidance of Nigel Twose, Director of IFC’s Development Impact Department. The core team of authors included Gabriela Armenta, Ferran Casadevall-Massuet, Namita Datta, Anastasiya Denisova, Rijak Grover, Luz Leyva, Junko Oikawa, and Anqing Shi.

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