Between 2023 and 2033, 1.2 billion young people will reach working age (15+) in developing countries. Of these, around 500 million will still be completing their education. Among those youth who are not in school, under the current trajectory, four out of ten, mostly young women, will not have a job.
Even among the six in ten who find a job, few will find good jobs, where workers can be more productive, earn more, and escape poverty. In most settings, labor income from one’s job is the most important driver of poverty reduction. However, more than 40 percent of people in low-income countries, including many who are employed, live on less than $2.15 per day.
Without immediate action, millions of young individuals could be left with dim prospects—with impacts on societies and economic growth.
Immediate action is therefore needed to unlock private sector-driven economic growth that creates productive jobs fostering dignified livelihoods and enhancing resilience to climate and other shocks that can push people back into poverty.
More productive and higher paying jobs are often created when more productive firms grow, hire more workers, and continuously increase productivity. Yet, such productivity and employment growth is often stifled. For example, many business owners in developing countries struggle to secure loans to expand their businesses, as banks tend to favor larger, more established companies. New, dynamic start-ups see their entry and growth suffocated by anti-competitive practices of older firms, while others find it difficult to hire the skills or access the technology they need.
Such market failures, coupled with policy failures—such as insecure property rights, movement restrictions, weak competition policies, and biased or overly stringent business and labor regulations— create a web of obstacles that hinder productivity and job creation.
Enhancing job opportunities is particularly critical for women and youth. Teenage pregnancy, early marriage, domestic responsibilities, limited access to childcare services, inadequate transport infrastructure and security, unequal access to assets, and restrictive societal norms all hinder girls’ access to higher education and restrict women’s participation in the labor force.
As a result, women’s occupational choices are often limited, leading to disproportionate involvement in vulnerable employment, if they engage in paid work at all. For youth, the challenge lies in ensuring that job opportunities align with their rising educational levels. In many low income economies, young people are staying in school longer, yet even with higher education, they often find themselves trapped in occupations that make little to no use of their skills.
The growth and jobs challenges in developing countries will become more daunting as the effects of climate change intensify. Key employment sectors in low-income countries, such as agriculture, are particularly vulnerable to the impacts of climate change, including extreme weather events and shifts in precipitation patterns.
Moreover, the transition to a low-carbon economy will require significant investments in renewable energy and green technologies, which could strain government budgets and escalate the demand (and costs) for scarce technological capabilities. Addressing these challenges requires pursuing growth and job strategies that simultaneously foster resilience to climate-related risks, promote the adoption of less carbon-intensive technologies, and expedite the transition to cleaner energy sources.
Education and skills development initiatives must be aligned with the competencies and knowledge essential for achieving a green transition. Also crucial is an enhanced effort to support firms, especially smaller ones, in accessing financing for mitigation and adaptation, and to develop insurance markets, which are critical for adaptation.
Last Updated: Oct 23, 2024
