Employment creation

This page compiles key resources on employment creation through PSD programming, including youth employment. While employment creation in developing countries is high on the agenda of most donor agencies, there are different views on how to achieve it. Key insights include:

• In the medium term, labour-intensive light manufacturing industries, supported by a conducive investment climate, can deliver productive jobs for low-skilled workers at scale. This potential may change in the age of automation, with more opportunities emerging in service sectors.
• SMEs contribute a large share of employment in developing countries; however, as many fail, their net job creation rate is likely similar to large firms. Job creation efforts should target SMEs that grow.
• Increasing productivity and incomes of the many people in traditional agriculture also needs to remain a short-term priority.

Young people globally are almost three times more likely to be unemployed as are adults. They are also particularly vulnerable to insecure and poorly paid jobs. As such, they are often a key target group of employment-focused interventions. Emerging evidence on effective support options include:

• Entrepreneurship support and skills training tend to be more effective than other interventions, leading to notable benefits in some countries.
• Wage subsidies and job services have so far been largely ineffective.
• Digital technologies have great potential in delivering training and financial services to youth, as well as offering new job opportunities.