Transcript A tentative framework to tackle the employment challenge

A FRAMEWORK FOR
OPERATIONALIZING JOBS POLICIES
Omar Arias
World Bank
Arias, Omar S., Carolina Sanchez-Paramo, Maria E. Davalos, Indhira Santos, Erwin R. Tiongson, Carola
Gruen, Natasha de Andrade Falcao, Gady Saiovici, and Cesar A. Cancho. 2014.
Back to Work: Growing with Jobs in Europe and Central Asia. Washington, DC: World Bank.
D. Purves
A Jobs Diagnostic Framework: From Symptoms to Constraints
Why Not?
Step 1a:
Is growth
sufficient
to create
Jobs?
(real GDP
growth >= LF
growth)
No
Yes
Step 2a:
Is
growth
creating
enough
jobs?
Yes
No
Step 2b:
Step 1b:
Consider
Growth
Diagnostic
Source: Jobs Group, World Bank.
Are better
Jobs being
Created?
(formal/
informal)
Yes, Nirvana!
Sector
composition
of growth is
too capital
intensive?
Labor
supply
constraints?
Labor
demand
constraints?
Labor
market
matching
constraints?
What are the constraints?
(Examples)
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•
•
•
•
•
•
•
•
•
•
Commodity boom (natural path)
Misaligned exchange rate (Dutch
disease)
Tax policies favoring capital
Low skills base
High labor (hiring/firing) restrictions
Skills
Low participation, High reservation wage
Constraints to women’s participation
Low worker incentives from labor taxes and poor
design of social benefits
Limited mobility
High public sector wage
•
•
•
•
•
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•
•
Limited domestic/external markets
Poor investment climate
Limited access to finance, FDI
Low innovation, limited external trade
Low churning; limited firm entry
Technology favors capital over labor
Tax/regulations favor K over L
Negative short-term impact of policy reform–
including where trade and FDI are disruptive in
short-term
•
•
•
Limited information on vacancies/skills
Discrimination, labor segmentation
Limited internal labor mobility
The Jobs Challenge in ECA: Two contextual factors
(1) Transition legacy and speed of reforms
Strongest reform record among middle
income regions…
… with significant variation in the
implementation speed of reforms
Doing Business Indicator (Gap to Frontier)
Transition Index (EBRD 2012)
4.5
90
4
85
3.5
80
3
75
2.5
70
2
1.5
65
60
0.5
55
0
50
2006
2007
ECA
OECD (EU)
2008
2009
2010
2011
LAC
OECD (Non-EU)
2012
EAP
Turkey
2013
Estonia
Hungary
Slovak Republic
Poland
Latvia
Lithuania
Bulgaria
Croatia
Romania
Fyr Macedonia
Slovenia
Turkey
Albania
Georgia
Armenia
Mongolia
Kyrgyz Republic
Russian Federation
Moldova
Montenegro
Ukraine
Serbia
Kazakhstan
Bosnia and Herzegovina
Azerbaijan
Tajikistan
Uzbekistan
Belarus
Turkmenistan
1
Source: Data from EBRD, WB DB. Notes: ECA = Europe and Central Asia; LAC = Latin America and the Caribbean; EAP = East Asia and Pacific.
The Jobs Challenge in ECA: Two contextual factors
(2) Impact of demographics on the labor force
ECA Countries: Change in 15+ Population 2010 - 2030 (%)
50
40
Percent
30
20
10
Older workers
will outnumber
youth due to:
Aging + Low
Fertility + OutMigration
Younger countries
also face
demographic
pressures:
Out-Migration, youth
bulge, and long-run
aging
-10
-20
Bulgaria
Ukraine
Georgia
Moldova, Republic of
Latvia
Lithuania
Belarus
Russian Federation
Croatia
Romania
Estonia
Bosnia and Herzegovina
Hungary
Poland
Serbia
Slovakia
Czech Republic
Slovenia
Macedonia, TFYR
Armenia
Montenegro
Albania
Azerbaijan
Kazakhstan
Turkey
Kyrgyzstan
Turkmenistan
Uzbekistan
Tajikistan
0
Source: Back To Work: Growing with Jobs in Europe and Central Asia (2014).
Meeting the Jobs Challenge in ECA: Three policy goals
Resuming Sustained
Growth:
 Ensure macro fundamentals
for economic recovery and
regain the pre-crisis reform
momentum
Enabling Private Sector-led
Job Creation:
Preparing Workers for Jobs:
 Helping workers acquire skills
for the modern workplace
 Making (formal) work pay by
removing disincentives and
eliminating barriers to the
labor market
 Removing obstacles to internal
labor mobility
 Enable business
creation and
expansion, tap on
entrepreneurship
Operationalizing Jobs Policies: 5 Evidence-based Principles
1.Reforms take time to payoff  Employment and
Productivity Virtuous Circles
Enabling Private Sector-led Job Creation – Reforms can payoff but take time
Reforms and modernization generate a virtuous circle between
productivity and employment growth over the long-haul
Reformers did better in 1990s and reforms paid off… with a lag
% of years in each decade when both labor productivity and employment increased
80%
70%
60%
50%
40%
30%
20%
10%
0%
1990s
2000s
1990s
2000s
1990s
2000s
Poland
FYR Macedonia
Belarus
Advanced Reformers
Intermediate Reformers
Late Reformers
Both labor productivity and employment increased
Source: Back To Work: Growing with Jobs in Europe and Central Asia (2014).
Enabling Private Sector-led Job Creation – Reforms can payoff but take time
Job creation in the private sector outpaced job destruction
among advanced reformers
Poland (advanced reformer) achieved net
employment creation in mid-2000s…
… while job destruction was still outpacing
job creation in Ukraine (late reformer)
Poland
Ukraine
6.0
4.5
4.1
3.3
2.1
1.8
5.7
4.9
2.8
4.7
13.6
4.0
3.4
11.1
0.9
-0.2
-2.5 -2.7
10.5
7.4
0.1
-2.0
11.6
9.7
9.6
1.5
0.4 0.2
-2.3
12.1
-2.2
-2.3
-0.5
-3.2
-2.8
0.2
0.3
-0.6
-2.2
-3.9
-8.7
-5.6
-11.6
-12.4
-11.9
-12.6
-11.9
-11.3
-11.1
-16.1
-8.5
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: Back To Work: Growing with Jobs in Europe and Central Asia (2014).
2002
2003
2004
2005
2006
2007
2008
2009
Operationalizing Jobs Policies: 5 Evidence-based Principles
2.Most new jobs are
created by a small set of
firms (typically young)
ENTREPRENEURSHIP
1.Reforms take time to payoff  Employment and
Productivity Virtuous Circles
Enabling Private Sector-led Job Creation – Nurturing the Gazelle Firms
A small segment of “super star” firms (Gazelles) accounts for
most job creation almost everywhere
As % of all firms and all jobs created during 2004-08
Share of Enteprises
72
72
5.2
14
10
2.8
73
71
54
22
Share of Jobs Created
1.1
2.6
Bulgaria Czech Estonia Poland
Republic
Advanced
73
66
51
50
13
67
42
18
5.0
B&H
13
4.5
19
1.4
17
-0.3
Croatia Romania Serbia
Intermediate
Notes: The number above each country represents the average growth rate of employment per year
Source: Back To Work: Growing with Jobs in Europe and Central Asia (2014).
12
7.7
-1.0
Russia Ukraine
Late
Enabling Private Sector-led Job Creation – Tapping on Entrepreneurship Potential
Advanced reformers translate entrepreneurship potential into
higher creation of new businesses
% workers who prefer to become self-employed, took steps, and actually
started a business, 2010
90
84
78
80
70
62
60
50
50
%
43
40
30
20
34
26
27
18
17
20
19
10
-
Want-to-be entrepreneur,
among wage-employed
Late reformer
Took steps to open a business,
Succeeded in opening a
among want-to-be entrepreneur business, among those who took
steps
Intermediate reformer
Advanced reformer
Western Europe
15
Source: Back To Work: Growing with Jobs in Europe and Central Asia (2014).
Operationalizing Jobs Policies: 5 Evidence-based Principles
2.Most new jobs are
created by a small set of
firms (typically young)
3.New jobs increasingly
require foundational (cognitive &
socio-emotional) and technical skills
tied to employers’ needs
ENTREPRENEURSHIP
MODERN SKILLS
1.Reforms take time to payoff  Employment and
Productivity Virtuous Circles
Preparing Workers for New Jobs – Growing demand for “new economy” skills
Work is becoming more intensive in non-routine skills and less so in
routine skills
Annual average change in employment share
(percentage points)
2
1.5
Change in Employment Composition by type of occupation
(2000-2012)
1
0.5
0
-0.5
-1
-1.5
-2
High-skilled occupations (intensive in non-routine cognitive and interpsersonal skills)
Middle-skilled occupations (intensive in routine cognitive and manual skills)
Low-skilled occupations (intensive in non-routine manual skills)
Source: World Bank WDR 2016 (forthcoming), based on ILO KILM data. For China, data comes from the Population Census for 2000 vs 2010.
17
Preparing Workers for New Jobs – Developing Strong Foundational Skills
Growing demand for “new economy” skills among youth;
concern for obsolescense among older workers
Czech Republic, Cohort born before 1955
Czech Republic, Cohort born 1975-1984
70
70
New Economy
Skills
60
Routine
cognitive
50
Manual Skills
40
Mean Skill Percentil of 2002
Skills Distribution
Mean Skill Percentil of 2002
Skills Distribution
60
New Economy
Skills
50
Manual Skills
Routine
cognitive
40
30
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: Back To Work: Growing with Jobs in Europe and Central Asia (2014).
30
2002
2003
2004
2005
2006
2007
2008
2009
2010
Operationalizing Jobs Policies: 5 Evidence-based Principles
2.Most new jobs are created by
a small set of firms (typically
young)
3.New jobs increasingly require
foundational and technical skills
tied to employers’ needs
ENTREPRENEURSHIP
MODERN SKILLS
4.Inclusive access to jobs
require adequate work
incentives and tailored &
integrated employment services
CONNECTING TO JOBS
1.Reforms take time to payoff  Employment and
Productivity Virtuous Circles
Preparing Workers for New Jobs – Adequate Incentives and removing barriers
Some groups face disincentives
and other barriers to work
Access to
services:
childcare
Work
arrangements
and working
conditions
Work
incentives
Some women, youth,
older workers, and
ethnic minorities often
face work disincentives
or multiple
Access to
Geographic
productive
disadvantages
inputs,
information
and networks
mobility
Attitudes
and social
norms
Preparing Workers for New Jobs – Adequate Incentives and removing barriers
high
Rebalancing social protection, work incentives and barriers to labor
force participation and formal employment
low disincentives
high barriers
high disincentives
high barriers
TUR
HUN
RUS
ITA
LVA
LUX
BGR
KAZ
ARM
ESP
PRT
AZE
GEO
ALB
NOR
KGZ
DNK
ISL
MDA
IRLPOL
BLR
MNE
NLD
low
low disincentives
low barriers
-1
SRB
LTU
DEU
CZE HRV
SWE
EST
GRC
SVK MKD
FIN
UKR
SVN
ROM
BIH
AUT
BEL
high disincentives
low barriers
GBR
-1/2 s.d.
low
mean
+1/2 s.d.
DISINCENTIVES
BLUE
Social Protection Index
RED Middle
GREEN High
Low
Source: Back To Work: Growing with Jobs in Europe and Central Asia (2014).
+1
high
Operationalizing Jobs Policies: 5 Evidence-based Principles
2.Most new jobs are created by
a small set of firms (typically
young)
3.New jobs increasingly require
foundational and technical skills
tied to employers’ needs
ENTREPRENEURSHIP
MODERN SKILLS
4.Inclusive access to jobs
require adequate work
incentives and tailored &
integrated employment services
5.Indirect local job creation
accounts for the bulk of new jobs
CONNECTING TO JOBS
SPATIAL CONNECTIVITY AND
LABOR MOBILITY
1.Reforms take time to payoff  Employment and
Productivity Virtuous Circles
Enabling Labor Mobility and Spatial Connectivity
Fostering job spillovers – Jobs Ecosystems
Evidence from USA, Sweden and Turkey shows that one new job in tradable
sectors (e.g, manufacturing) can lead to two to four new jobs in the nontradable sectors of the economy (Aldan, Maloney, Posadas, Talkin 2015; Moretti 2012;
Moretti & Thulin 2013)
Focus on enabling
agglomeration economies (3D /
3I, WDR 2009)
•
Integration through spatially
blind institutions, spatially
connective infrastructure, and
spatially targeted interventions.
Enabling the emergence of jobs
ecosystems through support to
Entrepreneurship, Modern skills
and Connecting people to jobs
EMC2
Spatially-integrated
jobs policies
•
•
Addressing market failures,
multiple constraints
Exploiting synergies
Preparing Workers for New Jobs – Enabling Labor Mobility
Many workers fail to move to areas with higher
job creation potential
70%
Percentage of adult (18+) population who moved to a different city in the last 20 years
60%
50%
40%
30%
20%
10%
France
Great Britain
Kyrgyzstan
Turkey
Sweden
Estonia
Germany
Albania
Kazakhstan
Georgia
Latvia
Croatia
Armenia
Romania
Azerbaijan
Lithuania
Belarus
Slovenia
Russia
Slovakia
Bosnia
Serbia
Ukraine
Tajikistan
Moldova
Bulgaria
Kosovo
Czech Republic
Hungary
Montenegro
Poland
FYR Macedonia
Italy
Uzbekistan
0%
Source: Back To Work: Growing with Jobs in Europe and Central Asia (2013).
Concluding Observations
SOME ISSUES FOR THE DESIGN AND
IMPLEMENTATION OF MULTI-SECTORAL JOBS POLICIES
• Country-specific tailoring
– Country context, phase of reform process
– Synergies across ongoing or planned reforms, policies and
targeted interventions
• Policy and inter-agency coordination
– Challenge of multi-sectoral implementation
• Across the National Government
• Across levels of Government
– Using Results-based budgeting and unified systems (e.g, registries)
• Leveraging financing
– Public, FDI, international partners
THANK YOU
http://documents.worldbank.org/curated/en/2014/01/18831
523/back-work-growing-jobs-europe-central-asia