JOBS DIAGNOSTICS

Andrew D. Mason

Practice Manager

Social Protection and Labor

Europe and Central Asia Region

World Bank

WHAT IS A JOBS DIAGNOSTIC?

Jobs DiagnosticNoun

1. A core World Bank analytical product that examines the job situation in countries, identifies key jobs challenges, their the underlying causes, and possible policy solutions. The findings from these diagnostics can feed into World Bank Systematic Country Diagnostics and/or inform World Bank country engagements on jobs.

2. Any class of multi-sectoral analytical product that examines the job situation in a country that identifies key jobs challenges, their the underlying causes, and possible policy solutions. The findings from these diagnostics can inform the development of national jobs/employment strategies, as well as policy frameworks and program design, to promote more, better, and inclusive jobs.

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CONTEXT

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Jobs challenges are inherently multi-sectoral and complex, affected by Macroeconomic fundamentals, levels and patterns of growth

The regulatory environment/business climate in which firms can grow and create jobs

Access to markets, inputs, capital, and technology

The preparedness of workers to effectively take jobs, including worker skills and mobility

Information that enables the matching of labor demand and labor supply

Most approaches to date have been sector-specific or focused on one or another of the puzzle pieces.

A growing consensus that a more comprehensive approach is needed

MEETING THE JOBS CHALLENGE IN EUROPE AND CENTRAL ASIA: 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:

Enable business creation and expansion, tap on entrepreneurship

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

KEY ELEMENTS OF AN INTEGRATED JOBS APPROACH

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Most new jobs are created by a small set of firms

(typically young)

ENTREPRENEURSHIP

New jobs require relevant generic and technical skills

tied to (local) employers’ needs

MODERN SKILLS

Inclusive access to jobs can be enhanced by tailored and

integrated employment services at the local level

CONNECTING TO JOBS

Indirect local job creation accounts for the bulk of new

jobs

SPATIAL APPROACH

WHY A COMPREHENSIVE JOBS DIAGNOSTIC?

Most diagnostic tools focus on one piece of the puzzle, not on jobs Investment Climate Assessments consider constraints to formal firms’ investments

and productivity growth

Growth Diagnostics (Hausmann, Rodrik, Velasco) are built around the entrepreneur’s decision to invest

Skills Assessments consider the supply of skills across people (some Skills Assessments also examine demand for skills, but with limited links to firm performance)

ADePT Labor provides tables that profile workers from households (supply side)

Diagnostic Trade Integration Surveys mostly consider barriers to trade integration in products (and more recently services) and more recently exporters (firms)

Each tool provide an important puzzle piece, but they need to be brought together

Benefits of a more comprehensive and multi-sector approach Identify most important jobs challenges from across the different dimensions

Enable a more systematic approach to finding possible solutions 6

DEEPENING THE ANALYSIS: MORE JOBS, BETTER JOBS, INCLUSIVE JOBS

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Job creation effects

- MORE -

Job quality effects

(productivity, earnings, skills)

- BETTER -

Jobs access effects

- INCLUSIVE -

A JOBS DIAGNOSTIC FRAMEWORK: FROM SYMPTOMS TO CONSTRAINTS …

KEY ELEMENTS OF A JOBS DIAGNOSTIC

Step 1: Basic Analysis. Establishing the country’s jobs situation and jobs needs

Step 2: Interpret Results. Using structured inquiry to define the key jobs challenges and identify the underlying causes / constraints on all three dimensions

A. More jobs. Is the economy creating sufficient jobs relative to the working age population?

B. Better jobs. Is productivity rising? Is the proportion of working poor declining in the labor force?

C. Inclusive jobs. Who has access to jobs?

Step 3: Define priorities and identify possible solutions

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KEY ELEMENTS OF A JOBS DIAGNOSTIC: STEP 1

Basic Analysis. Establishing the country’s jobs situation and jobs needs

A. Set context: Identify the country type, the country conditions and challenges (including growth and employment, wages and earnings, demographic trends, sectoral composition, etc.), and establish comparators

B. Identify relative importance of creating more, better and inclusive jobs

Present the changing profile of jobs, workers and employers

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KEY ELEMENTS OF A JOBS DIAGNOSTIC: STEP 2

Interpret Results. Using structured inquiry to define the key jobs challenges and identify the underlying causes / constraints

A. More jobs: Is the economy creating sufficient jobs relative to the working age population?

Growth – is growth sufficient? Is elasticity of employment to growth too low? Are jobs being created in areas that encourage transformations (structural; spatial; formalization)?

Demand constraints to job creation – fundamentals, business environment, governance

Supply constraints – incentives, skills, mobility constraints

B. Better jobs: Is productivity rising? Is the share of workers who are poor declining?

Are new and existing jobs more productive?

Are people raising productivity of current jobs or reallocating time to more productive jobs?

Are earnings rising? Are worker vulnerabilities addressed?

C. Inclusive jobs: Who has access to jobs?

Are job dynamics contributing to reducing poverty and promoting shared prosperity?

Are women, youth, minorities able to access job opportunities?11

KEY ELEMENTS OF A JOBS DIAGNOSTIC: STEP 3

Step 3: Define priorities and identify possible solutions

Identify key areas for policy reform and/or program development and whether evidence exists on policy/program efficacy

Look for synergies in solutions that can address multiple dimensions of the jobs challenges (more) efficiently and effectively

Identify where there are trade-offs and why (and whether mitigation measures are warranted)

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ILLUSTRATION: ONGOING AND FORTHCOMING JOB DIAGNOSTIC WORK IN GEORGIA

Demand-side Analysis

Workforce skills in the eyes of employers (STEP employer survey, 2014)

Growing occupations, declining occupations and skill shortages: (novel Labor Demand Survey (2015, ongoing)

Qualitative analysis of skill needs of employers (input to design of vocational training, (2015, ongoing)

Value-chain analysis (2015/16, forthcoming)

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Supply-side Analysis

Labor market outcomes and poverty (2013)

- Utilization of labor resources

- Causes and profile of unemployment

- Deficient demand

- Wage structure and inequality

- Profile of in-work poverty

- Skills mismatches

- Labor market – poverty linkages

Matching Supply with Demand

Developing LM information system as a way of addressing the skills mismatch (TA, ongoing)

- Labor Market Observatory

- Jobs Portal

- Labor Demand Survey to fill critical information gap

FROM DIAGNOSIS TO STRATEGY AND ACTION

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Diagnosis

Dialogue

Jobs Strategy

Policy Reform Program Development/Implementation

JOBS TOOLS AND DATA AVAILABILITY (EXAMPLES)

Macro:• Shapely decomposition tool• Tools for Growth Analysis • Jobs Generation and Growth Decomposition

(JoGGs)

Households:• Adept & Adept Labor

Firms:• Investment Climate Assessments

Trade:• Exports-Labor Elasticity Tool• Labor Mobility and Adjustment Costs toolkit

E.g., The recent jobs report used policy reform indices (building on existing data from Doing Business, EPL, etc.) to derive a typology that categorizes countries on reform efforts.

World Bank’s Find a Friend tool selects comparators based on various characteristics

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Data ToolsData SourcesMacro / aggregate :• WDI indicators• Jobs Data portal • ILO Key Indicators of the Labor Market (KILM) • UN demographic projections• National accounts surveys• Migration Facts Book• WITS

Households:• I2D2• Labor Force Surveys• Household survey (HHS/LSMS) • STEP Household Surveys

Firms:• Enterprise surveys and firm census • Enterprise Surveys (incl BEEPs)• STEP Employer Surveys

Policy indicators and coverage• Doing Business • Databases of Employment Protection

Legislations• SPeeD, ASPIRE Social Protection Databases

Benchmarking

FOR MORE INFORMATION…

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http://www.worldbank.org/en/topic/jobsanddevelopment

Diagnostics Contacts @ Jobs CCSA: Mary Hallward-Driemeier, Dino Merotto, Pierella Paci, Michael Weber, Thoko Moyo

http://globalpractices.worldbank.org/jobs/Pages/en/KBLanding.aspx

Contact Daniel Levine

Jobs Knowledge Base:

ANNEX

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STEP 1A – ESTABLISH COUNTRY CONTEXT

Identify Country Trends Type,

Conditions &Comparators

Conflict & Fragility*

Youth bulge

Ageing

Urbanizing

Formalizing

*Additional guidance will be prepared for

Countries with FCV features

Jobs Diagnostic

Step 1A:

Agrarian

Resource rich

Island State

Migration economy

In-Recession/crisis

Key policy indicators

Typologies (Not mutually exclusive):Growth & employment trends (aggregate; by sector)

Demographics (aging; youth bulge)

Shapely decomposition

Trade dynamics (X & M)

Trends in real wages

Trends in migration and remittances

Macro policy indicators (interest rates, real exchange rates)

Financial sector (depth, inclusion)

Labor market policies and core standards

Educational attainment

Infrastructure availability, cost

Investment climate indicators

Jobs Group is producing a standard “Jobs At A Glance” that will include these indicators of ‘fundamentals’ and `labor policies’

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STEP 1B – PROFILE OF JOBS, WORKERS AND EMPLOYERS

Profileof Jobs

and Workers(Bottom

40%, overall)

Jobs Diagnostic

Step 1B:

Agriculture

Unpaid work

Non-farm self-employment

Wage work

Employers

InformalFormal

Profile of

Employers and Job Creating

Enterprises (household enterprises, informal and

formal enterprises)

Size

Age

Ownership

Sector /products

Formal/informal

Location

Performance

Working age not in labor force

Unemployed

Employed

Disaggregate each by:• Gender• Age• Income

decile• Rural /

urban• Educatio

n

Where data allows, look at dynamics over

time in how these profiles are changing

InformalFormal

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STEP 2A – CONSTRAINTS/OPPORTUNITIES FOR MORE JOBS

Jobs Diagnostic

Labor supply

constraints

Step 2a:Is growth

sufficient to create Jobs?

(real GDP growth >= LF

growth)

Sector composition of growth is too capital intensive

Labor demand

constraints

Labor market

matchingproblems

What’s the constraint? (Examples)

No

Consider Growth

Diagnostic

Why Not?

Yes

• Commodity boom (natural path)• Dutch disease• Tax policies favoring capital• Low availability of skills • Limited non-cognitive skills• 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

Is growth creating enough

jobs (whether formal

or informal

)?

No

Step 2b:Are betterJobs beingCreated?

Yes

• 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 ST impact of policy reform

• Limited information• Discrimination• Segmentation• Limited mobility – including

where trade and FDI are disruptive short-term

It is possible that causality runs from jobs to growth: ie jobless growth reduces demand which reduces production, savings, etc

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STEP 2B– CONSTRAINTS/OPPORTUNITIES FOR BETTER JOBS

Jobs Diagnostic

Step 2b:Are Better Jobs being created?

Productivity does not improve

within existing jobs; new jobs

are low productivity

Labor is not moving

across jobs, lack of

matchingReal

earnings not rising

with productivit

y

What’s the constraint? (Examples)

Yes

Step 2c:Are Jobs

Inclusive?

Why Not?

No

• Limited structural transformation• Lack of competition; lack of innovation• Limited trade (entry, product

diversification)• Limited creative destruction and

reallocation• Inadequate markets; limited scale

economies• Lack of investment, FDI• Low skills• Weak rule of law• Constraints to women’s

entrepreneurship

• Restrictive labor market policies• Geographic segmentation; limited migration,

urbanization• Land tenure / access• Housing • Societal norms, eg on gender participation,

ethnicity• Higher reservation wage , high search costs,

entry costs• Excess supply of skills • Substitutability capital for labor• Limited worker rights• Excessive labor flexibility• Informalization; many informal competitors

Worker vulnerabilitie

s are not addressed

• Working poor are a significant and not declining share of the labor force

• Lack of minimum labor standards• Minimal social protection, incl. anti-

discrimination• Low or variable earnings (self-employment or

wage)

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STEP 2C – CONSTRAINTS/OPPORTUNITIES TO INCLUSIVE JOBS

Jobs Diagnostic

Not Accessible to Poor or Bottom

40%

Step 2C:Are Jobs Inclusive?

Not accessible to women

youthdisadvantaged groups

What’s the constraint? (Examples)

Yes

Lesson Learning

Why Not?

No

• Lack of employability • Skills (cognitive, non-cognitive)

• Lack of mobility, transportation• High fixed costs of entry• Relative costs of household

responsibilities• Discrimination

• High costs of transport / child care (in MICs)

• Early family formation• Discrimination• Lack of experience (school to work

transition)• Lower education• Societal norms• High reservation wage• Insider / outsider connections• Unionization / apprenticeships• Limited infrastructure• Lack of information /

connectivity• Local skills • Limited access to input and

output markets

Lagging Regions

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STEP 3 – DEFINE PRIORITIES & IDENTIFY SOLUTION AREAS:

Jobs Diagnostic

Jobless growth

(need more)

Jobs created are low

productivity (need better)

Women or youth or ethnic

groups are not getting jobs (need inclusive)

• Improve labor productivity (overlap with “better” jobs) to stimulate hiring

• Facilitate diversification• Examine relative tax treatment of

capital and labor

• Expand access to markets• Expand competition• Facilitate formalization• Facilitate urbanization• Reduce entry costs• Improve employability and matching• Facilitate migration / immigration

• Improve school to work transition• Improve employability of excluded

groups• Defend equal opportunities • Regulate against discrimination

Step 3:From Country

Context,Performanceand FutureProjections

Identify Country

Jobs Challenges

Possible Solution Areas: Examples

Jobs Challenges

Choice of solutions should reflect underlying country context and specific constraints underlying challenge

Jobs CCSA is developing a `jobs catalogue’ to capture and curate jobs challenges and jobs solutions