Assessing private sector contributions to job creation and poverty reduction
IFC, the largest global development institution focused on the private sector in developing countries, has completed a study on job creation by the private sector. High levels of unemployment, especially among youth, and large numbers of low-quality jobs are problems in developing countries around the world, and therefore creating more and better jobs is an urgent priority. Jobs are much more than monetary income; they are the cornerstone of development. Jobs boost living standards, raise productivity, and foster social cohesion, and they are the main path out of poverty. Currently 200 million people are unemployed globally, and the unemployment rate for youth is more than 2.5 times higher than that of adults. By 2020, 600 million jobs must be created in developing countries—mainly in Africa and Asia—just to accommodate young people entering the workforce. The private sector provides 9 out of 10 jobs in developing countries, and therefore plays a key role in creating the new jobs needed and fostering growth. It is crucial to understand the constraints that prevent the private sector from growing and generating jobs.