IFC cites major obstacles to jobs in developing nations

MANILA, Philippines - The International Finance Corp. (IFC), the private investment arm of the World Bank group, has identified four major obstacles standing in the way of developing nations to create more meaningful employment.

“Removing these obstacles can significantly increase job creation,” the IFC said.

These obstacles are: a weak investment climate; inadequate infrastructure; limited access to finance for micro, small, and medium enterprises (MSMEs); and insufficient training and skills.

IFC executive vice president and chief executive officer Jin-Yong Cai said joblessness is “a global crisis that is especially urgent in the poorest countries.”

“As the world’s largest development institution focused on the private sector, we believe that job creation offers the surest path out of poverty. Promoting it in developing countries is a top priority for us,” Jin-Yong said.

About 200 million people are unemployed globally. The World Bank estimates that 600 million jobs must be created by 2020, mainly in developing countries, just to keep up with population growth. The answer lies with the private sector, which provides nine out of every 10 jobs.

The study, “Assessing Private Sector Contributions to Job Creation,” also cited other obstacles that stood in the way of quality job creation.

One of the major contributors to economic growth is MSMEs which generate the most jobs in developing countries.

Unfortunately, they are also less productive, pay less, and do not offer as much training and development opportunities for employees. Smaller companies are also often most affected by obstacles to job creation, meaning they are unable to grow to their full potential.

The IFC said one of the key constraints for MSMEs is access to finance. There are 23 million MSMEs globally in 2011, which in turn employed over 100 million people.

The study found that 45 million people enter the work force each year. Yet more than a third of companies studied across the globe were unable to find employees with the skills that they needed. 

The study indicated that the largest numbers of jobs are created within companies’ supply and distribution chains. For every job created within the company, more than 20 were created in the supply and distribution chains.

The IFC study likewise cited other constraints including: lack of power; and a bias or discrimination on women and youth, in terms of jobs or job options.