Economic development, growth and employment

Combating unemployment and underemployment

Trainees at the Siripi Youth Skills Training Center in the Rhino refugee settlement in Uganda

Unemployment and underemployment are two of the main causes of poverty among broad sections of the population in developing and transition countries. According to the figures of the International Labour Organization (ILO), more than 190 million people around the world are unemployed. Women and young people are disproportionately affected by unemployment, underemployment and poor working conditions (the "working poor" as they are termed) – and all too often there is no social safety net in place.

The global financial and economic crisis has exacerbated these problems. The world is facing the challenge of creating more than 600 million additional decent jobs over the next ten years so as to provide employment for young people entering the labour market.

Economic development is an essential precondition for overcoming unemployment and underemployment. It must, however, be taken into account that the reasons for an unsatisfactory employment situation are many and diverse, and vary from one country to another. They can include constraints on both the supply and the demand side of the labour market, as well as ineffective labour market institutions and unfavourable economic conditions on the ground.

Deficits in the areas of supply, demand and job placement

Very often, the development prospects of the private sector – which has demand for labour – are affected by a poor business and investment climate, limited access to capital or lack of capacity in the public sector. And the workers – who offer their labour – frequently have inadequate access to education. Moreover, existing training systems and schemes are not particularly effective and not in line with the needs of the private sector. 

In addition, the matching processes in the labour market are often inefficient. Labour market information is not collected consistently, responsible institutions do not work effectively. As a consequence, vacancies often cannot be filled with suitable, qualified candidates, despite high levels of unemployment.

Effective job promotion measures, therefore, need to target all three areas.

The integrated approach in German development cooperation

Germany supports the governments of developing countries and international organisations in designing and implementing pro-employment development strategies. In its development cooperation, Germany pursues an integrated approach to employment promotion, which essentially embraces three complementary aspects:

  • Targeting companies' demand for labour by creating decent, new, productive jobs, with support consisting primarily of the delivery of economic-policy advisory services, private sector promotion measures and financial systems development;
  • Targeting the supply side, i.e. the quality of work offered by workers, by improving the employability of job-seekers through vocational training and upskilling, including programmes that address specific problem groups (e.g. non-formal training courses for disadvantaged young people);
  • Improving the coordination of supply and demand on the labour market by means of effective careers advice and guidance, job placement services and labour market information.

Before using these instruments, a thorough analysis of the obstacles to employment in certain regions and sub-markets of a country has to be performed. Only then, and based on the findings, can these instruments be used to address these obstacles in a targeted manner.

With the adoption of the 2030 Agenda for Sustainable Development in 2015, the global community set itself 17 goals, with SDG 8 being the promotion of decent jobs and economic growth. This reflects the understanding that economic growth must go hand in hand with the creation of a sufficient number of decent, high-quality jobs. Employment can deliver many positive impacts for individuals and for social development and also contribute to achieving other goals of the 2030 Agenda.

German development cooperation is aimed not only at generating more jobs in partner countries, but also at improving the quality of the jobs available. Those working in the informal sector in particular are frequently forced to work under dangerous conditions that constitute a health hazard. The essential legal framework is not in place and workers have few opportunities to demand their rights. As a general rule their income is not sufficient to allow them and their families to live in dignity. In line with the International Labour Organization's concept of decent work, the German government, in addition to promoting employment, endeavours to enhance social protection, ensure that core labour standards are respected, and improve the dialogue between employers and the workforce.

Special Initiative on Training and Job Creation

About 20 million additional jobs are needed every year to give Africa's youth better prospects for the future. At the same time, Africa's attractiveness for companies and investors keeps growing. Key factors in this regard are a young population, increasing availability of labour and skilled workers, rising purchasing power, new distribution markets and integration into global supply chains.

That is why the Federal Ministry for Economic Cooperation and Development (BMZ) is working to foster the business activities of German, European and African companies and investors in Africa under its Special Initiative on Training and Job Creation.

The goal is to create 100,000 decent jobs and 30,000 training places and to improve working conditions for people on the ground - as a contribution towards implementing the Marshall Plan with Africa and the G20 Compact with Africa.

You can find more extensive information on the Special Initiative here.

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