In many low- and middle-income countries, a persistent gap exists between economic growth and the creation of stable, formal wage employment. While output expands and investment occurs, job growth in the formal sector remains sluggish. This trend, documented by institutions like the World Bank and the International Labour Organization (ILO), results in persistently high levels of labor informality, where workers lack social protections and job security.
The phenomenon is often described as "jobless growth," where economies expand without generating a proportional increase in quality jobs. Key factors include technological changes that favor capital over labor, skills mismatches where the workforce's abilities do not align with new market demands, and regulatory environments that may discourage formal hiring. The conversion of economic output into decent work is thus a critical structural challenge.
Recent analyses, including the World Bank's "World Development Report 2023: Migrants, Refugees, and Societies," highlight how demographic pressures and urbanization in these regions intensify the need for job creation. The ILO's "World Employment and Social Outlook: Trends 2024" report also notes that global unemployment is expected to rise slightly in 2024, with existing deficits in decent work likely to persist, underscoring the ongoing nature of this structural issue.
Addressing the gap requires targeted policies beyond stimulating aggregate demand. Experts emphasize the need for strategies that enhance productivity in sectors that employ the majority of the workforce, improve education and vocational training systems, and create incentives for businesses to formalize their operations and hire workers with proper contracts.
