PS. Explain This: The Urban Employment Challenge

PS. Explain This: The Urban Employment Challenge

Since the start of the Industrial Revolution, the promise of greater economic opportunity has been the most potent driver of urbanization. But many cities today are failing to deliver on that promise. Globally, labor forces are growing fast. Sub-Saharan Africa’s workforce grows by about eight million people per year. South Asia’s grows by one million each month. According to the International Labor Organisation, between 2015 and 2025, 1.2 billion new entrants will join the labor market worldwide. Most of the new jobs will have to be created in cities. But for that to happen, major obstacles will have to be overcome – beginning with achieving overall growth that is both strong and sustainable. For example, economists have predicted that Pakistan will require 9% GDP growth to employ its under-20 population of some 90 million people. Yet growth barely exceeded 5% last year. GDP growth is only the first step. People also need the right education and training to compete in rapidly evolving job markets. In India, for example, millions of children technically complete their education, but without mastering basic reading, writing, and math skills. India’s government predicts that it will have to train 500 million young people by 2022, and yet the country has only 15,000 schools to do the job. India is not alone. Many firms report that they have difficulty finding the skilled workers they seek. As technology continues to transform economies, the need for quality education and broadly accessible lifelong learning programs will only increase. The fast-growing supply of urban workers, combined with inadequate regulatory frameworks, has also contributed to a rise in part-time and temporary work. In South Africa, temporary workers already comprise about 7% of the labor force, with the temporary staffing industry providing employment to 410,000 workers per day, on average. And the rates are rising. This is a worrying trend, because temporary and part-time workers are far more likely to lack employment benefits, legal protections, and job security. Women, in particular, face lower earnings in temporary positions. And temporary workers are less likely to contribute to pension funds or health insurance, diminishing their long-term economic prospects. Workers in the informal economy are even more vulnerable. In Indonesia, the effects of the 2008 economic crisis were ostensibly mild, yet informal workers suffered the most, as many lost their only source of income. The world’s failure to address the urban jobs challenge adequately is reflected in rising urban poverty. In the developing world, the share of poverty located in urban areas jumped from 17% in 2002 to 28% a decade later. The fastest urbanization of poverty has occurred in Latin America, where the majority of the poor now live in cities. Higher poverty rates exacerbate virtually every other urbanization-related challenge, including public health, transport, and law enforcement. That is why successful urbanization demands a reexamination of regulatory frameworks and social safety nets. Continued urbanization is certain. What remains to be seen is whether labor-market management will improve fast enough to enable cities to fulfill their development-boosting, poverty-reducing potential.

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About the Author: Oren Garnes


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