Rethinking our Current Approach: Starting with the Problem

1. Wendy Cunningham & Laura Sanchez Puerta Skills & Employability for the 21st Century Workshop World Bank June 8, 2009 Rethinking our Current Approach: Starting with the Problem

2. Challenge • Assist clients to improve • Employability: a person’s ability to get and keep a job (employment or entrepreneurship) • Efficiency in job matches: workers find high quality jobs conditional on internal and external factors • Two questions • What are the constraints (to employability/ efficiency)? • What are the interventions to address these constraints?

3. Assumptions for this presentation • Take as given • Macroenvironment • Investment Climate • Labor Regulation • Formal Education System • Focus on programs/interventions • Methodology: evolving constraints-incentives framework, applied in LAC and Africa

4. A bit of search theory Has in mind a job & wage he is willing to accept Has a set of skills Has in mind a set of skills she needs Has in mind a wage, she is willing to offer

5. A bit of search theory Has in mind a job & wage he is willing to accept Has a set of skills Has in mind a set of skills she needs Has in mind a wage, she is willing to offer

6. Where is the breakdown? Propose 5 categories of constraints to market clearing

7. I. Skills Mismatch constraints Constraints Intervention Is the missing factor • Technical skills • General skills • Life skills Caribbean: Employers’ assessment of most desired skill set Source: Blom and Hobbs( 2007)

8. I. Skills Mismatch constraints Constraints Intervention Is the missing factor • Technical skills • General skills • Life skills • Demand-driven, comprehensive voctec+lifeskills+internship training programs • Information on returns to skill investments • 2nd chance education programs Caribbean: Employers’ assessment of most desired skill set Source: Blom and Hobbs( 2007)

9. II. Job Matching constraints Constraints Intervention Many workers use informal mechanisms to find jobs (Peru) Source: Cunningham et. al. 2008.

10. II. Job Matching constraints Constraint Intervention More importantly (?) many employers use informal employee search mechanisms (Sierra Leone) Source: Peeters, et. al. 2009

11. II. Job Matching constraints Constraints Intervention More importantly (?) many employers use informal employee search mechanisms (Sierra Leone) • Employment offices with social workers (for both clients) • Web-based job information boards Source: Peeters, et. al. 2009

12. III. Signaling Skills to the LM Constraints Intervention • It is costly to hire workers (because it is costly to fire them) • Few good ways to signal skills • School certificate • Held a previous job

13. III. Signaling Skills to the LM Constraints Intervention • It is costly to hire workers (because it is costly to fire them) • Few good ways to signal skills • School certificate • Held a previous job • Skills certification/ Skills Qualifications Framework • Training center accreditation

14. IV. Capital Constraints Constraints Intervention Constraints to starting a business? • Financial capital • Social capital • Human capital

15. IV. Capital Constraints Constraints Intervention Constraints to starting a business? • Financial capital • Social capital • Human capital • Micro-finance • Entrepreneurship mentoring • Entrepreneurship training • Bundled? Share of each age group in each sector, 1st quintile (Brazil) Source: Cunningham, et. al. 2008

16. V. Insufficient Labor Demand Constraints Intervention • No growth/restrictive labor legislation • Too costly to hire

17. V. Insufficient Labor Demand Constraints Intervention • No growth/restrictive labor legislation • Too costly to hire • Public works/service + training (SR) • Wage subsidy for low productivity workers

18. Pulling it all together: Evidence-based ALMP in response to employment barriers

19. Conclusions & Next Steps • We can conclude • Many different constraints may interrupt the job match process • Probably more than one constraint at play in any country/for any target group … what are they? • We have some ideas about interventions • Moving forward • Develop diagnostic tools & identify the constraints that are most important in specific contexts • Continue to build the knowledge base of effective interventions

20. We welcome your feedback • When applying the framework to your region • Are there constraints that we missed? • Is there diagnostic literature that we missed? • Are there interventions that we should be aware of? Wendy: Wcunningham@worldbank.org Laura: Msanchezpuerta@worldbank.org

21. References • Betcherman, Gordon, Martin Godfrey, Susana Puerto, FriederikeRother, and AntonetaStavreska “A Review of Interventions to Support Young Workers: Findings of the Youth Employment Inventory” SP Discussion Paper #715 (World Bank) • Blom and Hobbs( 2007) School and Work in the Eastern Caribbean: Does the Education System Adequately Prepare Youth for the Global Economy? (World Bank: Washington, DC) • Cunningham, Wendy, Lorena Cohan, Sophie Naudeau, and Linda McGinnis. 2008. Supporting Youth at-Risk: A Policy Toolkit for Middle-Income Countries (World Bank) • Cunningham, Wendy, Linda McGinnis, Rodrigo Garcia-Verdu, Cornelia Tesliuc, and DorteVerner (2008) Youth at-Risk in Latin America and the Caribbean: Understand the Causes, Realizing the Potential (World Bank: Washington, DC). • Peeters, Pia, Wendy Cunningham, Arvil van Adams, and GayatriAcharya (2009) Youth Employment in Sierra Leone: Sustainable Livelihood Opportunities in a Post-Conflict Setting (World Bank: Washington, DC) • Puerto, Olga (2007). “Learning from International Experience: The Youth Employment Inventory” (World Bank: Washington, DC) • Sanchez Puerta, Laura. 2008. “Managing Labor Market Risks and Creating Better Jobs: Alternative Designs for Income Protection and Active Labor Market Policies” (manuscript) • Katz, Elizabeth. 2008. “Programs Promoting Young Women’s Employment: What Works?” http://siteresources.worldbank.org/INTGENDER/Resources/GenderYouthEmploymentKatz.pdf