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World Bank Support to Jobs and Labor Market Reform through International Development Association Financing

Report to the Board from the Committee on Development Effectiveness

The Committee on Development Effectiveness met to consider the Independent Evaluation Group (IEG) evaluation World Bank Support to Jobs and Labor Market Reform through International Development Association Financing: A First-Stage Evaluation and the draft management response.

The committee welcomed the report and noted that, while limited in scope, IEG’s first-stage early assessment of World Bank support to the jobs and labor market through International Development Association (IDA) financing provided a timely narrative and helpful inputs to inform the upcoming Mid-Term Review of the 20th Replenishment of IDA (IDA20) slated for December 6–8, 2023. Members welcomed IEG’s findings, noting that IDA support has helped address significant knowledge gaps, that jobs interventions were also well designed and relevant to the jobs objectives, and that IDA policy commitments adapted well to reflect learning from jobs diagnostics that have contributed to a better articulation of jobs-related objectives in Country Partnership Frameworks and operational work. From IEG’s findings, members also noted that performance ratings of closed projects were slightly better than those of the rest of the IDA portfolio; that integrating supply- and demand-side interventions—as recommended by jobs diagnostics and IDA Strategy—has proven challenging; that the IDA jobs strategy’s promise of improved results measurement has yet to be fulfilled; and that IEG can say little about jobs outcomes of IDA-financed interventions.

Members commended management’s preparedness to address the challenges identified by the evaluation and the commitment to enhance support for job creation in IDA countries. They noted their agreement with IEG’s recommendations aimed at strengthening measurement of IDA’s contribution to the jobs agenda given the identified weaknesses in the results framework, which largely track outputs rather than outcomes. They expressed concerns regarding the inadequate measurement of results and limitations in data availability and welcomed the World Bank’s response to this including efforts to enhance support for countries’ statistical systems in building capacity to strengthen data coverage and quality to effectively measure jobs and labor market outcomes. They also encouraged management to work closely with development partners in this regard.

Given that the adoption of jobs-related objectives in IDA17 was largely motivated by the view that rising inequality was undermining progress in poverty reduction and other Sustainable Development Goals, and considering that extreme poverty and inequality remain widespread, members highlighted the importance of systematically leveraging jobs diagnostics to inform IDA’s interventions on job creation, and appreciated management’s response to addressing this issue including through efforts to capture direct job creation in the new Corporate Scorecard. In addition, they urged management to enhance incentives underlying the results frameworks as part of the ongoing work on outcome orientation and on the Corporate Scorecard and to give greater attention to country statistical capacity to improve the quality of data needed to estimate labor market developments and to inform related policy. They expressed support for management’s plan to rename the World Bank’s detailed analysis of a country’s economic developments, prospects, and policy agenda from Country Economic Memorandum to Country Growth and Jobs Report, to strengthen the link between jobs diagnostics and country-level operations.