Management of the World Bank thanks the Independent Evaluation Group for the report World Bank Support to Jobs and Labor Market Reform through International Development Association Financing: A First-Stage Evaluation and the opportunity to provide comments. The evaluation assesses the implementation of the International Development Association (IDA) jobs strategy through three interrelated channels: labor demand, labor supply, and labor market flexibility. Provision of jobs is a critical agenda for IDA countries, which are grappling with burgeoning youth populations and low-quality jobs with limited earnings. It is also particularly relevant to the evolution discussion as the World Bank scales up its impact on key development outcomes, including jobs, and is developing a new scorecard to better measure its results. Management welcomes the report’s overall positive findings of the World Bank’s performance across several areas during three IDA cycles from fiscal year (FY) 15 to FY22. The report has useful insights to inform the Mid-Term Review discussions of the 20th Replenishment of IDA (IDA20) scheduled for early December.

World Bank Management Comments

Overall

Management is pleased with the report finding that, since IDA17, there has been a clear IDA jobs strategy with strong analytical underpinnings and a discernible influence on country strategies. The report finds that most jobs diagnostics undertaken during the period have provided actionable recommendations tailored to country contexts, offered guidance on prioritization, and successfully informed Country Partnership Frameworks (CPFs). The report recognizes that there was significant engagement with countries affected by fragility, conflict, and violence through the development of a jobs framework for conflict-affected and fragile countries and projects emphasizing youth employment and the economic inclusion of displaced people. The report points to youth employment and productive inclusion projects bundling labor market supply-side interventions, representing an improvement since Independent Evaluation Group’s 2012 evaluation. The report also highlights a robust feedback loop between evidence from jobs diagnostics informing policies of subsequent IDA cycles. Management appreciates the report’s finding regarding the strong uptake of learning, particularly from impact evaluations. Also welcome is the increasing inclusion of gender-disaggregated indicators in jobs-focused projects.

Management welcomes the report’s appreciation of the operational changes in IDA programs and notes the areas for improvement. The report finds that there has been only a slight increase in the total number of jobs-related projects in the IDA portfolio. Management notes that the total commitments related to jobs-related projects have increased from $6.5 billion (IDA17) to $9.7 billion (IDA19)—a 50 percent increase. Management also notes the increase in the estimated number of jobs enabled by relevant prior actions in development policy operations and concurs with exploring the increased use of this instrument for the jobs agenda. The benefits of cross–Global Practice collaboration have been identified in the report, particularly among Agriculture and Finance, Competitiveness, and Innovation Global Practices, and the need for doing this on a broader scale is well recognized.

Other Comments

Management believes that comprehensive approaches that address both labor market supply- and demand-side constraints are more promising than stand-alone job-focused interventions, and IDA is moving in that direction. It is widely accepted that projects focused on labor supply-side interventions alone would not effectively lead to more and better jobs. Likewise, labor demand-side interventions alone may fail to achieve intended jobs outcomes, especially for the vulnerable and excluded. This recognition is leading to IDA projects taking a more comprehensive approach following the evidence from well-evaluated labor market interventions. Traditional projects that had relied only on support to technical and vocational education training institutions have shifted toward interventions that either bundle labor demand and labor supply interventions or are closely aligned with labor demand dynamics, or both.

The report points to limited outcome orientation in the intermediate IDA results measurement indicators. Management notes that Tier 2 of the IDA Results Measurement System (RMS) captures outputs or results achieved to date, not high-level outcomes. More broadly, some caution may be required with respect to the ability of individual projects to influence jobs outcomes at scale, given the number of factors that are at play in labor market outcomes. For CPFs, management notes that, with the implementation of the new CPF guidance since FY22, more attention is being paid to outcomes (high-level outcomes) rather than outputs, including in IDA countries. The proposed new World Bank Group Scorecard includes a jobs indicator that will incorporate a detailed methodology to capture direct job creation and estimate job induced impacts and labor outcomes enabled by policy reforms supported by development policy operations and Bank Group upstream support.

The nature and complexity of the jobs challenge in IDA countries is daunting and requires sustained cross-sector reform efforts. The immediate challenge for IDA countries is in improving the quality, job security, productivity, and earnings from jobs in “lower tier” or easy-access informal self-employment. These types of jobs may need fewer skills and little capital but they are seldom “good” jobs. Many self-employed workers in IDA countries are involuntarily self-employed as “entrepreneurs out of necessity,” working long hours for limited pay. Higher-paid jobs supported by improved productivity and technological innovation are good for long-term growth and are also more likely to encourage women and youth to join the labor force and learn on the job. While apprenticeships have been effective in some contexts, as noted in the report, they may not reach the most vulnerable workers in the informal sector or self-employed workers. Management relies on expertise from across the World Bank to address this complex agenda and will continue to explore more effective ways to address the agenda at the country portfolio level, underpinned by several (single or multi–Global Practice) projects.

Recommendations and the Way Forward

Management concurs with the recommendation to strengthen IDA’s RMS, which is in line with ongoing work on the new Bank Group Scorecard and associated upgrading of the Bank Group results architecture. The report proposes a set of relevant outcome indicators and improved monitoring and evaluation systems (both are priorities for the new Scorecard and associated work) and support for strengthening the country’s statistical systems (this has been an important policy commitment in IDA, and progress is being made, particularly in Sub-Saharan Africa). Management notes that the lack of good quality jobs data (which impacts the choice of indicators for operations and the Jobs and Economic Transformation RMS more broadly) may influence the pace of operationalization of the recommendation. As part of the Bank Group’s efforts to enhance the outcome orientation of corporate reporting, a results indicator called the “number of new or better jobs” has been proposed in the new Scorecard. A Bank Group working group has been set up to define a detailed methodology and how the various measurement challenges will be addressed, including capturing indirect or induced jobs, and estimated labor outcomes enabled by policy reforms supported by development policy operations and Bank Group upstream work. Once developed, this new Scorecard indicator will be embedded in relevant CPFs and project-level results frameworks. As part of the IDA21 strategic discussions in the coming year, management will explore opportunities to align IDA’s RMS with the new Scorecard.

Management agrees with the second recommendation on increasing the use of jobs diagnostics. As part of the effort toward strengthening the analytical basis, alongside the existing jobs diagnostics, the revamped Country Economic Memorandum, to be renamed Country Growth and Jobs Report, will be a core advisory services and analytics to help client countries design and implement a strategy to accelerate economic growth and job creation. The Country Growth and Jobs Report will include a diagnostic of the macroeconomic drivers of economic growth as well as the drivers of business performance and growth. These diagnostics will be followed by an in-depth analysis of key cross-cutting topics that influence economic growth and job creation. The report will conclude with options for policy reforms required to achieve sustainable and inclusive growth and will provide estimates of potential effects on growth and jobs. The Jobs Group will complement the Country Economic Memorandum findings with detailed jobs diagnostics feeding into country policy dialogue and CPFs and plans to roll out a strategic jobs framework for the forthcoming Jobs for Development report.