the world of work: employment, entrepreneurship … · the world of work: employment,...

The World of Work: Employment, Entrepreneurship and Job Creation | MERCY CORPS 1

OverviewJobs. From Africa to the Middle East and across the Americas, adults and youth alike are searching for meaningful work and a decent income. Global unemployment figures are staggering with rates reaching as high as 50% in countries like Yemen. Particularly for those in the developing world, and especially for youth and women, the prospects of finding steady, equitable, and productive work are severely limited or are accessible by only a small portion of the population. In 2012, close to 75 million youth worldwide were unemployed.1 In that same year, a total of 621 million youth were not involved in education, employment or training.2

1 Global Employment Trends for Youth 2012. May, 2012. Geneva: International Labour Organization.

2 World Development Report on Jobs. World Bank, 2013.

Over the past few years, economic inequality and inadequate job opportunities have fomented tensions across the globe, spurring movements such as the Arab Spring and Occupy Wall Street. Although governments and the international development community have responded to the jobs challenge in various ways, what most agree on is this: Unemployment is a critical issue in developed and developing countries alike. Failure to address these issues now will impact the global economy for years to come.

MERCY CORPS’ THEORIES OF CHANGEMercy Corps views the employment challenge as an opportunity rather than a crisis. Our Theories of Change reflect the importance of finding local, sustainable solutions to widespread unemployment and promoting efficient and effective labor market systems rather than short-term interventions.

THE WORLD OF WORK:Employment, Entrepreneurship and Job Creation Strategy and Principles


If job creation occurs alongside building transferable skills and market-driven technical skills, individuals are more likely to secure productive, equitable and steady employment.

To improve the economic situation of individuals, we must first ensure that programs and interventions are responding to the actual needs of the market and availability of jobs. All technical and business trainings must respond to market demands and reflect the needs of potential employers. Furthermore, Mercy Corps believes that employability and skill-building activities (supply) must occur hand-in-hand with job creation initiatives (demand). We cannot train individuals for work and place them in jobs that do not exist. Complementing market-driven technical skills, jobseekers need transferable or life skills (such as effective communication, financial literacy, etc.) to assist them in finding steady employment and navigating other life transitions.

If aspiring entrepreneurs/self-employed have access to inputs and appropriate services and operate a sound business concept within an enabling environment, they are more likely to achieve success in starting, maintaining, and growing a profitable business.

Many individuals are interested in entrepreneurial opportunities. However, in environments which lack adequate services, training, and mentors, this path can be difficult. Youth and women often face unique challenges in starting a business. Appropriate

services (such as financial services) must complement a supportive enabling environment (ease of registering businesses, etc.) to allow more individuals to succeed as entrepreneurs. Additionally, aspiring entrepreneurs must have well-researched business concepts and possess the acumen to make sound business decisions.

KEY PRINCIPLES OF OUR EMPLOYMENT, ENTREPRENEURSHIP AND JOB CREATION APPROACH 1. Start with the Market: Any program focused on improving labor market outcomes must first understand the current environment. Market assessments are the first step to designing impactful employment, entrepreneurship, and job creation programs. These studies will identify both the supply side factors (current skills of jobseekers, quality of vocational training, etc.) and the demand side issues (skills in demand by local employers, hiring trends, etc.) Additionally, an effective labor market assessment must analyze the informal and formal rules that promote or prevent positive labor market outcomes. For example, assessments may unconver gender and cultural norms that govern labor markets, such as the status of women in the workforce and any social, cultural or religious barriers that prohibit them from equal partcipation. Assessments should also study the larger regulatory environment (labor laws, etc.) as it pertains to employment and entrepreneurship. Only after determining the contraints and opportunities in larger market systems should programs be designed.

If the trends of the past decade continue, Africa will create 54 million new, stable wage-paying jobs over the next ten years—but this will not be enough to absorb the 122 million new entrants into the labor force expected over the same period. (McKinsey & Company 2012)

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SUPPLY

Productive,Equitable,

SteadyEmployment/

Self-employment

JobseekersSocial

capital and networks

Perceptions of jobseekers (youth, women, etc.) as employees

Availability of jobs Formal and informal financial services

Market information

Employment-related services

Technology

Job safety

Financial education

Mentoring services

Market-driven skillstraining

Informal norms including

gender norms

National labor policies

Government regulation of

formal businesses

Private Sector Local market actors

Informalnetworks

Government(Ministry of Labor,etc.)

DEMANDCOREFUNCTION

Labor Market System

Business support services

Job security

SUPPORTING FUNCTIONS

RULES

UNDERSTANDING LABOR MARKET SYSTEMS

2. Address Supply (Technical and Transferable Skills) and Demand (Job Creation): Unemployment is often a result of myriad compounding factors, including the mismatch between jobseekers’ skillsets and employers’ needs. Traditional employment programs often work to increase income by buildling skills through vocational training or other non-formal education initiatives. However, this supply-side approach is often not synced with the needs of the market and may overlook the fact that the primary constraint may be a lack of appropriate, available jobs. Even a sophisticated, highly-educated population will struggle to find work if the right jobs simply do not exist. After market analysis, Mercy Corps facilitates demand side (job creation through targeted private sector development) and supply side (training based on local needs) initiatives. Mercy Corps’ approach to job creation involves assisting the

strengthening and expansion of businesses with high potential for creating employment.

3. Strengthen the Informal Sector: Mercy Corps frequently works with populations operating in the informal economy rather than the formal economy.3 The constraints of the informal economy can include poor job security, irregular and inconsistent working hours, indecent and unsafe working conditions, and lack of access to formal financial services. Although much depends on context, Mercy Corps does not aim to simply transition all informal businesses and workers into the formal sphere, as sometimes this is 3 According to the World Bank, the informal economy encompasses activities

and income that are partially or fully outside government regulation, taxation, and observation. In the Mercy Corps context, the informal economy refers to largely unregistered small enterprises, generally employing few people (e.g., under 5). The informal economy may include work within the agricultural sector, although formal enterprises also exist in this sector.


While we often promote self-employment and entrepreneurship, we do not see these pathways as a panacea to a lack of jobs. Instead, we recognize that three conditions must be in place to support successful, sustained self-employment and entrepreneurship:

• Individuals must demonstrate soundbusiness acumen and a viable, thought-out concept.

• Individuals should have access toappropriate services, such as financial services.

• Individuals should operate withina supportive enabling and regulatory environment.

When the above factors are aligned, Mercy Corps supports self-employment and entrepreneurship. However if one of the elements is not present, our interventions may not only be unsuccessful but may also exacerbate the frustrations of aspiring entrepreneurs. For example, in countries where the regulatory environment presents seemingly insurmountable obstacles (such as inability to register new businesses) we should not promote

not feasible or possible. We recognize that many informal market actors can benefit from a more organized and productive informal economy. Mercy Corps often enables these actors to build internal systems and processes, links businesses owners to trade groups or unions, facilitates access to both formal and informal financial services, and increases their access to market information. Through the process of strengthening these businesses, we may recognize opportunities to assist them in moving to the formal sector and may help them to register their businesses with the government, etc.

4. Understand Entrepreneurship: Mercy Corps recognizes the power that the self-employed and entrepreneurs play in a labor market – we know that strengthening new and existing businesses and enabling them to diversify, grow, and expand is the true pathway to real private sector job creation. We believe that the new business owners of today can be the employers of tomorrow. However, we know these pathways can be difficult and risky. Due to both necessity and opportunity, many individuals turn to self-employment and entrepreneurship to meet their income needs.

Jobs: More than IncomeMercy Corps understands that jobs are more than just income – they often represent status, a place of belonging, and a sense of purpose and meaning for many individuals. When individuals are not working, the situation may also have deep personal, social, and cultural impacts, in addition to affecting economic status. According to the World Development Report 2013, “Jobs are transformational… Jobs are more than just the earnings and benefits they provide. They are also the output they generate, and part of who we are and how we interact with others in society. Through these outcomes, jobs can boost living standards, raise productivity, and foster social cohesion.” (World Bank)

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and illegal, such as involvement in the narcotics trade, commercial sex work, or paid participation in militant movements. Although the types of jobs vary in any economy, Mercy Corps promotes legal, decent work which does not threaten the positive growth of an individual, community, or society.

• EQUITABLE WORK: In many countries, a vastinequity exists between salaries and benefits for people with diverse characteristics and demographic profiles. This is especially true for women – where they perform the same duties and tasks as men but with a lesser title and lower wages. Mercy Corps believes in equitable work, where salary and wages are based on responsibilities and tasks, regardless of gender, age, ethnic background, etc.

• STEADY WORK: Entering the labor market, orfinding that first job, is often the most difficult part of productive participation in an economy. While multiple income streams and short-term and seasonal work are often necessary (particularly in informal and/or agriculture-based economies), we believe that enabling individuals to find long-term, steady work is critical to ensuring that they play a continual, active role in the labor market. When possible, Mercy Corps promotes work opportunities that are stable and secure.

entrepreneurship without also aiming to address these larger enabling environment constraints.

5. Combine Relevant Technical + Transferable Skills: Individuals need demand-driven skills so they can fill gaps in the local economy. Mercy Corps understands the needs of local employers and then facilitates technical training opportunities through existing vocational or other training centers. In addition to promoting sector-specific skills, Mercy Corps understands the importance of transferable, or life skills, which often include effective communication, leadership, and decision-making skills. Today’s employers place a strong and sometimes higher emphasis on these skills which are often not taught in formal education systems. Transferable skills are critical in conflict and post-conflict environments where many individuals may have a limited or non-existent employment history. Employability programming will include a blend of demand-driven technical skills training with transferable skills development so that jobseekers are fully equipped to enter the labor market as competitive candidates.

6. Promote Productive, Equitable and Steady Work: Through an approach which supports sustained positive outcomes, Mercy Corps specifically promotes work that is 1) productive, 2) equitable, and 3) steady.

• PRODUCTIVE WORK: The inability to finddecent jobs can drive individuals towards work that is dangerous, exploitative,

Work can be informal.Dima Halke, 49, sells milk near Yabello, Ethiopia. Her business, while informal, provides the only stream of income supporting her eight children. Mercy Corps works to support small, informal businesses around the globe.

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FULL-TIME EMPLOYMENT

PART-TIME EMPLOYMENT

SEASONALEMPLOYMENT

SELF-EMPLOYMENT

ENTREPRENEURSHIP

FORMAL

INFORMAL

TYPES AND CATEGORIESOF EMPLOYMENT

Definitions: How we define the world of workEmployability: A set of skills (technical and soft), knowledge and competencies that enhance a worker’s ability to secure and retain a job, progress at work and cope with changes in the working environment. For example, vocational training can increase employability.1

Employment: Employment entails labor agreements that generate income in the form of a wage or salary in exchange for a service provided. Employment can include self-employment and farming. Employment can be informal or formal.2

• Full-time employment: Ongoing employmentin which a person works a minimum number of hours as defined by the Ministry of Labor/local government or his/her employer. Full-time employment and number of hours worked varies by context.

• Part-time employment: Ongoingemployment where hours worked are less than full-time counterparts or less than normal for the context.

• Seasonal employment: When the timingand duration of the labor contract is significantly influenced by seasonal factors such as weather cycles, public holidays and/or agricultural harvests. Seasonal employment can be part-time or full time.

What is not employment creation? Cash-for-work or similar short-term emergency or humanitarian interventions and the provision of tools and start-up materials to an entrepreneur.

1 International Labour Organization. 2 Mercy Corps economic programming adheres to local labor laws regard-

ing age requirements and working conditions, etc.

Self-employment/entrepreneurship: Being self-employed is the act of generating one’s income directly from customers, clients or other organizations as opposed to being an employee of a business (or person). Self-employment can include work in agriculture. We differentiate between necessity driven self-employment (those who start a business to sustain their livelihood by necessity) and opportunity driven self-employment (those who pursue a perceived opportunity and choose to start their own business, despite having the option of generating an income through employment elsewhere at the time of starting or considering to start a business).3

Entrepreneurs are a sub-set of self-employed persons who seek to generate value, through the creation or expansion of economic activity, by identifying and exploiting new products, technologies, processes or markets.4

Job creation: Employment creation or job creation is the process of generating new wage employment positions in an economy. Mercy Corps promotes job creation by working with high-potential existing businesses to diversify, expand, and grow.

3 International Labour Organization. 4 Organization for Economic Cooperation and Development.


constraints of young people and develops interventions accordingly. For example, our youth entrepreneurship programs frequently include mentoring or one-on-one coaching components.

2. Employment impacts social norms: In some cultures, young men and women cannot marry without the status of a job, a steady income, or a dowry. When young men cannot find jobs, their other status-associated life transitions (marriage, children, etc.) can be delayed, leading to a shift in traditional social and cultural structures.5 In the Middle East, this often means that young men are living at home longer, increasing their dependency on aging parents and exacerbating economic strains on households. In contrast, the importance of delaying marriage for girls and ensuring equal and appropriate economic opportunities is clear – closing the joblessness gap between girls and their male counterparts can yield an increase in GDP of up to 1.2% in a single year.6 Understanding the nuances of cultural and gender norms and their interplay with economic status in each context is crucial to developing effective economic programs for youth.

3. Youth + technology: Worldwide, youth are demonstrating their ability to navigate a wide range of technology. Additionally, hard-to-reach, rural populations benefit from the connectivity opportunities provided by mobile phones and other forms of technology. For example, many young people now have unprecedented access to education and training opportunities through Massive Open Online Courses (MOOCs). In additional to improving the ways youth learn, technology is also expanding the pool of available jobs. Digital jobs are opening doors for youth to enter the global labor market. For these reasons 5 Brookings Institute, Pursuing a Positive Agenda for the Middle East.6 Chaaban, Jad and Wendy Cunningham. ‘Measuring the Economic Gain of

Investing in Girls: the girl effect dividend,’ World Bank 2011.

SPECIAL FOCUS ON YOUTHIn addition to high unemployment rates, many of the countries where Mercy Corps operates are also experiencing surging youth populations. In Uganda, more than 75% of the population is under the age of 30 and it is estimated that 70% of the youth population is currently underemployed or unemployed.4 Youth unemployment has become a significant concern for governments, young people, economists, NGOs, donors, and the private sectoractors alike. The issue of youth employment is one that can have major implications on stability and the preservation of social structures. Mercy Corps believes younger generations must play an active role in shaping and maintaining economic progress. We invest in youth because they represent a powerful source of hope, determination, and resilience, with the ability to drive lasting change. Youth are the entrepreneurs and innovators of today, and they are the employers and economic leaders of the future.

Same Strategies, Different TacticsThe strategies outlined above also apply to youth, but our tactics and approach are different. Young people (ages 15-24) face many unique life transitions, challenges, and opportunities which are not also experienced by adults. Therefore, our youth employment work must be thoughtful, strategic, and nuanced. The ways we work to increase successful and sustainable youth participation in labor market systems often include an understanding of the following:

1. Targeted Entrepreneurship Support: : Young people may be more willing than adults to take on risks like starting a business. Yet, they also face unique challenges in self-employment and entrepreneurship such as accessing loans and registering their businesses, as banks and governments frequently enforce age requirements. Young people can also lack the professional networks and previous experience needed to start and manage a successful business. Mercy Corps takes into consideration the specific

4 World Bank. Health and Nutrition Population Statistics, 2012.

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and more, we integrate technology into our youth economic empowerment programs. Smart phones, mobile payment systems, and the wide reach of the internet are revolutionizing the way youth connect with the world and one another and should be leveraged to promote more accessible income opportunities.

4. The Importance of Safe Work: In addition to productive, equitable, and steady work, we place additional emphasis on promoting safe work for youth. This is particularly important for refugees, Internally Displaced People (IDPs), and young women and may focus on improving security related to transportation, ensuring safe sanitation facilities, and including female mentors in the workplace.

5. Focus on Transferable Skills: Our work with youth places a strong emphasis on developing universal transferable skills, particularly in programs focused on increasing employability. Particularly for youth with limited education and those impacted by conflict, these skills may not have been addressed, strengthened, or honed. Employers often value these skills as much as technical skills and formal education. Mercy Corps promotes transferable skills development in all youth programs, but particularly alongside interventions which focus on increasing employability.

6. Increasing Social Capital: Youth often have limited professional and social networks which

hinder their opportunities to find work. Nepotism and hiring ‘those you know’ are pervasive practices in cultures across the globe. Young people, especially those who are marginalized due to age, gender, ethnic background, and economic status, often struggle to make their initial entry into the labor market without personal connections. Internships, mentoring, and engaging youth in labor market assessments can be important strategies for strengthening social networks and building professional relationships. Increases in social capital can put youth on a positive pathway by providing role models and new opportunities for learning, working, and accessing information.

7. Youth-led Labor Market Assessments: Youth are often unaware of local market activities and thus have unrealistic expectations about viable income opportunities. Inaccurate knowledge of labor markets can cause youth to invest scarce resources in skills building which ultimately does not result income generation and is not tied to the needs of the market. Mercy Corps facilitates youth-led labor market assessments so that young people can 1) gain firsthand knowledge on job openings, skills in demand, and high potential growth sectors; 2) increase social capital via interactions with local private sector actors; and 3) build skills in effective communication and market research.

ABOUT MERCY CORPSMercy Corps is a leading global humanitarian agency saving and improving lives in the world’s toughest places. With a network of experienced professionals in more than 40 countries, we partner with local communities to put bold ideas into action to help people recover, overcome hardship and build better lives.

TARA NORONHA

Advisor Economic and Market [email protected]

SASHA MUENCH

DirectorEconomic and Market Development [email protected]

CONTACT

45 SW Ankeny StreetPortland, Oregon 97204888.842.0842mercycorps.orgCover Photo: K. Lynch for Mercy Corps

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