JOBS NOTES Issue No. 8 ADAPTING JOBS POLICIES AND PROGRAMS IN THE FACE OF ACCELERATED TECHNOLOGICAL CHANGE KEY MESSAGES ¬ Rapidly changing technologies are disrupting labor ¬ Ineffective labor regulations raise labor costs, markets, posing significant risks to those with while current social protection models leave too insufficient and inadequate skills. many of the most vulnerable behind. ¬ Improving access to digital infrastructure and ¬ The World Bank Group (WBG) is investing widely in affordable broadband will enable people to find human capital to increase labor skills, while jobs, innovate, and compete. promoting reforms to increase digital access and ¬ Developing countries with high informal social assistance, including for informal workers. employment need policies to increase worker ¬ Expanding this agenda requires more research and productivity and skills. Increasing dialogue and data on labor market functioning, human capital, collaboration to match labor skills with those and the specific policies and regulations needed to demanded by employers will help workers adapt. help countries and workers adapt to technological changes. This Jobs Solutions Note identifies approaches for practitioners and policymakers to proactively adapt policies and development programs to accelerated technological change. Based on curated knowledge and emerging evidence for a specific topic and relevant to jobs, the Jobs Solutions Notes are not intended to be exhaustive; they provide key lessons, solutions and approaches synthesized from the experiences of the World Bank Group and partners. This Note draws from World Development Report 2019: The Changing Nature of Work and Protecting All: Risk-Sharing for a Diverse and Diversifying World of Work. MOTIVATION: WHAT IS THE PROBLEM? is rising rapidly: by 2020, there will be 3 million new industrial robots in operation, more than doubling People fear the advent of a jobless economy. the operational stock over the seven years spanning “They’re always polite, they always upsell, they 2014–2020.2 never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex or race The fast pace of change exacerbates job discrimination case,” Andrew Puzder, chief executive insecurity. The declining cost of machines threatens of Hardee’s restaurant chain with headquarters low-skill jobs in routine tasks—occupations in Tennessee, says of swapping employees for most susceptible to automation and offshoring.3 machines. 1 Such statements give workers good Automation also threatens some relatively complex reason to fear the advent of a jobless economy: tasks jobs, such as assessing legal documents. Decline traditionally performed by humans are increasingly in industrial employment in many high-income performed using robots and artificial intelligence. economies over the past two decades is well known. Indeed, the number of robots operating worldwide The United States, Singapore, and Spain are among Adapting Jobs Policies and Programs in the Face of Accelerated Technological Change APRIL 2020 to reduce trade barriers, which expands global value chains5 and changes the geography of jobs.6 New business models—digital platform firms— can evolve rapidly from local start-ups to global behemoths, often with few employees and tangible assets.7 Digital platforms can enable clusters of businesses to form in underdeveloped rural areas. Online work platforms eliminate many geographical barriers previously associated with certain types of work and tasks. Bangladesh contributes 15 percent to the global labor pool online through 650,000 freelance workers. Indiez, founded in 2016 in India, brings a remote, distributed community of talent—mainly from India, Southeast Asia, and Eastern Europe—to work in teams remotely on tech projects for clients anywhere. •  Technology is reshaping work skills, implying adjustment costs for workers. While returns Photo credit: John Hogg / World Bank to routine, job-specific skills are declining, the premium for skills that cannot be replaced by robots countries where the share of industrial employment is increasing; these include cognitive skills such as dropped 10 percent or more since 1991. Foxconn critical thinking, as well as socio-behavioral skills such Technology Group, the world’s largest electronics as managing and recognizing emotions that enhance assembler based in Taiwan, cut its workforce by teamwork. Earnings are higher for those having a 30 percent when it adopted robots for production; combination of skills as opposed to just one skill. workers decreased from 1.3 million in 2012 to The evolving world of work demands adaptable skills 873,467 by the end of 2016.4 that enable workers to transfer them more easily from one task to another. Since 2001, the share of Meanwhile, technological progress also provides employment in occupations intensive in non-routine opportunities. Digital technology improves aggregate cognitive and socio-behavioral skills has increased efficiency by reducing or eliminating “frictions” and from 19 to 23 percent in emerging economies, and intermediation costs between economic actors. It from 33 to 41 percent in advanced economies. decreases transaction costs, including in remote markets •  Digital technology is changing the terms lacking transport infrastructure. Firms that embrace of work. Rather than “standard” long-term technology grow and can compete better in global contracts, digital technologies are giving rise to markets. More importantly, digital platforms reshape more short-term work, often via online work labor demand, directly or indirectly, and create jobs. platforms. These “gigs” make certain kinds of work more accessible and flexible. That said, despite How governments prepare, shape policies, the hype, the gig economy is slow to take over and intervene will largely determine how traditional occupations. The largest three global technological change affects jobs. In approaching gig platforms—Freelancer of Australia, Upwork this challenge, some features of the current wave in the United States and Zhubajie in China—have of technological progress are especially salient: (a) 60 million total users; only 0.3–0.5 percent of the disruption of the production process, (b) changing active labor force participate in the gig economy demand for skills, and (c) terms of work. globally.8 The majority of workers regard gig work •  Technology is disrupting production processes. as a supplement to more stable income. Data show Technology decreases the costs of doing business, that about 10 percent of registered users on global complementing investments in infrastructure, free freelancing platforms are active and that this figure trade agreements, and other liberalization efforts is growing fast. Most of these workers concentrate 2 Adapting Jobs Policies and Programs in the Face of Accelerated Technological Change APRIL 2020 in a few countries: India, Bangladesh, Pakistan, also reinforces the need for developing countries to United States, Philippines, and the United Kingdom. rethink social protection and labor regulations. Here too technology can help by expanding options for Persistent informality continues to pose the government service delivery, while improving citizens’ greatest challenge for emerging economies. ability of to hold governments accountable. Informality has remained remarkably high across regions over the past two decades in spite of improvements in business regulatory environments and the changing WHAT ARE WE DOING? nature of work. About two-thirds of the labor force in emerging economies is informal with no social World Bank Portfolio protection and little access to technology. Women Human Capital make up a disproportionate percentage of workers in the informal sector. In South Asia, over 80 per cent The World Bank (WB) is committed to improving of women in non-agricultural jobs are in informal human capital outcomes at all stages of employment; in sub-Saharan Africa, 74 per cent; and in the human development cycle. For children, Latin America and the Caribbean, 54 per cent.9 While the WB helps provide nutrition, early childhood platforms make certain kinds of work more accessible education, and social insurance. For adults, it helps and flexible, they also raise concerns about income workers participate in labor markets through skills instability and lack of social insurance. This means development, expanding social insurance, and that many digital economy jobs facilitated and created investing in digital infrastructure and services. This may increase the large share of informal workers in is achieved through lending, analytical work, and developing countries without social protection. partnerships with donors and the private sector. Technology access is necessary for people and World Bank human capital projects are often businesses in the digital era, but developing multi-sectoral. For example, The Marshall Islands— countries lag. Evidence on automation suggests Multisectoral Early Childhood Development Project that these technologies have contributed to higher includes three components to address a range productivity and larger scale production. 10 Yet, of challenges: (a) the early childhood education although cities and towns may have online access, component aims to improve children’s cognitive rural or remote communities—where four-fifths of and socio-emotional development to prepare them the poor live11—are drastically underserved. Mobile for on-time transition to primary school, (b) the phone access alone is also not enough; broadband nutrition component aims to decrease infant mortality technologies push down transaction costs even further through facility-based care for pregnant women and in remote markets that lack transport infrastructure. newborns, and (c) the social insurance component Regulatory and market failures often hinder provision provides cash transfers to families with young children of affordable and reliable internet and broadband (age 0–59 months) in selected areas to modify care access to these areas. practices and promote uptake of best practices in early childhood development. Innovation will continue to accelerate, but developing countries will need to take rapid Governments have a vital role to play in building action to compete in the economy of the future. human capital. Governments should provide health, Technological progress—even that involving labor- education, and financing, and regulate accreditation saving technologies—provides opportunities to create and quality control of private providers. Yet new jobs, increase productivity, and deliver public governments often fail to deliver. Good measurement services. To harness the benefits of technology and of education and health outcomes raises human make the most of these opportunities, governments capital locally, nationally, and globally, and is essential need to invest in people, while adopting policies that for research and analysis to inform policies to improve alleviate disruptions. The most significant investments human capital. With this goal in mind, in 2018 the people, firms, and governments can make are those World Bank launched the Human Capital Project (HCP) that enhance human capital. Digital technology to raise awareness and increase interventions to build 3 Adapting Jobs Policies and Programs in the Face of Accelerated Technological Change APRIL 2020 human capital. A program of advocacy, measurement, Education. The new generation of skills projects and analytical work, the HCP has three components: address market demand for skills, with curriculum (a) a cross-country metric—the Human Capital Index designed in consultation with employers to facilitate (HCI), (b) a measurement and research program to smooth transition of trainees to employment. The inform policies, and (c) a program to support country Niger Skills Development for Growth Project, for strategies to accelerate investment in human capital. instance, provided employer approved training in agribusiness and entrepreneurship, as well as start-up The Human Capital Index quantifies the funds to young graduates. contribution of health and education to the productivity of the next generation of workers. Technology Access Countries can use the HCI to assess how much income they forego because of human capital The World Bank’s recently established Digital gaps, and how much faster they can turn reverse Development Global Practice (GP) underscores these losses. Globally, the HCI finds that nearly 60 the importance of digital infrastructure and percent of children born today will, at best, be half as networks. The GP provides knowledge and productive as they could be with complete education finance to help countries participate in the digital and full health. The medium-term program of data revolution. World Bank lending operations in the and analytical work aims to improve measurement ICT Infrastructure and Services sector totals 179 of a wide range of human capital outcomes, better projects valued at US$20 billion.12 These include understand human capital formation, and link it projects to increase geographic reach of broadband, to country policies. The World Bank Group (WBG) reduce communication service costs, and develop supports governments, together with development e-government solutions. For example, The West Africa partners, to identify national human capital priorities Regional Communications Infrastructure Project in the and implement policies to address barriers. As of June Islamic Republic of Mauritania and the Republic of 2019, 63 countries had joined the HCP—nearly a third Togo increased access to telephone services from 72 of WBG members. to 87.4 phones per 100 people in two years. Digital development projects also address sector specific World Bank investments reflect the changing problems. For example, the e-Gabon Project supports nature of skills employers need with the rapid the National Health Information Service (NHIS) in Gabon onset of automation and access to digital to transmit health information electronically, thus infrastructure. The World Bank portfolio addressing reducing administrative burdens and medical errors. skills and technical and vocational education and training (TVET) comprises 114 projects valued at The WBG supports developing countries through US$13 billion, in the following sectors: Tertiary financing and technical assistance to expand Education sector, Workforce Development and digital access and incorporate digital technology Vocational Education, and Adult and Continuing into government services. For example, in Niger’s BOX 1. CODING BOOTCAMPS FOR WOMEN’S DIGITAL EMPLOYMENT Rapidly expanding global connectivity and cloud-based technologies have opened new digital employment opportunities. This has enormous potential to allow women to work from home on flexible schedules, thereby overcoming employment constraints related to child and family care, mobility, and legal, regulatory, and social restrictions. This activity focuses on delivering coding “bootcamps” training for women in Nairobi (Kenya) Medellin (Colombia), and Peshawar (Pakistan). Program design took into account specific women’s needs and constraints, including “wrap-around” services such as fostering business networks to increase and sustain women’s participation in the technology sector. The program’s methodology will be revised as needed, including adjusting content. In addition, randomized control trials (RCTs) in Medellin and Nairobi will test youth employment and wage outcomes compared to women-centered coding bootcamps. 4 Adapting Jobs Policies and Programs in the Face of Accelerated Technological Change APRIL 2020 Smart Villages program the WB supports digitizing economy jobs, especially for Pakistani youth. The payments for people living in rural areas, including Malawi Resilient Productive Landscapes project aims to farmers and civil servants. The Uganda Digital increase resilience-enhancing landscape management Acceleration Program aims to improve access to in watersheds and strengthen water management high-speed internet, increase efficiency of digital capacity. The Agricultural Productivity Program for government services, and strengthen the enabling Southern Africa in Angola and Lesotho aims to increase environment for digital technology adoption. The availability of improved agricultural technologies in the E-Society and Innovation for Competitiveness Project South African Development Community. The Climate in Armenia addressed constraints to competitive Resilient Agriculture and Productivity Enhancement e-Society and enterprise innovation. The program project in Chad supports institutions to improve enhanced penetration of digitization in businesses, sustainable agriculture and climate resilience by grew the technology-enabled services sector, and strengthening institutional capacities for research and created 12,685 jobs. development and climate adaptation. At the current incremental pace of economic World Bank Analytical Work and social advancement, too many of Africa’s expanding youth population will fall short of Recent key World Bank studies focus on how their potential. Digital technologies can disrupt this technology advances are changing work in trajectory by unlocking new paths for rapid economic developing countries. It is critical that workers growth, innovation, job creation, and access to prepare to embrace technology, digital literacy, services that would have been unimaginable a decade and connectedness. This challenge is most acute ago. Several WB initiatives deepen the benefits of in developing countries. The World Development digital technologies and overcome the risks of digital Report (WDR) 2019: The Changing Nature of Work exclusion. The Digital Economy for Africa (DE4A) emphasizes the need for a new social contract to Moonshot, for example, aims to digitally connect every protect workers, address high informality, harness individual, business, and government in Africa by technology, and prepare countries for the future. The 2030. Goals include improving digital infrastructure, recently published WB Protecting All: Risk Sharing for equipping the workforce with digital skills, expanding a Diverse and Diversifying World of Work analyzes the use of digital platforms, increasing access to these issues in more detail. digital financial services, and encouraging digital entrepreneurship. The IDA 19 paper on Jobs and Economic Transformation identified digital economy as The Jobs Multi-Donor Trust Fund (MDTF) also one of the emerging priority areas for creation finances projects related to leveraging new of more and better jobs. Core investment in technologies. For example, the Digital Jobs for Khyber digital infrastructure and platforms is a powerful Pakhtunkhwa (Box 2) project aims to create digital jobs stimulus and facilitates labor market inclusion, BOX 2. DIGITAL JOBS FOR KHYBER PAKHTUNKHWA (KP) Khyber Pakhtunkhwa province in Pakistan has a population of 20 million. A significant youth “bulge” persists with roughly half the population being under age 30. The province is emerging as a nascent digital economy with rapidly expanding mobile and internet connections presenting a unique opportunity to accelerate development through faster growth, more jobs, and better services. Building on the Jobs MDTF Digital Jobs Pilot, the project aims to promote inclusion of women and youth in the digital economy. The project will leverage Pakistan’s growing role in the global Business Process Outsourcing (BPO) industry to create jobs through BPO-ready spaces. It will also promote digital entrepreneurship and freelancing though an online platform to match jobs with trained youth. The project will also expand a network of publicly available, gender-inclusive co-working spaces to promote women’s inclusion in the digital economy. 5 Adapting Jobs Policies and Programs in the Face of Accelerated Technological Change APRIL 2020 especially for youth. It is also an enabling sector that supports wider economic growth and indirect job creation. Two of the nine policy commitments in IDA 19 relate to digital jobs: (a) 30 percent broadband penetration in at least 20 IDA countries by 2023, and (b) 50 percent of entrepreneurship /  projects with digital financial services and  or digital entrepreneurship element. Client countries also understand the importance of digital economy as reflected by its inclusion in upcoming Country Partnership Frameworks (CPFs).The Benin CPF for FY 2019–23 states that digital economy could be transformative given its strategic location within West Africa and access to existing submarine cable Photo credit: Peter Kapuscinski / World Bank networks. Improved digital access can increase crop yields and sales volumes, and reduce post-harvest with government agencies to improve credibility, and losses. Similarly, the Armenia CPF for FY 19–23 better targeting the programs for women (providing states that the government aims to improve farm childcare and meal stipends, among other things). productivity and strengthen resilience to climate and market risks through use of digital platforms. WHAT WORKS? Several Jobs MDTF-financed activities have also focused on advancing knowledge on the impacts The future of work is hard to predict: The WDR of technologies on labor markets and potential 2019 documents the wild variations in predictions for policy interventions. Robots, Tasks and Trade automation. Illustrations below of what works are explores the effects of robotization on trade patterns based on the best evidence we have, understanding and wages. The study finds that robotization makes that new ideas and better solutions may emerge. firms more competitive in rich economies, which in Thus, the forward-looking nature of this topic merits turn increases demand for products from developing viewing the examples below with some caveats given economies. Does Automation in Rich Countries the forces of change in motion. Hurt Developing Ones? Evidence from the U.S. and Adapting to the changing nature of work requires Mexico finds that although increased use of robots investments and reforms in critical areas: in the United States decreased Mexican exports to the U.S., it does not find effects on labor markets. a. Lifelong learning to build and maintain human From Ghana to America: The Skill Content of Jobs and capital as conditions change. Economic Development measures the skill content of b. Social protection to protect people no matter jobs in developing economies. It finds that developing how they work or on what terms. countries have more jobs intensive in skills facing c. Labor markets flexibility to encourage worker automation risks—such as routine manual work— skills acquisition and reduce ineffective and while developed countries have jobs more intensive burdensome labor costs to firms. on skills that benefit from greater technology, such as non-routine cognitive skills. d. Bridge gender gaps by providing women with the same opportunities to acquire skills and access The Jobs Group has also undertaken analytical technology and finance, while removing gender- work in the digital economy. The Solutions for specific legal barriers. Youth Employment Partnership (S4YE) recent report Digital Jobs for Youth identifies main challenges 1. Invest in lifelong learning alongside for employment programs through 19 case studies, formal schooling and proposes strategies to mitigate them such as scoping the job market relevance of skills, partnering In the digital era, technology advances demand rapid uptake of new skills. In the past, shifts in skill 6 Adapting Jobs Policies and Programs in the Face of Accelerated Technological Change APRIL 2020 Figure 1 The increasing rate of technology diffusion The first start-up for business process outsourcing (BPO) in TECHNOLOGY DIFFUSION The production India appeared in 2002; line appeared in around 2.8 million people The mechanical 1870; it became were employed in the BPO loom was a part of Henry industry by 2012. Movable type Ford’s mass invented in 1784; printing was production of Papermaking was it displaced introduced in cars in the U.S. invented in 105 almost all hand 1040; it became around 1914. and was used as weavers in the widespread in the main writing U.K. by 1860. WeChat Pay was introduced in China in the medium in the China in 2013; its mobile 17th century. 3rd century. payment users reached 600 million and total transactions surpassed US$8 trillion in 2017. 105 1040 1784 1870 1989 2004 TIME Papermaking Movable Type Mechanical Loom Production World Wide Digital Wallet Printing Line Web Source: 2019 WDR requirements took centuries to manifest (Figure  1). in Sierra Leone. 15 In Jamaica, early childhood Today, labor markets value the ability to quickly adapt stimulation for infants and toddlers increased their to changes. Demand for advanced cognitive13 and future earnings by 25 percent—equivalent to that of socio-emotional skills14 are increasing across low to adults raised in wealthier households.16 In Guatemala, high-income countries, while demand for narrow an early childhood development nutrition program job-specific skills is waning. Yet, technological change for poor families significantly increased wages for makes it hard to anticipate which job-specific skills these children in adulthood.17 By contrast, poor early will thrive and which will become obsolete. Strong childhood development programs are associated skill-foundations are important for developing in-de- with disappointing results in children’s language mand skills and adaptability. However, schools in many development, cognitive skills, and sociability. A low and middle-income countries are failing to teach study of preschools in a Nairobi slum shows that, foundational skills. Important skills re-adjustments despite high participation rates, the curriculum and happen increasingly outside compulsory education pedagogical approach were not age-appropriate; and formal jobs through early childhood, tertiary edu- three to six-year-olds were forced to follow cation, on-the-job learning, and adult learning outside inappropriate academic oriented instruction and even the workplace. sit for exams.18 1.1. Invest in learning in early childhood. The Despite their efficiency in producing important skills, most effective way to acquire skills demanded by early childhood investments are underprovided. the changing nature of work is to start early. Early Some 250 million children under age 5 are at risk of investments in nutrition, health, social protection, and not reaching their developmental potential in low education lay strong foundations for acquisition of and middle-income countries despite availability of cognitive and socio-behavioral skills. They also make effective early childhood development solutions. Cash future skills acquisition more resilient to uncertainty. transfers to support early childhood development for Returns to early investments are the highest of those poor children have succeeded in various contexts. made over the lifespan: a dollar invested in quality early Such programs reduced stunting in Mexico, fostered childhood programs yielded a return of US$6–$17 language development in Ecuador, and improved 7 Adapting Jobs Policies and Programs in the Face of Accelerated Technological Change APRIL 2020 a progressive curriculum balancing academics with student support. The approaches improved students’ critical thinking skills.22 1.3 Increase support for on-the-job learning for informal workers. Most people work in the informal sector in developing countries, often starting at a very young age with limited formal education; learning on-the-job in the informal sector is crucial. The WBG is increasing support to informal apprenticeship systems and other training opportunities. In Senegal, for example, a new WBG US$53 million project aims to strengthen the apprenticeship system and improve youth employability in selected Photo credit: Khasar Sandag / World Bank trades through providing capital grants to upgrade technology for informal workshops; strengthening the pedagogical and technical skills of master crafts- children’s socioemotional skills in Niger.19 Integrated persons or companions; strengthening the literacy, approaches that combine health, nutrition, and socio-emotional, and business skills of apprentices; learning stimulation investments can be highly and providing financial assistance to enable youth effective. Chile’s Crece Contigo program integrates entrepreneurship. The WBG is expanding similar health, education, welfare and protection services—a initiatives in Africa, Latin America, and South Asia. child’s first contact with the system occurs while still In South Africa, the WBG is partnering with the in the womb.20 Community-based playgroups have Youth Employment Service (YES), a local public- also generated sustained outcomes at low cost. In private partnership, to support small and medium Tonga, playgroups significantly improved children’s enterprises, which have many informal workers, early grade reading skills.21 to provide on-the-job training to vulnerable youth through one-year internships. 1.2 Establish lifelong tertiary education. Integrated, technology-driven economies increasingly 1.4 Make adult learning programs more effective. value tertiary education, defined as any education Workers are caught in the crosshairs of ongoing beyond high school, including trade schools and disruptions in demand for skills. As economies adjust, college. As technology increases demand for lifelong adult learning can supply people not in schools or jobs learning, tertiary education with a wide array of course with new or updated skills. However, many programs offerings and flexible delivery models, from general to are not effective due to designs that do not reflect vocational, can meet this growing demand. One path biological, emotional, or socioeconomic conditions of to flexibility is through “bridging” arrangements, such adult learners. Adult learning can be improved in three as those the Democratic Republic of Congo (DRC) and ways: (a) better evaluate the specific constraints adults Tanzania have piloted, allowing vocational students face, (b) customize pedagogies for the adult brain, to continue studies at universities. Tertiary education and (c) create flexible delivery models compatible with systems should deliver a minimum of transferable, adult lifestyles. high-order cognitive skills, the best inoculation against a. Better evaluation. Data collection before job uncertainty. Incorporating more general education program design can identify constraints for the in tertiary programs and innovating on pedagogy are target population. For example, administrative effective. For example, an additional year of general data under India’s massive National Rural education added in 2012 to undergraduate programs Employment Guarantee Act program offers in Hong Kong focused on problem-solving and critical powerful insights about local labor markets. thinking. The Faculty of Architecture and Environmental Design at the College of Science and Technology, b. Customize pedagogies for adults. There is University of Rwanda promoted strategies that include tremendous scope to tailor programs for adults open-ended assessment, feedback opportunities, and using insights from neuroscience and behavioral 8 Adapting Jobs Policies and Programs in the Face of Accelerated Technological Change APRIL 2020 economics. Motivational tools such as financial rewards, work experience, or frequent feedback can boost adult learning. Incorporating socio- emotional skills in training design has also shown promise. In Togo, teaching informal business owners “personal initiative”—a mindset of self-starting behavior, innovation, and goal-setting—boosted firms’ profits by 30 percent two years after the program, which was much more effective than traditional business training.23 c. Flexible delivery models. Adult learning programs need to be flexible so adults can learn at their convenience. In a voucher program for vocational training in Kenya, nearly 50 percent of women cited proximity to a training center Photo credit: Simone D. McCourtie / World Bank as a determining factor. 24 Given competing demands on adults’ time, training programs developing countries, most people would be better-off with short-modules and delivered through mobile with a social protection system that does not depend applications are promising. Delivering training on formal employment. Three main components programs via mobile phones can also shield of social protection systems can help manage labor adult learners from stigmatization. Moreover, market challenges: (a) a guaranteed social minimum studies show that adult learning programs are (with social assistance at its core), (b) social insurance, more successful when linked to employment and (c) improved labor market regulation (Figure 2). opportunities, such as apprenticeships or internships. In Colombia’s Jóvenes en Acción 2.1 Establish a social minimum. Expanding social (Youth in Action) program, which combines assistance will help manage labor market risks classroom instruction with on-the-job training and increase support, irrespective of how a person at private companies, formal employment and works. Social assistance works on many levels. Cash earnings rose in the short term and has been transfer recipients spend on items such as food, sustained in the long run.25 health care, education, and other goods associated with improvements in human capital. A systematic 2. Expand social protection beyond the review of 56 cash transfer programs found significant formal sector advances in school enrollment, test scores, cognitive development, food security, and use of health The changing nature of work and uncertain facilities.27 In Mexico, the Prospera conditional cash labor markets call for strengthened social transfer program improved motor skills, cognitive protection. Most social protection systems in rich development, and receptive language of children from countries are based on mandatory contributions and age 24 to 68 months. In Kenya, secondary school payroll (labor) taxes on formal wages. The changing enrollment increased by seven percent for children in nature of work, including diverse and fluid forms the Orphans and Vulnerable Children program. Gains of employment—that is, the “gig” economy and are usually largest for the poorest, rural dwellers, girls, part-time work—challenges this model. While these and ethnic minorities. Cash transfers reduce stress and arrangements have served many countries well, the depression, increase mental bandwidth, and foster model remains mostly aspirational in developing more involved parenting. Social assistance programs countries due to persistently high informality, and it increasingly reinforce livelihood effects by raising has seldomly been adopted at scale. As a result, in the awareness on nutritional risks, fostering financial poorest quintile of countries, only 18 percent of people inclusion, training entrepreneurs, and providing asset are covered by social assistance and 2 percent by social transfers (See Box 3). insurance.26 Given the endemic nature of informality, which accounts for around 80 percent of work in 9 Adapting Jobs Policies and Programs in the Face of Accelerated Technological Change APRIL 2020 Figure 2 Social protection and regulation can help manage labor market challenges and changing nature of work Labor market regulation “Nudged,” incentivized, and voluntary insurance Mandated social insurance Guaranteed social minimum Source: 2019 WDR BOX 3. SUPPORTING EXPANSION OF SAFETY NETS TO HELP INFORMAL WORKERS MANAGE RISKS The Egypt Strengthening Social Safety Project (ESSSP) Takaful and Karama cash transfer program has reached 2.26 million households and 9.46 million individuals, and is now being expanded to cover 3 million households, or about 12.6 million people, with proposed additional financing (AF). The program has reduced poverty among beneficiaries by 12 percentage points. Karama supports poor families with elderly and disabled people, while Takaful supports poor families with children and is conditional on households’ health and education investments. Takaful covers poor families with adult members who are able to work but are either not working or working informally. In response to concerns about dependency on cash transfers and lack of economic inclusion, the World Bank will also support pilot interventions under the proposed AF to improve access to and quality of employment among Takaful beneficiaries, focusing on youth and women. 2.2 Enhance social insurance. Social assistance voluntary savings would allow people to contribute could include more informal sector workers (Box 4). In more, if desired.28 Bangladesh, India, Indonesia, Nigeria, and Pakistan— together making up about one-third of the world’s 2.3 Strengthening labor market programs to population—coverage of social insurance languishes raise productivity and earnings, especially in in the single digits, with virtually no increase over the informal sector. The WBG is helping address recent decades. A reformed system must help constraints inhibiting informal workers from low-income workers access risk management tools. A accessing better jobs or enhancing productivity. comprehensive package of protection would contain: Many labor market programs have shown mixed results. To improve future programs, studies and •  Guaranteed minimum insurance with subsidized evaluations have tried to understand why some coverage against impoverishing losses, to programs are successful and others are not. Evidence complement social assistance by covering losses shows that “productive inclusion” programs for too large to address through transfers. poor and vulnerable youth have mixed effects. •  A mandated savings and insurance plan to Certain interventions, such as wage subsidies, have “smooth” consumption. Initially, the mandate can been more effective in peri-urban contexts with apply only to formal workers to attract greater large industrial parks, while safety net programs, compliance. Market-based “nudges” or purely including transfer of assets such as livestock, are more 10 Adapting Jobs Policies and Programs in the Face of Accelerated Technological Change APRIL 2020 BOX 4. SOME COUNTRIES ARE ALREADY IMPROVING SOCIAL PROTECTION China is significantly extended its rural pension scheme. Currently, about 360 million rural and urban informal workers contribute to the scheme, and about 150 million older people are receiving payments. Similarly, the Government of Costa Rica covers part of pension contribution for the self-employed. Thailand does the same for informal workers who choose to join a special pension scheme. Subsidies could be offered to everyone or just to the poor, or they could be gradually reduced as income grows. In addition to providing an almost universal old-age pension, Thailand pays part of the social insurance premium for working-age people in the informal sector. Building on recent extension of pension coverage to the informal sector in Benin, the Disruptive Technologies for Development (DT4D) Secretariat of the WBG has provided additional funding to develop a regional, flexible, digital-pension benefits platform to enhance social protection for precarious, informal workers. As opposed to savings tied to standard employment contracts, participants in the scheme can contribute to their pension through individual accounts using mobile money. successful in rural areas. Interventions facilitating should also be reconsidered especially when they transition out of very low–productivity activities are raise labor costs. Reducing labor costs by reforming among the most difficult, and often require traditional expensive and ineffective labor regulations also reduce labor measures, such as training and subsidies, incentives to substitute workers with robots.29 Lower combined with demand-side interventions. The World labor costs help firms adapt to the changing nature of Bank Kenya Youth Employment and Opportunities work, while encouraging greater formal employment, Project (KYEOP) addresses multiple constraints to especially for new entrants into the labor market and employment, including interventions to improve skills, low-skill workers. A proper balance between labor foster productivity of informal workers, and support market flexibility and adequate protections is needed. self-employment using methods such as competitions Complementary support for learning new skills, as to identify promising job-creation initiatives. well as new arrangements for strengthening the voice of workers, remain important. Increasingly, safety nets are combined with programs and policies to increase informal 2.5 Enhanced social assistance and insurance worker productivity. The WBG engagement in can reduce the need for labor regulations. Some Ethiopia is a case in point. Building on the success regulations in place to manage job market risks of the Ethiopia Urban Productive Safety Net Project, burden firms, for example, severance pay obligations. the WBG is discussing an Urban Safety Nets and Jobs As people have better protection through enhanced Project to expand and solidify gains to urban safety social assistance and insurance systems, labor nets, but also to increase support to improve youth regulation could, where appropriate, be more flexible. economic opportunities. The program increases For example, unemployment benefits could supplant access to wage internships, mentoring, and coaching severance pay. The WBG is working with several to support transition out of informal employment governments on labor market reforms. In Indonesia, or into more productive informal employment. the government is considering improving worker In addition, the new project will harness digital protection to reduce the formal-informal divide, while technologies to improve job search, including in the lowering labor costs to incentivize formal job creation. informal sector. Recommendations focus on revising rigid labor regulations with policies that balance between worker 2.4 Make labor regulation more flexible to protections and business flexibility. For example, the facilitate job changes. The International Labor proposal includes overhauling the expensive severance Organization (ILO) core labor standards represent pay system in favor of an unemployment benefit vital bulwarks to safeguard hard-won advances in program open to informal workers. Proposed reforms human well-being. However, burdensome regulations 11 Adapting Jobs Policies and Programs in the Face of Accelerated Technological Change APRIL 2020 also include shifting burden for paid maternity leave from employers to the social security system. 3. Bridge Gender Gaps 3.1 Level the playing field by enabling women to benefit from technological change through better access to technology, skill acquisition, and financing. Women’s access to digital technologies remain low. The internet access gender gap in developing countries is about 25 percent. Women in low and middle-income countries are, on average, 10 percent less likely to own a mobile phone than men. Labor market success and technological adaptability depends on whether women have the right education and skill development before entering the labor market. Education is not just important Photo credit: Stephan Gladieu / World Bank for labor market outcomes but for agency as well, which includes control over resources, condoning WHAT’S NEXT? wife beating, and child marriage. 30 Prioritizing capacity building through investments in lifelong Better data and research on developing learning is important, especially for women in places countries. There is still a large knowledge gap where educations levels are low. Improving access regarding specific barriers to technology adoption to technology and skill acquisition for women is also and policies to maximize technology potential. necessary for them to attain less automatable jobs. Research has progressed about bottlenecks and their negative effects on technology adoption, but there 3.2 Legal frameworks and informal institutions is a wide gap between the amount of knowledge on shape whether women transition to high-skilled these issues in developed and developing countries. jobs that complement automated systems. Furthermore, evidence about labor market disruptions Discriminatory laws and provision of care services will linked to technology and automation in developing determine whether women face additional barriers to economies remains limited. This knowledge gap must enter the labor market or transition into better jobs, be addressed to design better, evidence-based, and and also whether they are able to balance family and forward-looking policies. work. Social norms shape beliefs of the role of women and can sometimes impede women from accessing Human capital. The World Bank Human Capital formal, well-paying jobs. More recent evidence has Project (HCP) will continue efforts to boost human shown that removing legal barriers faced by women capital outcomes globally. HCP countries are focusing can help them access high paying jobs and managerial on national plans that prioritize human capital, positions. These wide-ranging barriers include travel acting on national and international agreements. and mobility restrictions, restrictive inheritance laws, The WBG launched its Africa Human Capital Plan in less access to finance, and unequal pay.31 April 2019 to respond to the tremendous challenges and opportunities for human capital development 3.3 Technology can be leveraged to close gender in Sub-Saharan Africa (SSA). The Plan sets ambitious gaps too. Virtual learning provides opportunities targets for the region by 2023, including innovative for women to acquire skills. Online jobs can help human capital interventions to foster policy change, women to overcome mobility restrictions, especially women’s empowerment, demographic change, and in countries where such constraints are pronounced. mobilization of a network of Africa Human Capital IFC’s report on Driving Toward Equality: Women, Champions. The WBG is developing similar visions for Ride-Hailing, and the Sharing Economy sheds light on the Middle East and North Africa (MENA) and South how ride-hailing can improve women’s mobility and Asia regions. Efforts are underway to gather more labor force participation. 12 Adapting Jobs Policies and Programs in the Face of Accelerated Technological Change APRIL 2020 disaggregated subnational and gender data to better digital economies and competitive markets. Further inform policies, but continuous investment in these data research is needed on how to improve regulatory efforts is needed. For example, subnational geographic frameworks given new digital challenges. disaggregation of HCI data has been completed for Angola, Chad, Indonesia, Mali, Niger, Pakistan, Peru, Labor supply and demand. Encouraging dialogue the Philippines, Romania, Sierra Leone, Sri Lanka, and and collaboration between labor supply and labor Turkey. Disaggregation by socioeconomic status is demand (firms) may allow workers to adapt faster ongoing for a large group of countries. to technology. With 90 percent of employment in the private sector, skills need to be relevant and Skills. Promising work on skill content of jobs in demanded by firms. Educators rarely, however, take developing economies is underway, such as in Ghana,32 part in private sector activities and vice versa. Tertiary where a study maps out the nature of skills—cognitive, education and the private sector can come together manual, routine, among others—to determine how through “knowledge hubs” to drive new capabilities, susceptible these jobs are to automation. Studies innovation, and high-tech entrepreneurship. limited to a handful of developing economies have to A healthy innovation ecosystem connecting be scaled-up to understand global automation risks. supply and demand also requires an enabling Furthermore, the importance of socio-emotional skills environment. Governments can create environments in work necessitates understanding the prevalence where innovation clusters flourish by providing local of such skills globally. The Programme for the infrastructure, allocating more budget to research International Assessment of Adult Competencies and development, connecting high quality researchers (PIAAC) assesses adult skills for OECD economies. with innovative private sector firms, and relaxing rigid The World Bank’s Skills towards Employment and labor market regulations. These methods have been Productivity (STEP) survey has made progress in a successful in developed economies: in the United States handful of developing economies to capture soft at Stanford University, University of California, Berkeley skills, but with mixed success. New data initiatives are (Silicon Valley), Harvard, and the Massachusetts needed, along with cheaper innovative alternatives to Institute of Technology (Boston’s Route 128); and in current expensive and time-consuming surveys. the United Kingdom at the University of Cambridge, The digital agenda. Closing the digital infrastructure University of Oxford, and University College London gap and increasing affordable broadband access is (“golden triangle”). Similar endeavors are emerging in an immediate regulatory priority. The WB Digital middle-income economies. Peking University is building Moonshot initiative is based on five principles: a research cluster for precision medicine, health big data, and intelligence medicine (Clinical Medicine Plus a. Taking a comprehensive ecosystem approach. X). The University of Malaya has eight interdisciplinary b. Increasing the scale of ambitions to be research clusters covering sustainability science and transformative, beyond incremental “islands” biotechnology. In Mexico, the Research and Technology of success. Innovation Park has seven university-led research c. Creating an inclusive digital economy for everyone. centers on research and development in biotechnology, nanotechnology, and robotics.33 d. Aiming for local, homegrown content and solutions. Labor regulations. Governments must avoid e. Encouraging collaboration across different actors. extremes when crafting labor regulations. The World Development Report 2013: Jobs advocated for a broad Five foundations that need to be in place are: digital “plateau” between extreme “cliffs” of too little and too infrastructure, digital platforms, digital financial much regulatory intervention. This Note fully espouses services, digital entrepreneurship, and digital skills. the powerful “plateau” metaphor to guide policies and Digital infrastructure entails greater connectivity; labor market regulations. However, it is currently not however, good regulatory frameworks and business possible to provide actionable policy guidance. More environments are also needed for digital financial empirical analysis is needed to identify features and services and digital entrepreneurship to thrive. A inflection points—that is, precisely what regulations and digitally-savvy workforce is needed to build robust policies represent “too little” and what is “too much.” 13 Adapting Jobs Policies and Programs in the Face of Accelerated Technological Change APRIL 2020 Gender. Technology and more flexible work “Government to Person” (G2P) payments, ranging arrangements can help integrate excluded groups. For from salaries to cash transfers, are increasingly digital, example, internet access may help women overcome reducing payment costs, delays, and waste, while safety and security barriers and facilitate women’s increasing program efficiency. Technology is also labor force participation. Furthermore, some evidence improving personal identification (ID) systems, the shows that automation is less likely to occur in first step in delivering social protection and payments. woman-dominated sectors.34 Research on the effects In SSA, the share of the Rwandan population with of technological advancement on women can point national IDs is 90 percent, but less than 10 percent in to tangible policies. Furthermore, obtaining gender- Nigeria. Oman’s worker protection scheme monitoring disaggregated data should be a priority for data wage payments has reduced worker payment delays. collection initiatives to support research on gender- In Ghana’s Labor-Intensive Public Works (LIPW) specific barriers preventing women from thriving in scheme, digitization of paper-based transactions and an era of technological change. use of biometric machines reduced wage payment time from four months to one week. In the Indian Social protection. Technology can improve state of Chhattisgarh, the Public Distribution System social protection delivery, even in fragile contexts. used electronic devices for food assistance, helping In Lebanon, for instance, electronic smartcards reduce “leakage” from 52 percent in 2005 to 9 provide 125,000 Syrian refugee households with percent in 2012. food vouchers. Some programs are already using technology-based data, although evidence on their These examples are largely anecdotal, so more effectiveness comes only from a handful of ongoing rigorous evaluations are needed related to the use of programs. In Mexico, geospatial mapping identifies technology to implement social protection programs. the most vulnerable in cities. In Côte d’Ivoire, mobile phone data is used to construct poverty maps. In Benin, GPS-based data locates households lacking addresses in urban settlements. 14 Adapting Jobs Policies and Programs in the Face of Accelerated Technological Change APRIL 2020 KEY REFERENCES A full bibliography of underlying evidence can be found at www.Jobsanddevelopment.org. Acemoglu, D., and Restrepo, P. (2017). Robots and Jobs: Evidence from US Labor Markets. SSRN Electronic Journal. Artuc, E., Christiaensen, L., and Winkler, H. (2019). Does Automation in Rich Countries Hurt Developing Ones? Evidence from the U.S. and Mexico. World Bank Policy Research working paper no. WPS 8741. Baldwin, R., and Venables, A. J. (2013). Spiders and snakes: Offshoring and agglomeration in the global economy. Journal of International Economics, 90(2), 245–254. IFC. Driving Toward Equality: Women, Ride-Hailing, and the Sharing Economy. 2018. Washington, DC. Lo Bello, S., Sanchez-Puerta, L., and Winkler, H. (2019). From Ghana to America The Skill Content of Jobs and Economic Development. World Bank Policy Research working paper no. WPS 8758. World Bank. (2016). Poverty and Shared Prosperity 2016: Taking on Inequality. Washington, DC: World Bank. World Bank. (2017). World Development Report 2018: Learning to Realize Education’s Promise. In World Development Report. Washington, DC: World Bank. World Bank. (2018). World Development Report 2019: The Changing Nature of Work. In World Development Report. Washington, DC: World Bank. World Bank. (2019). Protecting All: Risk-Sharing for a Diverse and Diversifying World of Work. Washington, DC: World Bank. ENDNOTES 1 Kate Taylor. Business Insider, March 2016. 2 International Federation of Robotics. 3 Acemoglu and Restrepo 2017. Artuc, Christiaensen, and Winkler 2019. Giuntella and Wang 2019. 4 Chan, Jennifer. 2017 5 2020 WDR 6 Baldwin and Venables 2013 7 2019 WDR 8 2019 WDR 9 UN Women, Progress of the World’s Women 2015–2016 10 Artuc, Bastos, and Rijkers 2018 11 World Bank 2016 12 Standard Reports, Operations Portal. Data accessed on 11/25/2019. 13 Krueger and Kumar 2004 14 Deming 2017; Cunningham and Villasenor 2016 15 Rosas and Sabarwal 2016 16 Baird, McIntosh, and Özler 2016 17 Hoddinott et al. 2008 18 Bidwell and Watine 2014 19 Fernald and Hidrobo 2011; Fernald et al. 2008; World Bank 2017 20 Araujo et al. 2015 21 Macdonald et al. 2017 22 Schendel 2013 23 Campos et al. 2017 15 24 Hicks et al. 2011 25 Attanasio et al. 2017 26 The corresponding rates increase to 77 and 28 percent in upper-middle-income settings. 27 Bastagli et al. 2016 28 World Bank 2019, Protecting All. 29 Kuddo et al. 2015 30 Klugman et al. 2014 31 Hyland, Djankov, and Goldberg, 2019; Islam and Amin 2019; Hallward-Driemeier and Gajigo 2015. 32 Lo Bello et al., 2019 33 World Bank 2019 WDR. 34 Blog. Maruo and Young 2018 This Jobs Note was prepared by Federica Saliola, Asif Mohamed Islam, with input from Hernan Winker. We are grateful for comments from three peer reviewers—Christian Bodewig, Bob Rijkers, and Siddhartha Raja. Comments and suggestions were also provided by Kathleen Beegle, Davida Connon, Vismay Parikh, Indhira Santos, Siv Tokle, Ian Walker, Michael Weber, and Yucheng Zheng. This Note was prepared as part of the Knowledge Program for Jobs: From Jobs Analytics to Support for Jobs Operations (P170399; Siv Tokle, Task Team Leader). It was edited by Aldo Morri. The production and publication of this report has been made possible through a grant from the World Bank’s Jobs Umbrella Multidonor Trust Fund (MDTF), which is supported by the Department for International Development / UK AID, the Governments of Norway, Germany, Austria, the Austrian Development Agency, Italy, and the Swedish International Development Cooperation Agency. All Jobs Group’s publications are available for free and can be accessed through the World Bank or the Jobs and Development Partnership website. Please send all queries or feedback to Jobs Group. Join the conversation on Twitter: @WBG_Jobs #Jobs4Dev.