The private sector can also help in removing challenges on investment climate, infrastructure, access to finance, and training and skills that hinder job creation, according to a report recently released by the International Finance Corp. (IFC).

IFC noted that the report Assessing Private Sector Contributions to Job Creation, has seen that job effects are often much larger in supply chains and distribution networks, and that these jobs often provide opportunities for the poor.

“Helping to strengthen the link between client companies and their local suppliers and distributors is an effective way to reach the unskilled and reduce poverty,” the IFC report said.

It stated that reducing obstacles that discourage businesses from becoming formal is another way to eliminate poverty.

Also, supporting financial institutions that serve micro, small and medium enterprises has proven to be efficient in reaching underserved and unserved groups.

The report added that microfinance also plays a crucial role in helping unserved individuals and in offering opportunities for self-employment.

Meanwhile, it continued that a comprehensive approach is needed in order lessen skills and unemployment mismatch, particularly for the youth.

“Development finance institutions must collaborate with the private sector to identify its needs, as well as partner with other relevant stakeholders,” the publication further said.

Role of companies
To ensure that the youth can transition from one level of education to the next and later to the labor market, it mentioned that cooperation between different levels of educational institutions and collaboration across multiple economic sectors is also important.

The IFC report also observed clusters of companies or businesses in the same sector can help by making specialized training more affordable and relevant.

Moreover, it said that training and skills programs can be part of this comprehensive approach, and vocational training systems, which combine classroom with on-the-job training show better results.

“SMEs [small and medium enterprises] appear to invest too little in training compared to larger companies, but training is important for them since it can help them move up the value chain to more productive activities and grow,” the report noted.

It also stated that lack of skills by managers and business owners, which tends to limit the potential for businesses to grow and create more jobs, is another important challenge.

Meanwhile, the publication revealed that the most effective way to improve the quality of jobs is a combination of monitoring and tackling the root causes of poor working conditions.

It cited interventions such as the International Labor Organization-IFC Better Work program target labor compliance in global apparel supply chains, adding that the program leverages the interests of global apparel brands to protect their reputations by incentivizing factories to work on institutional change.

The IFC report also mentioned the Equator Principles, which was based on the institution’s Performance Standard 2, that pointed out the importance of better management practices as a key entry point and driver for businesses to improve compliance with labor standards, including in supply chains.

Furthermore, it identified two main strategies that will help in increasing the economic participation of women, and reduce the concentration of women in less productive sectors.

Such strategies include supporting industries that are already women-friendly and encouraging the participation of women in non-traditional fields.

“The private sector can play a major role in promoting women as valuable leaders, productive employees and dynamic entrepreneurs,” the report continued.

It further said that a comprehensive strategy is necessary to address the multifaceted challenges facing youth. Training must integrate the needs of the private sector to give youth the skills they
need for current and future jobs.

“There also must be sufficient job opportunities. Other pieces of the puzzle are investment climate reforms that facilitate entrepreneurship,” the publication noted.

Finally, it said that policies to promote the information and telecommunications sector are of special relevance for youth, adding that not only can this sector help close the skills gap, but it also is an important direct provider of jobs for young workers.