Geopolitical conflicts, climate change, energy crisis, and economic instability aside, the world is on the verge of another emerging crisis: the one in the labor market. More than 1.2 billion young people in developing countries will reach legal working age in the coming decade, yet only around 420 million jobs are expected to be created. The lack of job opportunities for young people in developing countries can amplify several negative phenomena, such as migration and social inequalities, while negatively influencing global economic growth. What can governments and international development actors do to address this issue, and how can they better collaborate to create sustainable and inclusive employment opportunities for the next generation? Read their insights below.
Key Takeaways:
- The World Bank President, Ajay Banga, drew attention to the fact that in the next 10-15 years, approximately 1.2 billion people from emerging economies will enter the labor market, but only about 400 million jobs will be created.
- The current geopolitical and economic context contributes to the worsening of the situation through the intensification of international tensions, the slowdown in global economic growth, and decreased investments.
- According to experts, one of the main barriers to job creation in developing economies is the mismatch between education systems and labor market needs.
- To address this challenge, priority actions should focus on strengthening private sector development, aligning education and training with market needs through closer collaboration with businesses, and investing in energy and productive infrastructure.
DevelopmentAid: In your opinion, what are the key barriers preventing job creation at the pace required by growing populations, and what should be prioritized to address this challenge effectively?
“The 800-million-job gap is real, but the framing is wrong, in my opinion. Chasing Western-style formal employment as the benchmark misses what actually works on the ground. The core problem is infrastructure. Unreliable electricity, broken transport networks, and limited internet access strangle businesses before they can scale. Kenya’s HyaPak, turning invasive water hyacinth into biodegradable packaging, is a perfect example of what emerges when communities solve their own problems creatively. That kind of innovation needs power and roads more than it needs foreign job targets. Honest partnerships matter too. China’s infrastructure-for-resources deals and Brazil’s regional labor mobility agreements show that fixing skill mismatches does not require surrendering local control. A great starting point is agriculture. It feeds people directly and pulls related industries along with it. From food processing and hospitality to the health sector, each one creates another layer of skilled roles. In conclusion, jobs are a byproduct of economic conditions. Build the conditions first. Redefine success as whether those conditions exist, and the jobs will follow.”
“Many developing economies face a structural inability to generate jobs at the scale required. The core barriers include concentrated wealth, weak social mobility, and misalignment among the “triple helix” of government, private sector, and education systems. Economic growth often occurs without institutional reforms, while corruption and low institutional capacity limit competitiveness and investment. At the same time, education systems are not producing the skills demanded by modern industries, and private enterprise frequently prioritizes short-term gains over broader social impact. Addressing the future labor market challenge requires a long-term social pact that aligns incentives across all actors. Governments should prioritize transparent, pro-competition policies and progressive, opportunity-expanding frameworks. The private sector must embrace responsible, inclusive growth, and education systems must shift toward market-relevant skills, research, and project-based execution. A multi-year national program—implemented in every country through an enterprise-level Program Management Office (PMO) that coordinates reforms, standardizes methodologies, and shares global best practices—can provide the strategic backbone needed. With a centralized structure guiding cooperation agencies, sector leaders, and local institutions, countries can build the systemic conditions required for sustained job creation.”
“According to the World Bank, the growing gap between the number of young people entering the labor market and the limited number of jobs being created is a major challenge for developing economies. This situation is mainly driven by structural constraints. First, many economies suffer from a weak and underdeveloped private sector, which lacks the capacity to absorb large numbers of young workers. Second, there is a persistent mismatch between education systems and labor market needs, leading to high youth unemployment, even among graduates. In addition, limited access to reliable energy and basic infrastructure slows down industrialization and prevents countries from transforming raw materials locally and creating value-added jobs. To address this challenge, priority actions should focus on strengthening private sector development, aligning education and training with market needs through closer collaboration with businesses, and investing in energy and productive infrastructure. Without these structural reforms, economies will continue to fall behind demographic growth, increasing the risks of unemployment, informality, and social instability among young people.”
“One of the main barriers to job creation in developing economies is the mismatch between education systems and labor market needs. For example, in Afghanistan, during the past 20 years of the republic period, many individuals became educated and skilled practitioners. However, after the government collapsed, the majority of them left the country, creating a significant talent gap. In the current context, international organizations should adopt more flexible recruitment criteria, focusing on candidates who meet at least 50% of the requirements. After selection, organizations can provide the necessary technical training, either inside or outside the country, especially given the shortage of qualified trainers locally. Additionally, many young people enter the workforce without the practical or technical skills required by employers. Weak private sector growth, limited access to finance, and political instability further restrict investment and job creation, while technological change continues to replace low-skilled jobs. To address these challenges, governments should prioritize education reform, support SMEs, and promote investment to create sustainable employment opportunities.”
“The main barrier to job creation is the gap between what education systems produce and what labor markets, local and global, need. Graduates leave universities for sectors that are not growing, while growing sectors cannot find the right skills. Weak infrastructure in developing economies deters private investment and prevents industries from scaling. Running through both is a quieter problem: capable people sitting outside formal work, especially displaced health and social care workers who have the skills but no clear route back in. In my opinion, three strategic priorities should come first. Target skills development at sectors where jobs exist, rather than general training programs. Build ethical mobility routes so that the movement of workers brings returning expertise home rather than a permanent outflow. Use artificial intelligence in workforce planning, which is likely to become the standard method for mapping skills gaps as predictive analytics matures. None of this succeeds without a regulatory environment that encourages employers to hire.”
“In Latin America, the main barrier to job creation at scale is a structural misalignment between the skills required in today’s job market and what young people are learning in schools and vocational training. This misalignment stems from a lack of effective and timely communication between government, industry and academia and better investment decisions. First, education and training systems often operate disconnected from industry needs, producing graduates without the technical and soft skills required by high-growth sectors. Skills are changing with technology, much faster than before, and the lack of coordination between sectors reduces the speed and effectiveness of responses to labor market demands. Second, the region has struggled to attract and scale investment in sectors that generate large volumes of formal jobs. Manufacturing and other tradable industries—key drivers of employment—are constrained by talent gaps, regulatory inefficiencies, and limited integration into global value chains. To address this, three priorities stand out: (1) demand-driven, industry-aligned training systems focused on rapid employability; (2) investment promotion strategies linked directly to workforce development; and (3) strong public-private coordination platforms to align incentives, mobilize resources, and execute at speed. Closing the jobs gap will depend on aligning these systems to respond dynamically to economic opportunities.”
See also: What to expect from the job market in 2026 | Experts’ Opinions
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