A Stage 3? Labor Intermediation and the New Jobs Agenda for Development

Finally it has become fashionable to talk about jobs as central to development! Good, stable jobs are fundamental to getting the poor permanently out of poverty and poor countries permanently on the road to middle-income status. It is also no secret that to get anyone, and the poor in particular, a good job in a developing country requires many, many things to work in the right direction. This book has focused very practically on just one policy - labor intermediation services - that need to work right to support a more efficient, fair, and productive way to connect people to jobs. With examples from a wide range of developing countries, this book has taken you from the establishment of core employment service functions in Stage 1 through to advanced Stage 2 - an evolution, sometimes even a transformation, into labor intermediation services that can serve a diverse and relatively country-specific set of misconnections among employment, skills, training, education, and private sector growth. This chapter will go another step further to look at how labor intermediation services are working, and need to work, differently and in coordination with other policies to move workers to jobs in today’s more global economies.

Labor intermediation services play a supportive, not the lead, policy role in the new jobs agenda. Even in advanced Stage 2, a single national employment service working with a wide range of partner institutions will likely only serve a proportion of new job hires. The United Kingdom’s Jobs Plus Service Centers, for example, advanced in coordinating tailored © The Author(s) 2017

J. Mazza, Labor Intermediation Services in Developing Economies, DOI 10.1057/978-1-137-48668-4_5

interventions for the long-term unemployed, are estimated to serve directly only 20% of new job hires.¹ But, for developing countries with even less functional labor markets, there are indirect impacts of labor intermediation and much wider market changes to consider beyond just how many new hires are registered by a national intermediation service.

This book has argued that developing countries would be wise to look at the functioning and needs of the broader labor intermediation “system” for both setting national jobs priorities for services and for targeting what part of the market needs expansion. What is likely to be more significant for developing economies than strict placement rates are the indirect impacts of a better functioning labor market operating today with so little transparency in job hiring and so much dysfunction. Indirect impacts include inducing education and training systems to focus more on the placement of their graduates and stimulating a new generation of businesses in the business of intermediation. Placement rates are not going to be able to measure individual impacts such as those who found a different type of job based on better labor market information; employers improving who they hire, how openly they hire, and their productivity gains to better defining their skill needs. As Chapter 4 laid out, what may be more or at least just as consequential for developing countries is where the market itself can be stimulated to work on a more open and competitive basis and expanded via a chain of market-stimulating effects. A pro-jobs agenda in any country includes getting intermediation as part of a functional labor market right, or at the very least, a lot better.

If we are to imagine a Stage 3, it is not necessarily a bigger single national employment service once a level of scale has been reached. Instead, it would be that better labor intermediation - the matching of workers and their skills to employment - happens more significantly in multiple directions on multiple fronts by diverse “intermediaries” to contribute to more productive workers in better jobs. This includes training and educational institutions being induced to align their curriculums to actual jobs, foreign investment being linked more directly to jobs and career paths, and social policy better leading people from income supports out of poverty through employment exits. In short, better labor intermediation plays its role in a Stage 3 as part of a more strategic national focus on employment as a component of a wide spectrum of other policies and activities of distinct intermediaries, far beyond the initial conception of a single active labor market policy acting on its own.

This chapter concludes this book by speculating on how improved labor intermediation services can play a more integral role in development oriented to productivity and better job growth, integral roles appropriate to what labor intermediation can and cannot do, a la Chapter 2. To do so, we need to restate our labor market humility one more time. Tens of thousands of PhDs in economics have not been able to pinpoint what is needed to foster good job growth - if it had, the Nobel Prize Committee would have retired! What is humbly suggested here is that better labor market connections will not be made in an isolated, single-policy fashion in the new jobs agenda but will require stronger relationships with at least three other key policies: economic development, social and labor market policies, and skills development/education. Truth be told, this new more integrated policy direction on jobs is much more than speculation. Both developing and developed countries are moving to infuse, integrate, and connect labor intermediation to a wider set of policies. Is one direction better than another? Aren’t all these interconnections needed?

While it is premature to assert a single global answer to where labor intermediation services should fit in a pro-jobs development agenda, put all your money on the bet that there is not one single answer. To help see what is worth betting on, this chapter looks in the window of some current new thinking and policy directions about, first, how different jobs strategies fit in different country contexts. From the vantage point of different countries/ different jobs agendas, we then recap the wider roles of labor intermediation services as “connectors,” as looked at in Chapter 4. This can lead us finally to the policy future, a look at how labor intermediation services are and can be playing greater connector roles in a future Stage 3. This chapter examines future policy integration from three dimensions: integrating from the “center” with workforce, education and skills development (OK, a big simplification, but indulge me for this last chapter); from the “left” with social and labor market policy; and, finally, from the “right” with economic development. This is not pure speculation, but we can already see this policy experimentation under way in middle-income developing countries.