Education for Sustainable Job Creation

Research has found that jobs for poor people can provide a direct route out of poverty and job creation is thus key to achieving several of the Sustainable Development Goals (SDGs). However, many jobs in developing countries do not offer decent wages and working conditions that can sustain a path of productivity growth and poverty reduction. In light of the SDGs, these jobs are not sustainable. One indicator of this is the high worker turnover that is frequently observed in manufacturing. In the rapidly expanding manufacturing sector in Ethiopia, for example, most workers starting in the new factories quit their job within the first year. This is very costly for the workers, in terms of time searching for a job that they did not really want and in terms of low wages during the initial period of work when they are learning how to do the job. The extreme turnover is also very costly for the companies in that it curtails productivity when new workers are trained to take over the job, and in the initial phase when the new workers are less productive than more experienced workers. Reducing these costs for the factories should make them more profitable and increase the demand for labor and therefore create new jobs. Although the work can be hard, hazardous and unattractive for many people, it offers income generating opportunity that is highly appreciated by others. At the same time, workers seem to lack both the technical skills and the soft skills necessary to hold on to a job. Our study assess the individual and complementary causal effects on business growth, job creation and worker welfare of employer/manager and employee training by a large-scale randomized controlled trial (RCT), complemented with lab experiments on incentive effects and qualitative studies. Separating the synergies from training both managers and workers from the standard approach of training either group is novel and potentially important.

Jobs can provide a direct route out of poverty and job creation is thus key to achieving several of the Sustainable Development Goals. However, research shows that many jobs do not offer wage and working conditions that can sustain a path of productivity growth and poverty reduction. One indicator of this is the high turnover rate in industrial employment: Blattman and Dercon 2018 report that 77 percent of those offered an industrial job in Ethiopia had quit within a year. Often referred to as sweatshops, jobs in this sector are typically poorly paid and often hazardous, and may offer worse prospects than informal sector activities. But also supply-side constraints, that of the employee, may be important in this respect: workers may lack both the technical skills and the soft skills necessary to hold on to a job. Unsustainable jobs are costly both to the employer and to the employee, so why is this phenomenon so pervasive? We propose that insufficient knowledge and suboptimal attitudes on both sides are important factors behind the lack of sustainable jobs. In order to test this hypothesis, we propose a field experiment addressing the knowledge and attitudes dimensions on demand and supply side of jobs through targeted training programs. There may be important complementarities in employer-employee relations: Training employers about human resource management may have limited value if the employees do not appreciate the importance of time management. Training workers to take long-term perspectives may have limited value if the employer only focuses on the present. Offering training to both the employer and the employee may be essential for decent job creation. There are no studies addressing such complementarities, and our project should provide important new insights to the literature. Our research has high potential impacts as most large donors run one-sided programs focusing on either workers or employers.