IZA/KfW Conference in Berlin

Sustainable and decent employment is increasingly recognized as an important end as well as a means of development. Recent events in North Africa have shown that lack of employment is a serious socio-economic and political challenge. Successful employment, on the other hand, involves not only income and poverty reduction, but also contributes to social security and cohesion and can provide a basis for economic development. To achieve more and better employment, partner countries and donor agencies need a better understanding of the causes of unemployment and the interactions between employment, growth, poverty and other factors. At the same time, drawing on practical experience, research can identify knowledge gaps that still pose limits to successful employment creation policy.

These issues were addressed at the conference on “Employment and Development” (Berlin, March 15-16, 2012) organized by IZA in cooperation with the KfW Development Bank, the German government’s agency for financial cooperation with developing countries. The conference consisted of a half-day public event with a distinguished keynote speaker and a high-level panel discussion, in which the challenges of employment were debated. The second day included a result-oriented working symposium at which leading academics presented the state of research. Subsequently, the participants discussed in parallel workshops how current knowledge can inform policymakers about innovative and more effective programs, and how this can be improved by further research and research-practice cooperation.

Participants stemmed from a wide range of research and practice organizations, including international organizations such as the OECD, the World Bank and the International Labour Organization (ILO), policy-makers from partner countries, German development cooperation agencies, political foundations and non-governmental organizations. Among the attendees there was a broad consensus that productive employment is key to fighting poverty and inequality. Keynote speaker Dani Rodrik (Harvard University) argued that countries should focus on creating a growth-enabling environment and labor markets. By contrast, some experts from the ILO favored the promotion of such forms of growth that directly serve the creation of decent employment.

The role of the informal sector was discussed controversially. Since it is in many developing countries an important and fast-growing sector, a sweeping reduction of the informal sector could be counter-productive for the poor. On the other hand, informal work is often characterized by low wages and labor standards. As a strategy to take advantage of the existing informal sector and gradually improve the working conditions, the KfW Banking Group uses instruments of microfinance and the promotion of small and medium enterprises. Moreover, the KfW Development Bank considers employment creation as a cross-cutting task including all sectors and regions.

IZA Director Klaus F. Zimmermann pointed out that the high-level conference helped bring together internationally available knowledge of development research and development practice. The conference thus contributed to building a catalog of innovative approaches in order to derive concrete recommendations for action. The expert meeting complemented IZA’s extensive activities in the field of development research. IZA has been cooperating for many years with the World Bank within the program area “Employment and Development”. In addition, the UK Department for International Development (DFID) recently commissioned IZA to coordinate research projects worth over ten million euros dedicated to the analysis of “Growth and Labour Markets in Low Income Countries”.

The conference program is available online.