Here are 3 industries with the highest potential for job creation

The economic fallout from the COVID-19 pandemic together with recent geo-political crises have impacted labour markets in very different ways, according to a new report.

In many advanced economies, unemployment rates are the lowest they have been for decades and labour shortages are widespread. In member countries of the Organisation for Economic Cooperation and Development (OECD) the average jobless rate was 4.9% at the end of 2022.

However, the picture is very different elsewhere. In low and lower-middle-income countries, levels of unemployment remain above pre-pandemic levels. Lower-middle income countries in particular have been experiencing the highest rates of unemployment.

This is why the World Economic Forum is launching a Global Future Council on the Future of Job Creation, to help leaders discover and act on key investment pathways to create new jobs. In preparation for the council, a new report lays out the global need for job creation and four potential investment pathways leaders should consider.

Demographics have also played a significant role in the mixed global employment picture. Labour shortages in richer countries may be compounded further by a decline in the working-age population.

The paper notes that in Africa, which has the highest unemployment rates, the population is projected to grow by 450 million by 2035. But World Bank data suggests that without policy reform between now and then, there may be only 100 million new jobs on the continent available by then.

Women also experienced a greater loss of employment during the pandemic. Gender parity in the labour force was 62.9%, according to the World Economic Forum’s Global Gender Gap Report 2022. This is the lowest level ever registered by the index.

And young people are another demographic experiencing greater levels of joblessness. The share of 15-24-year-olds not in employment, training or education rose to 23.3%, according to International Labour Organization (ILO) data.

The paper's authors say that aside from challenging macroeconomic headwinds, labour markets around the world are being disrupted by an era of industry transformation. And increased adoption of technology, the green energy transition and the restructuring of value chains are also impacting job creation.

The Council will work to help leaders discover the key investment pathways to create new jobs at both a local and global level: "Industries with a high potential for job creation are industries in which investments lead to a high rate of direct and indirect job creation. Direct job creation is driven by the creation of new businesses and the growth of existing businesses."

These are three industry sectors it identifies as having the greatest existing and future potential to drive high job creation:

Most of the world’s economies have committed to lowering emissions to combat the climate crisis. The energy transition could lead to significant job growth as domestic renewable capacity is scaled up.

China is currently the world leader in this sector providing a 42% share of renewable energy jobs globally. The country “has secured a leading role largely due to investments in offshore installations, production of critical materials such as polysilicon and dedicated industrial parks,” the briefing paper notes.

In the US, the Inflation Reduction Act (IRA) has created an estimated 100,000 clean energy jobs since it became law in August 2022. The Biden Administration is providing $370 billion in investments and tax incentives to turbo-charge the green energy transition in America.

Technology and digitalization are important drivers of direct job growth globally, but they are also significant drivers of growth elsewhere.

A study on employment growth in Europe has provided empirical evidence to support this.

“By using a standard economic growth model with employment multipliers, the authors estimate that each additional tech job leads to the generation of around five additional jobs in other sectors in Europe," says the paper.

Investing in care could create almost 300 million jobs globally by 2035, according to the ILO. It estimates this will include 96 million direct jobs in childcare, 136 million in long-term care, as well as 67 million indirect jobs in other non-care sectors.

Out of total net employment creation, women will hold 78% of these new jobs by 2035. The report says making the necessary investment will “reap crucial economic and social benefits”.

However, new employment must offer "fair pay, protection and equal opportunity for all". The report highlights the fact that 214 million workers are currently living in extreme poverty globally and 60% of workers employed in the informal economy lack social protection, according to ILO data.

The World Economic Forum’s Growth Summit in Geneva on 2-3 May 2023 is focused on finding ways to ensure jobs and future opportunities for all. Its key themes are enabling resilient growth, developing human capital and accelerating economic equity.

“We are facing a critical moment for the global economy, as the past year has accelerated trends of rising inequality, sharpening polarization, and both threats and opportunities from technology to jobs," says Saadia Zahidi, Managing Director, World Economic Forum.

"The Growth Summit will bring together leaders to shape a new vision for inclusive growth and advance initiatives to empower people with future-ready knowledge and skills. We must shape a recovery and a future economy that works for all."