By Dani Rodrik and Rohan Sandhu for the NBER , July 2024
IV.Illustrative cases
In this section, we provide summaries of four of the twenty initiatives. These case descriptions are meant to serve as illustrations of the four broad strategies we outlined previously. The first case represents an intervention focused on established, large incumbent firms (Uber and Ola), and their partnership with the state government of Haryana, India, to expand employment. The second case focuses on the provision of public inputs, such as management training and financing to small enterprises in Nigeria, through a business plan competition called Youth Enterprise With Innovation in Nigeria (YouWiN!). The competition element of this intervention enabled self-selection of the most promising and dynamic small enterprises. The third case summarizes the use of new technologies to complement less-skilled labor to enhance the tasks workers can perform. In this case, frontline health workers, called Accredited Social Health Activists (ASHAs) in Jhansi, India were provided a mobile phone-based multimedia job aid. This mobile application served as a combination of a self-learning, client management, decision support, and reporting tool for ASHAs. Our final case focuses on labor market intermediation provided by Harambee in South Africa, where less-educated workers are provided vocational training combined with wrap-around services, including psychometric data, career counselling, and internships, to enhance employability.
A.Saksham Saarthi Partnership with Uber & Ola in Haryana
In 2018, the state of Haryana in India faced a youth unemployment rate of 9.2 percent. In July of that year, the state government launched a unique public-private partnership – called Saksham Saarthi – with taxi aggregators Uber and Ola, to increase employment opportunities for youth in the state. 3 The partnership was based on mutual benefit rather than a financial obligation, enabling the government to address youth unemployment and the taxi aggregators to expand their services in the state.
Saksham Saarthi, which translates to “capable charioteer/driver,” was initiated via a Memorandum of Understanding (MoU) between the Government of Haryana and taxi aggregators Ola and Uber. Both companies responded to a request for “expressions of interest” from the government’s Department of Employment. The Government of Haryana provided the companies targeted access to their database of registered unemployed youth, enabling the companies to more efficiently recruit new drivers. In return, Ola and Uber were requested to provide periodic employment targets to the government; but these numbers were intentionally flexible with no penalty if stated targets are not met.
The partnership is predicated on a consistent feedback loop between the partners, through regular calls and meetings, to maintain good faith and goal alignment. The government also uses its existing resources such as media campaigns and jobs fairs held by district employment offices to publicize the program. While the program hasn’t been formally evaluated, intermediate reporting reveals several positive trends:
•Job creation: Between July 2018 and April 2019, 24,000 youth were on-boarded by Ola and Uber in Haryana and the opportunity to drive bike taxis with these aggregators was created.
•Policy reform: As part of the program, the Government of Haryana implemented policy changes to reduce the administrative burden of obtaining commercial licenses, which are required to operate a taxi in the state. This included reducing the processing time from four to two weeks, standardizing the application and requirements, and allowing non-resident migrants to apply for commercial licenses. These changes were piloted in the district of Gurugram with plans to scale to the entire state.
•Market expansion: The program has facilitated Uber and Ola’s introduction and expansion of two-wheel/bike taxi services in Haryana. Although not a stated goal of the program, this could also serve to benefit the government and public by increasing the availability of lowcost transportation, contributing positively to local economic development.
B.Youth Enterprise With Innovation in Nigeria (YouWiN!)
Youth Enterprise With Innovation in Nigeria (YouWiN!), a business plan competition for young entrepreneurs, was launched in 2011, with the aim of encouraging innovation and job creation through the creation of new businesses and expansion of existing businesses.4 The program was developed as a collaboration between the Ministries of Finance, Communication Technology, and Youth Development, with support from the U.K. Department for International Development (DFID) and the World Bank. At the time YouWin! was implemented, 99.6 percent of firms had less than 10 workers. Multiple market failures and informational asymmetries prevented individuals with good ideas from accessing finance. Female entrepreneurs faced even more difficulties to secure funding.
The competition was implemented over multiple stages, comprising an initial application, a four-day training, submission of detailed business plans, evaluation and selection, and disbursement of grants. At the outset, awareness about the program was created through several outreach programs, including a high-profile launch by the President, roadshows, rallies, and social media campaigns. At the first stage, applicants submitted basic information about their business. This was scored along various parameters (including, quality and viability of business ideas and number of jobs created) by an independent evaluator. Subsequently, successful applicants were invited to a short training on preparing a business plan, which was scored by the Enterprise Development Center (EDC) of the Pan-African University and the professional services firm PricewaterhouseCoopers (PwC). The program also had a regional dimension; applications were sourced and selected from geographical zones, and winners were linked to banks, financial institutions, and mentors in their respective regions.
Successful applicants were notified and eligible to receive up to 10 million naira (around $7,000) in grants, depending on their business plans. The disbursement of each tranche of the award was conditioned on the firm’s performance on specific milestones, such as business and job creation and opening of corporate bank accounts. The partnership between the government and independent external monitors enabled easier tracking of “problem awardees.” Winners received one-on-one mentoring from seasoned local entrepreneurs and business managers. An additional bootcamp session provided deeper training on topics such as business planning and management, operations, finance and accounting, and communication (including business writing and public speaking)..
Evaluations of the program reveal that it has had significant impact on the rate of business startup, employment, profit, and survival of existing firms (McKenzie 2017). It has been able to accurately identify high potential entrepreneurs who invest in innovation, physical, and human capital in a largely informal Nigerian economy. More than 9 billion naira was awarded to winners through the program. The success of the initial pilot led to its replication in subsequent years. Some of its key successes include:
•Better visibility of smaller businesses: YouWiN! has funded 1200 businesses between 2011 and 2014. The Government has also created websites by industry and zone to boost the visibility of growing businesses. As per a survey in 2013, more than 85 percent of the awardees felt that the websites were useful (Aina, 2016).
•Mechanism for identifying high potential entrepreneurs: McKenzie (2017) finds that the program attracted entrepreneurs who invest in higher innovation, resulting in higher sales and profits, even during periods of economic crises (e.g., in 2016).
•Higher job creation: the competition had a positive impact on individuals starting new businesses as well as those growing their existing business. Notably, winning firms were also more likely to have 10 or more workers. Overall, the competition created 7,027 jobs (McKenzie 2017).
C.The Manthan Project in Uttar Pradesh, India
In 2012, the Manthan Project provided Accredited Social Health Workers (popularly known as ASHA workers or ASHAs) in two districts of the state of Uttar Pradesh, India, a mobile phonebased multimedia job aid called mSakhi. 5 This project was initiated as a collaboration between the Bill and Melinda Gates Foundation, Qualcomm, IntraHealth International, and the Government of Uttar Pradesh, with the objective of enhancing the training support provided to ASHAs to improve maternal and newborn health outcomes in Uttar Pradesh. Despite the establishment of routine training procedures, ASHAs struggled with inadequate knowledge and skills, lack of supervisory support, and onerous reporting requirements. In addition, from a personnel management perspective, there was no mechanism for coordination between ASHAs and auxiliary nurse midwives (ANMs) who provided additional support to ASHAs during home visits.
The mSakhi app sought to address these challenges by combining self-learning, client management, and reporting in an easy-to-use format. The content on the app was sourced from national government repositories. Upon registration, mSakhi generated a home visit schedule for each beneficiary and provided a set of audio-video guided instructions for counseling, assessment, and referral specific to each visit. ASHAs entered beneficiary data such as names and village information into the app during home visits. Data was stored in a centralized database, which was integrated with existing government systems for real-time tracking of both ASHAs and beneficiaries.
The initial pilot studied over 140 ASHAs, covering more than 80,000 beneficiaries in the Bahraich and Jhansi districts of Uttar Pradesh. The results indicate that adoption of the technology contributed to improved knowledge, skills, and productivity of ASHAs. In 2015, the mSakhi app scaled to 5 districts of Uttar Pradesh. In 2018, the app was also scaled to other functions, like screening people over 30 years of age for non-communicable diseases like diabetes and hypertension in the state of Jharkhand. Surveys conducted by the implementing partners of the program highlight the following:6
•Higher productivity: The initial pilot results highlight that for the ASHAs treated, average monthly usage per ASHA increased from 52 minutes at start-up to 121 minutes at endline. ASHAs gained confidence in using the application as a counseling tool. Having a mobile phone enabled them to quickly access counseling messages without carrying heavy flipbooks during visits.
•Improved Knowledge: ASHAs showcased significant improvements in knowledge of critical RMNCH (reproductive, maternal, newborn, child, and adolescent) topics along with greater recall of at least six critical newborn conditions warranting referral.
•Improved Skills: ASHAs were able to deliver complete counseling messages with all critical steps using mSakhi: giving the message, explaining its importance, and using a counseling tool during their interaction with the beneficiary. ASHAs who used the mSakhi app were also able to correctly identify sick newborns needing immediate referral and those needing home-based treatment more often than ASHAs who did not use the app during the pilot.
•Better tracking: mSakhi enabled better monitoring of ASHAs by their supervisors (ANMs) and Medical Administrator of the Community Health Centre of Baragaon along with timely intervention to improve health outcomes. Seamless integration with the Government’s Mother-Child Tracking System (MCTS) and the Health Management Information System (HMIS), also led to better tracking of beneficiaries and community practices regarding maternal and newborn health.
D.Harambee Youth Employment Accelerator in South Africa
South Africa has some of the world’s highest rates of unemployed youth, at 61 percent (Chutel 2023). The social enterprise Harambee, established in 2011, has been one of the most celebrated solutions to this crisis. It was founded by private equity firm Yellowwoods Capital, has partnered with the National Treasury and subnational governments, and received funding and support from USAID and a variety of global private philanthropic organizations. Its goal is to target two key drivers of youth unemployment: 1) poor education leading to youth who lack employable skills, and 2) reliance of most South African firms on their own limited social networks for recruitment and biases against “unskilled” workers from poor backgrounds (Altbeker 2015).
Harambee operates a Youth Employment Accelerator Program that aims to: 1) recruit unemployed youth, 2) assess and develop youth skills and competencies, 3) partner with employers on job matching and creation, and 4) support youth in the job search process through trainings and tools (skills certifications, reference letters). It leverages mobile networks and data analytics to reach and match excluded, poor youth to long-term employment opportunities. This includes partnerships with employers to rethink the skills they are looking for and to recruit using Harambee’s platforms. It also includes conducting door-to-door and social media outreach to get the most excluded youth to join the platform. Harambee conducts standardized skills assessments of jobseekers and analyzes psychometric and other data to better match them with jobs and provide job-specific training to prepare them for success and retention in their roles.
Harambee reports the following key outcomes to measure its overall impact (Harambee 2023):
•Job creation: 3.8 million jobseekers have been supported through the program and 1.2 million opportunities enabled.
•Partnerships: 1386 employer partners.
In addition, formal evaluations have generated evidence to support the following outcomes of Harambee’s interventions:
•Information: Providing job seekers with certified information on their skills assessments that they can share with prospective employers led to increases in employment (+5.2 percentage points), hours worked (+20%), earnings (+34%), and the likelihood of obtaining a formal job with a contract (+2 percentage points) (Carranza et al. 2022).
•Reference letters: Providing job seekers with a reference letter template that they can share with prospective employers increased the likelihood an employer would respond to them (+60%) (Roode 2021).
V.Conclusion and takeaways.
Traditionally, jobs initiatives have been framed in terms of skilling and workforce development policies. However, research over the past decade has found that such policies have limited impacts on employment and earnings and that they are seldom cost-effective (McKenzie 2017; Blattman and Ralston 2015). This traditional approach is rooted in the notion that policy should address training shortcomings while letting firms create jobs. However, creating employment at the scale we need requires more active productivity-enhancing labor market strategies on the demand side of labor markets as well. Policy interventions need to focus on creating productive jobs as well, rather than simply training workers (Carranza and McKenzie 2024). The interventions we study help us uncover some of the underlying mechanisms and approaches to affect the demand side of labor markets, and in some cases, the intermediation space.
The programs we study show that interventions focusing on the demand side tend to outperform solely supply-side strategies. Successful demand-side interventions take several forms. A key feature that emerges is the need for close coordination between governments and firms. For example, Haryana’s Saksham Saarthi job creation program enabled the state government to make data on unemployed youth available to large existing firms, to expand employment. While the government didn’t impose any explicit conditionalities or employment targets for the firms, the partnership served as an avenue for the government to better understand the firms’ operational challenges and provide public inputs. Among other changes, the government reduced the administrative burden of obtaining commercial licenses to operate taxis in the state, by cutting the processing time in half, changing application requirements, and allowing non-resident migrants to apply for commercial licenses. The program also enabled an expansion of Uber and Ola’s two-wheel and bike taxi services. Such productivity-enhancing policy interventions are likely to have downstream impacts on employment.
Another demand-side approach involves appropriately targeting SMEs and providing intensive coaching, mentoring, and incubation services. Nigeria’s YouWIN! Program sought applications from firms with business plans. This multi-round application process was evaluated along a range of parameters – job creation goals, viability of ideas, management skills and experience, and profitability. Winners of this program received financial support (conditioned on milestones), entrepreneurship training, and targeted mentoring. UPSHIFT in Kosovo similarly selected youth groups to receive seed funding for start-up projects. These groups were then provided incubation support, access to mentors, equipment, and co-working spaces.
The goal here isn’t to just provide SMEs financial support and incentives, though that is a crucial element of these programs. The long-term effects of such interventions depend on their ability to enhance firms’ productivity and entrepreneurial capabilities. By contrast, the provision of a wage subsidy to urban microenterprises in Sri Lanka in 2009 had limited impacts on long-term employment and profitability. De Mel et al. (2019) conclude that it wasn’t labor market imperfections per se that prevented these microenterprises from hiring more.
Focusing on productivity is key, both in targeting firms that have the capacity to grow and enhancing their capabilities. The competition element of YouWIN! and UPSHIFT allow the more dynamic firms to self-select. China’s Little Giants program, which focuses on the high-tech manufacturing sector, serves as a case study for the targeting of SMEs more broadly. We also include it among the programs we study given its potential supply chain effects. The program is a part of a support framework that classifies SMEs as Innovative, Specialized, Little Giants, and Manufacturing Champions. The first two categories are determined at the provincial level and the latter at the national level, with a goal of identifying 1 million “Innovative SMEs” and 10,000 “Little Giants” by 2025. Brown et al. (2023) describe this as a continuous competition-based process, involving multi-level evaluation and cultivation at the national and local levels. The program has also brought in national and local banks and financial institutions, large firms to serve as clients and mentors, and universities and research institutions.
A third approach we studied includes providing new technologies to complement less-skilled labor to enhance the tasks workers can perform. As the mSakhi case reveals, a well-designed technological intervention combining self-learning, client management, and reporting in an easy-to-use format can produce greater adoption, higher productivity, and improved knowledge and skills among community health workers. This app-based support not only provided continuous, on-the-job training and resources to the health workers, but was also integrated with their day-to-day management and reporting systems.
Employment problems are likely to be less effective if the productivity component is neglected. The Zambian government created a new Community Health Assistant (CHA) position both as a public employment program and to plug gaps in the delivery of health services in rural areas. CHAs are provided training for a year before they return to work in their communities. Research finds that bad management and governance and inconsistent supervision adversely affected the performance of the CHAs (Zulu et al. 2015; Shelley et al. 2016). The contrast with the mSakhi intervention highlights the importance of interventions that can serve as skill-enhancing complements to workers on the job and be effectively integrated with their day-to-day needs.
Our case studies reveal that the training programs that work are often led by social enterprises and are combined with other types of labor market intermediation and wraparound services. This is consistent with Alfonsi et al. (2020) that finds training interventions that are most effective are those that are intensive, target specific sectors, and rely on selecting high-quality training institutions. Among our cases, the U-Learn II program in Uganda offered comprehensive training to unemployed youth around technical skills, financial literacy, and life skills. Notably, the program partnered with large firms to offer youth internships and training in fields related to supply-side challenges faced by firms. In Kenya, the Mombasa County Government established Labor Market Information and Training Centers (LMTCs) to provide competency development trainings, career counseling, and internships. Notably, these centers worked with local suppliers of consumer goods to create – and fill – micro-distributor jobs to deliver goods to the thousands of small retailers across Mombasa County (ILO, 2016).
To be effective, training programs require significant labor market intermediation and coordination with firms to understand employment needs, co-design training, establish apprenticeships and internships, and in some cases, to rethink the skills they are looking for (as in the case of Harambee’s intervention). Additionally, successful training interventions also tend to target specific sectors. For instance, Panama’s New Employment Opportunities (NEO) program sought to address the skills gap across construction, logistics, and tourism – sectors it identified as having the highest need for trained personnel. Notably, the initiative also brought the private sector on board in a formal capacity on sectoral development strategy and skills councils. The private sector involvement also required a $3:$1 match, which could be in-cash or kind.
The “training” in these programs is just one element in a suite of concomitant interventions. Three common themes emerge across these programs. First, they provide important wraparound services, ranging from career counselling and internships to transportation stipends for workers to increase job retention. Second, and relatedly, several of these programs are localized, implemented at the county and city levels, rather than nationally. And finally, these require a variety of stakeholders to work in concert.
This final theme is generalizable across all four of the strategies we have identified. These programs are fundamentally implementation intensive, requiring coordination of a range of inputs, a multitude of incremental steps, and real-time monitoring. Accordingly, successful interventions are predicated on partnerships. Coordination between governments and firms, and intermediary institutions (like Chambers of Commerce and civil society) are critical. The success of programs also depends on coordination across government departments, including local agencies which are able to respond iteratively. For instance, in Haryana, while there was a high-level partnership between the state government and Uber and Ola, action at the district level was critical to help address constraints to the firms’ productivity.
Our goal in this paper wasn’t to formally assess the effectiveness of different types of programs. We are skeptical that this is a domain where “best practices” can be formulated and disseminated. Policy should focus instead on multiplying the kinds of interventions we have summarized here and scaling those that seem locally successful. Our review highlights some of the critical systemic aspects that need to be in place and underscores the need to think about productive employment generation within a larger system. The supply and demand sides of labor markets are equally important, and successful programs tend to address both. Productive employment creation requires enhancing the skills of both workers and firms, as well as the provision of the intermediation services that connect the two sides of labor markets..
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