By DAVID JOHN-FLUKE

The Coming Jobs Crunch: World Bank Warns 1.2 Billion Young People Face a Shrinking Opportunity Gap

THE World Bank Group has warned that developing economies face a major employment challenge over the next 10 to 15 years, with approximately 1.2 billion young people expected to enter the labour market while only about 400 million jobs are projected to emerge.

The resulting shortfall of roughly 800 million jobs could intensify economic pressures across countries already grappling with high debt, conflict, expensive essential goods and limited public resources.

World Bank Group President Ajay Banga presented the figures during the 2026 Annual Meetings Plenary in Bangkok, Thailand, on 16 October. He called for a development model that combines infrastructure, private enterprise, institutional reform and technology to create opportunities at a scale capable of absorbing the growing workforce.

His warning centres on a fundamental question: how can developing economies turn rapid population growth into a source of productivity and prosperity when employment opportunities are not expanding at the same pace?

The answer, according to Banga, requires governments and development partners to rethink how they finance projects, support businesses and prepare workers for changing economic conditions.

The Scale of the Employment Challenge

The projected shortfall is not a count of people currently unemployed. Instead, it compares the number of young people expected to reach working age in developing economies with the jobs those economies are projected to create.

That distinction matters because the challenge extends beyond existing unemployment figures. Countries must generate additional opportunities for new labour-market entrants while also helping current workers improve their productivity, skills and earnings.

If job creation falls behind population growth, young people may struggle to find stable work even when they have completed their education or acquired practical skills. Businesses may also lose opportunities to expand because household purchasing power and local demand remain weak.

Furthermore, the consequences can cross borders. Persistent employment shortages may intensify migration pressures, increase social frustration and weaken the economic stability on which regional trade and investment depend.

Banga framed the issue in human terms, arguing that work provides more than income. It offers dignity, independence and the opportunity to build a future.

Yet demographic growth need not become an economic liability. With sufficient investment, reliable infrastructure and productive businesses, a growing workforce can strengthen domestic markets and support long-term growth.

The central policy challenge is therefore to create the conditions under which young people can turn their capabilities into productive work.

Reorganising Development Finance Around Jobs

Banga said the World Bank Group had been adapting its financing model to respond to countries’ changing needs. Rather than relying on a single source of funding, the institution aims to combine public finance, private capital, philanthropy and technology.

Each source has a different role. Public and concessional resources can support essential services and projects that commercial investors may initially avoid. Private capital can help expand investments that become financially viable, while philanthropic funding can absorb early-stage risks and support experimentation.

Technology, meanwhile, can help governments and businesses improve productivity and make development spending more effective.

This approach places greater emphasis on using development finance to mobilise additional resources. However, it also makes the quality of project selection, risk management and accountability particularly important.

A project may attract large financing commitments without producing the expected employment benefits. Consequently, governments and development institutions must assess not only how much money they mobilise, but also whether projects improve productivity, support local businesses and create durable economic opportunities.

Banga outlined internal reforms intended to make the World Bank Group more responsive. He said project preparation time had fallen from 19 months to nine months, while 153 performance scorecard measures had been replaced with 22 indicators focused on development impact.

He also reported that financing tied to results had risen from about one-third to half of the institution’s financing. In addition, balance-sheet reforms had created more than $100 billion in additional International Bank for Reconstruction and Development lending capacity over a decade.

These measures are intended to improve efficiency and expand the institution’s ability to support development. Their significance, however, will ultimately depend on what happens after financing decisions are made.

The Private Investment Gap

Private investment has become a central element of the World Bank Group’s employment strategy. Banga reported that capital mobilised by the institution increased from approximately $35 billion in the 2022 financial year to $112 billion in the previous financial year.

Including the institution’s own financing, the total exceeded $230 billion during the period.

He also reported that private capital mobilisation nearly tripled in lower-middle-income countries, quadrupled in upper-middle-income economies and more than doubled across Africa.

Despite this expansion, investment remains unevenly distributed. Banga acknowledged that the figure for low-income countries stood at approximately $3 billion, reflecting the difficulty of attracting commercial capital to economies where risks remain high.

This imbalance presents a serious development question. Countries with weak infrastructure, limited access to finance and fragile institutions often need investment most, yet those same conditions can discourage investors.

To address the problem, the World Bank Group is seeking to improve the conditions under which businesses operate. These include more predictable regulations, stronger institutions, better infrastructure and financing arrangements that reduce barriers to investment.

However, reducing risk for investors must go hand in hand with clear development objectives. Governments and development institutions need to establish whether investments generate local economic value, expand productive capacity and create employment rather than simply increase the volume of capital moving through financial markets.

Small Businesses at the Centre of Job Creation

Micro, small and medium-sized enterprises are a major focus of Banga’s strategy. These businesses can provide employment across sectors and communities, including fragile and conflict-affected areas where larger investment projects may be difficult to establish.

Yet smaller firms often struggle to obtain affordable financing, maintain reliable digital records, reach larger markets or navigate complex regulations.

The World Bank Group’s proposed strategy aims to help them overcome these obstacles. Better access to finance could allow viable firms to purchase equipment, increase production and recruit workers. Digital records could also help businesses demonstrate their performance and establish relationships with lenders and suppliers.

Nevertheless, credit alone will not solve the problems facing small enterprises. Firms also need customers, reliable electricity, accessible transport, suitable skills and a regulatory environment that allows them to grow.

For that reason, support for small businesses must connect financing with broader economic reforms. A loan may help an entrepreneur buy machinery, but unreliable power or poor access to markets can prevent the investment from generating the expected returns.

The employment challenge therefore requires an integrated approach that supports businesses throughout their growth, rather than treating access to capital as the only obstacle.

Infrastructure & Skills Must Advance Together

Banga said the World Bank Group committed $40 billion to infrastructure and human development foundations in the previous financial year, representing nearly one-third of its financing.

Another 30 per cent of its public-sector financing supported policy and institutional reforms intended to strengthen governance, improve institutional performance and create a more predictable environment for businesses.

These investments address some of the constraints that prevent economies from generating jobs. Roads can connect producers to markets, electricity can support manufacturing, and water infrastructure can improve public health and agricultural productivity.

At the same time, education and skills development help workers participate in changing industries. Employers need people who can operate equipment, maintain infrastructure, use digital tools and adapt to new production methods.

If either side is neglected, the employment impact may be limited. Infrastructure without a skilled workforce may not generate the expected productivity gains, while trained workers may struggle to find employment if businesses lack the facilities and investment needed to expand.

The policy implication is clear: governments must coordinate infrastructure, education, healthcare and enterprise development rather than treat them as separate projects.

Artificial Intelligence & the Conditions for Adoption

Artificial intelligence offers another potential route to higher productivity. Banga identified possible applications in agriculture, education, healthcare and market access for entrepreneurs.

Farmers could use practical digital tools to improve decisions, while healthcare workers could gain support for certain tasks and small businesses could connect with customers more effectively.

However, the benefits are not automatic. Advanced AI systems require reliable electricity, computing infrastructure, data, digital connectivity and specialised skills. Many developing economies still face gaps in these foundations.

Consequently, governments must establish the conditions that allow people to use technology productively. That includes investing in electricity and connectivity, improving access to devices, developing relevant skills and introducing safeguards.

There is also a broader employment question. Technology can improve efficiency, but the effect on jobs depends on how firms use it and whether new economic activities emerge. The development priority should therefore be to connect technological innovation to productive sectors and help workers adapt as the nature of work changes.

Africa’s Electricity Challenge

Reliable power is especially important for countries seeking to expand manufacturing, agriculture, digital services and small businesses.

Banga said the World Bank Group and the African Development Bank were pursuing Mission 300, an initiative intended to provide electricity access to 300 million people across Africa by 2030.

He reported that 59 million people had gained access so far. The annual pace had accelerated from 12 million in the 2024 financial year to 18 million in 2025 and 28 million in the previous financial year.

Nevertheless, access alone does not guarantee a dependable electricity supply. Businesses need power that is sufficiently reliable and affordable to support production, refrigeration, digital transactions and equipment.

The World Bank Group’s approach includes renewable energy, hydropower, gas where appropriate, nuclear energy where viable, transmission infrastructure, electricity grids and storage.

Expanding electricity access could support employment in construction, maintenance, manufacturing and services. More reliable power could also reduce operating costs for existing businesses and make new investments more attractive.

However, governments must ensure that energy projects reach the communities and enterprises that need them, while maintaining affordability and financial sustainability.

Water, Agriculture & Healthcare as Economic Foundations

The jobs strategy also depends on basic services that improve productivity and living standards.

Banga said the World Bank Group was working with partners towards improving secure water access for up to one billion people by 2030, with the institution targeting 400 million. He added that 20 country compacts had established a pathway towards providing clean water to 150 million people.

In agriculture, the institution and its partners are targeting a transition for 300 million smallholder farmers from subsistence production to generating surpluses by 2030. The World Bank Group’s own target is 200 million farmers, while its initial AgriConnect pipeline was developed to support 82 million farmers in its first full year.

If supported by storage, processing, transport and market access, higher agricultural productivity could create opportunities beyond farming itself. Food processing, logistics, packaging and distribution can all contribute to employment and help producers capture more value.

Healthcare is another part of the development agenda. Banga said the HealthWorks initiative was targeting 1.5 billion people with quality, affordable healthcare by 2030, with approximately 600 million already reached.

Better access to healthcare can support a healthier workforce and reduce the burden that illness places on households and employers. Healthcare investment can also support jobs in service delivery, construction, supply chains and related industries.

However, announced targets should be distinguished from completed outcomes. Their contribution to employment and living standards will depend on implementation, access, service quality and the extent to which programmes reach underserved communities.

Economic Corridors & the Challenge of Local Value Creation

Banga also highlighted investments in critical minerals, economic corridors and local manufacturing as ways to help developing countries retain more value from their resources.

He reported that 52 new economic corridor projects were launched in the previous financial year, compared with 20 three years earlier.

The Lobito corridor illustrates the broader potential of transport infrastructure. Although initially designed to move minerals, Banga said it was increasingly supporting agricultural trade and economic activity in surrounding communities.

Such corridors can reduce transport barriers and connect producers with regional and international markets. They may also attract investment in processing, warehousing and manufacturing.

Nevertheless, the existence of a corridor does not guarantee widespread local benefits. Governments must consider whether domestic firms can participate, whether workers possess the required skills and whether communities gain access to the economic opportunities that emerge along the route.

For resource-rich countries, the wider challenge is to move beyond exporting raw materials and develop more of the industries, services and skills associated with production. Doing so could create additional jobs and retain a larger share of economic value within national economies.

Releasing Capital for More Development Projects

Banga said six multilateral development banks were working on common mechanisms to assess, document, package and transfer investments to other investors.

Under the proposed arrangement, development institutions could transfer mature investments to long-term investors such as pension funds, insurers and sovereign wealth funds. The institutions could then use the capital released to finance additional projects.

The approach could broaden the pool of development financing and reduce dependence on multilateral institutions’ own balance sheets. However, its impact would depend on transparent project assessment, investor confidence and the ability to demonstrate reliable financial and development outcomes.

The proposal also raises a practical question: how can governments ensure that efforts to mobilise private capital remain aligned with public development priorities?

Effective safeguards, transparent reporting and clear measures of results will be important in assessing whether financing arrangements deliver benefits for businesses, workers and communities.

From a Jobs Projection to an Employment Strategy

The World Bank Group’s warning places job creation at the centre of the development debate. But the projected gap cannot be addressed by a single institution, one financing mechanism or a collection of isolated infrastructure projects.

Governments must improve the business environment, strengthen institutions, invest in education and skills, and expand access to reliable electricity and other essential services. Businesses need conditions that allow them to invest, innovate and grow. Development institutions must demonstrate that their financing supports productive activity and delivers measurable results.

The World Bank Group’s strategy brings together several of these priorities, from small-business financing and energy access to agriculture, healthcare, digital technology and economic corridors.

The scale of the projected employment gap, however, means that implementation will matter as much as ambition. Policymakers will need to track whether projects are completed, whether businesses expand and whether new opportunities reach the young people entering the workforce.

Banga argued that the projected shortfall does not have to become the world’s future. Achieving a different outcome will require sustained coordination between governments, investors, businesses and development partners.

The central test is whether these efforts can turn population growth into productive employment. For the next generation, the success of development policy will ultimately be measured not only in financing commitments or completed infrastructure, but also in the opportunities people can access to work, earn and build secure futures.