The World Bank Group has warned that developing economies face a looming employment crisis as millions of young people prepare to join the workforce without sufficient jobs to accommodate them.
This mismatch threatens economic stability, increases migration pressures, and poses risks to global security.
In a blog post on its official platform, the Washington-based institution described demographic shifts in developing countries as one of the most significant yet underappreciated forces shaping the global economy over the next decade.
The World Bank projected that about 1.2 billion young people in developing countries will reach working age within the next 10 to 15 years. However, current economic forecasts suggest only around 400 million jobs will be created in the same period. This gap could leave hundreds of millions without productive employment.
World Bank Group President Ajay Banga observed that while global attention often focuses on immediate crises such as conflicts, technological disruptions, and market volatility, slower-moving structural forces like demographics, food and water pressures, and globalisation trends are likely to have deeper and longer-lasting consequences.
“This challenge is not only a development issue,” Banga wrote in the post. “It is an economic challenge and increasingly a national security concern.”
The institution cautioned that failing to close the employment gap could strain public institutions and fuel irregular migration, social unrest, and insecurity, especially in regions with rapidly expanding youth populations.
It noted that the issue received limited attention at recent global gatherings, such as the World Economic Forum Annual Meeting in Davos, where more immediate geopolitical and economic concerns took precedence.
The bank called on policymakers to prioritise job creation in upcoming international forums, including G-7 and G-20 meetings. It argued that early action could convert demographic growth into an economic advantage rather than a source of instability.
To tackle the challenge, Banga said the World Bank is advancing a jobs-focused strategy based on three core pillars: infrastructure development, business environment reforms, and support for private-sector expansion.
First, the institution stressed investment in physical and human infrastructure, such as reliable electricity, transport systems, healthcare, and education. Without these foundations, private investment and job opportunities remain limited.
The bank highlighted a skills development centre in Bhubaneswar, India, supported through government and private-sector collaboration. It trains nearly 38,000 people annually with programmes aligned to labour market needs, enabling most graduates to find employment or start businesses.
Second, the World Bank emphasised predictable regulations and clear policy frameworks to boost entrepreneurship and investment.
It explained that job creation at scale relies heavily on private enterprises, particularly micro, small, and medium-sized businesses, which generate the majority of employment in developing economies.
The third pillar involves assisting firms to grow through financing tools from the bank’s private-sector arms, including equity investments, guarantees, and political risk insurance to lower investment risks.
One example is a trade finance guarantee for Brazil’s Banco do Brasil, expected to unlock about $700 million in affordable financing for small businesses, especially in agriculture.
The World Bank identified five sectors with strong potential for large-scale job creation: infrastructure and energy, agribusiness, primary healthcare, tourism, and value-added manufacturing.
It based these recommendations on evidence from country experiences, showing where targeted public and private resources yield the greatest employment impact.
The institution argued that closing the jobs gap is not a zero-sum game between developed and developing nations. By 2050, more than 85 per cent of the world’s population is projected to live in developing countries, creating the largest expansion of the global labour force and a major source of future consumer demand.
Growing developing economies could become stronger trading partners and more resilient supply-chain hubs, benefiting advanced economies through expanded markets and reduced migration pressures.
The World Bank identified risk, both real and perceived, as the main historical barrier to investment in developing markets, rather than a lack of opportunity. Development institutions can help by financing infrastructure, supporting regulatory reforms, and reducing investment uncertainty.
“If we get this right, demographic change can become an engine of growth and stability,” the bank noted. “If we get it wrong, the world will continue reacting to crises that were visible years in advance.”
