Rethinking Job Creation for Palestinian Youth – World Bank Article

Imagine a 22-year-old Palestinian graduate: Let’s call her Rania. Rania dreams of one day becoming an engineer. She’s been fascinated with how things work since she was very young, always analyzing problems and building new solutions. Despite having a university degree, however, she hasn’t been able to find a job since she graduated, which was nearly a year ago. The longer she has to wait, the more this impacts her long-term prospects of financial stability and of starting a family and buying her own home. She lives with her parents in Bethlehem but is eager to start her career and go out on her own.

Rania’s story is a common reality: of the roughly 40,000 young people who graduate from Palestinian universities each year, three out of five remain unemployed. Compared to a young person in Israel, a young Palestinian person has just one-third of the likelihood of gaining employment. In Gaza, job prospects are even more grim; economic activity in Gaza is severely restricted, driving the youth unemployment rate up to about 60 percent.

Women face even higher barriers to employment. The probability of joining the labor market for a Palestinian woman who holds a second degree is only 8 percent, while for a Palestinian man the likelihood is 65 percent.

Bonds to the rescue

This is why the World Bank has recently launched its first Development Impact Bond (DIB) to tackle youth unemployment; the bond falls under the Finance for Jobs project.

One of the reasons it has been so difficult for Rania to find a job is because job-hunting isn’t always a smooth process or a clear one. It can be difficult to find out which companies are hiring, and even when you do, often the real difficulty is that young university graduates don’t have the specific technical skills that a company might need to fill a role, even when it can choose from a long line of candidates.

In Rania’s case, though she meets many of the qualifications for an opening with an engineering firm based in Hebron, she needs to complete specialized training in occupational safety to demonstrate she can do the job. To start with, since she lives in Bethlehem, she’s not even aware of the opening, or how to apply, or which training course she needs to complete in order to secure the certificate she’d need.

The DIB will address these challenges by connecting graduates to job openings and allowing employer input to be incorporated into training design upstream. This will help ensure that young people aren’t missing out on jobs just because they lack very specific skills or qualifications.

If young people like Rania complete their training and secure employment through the DIB, the private investors will be repaid by the World Bank and Palestinian Ministry of Finance. This incentive structure, as well as the risk of private investors take of losing their money, put results front and center of the project.

This is the World Bank’s first DIB for jobs and only the second DIB to launch in the Bank overall. As a relatively new instrument, there is much left to learn about whether this results-based financing structure can have a good impact on its intended beneficiaries. There is good reason to continue to follow the progress of this exciting initiative, with the World Bank’s focus on the Jobs and Economic Transformation agenda increased,

Funding for this DIB comes from the World Bank’s Trust Fund for Gaza and West Bank, and from the State and Peacebuilding Fund, the largest, global multi-donor trust fund established to finance innovative approaches to state- and peace-building in regions affected by fragility, conflict and violence.