Goal 8 in Agenda 2030
Goal 8 in Agenda 2030 is about promoting inclusive and long-term sustainable economic growth and productive employment, with decent working conditions for all. Today, over half of the world’s workers are still in precarious jobs. In developing countries, many people are stuck in a vicious circle of low productivity occupations, often in the informal sector, with low wages and limited access to education and social security. The global workforce is expected to grow by 800 million people over the next 20 years, making the goal of creating decent work and inclusive economic growth more important than ever.
Decent working conditions contribute to inclusive and sustainable economic growth
Negative developments in the global economy are hitting developing countries hard and threatening the fulfillment of goal 8 of Agenda 2030. To reverse this trend, more jobs with decent working conditions needs to be created.
This development is going backwards
The Covid-19 pandemic led to the worst economic crisis in decades and adversely affected the targets for goal 8. The recovery has been uneven and many developing countries continue to have sluggish economic growth, which in turn is having a negative impact on the labour market. At the end of 2021, the global recovery was further hampered by rising inflation, supply chain disruption and political uncertainty. For 2022, the ILO estimates that the total number of working hours globally will remain at two percent below pre-pandemic levels. In addition, inflation, which has risen as a result of the war in Ukraine, is expected to have a negative impact on global economic growth. Among developing countries, economic growth is currently well below the target of seven percent in Agenda 2030.
Job creation and poverty reduction are interrelated
In developing countries, over 90 percent of jobs are classified as low-quality or low-productive. The informal labour market, dominated by women, is substantial and characterised by small business owners and workers who are paid on a daily basis. This type of job provides low pay and often lacks security and overtime pay. In Africa, only 17.4 percent of the workforce is covered by a social safety net or insurance.
To reverse this negative trend, more jobs and better opportunities to start a business are needed. According to the World Bank, nine out of ten jobs are created in the private sector, and having a job is the single most important factor in enabling people to lift themselves out of poverty. A further aspect is the importance of the job being productive, with decent working conditions and a social safety net. Initiatives creating this type of jobs can have a major impact on poverty reduction and economic development.
The Covid-19 pandemic led to the worst economic crisis in decades and adversely affected the targets for goal 8. The recovery has been uneven and many developing countries continue to have sluggish economic growth, which in turn is having a negative impact on the labour market. At the end of 2021, the global recovery was further hampered by rising inflation, supply chain disruption and political uncertainty. For 2022, the ILO estimates that the total number of working hours globally will remain at two percent below pre-pandemic levels. In addition, inflation, which has risen as a result of the war in Ukraine, is expected to have a negative impact on global economic growth. Among developing countries, economic growth is currently well below the target of seven percent in Agenda 2030.
Job creation and poverty reduction are interrelated
In developing countries, over 90 percent of jobs are classified as low-quality or low-productive. The informal labour market, dominated by women, is substantial and characterised by small business owners and workers who are paid on a daily basis. This type of job provides low pay and often lacks security and overtime pay. In Africa, only 17.4 percent of the workforce is covered by a social safety net or insurance.
To reverse this negative trend, more jobs and better opportunities to start a business are needed. According to the World Bank, nine out of ten jobs are created in the private sector, and having a job is the single most important factor in enabling people to lift themselves out of poverty. A further aspect is the importance of the job being productive, with decent working conditions and a social safety net. Initiatives creating this type of jobs can have a major impact on poverty reduction and economic development.
Number of people the workforce is expected to grow by over the next 20 years
800m
Percent of jobs classified as low-quality our low-productive in developing countries
90%
Amount of jobs in Africa that will require some form of digital knowledge by 2030
230m
Swedfund creates jobs with decent working conditions
For Swedfund, a job with decent working conditions meets the ILO Fundamental Conventions and Basic Terms of Employment. They concern freedom of association and the right to collective bargaining, the abolition of forced and child labour, the elimination of all forms of discrimination, regulated working hours, minimum wage, and health and safety.
Swedfund’s investments help to accelerate the transition of jobs from the informal sector to the formal. When we consider a possible investment, we analyse the current situation and the scope to bring about improvements. If we go ahead with the investment, we will then link our requirements regarding improvements to our financial terms and conditions in the agreement. We operate in markets where our requirements are far from standard. This makes our work especially important.
Corruption an obstacle to development
In order to achieve goal 8, parallel initiatives aimed at combating corruption will be necessary. The UN estimates that USD 2.6 trillion, equivalent to five percent of the world’s GDP, is lost to corruption every year. That is much more than the total value of development cooperation.
Corruption undermines democracy and damages trust in society. It also creates inequality and hinders economic growth and development of the private sector. Research by the IMF shows that corrupt countries attract a significantly lower number of foreign investments compared with countries relatively free from corruption. Corruption also increases the cost for companies of doing business by an average of ten percent.
Swedfund has over 40 years of experience of sustainable investments in the world’s most vulnerable countries, many of which are also among the most corrupt. This gives us both a deep understanding of and a sense of humility ahead of the challenges when we work on sustainability among the portfolio companies, by stipulating requirements and supporting them in their efforts to fight corruption.
For Swedfund, a job with decent working conditions meets the ILO Fundamental Conventions and Basic Terms of Employment. They concern freedom of association and the right to collective bargaining, the abolition of forced and child labour, the elimination of all forms of discrimination, regulated working hours, minimum wage, and health and safety.
Swedfund’s investments help to accelerate the transition of jobs from the informal sector to the formal. When we consider a possible investment, we analyse the current situation and the scope to bring about improvements. If we go ahead with the investment, we will then link our requirements regarding improvements to our financial terms and conditions in the agreement. We operate in markets where our requirements are far from standard. This makes our work especially important.
Corruption an obstacle to development
In order to achieve goal 8, parallel initiatives aimed at combating corruption will be necessary. The UN estimates that USD 2.6 trillion, equivalent to five percent of the world’s GDP, is lost to corruption every year. That is much more than the total value of development cooperation.
Corruption undermines democracy and damages trust in society. It also creates inequality and hinders economic growth and development of the private sector. Research by the IMF shows that corrupt countries attract a significantly lower number of foreign investments compared with countries relatively free from corruption. Corruption also increases the cost for companies of doing business by an average of ten percent.
Swedfund has over 40 years of experience of sustainable investments in the world’s most vulnerable countries, many of which are also among the most corrupt. This gives us both a deep understanding of and a sense of humility ahead of the challenges when we work on sustainability among the portfolio companies, by stipulating requirements and supporting them in their efforts to fight corruption.
SDG 8 is not just about full employment but the quality of that employment.
Deborah Greenfield, ILO Deputy Director-General for Policy
Digitalisation an opportunity to accelereate development
Digitalisation contributes to increased productivity, jobs, innovation and economic growth. Research shows that a ten percent increase in mobile services in a country increased GDP by half a percent. Despite this, almost 2.9 billion people in the world, particularly those in developing countries, still have no access to digital services. There is still a substantial digital divide between men and women, between income groups and between urban and rural areas. A study by the IFC shows that approximately 230 million jobs in Africa will require some form of digital knowledge by 2030. To seize the opportunities offered by digitalisation and reduce the digital divide, further investments will be necessary in infrastructure and business models based on digital solutions.
Development finance institutions have an important role to play by investing in cost-effective digital solutions that contribute to job creation, better access to goods and services, and the emergence of new and innovative solutions, e.g. in education, healthcare, financial services and logistics. Digitalisation is one of Swedfund’s thematic areas that we work with regardless of country, sector or instrument.
Development finance institutions important for achieving goal 8
In conclusion, we are a long way from achieving the objective of decent work and inclusive economic growth. However, by continuing to work with sustainable investments in the private sector in developing countries, we as a development finance institution can contribute to the creation of more jobs and help to ensure that informal jobs are formalised and that working conditions are improved, inclusion and digitalisation increased and corruption reduced. These factors have ripple effects and ultimately lead to more inclusive economic growth and a better future in line with the 2030 Agenda.
Digitalisation contributes to increased productivity, jobs, innovation and economic growth. Research shows that a ten percent increase in mobile services in a country increased GDP by half a percent. Despite this, almost 2.9 billion people in the world, particularly those in developing countries, still have no access to digital services. There is still a substantial digital divide between men and women, between income groups and between urban and rural areas. A study by the IFC shows that approximately 230 million jobs in Africa will require some form of digital knowledge by 2030. To seize the opportunities offered by digitalisation and reduce the digital divide, further investments will be necessary in infrastructure and business models based on digital solutions.
Development finance institutions have an important role to play by investing in cost-effective digital solutions that contribute to job creation, better access to goods and services, and the emergence of new and innovative solutions, e.g. in education, healthcare, financial services and logistics. Digitalisation is one of Swedfund’s thematic areas that we work with regardless of country, sector or instrument.
Development finance institutions important for achieving goal 8
In conclusion, we are a long way from achieving the objective of decent work and inclusive economic growth. However, by continuing to work with sustainable investments in the private sector in developing countries, we as a development finance institution can contribute to the creation of more jobs and help to ensure that informal jobs are formalised and that working conditions are improved, inclusion and digitalisation increased and corruption reduced. These factors have ripple effects and ultimately lead to more inclusive economic growth and a better future in line with the 2030 Agenda.
