Paraguay jobs diagnostic: the dynamic transformation of employment

Jobs are central to economic development. Economies grow when more people work, when jobs become more productive, and when workers move to better jobs, e.g. from low productivity farm work into jobs in the modern manufacturing or services sectors, or from remote rural areas to urban centers with greater specialization and more job opportunities. Similarly, living standards improve and poverty declines when individuals move from inactivity or unemployment into jobs, or when workers’ labor income rises. Transformation that occurs at the level of the individual takes place through employment earnings that raise household living standards and welfare, contributing to social development. A jobs-centered development path that effectively connects vulnerable groups to jobs can have positive reinforcing effects on social cohesion, leading to a virtuous cycle of rising incomes, productivity, and inclusion (see WDR on Jobs, World Bank 2012). For Paraguay, achieving development objectives with respect to economic growth, diversification, competitiveness, and poverty reduction requires meeting specific goals for job creation, job quality, especially informal jobs, and access to jobs. The country’s recent strong economic performance and significant reductions in poverty are, in fact, explained by improvements in labor market outcomes. The aim of this report is to describe the types of employment transformations that enabled this to happen and the remaining challenges going forward.