What is the role of employment in the nexus of economic growth, poverty reduction and progress towards achievement of the UN Millennium Development Goals? Although employment is not an explicit component of the MDGs, it has a key role in economic and social development. As labour is the main resource that most poor people are endowed with, labour-intensive growth is the most effective way to reduce poverty. Employment is the key source of income, consumption and other material aspects of improved livelihoods. Moreover, it enhances also other dimensions of wellbeing including skills, physical abilities and self-respect. Sustained poverty reduction requires growing labour productivity of poor women and men, whether as paid or self-employed workers. Economic growth does not ensure poverty reduction; it leads to poverty reduction only when accompanied by rapid growth of productive and remunerative employment. Most countries that have succeeded in reducing poverty have followed strong employment creation policies. This issue of Poverty in Focus illuminates the mechanisms behind successes and failures in achieving pro-poor employment policies, including the basic elements of a high growth rate, high employment elasticity of growth, and increased ability of poor women and men to meet the growing labour demand. Not only labour market policies need to focus on employment creation, but also other relevant economic, institutional and social policies. Eduardo Zepeda first summarises Mexico?s recent experience, which includes periods of crisis, of rapid growth and of stagnation. These various episodes make for a good case study of employment with relevant policy lessons for all developing countries. Marty Chen highlights the links between informality and poverty and presents a policy framework for addressing informality in ways that will help reduce poverty. Denis Drechsler et al. find informality to be mainly due to insufficient job creation in the formal economy and to warped incentive structures, and discuss what policy makers should do about it. Rafael Ribas and Ana Flavia Machado study employment and poverty dynamics in Brazil and find that the informal sector has helped people move out of poverty more than the formal sector. Louise Fox and Melissa Sekkel examine the slow job creation in Africa and draw lessons for countries wanting to realise the aspirations of their growing, mostly urban, nonfarm labour forces. Aziz Khan analyses the linkages between employment and the relevant MDGs and proposes policy interventions to promote job-intensive growth and public investment. Terry McKinley advocates structural policies for poverty-reducing employment, as illustrated by an IPC Country Study of South Africa. James Heintz considers an alternative approach to macroeconomic stability that is more cognizant of the performance of the real economy and includes a coherent employment policy. Janine Berg and David Kucera revisit the issue of labour market institutions and employment, arguing that policy makers need to take on re-regulation as opposed to de-regulation. Per Ronnås looks at labour migration and the case of Moldova, where poverty fell rapidly thanks to the dual impact of remittances and improved domestic job and income opportunities. Erik Jonasson considers the role of rural non-farm jobs as a pathway out of poverty; investment in infrastructure and education stand out as the foremost policy measures. Christoph Ernst highlights the importance of youth employment as developing countries struggle with the challenge of offering decent jobs for the large number of young men and women entering the labour market every year. May these articles contribute to the analysis and policy debate on productive job creation and thus, indirectly, to the advancement towards the MDGs.
