Emerging Economies Face a Growing Jobs Challenge as Working-Age Populations Expand

A major demographic shift is taking shape across emerging market and developing economies, and it could become one of the defining economic challenges of the next decade. New analysis highlighted by the World Bank shows that many economies are expected to see their working-age populations grow faster during 2025–2035 than the average pace at which employment expanded during 2010–2019.

The finding points to a potentially widening gap between the number of people entering working age and the capacity of economies to generate jobs. The challenge is particularly pronounced in Sub-Saharan Africa, the Middle East and North Africa, South Asia, and several other developing regions.

The issue is not simply about population growth. It is about whether economies can convert a rapidly expanding labor force into productive employment, higher incomes and improved living standards.

A New Generation Is Entering the Labor Market

Between 2025 and 2035, approximately 1.2 billion young people in emerging market and developing economies are expected to reach working age, according to analysis from the World Bank and development economists. This is described as the largest youth cohort of its kind and creates both a major economic opportunity and a significant employment challenge.

A growing working-age population can be extremely valuable to an economy. More workers can mean greater production, a larger consumer base, higher tax revenues and increased savings and investment.

But these benefits are not automatic.

If the number of people looking for work rises faster than the number of available jobs, countries can experience higher unemployment, underemployment and informal employment. Young people may also struggle to find their first stable jobs, delaying household formation and reducing their ability to build savings.

This is why the next decade could prove particularly important for developing economies.

What the World Bank Chart Shows

The World Bank graphic compares regions according to the share of economies projected to experience faster working-age population growth during 2025–2035 than their average employment growth during 2010–2019.

The distinction is important. The comparison does not mean that employment will definitely fall in these economies. Instead, it highlights countries where the expected expansion of the working-age population is larger than the pace at which jobs were created during the pre-pandemic period.

Sub-Saharan Africa stands out dramatically, with the chart showing that almost all economies in the region fall into this category.

The Middle East, North Africa, Afghanistan and Pakistan region also records a high share, at roughly three-quarters of economies. East Asia and the Pacific and South Asia each stand at around two-thirds, while Latin America and the Caribbean and Europe and Central Asia have considerably smaller shares.

These figures underline how widespread the employment challenge could become.

Sub-Saharan Africa Faces the Greatest Pressure

Sub-Saharan Africa is at the center of the demographic transformation.

The region is expected to experience an exceptionally large influx of young people into working age over the coming decade. The World Bank has described this as a major development challenge because employment growth in many economies has historically struggled to keep pace with demographic expansion.

The situation also creates an extraordinary opportunity.

A young population can become a powerful source of economic growth if countries provide adequate education, healthcare, infrastructure, finance and employment opportunities. Businesses can gain access to a large pool of workers and consumers, while governments can benefit from a larger productive population.

But without sufficient job creation, the same demographic trend can increase economic and social pressures.

South Asia Also Needs More Productive Jobs

South Asia is another region where demographic changes could significantly influence economic development.

The region has millions of young people entering the labor market, creating substantial potential for manufacturing, services, technology, construction and entrepreneurship.

However, the quantity of jobs is only part of the equation. The quality of employment matters as well.

Workers need opportunities that provide reliable incomes, appropriate working conditions and pathways to higher productivity. If new workers are absorbed primarily into low-productivity or informal activities, the demographic advantage may not translate into the level of economic transformation that policymakers hope to achieve.

For countries such as India and its neighbors, expanding formal employment, improving workforce skills and encouraging investment could therefore become increasingly important.

The Middle East Faces a Different Set of Challenges

The World Bank chart also highlights the Middle East, North Africa, Afghanistan and Pakistan region, where roughly three-quarters of economies are shown as facing the demographic-employment mismatch described in the analysis.

Many economies in the region have young populations, while their labor markets are undergoing structural changes.

The challenge is particularly complicated because economies differ substantially. Some countries have large natural-resource sectors, others depend heavily on services, tourism, manufacturing or agriculture.

Diversifying economies and developing private-sector employment could be crucial to absorbing new workers over the coming years.

Why Investment Matters

Creating jobs on the scale required by demographic growth generally requires sustained investment.

Businesses need factories, offices, technology, transportation networks, electricity, telecommunications and access to finance. Governments need to create an environment in which private investment can expand.

The World Bank analysis points to investment as an important factor in employment growth. Economies with stronger investment growth have historically tended to experience better employment outcomes.

This makes investment policy especially important at a time when many developing countries face limited fiscal space.

Governments cannot rely exclusively on public spending to create jobs. Encouraging private investment, improving business conditions and strengthening financial systems could help expand employment opportunities without placing excessive pressure on public budgets.

Education and Skills Will Become More Important

A rapidly growing workforce also creates a demand for better skills.

Young people entering the labor market need education and training that correspond to actual economic opportunities. Traditional academic education alone may not be enough.

Vocational training, digital skills, technical education and entrepreneurship programs can help workers adapt to changing labor markets.

This becomes particularly important as artificial intelligence and automation transform the nature of work. Emerging technologies may create new occupations and improve productivity, but they can also reduce demand for certain routine tasks.

Developing economies therefore face the dual challenge of creating jobs while preparing workers for changing forms of employment.

Informal Employment Remains a Major Concern

In many emerging economies, a large share of workers already operate outside the formal economy.

Informal employment can provide an important source of income, particularly where formal jobs are scarce. But it can also mean limited social protection, unstable earnings and fewer opportunities for workers to build long-term financial security.

A successful demographic transition will therefore require more than simply increasing the number of jobs. Countries will need to encourage the growth of productive enterprises and help informal businesses move toward greater productivity and formalization.

Demographic Change Can Become an Economic Advantage

Despite the risks, the World Bank’s analysis does not suggest that a large young population should be viewed only as a problem.

A demographic surge can become a powerful economic advantage when countries succeed in creating productive employment.

Young workers can increase production while young consumers stimulate demand for housing, transportation, technology, financial services, education and other products.

This can create a positive cycle in which employment generates income, income increases consumption and investment, and stronger economic activity creates additional employment.

But achieving this outcome requires policy action.

The Next Decade Will Be Critical

The coming years will test whether emerging economies can transform demographic momentum into sustained economic growth.

The World Bank’s projections show that the pressure is particularly strong in regions where population growth is rapid but historical employment creation has been comparatively limited.

Governments will need to focus on investment, education, infrastructure, business development and labor-market reforms. International institutions and private investors could also play an important role in financing projects capable of creating productive employment.

Ultimately, the world’s emerging economies are approaching a historic crossroads. A huge generation of young people is preparing to enter the workforce. If countries can provide them with skills and productive jobs, the demographic wave could become a powerful engine of growth and poverty reduction.

If job creation fails to keep pace, however, the same demographic transformation could increase unemployment, informality and economic pressure.

**The central challenge for 2025–2035 is therefore clear: turning a rapidly expanding working-age population into a productive workforce rather than allowing a demographic opportunity to become an employment crisis.**