Creating and sustaining jobs is vital to reduce poverty. Jobs generate household income, are a basis for taxation, provide security, and can enable knowledge and skills development. To sustain the impacts, the jobs must be in businesses that are financially viable. Investing in job creation in developing countries is catalyst for a virtuous cycle of growth, poverty reduction, and enhanced social stability. Norfund contributes to direct job creation in our portfolio companies, while inducing indirect job creation in the companies’ supply chains. Our investments also contribute to indirect job creation through access to financial services and increased energy access and supply.

Global unemployment remained low at 5% in 2025, but structural challenges persist, especially in emerging markets. Youth unemployment remains high (12.6%), gender gaps are large, and many workers face informal, low-paid, and insecure jobs. Rapid labor force growth is not matched by sufficient formal job creation, leaving many underemployed or in low-productivity work. ILO estimates that the jobs gap, a broader measure of labor underutilization, is expected to increase to 408 million people, covering both 186 unemployed individuals and 222 discouraged workers who have stopped looking for jobs.

Slower growth, geopolitical tensions, climate pressures, and debt constraints are limiting job creation, particularly in fragile labor markets. Informality remains widespread, with 2.1 billion workers expected to be in informal employment by 2026. This is especially relevant in Sub-Saharan Africa, where informal work dominates and population growth increases the urgency of creating productive, formal jobs.

Furthermore, AI is also reshaping labor markets, and its benefits are unevenly distributed. In Sub-Saharan Africa and Southeast Asia, AI could boost productivity and create opportunities, particularly for small firms and informal workers, but limited infrastructure, skills gaps, and unequal access risk widening disparities. Targeted investment in digital infrastructure, skills, and scalable models will be key to ensuring inclusive outcomes.

Against this backdrop, Norfund’s investments play an important role in supporting businesses who sustain and create job opportunities. By investing in businesses and sectors with strong growth potential, Norfund contributes to the support of and creation of formal and decent jobs, while also seeking to strengthening productivity, inclusion, and long-term economic opportunities in underserved markets.