Research has found that jobs for poor people can provide a direct route out of poverty and job creation is thus key to achieving several of the Sustainable Development Goals (SDGs). However, many jobs in developing countries do not offer decent wages and working conditions that can sustain a path of productivity growth and poverty reduction. In light of the SDGs, these jobs are not sustainable. One indicator of this is the high worker turnover that is frequently observed in manufacturing. In the rapidly expanding manufacturing sector in Ethiopia, for example, most workers starting in the new factories quit their job within the first year. This is very costly for the workers, in terms of time searching for a job that they did not really want and in terms of low wages during the initial period of work when they are learning how to do the job.

The extreme turnover is also very costly for the companies in that it curtails productivity when new workers are trained to take over the job, and in the initial phase when the new workers are less productive than more experienced workers. Reducing these costs for the factories should make them more profitable and increase the demand for labor and therefore create new jobs.

Although the work can be hard, hazardous and unattractive for many people, it offers income generating opportunity that is highly appreciated by others. At the same time, workers seem to lack both the technical skills and the soft skills necessary to hold on to a job.

Policies aimed to enhance business growth for job creation usually focus on either support to companies/managers or on training workers. However, research have found only modest impact of such interventions. Business-training programs have been found to have relatively small impacts on profitability and job creation, while the evidence from vocational and non-cognitive skills training for unemployed workers shows some, albeit modest, positive effects on employment and wages. The impact of on-the-job worker training seems to be more positive, in particular in developing countries.

There may, however, be important complementarities in employer-employee relations. For example, there is reason to believe that training employers in human resource management may have limited value if the employees do not appreciate the importance of time management. Similarly, training workers to take the long-term perspective may have limited value if the employer only focuses on the present. So far there is no research addressing such complementarities, and our project will therefore provide important new insights:

In this project, we will assess the individual and complementary causal effects on business growth and sustainable job creation of employer/manager and employee training.

Moreover, the literature does not distinguish between effects on knowledge and attitude of the training, thus the underlying mechanisms are not well explored. We will therefore: explore the mechanisms for how training affects business growth and sustainable job creation, particularly the role of knowledge versus attitudes for both employer and employees, and complementarities between them.

The main research method will be a large-scale randomized controlled trial (RCT), complemented with lab experiments and qualitative studies. We will take advantage of the strengths of the different methodological approaches. In particular, the RCT structure provides the basis for the analysis of causal effects of the training components, and the lab experiments and qualitative studies will help to explore the underlying mechanisms through which the training works. We will, in addition, include analyses of whether gender plays a role, for instance in differences in outcomes, and whether gender-specific training components could make a difference (such as training on prevention of sexual harassment in the workplace).