The EBRD believes that an unequal distribution of economic opportunities in a country– when circumstances beyond an individuals’ control constrain their access to economic opportunities throughout life – has a significant detrimental impact on the growth potential of economies as well as their social cohesion and, ultimately, political stability. Equal access to economic opportunity is integral to sustainable market development. When individuals are unable to make the best use of their skills and talents because they were born in a remote or climate change affected area, or because of their disadvantaged background or their gender, market outcomes are negatively affected. However, if people are given a chance to succeed, they are more likely to pursue education, participate in the workforce and invest or engage in activities that lead to economic growth and prosperity.
This is recognised in the Bank’s Strategic and Capital Framework (SCF) 2021-2025 which underlines the importance of equality of opportunity in shaping transition in our countries of operations, in addition to the other two cross-cutting themes of green and digital.
While EBRD’s first Economic Inclusion Strategy 2017-21 targeted inequalities that arise from gender and inherent characteristics (e.g. place of birth, socio-economic background), our new Equality of Opportunity Strategy (EOS) 2021-25 is designed based on the recognition that characteristics that lead to inequality of opportunity can change throughout a person’s life. These are shaped by external events such as long term stressors and shocks, as well as by changing social norms, biases and legal frameworks. These characteristics overlap and intersect across factors such as gender, place of birth or residence, age, disability, skills types and levels, displacement, sexual orientation and identity, as well as life events triggered by other external factors.
The EOS (2021-25) opens up new areas for the EBRD’s investments that more closely reflect the specific challenges that its clients and policy partners face, thereby achieving a more targeted and relevant impact. Specifically, we provide an operational response along three expanded focus areas of
broadening skills, employment and sustainable livelihoods;
building inclusive and gender-responsive financial systems and business environments; and
creating inclusive and gender-responsive services and public goods;
With a stronger emphasis on systemic impact, ranging from the individual to the way a company operates, to the market / institutional level.
The focus on equality of opportunity to strengthen human capital development and resilience differs from other IFI’s mandates and builds on EBRD’s strong private sector focus. The EOS puts emphasis on the private sector’s role in addressing inequalities, introducing a clear operational response to equality of opportunity at the level of investments and policy engagements.
The EOS scales up existing inclusive investments and policy engagements, including the Bank’s successful Women in Business programmes, its vocational and private sector led skills programmes across corporate sectors and SMEs, its gender-lens investments in green technologies and sectors, or its focus on supporting inclusive infrastructure investments.
It furthermore enables the development of new types of investments and policy support interventions, for example more targeted support for inclusive regions, the promotion of digital and green skills and access to related employment across sectors, the development of inclusive financial systems, the introduction of ESG standards into investments, the piloting of sustainability and other similar bonds, the support of a ‘just’ transition of economies away from carbon intensive industries, or potential investment opportunities in the care economy.
Megatrends Shaping our World and Work
Climate change leads to economic disruption and threatens livelihoods across many sectors and large parts of the EBRD regions. It causes adverse health impacts from pollution, heat and other environmental factors, triggering displacement and asset loss for people in most affected regions. EBRD countries face a range of climate risk exposures such as water stress, heatwaves, and physical climate risks such as flooding.
The transition to the green economy requires mitigating the impact of climate change on livelihoods. By not leaving behind communities and people affected by the transition away from fossil fuel industries, a Just Transition can be ensured.
Livelihoods can be sustained by promoting sustainable business practices among resource-intensive and fossil fuel reliant sectors, and promoting green skills in these sectors, providing access to sustainable infrastructure and services in resource-scarce regions, and promoting green and inclusive financial systems.
Digitalisation & Future of Work
Digitalisation has the potential to be an enabler and equaliser for equality of opportunity. However, ongoing digital divides risk exacerbating existing inequalities – particularly when technologies are not accessible to or affordable for everyone, when the digital skills needed to use them are not widespread, or when the (over) adoption of technologies such as artificial intelligence can have unintended but negative consequences. Significant gaps in accessibility, adoption, quality and responsible use of the internet and digital services remain present in many EBRD economies, particularly impacting women, older workers and people living outside economic centres. In addition, basic and standard digital skills often lag behind advanced countries.
Changes are taking place in how people work, learn and earn across the EBRD region. Digital technologies and new working structures are alleviating the disadvantages traditionally faced by less educated or less mobile workers, unlocking new opportunities. Meanwhile, the emerging world of work risks marginalising others – particularly those in routine occupations and without transferrable skills – resulting in stranded human capital and skills.
Urbanisation, Regional Disparities, & Migration
Trends across the EBRD region show rising within-country inequality and growing population density in large cities and conurbations.
EBRD focuses on regions based on a number of factors reflecting EBRD’s demand-driven approach, alignment with country and sectoral strategies and the suitability of local economic conditions, including thriving cities; lagging regions and rural areas; and improving connectivity between the core and the periphery as well as between regions in the periphery to enable greater integration and economic opportunities in the periphery.
Large-Scale Shocks & COVID-19 Crises
COVID-19 has further exacerbated existing and created new inequalities for groups that already faced disproportionate barriers to economic opportunity before the crisis. The waves of unemployment caused by the crisis may give rise to pockets of ‘stranded skills’, particularly in the regions and sectors that were most dependent on face-to-face interactions and, therefore, affected by lockdown restrictions (e.g. hospitality, retail, services, and tourism). The achievement of the gender parity has been set back by a generation.
A sustainable recovery can only be achieved if not only these new inequalities are addressed but also the underlying ones that existed before the pandemic, for a more just and equitable future for all.
Women have accounted for 54% of global job losses, even if they make up 39% of employment. This is because women – as employees as well as entrepreneurs – are more likely to work in sectors affected by lockdown restrictions. In addition, women are disproportionately concentrated within more precarious, lower quality employment roles. When they manage a business, women enjoy relatively limited access to finance, information, professional networks and support.
Young people are more likely to work in non-standard employment, such as temporary or part-time work, and have been more vulnerable to dismissals and to the reduction in working hours or pay. Being unemployed at a young age can have long-lasting ‘scarring effects’ and may ultimately lead to a ‘lost generation’ of talent, with fewer career opportunities, lower wage levels, poorer prospects for quality work, and less security in old age.
The economic shock from the coronavirus has exacerbated regional disparities. The impact is likely to differ depending on exposures to tradable sectors, integration into global value chains, and sectoral specialisation (e.g. dependence on tourism). In addition, the least developed economies have poorer health systems as well as weaker safety nets.
Migrants see their remittances fall and their freedom of movement curtailed, which restricted their ability to seek seasonal agricultural work or other opportunities abroad.
Economic inclusion, the opening up of economic opportunities to under-served social groups, is integral to achieving a transition towards sustainable market economies.