In a well-functioning market economy, opportunities to receive an education, have a good job and earn a sufficient income should not be limited by gender, place of birth or parental background.
And yet, in many countries where the EBRD invests, 20-50 per cent of income inequality is due to circumstances at birth.
Parental background is the most important determinant of inequality of opportunity across the EBRD region, followed by gender.
This is more than just unfair.
It is also inefficient. A society that fails to capitalise on the potential of all its members misses out on significant economic gains.
It also risks compromising the stability of countries and markets. In countries where inequality of opportunity is higher, people express less support for market reforms and democracy – and backsliding is possible.
Economic inclusion is therefore not an optional extra. Rather, it is a core necessity. This is why we at the EBRD are committed to strengthening fair access to meaningful economic opportunities, for all, including the most vulnerable among us.
We do this by working in partnership with our clients, addressing regulatory barriers to individuals’ full participation in the labour market and, crucially, harnessing the private sector’s power to develop skills and open up employment opportunities.
In doing so, we create access to skills, jobs and entrepreneurship opportunities for women, young people, refugees and other groups who would otherwise face disproportionate bar-riers to fulfilling their potential.
For the sad fact remains is that those who lack such opportunities tend to live shorter and less healthy lives and are often unable to break the vicious circle of poor education, low skills and limited employment prospects.
At the EBRD we use our leverage with the private sector to support our clients to address business challenges such as skills mismatches or low workforce diversity.
In Croatia, for example, we have launched a partnership with the Croatian Employers’ Association to help young people train for and secure better internships and mentoring opportunities. So far 140 private sector companies and 40 academic institutions are participating, offering over 620 internships to youth in Croatia. We are very proud that the initiative was named runner-up in this year’s Emerging Europe Awards.
In Jordan, where tourism accounts for 20 per cent of all private sector employment, employers face a serious challenge to recruit young women and men who have the right skills for today’s labour market. In May this year, I signed a memorandum of understanding with the government of Jordan in Amman to set up a Sector Skills Council for Hospitality and Tourism to uplift national skills standards in the sector in partnership with the private sector. We are now aiming to do something similar in Albania and other countries of operations.
Another priority for our work is improving access to finance, especially for women. To address that problem, our Women in Business programmes provides financing and business advice in 18 countries, with nearly 500 million euros invested to help over 35,000 women entrepreneurs build up their businesses.
Our history shows that political commitment to economic inclusion is important – but in the long run it is not enough.
Across the board, if we are to make real progress, we need to look beyond social policy and programming towards the private sector.
Only by putting aside conventional notions that it is the government’s role to drive economic inclusion – and understanding and addressing all types of different market experiences, expectations and ambitions – can we ensure more sustainable market economies and greater well-being for all.
The views expressed in this opinion editorial are the author’s own and do not necessarily reflect Emerging Europe’s editorial policy.