The Role of Labor Market Intermediation

By connecting the dots between jobseekers and employers, good intermediation reduces information asymmetries, helps align skills supply with demand, and lowers the frictions that keep youth out of jobs. This includes better data systems, job-matching platforms, career guidance, training aligned to market needs (often with results-based incentives), targeted support for young jobseekers, and digital innovations – including open-source tools – that make job markets more transparent and efficient.

Below we delve into the different ways in which labor market intermediation addresses youth employment, followed by the promise of digital platforms and open source initiatives in shaping inclusive and accessible intermediation for the underserved.

1

Reduces Search Costs

Labor market intermediation plays a crucial role in connecting jobseekers with opportunities, especially for inexperienced young entrants who lack professional networks. Improved intermediation can close this gap by aggregating job listings, validating candidates’ skills, and streamlining matches. These efforts reduce time and friction (“search costs”) in the hiring process in mainly two ways:

• By improving market transparency: In many LMICs, information asymmetry is a big problem – youth often do not know where jobs are and employers struggle to identify reliable, qualified candidates. Labor market intermediation helps improve circulation of information in the market through on one hand, aggregating and actively publicizing vacancies, and on the other hand, by guiding jobseekers in properly positioning themselves based on firm/industry expectations (career counseling, CV guidance, interview coaching)

• By making information flows more targeted and efficient: Even with the rise of online job portals, the notes that obtaining the right kind of information remains a challenge for both job-seekers and employers. So now, modern job-matching platforms go beyond simple job boards: they can use advanced technology to pair candidates with suitable jobs in a more targeted way. For example, digital platforms that collect profiles of jobseekers (skills, education, and work preferences) and vacancies from employers, can algorithmically suggest good matches, alert youth to openings, and help employers find talent they might otherwise overlook.

2

Bridging the Skills Gap

To address the skills mismatch, many countries have been pursuing demand-driven training and education reforms as part of labor market intermediation. Demand-driven approaches start by asking: What skills are actually in demand by employers? and then working backward to shape training programs accordingly. This often involves close partnerships between training providers and industry. For example, some successful youth employment programs in Latin America have combined classroom vocational training with on-the-job internships in sectors that are hiring – essentially guaranteeing that what youth learn is immediately relevant to available jobs. Evaluations of such programs find positive effects on employment and earnings (e.g. , , , ). Key features include teaching technical skills that local employers are seeking, as well as “soft” skills and work readiness, and then placing youth into apprenticeships or short-term jobs to gain experience.

3

Reducing Labor/Hiring Costs

On the demand side, employer incentives can encourage firms to hire youth whom they might otherwise consider “high risk” due to lack of experience. Other demand-side measures include apprenticeship incentives (offsetting the cost for companies to train novices) and reducing regulatory burdens for hiring youth (for instance, providing a tax break or easing strict labor rules for youth apprenticeships).