Understanding the Job Needs of Extractives

At a Glance
  • Nascent markets often require targeted efforts to boost the skills of the local labor force.

  • To create and enhance local capabilities that can be transferred to other sectors, it is important to develop skills that are common across several; one way to accomplish this is to create and support the development of multi-industry clusters.  

  • Development of cross-sectoral skills is important because the mining, oil and gas sectors are highly sensitive to business cycle variations that often lead to employment contraction.

Case Studies

Key Resources

Topic Briefing

Planning and executing an extractive project require a broad set of skills, ranging from basic to highly specialized labor. In less developed labor markets, local employment often focuses on basic and low-skilled labor. Consequently, targeted training efforts are often needed to meet extractive projects’ demand.

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Policies that stimulate immediate increases in employment (for example, the share of local employment in the extractive sector) should be balanced with policies that contribute to long-term job increases (for example, the provision of appropriate skills training to the local labor force). Policies focused on the long term have the potential to create and enhance local capabilities that can be transferred to other sectors. These include the development of skills that are common across sectors, as well as the creation and support of clusters with other industries that have natural synergy with the oil and gas or mining industries. Developing cross-sectoral skills is important because oil and gas and mining are highly sensitive to business cycle variations; high commodity prices lead to increased activity, resulting in increased employment that lowers commodity prices, and then decreased sector activity and a contraction of employment (particularly in mining). The “direct employment number” provided in table 1, for several projects around the world, shows this dramatic contraction post construction.

Table 1: Direct employment table reprinted from World Bank, World Development Report 2013: Jobs (Washington, DC: World Bank, 2012), 200.

To stay competitive, the extractive sector is under global pressure to automate and digitize operations. This creates additional challenges to creating and retaining jobs, and restricts the type and number of jobs the industry can generate. Thus, automation is important to consider for policymakers trying to leverage extractive projects to further domestic human capital, particularly in remote and underdeveloped regions. The Mining a Mirage report (found in the Key Resources) is one of many studies that analyze the impact of automation on mining employment and its implications for policy making.