Macroeconomic policies have tended to assume that liberalization and deregulation would lead to economic growth and creation of employment. However, such policies by themselves may have only limited impact on poverty and may even have specific negative consequences for the urban poor. Macroeconomic policies need to be context-specific and sensitive to their effects on urban labor markets, especially on the conditions that need to be fulfilled to enable the urban poor to participate in the benefits of economic growth on an equitable basis. Policymakers must also create targeted programs for the urban poor and food insecure. Up to now, urban policies, particularly those of donors, have tended to focus on issues of service delivery, shelter, and infrastructure.
More thought needs to be given to employment-guarantee schemes in urban areas.
Macroeconomic policies and safety-net programs, however, are only part of the urban employment agenda. Policies need to pay more attention to enhancing productive employment for the urban poor that is, ensuring employability of and equal opportunities for the urban poor in an increasingly competitive urban labor market. Governments may also need to pursue special policies to reduce gender disparities and to break through the labor market segmentation that inhibits certain groups from taking up jobs in more rewarding activities. For further reading see the International Labour Organization's annual World Labour Report. Opinions expressed here are personal and do not necessarily reflect DFID policies.