This report focuses on the direct and indirect effects of private sector activity on job creation. It examines the conditions under which the private sector can best contribute to job creation and poverty reduction. This report also provides estimates of the magnitude of the employment-generation effects. The private sector provides approximately 90 percent of jobs in developing countries. It is essential to understand the constraints that private companies face in creating jobs. The public sector and development finance institutions must assist by creating an environment without obstacles that is conducive to employment and productivity. This report considers how the private sector generates jobs, what constraints limit job creation, and how these problems can be mitigated. There is a double challenge in terms of creating both quality and quantity of jobs. In 2011, there were 200 million people unemployed worldwide. As many as 600 million jobs must be created in the next decade to ensure that unemployment does not increase even further as millions of young people enter the workforce. Evidence suggests that private sector job creation can improve development and lead to poverty reduction. The public sector must provide a supporting role to provide the necessary macroeconomic environment and a supportive investment climate. To achieve this, the public sector may need support from development finance institutions, who can also work directly with private companies. Job creation, socioeconomic development, and poverty reduction are not independent. Policies focused on these themes must be integrated. Job policies should be a central part of any development policy.