World Bank’s New Procurement Rules Require 30% Local Labor in Civil Works Contracts

In a bold step to promote employment and economic growth in developing countries, the World Bank has announced a major update to its procurement framework, requiring international companies executing Bank-funded civil works contracts to allocate at least 30% of labor costs to local workers. The new rule will take effect from September 1, 2025, and will apply to civil works contracts subject to competitive international procurement, such as the construction and maintenance of transportation, water, and energy infrastructure.

This move is designed to directly address the youth employment crisis in emerging markets, as an estimated 1.2 billion young people are expected to enter the workforce across developing economies over the next decade. By tying international development financing to local employment generation, the World Bank is using its procurement leverage to foster inclusive, long-term economic impact.

“This new requirement underpins our commitment to job creation,” said Gallina A. Vincelette, Vice President for Operations Policy and Country Services at the World Bank. “By prioritizing the use of local labor in World Bank-funded projects, we not only create immediate employment opportunities for people in our client countries but also invest in the long-term potential of local communities.”

Making Infrastructure Work for People

Public infrastructure projects—especially large-scale initiatives in roads, railways, energy grids, and water systems—have historically been seen as tools for development through physical transformation. But the World Bank is now placing increasing emphasis on ensuring that these investments generate broad-based employment, foster skills development, and stimulate local economies.

With the revised procurement policy, civil works contractors bidding on high-value international tenders must explicitly account for local labor participation in their budgets and implementation plans. The goal is not only to deliver infrastructure but to ensure that communities benefit both economically and socially from the development process.

“Employing local labor contributes to income generation within communities,” the Bank stated. “It enables families to better support themselves, fosters the development of skills, and encourages reinvestment in local economies.”

Building on Prior Reforms

The 30% local labor mandate builds upon reforms introduced by the World Bank in March 2025, which revamped the procurement framework to promote:

• Higher quality outcomes in project execution

• Consideration of life-cycle costs and sustainability metrics

• Inclusion of innovative solutions and local impact factors in bid evaluations

• Better alignment with environmental, social, and governance (ESG) standards

Together, these reforms aim to transform procurement from a transactional exercise into a strategic development tool that delivers on key priorities like job creation, climate resilience, and inclusive growth.

The World Bank’s procurement portfolio is vast, covering billions of dollars annually across hundreds of projects in more than 100 countries. The new rule requiring local labor participation is expected to have far-reaching effects, particularly in countries with large infrastructure programs and high unemployment rates.

Implementation and Monitoring

To ensure compliance, the World Bank will require companies to submit detailed plans showing how they will meet the 30% local labor threshold, along with progress reports during implementation. The Bank is also exploring ways to support capacity building among contractors and local subcontractors to maximize the initiative’s success.

The rule applies to labor costs, not total contract value, meaning companies can continue sourcing materials internationally but must ensure that a substantial portion of their workforce—particularly laborers, skilled technicians, and on-site supervisors—are recruited locally.

A Win-Win for Development and Business

By incentivizing local hiring, the Bank hopes to create a pipeline of skilled workers, reduce reliance on external labor, and strengthen the social license of infrastructure projects. This, in turn, could reduce delays due to community resistance or lack of local buy-in.

For companies, the policy presents an opportunity to forge deeper relationships with host communities, access local talent pools, and contribute to more stable project environments.

“This approach helps build a skilled and better-equipped workforce and strengthens local economies,” said Vincelette. “It’s not just good development policy—it’s smart business.”

Looking Ahead

As the global development landscape evolves, multilateral institutions like the World Bank are redefining what it means to deliver value. Infrastructure projects are no longer judged solely by their cost and design but also by how they transform lives, reduce inequalities, and create pathways to prosperity.

The new procurement rule—prioritizing local labor—is a clear signal that the World Bank intends to leverage every dollar of its investment for maximum impact, starting with the people who need it most.