This policy guidance for donors is aimed at reducing poverty by increasing employment and making labour markets work better for poor people. It was prepared by the OECD’s Development Assistance Committee through the work of its Network on Poverty Reduction and builds on earlier work on private sector development. Recognising that poor people identify getting a job – whether through self-employment or from wages – as their most promising path out of poverty, this policy guidance advocates making employment a central feature of poverty reduction strategies and highlights the importance of addressing both the formal and informal labour markets more effectively. This policy guidance is based on available evidence from developing countries and lessons learnt from good practices, elaborated after consideration of a series of topics: (i) informality, (ii) vocational training, (iii) international migration, (iv) social protection, (v) youth and employment, (vi) women and employment, and (vii) situations of fragility. Additional work, including a conceptual framework on employment and poverty reduction and on the relationship between economic growth, employment and poverty reduction, underpinned preparation of this guidance.