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The Quest for Inclusive LaborMarket in Africa
MESELE ARAYAInternational Doctoral School in Human Capital
Formation and Labour RelationsAdapt-CQIA
University of Bergamo
International Conference on Labour Productivity and Investment in Human Capital: the Challenge of Youth Employment
Comparing Developments and Global ResponsesBergamo (Italy), 16-19 October 2012
The Quest for Inclusive Labor market in Africa
Outline
1. Introduction2.The degree of labor market exclusion3. Consequenses of the labor market exclusion4."demographic dividends" of the youth bulge5. What actions make the labor market be inclusive? The
role of early skill formation
1. Introduction: Labor Market and Economic Performance in Africa
�Africa as a continet has been enjoyng some degree of economic
growth ove the last few years (although its pace has been
slowed down by the spill over of the global crisis and the Arab
Spring influence)
�New data disclosed by the African Economic Outlook(2012)
indicate that Africa achieved 3.4% economic growth in 2011, but
down 1.6% from 2010, basically for reasons of the global
financial crisis and Arab revolution
�Only North Africa grew by just 0.5% in 2011, a fall of 3.6 points
from 2010, while sub-Saharan economies expanded by more
than 5%.
�Hoping that the North African economy will recover
soon from the Arab Spring influence and sustained
progress in all other regions, the continent is expected
to register a growth rate of 4.5% in 2012 and 4.8% in
2013
Introduction…..contd.
Introduction…..contd.
Introduction…..contd.�In fact, many jobs have been created, but there have not
been enough to accommodate the number of young
people in search of work.
�ILO (2011) estimates that between 2000 and 2008 Africa
created 73 million jobs, but only 16 million were for young
people aged between 15 and 24.
�As the result, millions of young people in the continent
have recently faced bleak employment opportunities.
�The African youths are really in search of inclusive labor
market and equitable growth!!
2.The Degree of Labor market exclusion (LME) in Afr ica
� What is Inclusive Labor Market, above all (else)?
�A labor market that allows and encourages all (young) people of
working age to participate in a decent work and provides a framework
for their development (ETUC, 2011). This implies full integration of the
youth into the labor market
�An inclusive labour market is fundamental in terms of fostering
economic development and social cohesion
� How ever, achieving this type of labor market has recently become a
challenging task, particularly in Africa where youth unemployment
currently constitutes about 60% of the total unemployment (African
Economic Outlook, 2012).
2. The Degree of Labor market exclusion……….contd
�In absolute terms, about 40 million of youth in africa
today are excluded from the labor market. Of those
excluded youth, 22 million have given up on finding a
job, and many of them are young females
Especially, North Africa as region is currently suffering
from 41% of youth unemployment(Gulf News, August
2012), with high incidence on young women and the
ratio of youth-to-adult unemployment rates was
estimated at 3.8 (ILO,2012)
�Isn’t it then a huge labor market exclusion? Certainly,
it is!
2. The Degree of Labor market exclusion……….contd
The African youths are a bit at anger because they are under abject working poverty while the continent is rich with many employment opportunities in various sectors
2. The Degree of LME……….contd
Table 1. Recent rate of (Youth) unemployment for selected African Countries
Country Youth unemployment rate (%) Unemployment rate (%)
Nigeria 37.7 23.9 South Africa 48 23.9 Egypt 11.8 Algeria 21.5 10 Botswana - 17.6 Comoros
44.5 14.3 Congo democratic republic 70 -
Congo republic
42 16
Djibouti - 50 Gabon Ghana
30 25
16
Gambia 40 - Guinea Besu 30 - Mali 15.4 Mauritania
59.9 - Mauritius 21.9 7.9 Mozambique
- 27
Namibia
- 51.2 Sierra Leone 60 -
Rwanda 42 - Sudan 22 11 Swaziland 50 -
Source: Compiled from the African Economic Outlook report, May 2012
2. The degree of LME…..Contd .�The Problem in Africa is not in fact limited to the unemployment
level, but also with underemployment and precarious jobs
�Marginal productivity of labour is nearly zero
�Many young people in Africa have no choice but to work in insecure
jobs for little money, or ONLY SUBSISTENCE WAGE in precarious jobs
�Sub-Saharan Africa is home to more than 27 per cent of the world’s
workers living in poverty, indicating that the regional working
poverty rate in sub-Saharan Africa is the highest in the world.
Particularly, with more than 58 per cent of workers in sub-
Saharan Africa still living with their families on less than
US$1.25 per person per day in 2008 (ILO,2012)
The Degree of LME….contd.�vulnerable employment rate in sub-Saharan Africa is still among the
highest in the world, and stood at 75.5 per cent in 2008 (ILO,2012).
�Example:
Source: National household income and expenditure surveys (HIES), Reported by ILO, April 2012
Consequences of LME
�Obviously, the real costs of joblessness are much beyond
economic costs or income poverty
�youth unemployment is considered as “ TICKING-TIME BOB”
as “young men and women [are] roaming the streets with
little to do, and in some cases engaging in criminal activities.”
�In Africa today, unemployment, particularly among young
men, is a key driver of civil unrest, political violence,
criminality and armed rebellion.
� A recent study conducted by the World Bank(2011) found
that ONE IN TWO young people who join rebel movements
in Africa cite joblessness as their main drive.
Consequences of LME�A recent Social Unrest index from ILO(2012) indicate that 57 out
of 106 countries with available information showed a risk of
increased social unrest in 2011 compared to 2010.
� The two regions with largest social unrest change are
A. Sub-Saharan Africa and
B. the Middle East and North Africa
�Regions like Latin America and the Caribbean and East Asia, South
East and the pacific have shown a dramatic decline in social unrest
index
Consequences of LME� Indeed, things do not end here and the current youth unemployment in
Africa is actually more than a security risk (PRB,2011).
�The youths are restless and have become increasingly marginalized from
many of their social values. Millions of young jobseekers are de
moralized and devoid of hope with no information at all where to find a
job. As the result, many of Africans are looking their way to other
regions of the world as illegal job seekers migrants.
�Thousands of Africans try to make dangerous journey to Europe and
other part of the world each year as illegal migrants - risking people
smugglers, deserts, sea crossings and the possibility of being sent
home, all for the dream of a better life
�It really incurs immense sunk costs for the African economies that
are “invested” nowhere
3. Consequenses of LME
� Only ‘lucky’ illegal immigrants are able to see the coastal areas of
Greece, Italy, Spain, Portugal, Yemen, Saudi Arabia, to name a few, but
many of them have been dying in small sinking boats and in harsh desert
and found dead [some times with stolen organs].
Sub-Saharan migrants continue attempting dangerous
and illegal crossings into Libya and AlgeriaThe job-seeking migrants
3. "demographic dividends" of the youth bulge �Africa has the youngest population in the world, with almost 200 million people aged between 15 and 24. This section of the population keeps growing rapidly with better education access�The demographic transition is an opportunity for Africa to compete internationally
�With good policies and institutions in place, Youth could be one of Africa's drivers of economic growth, as seen in the Asian economic tigers
�Estimates of the International Labour Organization (ILO) indicates that reducing the world’s rate of youth unemployment by half could add $2,200 bn –$3,500 bn to the global economy, about 20 per cent of that gain would go to sub-Saharan Africa(African Economic Outlook, 2012)
4. What actions make the labor market be inclusive?
�Achieving an inclusive labour market is a multi-faceted challenge and a key concern for African governments and their development partners.
�The solutions to youth unemployment in Africa are not only difficult, but they seem to be very large-scale as the African labor market basically lacks definite shape, dominated by week and inefficient (in)formal labor market institutions
�Sound macro economic polices, labour market policies(reforms), as well as improvement is social dialogue and political commitment, have an important role to play to promote inclusive labour market in Africa
Actions to be taken…..contd.
� Fundamentally long term solutions must stress on a. Improving education systems (Early skill formation of the
young generation could be the best solution).See fig. below for clarity
a. Giving second chance for the youth, in the form of increasing opportunities for internships and on-the-job training
b. Synergizing of sectors (e.g. improving healthcare, social protection, gender equality, legal frameworks, political inclusion are vital in doing the African labor market inclusive)
�Investment in or access to early learning opportunities, the existence and/or recognition of individuals’ skills (formal, informal, technical, social, language) and professional experience, the match between the training offered by education systems, vocational methods and the needs of the labour market are important issues that must be given a priority in ways of searching a long run inclusive labour market
