Youth Employment in Sub-Saharan Africa

YOUTH EMPLOYMENT IN SUB-SAHARAN AFRICA

Dimensions of the employment challenge

• The demographics, which created the youth bulge that is emerging onto African labor markets but could, in the longer term, stimulate economic growth and development.

• The structure of economies and of recent economic growth, which failed to increase the supply of the wage jobs most desired by the youth—and the prospects for reversing this trend in the future.

• The massive expansion in access to education, which is adding many years of schooling, but much less learning and skills, to Sub-Saharan Africa.

•  The aspirations of youth and policy makers, which focus on the wage employment sector at the expense of more immediate opportunities in the family farming and household enterprise sectors.

Message of the reportUnemployment (of urban educated graduates who want to work in the wage sector) is just the tip of the iceberg

Solving the youth employment problem is about pathways for all youth into productive work in the private sector: in agriculture, household enterprises, as well as modern wage enterprises sector

4

The Opportunity and Challenge: Africa’s Youth SSA Population 2015, 2035 South Asia Population 2015, 2035

0-4

10-14

20-24

30-34

40-44

50-54

60-64

70-74

80+

-100 -80 -60 -40 -20 0 20 40 60 80 100

Male 2015 Female 2015 Male 2035

Female 2035

Population in millions

0-4

10-14

20-24

30-34

40-44

50-54

60-64

70-74

80+

-100 -80 -60 -40 -20 0 20 40 60 80 100

Male 2015 Female 2015 Male 2035

Female 2035

Population in millions

Source: United Nations, Department of Economic and Social Affairs, Population Division (2011). World Population Prospects: The 2010 Revision. http://esa.un.org/wpp/Excel-Data/population.htm

Over the past two decades, agriculture’s share in GDP contracted in Africa, but manufacturing did not replace it

1990 2010 1990 2010 1990 2010Sub-Saharan Africa East Asia South Asia

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Low Income

Agriculture Industry (exc. Manufacturing)Manufacturing Services, etc.

1990 2010 1990 2010 1990 2010Sub-Saharan

AfricaEast Asia South Asia

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Low-Middle Income

Agriculture Industry (exc. Manufacturing)Manufacturing Services, etc.

The share of employment in agriculture contracted in many fast growing economies

Nigeria Rwanda Ghana Uganda Tanzania Senegal Cote d'Ivoire

-25.0-20.0-15.0-10.0

-5.00.05.0

10.015.020.0

Agriculture Private wage Household enterprises

Perc

enta

ge p

oint

cha

nge

in

empl

oym

ent s

hare

But agriculture still employs the majority of the labor force

Low Income Lower-Middle Income

Resource Rich Upper-Middle Income

Total

183 m 40 m 150 m 21 m 395 m

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Agriculture HE Wage Industry Wage Services Unemployed

Labo

r For

ce D

istrib

ution

15-

64

Wage employment remains low in sub-Saharan Africa

Especially in industry and compared with Asian countries

8

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,5000%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

BGDBOL

KHM

MNG

NIC

PHI

VNM

LAO

SLENER BFATCDCOD CIV

LBR COMMWI

RWA

KEN

COG AGONGACMRSENGHA

LSO

STP

SWZ

Sub-Saharan Africa low and low-middle income Comparators

GDP per capita, 2010 (current U.S. dollars)

Wag

e In

dust

ry e

mpl

oym

ent,

2010

(per

cent

of t

otal

)

Household enterprises Agriculture

Industry ServicesLow Income Sub-Saharan Africa 2.3 10.0 18.3 69.4

Lao PDR 5.4 8.1 19.0 67.5Bangladesh 10.8 14.9 27.7 46.6Cambodia 11.1 12.2 21.0 55.7

Low-Middle Income Sub-Saharan Africa 2.0 11.9 31.1 55.1Vietnam 14.3 17.5 19.1 49.1Nicaragua 13.3 30.6 22.9 33.2Philippines 12.6 36.1 19.5 31.8Bolivia 12.6 30.4 28.1 28.9Mongolia 5.9 33.4 16.0 44.7

Sources: I2D2; and Sub-Saharan Africa estimation from projections.

Wage

Employed Population 15–64, 2010

After a long transition to work, youth end up in the same sectors as adults – can they be more productive?

15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 340

10

20

30

40

50

60

70

80

90

100

Agriculture HE Wage

Age

15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 340

10

20

30

40

50

60

70

80

90

100

Agriculture HE Wage

Age

Rural Urban

10

Will this change in the future? Where will the new jobs be? (base case)

Number of new jobs by sector Distribution of new entrants by sector

125 million new jobs for 170 million new entrants

0

50

100

150

200

250

300

Agriculture Householdenterprise

Wageservices

Wageindustry

Mill

ions

New Jobs 2020

37%

38%

21%

4%

Agriculture Household enterprise

Wage services Wage industry

Framework for analyzing the youth employment challenge: Productivity and Pathways• Focus on the private sector:

• Agriculture• Household enterprises (HEs)• Modern wage employment (where the majority want to work)

• Two policy dimensions • Skills• Business Environment

• Two time dimensions• Address immediate constraints for quick wins• Address medium term constraints for game changers

Education determines opportunities…

Agriculture Household EnterpriseWage with no contract Wage with contract Total0

20

40

60

80

100

4232

126

35

22

13

20

8

18

21

27

25

14

22

16

28

43

73

24

No Education Primary Incomplete Primary Complete Secondary +

Per

cen

t

Education Profile of Workers in each Sector

But quality is key, and this is lagging, so benefits are not realized(Percentage of students who cannot read a single word of a simple paragraph, 2010)

0102030405060708090

Ghana Kenya Liberia Mali Senegal Senegal The Gambia

Uganda

Grade 3 End Grade 3

End Grade 2

End Grade 2

Grade 3 End Grade 3

End Grade 2

End Grade 2

Building skills is a medium term agenda, but reform has to start now• Countries can not get a quick win through TVET–

foundation has to be better education• Cognitive and behavioral skills for productivity

• For agriculture, build skills through extension, with programs targeted at youth

• Build on existing private approaches (e.g. apprenticeships) to help youth enter HE sector productively; address multiple constraints

• For entrance into wage jobs, use post-school TVET very selectively, use PPP

In agriculture, youth need land and support to make it productive

Land ownership by age group

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60+0

10

20

30

40

50

60

70

80

Malawi Tanzania Uganda

Age

Perc

ent

Opportunities and constraints

• Growing demand for food produced on Africa’s farms – domestically and exports

• Youth can be early adopters of new technology if it is available

• Credit• Rural infrastructure• Land markets• Private investment in agro-

processing• Producer organizations

HEs are not SMEs – they need their own approach, and youth need support to seize opportunities

Most enterprises are family operations

Self

Empl

oyed

Self

Empl

oyed

with

Fam

ily H

elpe

rs

With

1-4

Em

ploy

ees

5 + E

mpl

oyee

s0

10

20

30

40

50

60

70

80

90

100

Youth struggle to start a business

15 - 1

9

20 - 2

4

25 - 2

9

30 - 3

4

35 - 3

9

40 - 4

4

45 - 4

9

50 - 5

4

55 - 5

9

60 - 6

5

66+

0

5

10

15

20

25

30

35

Distribution of HE owners

Share of age group being in HE owners

%

Grow HE employment for youth through strategy to develop new businesses

• Need an inclusive strategy – at national and local level• Urban authorities should support sector, provide locations

to work and sell• Cluster for productivity, integrate into local development projects

• Expand infrastructure for productivity, profitability• Voice and association – Ghana is a good example

Financial inclusion for family farms and enterprises, as well as households

African youth save, but not in banks

LI LMI UMI LI LMI UMISSA Rest of the World

0

10

20

30

40

50

60

70

80

90

100

Formal Informal/Club Other

Indi

vidu

als

15-

24 (%

)

• Households, and farm or business finances comingled

• Households need place to save and to get credit

• Youth need savings to start a business or buy inputs for the farm, and a place to safeguard profits

• Mobile money shows promise but need better regulations

• Informal savings groups are filling the gap, especially in rural areas

A manufacturing strategy won’t solve today’s youth employment, but it will help the next generation

Manufacturing employment has grown slowly

1990

2007

1990

2007

1980

2003

1990

2007

1990

2007

1990

2000

1990

2007

Ethiopia

Kenya Ghana Cameroon

Malawi

Senegal

Tan-zania

0.00

50.00

100.00

150.00

200.00

250.00

300.00

“Game changer” scenario takes time to have an effect

Low Income Low Income Lower-middle income

Lower-middle income

Original Alternative Original Alternative248 m 248 m 52 m 52 m

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Agriculture Household enterprises Wage servicesWage industry Unemployed

In p

erce

nt o

f tot

al

What is needed for the “game changer” scenario?

Need to raise productivity or lower wages or both

1 2 3 4 5 6 7 8 9 10 11 12 13 140.00

0.10

0.20

0.30

0.40

0.50

0.60

China India Brazil

Unit

Labo

r Cos

t

• Ample supply of unskilled labor in most countries

• Primary focus should be on business environment

• Business environment often protects status quo

• Well known cost issues need to be addressed: infrastructure costs, high land and input costs, expensive logistics, lack of finance, etc.

• Management and market know-how may be a constraint

What operational approaches show promise?

• Enable the private sector, don’t duplicate it• Use NGOs and decentralized approaches for flexibility

• Performance contracts, monitoring and evaluation

• Safety net programs are reaching poor areas, use them to help low income youth get started

• Programs geared to young women’s needs show high returns

YE is about building skills through improving the quality of education, as well as behavioral and business skills

YE is about agriculture – where strategies exist but have not been implemented, and could benefit from a youth lens

YE is about household non-farm enterprises – where few strategies exist

YE is about creating more labor intensive enterprises as fast as possible to absorb the supply of new entrants with education who want wage jobs

YE is about female empowerment and focus on the poor

Governments need to own the “whole” problem

A mix of action - quick wins and laying the foundation for sustained progress

Thank you