The Challenges of Youth Employment in ACP Countries: A Global Perspective
Brussels Briefings16th June 2010Bruno Losch
Youth and Rural Development in ACP
countries
General Positioning Youth in ACP countries like in many developing countries are
often unemployed and they mainly participate in the informal labor market: they face high economic insecurity and poverty rates
Youth represent around 20% of the total population BUT more than 30% of the active population (EAP or 15-64 group): => 37% in SSA, 32% and 28% in Pacific and Caribbean regions
Answering the youth employment challenge is critical for poverty reduction and the future of DCs
While targeted solutions are useful, they must be part of broad development strategies addressing the structural transformation of economies and societies
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Basics 1: Demographic Transition
ACP countries face a large demographic growth: this is firstly the case of SSA and also of the Pacific while the Caribbean will slow down rapidly
In SSA: from 860 million people today, to 1.3 billion in 2030 and 1.8 billion in 2050 = + 103% = the last demographic transition in the world
In the Pacific: from around 10 million in 2010 and 17 million in 2050 = + 73% with sub-regional differences
In the Caribbean: from 40 million to 47 million in 2050 = +18% (but 80% of the population in Cuba, Haiti, Dominican Rep.)
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Basics 1: Demographic Transition
A rapidly changing demographic structure Activity ratio has remained extremely low throughout the
past decades in SSA This structure weighted heavily on growth
Growth of the economically active population presents a significant opportunity… “the demographic dividend”
… but also a source of significant tensions if economies do not generate sufficient jobs
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Basics 1: Demographic Transition
The present tensions on the labor market might intensify with the arrival of growing new cohorts:
A “big push” in SSA: approximately 17 million / year at
present, 24 million in 2025, 31 million in 2050 From 200,000 to 300,000 people between today and
2050 in the Pacific But 700,000 new entrants / year in the Caribbean and
already decreasing
The ability of African economies to absorb this additional workforce is a crucial question
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the World Bankthe World Bank
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The yearly cohort of new entrants in the labor market is 300,000 people today and will be 520,000 in 15 years (240,000 for rural EAP) The Malian economy will have to create 6,2 millions “new jobs”
These new entrants have already been born
The example of Mali
0
3
6
9
12
15
18
21
24
1960 65 70 75 80 85 90 95 2000 05 10 15 20 2025
Totale (NU) (BM) Rurale (NU) (BM)
Source : United Nations 2009 (NU) et Guengant 2010 (BM)
0
100
200
300
400
500
Totale
Rurale
Source : Guengant 2010 et calculs des auteurs
Evolution of Population 1960-2025 (in Millions)
Evolution of Active Population. 1960-2025 (in Thds)
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Basics 2: Economic Transition
Developing countries are at different stages in the structural transformation process characterized by a progressive shift from agriculture to industries and services
Within this process, the role of agriculture in GDP and in employment decreases
The major vehicles of transformation are: The development of the rural non-farm economy Rural depopulation and migrations to cities (or abroad).
The viability of this process implicates employment opportunities.
The Three Worlds of Agriculture (WDR08 )
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AZE
BDI
BEN
BFA
BGD
BGR
BLR
BOLBRA
CHLCHN
CIV
CMR
COL
DOM
ECU
EGY
ETH
GHA
GTM
HND
HUN
IDNIND
IRN
KEN
KHM
LAO
LKAMAR
MDG
MEX
MLIMOZ
MWI
NERNGA
NPL
PAK
PER
PHL
POL
PRY
ROM
RUS
RWA
SEN
SLV
THA
TJK
TUN
TUR
TZA
UGA
UKR
UZB
VEN
VNM
YEM
ZAF
ZMB
AGO
ARG
CZE
DZA
GIN
MYS
PNG
SDN
SVK
SYR
TCD
TGO
ZAR
ZWE
-0.2
0.0
0.2
0.4
0.6
0.8
0.0 0.2 0.4 0.6 0.8 1.0
Ag
ricu
lture
's c
on
trib
utio
n to
gro
wth
, 19
90-2
005
Rural poor/total poor, 2002
Poverty data from Ravallion et al. 2007
Other predicted poverty data
Dynamic analysis
Urbanized countries
Agriculture-based countries
Transforming countries
70-75
90-96
Indonesia (1970-96)
Brazil (1970-96)
India
China(1981-2001)
The Evolutionary Path
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Basics 2: Economic Transition
For most of the ACP countries the economic transition has been very slow
The population remains broadly rural and will remain rural till the 2030s
Agriculture has often a central role in GDP, trade, and particularly in employment 60-80% of the active population live from agriculture
in SSA
It means that most of the youth are rural and many are involved in agriculture
SSA’s Economic Transition: a Major Challenge
African economies are characterized by a low level of diversification Rapid urbanization with a low
level of industrialization Increased difficulties to develop a
sufficient industrial sector in a context of strong international competition
Consequences: Limited creation of formal
employment vs. absorption by the informal sector
Economic and geopolitical constraints to international migration
For a long time to come agriculture will remain the main employer
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0
10
20
30
40
50
60
1965 1970 1975 1980 1985 1990 1995 2000 2005
China Indonesia Thailand Sub-Saharan Africa
0
10
20
30
40
50
1965 1970 1975 1980 1985 1990 1995 2000 2005
Sub-Saharan Africa
Manufacturing % GDP
Agriculture % GDP
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Agriculture, Transition & Employment
The role of agriculture: Contributes directly to food security, income creation
and poverty reduction Is the major source of employment so far: this is too often forgotten in the existing debates It plays a central role in the economic transition
The lessons learnt from past transitions remind: the decisive role of farm income increase in the
development of a rural demand Rural demand is the necessary step for the emergence
of the rural non-farm economy (RNFE) Both agriculture and RNFE are critical for youth
employment: their development will automatically facilitate the inclusion of young people
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Prioritization, Targeting and Sequencing Many targeted programs can be efficient for
youth employment . However, there is a need for reengaging in development strategies based on long term vision, identification of opportunities and constraints , shared diagnostics and prioritization
the size of the yearly cohorts of young people entering the labor market is a strong reminder
Every country, region has its own development trajectory, comparative advantages and binding constraints, and heterogeneity is the rule: it means tailor-made policies instead of one-size-fits-all
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Prioritization, Targeting and Sequencing Two main issues can be raised:
A recurring binding constraints in many rural areas is risk: risk encourages self-consumption and prevents diversification. Addressing risks is critical.
Many instruments can be finely designed and efficient but have a limited impact in terms of numbers: the objective is to address the big numbers through inclusive policies and programs, selecting options which are employment intensive.
The future of youth is part of this general approach