Ask young Africans!
Are the days of gloating about Africa’s rise behind us? In the current debate about the continent’s growth performance – ‘myth or reality?’ – one crucial issue gets surprisingly little attention: employment.
The big picture is clear, and disappointing: Africa’s growth in the last ten years has failed to translate into enough jobs. Even this high growth did not create more jobs than much weaker growth in the 1990s.
Young Africans in particular cannot find productive and remunerative work. With 10-12 million more young people seeking work every year, job growth has to be much stronger to make a dent in unemployment.
Africa’s capacity to offer opportunities to its younger generation has been falling short of its demographic dynamism. The strong growth has been achieved without transforming African economies.
Are the days of gloating about Africa’s irresistible rise behind us? Last month’s debate in Foreign Policy about the continent’s growth performance – is Africa’s rise myth or reality? – seems to have kick-started an overdue, more sophisticated discussion.
And yet, one crucial issue gets surprisingly little attention from FP bloggers: employment. Since jobs are by far the most sustainable way out of poverty, a straightforward manner of assessing how much of Africa’s commendable growth performance over the last decade has been driving development is to look at the number and nature of jobs it created.
The big picture is clear, and disappointing: Africa’s 5 per cent average annual growth in the last ten years has failed to translate into enough jobs. What is more, our Figure below even shows that the high growth of the 2000s did not come with stronger job creation than the much weaker growth of the 1990s.
Young Africans in particular cannot find the way to productive and remunerative work. According to the ILO, Africa created 63 million jobs between 2000 and 2007, but 96 million young people entered the labour market in the same period.
With 10 to 12 million more young people seeking work every year, job growth would have to be much stronger to make a dent in unemployment.
But how much do we actually know about unemployment in Africa? Using the official, universal definition hardly helps: for instance, unemployment rates are officially 9% in Egypt, 3.8% in Cameroon, and 2.8% in Burkina Faso… Clearly, those figures underestimate the number of people without work.
That is because, to qualify as unemployed, a person must be simultaneously: a) without work; b) currently available for work; and c) seeking work.
Anybody not fulfilling the third criterion – the ‘discouraged’, who stopped looking, as well as those who never tried to get a job after school – does not qualify as unemployed and falls out of the official labour force. Although they are likely to be more at a disadvantage than those unemployed, the discouraged are almost always excluded from labour market analyses.
In order to get a better picture, partners in the African Economic Outlook worked with the Gallup World Poll to collate household data for 37 countries. We focused on the continent’s future: young African, between 15 and 24 years of age. Taking discouragement into account, we find that the share of young people in need of a job more than doubles from official figures, from 18 million to 40 million.
We distinguish between Low Income Countries (LICs, most sub-Saharan African countries) and Middle Income Countries (MICs, essentially North African countries and South Africa): in both categories, many more young people are discouraged or out of the labour force than unemployed, as shown below.
We also find that only a minority of young working Africans have a ‘good’ job. Wage employment in the formal sector — which is what is often considered as a prerequisite for a ‘decent job’ — concerns only 7 per cent of youth in LICs and 10 per cent in MICs.
Others fall in categories defined by ILO as ‘vulnerable employment’, including self-employment and unpaid work, e.g. family farming. And while self-employment may not be bad per se, in the overwhelming majority of cases it reflects the lack of alternatives, and implies precarious living conditions and working poverty.
Finally, while in poorer countries most young people work, in better-off countries more are neither in employment, education or training (NEET) than working, although those who do work tend to have better jobs. In other words, as countries grow richer, fewer young people work: more are students, but the share of youth that do nothing grows too.
This casts a crude light on the continent’s recent growth performance: Africa’s capacity to offer economic and social opportunities to its younger generation has been falling short of its demographic dynamism.
That is because the continent’s (fairly) strong growth has not yet transformed its economies: while in East Asia the fruits of growth are distributed by dynamic sectors that create new, more productive jobs, and in turn promote new activities, in Africa growth has been driven by sectors with low labour intensity such as telecom or energy.
In particular, employment growth in the manufacturing sector has been slow, by contrast with the East Asian experience.
But does it make Africa’s rise a myth? Not necessarily. Africa is not Asia: its comparative advantage lies in the abundance of natural resources rather than in cheap labour. And while oil or gas can never create meaningful employment, other sectors such as mining or agro-processing not only employ far more numerous people, they also lend themselves to much needed linkages with local economies.
For their potential to be fulfilled, and for Africa to give its youth hope for a better future, governments crucially need to put in place new growth strategies, that build on natural resources to absorb excess labour from agriculture and channel it into more productive sectors.
That is the debate we need now. This will be the theme of the African Economic Outlook 2013 which the OECD Development Centre will launch on 27 May in Marrakesh at the Annual Meetings of the African Development Bank (AfDB) in collaboration with AfDB, UNDP and the UN Economic Commission for Africa.