Youth Employment in Sub-Saharan Africa

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Presentation made by Louise Fox, Lead Economist at the World Bank, about youth employment in Sub-Saharan Africa region.

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  • SSA has a youth bulgeThe fertility transition has not happened at the regional level—unlike other regionsIn many countries, the fertility transition has stalled
  • If you compare the employment structure in low and middle income countries in SSA to high manufacturing exporters in Asia and LAC, you see about the same share in agriculture, but SSA has much less wage employment, esp. industrial sector wage employment - Viet Nam has 50% of LF still in ag, but 30% in wage employment, with about half of that in industry
  • Youth Employment in Sub-Saharan Africa

    1. 1. YOUTH EMPLOYMENT IN SUB-SAHARAN AFRICA
    2. 2. 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.
    3. 3. Message of the report Unemployment (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. 4. The Opportunity and Challenge:Africa’s Youth 4 SSA Population 2015, 2035 South Asia Population 2015, 2035 -100 -80 -60 -40 -20 0 20 40 60 80 100 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80+ Population in millions Male 2015 Female 2015 Male 2035 Female 2035 -100 -80 -60 -40 -20 0 20 40 60 80 100 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80+ Population in millions Male 2015 Female 2015 Male 2035 Female 2035 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
    5. 5. Overthe past two decades,agriculture’s sharein GDPcontractedin Africa,but manufacturing did not replace it 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1990 2010 1990 2010 1990 2010 Sub-Saharan Africa East Asia South Asia Low Income Agriculture Industry (exc. Manufacturing) Manufacturing 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1990 2010 1990 2010 1990 2010 Sub-Saharan Africa East Asia South Asia Low-Middle Income Agriculture Industry (exc. Manufacturing) Manufacturing
    6. 6. The share of employment in agriculture contracted in many fast growing economies -25.0 -20.0 -15.0 -10.0 -5.0 0.0 5.0 10.0 15.0 20.0 Nigeria Rwanda Ghana Uganda Tanzania Senegal Cote d'Ivoire Percentagepointchangein employmentshare Agriculture Private wage Household enterprises
    7. 7. But agriculture still employs the majority of the labor force 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Low Income Lower-Middle Income Resource Rich Upper-Middle Income Total 183 m 40 m 150 m 21 m 395 m LaborForceDistribution15-64 Agriculture HE Wage Industry Wage Services Unemployed
    8. 8. Wage employment remains low in sub-Saharan Africa Especially in industry and compared with Asian countries 8 SLENER BFA TCDCOD CIV LBR COM MWI RWA KEN COG AGONGA CMR SEN GHA LSO STP SWZ BGD BOL KHM MNG NIC PHI VNM LAO 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 0 1,000 2,000 3,000 4,000 5,000 WageIndustryemployment,2010(percentoftotal) GDP per capita, 2010 (current U.S. dollars) Sub-Saharan Africa low and low-middle income Comparators Household enterprises Agriculture Industry Services Low Income Sub-Saharan Africa 2.3 10.0 18.3 69.4 Lao PDR 5.4 8.1 19.0 67.5 Bangladesh 10.8 14.9 27.7 46.6 Cambodia 11.1 12.2 21.0 55.7 Low-Middle Income Sub-Saharan Africa 2.0 11.9 31.1 55.1 Vietnam 14.3 17.5 19.1 49.1 Nicaragua 13.3 30.6 22.9 33.2 Philippines 12.6 36.1 19.5 31.8 Bolivia 12.6 30.4 28.1 28.9 Mongolia 5.9 33.4 16.0 44.7 Sources: I2D2; and Sub-Saharan Africa estimation fromprojections. Wage Employed Population 15–64,2010
    9. 9. After a long transition to work, youth end up in the same sectors as adults – can they be more productive? 0 10 20 30 40 50 60 70 80 90 100 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Age Agriculture HE Wage 0 10 20 30 40 50 60 70 80 90 100 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Age Agriculture HE Wage Rural Urban
    10. 10. 10 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 Household enterprise Wage services Wage industry Millions New Jobs 2020 37% 38% 21% 4% Agriculture Household enterprise Wage services Wage industry
    11. 11. 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
    12. 12. Education determines opportunities… 42 32 12 6 35 22 13 20 8 18 21 27 25 14 22 16 28 43 73 24 0 20 40 60 80 100 Agriculture Household Enterprise Wage with no contract Wage with contract Total Percent No Education Primary Incomplete Primary Complete Secondary + Education Profile of Workers in each Sector
    13. 13. But quality is key, and this is lagging, so benefits are not realized (Percentageof students who cannot read a single word of a simple paragraph, 2010) 0 10 20 30 40 50 60 70 80 90 Ghana Kenya Liberia Mali Senegal Senegal The Gambia Uganda Grade 3 End Grade 3 End Grade 2 End Grade2 Grade3 End Grade3 End Grade2 End Grade2
    14. 14. 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
    15. 15. In agriculture, youth need land and support to make it productive Land ownership by age group 0 10 20 30 40 50 60 70 80 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60+ Percent Age Malawi Tanzania Uganda 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
    16. 16. HEs are not SMEs – they need their own approach, and youth need support to seize opportunities Most enterprises are family operations 0 10 20 30 40 50 60 70 80 90 100 Self Employed Self Employed with Family Helpers With 1-4 Employees 5 + Employees Youth struggle to start a business 0 5 10 15 20 25 30 35 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-65 66+ % Distribution of HE owners Share of age group being in HE owners
    17. 17. 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
    18. 18. Financial inclusion for family farms and enterprises, as well as households African youth save, but not in banks 0 10 20 30 40 50 60 70 80 90 100 LI LMI UMI LI LMI UMI SSA Rest of the World Individuals15-24(%) Formal Informal/Club Other • 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
    19. 19. Amanufacturing strategy won’t solve today’s youth employment, but it will help the next generation Manufacturing employment has grown slowly 0.00 0.05 0.10 0.15 0.20 0.25 0.30 1990 2007 1990 2007 1980 2003 1990 2007 1990 2007 1990 2000 1990 2007 Maufacturingemployment ('000,000workers) ―Game changer‖ scenario takes time to have an effect 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Low Income Low Income Lower-middle income Lower-middle income Original Alternative Original Alternative 248 m 248 m 52 m 52 m Inpercentoftotal Agriculture Household enterprises Wage services Wage industry Unemployed
    20. 20. What is needed for the ―game changer‖ scenario? Need to raise productivity or lower wages or both 0.00 0.10 0.20 0.30 0.40 0.50 0.60 1991-1993 2007-2009 1991-1993 2005-2007 1980-1982 2003 1991-1993 2000-2002 1991-1993 2007-2009 1991-1993 2000-2002 1991-1993 2005-2007 Ethiopia Kenya GhanaCameroonMalawi SenegalTanzania UnitLaborCost China India Brazil • 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
    21. 21. 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
    22. 22. 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
    23. 23. Thank you

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