HLEG thematic workshop on Measurement of Well Being and Development in Africa, 12-14 November 2015, Durban, South Africa, More information at: www.oecd.org/statistics/measuring-economic-social-progress

1. Economic
Transformation
and
the
SDGs—Measurement
and
Tracking
(Dr.
Yaw
Ansu,
Chief
Economist,
ACET)
1
The
SDGs
Sustainable
Development
Goal
(SDG)
#8
sates:
“Promote
sustained,
inclusive
and
sustainable
economic
growth,
full
and
productive
employment,
and
decent
work
for
all”.
This
goal
is
pivotal
among
the
set
of
17
SDGs.
Its
attainment
requires
the
attainment
of
several
of
the
SDGs,
and
attaining
it
makes
possible
the
attainment
of
several
others.
For
example,
inclusive
and
sustainable
growth
requires:
healthy
lives
(SDG
3),
quality
education
(SDG
4),
gender
equality
and
empowerment
of
women
and
girls
(SDG
5),
reliable,
sustainable
and
modern
energy
(SDG
7),
resilient
infrastructure
(SDG
9)
and
particularly
for
Africa,
sustainable
agriculture
and
industrialization
(SDG
2
and
9).
Furthermore,
inclusive
and
sustainable
economic
growth
that
is
accompanied
by
full
and
productive
employment
and
decent
work
for
all
will
help
reduce
poverty,
hunger,
food
insecurity,
and
malnutrition
(SDG
1
and
2).
It
will
also
help
reduce
inequality
within
and
among
countries
(SDG
10),
and
contribute
to
healthy
lives
and
quality
education
(SDG
3
and
4).
Indirectly,
achievement
of
SDG
8
could
also
positively
impact
some
of
the
other
SDGs.
For
all
of
the
reasons
above,
African
countries
should
prioritize
and
promote
the
achievement
of
SDG
8.
And
clarifying
the
concepts
underlying
the
goal
and
providing
metrics
that
will
facilitate
its
measurement
and
tracking
should
help
in
this
effort.
The
two
key
concepts
embodied
in
SDG
8
are
first,
“sustainable
economic
growth”,
which
should
lead
to
rises
in
per
capita
incomes,
and
second,
“full
and
productive
employment,
and
decent
work
for
all”,
which
would
help
ensure
that
rising
incomes
are
widely
shared
through
remunerative
employment,
leading
to
reduced
inequality
and
also
dignity
for
workers.
For
Africa,
underlying
both
concepts
is
the
idea
of
economic
transformation.
Economic
Transformation
In
ACET’s
2014
African
Transformation
Report,
we
define
economic
transformation
as
“Growth
with
DEPTH”
with
each
of
the
letters
in
“DEPTH”
representing
an
important
dimension
of
economic
transformation:
• Diversified
production
and
exports;
• Export
competitiveness;
1
Help from my colleague at ACET, Dr. William Baah-Boateng, is gratefully acknowledged.

2. • Productivity
gains
in
all
sectors
of
the
economy;
• Technological
upgrading
throughout
the
economy;
and
• Human
wellbeing
The
first
4
dimensions
are
what
generate
economic
growth,
and
more
importantly
make
it
sustainable.
The
last
highlights
the
need
for
economic
growth
to
improve
human
lives.
We
combine
all
5
dimensions
of
“Depth”
to
produce
an
African
Transformation
Index
(ATI)
with
which
we
evaluate
and
compare
countries
on
economic
transformation.
For
this
discussion,
we
will
confine
ourselves
to
the
last
dimension,
Human
wellbeing.
Human
wellbeing
involves
many
factors
including,
employment
and
income
security;
reduced
poverty
and
inequality;
good
health
&
education;
peace,
security
of
life,
justice,
shelter,
and
…etc.
For
ACET’s
ATI,
we
boiled
all
of
these
down
to
2
items:
per
capita
income
(GDP)
and
employment.
The
rationale
is
that
if
incomes
are
rising
and
they
are
being
widely
shared
through
rising
employment
levels,
then
inequality
will
be
reduced
and
people
will
have
greater
access
to
some
of
the
other
ingredients
of
human
wellbeing,
such
as
food,
education,
health,
shelter…etc.
So,
although
far
from
being
comprehensive,
the
two
indicators
that
we
use
as
proxies
have
profound
impacts
on
human
wellbeing,
and
for
us—economists—they
also
have
the
advantage
of
keeping
the
discussion
within
the
realm
of
economics.
Employment
Of
the
two
proxies—GDP
per
capita
and
employment—we
focus
on
the
latter,
since
several
of
the
other
papers
in
this
conference
will
discuss
GDP
issues.
As
is
well
known,
the
ILO’s
definition
of
employment
is
not
very
relevant
for
the
realities
of
African
economies.
To
be
classified
as
unemployed
under
that
definition,
a
person
(15
years
or
older)
must
meet
all
of
the
three
requirements
below
(for
a
reference
period,
usually
the
past
one
week):
• Out
of
work
• Available
for
work,
and
• Actively
seeking
work.
Many
African
countries
do
not
have
unemployment
insurance
and
other
social
protection
systems
to
cushion
people
out
of
employment,
and
they
also
do
not
have
functioning
labor
bureaus
to
facilitate
job
search
(and
collect
labor
market
statistics).
Most
people
therefore
cannot
stay
out
of
work
for
a
long
time;
they
have
to
find
something
do
to
survive.
Consequently,
reported
unemployment
rates
are
under
6
percent
for
most
African
countries—on
par
or
lower
than
many
richer
industrialized
countries
(Table
1).
But
these
rates
present
an
erroneous
picture
of
the
employment
situation
in
African
countries.
Indeed,
80
to
90
percent
of
employment
in
almost
all
African
countries
is
in
the
informal
sector
or
in
vulnerable
employment,
with
income
levels
that
keep
the
workers
in
poverty.

3.
Increasingly,
the
ranks
of
the
informal
sector
and
vulnerable
employment
are
being
swelled
by
the
educated
youth
whose
aspirations
and
attempts
to
secure
formal
sector
employment
have
proved
futile.
A
rising
proportion
of
these
youth
are
graduates
of
secondary
and
tertiary
institutions
with
training
that
has
geared
them
to
aspire
to
formal
sector
jobs.
These
youth
eke
out
a
living
in
frustration,
engaged
in
activities
that
do
not
utilize
their
education
and
training.
Table 1: Unemployment rates based on ILO definition and discouraged workers
Country Unemployment (ILO definition) Unemployment (Broad)
(No work, available & seeking) (No work, available, not seeking)
Ghana 3.1 6.5
Zimbabwe 5.4 10.7 .
Botswana 17.6 32.2
Tanzania 4.3 6.7
Niger 3.7 5.7
Zambia 8.8 11.5
South Africa 24.7 32.4
Source: Baah-Boateng (2015)
One
way
to
get
a
better
picture
of
unemployment
in
Africa
is
to
drop
the
criterion
of
“actively
seeking
work”
from
the
ILO
definition
and
to
include
in
the
ranks
of
the
unemployed
those
who
are
discouraged
and
have
stopped
actively
seeking
work
(Table
1,
column
2).
An
even
more
relevant
concept,
particularly
for
the
youth,
is
that
of
NEET—those
in
the
working
age
(or
youth)
population
that
are
Not
in
Employment
Education
or
Training.
Those
in
NEET
are
essentially
in
one
of
the
following
places:
in
the
formal
sector
labor
force
but
unemployed;
discouraged
and
dropped
out
of
the
formal
sector
labor
force;
or
inactive
(e.g.
housewives
and
those
kept
out
of
the
labor
force
for
long-­‐term
health
reasons).
The
figure
below
compares
this
measure
of
unemployment
for
the
youth
in
Ghana.
The
NEET
measure
of
unemployment
is
over
four
times
higher
than
the
conventional
ILO
measure,
and
about
double
the
“broad”
unemployment
measure
under
the
ILO
definition.
The
latter
includes,
in
addition
to
the
unemployed
by
the
conventional
definition,
those
who
have
been
discouraged
and
have
stopped
actively
seeking
work).
Figure…
shows
the
situation
in
other
African
countries.

4. Source: Aryeetey el al (2014)
Source: Constructed from Key Indicators of the Labor Market (KILM) 8th
edition
But
even
the
NEET
measure
does
not
reflect
the
large
numbers
of
educated
youth
who
have
been
forced
to
take
up
menial
activities
below
their
qualifications
in
the
informal
sector
due
to
lack
of
opportunities
for
jobs
or
self-­‐employment
in
the
formal
sector.
This
situation
represents:
• A
waste
of
national
education
resources
• A
waste
of
individual
talents
• A
waste
of
opportunity
for
the
nation
to
capitalize
on
its
most
important
economic
asset
for
economic
growth
and
development;
and
• A
burgeoning
army
of
frustrated
youth
that
pose
national
social
and
political
risks
0
20
40
1992
1999
2006
5.4
5.4
6.5
8.0
15.8
13.5
23.0
34.2
26.9
Figure
1:
Narrow
and
Broad
unemployment
rates
and
NEET
among
Ghanaian
youth
(15-­‐24)
ILO
Narrow
Broad
(ILO
Narrow
+
Discouraged
workers
NEET
0
5
10
15
20
25
30
Benin
Liberia
Malawi
Mali
Zambia
2.4
5.1
8.6
10.7
15.2
25.3
29.0
17.6
13.5
28.3
Figure 2: Youth unemployment rates and NEET of selected
African countries (%)
Youth
unemployment
NEET

5.
Unless
something
is
done
to
dramatically
increase
employment
in
the
formal
sector,
this
situation
will
get
worse
due
to
Africa’s
fast
rising
youth
population
and
the
increasing
access
to
education.
In
addition,
even
for
the
older
(non-­‐youth)
workers
already
in
the
informal
sector,
formalization,
entailing
raised
productivity
and
incomes
levels
and
improved
work
conditions
should
be
a
priority
focus
of
development
policy.
Apart
from
the
likely
benefits
that
these
workers
will
gain
from
formalization,
the
nation
will
also
benefit
from
increased
contributions
to
taxes
and
official
social
security
systems,
which
would
raised
the
level
of
domestic
savings
available
for
financing
development.
For
all
of
these
reasons,
the
expansion
of
formal
employment
(jobs
as
well
as
self-­‐employment)
should
be
a
high-­‐priority
national
economic
target.
The
case
is
often
made
that
since
the
bulk
of
the
working
population
in
Africa
(upwards
of
80%)
is
in
the
informal
sector,
that
sector
should
be
the
focus
of
policy.
This
may
be
justifiable
if
the
primary
objective
is
short-­‐term
poverty
alleviation—
“let’s
do
something
for
the
poor
now
to
alleviate
their
suffering”.
But
if
the
primary
goal
is
sustainable
improvement
in
incomes
with
dignity
and
reduced
dependency,
then
the
objective
of
expanding
formal
sector
employment
should
merit
primary
consideration.
It
will
help
focus
attention
on
pursing
economic
transformation
and
the
SDGs,
as
explained
below.
Expanding
formal
employment
African
countries
should
aim
to
raise
the
ratio
of
formal
employment
to
the
working
age
population
as
a
national
economic
target.
Specifically,
the
target
should
be:
Raise
FE/WP,
where
FE
is
the
number
of
workers
in
formal
employment
and
WP
is
the
size
of
the
working-­‐age
population
(15-­‐64
yrs).
This
target
can
be
decomposed
into
3
ratios:
FE/WP
=
FE/SG
*
SG/LF
*
LF/WP
(1)
Where:
FE
=
Formal
employment
WP
=
Working-­‐age
population
SG
=
Secondary
and
tertiary,
including
technical
and
vocational,
school
graduates
in
the
labor
force
LF
=
Labor
force
=WP
–
(Those
in
School
and
Training)-­‐(Housewives)-­‐(Those
incapacitated)
So
the
target
of
raising
the
ratio
of
the
formally
employed
to
the
working
age
population
amounts
to:
• Raising
the
ratio
of
formal
employment
to
secondary
and
tertiary
school
graduates
in
the
labor
force;

6. • Raising
the
share
of
secondary
and
tertiary
school
graduates
in
the
labor
force;
and
• Raising
the
labor
force
participation
rate.
Together,
these
three
component
ratios
constitute
a
focused
economic
transformation
agenda
that
can
effectively
respond
to
the
challenge
of
meeting
SDG
8,
as
explained
below.
Expanding
formal
employment,
speeding
economic
transformation
and
meeting
SDG
8
Raising
the
labor
force
participation
rate.
We
start
with
the
last
of
the
three
components
ratios
above—raising
the
labor
force
participation
rate
or
equivalently,
reducing
the
inactivity
rate.
Three
policy
areas
are
key
to
pursuing
this
objective:
(a)
policies
that
facilitate
access
to
good
and
affordable
health
care
in
order
to
keep
the
working
age
population
fit
so
as
to
reduce
the
number
of
people
incapacitated;
(b)
policies
that
remove
constraints
and
discrimination
faced
by
women
in
entering
the
labor
market;
and
(c)
family
leave
and
childcare
policies
that
enhance
the
options
of
women
to
participate
in
the
labor
force.
In
Ghana,
the
inactivity
rate
rose
from
25
percent
to
almost
30
percent
between
2000
and
2010.
Over
the
same
period,
the
percentage
of
the
inactive
that
were
incapacitated
rose
from
3.4
to
4.7
percent
(Figure
3).
As
can
be
seen
from
Figure
4,
in
some
African
countries,
women’s
labor
force
participation
rates
are
significantly
lower
than
those
of
men.
Source:
Population
and
Housing
Census,
2000
and
2010,
Ghana
Statistical
Service
25.3
28.9
3.4
4.7
0
10
20
30
40
2000
2010
Figure
3:
Inactivity
rate
and
proportion
of
economically
inactive
that
are
incapacitated
in
Ghana
(%)
Inactivity
rate
%
of
inactive
that
are
incaacitated

7.
Source:
Key
Indicators
of
the
Labour
Market
(KILM)
8th
Edition,
(ILO)
Raising
the
share
of
secondary
and
tertiary
school
graduates
in
the
labor
force.
The
key
here
is
education
policies
that:
(a)
facilitate
expanded
and
affordable
access
to
secondary
and
tertiary,
including
technical
and
vocational,
education;
and
(b)
ensures
that
those
entering
secondary
and
tertiary
institutions
graduate
on
time.
Indeed,
enrolments
at
the
secondary
and
tertiary
levels
are
low
in
many
countries
on
the
continent
and
Sub-­‐Saharan
Africa
(SSA)
has
the
lowest
enrolment
rate
at
secondary
and
tertiary
levels
among
all
regions
of
the
world.
The
gross
enrolment
rate
at
the
tertiary
level
stood
at
8.6%
in
SSA
compared
to
the
world
average
of
32.9%
with
the
same
pattern
reported
at
the
secondary
level
(Figure
5)
Source:
World
Development
Indicators,
2015,
World
Bank
0
20
40
60
80
100
Figure
4:
Labour
Force
Participation
Rate
by
Gender
(%)
Male
Female
0
20
40
60
80
100
120
High
Income
OECD
European
Union
Latin
America
&
Pacioic
East-­‐Asia
and
Pacioic
World
South
Asia
SSA
91.2
91.7
75.7
78.5
66.0
51.4
33.7
105.1
111.8
92.9
86.6
75.2
65.5
42.8
76.0
66.2
43.9
33.1
32.9
21.2
8.6
Figure
5:
Gross
and
Net
Enrolment
Rates
of
Secondary
and
Tertiary
NER
Secondary
GER
Secondary
GER
Tertairy

8. Raising
the
ratio
of
formal
employment
to
secondary
and
tertiary
graduates
in
the
labor
force.
Why
focus
on
just
secondary
and
tertiary
graduates
in
formal
employment?
First,
because
as
already
explained,
increasingly
the
crisis
of
youth
unemployment
and
underemployment
in
Africa
is
becoming
centered
on
this
population.
Second,
because
raising
the
minimum
level
of
education
in
the
labor
force
to
the
secondary
school
level
raises
the
potential
productivity
floor
for
the
whole
economy.
Currently,
the
share
of
secondary
and
tertiary
graduates
that
gain
employment
in
the
formal
sector
is
very
low
reflecting
in
the
high
unemployment
rates
of
secondary
and
tertiary
graduates
relative
to
those
with
no
or
lower
level
of
education
(Figure
6).
Source: Constructed from Key Indicators of the Labor Market (ILO, 2013)
Expanding
formal
employment
to
absorb
a
rising
number
of
secondary
and
tertiary
school
graduates
requires
focused
attention
on
the
quality
and
relevance
of
education,
and
on
the
nature
of
economic
growth
strategies.
First,
it
is
not
enough
just
to
raise
the
ratio
of
secondary
and
tertiary
graduates
in
the
labor
force
(i.e.
the
second
ratio),
these
graduates
must
have
the
skills
and
training
that
make
them
attractive
to
employers
or
that
enable
them
to
set
up
their
own
formal
sector
enterprises.
This
requires
close
alignment
between
educational
policies
and
economic
growth
strategies,
and
also
close
collaboration
between
educational
authorities
and
the
private
sector
in
curricular
development.
The
collaboration
could
take
the
form
of
internships,
inputs
of
the
private
sector
on
curricula
development
(particularly
for
technical
and
vocational
training
institutes),
adoption
of
practical
case
studies
in
teaching
and
training
as
well
as
opportunities
for
instructors
and
trainers
to
spend
some
time
at
economic
enterprises.
A
greater
emphasis
by
institutions
on
science,
technology,
engineering
and
mathematics
(STEM)
disciplines
and
an
increase
in
the
number
of
students
studying
them
will
also
be
needed
(ATR1).
0
5
10
15
20
25
30
35
Figure
6:
Unemployment
rate
by
level
of
education
Basic/Primary
Secondary
Tertiary

9.
Second,
a
viable
economic
growth
strategy
has
to
be
devised
and
implemented
in
order
to
keep
expanding
the
demand
and
opportunities
for
employment
in
the
formal
sector,
particularly
by
private
sector
enterprises.
The
key
requirements
for
this
are
well
known
by
now,
including:
(a)
a
stable
macroeconomic
environment;
(b)
a
business-­‐friendly
environment
(i.e.
policies,
institutions,
and
regulations)
that
makes
it
easier
for
existing
businesses
to
expand
and
for
new
businesses
to
establish
quickly,
and
for
businesses
in
the
informal
sector
to
grow
and
become
formal;
(c)
provision
of
good
public
infrastructure
(power,
roads,
water,
ports,
and
telecommunications)
through
efficient
public
investment
and
public-­‐private
partnerships
(PPPs);
(d)
smart
and
market-­‐oriented
industrial
policy
that
targets
promising
sub-­‐sectors
(in
agriculture,
manufacturing,
and
modern
services)
and
assists
them
with
access
to
technology,
finance,
and
external
markets;
and
(e)
targeted
assistance
to
the
informal
sector
to
help
them
to
grow
and
become
formal
(
ATR1).
A
summary
indicator
for
economic
transformation
and
the
SDGs
The
above
discussion
has
shown
that
raising
the
ratio
of
formal
sector
employment
to
the
working
age
population
is
a
powerful
summary
indicator.
It
captures
the
essence
of
SDG
8,
and
to
pursue
it
requires
the
successful
implementation
of
an
employment
creating
economic
transformation
strategy.
Furthermore,
as
demonstrated
as
the
beginning
of
the
paper,
SDG
8
is
pivotal
to
achieving
many
of
the
other
SDGs—i.e.
to
achieve
SDG
8
requires
achieving
several
of
the
other
SDGs,
and
achieving
SDG
8
facilitates
achievement
of
several
other
SDGs.
So,
if
we
are
looking
for
one
powerful
metric
to
track
the
SDGs,
the
ratio
of
formal
employment
to
the
working
age
population
is
it.
It
has
the
added
advantage
of
putting
employment
issues
at
the
center
of
economic
transformation
strategy,
rather
than
as
a
well-­‐intentioned
social
and
poverty-­‐reducing
after-­‐thought,
which
has
tended
to
be
the
case.
Now
the
question
is:
how
do
we
go
about
getting
the
data
needed
to
measure
and
regularly
track
this
ratio
and
the
associated
three
ratios
discussed
above?
Data
and
monitoring
issues
Where
can
we
get
the
data
needed
for
the
ratio
of:
(a)
formal
employment
to
the
working
age
population;
(b)
formal
employment
to
secondary
and
tertiary
graduates;
(c)
secondary
and
tertiary
graduates
to
the
labor
force;
and
(d)
labor
force
to
the
working
age
population
(i.e.
the
labor
force
participation
rate)?
Given
the
poor
quality
of
labor
force
and
other
household
surveys
in
many
African
countries,
perhaps
a
more
tractable
way
to
measure
the
above
ratios
is
to
convert
equation
(1)
into
flows,
focusing
on
changes
over
time.
Indeed,
in
terms
of
tracking
policy
performance
this
is
more
relevant.
In
terms
of
growth
rates,
equation
(1)
becomes:
(fe
–
wp)
=
(fe
–
sg)
+
(sg
–
lf)
+
(lf
–
wp)
(2)

10.
The
above
expression
says
that
to
raise
the
ratio
of
formal
employment
to
the
working
age
population
over
time:
(a)
the
rate
of
growth
in
formal
employment
must
exceed
the
rate
of
growth
of
the
number
of
graduates
from
secondary
and
tertiary
institutions
entering
the
labor
force;
(b)
the
rate
of
growth
of
these
graduates
must
exceed
that
of
the
labor
force;
and
(c)
the
labor
force
must
grow
faster
than
the
working-­‐age
population.
Data
on
growth
in
formal
employment
can
be
estimated
from
administrative
surveys
and
from
tax
and
company
registration
records.
The
numbers
(and
courses
of
study)
of
secondary
and
tertiary
institution
graduates
entering
the
labor
market
each
year
can
be
estimated
from
the
records
of
Ministries
of
Education
supplemented
by
surveys
of
secondary
and
tertiary
institutions,
which
can
be
easily
administered.
Population
censuses
can
be
used
to
estimate
the
growth
in
the
working
age
population,
and
to
some
extend
the
growth
in
the
labor
force,
but
the
latter
may
need
to
be
supplemented
by
specially
designed
surveys.
In
addition,
data
on
some
of
the
other
variables
mentioned
above
in
the
discussion
of
the
ratios
(e.g.
the
quality
and
relevance
of
education;
policies
and
practices
that
discriminate
against
women’s
entry
into
the
labor
force…etc.)
could
also
be
collected
on
a
systematic
basis.
In
the
medium
to
long-­‐term,
there
is
no
substitute
for
comprehensive
and
regular
labor
force
surveys
and
robust
socio-­‐economic
statistical
systems
in
African
countries.
But
in
the
mean
time
the
framework
proposed
here
enables
us
to
capture
the
essence
of
the
SDGs
and
economic
transformation
nexus.
At
ACET,
we
are
starting
a
program
aimed
at
implementing
this
framework.
References
1. ACET (2014) “Growth with Depth: 2014 African Transformation Report”
(ATR1), The African Centre for Economic Transformation, Accra, Ghana.
2. AfDB,
OECD,
UNDP,
and
UNECA
(2012)
Promoting
Youth
Employment,
African
Economic
Outlook
2012,
www.africaneconomicoutlook.org
3. Aryeetey, E., Baah-Boateng W, Ackah C, Mbiti, I and Lehrer, K. (2014) “Ghana”
in Hino and Ranis (ed.) Youth and Employment in Sub-Saharan Africa: Working
but Poor, Routledge Publication, pp. 233-302, ISBN: 9780415859387
4. Baah-Boateng W (2015) “Unemployment in Africa: how appropriate is the global
definition and measurement for policy purpose?” International Journal of
Manpower, Vol. 36, Issue. 5, pp. 650-667 Emerald, ISSN: 0143-7720

11. 5. Baah-Boateng W. (2013) “Determinants of Unemployment in Ghana”, African
Development Review, Vol. 21, Issue 4, pp. 385-399, Wiley Publication, ISSN:
1467-8268
6. ILO (2015) “Key Indicators of the Labour Market (KILM)” 8th
Edition,
International Labour Office, available at www.ilo.org
7. ILO (2013) “Key Indicators of the Labour Market (KILM)” 7th
Edition,
International Labour Office, available at www.ilo.org
8. Ghana Statistical Service (2005) “Analytical Report of 2000 Population and
Housing Census”, The Ghana Statistical Service
9. Ghana Statistical Service (2012) “Analytical Report of 2010 Population and
Housing Census”, The Ghana Statistical Service
10. World Bank (2015) “World Development Indicators 2015” The World Bank