What will Transformation do for Today’s African Youth?

April 9, 2014

The World Bank

Africa’s combination of urban, educated, unemployed youth and economies still dominated by a narrow range of commodities and the public sector has spurred many to call for structural shifts in production and employment as part of an inclusive growth strategy. A recent entry into the debate is the 2014 African Transformation Report, launched last week by the African Center for Economic Transformation (ACET).  As Homi’s and Julie’s post states, the depth, sophistication and pragmatism of the analysis are commendable. But if all the recommendations were implemented, what would they do for the employment prospects of today’s African youth? Not much. They would barely affect the job prospects of 90 percent of young people entering the labor force in this decade.

In our paper Africa’s Got Work to Do (a background paper for the recent World Bank report on youth employment in Sub-Saharan Africa‏), we used detailed country-level population and survey data to estimate where Africans are working today, and where the new jobs could come from over the next 10 years. We estimate that in 2010 only 11 million of the nearly 400 million people in the labor force worked at wage jobs in the industrial sector (mining, manufacturing and construction); note Figure 1. With a continuation of the recent high economic growth, this figure could rise to 23 million by 2020, but it would still amount to only 5% of the labor force. Even if Africa’s low- and lower-middle-income countries aggressively pursued labor-intensive manufacturing and achieved a growth rate similar to Vietnam’s over the past decade – what we call a “game-changer scenario” – only 7 million additional wage jobs would be created in a labor force of over half a billion.

Where will the rest of Africa’s youth work? One-fifth will find wage jobs in the public and private service sectors, about one-third will enter farming, and one-third in household enterprises, usually self-employment but also “mom-and-pop” operations: informal vendors, haircutting, beer brewing, artisanal furniture making, shoe and appliance repair, brick making, etc. (see Figure 2). While the number of jobs and the earnings in these sectors will increase with the domestic demand created by an expansion of wage jobs in a more diversified economy, for the most part those entering the labor force and working in household farms and firms will not benefit directly from a push to create more formal wage jobs. The way to improve opportunities for youth is for national jobs strategies to include not just promotion of more modern enterprises, but measures specifically designed to make it easier to enter and be productive in the household farms and firms sectors. (For a more specific agenda, seewww.worldbank.org/africa/youthemploymentreport).

Does this mean that the Africa Transformation Report recommendations are irrelevant? Of course not. Transformation is critical for Africa’s economic future, and the Report’s detailed and cross-cutting messages on domestic productivity, export competiveness, and regional and global integration are a useful starting point for national strategies. But policy makers and stakeholders need to recognize that for the foreseeable future, an export-oriented transformation strategy will not be enough. Strategies for infrastructure and skills development need to raise the productivity of the 80% or more of the labor force not working in the transformative sectors, to ensure that growth includes them, and so that they can afford to feed, clothe, educate, and nurture their children to participate in the coming transformation.

Tags: africa, jobs, labor and social protection, law and regulation, private sector development, social development, unemploymen
Posted in Africa, Infrastructure, Macro Economics, Politics Risk