7 January 2013

Rwanda: Unemployment Figures Don't Make Sense


Last week, more than a thousand people flocked to the second edition of the Rwanda Job Day, a fair which gave the opportunity to those looking for work to meet potential employers. Most of them were higher education graduates, and it is also fair to assume that the majority came from the Kigali area. In addition, while there will surely have been people who already have a job but are looking for something better, it is also probable that most are unemployed.

This high turnout of mainly university graduates from Kigali is a good indication of how serious the unemployment problem is in Rwanda. After all, according to a recent study those with tertiary education are more likely to find jobs (or become self-employed) than those who have only finished secondary school or lower levels.

Yet if you would believe the ministry of labor, of the active population in Rwanda only 1% is unemployed, while 43% are underemployed. Considering that even Barack Obama, the President of the world's biggest economy, can currently only dream of getting American unemployment below 5%, the Mifotra figure is obviously nonsense.

The reason for that unrealistically low figure is that the ministry relies on the definitions of the International Labor Organization (ILO), which considers underemployed people as those who work at least one (1) hour per week while the unemployed are those without occupation yet who are available to work and actively looking for employment.

As a result, subsistence farmers are considered as underemployed, and not unemployed as they should be. Never mind that they barely survive, have no income to speak of and thus cannot send their children to school or access basic health care (even with mutuelle). They work more than an hour per week for themselves, so they are not unemployed.

This example shows that in the Rwandan context, the ILO definitions are rather useless, and Mifotra should find itself other criteria to measure under- and unemployment. First, this should take into account poverty, and the revenue earned from labor. It is ridiculous to consider subsistence farmers (or anybody else making a miserable living for themselves that gives them no income at all) as self-employed. Nor are they underemployed. They are just trying to survive, nothing more, nothing less, and should be considered as people with no gainful employment, thus unemployed.

Secondly, defining underemployment based on the number of hours someone works doesn't make a lot of sense either. A highly qualified specialist might work just two hours per day and get stinking rich, while a factory worker with a 12-hour backbreaking job might hardly earn enough to pay the rent. The indicator is useless.

Instead, underemployment should be considered as a situation where someone is employed in a job that is actually below his educational level. That is a more useful definition for Rwanda, where we have a rather limited labor market for local graduates from tertiary education, and as a result many people with university degrees are working for example as receptionists or low-level accountants. This in turn results in jobseekers with lower education levels being unable to find work. Such a definition of underemployment, and the resulting statistics, would give a lot more information about the Rwandan labor market, and thus be much more useful to define labor policies

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