11 February 2017

Africa: Sub-Saharan Africa Fast Becoming Hotbed of Unemployment

Sub-Saharan Africa is fast becoming a hotbed of unemployment, vulnerable jobs and poor workers, a reality that is making the aspiration of most countries to transform into middle-level economies a mirage.

Despite massive investment in infrastructure to drive economic growth, research has shown that sub-Saharan Africa is not only grappling with run-away unemployment but the majority of the jobs are in the informal sector and the few employed people are actually living in poverty.

The International Labour Organisation (ILO) reckons that the informal economy contributes 50-80 per cent of gross domestic product, 60-80 per cent of employment and 90 per cent of new jobs.

Worse, about nine out of 10 workers in both rural and urban areas hold only informal jobs, leaving the majority of the population living from hand to mouth.

The informality of employment is exerting pressures on economies because only a few people can afford vital services like medical cover or saving for retirement.

The problem of poor quality jobs is endemic in sub-Saharan Africa, where over 70 per cent of workers are in vulnerable employment against the global average of 46.3 per cent.

"In sub-Saharan Africa, poor-quality employment - rather than unemployment - remains the main labour market challenge. This problem is compounded by rapid population growth, specifically growth of the working-age population," states the ILO's World Employment Social Outlook 2017 report.

It adds that across most of sub-Saharan Africa, the lack of productive opportunities for the youth and adults alike mean that 247 million people were in vulnerable employment in 2016, equivalent to around 68 per cent of all those with jobs.

Over the next four years, the region will pump an additional 12.6 million youth into the same precarious labour force market.

Working poverty

The reality of vulnerable employment is worsened by working poverty, considering that 33.6 per cent of all employed people in sub-Sahara Africa were living in extreme poverty -- that is living on less than $1.90 per day -- in 2016.

An additional 30.1 per cent were living in moderate poverty at between $1.90 and $3.10 per day, which corresponds to over 230 million people living in either extreme or moderate poverty.

The rate of moderate working poverty is rising and is projected to be 30.5 per cent in 2017, representing an increase of approximately five million people in one year.

The challenge is particularly dire for youth considering that almost 70 per cent of them in 2016 were in jobs characterised as working poverty.

"The fact that the informal sector is the one creating jobs is dangerous for the sustainability of the economy," Jackline Mugo, Federation of Kenya Employers chief executive told The EastAfrican.

Worsening crisis

She added the crisis in the job market is bound to worsen as long as countries fail to generate quality jobs and people who are employed continue to clamour for more wages.

East Africa is a study in contrasts as there is rising economic growth amid massive job losses and a growing informal job market.

According to Kenya's Education Cabinet Secretary Fred Matiang'i, a skewed education system that has been glorifying university degree instead of focusing on technical courses is largely to blame.

The CS contends that the assumption that Technical Vocational Education and Training (TVET) programmes are less prestigious is contributing to the growing informal market because university graduates, the majority of them in arts and humanities, cannot secure decent jobs.

"We need to graduate more students from TVET institutions," he said.

The challenge of unemployment and low quality jobs is worsening in East Africa despite the region's being expected to post economic growth of 5.4 per cent in 2017 against a continental average of 2.5 per cent.

In Kenya, there are over 520,000 students enrolled in public and private universities while only about 80,000 students are in TVET institutions.

Data by the World Bank show that the youth unemployment rate in Kenya currently stands at 17.3 per cent but at six per cent in both Tanzania and Uganda.

In recent months, the five East African Community countries have been hit by a spate of job losses as companies resort to job cuts to rein in rising operating costs and shrinking profits.

The financial services and manufacturing sectors have been the worst hit. Commercial banks like Bank of Africa, Equity Bank, Co-operative Bank, Standard Chartered and KCB which have regional operations and companies like Sameer Africa, Eveready East Africa and Cadbury have shed hundreds of jobs.

In Kenya, it is estimated that over the past 12 months at least 10,000 people have lost their jobs. Tanzania, Uganda and Rwanda are no better.

According to the ILO report, sub-Saharan Africa's unemployment rate is forecast to stand at 7.2 per cent in 2017, unchanged from 2016.

The report says while the unemployment rate remains stable, the numbers of the unemployed are expected to increase from 28 million in 2016 to 29 million in 2017.

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