Structural Change Key to Tackling Problem of Youth Unemployment in Africa

The Office of the Chief Economist of the African Development Bank released a working paper this month on the pressing issue of youth employment in Africa, entitled “Youth, Jobs, and Structural Change: Confronting Africa’s ‘Employment Problem’".

The paper discusses how Africa has enjoyed 15 years of sustained economic growth, with per capita income rising steadily and regional growth outpacing the global average; however this growth turnaround has not resulted in “robust growth of ‘good’ jobs”, described as “those offering higher wages and better working conditions – especially for the young.”

Both north and south of the Sahara, the share of African youth aged 15-24 has been rising over time and is now higher than in any other part of the world. As the paper’s author, John Page, observes, “this demographic bulge offers the possibility of a growth dividend, if – as in the case of East Asia – a rapidly growing workforce can be combined with capital and technology.”

But a demographic bulge can also represent a major threat, the paper argues: “Africa is not creating the number of jobs needed to absorb the 10-12 million young people entering its labour markets each year, and as recent events in North Africa have shown, lack of employment opportunities in the face of a rapidly growing, young labour force can undermine social cohesion and political stability.”

This paper argues that Africa’s “employment problem” is in fact a symptom of its lack of structural change – the shift in resources from lower to higher productivity uses. While many African economies have relatively low unemployment rates, they tend to have large informal sectors, condemning many workers to vulnerable employment and working poverty.

Seen from this perspective, the paper argues that employment policies cannot focus only on the supply side of the labour market. Instead, the author argues that the greatest traction is likely to come from policies and public actions designed to accelerate the growth of sectors with high value added per worker, such as manufacturing. In other words, the paper argues, the emphasis should be placed on building a strategy for structural change based the needs of each country.