2013

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Working Paper 175 - Youth Employment in Africa: New Evidence and Policies from Swaziland
18/06/2013 09:03
Working Paper 175 - Youth Employment in Africa: New Evidence and Policies from Swaziland
The main objective of this paper is to document the labor market disadvantages faced by Swazi youth, to analyze changes in these disadvantages over time and to discuss options for addressing them. Swaziland indeed faces a major youth employment challenge. Recent labor force surveys in Swaziland revealed that the country has one of the highest unemployment rates among Africa’s middle income countries, which stood at 26.3 and 26.8 percent of the labor force, in 2007 and 2010 respectively. The surveys also revealed that marked differences across subgroups have emerged, with youth, women, and less educated workers being disproportionally impacted. The labor market situation has worsened in 2011 and 2012 because of the delayed impact of the global financial crisis, which was transmitted to the economy mostly through the collapse of revenues from the Southern Africa Custom Union (SACU). The paper contributes to the literature on labor markets in Southern Africa by providing the first systematic evidence on the youth labor market in Swaziland, a country with a particularly high youth unemployment rate. Besides Southern Africa, the paper contributes to the ongoing more general analysis and policy debates on youth employment in Africa. First, reliable labor market data from African countries are still relatively scarce, and until recently, none was available for Swaziland. Second, with the global financial crisis turning into a job crisis and impacting youth disproportionally, youth employment became a key global policy issue. In Africa, where youth employment is a long-standing challenge, policymakers have put even higher priority on creating jobs for their youth and on entrepreneurship. The paper adds to these debates and provides insights from a small land-locked country with one of the highest youth unemployment rate in Africa and globally. The paper sheds light on the trends, scale, and forms of youth labor market disadvantages, by utilizing the first two (2007 and 2010) Swaziland Labor Force Surveys, which provide a sample of over 3,000 households and more than 13,000 individuals. Using statistical analysis, the paper first outlines the main features of the Swazi labor market based on the country’s Labor Force Surveys 2007 and 2010. It then discusses both supply-side (e.g., demographic, social) and demand-side (e.g., private sector growth) drivers of youth unemployment, and illustrates the first-round impact of the global financial crisis on Swaziland's labor market. The paper also utilizes a multinomial logit model to examine some of the key socio-economic factors (e.g., age, gender, education) that contribute to the high youth unemployment. The outcome categorical variable indicates whether the individual has a wage employment in the public sector, the formal private sector, the informal private sector, or is self-employed, inactive or unemployed. The vector of controls includes demographic characteristics (such as gender and age), household-related characteristics (such as the marital status and the individual’s responsibility in the household), proxies of mobility (such as the geographical location - urban versus rural- and the length of stay in the area), and education variables. The model focus on young adults (ages 20 – 29) since tertiary education and self-employment are relatively rare among teenagers (ages 15 – 19). The findings from the statistical analysis indicate that the youth labor market in Swaziland is characterized by a high overall unemployment with long duration, a declining employment and labor force participation rates. It also indicates that unemployment is especially widespread among women, less educated, and youth. The analysis also revealed that the labor market disadvantages faced by Swazi youth relate to the lack of jobs, discouragement or the lower quality jobs. The findings from the multivariate analysis indicate how socio-economic factors (e.g., education, age, gender, location and mobility) drive youth labor outcomes. The results show in particular that higher education, living in urban areas and being mobile increase employment chances of young people. Among young adults, women and very young people have lower probability of employment in the private sector relative to being unemployed, reiterating the need to pay special attention to these groups. Some of the key policy messages for fostering dynamic youth entrepreneurship – in Swaziland and other middle income countries in Southern Africa – that emerge from the paper emphasize that an enabling business environment is needed along with the government’s pro-active support for entrepreneurial training and start-up capital. Regarding the latter, the Swaziland’s experience underscores the importance of careful selection of projects for funding, and of monitoring the use of funds after disbursement. International good practices suggest that government interventions should target the most viable projects, extend greater financial support to a fewer high-potential entrepreneurs rather than spread resources thinly, and provide complementary packages of services instead of a single measure.Lire la suite
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