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Working Paper 328 - The Cost of Inaction: Obstacles and Lost Jobs in Africa
Africa has no shortage of labor supply. But it lacks high-productivity job opportunities in high- productivity nonagricultural sectors. Its relatively rapid and sustained economic growth over the past decade did not yield enough jobs for the growing wave of jobs seekers—mainly youth in urban areas. Nonagricultural employment continues to be dominated by the informal sector, where wages are low, benefits nonexistent, workplace safety absent, and labor exploitation common. With significant demographic change expected to bring pressure on African labor markets, the urgency of creating high-quality and remunerative jobs at a much faster pace is not only an economic issue but a political and social one. This report investigates the extent to which failure to remove business constraints hinders actual and potential job growth. In particular, using World Bank Enterprise Survey (ES) panel data, the report quantifies the number of actual jobs lost due to the impact of business obstacles on firm survival and employment growth.