Decent employment is the main escape route out of chronic poverty. Decent employment refers to both the quality of employment – rooted in productive and secure jobs that provide adequate income and reasonable work conditions – and the quantity of employment. The African Union’s 2004 Declaration on Employment and Poverty Alleviation acknowledges that widespread unemployment compromises basic human rights and constitutes a threat to social, political and economic stability. This Economic Report on Africa, by the Economic Commission for Africa, details the state of employment in Africa and looks at future prospects.
Despite the significant increase in African GDP in recent years, poverty has been unresponsive to economic growth. The absence of a clear link between economic growth and poverty reduction has been shaped by two factors: firstly, the low employment intensity of the growth process and secondly, poor people’s inability to integrate into the growth process and reap the gains from employment opportunities.
Four main issues need to be addressed to meet the challenges of unemployment and poverty alleviation in Africa.
- Structural transformation: African economies are still dominated by low productivity in the agricultural sector. Low productivity and earnings account for the lack of structural transformation and diversification into higher productivity sectors, either within agriculture or in the industrial and service sectors.
- Addressing problems of youth employment: a lack of demographic transition in Africa has resulted in high demographic growth, which exacerbates youth unemployment.
- Harnessing globalisation to create decent jobs: efforts are needed to improve competitiveness and efficiency through policies that favour trade and foreign direct investment (FDI).
- Private sector growth: investment in the private sector is too low to result in sizeable job creation and is impeded by macroeconomic volatility, political uncertainty, the lack of access to affordable credit and high transaction costs.
Employment-generating growth should be placed at the heart of the battle against poverty. Identifiable employment targets should be integrated into development strategies to facilitate the effective monitoring of progress in realising employment goals. Furthermore, African policy-makers should undertake concrete reforms aimed at:
- Structurally transforming African economies through labour-intensive technologies, especially in sectors that employ a disproportionate share of poor people.
- Improving agricultural productivity through modern farm techniques, small scale irrigation and improved storage and packaging. Strengthen appropriate agroprocessessing and marketing infrastructure to link agriculture with other sectors of the economy.
- Diversifying exports to minimise adverse effects of terms of trade instablility on households. In addition, reduce taxes on producers to stimulate employment growth and ensure that labour benefits from improved terms of trade.
- Bolstering intersectoral links. The employment-generating effects of growth are likely to be magnified in economies characterised by strong intersectoral links, which help to create jobs both directly and indirectly by stimulating demand in related sectors of the economy.
- Enabling private sector job creation by removing barriers to investment and growth and by minimising bureaucratic constraints.
- Improving political governance to sustain growth and to facilitate the equitable distribution of income.
