Urban Youth Unemployment in Eastern and Southern

Urban Youth Unemployment in Eastern and Southern Africa Features, Challenges, Consequences and Cut-Back Strategies

Editors P.B. Mihyo and T.E. Mukuna

Organisation for Social Science Research in Eastern and Southern Africa (OSSREA)

© 2015 Organisation for Social Science Research in Eastern and Southern Africa (OSSREA) OSSREA acknowledges the support of Swedish International Development Co-operation Agency (Sida), Norwegian Agency for Development Cooperation (NORAD), and Danish Development Agency (DANIDA).

Published 2015 Printed in Ethiopia ISBN: 978-99944-55-83-6 All rights reserved. Text layout: Alemtsehay Zewde Copyeditor: Matebu Tadesse Organisation for Social Science Research in Eastern and Southern Africa P. O. Box 31971, Addis Ababa, Ethiopia Fax: 251-11-1223921 Tel: 251-11-1239484 E-mail: [email protected] Website: www. ossrea.net

Table Contents Introduction: Tackling Youth Unemployment in Eastern and Southern Africa: So Much Done and So Much to Do

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Paschal B. Mihyo 1

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3

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7 8

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Urban Youth Unemployment in South Africa: Characteristics, Challenges and Consequences Mkhululi Ncube Urban Youth Unemployment in Zimbabwe: Nature, Challenges and Consequences Steven Jerie Youth Unemployment in Two Ethiopian Cities: Nature, Challenges and Consequences Gezahegn Abebe The Role of the Informal Sector in Alleviating Youth Unemployment in Hawassa Town, Ethiopia Tefera Darge Unprotected Youths on Kenyan Roads: Quest for Occupational Health and Safety for Boda-Boda Riders and Matatu Touts Truphena E. Mukuna and Boaz S.W. Maloba Urban Youth Unemployment in Malawi: Nature, Challenges and Consequences Mphatso J. B. Phiri Youth Unemployment in Mauritius: The Ticking Bomb Verena Tandrayen-Ragoobur and Harshana Kasseeah Determinants of Urban Youth Unemployment in Sudan: A CoIntegration and VECM Analysis Mohammed Elhaj Mustafa Ali Self-Employment Intention among the Youth: A Behavioural Tracing in Tanzania K. H. Majogoro and M. R. Mgabo Challenges of Urban Youth Unemployment in Tanzania: Perspectives of Youth and Employers Elinami Veraeli Swai

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40

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156 177 206

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Urban Youth Unemployment

Kicking My Way out of Unemployment and Poverty: Youth Football Clubs and Changing Nairobi's Neighbourhoods Saul W. Munoko University-Based Business Incubation and Entrepreneurial Training Initiatives as Interventions towards Urban Youth Employment: The Case of Kenyatta University Mwangi P. Wanderi, Jacqueline Kisato and Gladys W. Mwangi

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Public and Private Interventions in Addressing Urban Female Youth Unemployment in Uganda Kabukaire S. Catherine 14 A Critical Assessment of the Strategies to Curb Youth Unemployment in Uganda Ivan Ashaba and Mesharch W. Katusiimeh 15 Challenging the Challenger: Tackling Youth Unemployment by Changing the Players, the Game and Rules of the Game Paschal B. Mihyo Conclusions: The Good, the Bad and the Ugly of Urban Youth Unemployment in Selected Eastern and Southern African Countries Truphena E. Mukuna

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13

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About Authors Paschal Mihyo: Doctor Paschal Mihyo is a Tanzanian lawyer by profession. He is a Professor of Politics and Administrative Studies with LL.B., LL.M. and a PhD in Public Law from the University of Dar Es Salaam. He was the Executive Director of OSSREA from June 2008 to December 2014. Between 1988 and 2004, he taught at the International Institute of Social Studies, Erasmus University in The Hague where he was Dean of Studies from 1992 to 1995, Convener of the Labour and Development Programme and Deputy Convener of the Human Rights Programme. While on sabbatical leave during 1996 to 1998, he was CEO of the African Technology Policy Studies Network (ATPS) in Nairobi. From April 2004 and September 2005 he was Director of Research and Programmes at the Association of African Universities in Accra, after which he joined the University of Namibia briefly between 2006 and 2008. While on leave from OSSREA from February to December 2012, he served as the first Director of Higher Education at the Partnership for African Social and Governance Research (PASGR). Professor Mihyo has written several books and articles on youth issues. They include The Politics of Student Unrest in African Universities co-authored with Professor Issa Omari and published by the IDRC in 1994; African Youth on the Information Highway co-authored with Dr. Osita Ogbu and published by the IDRC in 2002; ‘Understanding and Managing University Student Crises’ in T.S. A Mbwette and Abel Ishumi, Managing University Crises, Dar Es Salaam University Press, 2000; ‘African Youth in the Information Society’, 2004, (Co-Authored with Gbenga Sesan) in K.B. Ben Sultane et.al (Eds.), Africa Networking: Information Development, ICTs and Governance, Utrecht International Books, and 'Breaking the Knots of Labour Market Exclusion through ICTs: The Case of Ugunja in Kenya and Mayawa in Tanzania' in Commonwealth Secretariat, 21st Century Citizens: Young People in a Changing Commonwealth, Commonwealth Youth Programme, Commonwealth Secretariat, London, 2003. In addition, he has authored and co-authored more than 12 books and published many articles of law, politics and higher education. He is also an editor of the book Employment Policies and Unemployment in Eastern and Southern Africa published in 2014 by OSSREA. Mkhululi Ncube: Mkhululi Ncube holds a PhD in Economics from Gothenburg University in Sweden. He is currently a Programme Manager at the Financial and Fiscal Commission in South Africa. Previously, Mkhululi has lectured in various universities in Africa. Dr Ncube has published extensively in the fields of labour economics and public finance. His present research interests span a number of areas, including labour market analysis and local economic development. Elinami V. Swai: Dr. Swai holds a Doctor of Adult Education Degree from the Pennsylvania State University, USA (with concentrations in Gender Studies). Swai received her B.A (Ed.) (Hons) in Education in 1997 and M.A

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(Ed) in 1999 from the University of Dar-es-salaam, Tanzania. Currently, Dr. Swai is Associate Dean and Coordinator of Post-Graduate Studies in the Faculty of Education at the Open University of Tanzania, Tanzania. She has over 15 years of experience in researching and writing about education and development. Swai has researched about adult education, youth development, lifelong learning and gender issues and has contributed chapters in books and published articles in reputable journals. Swai is the author of Beyond Women’s Empowerment in Africa: Exploring Dislocation and Agency (Palgrave MacMillan Press 2010). . Dr. Swai started teaching at the University of Dodoma in 1999, where she has worked as a Head of Department of Adult Education; and a Dean of School of Curriculum and Teaching. She has taught also at the University of Toledo (2007–2009), The Central Washington University, USA (2005– 06) and The University of Dar-es-salaam in Tanzania (1999–2000). Steven Jerie: Steven Jerie holds a DPhil in Geography and Environmental Studies from Midlands State University, MS. in Environmental Policy and Planning and a B.A. Honours in Geography from the University of Zimbabwe. He has been Chairperson of the Department of Geography and Environmental Studies at Midlands State University, 2010 up to now. He was also Chair of the Faculty of Social Science Research Seminar Series, 2009–2013. From 2011 up to now, he serves as Editor-in-Chief of The Dyke Journal of The Midlands State University. Dr. Jerie has published 32 articles in journals and 4 Geography textbooks. His research interests are in the areas of Environmental Management, Waste management, Climate change, Socio-economic issues, Occupational Safety and Health. Gezahegne Abebe: Gezahegn is a PhD candidate at the Department of Sociology and Human Geography, University of Oslo, Norway. He holds MPhil in Development Geography from the University of Oslo. He is on leave from his position as a lecturer at the Department of Geography and Environmental Studies, Addis Ababa University, Ethiopia. His areas of research focus on food insecurity, poverty, vulnerability and agriculture, livelihoods and social protection. Mphatso J. B. Phiri: Mphatso J. B. Phiri is doing his PhD at Coventry University specializing in Peace and Conflict Studies. He has served as a military officer in the Malawi Defence Force for 12 years before retiring to pursue further studies. He has also been an adjunct lecturer in human security and political science at Mzuzu University and University of Malawi - Chancellor College. He obtained a Masters degree in Security Studies from Naval Postgraduate School (California) in 2008 and a B.A. in Public Administration from University of Malawi in 2002. He has research interest in the areas of human security in Africa, African politics and peace building and has presented his research papers at different international conferences. Upcoming publications are: Youth in politics: Its future and challenges to socio-economic growth in Malawi; A cursed electorate or inverted democracy? The patronage politics of Malawi.

About Authors

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Mohammed Elhaj Mustafa Ali: Mohammed E. M. Ali is a Sudanese national. He is a lecturer at Department of Economics, Faculty of Economics and Administrative Sciences, University of Kassala, Sudan. He also works as a Head of the Department of Economics at the Faculty of Economics, Banking and Financial Studies, Sudan International University (SIU), Sudan. He is a Ph.D. candidate at the Faculty of Economics and Rural Development, University of Gezira, Sudan. In 2009, Mr. Mustafa got his M.Sc. in Economics from Faculty of Economics and Administration, University Malaya, Malaysia. In 2001, he earned a B.Sc. (honors) in Economics from Faculty of Economic and Social Studies, University of Khartoum. His has research interest in the areas of macroeconomics, Labour Economics, Development Economics and International Economics. He has published in nationally refereed journals. Ivan Ashaba Mugyenzi: Ivan A. Mugyenzi is an Assistant Lecturer in Department of Public Administration and Governance, Uganda Christian University. His areas of research interest include, but not limited to, public service delivery and youth unemployment, governance and the political process, aid withdrawal and coping mechanisms, post-conflict reconstruction, and non-state actors and development. He holds a Bachelor of Arts degree in Social Sciences from Makerere University (Political Science and Social Administration) and a Masters degree in Political Science from Ankara University in Turkey. He has experience of the civil society, having worked with Uganda Broadcasting Corporation and a children's nongovernmental organization— Christian Foundation for Children and the Aging. He has published on Incumbency and the political process and also taught at Kyambogo University. Mesharch W. Katusiimeh: Katusiimeh is a Senior Lecturer in the Department of Leadership and Governance, Makerere University Business School, Kampala. Previously he has worked at Uganda Christian University as Head of the Department Public Administration and Governance. He holds a PhD from Wageningen University, an MA degree in Public Administration and Management and a Bachelor of Arts degree in Social Sciences from Makerere University, Uganda. With research interest in local and urban governance and the politics of African development, Dr. Katusiimeh has contributed chapters to academic books and articles to refereed journals. Verena K. Tandrayen-Ragoobur: Verena has completed a PhD in Economics from the University of Mauritius, where she was a Commonwealth scholar under the Commonwealth Split-Doctoral Scholarship tenable at the University of Nottingham. She also holds an MSc in Economics and International Economics from the University of Nottingham, UK and a BSc (Hons) in Economics from the University of Mauritius. She also Verena is presently Senior Lecturer and Head of Department of Economics and Statistics at the University of Mauritius. She is lecturing at both undergraduate and postgraduate levels. Her teaching

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areas are international macroeconomics, international trade, microeconomic theory and labour economics. Her research areas include international trade, foreign direct investment, regional integration, globalisation, labour market, environmental economics, gender inequality and poverty. She has published in the area of international trade, foreign direct investment and labour markets. Her work relates essentially to countries of the African continent with main focus on Sub Saharan Africa. She was the Chair of the World Trade Organisation Chairs Programme and had worked on projects funded by international organisations namely CEEPA, BIDPA, UNCTAD, ILO, AERC, ESRC and DSA. Verena has also been involved in consultancy work with the University of Mauritius on the ‘Maurice Ile Durable’ and Rio+ projects. Harshana Kasseeah: Harshana Kasseeah is Senior Lecturer in the Department of Economics and Statistics at the University of Mauritius. She has a PhD in Economics and a Masters in Economics and Financial Economics from the University of Nottingham. Her research areas include finance, growth and development, entrepreneurship and job creation with particular focus on micro, small and medium enterprises. She has published in many international journals including the Journal of African Business, Journal of the Asia-Pacific Economy, Innovation and Development, International Journal of Economics and Business Research among others. Mwangi Peter Wanderi: Mwangi Peter Wanderi is an Associate Professor at Mount Kenya University, Kenya, where he serves as the Director, Quality Assurance, Linkages and Partnerships. He has over 25 years of University-based teaching, research and outreach since 1989. Working with the Vice Chancellor of Kenyatta University, he established the Chandaria Business Innovation and Incubation Centre at Kenyatta University in 2012. He initiated and facilitated very successfully the establishment of Students Training on Entrepreneurial Promotion (STEP) programme at Kenyatta University in 2012 in partnership with the University of Leuphana, Germany, and the Kenya National Commission for UNESCO. He contributed immensely to the introduction of STEP to youth businessmen and women in Kiambu County, Kenya, outside the university. Prof. Wanderi has also published widely on sports and culture, innovation and business/entrepreneurship (innovatentrepreneurship) and has a deep passion for entrepreneurial promotion especially among the youth in Africa. (e-mail contact: [email protected] and [email protected]). Jacqueline Kisato: Jacqueline Kisato is a lecturer at Kenyatta University in the Department of Fashion Design and Marketing since 2010. She received a PhD in E-Marketing among Micro- and Small Enterprises (MSEs) in 2014. She also holds an MBA and an undergraduate degree in Fine Art. She lectures students in Marketing, Computer Design-related courses and Entrepreneurship. In addition, she is an innovation enthusiast and mentors innovators at Chandaria Business Innovation and Incubation centre (Chandaria-BIIC). She has participated in numerous innovation and

About Authors

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entrepreneurship conferences and judging panels nationally. She has copublished in textile-related areas: Study on the Influence of Fibre Properties on Yarn Imperfections in Ring Spun Yarns. Asian Journal of Textile (2012). Currently she is a Trainer of Trainers on Student Training in Entrepreneurship Promotion (STEP) in collabouration with Leuphana University, Germany and UNESCO. She has participated in training of young entrepreneurs in Lesotho and Uganda and is working on research on entrepreneurial training. Dr. Kisato is passionate about converting academics to enterprise with research interest in innovation and entrepreneurship that will help in solving the challenges of the 21st century. E-MAIL: [email protected] Gladys Wangechi Mwangi: Dr. Mwangi trained as a pharmacist and Clinical Pharmacist in the University of Nairobi. She has worked at various capacities in the Ministry of Health and is currently a lecturer and Head of Pharmaceutics and Industrial Pharmacy in the School of Pharmacy, College of Medicine, Kenyatta University. She also holds the positions of Honorary Consultant Clinical Pharmacist at Kiambu Level 4 Hospital. She has been a trainer in the Student Training on Entrepreneurial Promotion (STEP) at Kenyatta University, a programme of the University of Leuphana, Luneburg, Germany and UNESCO, which has now been rolled out at county level. She is also a mentor at the Chandaria Business Incubation and Innovation Centre at Kenyatta University. Dr. Mwangi is currently pursuing her PhD in Pharmacology and Therapeutics. EMAIL: [email protected]. Tefera Darge: Tefera Darge Delbiso is a research associate and PhD student at the Centre for Research in the Epidemiology of Disaster (CRED), University Catholique de Louvain (UCL), Belgium. He obtained a BSc in statistics and an MSc in population studies from Addis Ababa University, Ethiopia; and an advanced master’s in public health methodology from Universite Libre de Bruxelles (ULB), Belgium. He served at Graduate Assistant and Lecturer positions at Hawassa University, Ethiopia, for over 5 years. He was also a research advisor at Marie Stopes International Ethiopia. He has published articles in reputable journals and conference proceedings. Tefera’s research interest includes population and development, reproductive health, and public health needs assessments in poor emergency settings. Truphena E. Mukuna: Dr. Truphena E. Mukuna is the Director of Research and Publications at Organisation for Social Science Research in Eastern and Southern Africa. She holds a PhD in Curriculum and Instructional Technology from Moi University and a Master of Education in Curriculum Studies from Maseno University, Kenya. She is a multidisciplinary social science researcher whose research interests include education, disaster risk reduction, climate change, social protection, gender issues, and policy analysis. She has written several peer reviewed journal publications, chapters in books and co-edited three books. She has authored

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two books, developed training manuals in curriculum and instructional technology and gender mainstreaming, analysis and budgeting. Dr. Mukuna has taught in institutions of higher learning for over 10 years. Currently, she is one of the designers and facilitators of an advanced Research Methodology Training in E-Learning course at OSSREA. She is also coordinating the Climate Impact Research and Capacity Leadership (CIRCLE) project by African Academy of Sciences at OSSREA. Mukuna is also a member of the OSSREA research team that is collaborating with CIPPEC on a research funded by DFID dubbed ‘Evidence and Lessons from Latin America to Africa’ on Parliamentary Accountability of the Legislature to the Executive. Boaz Maloba: Boaz Maloba is currently a PhD candidate at Kenyatta University in the Department of English and Languages majoring in Applied Linguistics. His research interests lie in Discourse Analysis with special focus on gender, media and communication. He is a part-time lecturer at Kibabii University College in the department of Linguistics and a long time tutor and teacher of English and communications skills in various institutions. He has authored a book Manifestation of Gender in Radio Call-in Shows on Mulembe FM”. Maloba has written a number of peer reviewed articles in the areas of communication, media, gender, and social protection. He is currently working on a communication skills manual for undergraduates and diploma students. Saul W. Munoko: Saul has over a decade of experience as a Lecturer and HR Consultant, most recently as a Managing Partner and Corporate Executive, where he oversees a wide range of business operations including Human Resources Consultancy and Operations, Training, Quality Systems, and Quality Assurance. His academic background is equally varied and includes MSc HRM from Jomo Kenyatta University, BEd (Arts) from Kenyatta University, and Diploma HRM, from Kenya Instituted of Management. He has also certification in Quality Systems from Bureau Veritas, Productivity certification from JICA and Productivity Centre. Saul is also a graduate of the JKUAT in Human Resources Management. Saul has published various articles in journals and made numerous academic presentations in HR and general management. Kayobyo Hosea Majogoro: Mr. Majogoro holds an MSc and BSc in Economics from Mzumbe University. He was teaching at the University of Dodoma from 2008 to 2013 when he was selected to join a team of 10 people to design and establish international taxation regime in the Tax Administration in Tanzania where he currently works as a Researcher focusing on International Taxation. Majogoro has published two articles. His research interest is in contemporary African challenges which include employment, taxation, natural resource and digital economy sectors. Maseke Richard Mgabo: Has been trained at the University of Dar Es Salaam (Tanzania), Makerere University (Uganda) and Kilimanjaro Christian Medical University College (Tanzania). Mgabo has a background

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in medical sociology and anthropology, and over 10 years of experience in health research and programming. He has specialized in Population and Reproductive Health with extensive research work on society, health and development, HIV/AIDS, health-seeking behaviour, poverty and rural development studies. Mgabo has published 20 articles in various international journals. He lectures at the Institute of Rural Development Planning- Dodoma (employer) and Kilimanjaro Christian Medical University College where he currently pursues his PhD studies in Community Health. His research interest is in society, health and development, programme development, monitoring and impact evaluation. Kabukaire S. Catherine: holds an MA and a BA (Hons) degree in Sociology from Makerere University, Kampala; a Post-Graduate Diploma in Public Administration and Management from the Uganda Management Institute; an IATA Diploma, Geneva; and a Certificate in Air Travel from Skyways Institute, Nairobi. She currently works as an Election Administrator with the Electoral Commission Uganda. She has research interest in the areas of women under which she has written papers about women and governance, women and health, reproductive health, women and the environment.

INTRODUCTION Tackling Youth Unemployment in Eastern and Southern Africa: So Much Done and So Much to Do Paschal B. Mihyo The Plight behind the Flight of the Youth As the noose of globalization and trade liberalization tightened its grip on weak economies of the South, Africa found itself forced to sell its commodities at lower prices and sacrifice the future by removing safety nets that once shielded its communities against vulnerability and income insecurity. The public sector which had assured many of secure employment, especially for the youth as they graduated from training and educational institutions was restructured throwing onto the street many workers that had, over years, called it home. Following the rules of first in last out, the young late entrants were the first to bear the brunt of corporate re-organization while fresh graduates were barred from entry. Left desperate without much choice, many youths started drifting away from their homes and countries in search of new avenues for employment. Many have been taking risks. An Ethiopian youth who tried to migrate to Europe through Djibouti and Yemen but was arrested in Djibouti and sent back told me a horrifying story of the perilous journey to Djibouti. He said on the way they had to walk through the desert in the heat of Djibouti and the desert is infested with lots of snakes and scorpions. As they walk for days they run out of food and water. Some of them lose energy and become very weak. All the time vultures fly over them trying to spot those who are getting weaker. As they identify them they swoop down on them with force forcing them to fall several times until those who have lost strength cannot walk any more. Then the vultures land on them and start eating them while they are still alive. He says this happened to two of his colleagues who were not lucky to reach where they could be rescued by being arrested. Similar stories can be seen on documentaries about youths from Malawi and Mozambique as they try to get into South Africa through Kruger’s Park. On the way lions wait knowing their paths and several of them are killed by lions as they try to escape from poverty and unemployment in their home countries. Recently there have been undocumented but real stories of Ethiopians trying to reach South Africa through Kenya and Tanzania who die on the way when their traffickers abandon them in bushes pretending their vehicles have run out of fuel and asking them to wait in these dangerous spots. Some have died of suffocation in containers. The last known group was 42 who died in Tanzania in 2014 and many more disappear unreported. These are few examples of victims of poverty, exclusion and income insecurity. This is not to mention migrants from West

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Africa who cross the dangerous and treacherous Sahara Desert, reach Morocco or Libya but end up drowning in the Mediterranean Sea. Those who are lucky manage to reach the European continent and subject themselves to the life of voluntary slavery. This book documents the nature and causes of the plight behind the flight of the youth from rural to urban areas, from some African countries to others and from the continent to other continents in an endless and perilous search for jobs and income security. The Ten Major Findings across the Book Almost in all the chapters, it is clear that governments in Eastern and Southern Africa are firstly worried about the youth bulge and the youth unemployment surge but their policies have tended to be more diagnostic than prescriptive. They are very robut and loud about the problems youth face but very muted about how to resolve them. Secondly, there is a disconnect between macroeconomic policies that they have adopted over the last three decades and the twin objectives of employment creation and poverty reduction or eradication. This is exemplified by the reduction of investments in social services such as education, health, water and sanitation, environmental management and infrastructure which are the main generators of jobs while expecting that jobs will grow out of a shrinking public sector which has been replaced in many cases by a private sector that is focusing on extraction and investment in financial institutions whose capacity for employment creation is limited. Thirdly, reform programmes have led to economically inefficient and politically dangerous income inequalities catering for a happy few leaving little for the rest. Fourthly, employment and youth development strategies put in place by the majority of the governments in the region have been top down, devoid of consultation and involvement of the youth, the educational institutions, civil society organisations (CSOs) and the private sector. Fifthly, key players in skill development such as the private sector which has experience in on the job training, apprenticeship and learning by doing, have been left out of the design of curriculum and have not been consulted on the role they can play in skill formation for the youth as they prepare to enter the labour market or as they experience the world of work. Sixthly, characteristics of the informal sector have been more assumed than understood. For example, it has been assumed to be a survival sector while in some cases earnings of workers in this sector are averagely twice as much as the minimum wage in some countries. In addition, workers in the informal sector have been kept out of trade unions because workers in the established sectors see them as a rival used by policy actors and the formal sector to keep the wages in the formal sectors low. At the same time and for the same reason, the formal sector and policy makers want it to remain insecure and unprotected and have, as a result, kept its workers out of social policy and social protection. Seventhly, strategies of the past public-sectordominated employment policies in some countries or export-led policies in others, which helped to create jobs in these countries, ended up with

P. B. Mihyo. Tackling Youth Unemployment in Eastern and Southern Africa

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massive unemployment when the public sector was re-organized in some countries or export zones closed or trimmed down in others. These countries that had moved in different policy directions have had to devise new strategies to cope with resultant unemployment. Eighthly, while the solution lies in increased manufacturing capacity, countries with stronger manufacturing capacity than others in the region such as South Africa, Mauritius and Kenya, have equally high rates of youth unemployment as those dependent on primary commodity exports and have lower manufacturing capacity. Ninthly, tertiary education graduate unemployment is a common problem in the countries studied. In some, it is easier for secondary school leavers to get employed than graduates from technical colleges or universities. Finally, in all the countries covered by the book, mismatch between jobs and skills is at the core of the youth unemployment problem. The dimensions differ from country to country but the verdict in all is clear: education providers are detached from the activities and needs of the enterprises in all sectors and those which have put in place entrepreneurship programmes have organized them in the same manner as they run courses that have failed to capture the spirit and actual needs in the real world of work. A Glimpse at Country Perspectives The book starts with a chapter by Mkhululi Ncube on ‘Urban Youth Unemployment in South Africa’ which indicates that South Africa with the strongest economy on the African continent with 35 per cent of its exports being capital goods, 25 per cent intermediate goods and 20 per cent consumer goods, has a higher rate of unemployment than the other SADC countries, most of whom except Mauritius depend on primary commodity exports. The lesson is clear: increasing manufacturing without strengthening other sectors of the economy and raising disadvantaged communities out of a subsistence economy is not enough to address the problems of unemployment. The chapter also indicates that South Africa with some of the best tertiary education institutions in Africa still faces a shortage of skilled labour for some of the industries. This may be an indicator that in rating the quality of tertiary institutions, very little attention is paid to the relevance of skills to industry and other sectors. The third observation from the chapter is that the labour market in South Africa is highly segmented including sub-segments within the informal sector but linkages between the large-scale enterprises and the small and micro enterprises, which are not developed well enough to contribute to employment creation and poverty alleviation. A fourth observation is that in South Africa, labour mobility is still constrained by geographical mismatches. Most of the poor job seekers live in disadvantaged communities and investors do not establish businesses near or around such areas. Some of these job seekers do not have enough money to afford travel costs to industrial areas or farms and some employers are still reluctant to take people from disadvantaged areas. The key lesson is that constitutional

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provisions about equal rights and the right to work are important but the living conditions of those formerly discriminated have to be changed in order to enable them to enjoy those rights. In the same vein, the chapter documents data on racial and gender discrimination which, twenty years after the new dispensation, have refused to go away due to cultural practices and gender and racial stereotypes. The key lesson is that it is important to make everyone equal in law and in fact by removing impediments to the attainment of equality of opportunity. The chapter on ‘Urban Youth Unemployment in Zimbabwe’ by Steven Jerie focuses on the city of Gweru— the third largest in Zimbabwe. It starts with the general problem of the limited number of labour studies in Zimbabwe which is rather paradoxical because, before the formation of the Movement for Democratic Change (MDC) — the largest opposition party, their main ally the Zimbabwe Trade Union Congress undertook a good number of labour studies. But it seems after the labour movement formed the backbone of the opposition many scholars have shied away from labour studies especially on unemployment that reached 80 per cent in urban areas at one stage. The chapter raises a few issues that challenge conventional thinking. The first one is that while in most of the other chapters the problem of youth unemployment is blamed on the way they are taught without being prepared for the world of work, the author argues that in Gweru many youths do not take education seriously because they do not see it being capable of preparing them to get jobs. This is mainly because there are many high school graduates without jobs. Related to that the author points out that local perceptions shape attitudes of the youth about appropriate skills in that while in other countries vocational training is flagged as the possible route to relevant skills if it is need-based, in Gweru adults and the youth attach low value to vocational training even if they do not have an idea of the content of its curriculum. The third finding out of mainstream thinking is that while elsewhere the feeling is that the supply of young workers is higher than demand for them, in Gweru there is lower demand for them than their supply. Fourth is the finding that the vocational education and training (VET) systems produce more unemployed graduates in Gweru than any other sub-sector of education. This is because of the irrelevance of the skills imparted by the VET institutions in Gweru which do not relate to the production and service occupations in that city. Finally, the author indicates that prolonged unemployment affects the level, availability and quality of services among the youth when they later get employed and this affects their capability to be employed for very long. There are two chapters on Ethiopia in this book. The first one by Gezahegn Abebe on ‘Youth Unemployment in two Ethiopian Cities’ starts by saying the rate of urban youth unemployment in Ethiopia is among the highest in the world aggravated by rapid youth migration from rural to urban areas. The first important finding is that although the country has recorded one of the fastest and steady rates of growth for almost a decade, this high rate of growth has not been matched by an equally high rate of employment


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creation. Secondly, although Ethiopia has retained a big public sector supported by a burgeoning private sector, the contribution of the public sector to employment has not increased. Thirdly, the Ethiopian government has increased the number of public universities and other tertiary education institutions over a period of twenty years. Instead of this expansion reducing the problem of skill shortage, it has aggravated the problem of graduate unemployment, forcing some graduates to engage in menial tasks and failing to use their skills. As in the case of Gweru in Zimbabwe, the author notes that in Ethiopia, youth and adults alike attach very little value to vocational training. The fourth finding is that high unemployment in Ethiopia encourages employers to keep wages low and this not only affects the quality of work but also it discourages some youths from taking up low paying jobs, thereby prolonging their job search. As is argued later in the chapter by Mihyo, the lesson is that there is need to prepare the youth for the labour market and the labour market for the youth. Finally, the author takes cognizance of the efforts made by the Ethiopian Government in helping the youth to form cooperatives and giving them assignments and contracts. However, he notes that these contracts are short-term or seasonal. The second chapter on Ethiopia by Tefera Darge on ‘The Role of the Informal Sector in Alleviating Youth Unemployment in Hawassa Town in Ethiopia’ indicates that the sector employs about 38 per cent of the youth in Hawassa and it is dominated by young adults most of who are male. The first interesting finding is that most of the workers in this sector acquire skills through informal training and learning on the job within the sector itself. Secondly, although the monthly profits of the workers are very low, the average earnings of the informal sector workers are twice as much as the minimum wage and about 74 per cent of the workers have savings which may not be the case with minimum wage earners in the formal sectors. Thirdly, most of the informal sector workers interviewed were very positive that their lives and livelihoods had been transformed by their activities in the sector and fourth, the author noted that the more educated a worker was the higher the income she or he gets. The Hawassa study gives more positive insights into the sector which is normally considered a deadend sector. In spite of this encouraging view, however, the informal sector is fraught with hazards, challenges and risks that do not confront workers in other sectors. This can be seen in the Chapter on ‘Unprotected Youths on Kenyan Roads: Quest for Occupational Health and Safety for Boda Boda Riders and Matatu Touts’ by Truphena Mukuna and Boaz Maloba. The two authors address the risks and hazards involved in one of the most dangerous informal sector activities in Kenya: road transport provision through minibuses known in Kenya as ‘matatu’ and speed motorbikes known as ‘boda boda’. Apart from exposure to recurrent and daily accidents, traffic management challenges and various types of pollution, the authors point out that averagely about 3000 people die on Kenyan roads every year. The authors point out that in spite of the risks of accidents workers in this sub-

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sector are not covered by formal occupational health and safety regulations or organizations. They note that Kenya has signed to many conventions of the ILO and policies on the African Union on social policy and occupational safety but it has not implemented them fully as it has left out workers of the informal sector who constitute 83.83 per cent of the workforce in Kenya. Explaining the plight of these workers further, the authors note a few weaknesses. Firstly, the informal sector workers lack bargaining status as they are not included or envisaged in the trade dispute legislation. Secondly, labour inspection regulations and processes cover mainly the formal sectors. Thirdly, the Kenyan Government spends an average of 2 per cent of its budget annually on social protection and 57 per cent of that goes to pensions of former civil servants. As a result, even workers in the formal sector do not get adequate coverage. The authors make a passionate case for inclusion of the informal sector workers in the mainstream of social protection through health insurance, a pension scheme, worker’s compensation, collective bargaining and other measures that may ensure decent wages and a decent life for people in that sector most of whom are employed and paid through commissions by operators in the formal sector or public employees running small transport businesses. The Chapter on ‘Youth Unemployment in Malawi’ by Mphatso J. B. Phiri starts by pointing out the problem of lack of reliable statistics on unemployment in Malawi which is not only confined to Malawi but is happening in most countries in the region. It also points out that Malawi does not have a functioning labour market information system and that exacerbates problems of unemployment in that country. It notes that the majority of the youth in urban areas work in the informal sector and live in slums. The major findings are first that the majority of unemployed youth interviewed were female and 64 per cent of the unemployed youth had no formal education, 14 per cent had primary education 13 per cent have junior secondary education and 9 per cent had the Malawi Certificate of Secondary Education. Secondly, land scarcity was on the rise as 55 per cent of smallholder farmers own less than one acre of arable land and land is being less and less able to support land-based livelihoods. Thirdly, in Malawi the public sector is still the largest employer. This implies that further reforms in the sector may lead to increase in unemployment if they involve lay-offs or a freeze on employment. Fourth, Malawi has not been able to attract foreign direct investment which could lead to new jobs because of excessive bureaucracy and lack of transparency. Fifth, most of the youth development projects are characterized by political interference and patronage and manipulated by political parties in their competition for power. This leads to favouritism, violation of procedures and deviation from objectives for which they were established. Finally the authors express a worry that unemployment in Malawi remains a threat to democracy as many unemployed youths get recruited by politicians to paramilitary wings of their political parties which are used, from time to time, to harass and intimidate opponents, especially during elections.


vii

The chapter on ‘Youth Unemployment in Mauritius’ by Verena Tandrayen Ragoobur and Harshana Kasseeah indicates that alongside the remarkable transformation of the country from a sugar plantation primary commodity dependent economy to a middle income country with manufacturing and strong export capacity, employment has been on the rise with a dramatic increase of female participation on the labour market. However, employment in the primary commodity sector has declined from 45.4 per cent in 1968 to 5.1 per cent in 2012 while the share of the secondary sector rose from 9 per cent to 30 per cent within the same period. This indicates that diversification and reduced dependence on one sector can help increase employment opportunities. The Chapter contains more interesting findings. First during the early seventies when other countries in the region were hooked to state planning and public sector dependence for employment, Mauritius embarked on export promotion zones (EPZs). They contributed highly to the rise in employment but the specialization of the enterprises in these zones was textile manufacturing. When that sector was badly fractured by the end of the Multifibre Agreement under which the least developed countries were given preferential market access into OECD countries, employment in this sector took a nose dive. Secondly, since the 1990s small establishments in Mauritius have been the drivers of job creation which in actual fact saved the economy from serious problems arising out of the decline in the EPZs. Thirdly, the EPZ enterprises had absorbed a good number of female workers. The decline of employment in these enterprises had a big negative impact on female employment. Fourth, the authors have noted that in Mauritius there is a problem of overeducation. The government had adopted a one family one graduate policy which has produced more graduates than can be absorbed. As a result, secondary school leavers get jobs easier than tertiary education graduates. This is also compounded by societal attitudes to certain types of jobs which some youths regard as inferior after attaining higher levels of education. The Chapter by Mohammed Elhaj Mustafa Ali on ‘Determinants of Urban Youth Unemployment in Sudan: A Co-Integration and VECM Analysis’ starts with worrying figures indicating that in Sudan 82 per cent of female and 62 per cent of male youths are unemployed and the population of people aged between 15 and 24 has been rising rapidly. He asserts that the oil boom and rapid economic growth have not had a significant impact on unemployment in the country as the rate of GDP growth has not been able to catch up with the rate of labour supply. He argues that the formal education system does not equip the youth with the requisite skills to enable them secure paying jobs. He also points out two more constraints. First that Sudanese culture encourages young people to expect to earn money without working hard or working at all and secondly that Sudanese society has created institutional barriers to women’s participation in economic activities. There are two chapters on Tanzania in this book. In the one by K.H. Majogoro and M.R Mgabo on ‘Self Employment Intention among the

viii


Youth: A Behavioural Tracing in Tanzania’, the authors examine what motivates young people to start their own businesses. Contrary to findings in other studies in the same book, they found that family background matters. Most of their interviewees came from families in which at least one of the members was an entrepreneur. Therefore, they concluded that role models in families motivate younger members in those families to enter into business. Secondly, they found that formal training did not create enough capacity for business among the youth but most of them learnt on the job. Thirdly, marital status among women was a major factor in deciding whether or not to be self-employed or to look for a job in the formal sector. This was because some male spouses were against their spouses entering business or becoming independent. Fourth they found out that decisions to enter into business are taken at early stages in life. After a certain age, people find it difficult to start businesses. The second chapter on ‘Challenges of Youth Unemployment in Tanzania: Perspectives of Youth and Employers’ by Elinami Veraeli Swai involved interviews with youth and employers on barriers to youth entry into the labour market. The interviews revealed that employers look at job experience, motivation and gender when recruiting and after that they look at hard work in decisions whether or not to retain recruits. Secondly, he found that the private sector had recruited more youth than the government in a year before the research because the private sector was growing while the public sector was stagnant. Thirdly, most employers he interviewed said they did not prefer young people because they lack motivation, are not reliable in the sense that they could leave any time, they have immature tendencies, they are always on the move, most of the time on the phone and some spend a lot of time searching for jobs or training opportunities. Some employers, however, had positive ideas about the youth and thought they are knowledgeable, they learn faster; they work differently and they are very resourceful. The interviewed youths thought corruption and old fashioned labour practices such as the ‘first in last out’ principle were barriers to their entry. They suggested that communities, parents, employers and policy makers needed sensitization about the problems, challenges and potential of youths. They further suggested that curriculum should be revised to ensure entrepreneurship and some vocational skills are mainstreamed at all levels of education. Selected Interventions to Address Youth Unemployment In all the chapters in this book, policies and programmes developed in various countries to curbbing youth unemployment are discussed. But, three chapters are specifically devoted to various efforts to do that. In ‘Kicking My Way Out of Unemployment and Poverty: Youth Football Clubs and Changing Nairobi’s Neighbourhoods’, Saul Munoko shows how the formation of local football clubs in formerly dangerous neighbourhoods in Nairobi has drawn youths away from gangs, crime and drug abuse and given them something to give them hope that they may end up as national


ix

or international footballers. He documents how clubs have managed to stimulate economic activities in such communities and how some of these clubs have managed to become strong competitors in national leagues thereby raising income for players and fame for their communities. In addition, the clubs have strengthened solidarity and cooperation within their communities. In the chapter on ‘University-Based Business Incubation and Entrepreneurship Training as Interventions Towards Urban Youth Employment: The Case of Kenyatta University’, P.M. Wanderi, J. Kisato and G.W. Mwangi give insights into a joint project between Kenyatta University and a prominent business group owned by Chandaria in Kenya known as the Chandaria Business Innovation and Incubation Centre (BIIC) launched in 2011 and the Student Training Entrepreneurial Promotion (STEP) established in 2012. Both programmes seek to enable unemployed youths to start their own businesses and seem to be successful. The chapter points out a few things noteworthy. First although some of the trainees come from families with a business background, this has not influenced the majority of trainees to start their own businesses. Secondly most of the trainees want to start businesses in food and beverages, fashion design, accessories and mobile phones because they believe there is a lot of demand for services in those areas. Thirdly, most of the trainees expected the programmes or government to help them secure seed capital to start their businesses. Fourthly, they concluded that the way the training was organized based on normal university training schedules was not appropriate for some trainees as they required flexible schedules to accommodate their normal businesses. As a result of the rigidity in the schedules, some trainees were dropping out. Fifthly, they noted that entrepreneurship cannot be learnt in one course over one period. There has to be a strategy that involves mentoring and follow up. The chapter by Kabukire Sarah Catherine on ‘Public and Private Intervention in Addressing Urban Female Youth Unemployment in Uganda’ notes that the informal sector in Uganda employs more youths than the formal sector does. The author commends the Government of Uganda for the legislative and policy frameworks it has put on the ground to address youth unemployment. She notes, however, that in spite of these efforts, youth unemployment in general and female youth unemployment in particular have been on the rise. She attributes this to a number of factors. First, youth involvement or engagement in the processes of youth policy formulation is not given a priority and as a result policies and programmes targeting youth do not address the actual problems and needs of the youth. Secondly, although the informal sector provides more jobs than the formal sector, it is not given the support it needs or deserves. Most of the programmes cannot achieve their goals because they have a top – bottom approach. Thirdly, programmes such as the Youth Venture Fund have tended to allocate more funds to beginners who have no entrepreneurial experience as a result of which most businesses it has supported have

x


failed. In addition, the fund excludes youth with ‘O’ level qualifications or no-education. Fourthly, some of the training activities aimed at strengthening entrepreneurship are too short, offer generic courses and do not address the fundamental weaknesses of the youth in managing businesses. Fifthly, lack of employment opportunities pushes boys and girls to join illegal armies and militias because being a soldier does not require previous experience, skills or seed capital and with guns youth gain power and control over resources. The chapter on ‘A Critical Assessment of Strategies to Curb Youth Unemployment in Uganda’ by Ivan Ashaba and Mershack Katusiimeh point out that youth unemployment in Uganda is above 80 per cent and the highest rates are in urban areas. The authors note that the government has launched a programme to help youths to secure jobs outside the country and this has enabled security and hotel companies to recruit young people for services abroad. About 40,000 youths had participated in this programme by 2013. Another programme was developed by the government under which foreign investors are given tax concessions if they invest over US$100,000.00 (which local entrepreneurs believe is too low). About 62 projects were established under this programme and were expected to create over 6000 jobs by 2012. The authors also give details about a joint venture between a German development agency and several banks in Uganda under which a Joint Venture Capital Fund was set up to support youth to develop their own small and medium enterprises. In addition, they give account of several projects launched by international and local civil society organizations to train youth on employment and handle problems of adolescents. The authors note, however, that the success of these projects will depend on several factors. First, their relevance to the economy is crucial. Second, diligence and transparency in the management of the funds are required. Third, government interference and politicisation of projects and funds has to be removed. Fourth, the youth have to change their attitudes towards work as most of them expect to work less or not at all and earn lots of money. In that vein, they should be supported and encouraged to consider involvement in agriculture which some of them currently consider a dead-end activity. In the last chapter, before the conclusion titled ‘Challenging the Challenger: Tackling Youth Unemployment by Changing the Players, the Game and the Rules of the Game’, the author suggests that youth engagement and involvement in policy and curriculum development is crucial to make policies and skills relevant to the needs of the youth. Community and enterprise involvement in youth policy and skill development is also recommended. The authors advise educational institutions to work together in a holistic, rather than a fragmented, way to ensure that they devise skills that are relevant and based on the needs of the youth and employers. He calls for the review of labour market information systems to ensure the data they produce reflects the demand and supply side components of the labour market based on thorough and scientific labour market analysis. He


xi

suggests that educational institutions should work more closely with enterprises in training and education, develop partnerships with enterprises that have apprenticeship programmes or skill development activities and use these partnerships to properly prepare the youth for the real world of work. Finally, he calls for intensive efforts to introduce the youth to agriculture through training, land policy review and improvement of infrastructure in the rural areas. It is the hope of the authors of the various chapters of this book that the findings presented will be used as a base for further research and review of policies regarding youth and skill development.

CHAPTER 1 Urban Youth Unemployment in South Africa: Characteristics, Challenges and Consequences Mkhululi Ncube Abstract South Africa has one of the largest youth unemployment rates in the world. Considering the potential threats of high unemployment levels to socioeconomic stability, it is a ticking bomb that requires urgent attention. Urban youth unemployment is particularly worrisome considering that the majority of the youth reside in urban areas and that the youth urbanization tide continues unabated. Efforts to deal with urban youth unemployment have not been effective as the nature and causes of the challenge are not fully understood. The present Chapter provides a comprehensive analysis of urban youth unemployment in South Africa. Our analysis suggests that urban youth unemployment in South Africa is to a large extent driven by, among other factors, a rapid increase in youth labour supply in the face of low economic growth, rural-urban migration, poor and inadequate skill formation processes, and the limited flexibility of the labour markets due mainly to stringent labour regulations. Although many options have been pursued to deal with urban youth unemployment, this Chapter proposes the following suite of measures: improving the quality of education, full implementation of a youth wage subsidy, an expansion of public works and active labour market programmes, and improving the flexibility of the labour markets.

INTRODUCTION A man's labour is not only his capital but his life. When it passes it returns never more. To utilize it, to prevent its wasteful squandering, to enable the poor man to bank it up for use hereafter, this surely is one of the most urgent tasks before civilization. (William Booth)

South Africa transitioned to democracy in 1994, almost 30 years after the first African countries became independent. The country faced many challenges then, and in particular huge developmental backlogs that were created by apartheid policies of social exclusion and discrimination. Unemployment has remained as one of South Africa’s biggest hurdles and a formidable bottleneck in the country’s desire to achieve an inclusive society. During the first quarter of 2013, a total of 4.6 million people were unemployed in South Africa - a figure that is equivalent to a quarter of the country’s labour-force. Since 1994 unemployment in South Africa has remained at chronic levels, especially for the youth. Over 70 per cent of the unemployed individuals are youth between the 15 to 35 age cohorts. The

2


unemployment challenge is very acute among African youth given their historically disadvantaged positions. Numerous studies have demonstrated that youth unemployment – the exclusion of youth from economic activities is associated with a multitude of negative social and economic consequences (O’Higgins 2001; Rees 1986). For the economy at large, the inability to exploit this demographic dividend is of great concern. Other unemployment consequences, especially to individuals, include loss of income, poverty, and the loss of self-esteem and self-confidence which all fuel social unrest. Also youth unemployment is related to drug abuse, crime and vandalism - which could persist throughout an individual’s lifetime (O’Higgins 2001). Furthermore, unemployment during the early stages of one’s working life may lead to depreciation of human capital with lasting damages on one’s productive potential and hence, long-term employment prospects and earnings potential (O’Higgins 2001; Du Toit 2003). Given the severity of the problem, getting young people into jobs, especially jobs that are stable and with decent earnings, is a key policy issue in South Africa. Such a goal is, however, elusive given lack of a sound understanding of the nature of the problem: its causes, dynamics, and political as well as socio-economic consequences. For government to devise strategies that would be effective in dealing with youth unemployment, a consistent and coherent analysis of the nature and causes of the challenge is required. The Development Bank of South Africa (DBSA) (2011) has described the problem of youth unemployment as a “ticking bomb” considering its potential threats to social and political stability. Although many studies have been undertaken to understand the characteristics of youth unemployment in South Africa, the main limitation of these studies has been the fact that urban and rural youths have been treated as the same, while in reality these youth groups face different challenges in the labour market and therefore should be treated differently. For example, job search in the urban set up requires different levels and depths of sophistication, resources and networks. The majority of the South African youth resides in urban areas and this tide towards urbanisation of the youth continues to show in most of the population statistics. It is therefore important to understand the labour market performance of this population group. The present Chapter provides insights into the characteristics of urban youth unemployment and lays a firm basis for policies and programmes meant to deal with urban youth unemployment. This analysis allows for proper targeting of interventions to the group that suffers from the unemployment crisis. The analytical approach followed in this Chapter is both quantitative and qualitative. On the quantitative part, we use pre-collected (secondary) data to probe shifts in labour market indicators and general behaviour of the urban youth labour market. On the qualitative side, we employ information from existing materials and documents to describe variation in labour

M. Ncube. Urban Youth Unemployment in South Africa

3

market indicators and describe the labour market experiences of the urban youth. 1. THE ECONOMIC CONTEXT OF YOUTH UNEMPLOYMENT South Africa’s economy is the largest in the African continent. It is ranked 26th in the world in terms of Gross Domestic Product and accounts for 80 per cent of the SADC region’s Gross Domestic Product (Mashayekhi, Peters and Vanzetti 2012). It is an upper middle income country with welldeveloped primary, secondary and tertiary sectors. The country has an established manufacturing base, a well-developed infrastructure network, a well-capitalised banking system and abundant natural resources. South Africa’s per capita income of about US$10000 dwarfs many countries’ in the region, e. g., compared to US$201 in DRC or US$408 in Mozambique. The economy is one of the most diversified in the continent, with different sectors contributing the following proportions to GDP:  Agriculture: 2.2 per cent;  Mining: 10 per cent ;  Manufacturing: 12.3 per cent;  Electricity and water: 2.6 per cent;  Construction: 3.9 per cent;  Wholesale, retail and motor trade: 16.2 per cent ;  Transport, storage and communication: 9 per cent ;  Finance, real estate and business services: 21.2 per cent ;  Government services: 16.7 per cent ; and  Personal services: 5.9 per cent. The country has a relatively balanced mix of exports: 28 per cent raw material, 41.3 per cent intermediate goods, 15.8 per cent consumer goods and 15 per cent capital goods. For most of the SADC countries, there is little diversity and value addition in their basket of exports (See Figure 1). Take for example, Botswana, Malawi and Mozambique, where exports are dominated by raw materials. Despite being the largest economy in the continent, the performance of the economy in the past decade has consistently been below the continent or SADC average (see Table 1). All economic indicators shown in Table 1 show the same story of an economy performing below the African average. In terms of economic growth, South Africa has had uninterrupted growth between 1994 and 2007. During this period, growth has averaged 5 per cent (Table 1). In 2008 the economy grew by 3.6 per cent before the international recession pushed growth to negative figures in 2009 (see Table 2). The international financial crisis was instrumental in increases in inflation, worsening BOP conditions and unemployment. The rebound witnessed in 2010 was not that substantial to make a significant impact on the other socio-economic fundamentals such as employment, poverty and inequality.

4


Figure 1. Export Shares (per cent), 2010 SOURCE: Statistics South Africa (2011)


5

Table 1. Macroeconomic indicators of South Africa Real GDP growth (per cent) South Africa Southern Africa Africa Consumer prices (Inflation) per cent South Africa Southern Africa Africa Overall fiscal balance, including grants (per cent of GDP) South Africa Southern Africa Africa External Current Account including grants (per cent of GDP) South Africa Southern Africa Africa SOURCE: African Economic Outlook (2012)

Jul-03

2008

2009

2010

2011(e)

2012(p)

2013(p)

4. 8 5. 9 6

3. 6 5. 2 5. 6

-1. 5 -0. 4 3. 1

2. 9 3. 5 5

3. 1 3. 5 3. 4

2. 8 4 4. 5

3. 6 4. 4 4. 8

4. 5 7. 9 7

11. 5 11. 5 10. 9

7. 1 8. 1 9. 2

4. 3 6. 2 7. 4

5 6. 7 8. 5

6. 2 6. 8 8. 4

5. 4 6. 1 7. 3

-0. 5 0. 2 1. 5

-0. 9 1. 1 2. 8

-6. 3 -5. 5 -5

-4. 2 -2. 6 -3. 5

-4. 8 -2. 5 -3. 6

-4. 4 -2. 6 -2. 9

-4. 2 -2. 4 -3

-4 -1. 9 4. 7

-7. 2 -2. 4 6. 8

-4 -6 0. 2

-2. 8 -1. 8 -0. 6

-3. 1 -1 -0. 6

-3. 9 -1. 9 -0. 4

-4. 3 12

6


Since the transition to democracy, South Africa’s economic growth has not been sufficient to generate a meaningful number of jobs. The unemployment rate has increased from 17.6 per cent in 1995 to 27.1 per cent in 2003 and to 24.7 per cent in 2011 (StatSA 2012). The jobs that have been created have mainly been in the public sector (see Figure 2). Such a picture is not sustainable in the long run and has partly been responsible for the high public sector wage bill (Financial and Fiscal Commission (FFC) 2013a). The rise in the public sector wage bill has been driven partly by more people being employed than productivity increases (Ibid).

Figure 2. Employment in the Non-agricultural Sectors SOURCE: South African Reserve Bank (2012)

Also, South Africa’s growth has not translated into significant inequality and poverty reductions. South Africa has one of the highest inequalities in the world. In 2005 the country’s Gini coefficient of 0.67 was one of the highest in the world. The national income that goes to the poorest 20 per cent is about 2.3 per cent, while the richest earn about 70 per cent of the income. The incidence of poverty has also remained relatively high. In 1995, 53 per cent of the population lived below the poverty line of US$2 a day, and in 2008 this proportion had declined to 48 per cent (National Planning Commission 2011). 2. THE LABOUR MARKET: NATURE, TRENDS AND OUTCOMES

The South African labour market is to a large extent segmented. We have informal and formal, private and public; and rural and urban segments. The distinction between some segments is quite blurred. The informal sector is small by African standards and jobs in the informal sector are generally of poor quality, skills, productivity and incomes are low, while selfemployment and high concentration of migrant labour are some of the key


7

features of the informal sector. The informal sector tends to absorb workers who are unable to secure formal sector jobs. The formal sector comprises government and business sector workers. The formal sector labour market is characterised by large trade union organisations, high wages and collective bargaining as the key mechanism for determining employment conditions. Labour mobility between formal and informal segments is limited due to various structural barriers. Such barriers include adverse geographical location of the unemployed due to the spatial development patterns of urban areas in South Africa, where the poor reside far away from places where there are job opportunities. This increases the transport costs associated with job search for the unemployment especially, as most of them lack assets and cash. In addition, barriers result from the limited social networks to support urban job search activities, poor education and limited relevant work experience required by informal labour markets and racial prejudices. In South Africa gender, race and age continue to influence labour market outcomes. The age, gender and race characteristics of the labour market are shown in Table 2 and Figure 3. The incidence of unemployment is higher among females than males, while more males are likely to participate in the labour market than their female counterparts. The difference in the labour absorption rates for females and males is sizable, with women at 34.4 per cent and men at 47.4 per cent. Another point to note is that in all labour categories, the participation rate is very high compared to the absorption rate. The huge disparities between the two statistics explain the huge unemployment rate. Figure 2 shows the estimated probabilities of accessing employment for various population categories. The comparators in each category are blacks, females and 15–24 age group. Women fare quite badly compared to men in all the three periods. Earnings estimates in Figure 3 also show that women earned between 22 per cent and 28 per cent less than their male counterparts. The gender disparities in the South African labour market outcomes can be attributed to a number of factors. Obviously, the disparities can partially be explained by differences in “productive characteristics” such as education, training, experience, etc. However, some studies show that discrimination explains the residual gender gap. According to Shepherd (2008) and Grün (2004), who apply the OaxacaBlinder decomposition criteria in their study, discrimination in terms of employment, wage is very prevalent in the South African labour market and African women are more discriminated than their coloured, Indian and white counterparts. Gender discrimination in the labour market is of great concern as it has a negative effect on economic growth and overall development (Esteve-Volart 2004). Discrimination artificially restricts the pool of talent and skills available for economic development.

8


Table 2. Structure of the South African labour market (2010) Variables

By gender By population group

By age

Male Female Black Coloured Indian White 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

SOURCE: DBSA (2011)

Population

Working age

Economically active population

Unemployment rate (per cent)

Share of unemployment (per cent)

Participation rate (per cent)*

Labour absorption rate

24329000 25662300 39682600 4424100 1299900 4584700 5226200 5018500 4518800 4035700 3465200 2524200 2230600 2019100 1653700 1319700

15280570 16473149 24747494 3008715 910318 3087191 5219593 4988006 4469765 3988807 3403999 2483787 2226648 2010905 1645283 1316927

9402952 7798600 12621127 1926121 551055 2103249 327634 2314250 3101497 2977941 2563358 1874641 1570197 1284475 835298 352270

22. 9 27. 4 29. 3 22 9 5. 8 64. 1 48. 6 33. 3 24. 3 19. 9 14 12. 7 10. 9 8. 7 3. 9

50. 2 49. 8 86. 1 9. 9 1. 2 2. 8 4. 9 46. 4 69. 4 74. 7 75. 3 75. 5 70. 5 63. 9 50. 8 26. 7

61. 5 47. 3 51 64 60. 5 68. 1 6. 3 46. 4 69. 4 74. 7 75. 3 75. 5 70. 5 63. 9 50. 8 26. 7

47. 4 34. 4 36. 1 50 55. 1 64. 2 2. 3 23. 8 46. 3 56. 3 60. 3 64. 9 61. 6 56. 9 46. 3 25. 7

0.1

0.21068

0.07676 0.09173 0.15437

0.2

0.0921 0.0921 0.1003

0.3

0.0456

0.4

9

0.06931 0.15931 0.27273

0.1611 0.2059 0.1411 0.3012


-0.1 0.1989

-0.2

-0.03078 -0.1241 -0.02421

0

-0.3 Figure 3. Probability of Employment in 1995, 2001 and 2009, by Gender, Race and Age SOURCE: Leibrandt et al. (2010)

Disparities in the labour market outcomes in South Africa are also a reflection of racial divisions in the country. The performance of whites in the labour market is always superior compared to other population groups, followed by Asians, then coloureds, and at the bottom are blacks. The unemployment rate of whites is 5. 8 per cent compared to about 29 per cent of blacks (Table 2). The absorption rate of blacks is almost half of that of whites, indicating that blacks face a raw deal in the labour market compared to whites and other population groups (Figure 3). Although the gap between those at the bottom and at the top is narrowing, the disparities are still very high. Earnings disparities by gender and race are shown in Figure 4. Whites command better earnings than other races, while women lag behind their male counterparts. Disparities in earnings and other labour market outcomes are rooted in a number of factors, including disparities in the quality of education and outright pre- and labour market discrimination. Affirmative action policies and other institutional and legal remedies are employed to address disparities in labour market outcomes.

10


Figure 4. Earnings Function Estimates for 1995, 2001, and 2007, by Race and Gender SOURCE: Leibrandt et al. (2010)

Labour market outcomes respond to age in many ways. As shown in Figure 5, adults fare better in the labour market than the youth. Figure 5 also shows that unemployment declines with age. The reasons for poor employment chances among the youth include inexperience, and to a certain extent, fewer networks to aid job search. A National Treasury (2011) study demonstrates that experience is a significant factor in the unemployment equation. The study shows that the probability of finding a job increases with age: 11 per cent for 15–24 age group, and 22 per cent for the 25–54 year olds, and the gap is explained by experience.

Figure 5. Unemployment, by Age SOURCE: Statistics South Africa (StatSA) (2010 and 2011)


11

3. INCIDENCE AND CHARACTERISTICS OF YOUTH UNEMPLOYMENT

In South Africa, the youth are defined as the population group within the 15–34 year age cohort. This definition is in line with other international norms, such as that used by the African Union and other multilateral institutions. Figure 6 divides the South African youth population into various labour market groups. The largest group consists of the economically inactive, followed by the employed, then the unemployed, and the least being the non-job searching unemployed (discouraged) workers.

Figure 6. Characteristics of South African Youth Population (2010) SOURCE: Own calculations from StatSA (2011)

The gap between youth and adult unemployment is surprisingly the widest in the more advanced SADC economies: South Africa and Mauritius (Figure 7). The unemployment rate for youth in South Africa is almost 2.5 times that of adults. Comparing South Africa’s youth unemployment with other emerging economies, the African Economic Outlook Report (2012) notes that in South Africa, 13 per cent of the 15–25 have jobs while the average for emerging economies is 40 per cent. Compared to the other BRICS (Brazil, Russia, India, China), South Africa’s unemployment problem is unusually high. Of the young population, the African Economic Outlook Report estimates that 40 per cent of South Africans have jobs, compared to 65 per cent in Brazil, 71 per cent in China, and 55 per cent in India.

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Figure 7. Youth and Adult Unemployment (2009) SOURCE: ILO (forthcoming)

Figure 8 provides trends in unemployment rates by age between the period 2000 and 2011. It is clear from Figure 8 that in the past decade, the youth unemployment rate has surpassed the adult unmeployment rate, and within the youth, it is also clear that the incidence of unemployment is much higher among the youngest population than older youth. As has been noted above, the plausible explanation for the higher unemployment rates among the youth is their lack of work-related experience that many employers require before recruiting workers. The remedy to this is providing the youth with opportunities to experience the world of work through internship, learnership or mentorship programmes.

Figure 8. Youth and Adult Unemployment Rates SOURCE: StatSA (2011)

In terms of gender, Figure 9 shows that women youths carry a double burden of age and gender. Female youth are more likely to be unemployed


13

than their male counterparts. Gender differences can be explained by a number of factors, including educational attainment and educational quality, location and household composition. As shown elsewhere in this Chapter, literature suggests that labour market discrimination partly explains the residual gap. The challenge with discrimination is that it condemns many women to unemployment or inferior jobs.

Figure 9. Youth Unemployment, by Gender SOURCE: StatSA (various)

Figure 10. Youth Unemployment, by Education (2010) SOURCE: DBSA (2011)

Youth unemployment rates are generally lower for those with “no schooling” and tertiary graduates compared to those with primary and secondary education (Figure 10). The plausible reason for these hyperbolic trends shown in Figure 10 is that the reservation wage for unskilled workers is low and thus any job can be taken. For semi-skilled and skilled

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categories, the reservation wage is high in a situation where jobs that require their skills are very limited. The unemployment rate for those with tertiary education is low probably due to the technological shifts being witnessed: from a manufacturing-driven economy to a services- oriented base. The latter requires tertiary skills. The apartheid legacy is also evident in unemployment situations of the youths. During the apartheid era, blacks and coloureds were placed at the tail end of the employment queue. The blacks and coloureds had inferior education and training. Although discrimination laws were abolished in 1994, the elimination of this legacy has not been easy. Figure 11 indicates that unemployment is more endemic among the previously disadvantaged groups (i. e., blacks and coloureds). In some older youth groups, blacks are more than twice as likely to be unemployed than their white counterparts.

Figure 11. Youth Unemployment, by Population Group and Age (2010) SOURCE: DBSA (2011)

4. THE INCIDENCE OF URBAN YOUTH UNEMPLOYMENT

Statistics on urban youth unemployment in South Africa is sketchy. In this Chapter we use data from the Household Consumer Survey of 2007 and Census 2011 data to gain some insights into urban youth unemployment. Figure 12 compares urban and rural unemployment rates. Save for the 1519 year olds, rural unemployment is higher in all other youth categories. The figure for rural unemployment can even be higher if we include the discouraged and seasonal unemployment. In rural areas seasonal unemployment is significant as agriculture; the mainstay of rural economies is a seasonal activity. But it is important to bear in mind that South Africa is


15

an urbanised society where more youths reside in urban areas. Continuous migration to urban areas in escape of the poor living conditions and lack of opportunities in rural areas is also an important dimension of the South African labour market landscape. Migrants to urban areas are lured by prospects of finding employment in urban areas as employment opportunities are more in urban areas than in rural areas. Rural areas have been subjected to underdevelopment for many years and they are characterized by poor infrastructure, inadequate social services and poor service delivery. The rural sector has faced a consistent decline in agriculture, a phenomenon that has caused rural unemployment and ruralurban migration. The 2011 Census data reveals that provinces with large urban areas have grown rapidly in terms of population and rural-urban migration is the only plausible reason for this. Rural-urban migration tends to exacerbate urban unemployment as not all persons that leave rural areas secure urban jobs. A deliberate focus by government to develop rural areas is partly the answer to urban unemployment and rural-urban migration.

Figure 12. Urban and Rural Unemployment Rate (2011) SOURCE: Own calculations from StatSA 2011census data

5. CAUSES OF URBAN YOUTH UNEMPLOYMENT IN SOUTH AFRICA

Before proceeding to an in-depth analysis of urban youth unemployment in South Africa, it may be useful to have a brief overview of the existing empirical literature in South Africa on unemployment in general and youth unemployment in particular. Although empirical literature on youth unemployment in South Africa is limited, there is a burgeoning literature on post-transition unemployment in general (Kingdon and Knight (2004; 2005; 2006); Burger and Woolard (2005); Banerjee et al. (2008)), thanks to the large samples of regular cross-sectional household surveys conducted after the transition to democracy. Only a few studies deal with youth unemployment as the main subject and to the author’s knowledge there is

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no study that exclusively looks at urban youth unemployment. Despite these limitations, vital lessons about youth unemployment can be discerned from this literature. The debate on unemployment in South Africa has been alive since the new democratic dispensation, and the focus has been on a number of areas including, the measurement, dimensions, incidence, determinants and causes of unemployment; relationship between wages (including reservation wages) and unemployment; unemployment duration, unemployment and job search; gender and racial gaps in unemployment; unemployment and skills and the relationship between poverty and unemployment, and cures of unemployment. This present section discusses this literature and draws some key lessons on the nature, causes and cures of youth unemployment in particular. On unemployment measurement, Kingdon and Knight (2006) grapple with the question: what is a better measure of unemployment in the South African context; is it a narrow or broader definition? The use of an appropriate measure of unemployment matters as the measure chosen sheds light on the extent and magnitude of the unemployment problem and perceptions about the challenge. Kingdon and Knight (2006) favour the use of the broad definition as it is inclusive and covers all individuals that have no meaningful means of survival. Several studies have focussed on the causes or determinants of unemployment. Among these are Kingdon and Knight (2004; 2005), Burger and Woolard (2005), Banson and Wittenberg (2007), Burger and von Fintel (2009), Rodrik (2008), Banerjee et al. (2008) and Nieuwenhuis (2012). The causes of unemployment cited by these studies are many and varied. Banerjee et al. (2008), Burger and Woolard (2005), Banson and Wittenberg (2007) and Burger and von Fintel (2009) have underscored that rapid growth of labour supply is the cause of unemployment. South Africa has seen labour supply rising faster than labour demand, especially during the post-democratic period. Labour-force participation increased from 60 per cent in 1995 to 71 per cent in 2005. According to Banerjee et al. (2008), the population aged 14–65 grew by 2.68 per cent per year between 1970 and 2005 while employment growth grew only by 1.3 per cent per year between the two periods. These figures suggest that part of the secular movement in unemployment was precipitated by the high numbers of new entrants into the labour market in the face of a stable demand for labour as the economy was not able to absorb productively all new labour market entrants (Kingdon and Knight 2005). The non-mineral tradable sectors (manufacturing in particular) have not grown sufficiently to absorb new labour market entrants (Rodrik 2008). In some sectors (mining and agriculture) labour demand has actually declined (Banejee et al. 2008). The greater levels of educational attainment especially among the previously marginalised Africans, and the reversal of discriminatory policies that came with a new democratic dispensation contributed to


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higher rates of labour market participation. Banerjee et al. (2008), Kingdon and Knight (2005) and Ntuli (2007) further indicate that since 1995 there has been an unprecedented entry of African women in particular into the labour market, something which Casale and Posel (2002), and subsequently Ntuli (2007), characterise as the feminisation of the labour market. The two studies attribute the rapid increase in the labour force participation rates for women to greater educational attainment and the decline in the proportion of married women. Kingdon and Knight (2005), Rodrik (2008), Burger and von Fintel (2009) and IMF (2009, 14) also pin the reasons for high unemployment rates to tighter labour legislation that characterised the post-apartheid period. These studies suggest that various pieces of well-meaning labour legislation (i. e. Basic Conditions of Employment Act of 1997; Labour Relations Act of 1995 and the Employment Equity Act of 1999) may actually have had unintended consequences of discouraging employment and investment. Burger and von Fintel (2009) note that tighter labour legislation endowed unions with greater bargaining power and rendered the formal labour market to be unresponsive to labour market changes. According to Rodrik (2008), one of the immediate causes of South Africa’s unemployment problem was the high real wages obtaining in the formal sector. The high wages did not allow the labour market to clear. In fact there were other institutional constraints such as strong unions that prevented real wages from falling to clear excess supply of labour as market forces would have otherwise dictated during economic downturns (Banerjee et al. 2008). Unemployment is also a structural issue (Pauw, Oosthuizen and Westhuizen 2008). The South African paradox is that high unemployment coexists with skill shortages. The unemployed have skills that are not required by the economy, especially in the context of rapid changes in production technology and capital deepening (Pauw, Oosthuizen and Westhuizen 2008; Yu 2013; Burns, Edwards and Pauw 2010). The training and retraining of the population in the post-apartheid period has occurred at a slower pace than the changing structure of labour demand (Ibid). The education and training systems are churning out graduates that are ill-prepared for the world of work. On youth unemployment, analysts agree that the youth has borne the greatest brunt of the unemployment increase (Mlatsheni and Rospabe 2002). From a theoretical point of view, youth unemployment is always larger than adult unemployment for a number of reasons (Blanchflower 1999; O’Higgins 2005). The rule of thumb is that youth unemployment is twice that of the adult population (Blanchflower 1999). The theoretical reasons include: (i) the youth are more likely to be seasonally unemployed than adults; (ii) youths are more likely to quit or be fired from employment than are adult workers; (iii) in competing for jobs with adults, the youth tend to fare poorly as they are less endowed with skills and experience; and

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(iv) the youth have less networks that often aid the job search processes. For South Africa, there is no reason why most of these reasons cannot apply. In South Africa, the reasons for the increase in youth unemployment mirror that of the general population. Youth unemployment is driven by the steady increase in labour force participation in the face of the low absorptive capacity of the economy (Burger and von Fintel 2009); an education system that ill prepares learners for the world of work (Pauw, Oosthuizen and Westhuizen 2008); failure to strike a good balance between protectionist employment regulations and attracting investment; limited networks and financial resources to access job- related information (Yu 2013; Von Fintel and Black 2007; Rankin and Roberts 2011). The Labour Relations Act places a high premium on many employers on the risks of hiring young inexperienced workers that cannot be easily fired (Van Aardt 2009; Yu 2013). Other reasons include minimum wages that are only afforded by large firms (Natrass 2000); lack of experience among many youths (Yu 2013); the recent economic recession that may have led to more youths being laid off (Yu 2013); and finally, employment discrimination against the youth workers (Shepherd 2008). As has been shown above, literature on unemployment in general in the South African context is vast; however, not much has been said about urban youth unemployment. In subsequent paragraphs we piece together evidence on urban unemployment and its drivers. The drivers of urban unemployment can be underpinned by two theories: the “spatial mismatch approach (SMA)” and the “characteristics approach (CA)”. The SMA attributes urban unemployment to urban firms that continuously shift locations far from where workers reside. As part of the urbanisation process, firms change locations, and employment opportunities are increasingly becoming decentralised. Regarding policy, the SMA encourages the development of compact cities and subsidising job search. This theory resonates well with what obtains in South Africa. The spatial development of urban areas in South Africa under apartheid saw, to a large extent, the poor and largely blacks being located far away from places of employment. Post-apartheid developments have continued to encourage sprawling cities, with poor people residing in city peripheries (National Planning Commission 2012). The costs for workers to get to places of employment are exorbitant. For job seekers, high transport costs make job search a Herculean activity. Where the poor reside, unemployment is very high and evidence indicates that unemployment in South Africa in city peripheries (where the poor stay) and squatter settlements is very high and employment opportunities continue to drift away from residential areas of poorer people. A good example is Johannesburg where firms are gradually moving towards the North while densely populated black areas are concentrated in the Southern part of the city. Figure 13 illustrates this point. The red bars in Figure 13 represent unemployment rates in squatter settlements and high density poor suburbs of Johannesburg. It is clear in the Johannesburg case that the incidence of unemployment is


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disproportionately higher in city peripheries and informal settlements. Thus it is probable that the high transport costs due to long distances between residential and employment location is an impediment to successful job search.

Figure 13. Unemployment in Johannesburg Urban SOURCE: Nemavhandu (2008)

The CA places emphasis on the characteristics of the population of a particular area as a cause of unemployment. According to this theory, unemployment is associated with population characteristics of areas. Unemployed people may be concentrated in less desirable residential areas in city peripheries or in slums. For example, in South Africa racial segregation concentrated blacks in poor housing areas in townships and unemployment is closely related to the population characteristics of these areas. In terms of policy, the CA puts emphasis on training and skills development of populations in disadvantaged neighbourhoods. The following sub-sections provide a summary of the key drivers of urban unemployment in South Africa. 5.1. A Surge in Labour Force Participation Rates and Low Absorption Rates Since the new democratic dispensation, labour supply in South Africa in general, has increased (relatively faster than labour demand) due to a surge in labour market participation for various population groups and across generations, albeit in the face of low labour absorption rates1 (Burger and Woolard 2005; Branson and Wittenberg 2007). In 1995, only 24.2 million people were of working age in South Africa, and by 2010 this figure had increased by 7.6 million to 31.8 million people. Many factors have been responsible for the increase in labour market participation in South Africa. The most notable factor is the opening up of educational opportunities for the previously disadvantaged population groups. With an increase in the

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educated population, labour market participation rates increased, but not commensurately with labour demand. Casale and Posel (2002) suggest that beginning shortly after independence in 1994, women’s participation in particular increased due to an increase in educational attainment for women, a decline in the proportion of married women, and changes in household composition as a result of an increase in single women or women living in households without employed men (Burger and von Fintel 2009). The surge in labour force participation rates has been relatively higher among the youth, the same population group that faces very low labour absorption rates. Figure 14 shows equally inverted “U”-shaped labour force participation and labour absorption rates when plotted against age. Figure 14 reinforces our earlier argument that unemployment decreases with age.

Figure 14. Unemployment, Labour Participation and Labour Absorption Rates (2011) SOURCE: Author’s calculations from 2011 census data

5. 2 Skills Mismatch, Poor Quality Education and Unemployable Youth In South Africa skills mismatches are not uncommon as the education and training systems are not responsive to industry needs. Evidence shows that the education system does not adequately equip the youths for the world of work. In fact the situation in South Africa is paradoxical as huge unemployment coexists with a severe shortage of critical skills. The country has a low skills base and vocational training institutions are not adequately addressing the skills gap. The enrolment rates in VETs are low as shown in Figure 15.


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Figure 15. Percentage of Youth Enrolled in FET Colleges, by Province and Gender (2011) SOURCE: FFC (2013a)

Many school leavers probably enter the labour market with skills that are irrelevant to industry. The youth do not understand the demands of industry, and as a result attain qualifications that are not demanded by industry. On the other hand, universities and vocational training institutions may not be effective in analysing the skills gaps in the market so that their course offerings speak to the needs of industry (DBSA 2011). Of the 1000 unemployed graduates polled by South African Graduates Development Association (2013), the largest shares of unemployment came from FET and Universities of Technology graduates (see Figure 8).

Figure 16. Unemployment among Graduates in South Africa (2012) SOURCE: South African Graduates Development Association (2013)

This illustrates the point that graduates from FETs and Universities of Technology, who are supposed to be skilled in applied trades, are finding it difficult to secure employment, and the plausible reason for this is that their

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skills are, to a large extent, irrelevant to the needs of the business sector. It is important to note that FET institutions also suffer from a lack of human and institutional capacity to provide learners with adequate and appropriate skills. The poor quality of education (from basic to tertiary) in South Africa has also been a factor in the poor performance of the youth in the labour market. DBSA (2011) estimates that high quality education in South Africa is only accessed by about 10 per cent of young people, mainly in former white schools. The same study notes that the other 90 per cent have weak cognitive skills and are destined to acquire low-level skills and eventually become employed in manual jobs or join the unemployed group. The South African education system is, by and large, still divided into two different functional subsystems: the historically disadvantaged system that caters mainly to black and coloured students and the historically served system that mainly caters to white and Indian children. This division manifests in quality that is inequitably distributed. According to Van der Berg et al. (2011), learners in the historically disadvantaged schools (by far the majority), demonstrate low proficiency in reading, writing and numeracy (DBSA 2011). On the other hand, the mainly white and Indian schools have all the characteristics and quality outputs closer or similar to any developed economy. Taylor (2011) observes that a grade 5 learner in a historically disadvantaged school performs worse than a Grade 3 learner in a historically served school in numeracy and literacy. Skills in Maths and English are lacking in South Africa, albeit the skills that underpin employability. As numeracy and literacy are key building blocks for acquiring critical skills needed in the country, this means children in historically disadvantaged schools will have poor labour market outcomes compared to those from previously advantaged schools. The reasons for poor quality education in many South African schools are many and include:  Inadequate school infrastructure and teacher training institutions: South Africa has a significant number of schools that have no infrastructure that is conducive for learning or teaching. Poor infrastructure often gives rise to large classes especially at primary and secondary schools. The quality of education also depends on quality and quantity of its teachers. The quality of teaching is compromised by the high vacancy rates as shown in Table 3. Some of the vacant posts are occupied by untrained teachers. The number of teachers being trained is also inadequate; hence, almost 20 years into democracy; the education system has a significant number of untrained teachers. Many teachers leave the profession, die of HIV/AIDS or immigrate. Teacher training colleges were also closed and teacher training transferred to universities. At independence, South Africa had a total of 150 teacher training colleges, and in 1998 the number was only 50, and currently all were closed and teacher training transferred to universities. Currently,


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the education system has an untenable situation where only 400,000 teachers service over 12 million learners. Teacher training is now done by universities, albeit a toll order considering that universities are not well designed and capacitated to train teachers. For example universities may not be the right place to train primary school teachers. Universities tend to focus on the tail end of the teaching profession, i. e. upgrading teachers.  Inadequate training material: Teaching material is more often inadequate to meet demand and distribution inefficiencies are common in the system. o Deficient teaching competencies within the teaching force: Within the teaching force, there is a weak teachers’ content knowledge and pedagogical skills (Taylor and Moyana 2005; Carnoy et al. 2008). In addition, South Africa’s education system has a significant number of unqualified and under-qualified educators who handle large classes in poorly equipped classrooms (Modisaotsile 2012). o Low teacher effort: One indicator of low teacher effort is teacher absenteeism, which was estimated at 11 per cent by Reddy et al. (2010). o Weak management and instructional leadership in schools (Van der Berg et al. (2011): This problem is manifested in low-time on task, poor curriculum coverage, and low content exposure. o Systemic restructuring of the education system: The education system has been undergoing reforms and many experiments since 1994. Such reforms are sometimes disruptive and bring about lots of uncertainty.

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Table 3. Teacher vacancy rates Area

EC FS GP KZN LP MP NW NC WC

2006

2007

2008

No. of posts

No. of vacancies

Vacancy rate

No. of posts

No. of vacancies

Vacancy rate

No. of posts

No. of vacancies

Vacancy Rate

75 744 27 690 51 724 85 213 70 307 34 053 38 291 7 925 33 924

11 769 4 368 6 106 10 912 10 930 6 922 7 784 1 150 6 099

15. 5 15. 5 11. 8 12. 8 15. 5 20. 3 20. 3 14. 5 18. 0

70 608 27 764 58 793 93 324 73 516 40 853 27 355 9 759 31 134

6 640 3 737 3 737 6 847 15 797 7 101 176 1 049 4 938

9. 4 13. 5 13. 5 7. 3 21. 5 17. 4 0. 6 10. 7 15. 9

70 007 28 644 60 035 93 174 66 542 41 882 27 583 10 718 34 695

7 330 3 401 8 748 13 550 12 560 7 958 1 727 1 727 5 615

10. 5 4. 9 12. 5 19. 4 17. 9 11. 4 2. 5 2. 5 8. 0

SOURCE: Department of Higher Education (2010) Note: EC: Eastern Cape; FS: Free State province; GP: Gauteng province; KZN: KwaZulu Natal province; LP: Limpopo province; MP: Mpumalanga province; NW: North West province; NC: North Cape Province; WC: Western Cape Province.


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The poor quality of education mainly among black and coloured learners is also an indication that South Africa is not only sitting on a youth unemployment problem, but also facing the challenge of unemployable youth as well. The education system in South Africa is also deficient in one aspect that is key to self-employment: entrepreneurship training. Entrepreneurship training is not emphasized as a subject of choice in schools and higher education institutions, despite its centrality in creating jobs and improving chances of self-employment. 5.3 Migration and Urban Unemployment Another cause of urban unemployment in South Africa is rural-urban migration. The recent Census data (2011) provide ample evidence of the significance of rural-urban migration in South Africa. Between the Census of 2001 and 2011, provinces that had the highest numbers of urban areas have grown faster than those with a large rural component. Take, for instance, the Gauteng province with three metros: it has grown by 33.7 per cent between 1996 and 2011 and the Western Cape by 28.7 per cent in the same period. During the same period, the national population grew by 15.5 per cent only. The birth rate cannot account for the disparities between the national and the population growth rates of Gauteng and Western Cape provinces. There is a prima facie case that rural-urban migration might explain part of this growth. Internal migration patterns in South Africa are not only rural to urban (i. e. urban in the true sense), but from rural areas to mining areas, to the tourism belt in the Western Cape and to commercial agricultural areas. South Africa has a huge mining industry which attracts significant numbers of migrants, e. g. the Rustenburg mining belt. Unemployment in the fringes of these mines is high and sometimes a contributor to the volatile situation in mines. Many people migrate from rural to urban areas to escape drudgery associated with rural life and in search of better incomes and employment. The youth are more likely to migrate than adults as brighter prospects in cities are likely to attract many. Migration can be viewed as a social protection mechanism as it affords youth, among others, the new opportunities and possibly better livelihoods. Classical theories put forward various explanations for rural-urban migration and the unemployment dichotomy issue. The Todaro model in particular notes that rural-urban income differentials are a significant cause for rural-urban migration. Rural incomes are lower than urban incomes, and coupled with diminishing agrarian activities in most of rural South Africa, many people migrate in expectation of better jobs and better incomes in urban areas. However, in reality chances for many to land a permanent job and receive a predictable income are minimal. Many rural migrants fail to secure employment because they have limited urban networks as their urban counterparts.

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Some migrants join the informal sector while some join the unemployed group. Other theories put emphasise on uneven development, and biased urban development as causes of rural migration. The rural sectors in South Africa have been subjected to underdevelopment for a number of years while urban areas have seen significant wealth creation and development. The main attractors of migrants are Metropolitans (Metros) and large towns as they are the economic hubs. The challenge is that many migrate to the cities in anticipation of easily finding employment. However, most of the cities have not created employment that is commensurate with their economic growth (see section on Macroeconomic issues below). External migration also contributes to urban unemployment. South Africa, because of its economic influence, receives significant numbers of migrants from neighbouring countries in search of employment and better livelihoods. As about 80 per cent of SADC GDP resides in South Africa, many migrants move to South Africa in the hope of finding employment and better livelihoods. These migrants often settle in cities and towns where chances of finding employment are higher. Most of the migrants are unskilled and therefore pose stiff competition for low-level jobs with unskilled South Africans and many fail to secure employment. 6. MACROECONOMIC ISSUES, INVESTMENT AND BUSINESS ENVIRONMENT Youth urban unemployment has also been influenced by macroeconomic developments, low investment and a business environment that has not augured well for investment. Urban areas by their very nature are hubs for economic growth and job creation. South Africa is more urbanized than the rest of Africa, and agriculture is small by African standards. The strong links that South Africa has with the rest of the world draws from the highly urbanized nature of the country. For example, the adverse historical shocks of the 1980s (Schoeman, Blaw and Pretorious 2008) and the international crisis of 2008/9 which dealt a big blow to the South African economy, tempt one to infer that urban areas were affected more than the rural sector because of the strong linkages that urban areas have with the outside world. The changes in economic activity in urban areas of South Africa have not created significant jobs to make a big impact on the country’s unemployment crisis. In Figure 17, we compare average economic (GVA) growth and employment growth rates for the period 1996-2009 for six Metros (all Metros have a combined GVA share of 55 per cent (see Figure 17). It is clear from Figure 17 that economic activity does not necessarily lead to job creation, as in all Metros, employment creation lags behind economic growth, which implies that many migrants end up joining the unemployment queues in these big cities. Figure 17 and Table 4 show that the 6 Metros have experienced jobless growth; for instance, for the period


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under review, economies of the 6 Metros grew on average by 3.7 per cent, while employment grew by 0.9 per cent.

Figure 17. Annual Growth in GVA and Employment in South Africa’s Metropolitan Cities (1996–2009) SOURCE: Quantec (2012)

Table 4 shows that the manufacturing sector, which employs 19 per cent of the 15-19 year olds, experienced negative average employment growth rates between 1996 and 2009. Table 4 also indicates that employment growth was low in some of the sectors that have a large concentration of youth. One plausible reason for the jobless growth in Metros is that there could be some possible structural changes and shifts in urban economies, albeit, away from labour intensive production techniques. There could be a gradual move towards capital intensive production technologies as companies search for efficiencies. Evidence of such shifts has been documented since the late 1970s. For example, Banerjee et al. (2008), Bhorat and Hodge (1999), and DBSA (2011) note that, since the 1970s, there has been some evidence of structural change in the economy. These studies note that there has been skill-biased technological change which has resulted in a decline in the demand for the otherwise abundant unskilled or semi-skilled workers while the demand for skilled workers increased (DBSA 2011). Evidence of the shifts is clear in the mining and agriculture sectors, which have contracted since the 1980s, while manufacturing has remained stagnant. Employment growth has come from the services sector, which often demands highly skilled workers. This explains why South Africa has a critical shortage of skilled workers.

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Table 4. Annual average GVA and employment growth for the 6 Metros (1996-2009) Sector

Johannesburg

GVA Manufacturing Mining Construction Trade Transport Finance Services Average

2. 2 2. 5 6. 5 3. 8 7. 5 6. 9 4. 2 4. 8

Cape Town

eThekwini

Tshwane

Ekurhuleni

Nelson Mandela

EMP

GVA

EMP

GVA

EMP

GVA

EMP

GVA

EMP

GVA

EMP

0. 3 -3. 9 -1. 3 3. 2 1. 9 5. 4 3. 5 2. 9

1. 6 _ 6. 8 4 6. 1 5. 1 3. 2 3. 8

-3. 1 _ -2. 2 2. 8 -0. 5 3. 1 2. 2 0. 8

1. 2 _ 3. 9 3. 4 4. 8 5. 2 3. 2 3. 1

-3 _ -2. 4 0. 9 -0. 6 1. 9 2. 2 0. 2

3. 1 _ 9. 9 3. 9 7. 1 6. 7 2. 8 4. 8

1. 4 _ 2. 2 3. 5 0. 8 5. 7 2. 3 2. 8

2. 7 -1 6. 9 3. 5 4. 8 6. 8 4. 6 4. 0

0. 5 -7. 6 -1. 4 3. 1 0. 5 5. 5 3. 6 2. 3

0. 4 _ 6. 6 0. 1 3. 2 1. 9 2. 3 2. 1

-0. 8 _ -1. 6 -0. 8 -1. 5 1. 7 -1 -0. 7

SOURCE: Quantec (2010)

Average GVA growth

Average EMP growth

Share of youth in the sector EMP Age 15-19 (%)

1. 9 0. 0 6. 8 3. 1 5. 6 5. 4 3. 4 3. 7

-0. 8 0. 0 -1. 1 2. 1 0. 1 3. 9 2. 1 0. 9

19 5 14 30 10 13 9


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7. LEGISLATIVE RIGIDITIES AND URBAN UNEMPLOYMENT South Africa has a very strong militant and well-organized trade union movement. Trade unions in South Africa often launch some of the fiercest labour strikes in the region, with “strike seasons” being part of the union calendar. Trade unions can affect economic activity and possibly contribute to unemployment. A number of empirical studies have been done to establish the link between employment and trade union presence. One of the empirical works by Blanchard and Phillipon (2006) shows that the frequency of strikes in South Africa influences a switch to capital intensive production technologies. Burger and von Fintel (2009) attribute unemployment in South Africa to stringent labour market legislation that affords Trade Unions more power to determine labour market outcomes. The argument is that the labour market is overregulated, and that employees are overprotected, which make it difficult and less attractive for employers to hire new workers and downsize when necessary. 8. POSSIBLE CONSEQUENCES OF URBAN UNEMPLOYMENT

The possible effects of unemployment on urban youth in South Africa can be divided into three categories: individual, societal and economy-wide impacts. At the level of an individual, unemployment condemns people to poverty, homelessness, poor living standards and if long term, it may lead to mental problems. Unemployment is disempowering, aggravates social exclusion and inequalities; it takes away one’s dignity and self-worth. Prolonged unemployment results in the depreciation of one’s human capital as new technologies and production techniques render one’s education and skills obsolete. According to Fourie (2012), unemployed individuals often experience boredom, depression and low self-esteem. The individual challenges associated with unemployment give rise to societal challenges. At the level of society, the youth are supposed to be the country’s valuable assets as they have the energy, creativity and innovative ideas that can benefit society. This demographic dividend can only be realized when youth are gainfully employed. Unemployment diminishes the value of youth in a society. Unemployment spawns a myriad of challenges. In South Africa, unemployment has been a key factor in high inequalities. South Africa is second to Brazil in terms of inequalities. Unemployment is also a factor in the high rates of crime in South Africa. Literature suggests that when job markets are not sources of income, individuals tend to switch to illegal means of getting an income and thus a positive relationship between unemployment rate and income is expected. A simple regression was done (by the author) to establish this assertion (equation 1): that crime is positively related to unemployment. The regression below demonstrates a significant positive relationship between crime and unemployment in South Africa. A 1 per cent increase in youth unemployment yields a slightly more than 1 per cent in increase in the crime rate.

30


3.008…..(1)

…

The result from equation 1 above confirms the results of Blackmore (2003), who from found that crime rate in South Africa is explained by income per capita, unemployment rate, and degree of urbanization, among others. The study found that a single percentage increase in unemployment will lead to a 0.75 per cent, 1 per cent, 1 per cent, 0.22 per cent and 0.48 per cent in murder, stock theft, motor vehicle theft, shop lifting, and arson, respectively. At the level of society, unemployment contributes to poverty, inequalities, increase in slums, and homelessness and general breakdown of family structure. For the economy, unemployment simply implies operating inside the production possibility frontier where the country’s output is less than the optimal. Unemployed people pay less direct tax and spend less money, which results in lower economic activity. Overall, high unemployment means forgone economic growth and development. 9. DEALING WITH URBAN YOUTH UNEMPLOYMENT

Literature suggests the following solutions to South Africa’s overall unemployment problem (i. e. all generations): scaling up economic growth (DBSA 2011); pursuing an export oriented strategy (Rodrik 2008); and retraining of individuals in skills that are relevant to the labour market (Pauw, Oosthuizen and Westhuizen 2008; Yu 2013). For youth in particular, Pauw, Oosthuizen and Westhuizen (2008) and Yu (2013) propose a youth wage subsidy to be provided to employers to increase labour demand; financial support to fund studies in critical skill shortage areas (Yu 2013); expanded public works programmes (Yu 2013 and DBSA 2011); active labour market policies such as career guidance, financial and informational support to aid job search; mentoring/coaching; promotion of selfemployment and, finally, improving the quality and relevance of education and training (Yu 2013 and DBSA 2011). South Africa has initiated various mechanisms to deal with youth unemployment. Besides national initiatives, various urban centres have initiated their own programmes. The urban governments have often recycled national government policies and programmes in dealing with youth unemployment. At a micro level urban centres have various income generating schemes for youth and projects that facilitate job search. The next subsection discusses employment creation initiatives that are national in character and applied to urban areas. 9.1 The New Growth Path and National Development Plan The government has recently put across two blueprints to guide the nation in economic development and employment creation in particular: the New Growth Path (NGP), which is the government’s economic strategy, and the National Development Plan (NDP), which is the country’s social development vision through 2030. The NDP and NGP are clear that of the


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challenges facing South Africa, “too few people at work” is at the top one. The two blueprints identify public infrastructure investment as a potent avenue for creating employment. The NGP aims at creating 250,000 jobs a year through to 2015 by investments in energy, transport, water, communication and housing infrastructure, while the NDP sets a target of 10 per cent of GDP for investment on public infrastructure to create employment. The success of the two complementary national policies may be limited due to the limited capacity in the country. The implementation of the proposals in the two documents requires a well-capacitated state machinery to intervene where necessary and follow through every proposal. In the previous policy regimes such as GEAR and ASIGISA, the state has been found wanting in terms of capacity to follow through all policy elements, hence their limited performance. Another factor that will limit the employment creation of these policies is the obsession with the formal economy at the expense of the informal economy, albeit where (i.e. informal) employment opportunities are massive. The formal sector employs 30 per cent of the labour force while 60 per cent of job creation occurs in the informal sector (Fourie 2012). The rate of jobs creation in the formal sector (or GDP growth) is low. Estimates indicate that a 1 per cent increase in GDP results in a 0.5 per cent growth in formal employment or employment grows at roughly half the growth rate of GDP. This means that the solutions to the unemployment crisis should not be assumed to be found in the formal sector alone, but interventions should be directed to the informal sector as well. There should be an integrated approach that promotes growth in the informal sector and selfemployment. 9.2 Public Works Programmes One of the government’s direct employment creation programmes is the Expanded Public Works Programme (EPWP). The EPWP is an incentive grant introduced to motivate provinces and municipalities to shift from capital intensive production methods towards labour intensive techniques. It is an incentive that rewards employers who excel in creating employment. It is designed to keep the unemployed in contact with the labour market by providing temporary employment, experience and income. However, despite the decent objectives of this initiative, it has not yielded the number of jobs that were expected. The uptake of this grant has been weak resulting in a few jobs being created and low incentives being earned. The reasons for the poor performance of this grant are many and include: the onerous reporting and payment procedures; the performance bonus concept not being clearly understood by municipalities; provincial and municipal treasuries not sure of how to apportion the incentive; the value of the incentive is insignificant to induce more municipalities to participate and also the value is insufficient to induce behavioural change (not carrot enough to turn labour intensity around); incentive not reaching

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contractors who are responsible for changing into labour-intensive production techniques; and for small municipalities, there is no technical capacity for designing labour-intensive delivery techniques (Department of Public Works 2011). 9.3 Education and VETs The analysis above suggests that the education system delivers poor quality graduates and that the system is not churning out skills in the right quantities for the economy. The point to be emphasised is that the education system is not preparing school leavers adequately for the labour market. Government has sought to address these deficiencies in the education and training system through various mechanisms. To improve quality, the government has introduced national assessments for Grade 3, 6 and 9 learners as a way to improve literacy and numeracy. The focus of government has also been on improving the teaching of maths and science subjects by having regular training and workshops of teachers in these subject areas. To minimise high incompletion rates, the government as well as the National Youth Development Agency (NYDA) have introduced second-chance programmes to offer tuition support to learners who drop out of mainstream school. Regarding training and improving vocational education, the government recently launched the National Skills Development Strategy to guide skills development in the country. The government, through the Department of Labour, has also established the Training of Unemployed Persons programme which provides vocational training for young unemployed persons. Vocational training is also pursued vigorously through FET colleges. The government has also established almost 30 Sector Education and Training Authorities (SETAs) to support skill formation within various sectors. The focus of SETAs is on learnerships and apprenticeships. A tax allowance, which is a form of an employment subsidy, is provided to employers that use learnerships or apprenticeships. In 2009/10, about 51,607 young people were involved in learnership programmes. The learnership and apprenticeship programmes have shown some reasonable amount of success in terms of alleviating the unemployment problem. According to Kruss et al. (2012), 57 per cent of previously unemployed learners found jobs after completing learnerships. This statistic indicates the potentially positive effects of SETAs in bridging the skills gap in the country. The only drawback with SETAs is that they are also plagued by weak capacity to manage and monitor some of their programmes (National Treasury 2011). 9.4. Stimulating Employment through Infrastructure Investment The government has prioritised infrastructure investment to stimulate economic growth and employment. In 2009, the state injected R846 billion for infrastructure investment. These funds have been channelled to various municipalities in the form of conditional grants. Funding has focused on a


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variety of infrastructure programmes that include building new power stations, public transport infrastructure and upgrading bulk water supply infrastructure. In 2011, the government established a R9 billion jobs fund to run for three years and targeting the creation of 150,000 jobs by 2013. The fund has the infrastructure funding and enterprise development windows. Labour supply quality is catered for in the fund through the “support for work seekers” funding window. For a country where over a quarter of the working age population is unemployed, questions are still being raised on the adequacy of the R9 billion jobs fund. Questions on the adequacy of the amounts aside, the impact of the jobs fund and other infrastructure grants can be improved if there is proper targeting of recipients. There should be proper targeting of individual participants, and geographic, industrial and sectoral location targeting should be the cornerstone of the fund (Rakabe 2012). The limitation of the jobs fund is that it follows a universal targeting approach and, as it is, the fund is not targeted to any sector, industry or geographic location where the employment effects may be higher. 9.5. The National Youth Development Agency (NYDA) The NYDA is a government funded entity that provides funding to youth projects. It has also programmes that facilitate job search and job matching for young workers. These consist of youth advisory programmes where one-stop shops have been established for youth to access all NYDA products. NYDA has programmes that enhance the employability of tertiary and high school graduates, such as computer literacy, CV preparation, and interview readiness. 9.6. Active Labour Market Policies The government has also tried to tackle urban youth unemployment through active labour market policies (ALMP). The government has established several public employment services centres (PES) to improve job search efficiency and job matching. These centres assist the unemployed with carrier guidance and counselling, and also provide the unemployed and potential employers with information on scarce skills, available vacancies, and registers of job seekers. 9.7. Youth Employment Subsidy The South African government has contemplated the introduction of a youth wage subsidy since 2010. However, Trade Unions were vehemently opposed to a youth wage subsidy. Trade Unions argued that the subsidy would have adverse effects, i. e., it would lead to adult workers being substituted by young workers. Secondly, Trade Unions argued that the old and unemployed will find it difficult to find employment as employers will bypass them for young subsidy-earning workers. Thirdly, Unions argued that the incentive can be easily abused by employers faking youth employment contracts to benefit from the subsidy. On the other hand,

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proponents of a youth employment subsidy argued that: (i) it does not make business sense that employers will substitute experienced workers with non-experienced ones and that old unemployed workers will always be first choice compared to young workers because of their experience; (ii) The abuse of incentive is real, but tight regulations and onsite inspections would minimise incidences of faking youth employment contracts; (iii) On releasing subsidised workers at the expiry of their contracts, it is argued that it does not make a business case as employers are more likely to hang onto more experienced workers than starting a new skills development cycle again. The youth wage subsidy was put on hold until the budget speech of February 2013, wherein the Finance Minister introduced a tax incentive to private sector employers that employ young workers. The description of the youth employment tax incentive is the same as the stalled youth wage subsidy in all respects. The incentive is a cost-sharing mechanism with employers who provide young workers their first experience of work. Presently, the incentive scheme is being designed. CONCLUSION The foregoing analysis of urban unemployment in South Africa has shown that this challenge is multifaceted and complex. Although data is a limiting factor, the analysis from the assembled data is revealing: South Africa is sitting on an urban youth unemployment problem that has few international comparisons, especially among other emerging economies. Only 40 per cent of working-age population is employed and for almost two decades into majority rule, the unemployment rate has remained above 20 per cent and largely involuntary. For the youth, unemployment is above 50 per cent. The unemployment problem in South Africa has very distinct racial and gender divides. The incidence of unemployment is highest among blacks and women. Unemployment decreases with age and increases with education. The causes of South Africa’s urban youth unemployment were traced to both demand side and supply side factors. On the demand side, this Chapter noted that economic growth has been insufficient to close the unemployment gap. The gradual shift from manufacturing production towards services, and poor export performance, sometimes due to an overvalued currency and rigid wages, all contributed to unemployment (OECD 2013). The informal sector was also prevented to absorption of many people due to entry barriers such as unavailability of land and credit. The high crime rate and lack of entrepreneurial training are some of the factors that inhibited large-scale informal sector employment. On the supply side, an increase in youth (and young women in particular) labour force participation rates in the face of low absorption rates contributed to youth unemployment. Poor education quality, skills mismatches and general skill deficiencies in the country are additional determinants of


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youth unemployment. Migration (both internal and external) is another hurdle to youth employment. Urban unemployment has far reaching consequences on the youth, society and economy. Unemployment contributes to youth delinquency, crime and drug addiction. It also contributes to social exclusion, poverty, and tensions within society. Inequalities in South Africa are very tightly linked to labour market outcomes. Labour market incomes explain 85 per cent of income inequalities (Leibrandt et al. 2010). With a large youth unemployment problem, it means the economy is deprived of production and essential inputs from this demographic dividend. The government has tackled youth unemployment through various direct and indirect programmes. The direct programmes include infrastructure investment, the establishment of a jobs fund, expanded public works programmes, and active labour market programmes; while the indirect ones include reforms in education and training, and social grants schemes that indirectly aid job search. Our analysis suggests that the impact of government programmes in addressing unemployment has not been substantial, considering that still, close to 50 per cent of the youth are without decent jobs. We suggest the following measures to deal with urban youth unemployment: a youth wage subsidy, linking industry and training/education systems to improve the relevance of skills, improve the quality of education, expansion of public works and urban infrastructure programmes, expansion of active labour market programmes and some movement towards more flexible labour legislation.

Note 1

Absorption rate measures the proportion of working age population that is employed.

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Blanchflower, D. 1999. ‘What can be done to reduce the high levels of youth unemployment in the world?’ Technical Report, ILO, Geneva. Branson, N. and M. Wittenberg. 2007. The measurement of employment status in South Africa using cohort analysis, 1994-2004. South African Journal of Economics 75(2):313-326. Burger, R. and Dieter von Fintel. 2009. Determining the causes of the rising South African unemployment rate: An age, period and generational analysis.Stellenbosch Economic Working Papers, 24/2009, Department of Economics, Stellenbosch University. Burger R. and I. Woolard. 2005. The state of the labour market in South Africa after the first decade of democracy. Working Paper 133, Centre for Social Science Research, Southern Africa Labour and Development Research Unit, Cape Town. Burns, J., L. Edwards and K. Pauw. 2010. Wage subsidies to combat unemployment and poverty: Assessing South Africa’s options. IFPRI Discussion Paper 00969. Carnoy, M. , L. Chisholm et al. 2008. Towards understanding student academic performance in South Africa: A pilot study of Grade 6 Mathematics Lessons in South Africa. Report prepared for the Spencer Foundation. HSRC, Pretoria. Casale, D. and D. Posel. 2002. The feminisation of the labour force in South Africa: An analysis of recent data and trends. South African Journal of Economics, 70(1): 156–184. Department of Higher Education. 2010. ‘Presentation to Parliament’. Parliament of South Africa, Cape Town. Department of Public Works. 2011. ‘Expanded Public Works Programme’. Presentation to Parliament of South Africa, Cape Town. Development Bank of Southern Africa (DBSA). 2011. Towards a youth employment strategy for South Africa. Working Paper Series No., 28, Development Planning Division, DBSA. Du Toit, R. 2003. ‘Unemployed youth in South Africa: The Distressed Generation?’ Paper presented at the Minnesota International Counselling Institute (MICI), 27 July – 1 August. Esteve-Volart, B. 2004. Gender discrimination and growth theory and evidence from India. London School of Economics, London. Financial and Fiscal Commission. 2013a. ‘Managing the provincial wage bill to contain fiscal stress and build a capable state’. FFC Annual Submission, Chapter 7, Midrand, Johannesburg. _____. 2013b. Financing Higher Education. FFC Annual Submission, Chapter 4, Midrand, Johannesburg.


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Fourie, F. 2012. The unemployment debate is too fragmented to address the problem. Department of Economics, University of Free State, Accessed 20 May 2013 at http://www.econ3x3. org/sites. pdf. Grün, C. 2004. Racial and gender wage differentials in South Africa: What can cohort data tell? Available online. International Labour Organization (ILO). 1998. World employment report 1998– 1999: Employability in the global economy – How Training Matters. Geneva: ILO. ———. (Forthcoming). Employment promotion policy for SADC. Pretoria: ILO. International Monetary Fund (IMF). 2009. South Africa: 2009 Article IV Consultation Staff Report, IMF Country Report No. 09/273, Washington. Kingdon. G. and J. Knight. 2004. Race and the incidence of unemployment in South Africa. Review of Development Economics 8(2): 198–222. _____. 2005. Unemployment in South Africa, 1995–2003: Causes, problems and policies. Economic and Social Research Council Global Poverty Research Group, Working Paper Series 10. _____. 2006. The measurement of unemployment when unemployment is high. Labour Economics, 13, No. 3 (June): 291–315. _____. 2007. Unemployment in South Africa 1995–2003: Causes, problems and policies. Economic and Social Research Council Global Poverty Research Group, Working Paper Series 10. Kruss, G., A. Wildschut, D. J. van Rensburg, M. Visser, G. Haupt and J. Roodt. 2012. ‘Developing skills and capability through the learnership and apprenticeship pathway systems’. Impact assessment of National Skills Development Strategy II. Human Sciences Research Council, Pretoria. Leibrandt, M. , I. Woolard, A. Finn and J. Argent. 2010. Trends in South African income distribution and poverty since the fall of Apartheid. OECD Social, Employment and Migration Working Papers, No. 101. Mashayekhi, M., R. Peters and Vanzetti. 2012. Regional integration and employment effects in SADC: Policy priorities for international trade and jobs. OECD. Mlatsheni, C. and S. Rospane. 2002. ‘Why is youth unemployment so high and unequally spread in South Africa?’ DPRU Working Paper 02/65. Cape Town: Development Policy Research Unit, University of Cape Town. Modisaotsile, B. M. 2012. The falling standard of basic education in South Africa. Policy Brief, AISA: 72: 1–7. National Planning Commission. 2011. Diagnostic overview of South Africa. National Planning Commission, South Africa.

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Shepherd, D. 2008. Post-apartheid trends in gender discrimination in South Africa: Analysis through decomposition techniques. Stellenbosch Economic Working Papers. South African Graduates Development Association. 2013. Graduate placement: Hope 4 gainful employment. Johannesburg, South Africa: SAGDA. South African Reserve Bank. 2012. Quarterly Bulletin, No 263 (March). South African Reserve Bank. Statistics South Africa (StatSA). 2010. ‘Quarterly Labour Force Survey’. Pretoria, South Africa. _____. 2011. ‘Statistical Release P0211: Quarterly Labour Force Survey, Quarter 3, 2011’. http://www. statssa. gov. za/publications/StatSA (2011). _____. 2013. ‘Quarterly Labour Force Survey’. Pretoria, South Africa. Taylor, N. 2011. ‘Priorities for addressing South Africa’s education and training crisis’. A review commissioned by the National Planning Commission, JET Education Services, June. Taylor, N. and J. Moyana. 2005. Khanyisa Education Support Programme: Baseline Study. Part I. Johannesburg: JET Education Services. Van der Berg, S., R. Burger, de Vos, G. du R. and M. Gustafsson. 2011. Low quality education as a poverty trap. Stellenbosch University, Department of Economics. Von Fintel, D. and P. Black. 2007. From labour market misperceptions to wage scarring: The long-term impacts of youth unemployment. Proceedings of the ESSA Conference, 10–12 December, Johannesburg. Yu, D. 2013. Youth unemployment in South Africa revised. Development Southern Africa, 30 (4–5): 545–563.

CHAPTER 2 Urban Youth Unemployment in Zimbabwe: Nature, Challenges and Consequences Steven Jerie Abstract This study examined the nature, challenges and consequences of urban youth unemployment in Gweru, the third largest city in Zimbabwe. The study focused on 164 youths selected using stratified random sampling based on gender. The sample comprised 92 males and 72 females aged 18-24 years. Questionnaire surveys were administered to the youths and interviews involved key informants in government departments, labour unions and non-governmental organisations. The results revealed that education-related reasons for unemployment included insufficient education on the part of the youth, inadequate emphasis attached to education and training by young people, education-training not being employment-oriented, imbalance between vocational and general education and too many high school graduates without relevant skills. Structural causes of youth unemployment included supply-demand imbalances, high population numbers as well as a large share of youth population, the influx of population due to rural-urban migration and the failure to create a safe environment for investment in the country. Sociocultural reasons for unemployment included the low opinion placed on vocational colleges by parents and children alike and the fact that many youths expect the government to create jobs for them. Consequences of youth unemployment in Gweru include psychological and crime related ones, vulnerability to abuse and exploitation, psychosomatic complaints and oversleeping among females; irresponsible sex leading to increased teenage pregnancies and fatherless children. In order to combat the unemployment problem there is need to develop a comprehensive national youth policy in consultation with relevant stakeholders and to adopt a multi-sectoral approach involving relevant ministries and civic society organisations.

Key words: Youth, Unemployment, Employment, Gweru, Zimbabwe 1. INTRODUCTION A critical element in the current global crisis is the struggle of young people to enter into the labour market. Today young people are three times more likely than adults to be out of a job and for those with a job the quality of the job is another issue (Jongwe 2013). Youth unemployment is a global phenomenon; the youth make up 43. 7 per cent of the total unemployed population (International Labour Organisation— ILO 2011). In sub-

S. Jerie. Urban Youth Unemployment in Zimbabwe

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Saharan Africa, about 60 per cent of the unemployed are youths and the situation is no different in Zimbabwe where a Poverty Assessment Study (ILO 2011) revealed that the youth have the highest unemployment rate among all the age groups in the labour force of Zimbabwe. According to the International Labour Organisation (ILO 2006 and 2011) estimates, of the total 200 million unemployed worldwide, 75 million or around 40 per cent are young people. If the estimated 152 million young people living on less than US$ 1.25 per day were added, the number of youths in extremely vulnerable situation would be 225 million (Jongwe 2013). This has created a renewed need for action. Youth unemployment is reaching unprecedented proportions globally and between 2007 and 2010, youth unemployment increased by 5. 1 million and in 2012, four out of ten unemployed were young men or women (Jongwe 2013; Zinhumwe 2012). According to the 2010 African Economic Outlook report, more than 60 per cent of Africa’s population is under the age of 25 and this is expected to increase to 75 per cent by 2015. Africa will also account for 29 per cent of the world’s population aged 15–24 years by 2050 up from nine per cent in 1950 according to the United Nations population figures. About 7.2 per cent of Africa’s youths are unemployed and an additional 46.9 per cent are underemployed or inactive according to the ILO (ILO 2006). The importance and urgency of addressing youth unemployment through relevant policies in general have received wide recognition worldwide, as exemplified by various international initiatives to date. There have been a number of initiatives that bear testimony to the extent to which youth employment is being given the highest priority. These include the Millennium Declaration which was the final outcome of the Millennium Summit where Heads of State and Government agreed wholly to develop and implement strategies that give young people everywhere a real opportunity to decent and productive work. Other initiatives included the UN Youth Employment Network (YEN); the Tripartite Meeting on Youth Employment: The way forward, held from 13th to 15th October 2004, in Geneva; the AU Extraordinary Summit of Heads of State on Employment and Poverty Reduction in Ouagadougou, Burkina Faso, in September 2004; the XV Malente Symposium by the youth representatives of Lead YEN countries, in Lubeck, in October 2004 as well as the discussion on youth employment at the 93rd Session of the International Labour Conference in June 2005. In Zimbabwe, very few studies have examined the problem of youth unemployment or issues related to the employment of youth in urban areas. Most of the existing studies, including those by Chirisa and Muchini (2011), Jongwe (2013) and Zinhumwe (2012), have concentrated on the descriptive aspects by simply outlining the statistics on youth employment or unemployment in the capital city, Harare. Youth unemployment is a challenging policy arena for Zimbabwe and little empirical evidence is available to inform policy planning and development. If overlooked, youth unemployment can result in serious and significant social repercussions.

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Youth unemployment has implications for social exclusion and division within the society (ILO 2006). If prolonged, unemployment may have negative consequences for the later stages of working life in terms of lower wages and longer spells of unemployment (Arulampalam 2001; Jongwe 2013; O’Higgins 2012). These scenarios imply that youth unemployment in Zimbabwe has the potential to impact not only a person’s lifetime economic wellbeing, but also the social and political participation and the economic inequality in the society at large. Therefore, youth experiences as they relate to the labour market need to be viewed within macro-level contexts while taking micro-level perspectives into consideration. This study focuses on the factors that explain the size, distribution and consequences of youth unemployment in Gweru, Zimbabwe. The sociological perspective of the study analyses the experience of youth unemployment and their relationship with their families and the economy at large. For this, the triangulation method was used since it assists to overcome the weakness or intrinsic biases that come from using a single method, observer and a theory. Triangulation is only possible if different methods, instruments, sources and investigators are being used to ‘measure the same thing’ and thereby increase the validity of findings. In this study both qualitative and quantitative research methods involving questionnaire surveys, in-depth interviews and observations were used. The questionnaire was designed to collect information on youth educational levels, marital status and gender. It also attempted to establish whether there was any relationship between how unemployment was experienced by young people and factors such as the number of family members, the number of dependent members and the availability of support from family members and neighbours. The questionnaire also attempted to assist in determining whether unemployment caused financial dependence and how the youth were experiencing dependence and the coping strategies they were employing to overcome these problems. The other data collection technique involved interviews with key informants that included decision makers. A total of ten interviews were undertaken with officials from the Ministry of Youth and Indeginisation, the Ministry of Labour and Social Welfare, the Ministry of Education, Sport and Culture, the Ministry of Higher and Tertiary Education, the Employers Council of Zimbabwe (EMCOZ), labour unions and private sector industrial firms. The information included the opinions of the key informants on the causes of unemployment and possible solutions by the government, local councils, the private sector and the youth. This study focused on a total of 164 youths in the third largest city of Zimbabwe, Gweru (Figure 1). The sample comprised 92 males and 72 females (56.1 per cent and 43.9 per cent, respectively, of the sample) are randomly chosen from the age range of 18 years to 24 years. The city has a population of 300 000 people and covers an area of about 16,700 square


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kilometres. It is located 275 kilometres southwest of the capital city, Harare, and the prime city in the Midlands Province of Zimbabwe. N

as ho Ea nala st nd

Mashonaland Central

Chinhoyi #

#

#

M

Harare #

#

Victoria Falls

M

Marondera

an ic al an d

Mashonaland West

#

Midlands

Matabeleland North

Mutare #

Gweru Bulawayo # #

Masvingo Gwanda #

Masvingo Matabeleland South

200

0

200

400 Kilometres

Figure 1. The Location of Gweru in Zimbabwe

2. CONCEPTUALIZING YOUTH UNEMPLOYMENT In order to understand the dynamics of youth unemployment it is important to understand the basic concepts of youth unemployment. These include the various ways in which youth unemployment is defined and how it ranks among other socio-economic problems worldwide based on issues such as the strength of an economy. According to the ILO, the unemployed are those people who have not worked for more than one hour during the short reference period, which is usually the previous week or day, but who are available or actively seeking work (O’ Higgins 2001). The United Nations defines the youth as persons who are between the ages of 15 years and 24 years inclusive, but there may be variations among countries with some making reference to those aged 16 years to 18 years and others 14 years to 32 years. In the 2008 Global Employment Trends for Youth Report

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prepared by the ILO, it is observed that youth make up 40 per cent of the total unemployed worldwide despite accounting for only a quarter of the total working-age population (aged 15 years and above). It has also been noted that the youth are approximately three times more likely to be unemployed than adults. Unemployment is among the many challenges that face the youth in the labour market (Celik 2006). Youths experience problems such as long working hours, work with short-term and/or informal contracts, low pay and little or no social protection (ILO 2006). Additional youth labour market indicators include longer spells of unemployment that are said to be directly linked to future poverty and social exclusion. It is therefore important to identify people experiencing long-term unemployment so as to come up with timely interventions for the most vulnerable members. In the case of developing countries, cultural values and social and family ties may allow the youth to spend longer periods of times with their families, without working. A number of different forms of unemployment can be recognized. According to Nadia (2011), the first distinction is between voluntary and involuntary unemployment. The former refers to a state of willingness of the individual to be out of work, while the latter describes a situation in which a person does not have a job, but it is not his or her choice to be unemployed. Involuntary unemployment is divided into three categories, namely, frictional unemployment, structural unemployment and cyclical unemployment. Frictional unemployment is described as a short-period unemployment while workers are changing jobs or searching for their first job. This is a situation in which unemployment is not associated with slumps of the economy or market failures, but it benefits the single individual as well as the whole labour system by improving the jobmatching process. Frictional unemployment encourages workers to search for jobs that suit them best and employers get motivated workers who match the vacant posts. Nadia (2011) notes that active labour policies can reduce this type of unemployment by improving the availability of job information and subsidizing the search costs. The strength of an economy has also been regarded as a vital determinant of youth unemployment and this relates to structural unemployment. At an aggregate, when the economic activity is low and the level of adult unemployment is high, youth unemployment is also high. This is an indicator that has been regarded as being very vulnerable to changes within the labour market. From a demographic point of view, the proportion of young people in the population was often referred to as an indirect determinant of youth unemployment. Nadia (2011) also observes that structural unemployment is caused by the mismatch between employment vacancies and workers’ skills which usually result from technological changes. Under this type of unemployment, the individuals have to retain and acquire new competences


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in order to upgrade their knowledge and obtain another job. Cyclical unemployment is a recurrent spell of unemployment arising at specific stages of the business cycle, which is characterised by periods of growth followed by downturns. In this case unemployment results from a deficiency of the aggregate demand and the decline in job vacancies within a certain region or industry that lasts for a limited period of time (ILO 2011). It has been observed that youth unemployment is higher when compared to adult unemployment for a number of reasons. Firstly, the youth have less experience in acquiring jobs than the elderly people and hence lack of this experience leads them to accept even those jobs that are insecure and only offer short-term contracts (Nadia 2011). The second reason is that the youthful population is very sensitive to economic recessions (as was the situation in Zimbabwe between 2000 and 2008) and companies and the formal job market tend to respond by freezing jobs and cutting down the size of their labour force. Companies usually find it economical to reduce the size of the youthful labour force since reducing the size of the elderly labour force is costly because of their experience and knowledge developed over the years. Length of service is usually associated with larger financial compensation in the case of dismissal. This means that it is cheaper for the companies to dismiss the younger workers. The third reason is that of the youngsters’ financial independence which is not visible until they reach their mid-twenties or when they get their first job. Since the youths do not have financial independence to sustain themselves, they are usually tied to their families and this reduces the motive to migrate to situations with higher job opportunities. Nadia (2011) conclusively argues that a combination of these aspects makes the youth rank among the most vulnerable and weak group of any society and this is more so during times when economic problems are experienced. 3. RESULTS AND DISCUSSION There are several causes that were identified in this study as contributing to the unemployment problem in Gweru. The causes could be classified as education-related, socio-cultural and structural factors. The educationrelated reasons include inadequate emphasis attached by young people to education and training, education’s not being employment-oriented, the imbalance between vocational and general education and too many high school graduates without relevant skills. The structural causes include supply-demand imbalances, high population numbers as well as a large share of youth population, an influx of population due to rural-urban migration and the failure to create a safe environment for investment in the country. There are also other causes of employment that are socio-cultural oriented and these include the low opinion placed on vocational colleges by parents and children alike and the fact that many youths expect the government to create jobs for them. These causes of unemployment in Gweru are discussed in detail in the sections that follow.

46


a). Education-related reasons Lack of education was identified by interviewees as a cause of youth unemployment in Gweru. The economic perspective postulates that youth unemployment is a result of an imbalance between supply and demand. In Gweru, just as in the majority of cases in the developing countries, the demand for young workers is lower than its supply. A potential justification for this is the mismatch between the youth’s education and the skills required to obtain a particular occupation. Sometimes employers cannot find the right competences and working experience within the youth labour force (ILO 2011). In the case of the city of Gweru, the study established that, apart from insufficient education, the major causes of unemployment include lack of profession, unavailability of a suitable job for one’s education, the lack of a ‘strong back’ and gender discrimination, as shown in Table 1. Education is a major determinant that impacts on a person’s personal and professional development and social integration. These factors have an impact on employability, mobility and life-long learning prospects (Celik 2006; Chirisa and Muchini 2011; Nadia 2011; O’ Higgins 2012). Determining the relationship between educational status of the youth in Gweru and unemployment is therefore necessary. Survey results in Gweru showed that youth unemployment becomes more pronounced as the educational attainment decreases. Unemployment among university graduates is 64.9 per cent, and among those without any schooling it is 100 per cent; for the O-Level graduates it is 91.5 per cent, for college graduates 90.1 per cent and for A-Level graduates 84.4 per cent. High school graduates constitute a large proportion of the unemployed youth, thus suggesting that in Zimbabwe the high school curriculum is far from providing the necessary skills for the labour market, although pay and job quality expectations of high school graduates are higher than those of youth with lower educational attainment. In the case of Gweru, as is the situation in the rest of Zimbabwe, the youth with low educational attainment (no schooling, O-Level and A-Level), will take on any job offered and since their future expectations are rather limited they thus cling on to any job, get married and start a family. The unemployment spells of the youth with low educational attainment in Gweru are shorter, but more frequent. In this regard, a variable that plays an important part is marital status because a young person who is of low educational status and unemployed may be dependent on his family as well as burdened by the needs of his wife. Low education and experience are undoubtedly vital determinants of youth unemployment in Gweru and in Zimbabwe as a whole. The youth face barriers in entering the labour market as a result of their lack of experience. Shorter credit history and lack of access to business networks makes it more difficult for them to become successful entrepreneurs (Coenjaerts et al. 2009). In times of recession as was the case in Zimbabwe in 2008, before starting to lay off workers, firms first stop hiring. Given that young


47

workers are represented disproportionately within the pool of job-seeking individuals, they will be disproportionately affected by such a slowdown in hiring (O’Higgins 2001). The problem of insufficient education in Gweru may also be attributed to youths dropping out of school due to inability of their parents or guardians to support their education beyond Ordinary Level. Inability by parents or guardians to sufficiently fund the education of their children is closely linked to the weak performance of the Zimbabwean economy since the 1990s after the introduction of the Structural Adjustment Programme (SAP). One of the tenets of SAP was the reduction of state subsidies in the social services and this affected the education sector which relied on State funding for poorer families. School drop-out rate was exacerbated by the sharp decline in the performance of the economy, especially during the 2006-2009 period due to the political crisis that bedeviled Zimbabwe. Most industries have been closed since then and these had been the major source of employment for those who funded the education of their children and other members of the extended family. Lack of profession or vocation was identified as the second educationrelated cause of unemployment in Gweru by 21 per cent of the respondents. Those who had attained A-Level education were 43 per cent and O-Level education 29 per cent. The proportion of unemployment among vocational graduates or those youth who had acquired skills through other channels was lower than those without a profession. Vocational skills or professional skills are skills obtained from vocational training or apprenticeship and formal schooling. The jobs that require vocational training in Gweru according to education experts from the technical colleges and the Ministry of Higher and Tertiary Education included plumbing, building, carpentry, welding, sewing, painting, tinsmithing, nursing, embroidery, textiles, babysitting and housekeeping that correspond to traditional gender-specific jobs and skills. The mismatch between the demand and supply of skills possessed by young workers is thus a contributor to youth unemployment in the developing countries such as Zimbabwe (Coenjaerts et al. 2009). Scholars such as Assaf and Benhassine (2003) have shown that entrepreneurs regularly cite the lack of skills as a significant constraint to hiring and suggest that it outweighs concerns with labour market regulations. In the end, skills mismatch together with the growing number of youths in the labour force in Zimbabwe has created a situation in which too many young people have had a hard time finding jobs.

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Table 1. Education-related causes of youth unemployment in Gweru Cause of unemployment

Education level No schooling

Insufficient education Lack of profession No suitable job for my Occupation No suitable job for my Education Gender discrimination No strong back Total

Primary School

O-Level

A-Level

Total

College

University

Postgraduate

1 0 0

7 1 0

36 10 1

10 15 1

5 1 6

1 6 4

0 2 0

60 35 12

0

0

5

1

4

12

0

22

0 0

0 0

2 5

1 4

1 5

0 14

1 2

5 30

1

8

59

32

22

37

5

164


49

Zimbabwe has the opposite of the situation obtaining in developed countries in terms of the distribution of academic versus vocational school graduates. This survey has shown that the rate of unemployment is as high among vocational graduates as it is among the non-vocational high school graduates. This is due to the irrelevance of the vocational training with respect to the skills that are demanded in the labour market and the problem of mismatch between vocational school training and the labour market. The rising unemployment has also given employers the opportunity to increase their criteria in recruitment as they may require a university degree for a job that can be performed by a high school graduate. The high rates of unemployment have also discouraged employers from undertaking preemployment or on-the-job training. The third group of education-related inhibitors to finding employment in Gweru related to the need for wealth or influence to get a job and this is was referred to as ‘lack of a strong back’. This was indicated by 19 per cent of respondents involved in the study. Poorer families of Gweru cannot access various types of services due to their low socio-economic status and weak social networks. In such cases, employment opportunities are not based on your merit but on whom you know. This group comprises workers who have given up looking for work since they believe there is no opportunity for them in the labour market (ILO 2006). The incidence of the discouraged worker phenomenon is higher for youths in the 22-24 years age group in Gweru. Females are also more likely to be the discouraged workers than men and this has been the finding in research done elsewhere by the ILO (2006, 2011). Effective unemployment support mechanisms are therefore important in providing ‘strong backs’ to job-seeking youths of Gweru. Countries which do not have effective unemployment support mechanisms risk excluding from the analysis the less privileged groups who simply cannot afford to be unemployed and therefore accept any form of work they can find. In several developing countries, young people of higher socio-economic backgrounds are over-represented in unemployment numbers because they are the only ones who can afford to spend time looking for work, while not earning any wages (ILO 2006). The fourth education-related cause of unemployment in Gweru was identified by 13 per cent of respondents as lack of a suitable job for one’s education. The education system of Zimbabwe as well as the curriculum are not planned to meet the needs of the labour market. Such an education system does not produce adequate and qualified graduates for the labour market. Though diplomas and certificates are handed out to the graduates, these do not create opportunities to get jobs in the labour market. In terms of their understanding of success, the youths of Gweru revealed that this was guided by finding a suitable job for their occupation or profession. Unavailability of a suitable job for one’s occupation was the fifth education-related cause of unemployment in Gweru and was identified by 7 per cent of the respondents. The youth regarded those professions that

50


needed more years of schooling as more prestigious; these jobs included those of an engineer, pilot, lecturer, IT specialist and a lawyer. The jobs in the public service were also mentioned by those youth who felt these provided job security. In terms of remuneration expectations, the young males and females of Gweru are ready to accept a job at a slightly higher minimum wage though expectations would be slightly higher in the capital city, Harare. There are young people in Gweru who are ready to work for US$100 dollars a month. The longer periods of unemployment tend to water down the expectations of the young people of Gweru. However, there is a strong correlation between educational attainment and wage expectations. As expected, university and college graduates expect a higher pay, on average (p< 0. 05), but this does not vary much with gender (p>0. 05); males expect to earn higher salaries than females, but the statistical difference is still insignificant. Gender was the last education-related reason cited by the respondents for the unemployment of the youth of Gweru. Males and females experience unemployment in varying degrees. The gender factor is vital because it is gender roles that shape the expectations of families that regard the males as the breadwinners. The survey results in Gweru also revealed that males in the group had more years of education than the females. The labour force participation of women is lower in Gweru and in Zimbabwe in general due to their limited educational attainment. This can be attributed to socialization attitudes that promote the education of the male child at the expense of the female child. Rising levels of education, on the other hand, would create the essential opportunities for females to earn for a living because staying at home is more costly due to the missed income opportunity. Table 2 shows the relationship between gender and level of education among the unemployed youths of Gweru. The males dominate among youths with Ordinary level, Advanced level, college and university and post-graduate education. Table 2. Gender and level of education in Gweru Gender

Male Female Total

No schooling

Primary school

1 0 1

3 5 8

Education level OA- College Level Level 30 29 59

18 14 32

17 5 22

Total University

Postgrad.

20 17 37

3 2 5

A young male in Gweru is expected to have a job in order to get married and take care of his own family. The unemployed male youths of Gweru feel stressed by their unemployment status and this has tended in most cases to affect their ‘male-hood’. Unemployed male youths in Gweru have also tended to be more mobile than their female counterparts in order to search for greener pastures and have migrated mainly to the capital city,

92 72 164


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Harare. The mobility of female unemployed youths has been limited since they attach more importance to the nature of possible jobs and hence they consider working hours, working environments and other colleagues at the workplace, aspects that may not hinder the young males much in terms of migration (Celik 2006). Historically, it has been observed that there has been a high participation rate by women in the labour force in rural societies, but there has also been a decline due to urbanization and industrialization and then there has been another increase thereafter (Celik 2006). As the educational status of women increases in urban areas such as Gweru, there has been a relative increase in their participation in the labour force. In the case of Gweru, there were differences that were observed when the impacts of the youth labour cohort were analysed separately for the two genders. The elasticity of female youth unemployment with respect to the relative cohort size is greater than that of males. Therefore, from a demographic point of view, the proportion of youths in any population is an indirect determinant of youth unemployment. Isengard (2007) observes that young people tend to be unemployed for shorter periods than adults, but the frequency of their unemployment is higher. Furthermore, Hans Dietrich reveals that each month of unemployment reduces the probability of employment by about 3 per cent (Hammer 2003). The younger people would not have saved enough financial resources and therefore have a high poverty risk (Julkunen 2002). In this regard the duration of unemployment results in a decline in income and this also results in economic dependence on others. b). Structural reasons A number of studies have revealed that the relative size of the youth cohort impacts strongly on youth unemployment and the aggregate labour market conditions have even more influence (O’ Higgins 2012 & 2007; ILO 2011; Nwokwa 2013). The first structural cause of youth unemployment identified in interviews with economic experts and other authorities in Gweru was related to supply/demand imbalances in the Zimbabwean economy and hence the fluctuations in aggregate demand and the youth cohort size. When all other factors remain constant, a larger number of people in the labour market would require more jobs to absorb them. In Gweru, getting a job soon after graduating from school does not simply mean earning an income, but constitutes a vital transition from youth to adulthood and provides the means for graduating into adulthood. A job for the youthful person in Gweru is vital as it signifies economic independence and hence it is imperative that one considers the employment status of the youth soon after leaving school. Table 3 shows the employment status of Gweru youths soon after leaving school. The statistics in the table show that most youth remain unemployed soon after leaving school.

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Table 3. Level of education and employment status Educational level No schooling Primary school O-Level A-Level College University Post-graduate Total

Employment status after graduation Started work Unemployed 0 2 5 5 2 13 0 27

1 6 54 27 20 24 5 137

Total 1 8 59 32 22 37 5 164

According to Table 4 there is a marked increase in the frequency of unemployed youth from the age of 21 years from an average frequency of 7 or 8 to a frequency of 22. The number of unemployed youth increases with an increase in age, with over 40 per cent of the youth aged 24 years old. Almost 86. 6 per cent of the youth are aged between 21 years and 24 years, with the ages 23 and 24 years contributing 61 per cent of the unemployed youths. In terms of gender, out of the 164 youth involved in the survey, 92 were male and 72 were female. Unemployed males dominated in the 22 and 24 year age group and females in the 23 year age group. Survey results also reveal that the young people of Gweru tend to be unemployed for longer periods than adults, but the frequency of their unemployment is higher. It has been established that each month of unemployment reduces the probability of employment by approximately 3 per cent (Cockx and Picchio 2011; Hussmann 1990; Hammer 2003). Young people tend not to have accumulated much in terms of financial resources, and have therefore a high poverty risk. Therefore, unemployment reduces income remarkably month by month and increases dependence on others. The majority of the group has unemployment periods that are longer than a year; 32 per cent of males and 24 per cent of females have unemployment periods that are shorter than a year. The unemployment period of 43 per cent of the males and 37 per cent of females of Gweru is longer than 48 months. Such an extreme situation is suggestive of a somewhat subjective experience of unemployment instead of that which is internationally defined. According to the universal definition, the duration of unemployment is considered to be the period following the first registration with an employment agency. The term ‘long-term unemployment’ does not refer to those who have been unemployed for a year or longer. In this study the latest unemployment experience of about one-third of the group is for one year or shorter. The second most prominent group consists of those unemployed for a period of 12-23 months. Hence by examining the latest


53

unemployment figures, one can conclude that long-term unemployment exists among the young population. This is also supported by the fact that two-thirds of the sample group claimed that duration of their unemployment was longer than a year. Long-term unemployment normally leads to poverty and social exclusion and this tends to further undermine future chances of finding a new job. Long durations of unemployment spells indicate a stagnant labour market, where chances to escape unemployment are limited (ILO 2006; 2011). Table 4. Age distribution of the unemployed youth Age 18 19 20 21 22 23 24 Total

Frequency 7 7 8 22 20 33 67 164

% 4. 3 4. 3 4. 9 13. 4 12. 2 20. 1 40. 9 100. 0

Valid % 4. 3 4. 3 4. 9 13. 4 12. 2 20. 1 40. 9 100. 0

Cumulative % 4. 3 8. 5 13. 4 26. 8 39. 0 59. 1 100. 0

The effect of a fall in aggregate demand has been a fall in the demand of labour of both young and adult workers in Zimbabwe. The 2008 financial crisis worldwide was felt hardest in Zimbabwe, where high inflation exacerbated the situation and the youths were the worst affected. This phenomenon resulted in the high rates of unemployment that are being felt in towns and cities in Zimbabwe up to this day. It was revealed during interviews with key informants in the city of Gweru that on the supply side young workers are likely to quit their jobs than adults even during periods of recession as was the case in 2007–2008 in Zimbabwe. This was due to the low opportunity cost of doing so and therefore they will tend to be disproportionately affected by recession-induced reductions in hiring new employees. The second structural problem is related to insufficient investment in the industrial sector of Gweru and Zimbabwe in general. The limited investment has resulted in fewer new jobs and employment creation opportunities. The causes of the limited investment opportunities include the frequent crises in markets, the absence of secure environments for investment, the attractiveness of other ways of profit making such as nonproductive means, the stock market and real estate. Authorities in the city of Gweru have also failed to undertake effective supervision and follow up of investment incentives and this has exacerbated the unemployment problem.

54


The third structural cause identified as the cause of unemployment in Gweru was that of rural-urban migration. The rapidly growing urban population of Gweru due to rural-urban migration was identified by economists and other officials as contributing to youth unemployment. Rural-urban migration results from a combination of push and pulls factors. The push factors included the pressure resulting from lack of infrastructural facilities and the perennial droughts that have resulted in reduced harvests and thus starvation. The youths migrate from the surrounding rural areas in the Midlands province with the hope of securing lucrative employment in the industries of Gweru. However, with the economic downturn experienced in the country from 2000 to 2008, job opportunities in industries were difficult to get since most industries closed down due to the recession. In Gweru, the rate of urbanization is currently estimated at 33 per cent, up from 25 per cent at independence in 1980. Youth migrants in Africa are three times more in number than other migrants. The urbanization rate of the youths in Africa was 32 per cent in 1990 compared to less than 25 per cent for the non-youth population (Nwokwa 2013). 4. THE CONSEQUENCES OF YOUTH UNEMPLOYMENT Youths have a complex relationship with unemployment (Chirisa and Muchini 2011). Alheit (1994) identified disruption of social reference points, dramatic change in everyday habits or habits of a lifetime, loss of identity and mental depression as typical social problems of unemployment. The consequences of youth unemployment in Gweru can be grouped as psychological, crime-related, gender-related, reduction in production potential, migration-related, impact on service delivery and divorce related. Psychological and crime-related consequences of youth unemployment were the first group of problems identified in the context of Gweru. The problems that emanate from unemployment do not only affect the unemployed youth, but also affect families and other individuals. Unemployed youth in Gweru do not have the means for survival and therefore need to depend on their families for everyday needs and this has resulted in psychological problems among them. In some cases, families are not even able to support their unemployed children and hence the tendency to engage in prostitution and some criminal acts such as petty theft and burglary, armed robbery and rape. In Gweru, 42 per cent of unemployed youth felt there was a strong and direct relationship between unemployment and the tendency to commit crime, 23 per cent felt the relationship was indirect and 35 per cent felt there was no relationship. The psychological and crime-related problems associated with unemployment are universal as noted by Celik (2006, 288): The children are driven to psychological stress. They may harm themselves and their surroundings. They may steal; enter into gangs or mafia groups. Now can you imagine a young person with a job and fine income getting involved into all these? If their families are well educated, they get ruined


55

seeing their children in such a mess. I think these situations do not affect low income families much. They are ready to see them off even in harm’s way. There are legislative arrangements to protect street children, but they mostly remain on paper. The number of street children and substance abuse are both on the rise. Our society will pay for this in future.

In this study emotions regarding the jobless status of the youth were expressed in the following ways: Not having a job is an ‘awful/very bad’ feeling; ‘Dependency on my family means making no contribution to others, facing economic difficulties and not being able to do enjoyable things since there is no money’; joblessness ‘is the feeling of vacuum without any objective and feeling of unworthiness’, it means being ‘a person not heeded and respected by others’; unemployment ‘makes you feel pain, it gives you unrest and puts you under stress’; joblessness is a hard experience giving rise to injurious and troublesome feelings. Though the modes of expression differ from person to person, essentially the respondents express feelings of frustration due to their dependency on others, feelings of emptiness and isolation compared to that of a vacuum and feelings of worthlessness because they are not being esteemed or valued by others around them. The difficulties of the unemployment status of the young urban youths of Gweru are expressed in the following statistics emphasizing how much they would want to have a job: 81 per cent agree fully with the statement that ‘having a job is very important for me’ 94 per cent of the respondents fully agree with the statement that ‘I hate being unemployed’, 78 per cent agree with the statement that ‘having a job is the most important thing for me in life’ while 11 per cent disagree and 1 per cent is undecided. A total of 93 per cent of the people fully agree with the statement ‘I’d still be working even if I had a lot of money’ while 7 per cent of young people disagree. When considering the group as a whole, it can be noted that young people do want to be gainfully employed and the majority do not want to be unemployed. However, there are a considerable number of young people who do not consider having a job as the most important thing in their lives and a small number of the group would not work if they were rich. Hearn (1994) observes that youths who are unemployed experience feelings of rejection and humiliation while the lack of financial resources prevents them from becoming independent. The loss of work may be more than a smooth biographical discontinuity such as the death of a close relative; instead it may be a chaining together of different discontinuity experiences which can be coupled in different ways (Alheit 1994). The other social effects of unemployment include threat to identity meaning and hence disruption of wishes and self-definition. This often leads to drug and substance abuses by the youth and various types of criminal activities. Persons who experience extended unemployment in youth are at increased risk of other social pathologies: direct poverty effects on unemployed young peoples’ families include ‘considerable cognitive health, nutrition

56


and psychological deficits for children raised in poverty. Chronic unemployment is associated with increased incidents of criminal behaviour. As these young people grow older and raise families, their own failure to accumulate economic and social capital perpetuates the same cycle for their children. The second group of youth unemployment-related consequences that were identified through interviews with key informants in Gweru involved gender. There is a tendency for unemployment to have different impacts on males and females (Celik 2006). There is no significant difference among males and females in their responses to the association between unemployment and tendency to commit crime (p>0. 05). Contrary to the supposed links between young female unemployment and prostitution, both decision makers and young respondents in Gweru displayed approaches within the boundaries of existing stigmatizing information (employmentinclusion, unemployment-exclusion). More and more young people are currently being exposed to social and economic risks as educational failure, unemployment and homelessness. This deterioration of young people’s material well-being in turn results in a deterioration of their mental well being. As a consequence, today’s youths run a greater risk of alcoholism, drug abuse and psychological dysfunction. In some cases, the young men and women of Gweru displaying symptoms of such psychological distresses and material hardship, end up engaging in irresponsible sex, resulting in high rates of teenage pregnancy and fatherless children. The study reveals though that the unemployed males (36 per cent of total males) tend to be involved in crime and drugs whilst unemployed females react in different ways to this phenomenon. Scholars such as O’Higgins (2001) and Nadia (2011) believe that unemployment has greater impact on young females than males because they tend to become more vulnerable to abuse and exploitation and this includes prostitution. Out 164 youths in Gweru, 78 believed there is a strong relationship between unemployment and prostitution and 52 believe there is no relationship and 34 indicated an indirect relationship. Females also had a tendency to be more isolated in their homes and these accounted for 26 per cent of Gweru women, according to the survey. Those youth who stayed for longer periods with their parents tended to be less visible and less active in the public sphere and this led to stress in young people as expressed by 63 per cent of the sample. Staying too long at home could lead to psychosomatic complaints and oversleeping especially among females. The poorer females in Gweru had little chance of further extending their period of unemployment and hence were ready to take up any job without considering its nature, the remuneration and tasks involved. According to Celik (2006), such people experience problems which include isolation, distortion of time orientation, and feeling of uselessness or worthlessness to a lesser degree when compared with others. The activities taken up by the unemployed youths of Gweru are indicative of the fact that their isolation is of a material nature


57

and directly related to economic difficulties in the home as well as in the country as a whole. The third group of consequences of youth unemployment in Gweru involved their productive potential. According to all the key informants in the study, unemployment early in life may have persistent negative consequences later on in one’s career since it may impair their productive potential and employment opportunities. O’ Higgins (2007), Gorlich and Snower (2010), Nodstrom (2004) and Ryan (2001) argue that there are scarring effects attached to early unemployment spells and these significantly reduce subsequent wages and increase the probability of future unemployment spells. This can be explained in a number of ways. Firstly, patterns of behaviour established at an early stage have the tendency to persist. According to O’Higgins (2007), some behaviour inherited from unemployment spells may make such workers less productive. Secondly, skills and motivation tend to wane during periods of unemployment (Ryan 2001). In this regard skills may become obsolete as a result of non-use or because organisational or technological developments may make formerly acquired skills less valuable. Employers may also take unemployment spells as signalling demise and this suggests to them that the person is potentially less productive. Mobility was the fourth consequence of youth unemployment in Gweru. It has been observed that the expectation of modern day life is that people should be prepared to move geographically to areas where there are jobs available (Jones 2000). Migration tended to increase as a means of escaping the non-existence of jobs in some areas of Zimbabwe. According to Urry (1995) in conditions of post-modernity, cultural capital needs to be transferable. Geographical mobility is associated with upward social mobility and hence with the middle class, as a result middle class families of Gweru in particular have geographically spread kinship networks. Where downward social mobility is treated or upward mobility blocked, a family’s cultural capital may be mobilized. Migration can form part of a family mobility project, involving the mobilization of family resources. Youths in Gweru and indeed the whole of Zimbabwe need to have mobilized a lot of support that comes in many forms including knowledge and guidance. A social worker in Gweru indicated that parents could play a significant role by passing on relevant knowledge to the young people who may be socially as well as geographically mobile. In Gweru, it was revealed from the study that 44 per cent of the young people from low-income families and with low educational attainment turned down employment offers from workplaces that were far away from their homes because they felt the distant jobs would disrupt their family ties. A fifth consequence of youth unemployment in Gweru relates to service delivery. According to the youths and key informants interviewed in Gweru, the increase in the number of unemployed youths means that service delivery in other sectors of the economy indirectly related to

58


unemployment is negatively affected. Examples given were those of health and education services which could not be provided to all and even when they were available the quality of was poor. According to Celik (2006), high population is the most significant factor in creating a qualified labour force. The rapid expansion of the education system directly leads to an increase in the supply of educated manpower above the corresponding demand for them. Currently, there are 13 universities in Zimbabwe. The increasing demand for higher education has posed a problem in creating suitable employment for the varieties of graduates that are produced every year by these institutions of higher learning. The sixth and last consequence of youth unemployment in Gweru involved incidents of divorce. A considerable number of youths, 39 per cent of the males and 38 per cent of females, indicated that there was no relationship between unemployment and incidences of divorce while 61 per cent of the youths indicated that there was a strong and direct relationship between unemployment and incidences of divorce; 29 per cent indicated that the relationship was indirect. There is no significant relationship between unemployment and the tendency to divorce (0. 910>0. 05). High rates of youth unemployment in Gweru represent wasted resource for Zimbabwe. The poor youth labour market participation limits the inputs available for the urgently needed growth and makes it harder for the country to realise the benefits of labour-intensive growth strategies. Developing countries such as Zimbabwe pass through a unique demographic window where the youth population is maximized before birth rates begin to fall to a more ‘developed economy’ pattern and their success or failure in realizing the economic potential of young people during this low dependency period can make the difference between sustained and faltering long-term development. The most important consequences of youth unemployment thus go beyond the impact of temporary market fluctuations, but the experience leaves a permanent imprint on both individual life outcomes and national development trajectories. 5. CONCLUSION Young people view job security as the primary indicator of a good job. What the youth desire from the state is really not assistance, but stable, available employment. A number of aspects were listed from which the youth were asked to choose three which they thought defined ‘a good job’ sufficiently enough for them. The first criterion for a good job was determined to be job security and this was more so as far as 69 per cent of the women were concerned. The second key indicator of a good job was a good pay. This criterion was likewise essential as far as 62 per cent of the males and 53 per cent of the females were concerned. The third chosen was good working conditions. For 44 per cent of the unemployed women in Gweru the third most essential virtue was the presence of ‘good work-


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mates’ and for 34 per cent of the males ‘the possibility of taking initiative’ remained at the bottom of the list. Each generation has a positive responsibility to take affirmative action to prepare the next generation for successful economic participation. Employers’ response to the youth unemployment challenge should be shaped by their own responsible self-interest in ensuring their firms’ longterm growth and in securing their access to talent for emerging and future needs. It has been observed that given that the youth unemployment problem is strongly correlated with general unemployment in Zimbabwe, the most important solution would be to improve the macro-economic environment in order to achieve a growth of salaried employment (Gorlich and Snower 2010). Policies may target sectors with high potential for growth to youth friendly sectors such as tourism, ICT, basic and social services or environmental management. Wage subsidies and reductions in pay-roll taxes have also been suggested since the goal would be to increase the firms’ incentives to hire young workers in light of worries about the youth’s lack of expertise and the volatility of their employment relations. Active labour market policies are essential in dealing with the problem of youth unemployment. These include entrepreneurship training (Coenjaerts et al. 2009), career guidance or job research assistance programmes. Many young people in Zimbabwe stumble in their initial career steps due to lack of information about the world of work. The OECD/ILO Report of 2011 notes that high quality career guidance can help youth make better-informed decisions about their future, including the selection of academic/ vocational programmes, a decision to complete high school and an optimal combination of education and work. One of the simplest and most direct things that employers can do is to partner with schools and vocational institutions to increase young people’s exposure to the world of work. They can volunteer as classroom visitors and deliver courses relevant for the world of work. However, it would appear that training and employment programmes have a small impact on employment prospects as their effectiveness largely depends on the state of the economy as noted by O’Higgins (2007) and Ryan (2001). Internet, mobile devices and social networking technology provide young people with more transparent access to labour market information while it maximizes the recruitment reach of employers. According to the 2011 Source of Hire Report by Career X roads, internet job boards are the source of about 25 per cent of new hires worldwide and could be a useful tool for young job seekers in developing countries such as Zimbabwe. It is vital to create a dual system that links education and training because of its role in alleviating youth unemployment by improving the school-towork transition. The dual system has a strong linkage between work-based training and apprenticeship, and school-based education, and these have been very successful in countries such as Germany and Japan. It is vital for

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developing countries to adopt the dual system around the informal market so that skills that were obtained informally are recognized and certified (Coenjaerts et al. 2009). The establishment of a dual system is, however, difficult since it needs powerful employer associations and the involvement of all social partners. There is also a persistent struggle to ensure that all the type and content of training meets the constantly changing labour market demands. There is now a trend towards multitasking and this is an on-going blurring of occupational borders (Gorlich and Snower 2010). This means that occupations in the past used to be tied to specific tasks, but today they entail a much broader span of tasks and as a result require more versatility from workers. There is a serious need to promote a more positive attitude towards vocational education in Gweru and in Zimbabwe as a whole. Talent shortage surveys consistently include technicians and skilled trade positions among the most acute areas of skills shortage around the globe. Young people of Zimbabwe, especially those disenchanted with an academic education and in danger of dropping out of school, need to understand the high demand that exists and the competitive salaries for well-prepared vocational and technical personnel. Young people of Zimbabwe can be inspired by a vision of vocational career paths that include entrepreneurship and small business formation based on technical trade expertise, as well as the possibilities for academic re-entry in technical, engineering and related trades. Training-to-employment programmes can be emphasised in Zimbabwe since these focus training narrowly and intensively on the requirements of specific, available jobs and include a post-training placement component based on prior hiring commitments from employers. These programmes can help employers rapidly address skills shortages and they can efficiently expand access to work opportunities for individuals who may not have been able to obtain these jobs on their own (Zinhumwe 2012). In order to succeed in the workplace, young people need to acquire not only skills, but the experience that demonstrates to employers that they are capable of applying those skills to practical tasks. Prior work experience is positively associated with an individual’s ability to obtain permanent work at a later date. Temporary work is an especially effective tool in improving labour market outcomes for long-term unemployed persons and others seen as ‘bad risks’.


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References Alheit, P. 1994. Taking the knocks: Youth unemployment and biography: A qualitative analysis. London: Casel Educational. Arulampalam, W. 2001. Is unemployment really scarring? Effects of unemployment experiences on wages. Economic Journal, 111 (475): 585– 606. Assaf, R. and N. Genhassine. 2003. Private sector employment and the investment climate in the MENA Region: Outlook and recent trends. Washington, D. C.: World Bank. Celik, K. 2006. ‘Unemployment experience of youth in Ankara and Sanliurfa.’ School of Social Sciences, Middle East Technical University. Chirisa, I. and T. Muchini. 2011. Youth, unemployment and peri-urbanity in Zimbabwe: A snapshot of lessons from Hatcliffe. International Journal of Politics and Good Governance, 2 (22):1–15. Cockx, B. and M. Picchio. 2011. ‘Scaring effects on remaining unemployed for long-term unemployed school leavers.’ IZA Discussion Papers, IZA, Bonn. Coenjaerts, C., C. Ernst, M. Fortuncy, D. Reid and M. Pilgrim. 2009. Youth unemployment. In: Promoting pro-poor growth: Unemployment. Paris: OECD. Gorlich, D. and D. J. Snower. 2010. Wage inequality and the changing organisation of work. Kiel Working Paper 1588, Kiel Institute for the World Economy, Kiel. Hammer, T. 2003. Youth unemployment and social exclusion in Europe: A comparative study. Old Park Hill, Bristol, UK: The Policy Press. Hearn, L. 1994. Working with urban youth: Experiences from Medellin, Colombia. Community Development Journal, 29 (4): 337-345. Hussmann, R. 1990. Surveys of economically active population; employment, unemployment and underemployment: An ILO manual of concepts and methods. Geneva: ILO. International Labour Organisation (ILO). 2006. Fourth item on the agenda: Youth employment. http://www. ilo. org/wcmss/groups/public Retrieved 2/04/2013 _____. 2011. Tackling youth unemployment challenges. Turin. Isengard, B. 2007. Youth unemployment: Industrial risk factors and institutional determinants: A case study of Germany and the UK. Journal of Youth Studies, 6 (4): 357–376. Jones, G. 2000. Youth homelessness and the underclass. In Youth and social exclusion, edited by Robert MacDonald. London and New York. Jongwe, D. 2013. Tackling urban youth unemployment in Zimbabwe. Nehanda Radio, Harare.

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Julkunen, I. 2002. Social and material deprivation among unemployed youth: A northern European perspective. Journal of Youth Studies, 4 (3): 265–278. Nadia, D. 2011. Youth unemployment: The cases of Denmark and Italy. Copenhagen: Department of Economics, Copenhagen. Nodstrom, O. 2004. Scarring effects of the first labour market experience: A sibling based analysis. IFAU Working Paper Series no. 14, IFAU, Uppsala. Nwokwa, M. 2013. The future of security industry in the Nigeria economy. 16th World Congress of International Security for Criminology. Kobe, Japan. O’Higgins, N. 2001. ‘Youth unemployment and employment policy: A global perspective’. MPRA Paper 23698. University Library of Munich. _____. N. 2007. Trends in the youth labour market in developing and transition countries. International Security Review, 50(4/97): 63–93. _____. 2012. This time it’s different? Youth labour markets during ‘The Great Recession’. IZA Discussion Paper 6434, IZA, Bonn. Ryan, P. 2001. The school-to-work transition: A cross-national perspective. Journal of Economic Literature 39 (1): 34–92. Urry, J. 1995. Consuming places. London: Routledge. Zinhumwe. C. 2012. ‘Building a future with decent work for young people’. Paper presented at the National Youth Conference, Harare.

CHAPTER 3 Youth Unemployment in Two Ethiopian Cities: Nature, Challenges and Consequences Gezahegn Abebe Abstract This chapter dwells on youth unemployment in two urban areas in Ethiopia. The study uses quantitative and qualitative methods involving questionnaires, in-depth interviews, and focus group discussions with unemployed youth and key officials in the cities of Addis Ababa and Dire Dawa. The study starts with the argument that the causes and effects of unemployment are not only complex and multi-faceted but also have negative outcomes in social, economic, and political contexts of the country. It examines the complex ways in which youth experience and navigate through unemployment. The conclusion that is arrived at is that meeting the needs of the youth and creating a wide-range of job opportunities in the cities calls for a youth-centred approach. This approach shall include training opportunities for youth and access to credit services to enable youth to engage in self-employment as well as to facilitate possibilities for the youth to engage in entrepreneurial activities.

Keywords: Unemployment, youth, Addis Ababa, Dire Dawa, Ethiopia. 1. INTRODUCTION Urban youth unemployment and underemployment is a growing global phenomenon. Nearly 75 million people (15–24 years of age) are unemployed; and the youth unemployment rate was 12.6 per cent in 2012 (ILO 2013). It has become a challenging issue particularly for many subSaharan African countries including Ethiopia (Kolev and Saget 2005). The incidence of youth unemployment in sub-Saharan Africa is estimated at over 20 per cent (AEO 2012), the 2008 global financial crises having exacerbated the problem (Nielsen et al. 2011; ILO 2012). About 60 per cent of the unemployed are youth (ILO 2010) and an estimated 72 per cent of these youth live on less than $2 a day (World Bank 2009). Despite the different efforts that have been made by African countries, the overall youth employment situation has not changed (UNECA 2010). Youth face not only the challenge of obtaining ‘productive employment, but also safe and acceptable work’ (Broussard and Tekleselassie 2012, 2). Abebe and Kjørholt (2012) and the World Bank (2009) point out that throughout African cities, a significantly higher proportion of young men and women than adults work in the informal sectors, where wages are lower and work place protection and benefits are nonexistent (ILO 2004). Young women in sub-Saharan Africa are more likely to be unemployed than young men (ILO 2009).

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Ethiopia is one of the poorest countries in the world. Agriculture is the mainstay of Ethiopian economy. It contributes 45 per cent of the Gross Domestic Product (GDP) and 85 per cent of foreign exchange earnings (MoARD 2010). An estimated 83 per cent of Ethiopia’s 88 million people derive their livelihoods directly from agriculture (World Bank 2012; MoFED 2010). According to African Economic Outlook (AEO 2012), in recent years Ethiopia has recorded remarkable economic growth rate. Regardless of this impressive economic growth, youth unemployment is one of the main challenges in the country’s socio-economic development. Ethiopia has a youth population of about 21 million— 28 per cent of the total population of the country (CSA 2010). A growing body of literature shows that the Ethiopian youth (15–29 years of age) unemployment rate is one of the highest in the world (Broussard and Tekleselassie 2012; Yusuf et al. 2010). However, some sources (CSA 2012) indicate that urban youth unemployment figures in Ethiopia show a declining trend, although the high figures represent a major challenge. Compared with rural youth unemployment, youth unemployment is more prevalent in urban areas. The CSA (2012) data indicates that the highest youth unemployment rate was registered for Addis Ababa (31.7 per cent) followed by Dire Dawa (26. 9 per cent). Although the dynamics and causes of unemployment in these cities are multi-faceted and complex, some scholars (Okafor 2011; Awogbenle and Iwuamadi 2010) attribute the high level of youth unemployment in urban areas to immigration to these cities. Urban youth unemployment has complex ramifications not only for the physical and socioeconomic well-being of the individual but also in terms of accentuating corruption, poverty, drug abuse, crime, HIV/AIDS, and social exclusion (Cephas 2012; Venatus and Agnes 2010; Yusuf et al. 2010; Shuja 2008). The government of Ethiopia has recognized the high youth unemployment rate and its negative consequences. To combat its effects, it formulated long-term economic development strategies including Agricultural Development Led Industrialization (ADLI 2005–2010) and the five-year Growth and Transformation Plan (GTP 2010–2015). National urban development policies further rely on different strategies to transform the backward economic structure, thereby reducing poverty and unemployment rates. These policies show that the objectives of urban sector development are to provide youth employment opportunities. Although unemployment is decreasing gradually (CSA 2012), only a small body of literature on urban youth unemployment takes into account the nature, characteristics, and the various inter-related causes for youth unemployment and its socio-economic impact in Ethiopia. Research on youth employment also does not take into consideration the non-economic faces of youth livelihoods. A large number of youth in Ethiopian cities engage in informal—and at times illegal—survival strategies that are outside of the purview of government formally registered job sectors. In this chapter, I examine the nature, causes, and magnitude of unemployment among youth in two federal chartered cities in Ethiopia: Addis Ababa and

G. Abebe. Youth Unemployment in Two Ethiopian Cities

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Dire Dawa, where the problem of unemployment is more prevalent. Drawing on national surveys (CSA 2012) results obtained from the Ethiopian Central Statistics Authority (CSA), and qualitative and quantitative data gathered from fieldwork in two cities, this study provides evidence-based research on unemployed youth and the perspectives of different stakeholders (government and NGOs) on the challenges of urban youth unemployment in Ethiopia. The study assesses the social, political and economic contexts of unemployment and the complex ways in which the youth experience and navigate the challenges of unemployment. In doing so, some of the successes and failures of interventions aimed at reducing youth unemployment in urban Ethiopia are explored. The chapter is structured as follows. The first part presents conceptual definitions related to the concepts of youth and unemployment. Then the literature on the causes and consequences of youth unemployment and the study contexts are presented. Drawing on data from Central Statistics Agency, the profile of youth unemployment is presented, including variations by occupational and educational status. Then the empirical findings from the study sites are presented and discussed focusing on: a) the perception of youth on the causes and impacts of unemployment, and, b) the different policy interventions that are in place to reduce the problem. Implications of the research findings for addressing the problem of urban youth unemployment in the country are also discussed. 2. REVIEW OF RELATED LITERATURE 2.1. Defining Youth and Unemployment The definition of youth varies widely from country to country. Governmental organizations, NGOs use different age ranges to define youth. The United Nations, for example, defines youth to be between 15–24 years of age. The African Youth Charter (AYC2006) defines youth to mean every person between the ages of 15 and 35 years. Uganda has used the age ranges 12–30 and South Africa has used 14–28. Ethiopia defines youth as the age group of 15–29 years (CSA 2012). This is because, as Abebe and Kjørholt (2012, 6) point out, ‘youth is a value-laden and culturally informed concept.’ Defining youth depends on cultural, institutional, and political factors, and definitions inform the official statistics of each country (Stepanok et al. 2012). Durham (2004) further argues that ‘youth should be examined as a social shifter,’ meaning that ‘who is considered youth and in what context is highly contested and rapidly changing’ in time and in different regions. There is also a significant variation in the definition of unemployment depending on the context. Nielsen et al. (2011, 15) say that unemployment is a ‘forced absence from paid work of some duration.’ Okafor (2011) defines it as the condition of people who are without jobs. According to the ILO (2011), the unemployed population comprise the economically active population that is: (a) without work; (b) currently available for work; and

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(c) actively seeking work but unable to secure employment. Obumneke (2012, 49) argues that the variation of definitions across countries arises from ‘most published unemployment documents that recorded open unemployment.’ Open unemployment is defined as a condition where people are able and willing to work but are without work. Other scholars (Okafor 2011; Sommers 2010) suggest that there are a number of possible causes of the variation, including the difficulties in providing accurate statistics on the youth unemployment rate, as the reported range is phenomenal. Others still argue that ‘unemployment’ arises not only from the ambiguous nature of the concept of unemployment but also from the challenges of measurement and the difficulty to get accurate data and to assess the problem and trends associated with unemployment (Sommers 2010). Stepanok et al. (2012, 1) point out that ‘in some countries students who are actively looking for a job are counted as part of the work force while, in others, they are not’. On the other hand, the number of inactive youth can exhibit quite a variation across countries. 2.2. Causes of Youth Unemployment The causes of youth unemployment are complex and multi-dimensional (ACBF 2011). ILO (2011, 6) identifies different types of unemployment: i. Frictional unemployment: unemployment of a short duration brought about by movement from one job to another. ii. Structural unemployment: unemployment due to a shortage of job vacancies for jobs requiring different skills, usually brought about by technological changes. iii. Cyclical unemployment: unemployment by a deficiency of demand associated with a fall in the number of vacancies as the job market and economic activities change over time. A number of studies highlight the different reasons for the high level of youth unemployment in Africa. Studies in Nigeria (Obumneke 2012; Okafor 2011; Awogbenle and Iwuamadi 2010), for example, indicate that the labour market conditions created by the growing number of urban poor is the main cause for the rising level of unemployment. The rapid youth immigration puts strain on labour opportunities in urban areas (World Bank 2009). Youth migrate to cities to find better educational and work opportunities as a way out of poverty (Abebe and Kjørholt (2012). However, the limited job opportunities in cities cause youth to remain without employment (Venatus and Agnes 2010). Earlier research by Clark and Summers (1982) shows the high rate of youth unemployment in two ways. The first is ‘the traditional view,’ whereby youth unemployment is attributed to the lack of job availability in general. In the ‘new view,’ employment instability caused by rapid economic change in Africa is seen as the cause of unemployment among youth. When economic growth does not translate into a sufficient increase in stable employment opportunities for young people, unemployment becomes structural (ADB 2012).


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Low levels of activity in the manufacturing sector may also be a cause of high rates of youth unemployment (Okafor 2011, 364). ILO (2012) suggests that the inability of the formal sector of the economy to create sufficient employment opportunities is at the core of unemployment (ILO 2012). A number of studies outline the major barriers for youth employment: insufficient job creation (ADB 2012) and a mismatch between job seekers and available jobs (Clark and Summers 1982). The Structural Adjustment Programmes have led to a loss of jobs in the public sector, which in turn has led to the constriction of the youth’s access to formal sector employment opportunities (Yitbarek 2008). It has also led to low labour force participation rates (O’Higgins 2012). Some studies have analyzed the causes of lack of employable and entrepreneurial skills to facilitate self-employment among youth (Coenjaerts et al. 2009; Clark and Summers 1982). Lack of job search assistance programmes (OECD 2006) and the increasing rate of economic inequality (Boyden and de Berry 2004) in addition to discrimination and poverty (Clark and Summers 1982) contribute to youth unemployment. The level of qualification is a good predictor of an individual’s ability to access job in the labour market. Education is one of the factors contributing to youth’s ability to secure employment (O’Higgins 2012) and an important asset for economic growth both for the individual and society (Obumneke 2012). According to ACBF (2011), about 133 million youth in Africa are illiterate, which contributes to their unemployment (AEO 2012). The ILO (2004) report shows that many young people with low education and skills are vulnerable to unemployment, and to exclusion from productive economic and social lives. The low status students attach to technical and vocational trainings (Obumneke 2012, 54) and the low quality of jobs for young people (ADB 2012) also contribute to youth unemployment. Studies indicate that poor governance and corruption (Okafor 2011) and the incompatibility between curricula in educational institutions and the changing needs of industries (Cephas 2012) further contribute to youth unemployment in many countries. 2.3 Challenges and Consequences of Youth Unemployment Youth unemployment poses a significant problem in much of the developing world (Urdal and Kristian 2009). Studies that focus on the consequences of unemployment do not only explain the problems in terms of finance for young individuals but also for society as a whole (Nielsen et al. 2011; Toit 2003). Evidence from a range of studies (Okafor 2011; Samboja 2007; Urdal 2006) suggests that youth unemployment is a threat to the economic and political stability of nations. It was documented that “young people are a potential resource for growth and social development if gainfully employed and productively engaged” (ECA 2002, 1). Conversely, having a large unemployed youth population may threaten a country’s economic growth and overall development (Obumneke 2012, 56). Venatus and Agnes (2010) present evidence of the relationship between

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unemployed youth rates and illegal activities. Consequences of the former for young individuals include deprivation and marginalization (Venatus and Agnes 2010), limited access to credit facilities, and low-wage employment. As opportunities for formal sector employment decrease, the youth become involved in illegal activities such as drug abuse, violence, and crime (Venatus and Agnes 2010; Gill et al. 2009; O’Higgins 2007). Many try to cope with the lack of or insufficient income by stealing or engaging in prostitution (Cephas 2012; Shuja 2008). Prostitution may lead to contracting HIV/AIDS and other sexually transmitted infections (Yusuf et al. 2010). This further affects the participation of youth in economic, social, and political processes (Venatus and Agnes 2010), which may create social tension and instability (ILO 2011; ECA 2002) and social exclusion (Nielsen et al. 2011). Moreover, these effects tend to be more severe among young women who have lower socio-economic status than young men (ILO 2012). Recent literature highlights the long-term complex effects of youth unemployment. Viollaz et al. (2012) present a detailed review of evidence from Argentina and Brazil and examine the effects of increasingly informal employment. Similarly, O’Higgins (2002) notes that in countries where there is no adequate social net, youth unemployment is compounded by informal sector work. 3. STUDY CONTEXTS This study was conducted in two federal cities of Ethiopia: Addis Ababa and Dire Dawa. These cities were selected because they are the largest and the second largest Ethiopian urban populations, respectively (CSA 2010) with rapid demographic change, which has contributed to an everincreasing rate of youth entering into the labour market. In both cities, different urban development interventions have been taking place, but the labour demand and supply do not match. A common denominator for both cities is youth employment. It is one of the most visible and critical threats to the economic growth in both cities. 3.1. Addis Ababa Addis Ababa is divided into ten sub-cites and covers an area of 540km2 (CSA 2011). The city is currently experiencing rapid population growth. The estimated total population of Addis Ababa is about 4 million. Hence, Addis Ababa houses 28 per cent of the national urban population (CSA 2012). This is the outcome of high rates of rural-urban migration and natural population growth (excess birth rate over death rate) (CSA 2010). However, in-migration, mainly for economic reasons, is the major factor for the increasing city population (CSA 2010). Most of this growth takes place in slum areas of the city (UNHSP 2007), where young males and females are the dominant migrant groups (CSA 2010). Youth constitute 45. 32 per cent of the city’s population, and the largest portion of that is female (CSA 2010). According to the 2007 census (CSA 2010), the share of youth migrants to Addis Ababa was 48.9 per cent of the total youth population. It


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is much higher than the average rate in the country, which is about 22.4 per cent. Out of the total youth migrants, 39.8 per cent were male while 60.19 per cent were female (CSA 2010). Besides its population growth, the incidence of poverty in Addis Ababa (32.6 per cent in 2004/05) is a chronic problem (MoFED 2008). Poverty incidence has shown a dramatic increase. It was estimated that about two-thirds of the city residents were living at or below subsistence levels (UNHSP 2008a). This level of poverty aggravates unemployment. Consequently, unemployment remains a threat to the socioeconomic development of the city (UNHSP 2008a). 3.2 Dire Dawa Dire Dawa is located 520 kilometers east of Addis Ababa and is the second largest city in Ethiopia. The city is an autonomous and chartered town under the federal administrative arrangement. Dire Dawa covers 130,000 hectares (UNHSP 2008b) and is divided administratively into two settlements— the urban settlement, which includes nine kebeles, and the non-urban part of the town, which includes 38 rural kebeles. Dire Dawa witnessed rapid population growth from 180,000 in 1995 to 284,000 in 2005 (CSA 2006). It is estimated that the city has a total population of 341,834, of which 74 per cent live in urban Dire Dawa while the remaining 26 per cent live in rural Dire Dawa (CSA 2010). The youth constitute 44.37 per cent of the total population (CSA 2012). This is due partly to migration by the youth, which accounts for 33 per cent of the total population. Out of the total youth migrants, 55.05 per cent were female while 44.94 per cent were male (CSA 2010). A report by MoFED (2008) indicates a poverty incidence of 32.9 per cent in 2004–2005 and low incomes in Dire Dawa. The weakening of the contraband trade has contributed to the decline of economic activities. 4. METHODOLOGY The study participants were selected from the two weredas (districts) in Addis Ababa: Wereda 01 of Gulele sub-city, and Wereda 01of Arada subcity. The two sites in Dire Dawa are Sabian Kebele 08 and Legehare Kebele 02. These were purposefully selected by considering their proximity and availability of information. Once I selected the study sites, I made decisions about appropriate data collection methods. The research participants who were accessible and willing to provide information were approached by the Forum Youth Association leaders and by visiting youth centres. A snowballing sampling method was used. In Dire Dawa, individual participants were contacted when they were attending vocational training for unemployed youth. This was a good opportunity to meet female informants. I established rapport through short conversations by explaining the purpose of the study. Interviews were made after obtaining individuals’ permission to participate in the study, granting anonymity, and being told about the purpose of the study and use of data.

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Both qualitative and quantitative methods were used to collect data. A mixed research methodology seeks to discover various social phenomena within the subjective reality of research participants (Creswell and Clark 2007). A questionnaire was given to 76 unemployed youth (23 females and 53 males). The questionnaires were written in English. The interviews were translated into in Amharic. About 44 individuals mostly women (26 from Addis Ababa and 18 from Dire Dawa) were asked to write the causes and effects of unemployment for youth in Amharic and then translated. As a result, informants have come up with different chronological order on the causes and effects. This approach was helpful to understanding what youth think about unemployment and how they rank associated issues according to their severity. In addition, this method increased the reliability of the collected data and my understanding of youth unemployment situation. The qualitative data collection includes in-depth interviews of 17 youth to get valuable information on informants’ understandings of the challenges of unemployment. Twelve in-depth interviews were conducted with police officials and people working in the Bureaus of Women, Children, and Youth Affairs and Youth Forum representatives. Group discussions with male individuals were conducted after preliminary investigations about the participants and their circumstances were made. Five group discussions with men as well as several informal dialogues in coffee-bars (in Dire Dawa) were conducted— coffee-bars are convenient and comfortable places for youth to talk about their personal experiences with employment and its challenges (Hesselberg 2009). The diverse methods of data collection provided insight into the problems and priorities of youth; it also validated data from questionnaires, individual interviews, and group discussions. After data collection, the survey data was entered into the computer using the Statistical Package for the Social Sciences (SPSS) software version 20.0 for analysis. Because the Likert Scale produces a highly reliable scale that is easy to read and complete for participants (Zikmund 2000), it was the chosen tool to measure youth’s attitudes towards unemployment. In the analysis, analytical and descriptive statistical tools were used. In order to strengthen the quantitative analysis, qualitative data were employed. The qualitative material and field notes were transcribed and recorded every day after each interview and then the final analysis was made.


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Table 1. Overview of methods and data Research tools

Number of participants Addis Ababa

Questionnaires In-depth interviews: Youth 15–29 Youth Forum Representatives Key informants Group discussion: Youth 15–29 Coffee-bar dialogue: Youth 15–29 Causes & effects of unemployment Informal dialogue Field notes

Dire Dawa

44

32

10 2 5

7 2 3

3(n=5)

2(n=6)

– 26

2(n=3) 18

Researcher

Researcher

Note: n = refers to the total number of participants involved in the research process.

To assess the validity of the data, checking the convergence of empirical material with other sources of data triangulation methods was used (Johnes and Phillip 2012). As Patton (2002, 247) points out, “triangulation strengthens a study by combining methods,” thereby maximizing the reliability of data. Efforts have been made to ascertain the reliability and transferability of data by combining evidence from different sources. Therefore, the collected empirical data was subjected to clear and precise “analytical generalization’ to the study sites” populations. 5. CHARACTERISTICS OF UNEMPLOYED YOUTH IN URBAN ETHIOPIA 5.1. Profile of Youth Population Ethiopia experiences rapid youth population growth. According to CSA (2010), Ethiopia’s population is predominantly young. It constitutes about 45 per cent of the total population (CSA 2010) and 36.26 per cent of the total urban population (CSA 2012). Similarly, the number of new entrants into the labour force is growing rapidly. It was estimated that the influx of youth migrants (about 37.59 per cent of the total youth migrants, CSA 2010) driven to cities by complex factors aggravated the problem of youth unemployment in urban areas. Compared to the 2009 survey result, the incidence of unemployment among youth has declined from 26.6 per cent in 2009 (CSA 2009) to 23.3 per cent in 2012 (CSA 2012). The highest youth unemployment rate was recorded in Addis Ababa (31.7 per cent) followed by Dire Dawa (26.9 per cent). Despite the slightly declining trend

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rates, unemployment remains consistently higher among females than among males. The unemployment rate for females in Dire Dawa was 41.16 per cent in 2009 and declined to 32.37 per cent in 2012. Also in Addis Ababa, the unemployment rate for women fell from 38.05 per cent in 2009 to 31.56 per cent in 2012. This downward trend has been attributed in part to the increasing ratio of females to males enrolled in schools and to the current employment creation efforts made by the government. The informal and formal employment sectors in urban Ethiopia are highly segmented. Although there is insufficient data, it is estimated that the youth engaged in the informal sectors make up a large portion of the labour force. Data collected by CSA (2012) indicated that the young male employment rate (22.99 per cent) was only slightly higher than the young female employment rate (21.06 per cent) in 2012. These numbers indicate fairly balanced gender employment at the national level. The youth employed by occupational groups, as legislators, senior officials, managers, professionals who can be referred to as ‘white collar professionals’ made up a small portion (21 per cent) of the urban youth. Women employed in ‘white collar’ occupations did not exceed 9.76 per cent in 2012. In Addis Ababa, service workers were the most dominant employment sectors. These include service providers, shop attendants, and market sellers, who accounted for about 35.03 per cent, followed by crafts and related trades and elementary occupations like street vending and related works; shoe cleaning and street services; building caretakers, helpers and cleaners and laundries; domestic and related helpers; garbage collectors and doorkeepers; manufacturing labourers; transport labourers; mining, construction and agriculture as well as fishery-related labourers accounted for 33.79 per cent and 23.77 per cent, respectively. In Dire Dawa, service, shop and market sales workers’ share was 46.46 per cent followed by elementary occupation (25.86 per cent) and crafts and related trades (20.53 per cent). Looking at the employed youth by major industrial divisions, the bulk of youth in urban Ethiopia (32.37 per cent) was employed by private organizations, 27.17 per cent were self-employed through a variety of business activities, and 14. 51 per cent were employed in government work in 2012 (CSA 2012). Similarly, the self-employed group and the group employed in private organizations in Addis Ababa and Dire Dawa ranked first and second, respectively. Youth who were employers comprised a negligible portion of the population at both study sites. In terms of education, the unemployment rate varies in the level of education attained. The CSA (2012) data suggests that the overall unemployment rates for educated youth were registered higher than that of no education. The total unemployed youth who have no education has been showing a declining trend from 14.02 per cent in 2009 per cent to 9.92 per cent in 2012. The rate was higher among youth who had completed secondary schools (38. 53 per cent in 2009 to 33.74 per cent in 2012), closely followed by those who had completed the grade levels 1–8 (35.09 per cent) in 2009 and 32.42 per cent in 2012. The proportion of those who had completed college diploma


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and above increased from 6.88 per cent to 14.22 per cent over the three years. Similarly, unemployed male youth who had completed college diploma and above was 11.43 per cent and that increased by 8 per cent during the three years. The share of females was 4. 75 per cent and rose to 11.56 per cent during the same periods. However, the unemployment rate among illiterate young females was the highest in Addis Ababa (19.7 per cent) and Dire Dawa (39.8 per cent) in 2012. However, in 2009 to 2012, the incidence of unemployment among youth was relatively low for those with pre-school and non-formal education in both study sites (CSA 2009; 2012). 6. YOUTH EMPLOYMENT POLICIES IN ETHIOPIA Ethiopia’s Agricultural Development Led Industrialization (ADLI 2005– 2010) and the five-year Growth and Transformation Plan (GTP 2010–2015) targeted poverty and unemployment rates. The National Urban Development Policy, known as Urban Development and Urban Good Governance (MUDC 2007), aimed at the major pillars of reducing poverty and youth unemployment. Creating employment opportunities and integrating youth into the labour market has been a growing concern for the government. The steps outlined in the Plan for Accelerated and Sustained Development to End Poverty (PASDEP) and GTP to generate employment were identified to address two important dimensions—the demand and the supply—of employment creation. The demand side of employment generation includes promoting job creation in the private sector and selfemployment and entrepreneurship in the public sector in urban and periurban areas. The participation of the private sector in the process of urban development has been given great emphasis. It is widely believed that involvement in the private sector is needed to bring about sustainable urban development and employment creation. They are seen as the major sources of economic support particularly for youth in creating job opportunities for the unemployed and therefore play an important supportive role in the achievement of the government’s plan for employment growth and poverty reduction. Similarly, great emphasis is given by the government to ensuring effective and efficient public sector employment creation through labourintensive urban infrastructure and housing development (MUDC 2011). Hence, these sectors have generated much employment for both semiskilled and unskilled labour forces. The construction industry is expected to generate employment for about 1,264,598 persons between 2010/11– 2014/15 (MUDC 2011). Some attention is given to the development of Micro and Small Enterprises (MSEs), which created 542,000 jobs in 2010/11 (MoFED 2012). The sector is believed by the government to be instrumental to secure jobs and income generation for the majority of the urban poor (MoFED 2010). On the supply side of employment, major emphasis has been given to the importance of labour productivity and raising productivity of the non-farm private and informal sectors (MoLSA 2009). The industry and service sectors are believed to provide productive employment opportunities. These

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sectors are supported by access to finance and workplace skills development. To date, institutional frameworks and proclamations have been formulated as well as promulgated to improve employment outcomes (MoLSA 2011). These include: the Labour Proclamation No. 377/2003, which was provided to protect workers; the provisions of the employment exchange service (Proclamation No 632/2009); the right to employment of persons with disability (Proclamation No568/2008), which governs the relations between employers and employees; and the ILO Conventions that Ethiopia has approved as part of its domestic law (MoLSA 2011). Also, the Ministry of Youth, Sports and Culture (MYSC 2005) formulated a national youth policy that aimed at facilitating the participation of youth in politicoeconomic and socio-cultural life of the country. The policy prompts the rights of workers to form associations, and regulates apprenticeships and the employment of young people (MoLSA 2011). However, despite the wide-ranging efforts that have been made by the government, high urban youth unemployment rates remain to be a major policy challenge. 6.1. The Nexus between Economic Growth and Employment in Ethiopia: An Overview Youth unemployment is closely linked to the economy of the nation. Studies (MoFED 2010; 2012) indicate that the overall economic growth of a country is an important factor in poverty reduction. The real GDP per capita growth in Ethiopia rose with a total average of 11 per cent in 2008/09. During the years of 2005 and 2010 for example, the country showed positive growth in different sectors. The three largest sectors were service (14. 6 per cent) followed by industry (10 per cent) and agriculture (8. 45 per cent). The percentage contribution of each sector to the total GDP (2009/10) was recorded respectively as 45.5 per cent, 12.9 per cent, and 41.6 per cent (MoFED 2010). According to the World Fact Book (CIA 2012), agriculture (46.6 per cent) and industry (14. 6 per cent) sectors grew with a slight reduction of the service sector to 38.8 per cent. MoLSA (2011; 2009) reports indicate that the growth of these sectors has been further supported by the growth of the construction and manufacturing, banking and insurance, and real estate development sectors. The mismatch between economic growth and youth employment goes hand in hand with urban poverty. Increasing youth rural-urban migration is believed to have contributed to the increased rate of urban poverty. Poverty in urban Ethiopia is widespread but has shown a declining trend. According to the survey in 1999/2000, about 37 per cent of the urban population was found to be living under the poverty line (MoFED 2010). In 2004/05, the figure declined to 35 per cent (MoLSA 2009) but remained high at 25.7 per cent in 2010/11 (MoFED 2012). The labour force participation rate—the share of the population working or looking for work—of the country has been increasing at an average rate of 3.2 per cent (Yusuf et al. 2010) despite the alleged acceleration of economic growth in recent years. The size of labour force participation was


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estimated at 26.5 million in 1994, 33 million in 2005 (CSA 2006), and more than 35 million in 2007 (CSA 2010). However, there has not been a sufficient increase in employment opportunities for the increasing labour force in Ethiopia. The national job creation has been slow (4.4 per cent per annum). Although over the past ten years the urban economy grew at an annual rate of 2 per cent per capita, there is a loose connection between GDP growth and employment creation. Labour force participation rates in recent years in urban areas have increased slightly from 63 per cent in 1999 to 65 per cent in 2005 (MoLSA 2009), but the participation rate was higher among adults than among the youth (CSA 2012). The sluggish job creation was particularly disadvantageous to women and youth (World Bank 2007). Women’s participation rates in urban Ethiopia slightly increased during 1999–2012 due, partly, to their involvement in diverse employment sectors. 7. DISCUSSION ON YOUTH UNEMPLOYMENT IN ADDIS ABABA AND DIRE DAWA 7.1 Respondents’ Socio-Demographic Data Table 2 illustrates the distribution of the respondents by some selected social characteristics such as age, sex, religion, educational status, and monthly income. The majority of the respondents (53.31 per cent) were in the age category of 25–29 years. A substantial portion (44.73 per cent) and only 3.94 per cent of the respondents were in the age groups of 20–24 and 15–19 respectively. The largest portion (69.73 per cent) of the respondents was male, while the remaining 30. 26 per cent were female. With regard to religion, 56.57 per cent of the respondents were Orthodox Christians followed by Muslims (32.89 per cent) and Protestants (10.52 per cent). The data shows that youth unemployment rates vary with the level of education attained. About 36.84 per cent of the respondents had completed preparatory class (12 grades) and 27. 63 per cent had completed 10th grade (first cycle of secondary education) and 27.63 per cent of them had received a certificate (10+1 or 10+2). The data further show that the greater proportion of the respondents’ monthly income ranges between 0–500 birr (61.84 per cent) followed by 501–1000 birr (34.21 per cent). A small portion (3.94 per cent) of the respondents in Addis Ababa reported that their income ranges between 1001–1500 birr. Respondents added that their income was not regular and could not be fixed.

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Table 2. Percentage distribution of study population, by selected characteristics Characteristics

Addis Ababa (n=44)

Dire Dawa (n=32)

No

Per cent

No

Per cent

15–19 20–24 25–29 Total

1 21 22 44

2. 3 47. 7 50. 0 100

2 18 12 32

6. 3 56. 3 37. 5 100

Male Female Total

32 12 44

72. 7 27. 3 100

21 11 32

65. 6 34. 4 100

Orthodox Muslim Protestant Total

28 12 4 44

63. 6 27. 3 9. 1 100

15 13 4 32

46. 9 40. 6 12. 5 100

Secondary Educational Preparatory status Certificate Diploma Total

15 13 13 3 44

34. 1 29. 5 29. 5 6. 8 100

6 15 8 3 32

18. 8 46. 9 25. 0 9. 4 100

0–500 501–1000 1001–1500 Total

20 21 3 44

45. 5 47. 7 6. 8 100.00

27 5 – 32

84. 4 15. 6 – 100.00

Age

Sex

Religion

Monthly Income

SOURCE: Field data (2013).

7.2 Youth Perceptions about the Causes of Unemployment 7.2.1 Training Quality, Employment Options and Youth Preference The Ethiopian work force is characterized by low levels of skill and educational attainment. It was widely noted that these groups are more likely than others to be unemployed and disadvantaged in the labour market. The study findings suggest that most respondents (59.1 per cent) in Addis Ababa and (62.5 per cent) Dire Dawa believe that insufficient skills training is the main cause of their unemployment. As shown in Table 2, the majority of respondents had completed secondary and preparatory education. Following the general trend, this group was also of the opinion that the cause of their unemployment was an insufficient supply of skills training (see Table 3). These individuals believe they need more training to


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increase their possibility of getting a job. In recent years, the expansion of education in Ethiopia has resulted in a considerable growth in the number of high school and college graduates. According to MoE (2012), the annual enrolment ratio in 2011/12 has increased on average by 4.5 per cent in primary schools (1–8), 17.3 per cent in secondary first cycle (9–10), 13.7 per cent in preparatory programmes, 30 per cent in TVET, and 28.2 per cent in a first degree programme. However, the rate of unemployment was higher among young people who had completed secondary schools (CSA 2012). Young people who had completed the first cycle of secondary education and preparatory education but had no prospect of joining higher institutions or obtaining a job have continued to depend on their parents for a living. The rapid expansion of tertiary education and hence the number of graduates from the various institutions has resulted in the swelling of the labour market, which aggravates unemployment among the youth. The CSA (2012) data suggests that the overall unemployment rate in urban areas for educated youth were higher than in rural areas. In particular, the portion of urban young people who had completed a diploma programme or higher education has more than doubled from 6.88 per cent to 14.22 per cent between 2009 and 2012. An important policy pursued regarding youth unemployment problems in Ethiopia is to offer youth Technical Vocational Education and Training (TVET) with entrepreneurship development training being one strategy, which is believed to foster entrepreneurship, create jobs, and facilitate entry into private businesses (ECA 2002). TVET institutions have increased in number reflected by the size of enrolment and diversity of fields of training (MoE 2012). Between 1996/7 and 2004/5, the number of TVET institutions increased from 17 to 199 and enrolment from 3,000 to 106,305 (MoE 2008, 10). In 2011/12, the TVET enrolment (level 1–5) increased to 29,818 in Addis Ababa and 6,842 in Dire Dawa (MoE 2012). TVET trainings aim at contributing to the socioeconomic development of the country and reducing poverty through self-employment (MoE 2008). Besides the regular TVET trainings, the government has launched special training programmes for youth in diversified fields. Informants indicated having received some kind of training in woodwork, metalwork, cobblestone production and paving, or hollow block production. Training in such labour-intensive work not only creates job opportunities for individuals, but also promotes gender equality since the nature of this type of work does not exclude women (MUDC 2013b).

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Table 3. Percentage distribution of causes for youth unemployment Statements

Lack of training Job preference Limited skill centres Lack of motivation Growing job seekers Limited job opportunities Shortage of initial capital Waiting job supply from government Desire to work at institution Lack of working place Lack of interest in daily labour Limited access to credits

Addis Ababa (n=44) N

D

Dire Dawa (n=32)

SA

A

59. 1 31. 8 25. 0 43. 2 25. 0 38. 6 63. 6 43. 2

20. 5 56. 8 31. 8 38. 6 43. 2 27. 3 36. 4 31. 8

0 0 0 0 4. 5 0 0 0

15. 9 11. 4 40. 9 18. 2 27. 3 34. 1 0 25. 0

4. 5 0 2. 3 0 0 0 0 0

62. 5 28. 1 37. 5 46. 9 68. 8 56. 3 65. 6 68. 8

31. 3 53. 1 34. 4 37. 5 18. 8 43. 8 34. 4 28. 1

0 0 0 0 0 0 0 0

6. 3 12. 5 28. 1 15. 6 12. 5 0 0 3. 1

0 6. 3 0 0 0 0 0 0

20. 5 68. 2 56. 8 47. 7

27. 3 27. 3 31. 8 36. 4

2. 3 2. 3 0 11. 4

50. 0 2. 3 11. 4 4. 5

0 0 0 0

46. 9 56. 3 53. 1 46. 9

15. 6 37. 5 28. 1 40. 6

0 6. 3 0 12

37. 5 0 18. 8 0

0 0 0 0

SOURCE: Field data (2013) Note: SA=strongly agree; A=agree; N=neutral; D=disagree and SD=strongly disagree

SD

SA

A

N

D

SD


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Interviews held with trainees in Dire Dawa and with those who completed their training in Addis Ababa revealed that they are less confident of the quality of their training as well as its effectiveness for preparing them for productive employment. This reservation might be influenced by diverse factors. In my observation at Sabian Technical and Vocational Education and Training school in Dire Dawa (March 2013), trainees trained in hollow block production, wood work, and general mechanics were taking short practicums, often under two months. Limited numbers of training machines were used for a large number of trainees. Some of the trainees do not get a chance to fuse the theory into practice. Trainees (in Dire Dawa) were told that the training was not designed based on the demands of the labour market. Consequently, the training programmes contributed little to the labour supply deficit and did not help increase youth employment. This may not be true in Addis Ababa since construction and related works play a critical role in creation of employment opportunities. During the informal discussion, some informants, especially in Dire Dawa, noted that they quit the training for various reasons. One reason for dropping out was distance, as the training centres were located far from their residence. In Dire Dawa, there is a need for more governmental TVET schools, but the new Italian Government TVET College, a single technical school, provides training for a large number of students in the town. It was observed that distance was a cause for lack of motivation to enrol for the training. A number of respondents in Dire Dawa (46.9 per cent) and in Addis Ababa (43.2 per cent) strongly agreed with the view that lack of youth motivation contributes to youth unemployment. My observation and the view of the vocational teacher in Dire Dawa were consistent with the informants’ viewpoints. Agreeing that training and qualifications were significant factors for youth’s job search outcomes, the vocational teacher suggested some problems that may continue to lower youth’s motivations as follows: The youth [usually] do not have motivation to take part in the trainings. Lack of motivation is the cause for their unemployment. Their attendance is irregular due to various reasons. Distance is one of the reasons. There are only two training centres in the town. It is not enough. The duration of the trainings is also not sufficient to equip them with the necessary skills. … The existing training types are another factor. Some of the youth do not have interest in the training types, as they think that they are not marketable. Most of them do not get work as per their expectations after completing the trainings. Some of them tell us that these types of training are not in their interest. (Sabian Kebele 08, Dire Dawa)

The above response suggests the low quality of training the youth get and employers’ preference to hire skilled and experienced individuals. In line with this, the study of MoE (2008) indicates that “the massive quantitative expansion of the public TVET […] do not address the actual competence needs in the economy, with most programmes being of low quality and

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theory-driven due to resource constraints” (p. 10). Lack of skilled teachers could be another contributing factor for the low quality of trainings (MoE 2008). This process has excluded youth with little skills from the labour market, thus reducing the employability of graduates. Likewise, central allocation of students to the diverse specializations as well as colleges (Krishnan and Shaorshadze 2013) might contribute to their low motivation for the training. Krishnan and Shaorshadze based on qualitative interviews with TVET graduates explain the situation: It may be the case that an applicant preferred to go to college A and study construction, but he is instead allocated to college B to study sewing …. A similar match takes place in higher education…. [This indicates that] the allocation of students to particular specialization is not entirely market driven …. (p. 17)

Attitudes about work in general and the types of work young people prefer also contribute to their unemployment. Low level of motivation due to insufficient salary is a major factor for youth unemployment, as the following quotation illustrates: We took trainings in textile production. We were happy to work in the [new] textile factory… We were informed [we would] be paid 600birr/month. Many of us did not agree with the salary and then decided to stop working there because of its low wage. Now many women are working in the factory [for] the same salary. (Group discussion, Legehare Kebele 02, Dire Dawa)

It was evident that little has been done to motivate youth to be involved in any type of employment available and in recognizing the value of vocational trainings for their future employment. Based on the 1999 and 2011 CSA data, Broussard and Tekleselassie (2012) indicate a decrease in the number of unemployed youth who tried to start their own business as a means to obtain employment. Finding jobs in the formal sector might equally be problematic for young people with limited work experience. The problem might be aggravated by the youth’s desire to be engaged in ‘white collar jobs’ in public institutions and their limited interest in ‘blue-collar’ jobs, something with which 62. 5 per cent of respondents in Dire Dawa and 47.8 per cent in Addis Ababa strongly agreed. Although the informal sector is an important source of livelihood for the overwhelming majority of urban residents in Ethiopia (UNHSP 2008a), the youth’s desire to work at institutions might be due to their perceptions about the informal employment sector. This tendency has had an adverse impact on the youth’s motivation to participate in the economy. This can be illustrated by an informant’s comment: I took three different trainings. The training is by itself good … [But] I do not expect that the trainings would bring something for my life in the future. My friends and I did not get a job after the training . … This does not motivate others to come here to take the trainings. However, I have continued taking


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part in the training instead of sitting at home. (24 years, Sabian Kebele 08, Dire Dawa)

The share of graduates (between 2006 and 2011) employed in the public sector was 63.82 per cent and 54.23 per cent, respectively. The private sector’s share was dimly increased from 14.85 per cent to 17.39 per cent between the two years. The share of self-employment rose from 8.17 per cent to 12.01 per cent (CSA 2006; 2011). The CSA data shows that the government sector takes the largest share in employing TVET graduates. Due to a limited capacity to start self-employment, the youth often prefer to wait until they get a ‘white-collar’ job in the formal sector. The data revealed that this often results in their unemployment. About 68.8 per cent of the respondents in Dire Dawa strongly said that waiting for a government job was a cause of unemployment compared to 43.2 per cent in Addis Ababa. Close to a third of the study respondents (31.8 per cent in Addis Ababa and 28.1 per cent in Dire Dawa) indicated that waiting for government job opportunities was a cause of youth unemployment. Graduates’ involvement in government jobs decreased by about 9 per cent in 2006-2011 (CSA 2006; 2011), which might be due to the gradual increase of self-employment. The CSA data indicates that graduates in woodwork, electricity, and metalwork have a lower involvement in government sectors. The training programmes do not include labour market information for the youth as they search for jobs. In line with this, a study from Ethiopia (Broussard and Tekleselassie 2012) indicates that the most common methods that youth apply to identify employment opportunities are searching for vacancies on advertisement boards, seeking assistance from friends or family members, and checking at work places (pp. 26–27). The CSA (2011) statistical report indicates that from the selected cases, about 32.3 per cent and 20.4 per cent used the first and second options, respectively, to search for formal work. Only 4.3 per cent searched for work through newspapers, radio, and TV. As the CSA data shows, ‘the concept of creating jobs through producing skilled manpower instead of more job seekers needs structural support, enabling new graduates to apply their skills in the widest possible areas’ (UNHSP 2008b, 8). 7.2.2 Unemployment and Employment Initiatives There is a gap between the growing number of youth seeking work and the number of available jobs. A study by Broussard and Tekleselassie (2012) indicates that the labour demand has been unable to keep pace with the increasing number of graduates. As a result, there is increased competition for the limited job opportunities. A large portion of respondents (68.8 per cent) in Dire Dawa and Addis Ababa (25 per cent) strongly agreed that an enormous increase in job seekers was one of the causes for their unemployment, and 18 per cent of respondents in Dire Dawa and 43.2 per cent in Addis Ababa agreed that the increasing number of job seekers was a cause of unemployment. A moderate number of respondents (12.5 per cent

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in Dire Dawa and 27.3 per cent in Addis Ababa) disagreed with this view. A large number of the respondents (56. 2 per cent) in Dire Dawa and (38.6 per cent) in Addis Ababa strongly agreed that the lack of job opportunities was the cause for unemployment. About 43. 8 per cent of the respondents in Dire Dawa agreed with this conviction. Yet, a moderate number of respondents (34.1 per cent) in Addis Ababa disagreed with the statement that limited job opportunities cause unemployment. These disagreements across the study sites might be a result of the difference in the availability of jobs between the study sites. In Dire Dawa, public and private sector investments, which may generate employment opportunities and create sustainable livelihoods for youth, have been limited. According to Dire Dawa Administrative Council (2006), the fact that only 136 investors are working in various sectors indicates the small rate of investment to create employment opportunities. As indicated in Ethiopia’s Five Year Growth and Transformation Plan (GTP), job creation through private sector development, small and medium enterprise development, as well as the Integrated Housing Development Programme (IHDP) have been the main strategies of poverty reduction and employment creation. Increasing the productivity and earning capacity of the informal and employment-intensive formal sector is indispensable for the alleviation of urban poverty (MoLSA 2009). The Ministry of Urban Development and Construction (MUDC 2013a) report indicates that there are about 16,937 micro and small enterprises (MSEs) in 13 urban centres, employing 666,192 people. The existing data further suggests that by the end of 2010/11, some 95,000 young people were engaged in quarrying, carving cobblestones, transporting stones, paving with stones, tool production, and other infrastructure work. Of those workers, 65 per cent are male and 35 per cent female (World Bank 2011). In 2011/12 alone, this sector, including other infrastructural expansion, created jobs for more than 1.15 million people through MSEs (Kibru 2012). Despite the government’s concerted efforts, the study data reveals that there are different views and expectations on the part of young people regarding the labour market. Young informants stated that they were often hired only for temporary jobs. The data confirmed that savings among youth was positively associated with income and continuity of available jobs. During a discussion, an informant suggested some of the challenges youth face while trying to secure regular employment: I had worked in the area of cobblestone for some time in group. If the work continues for a long time, the salary is good and would help us more… [But], the work is not long-lasting. Getting those jobs that would last is compounded with challenges. Getting a job depends on personal networks. [Moreover] a number of youth cooperatives working in the same area are there. [If we fail to get one], we have to wait until another chance comes; it may take us three to four months or more. This undermines the continued existence of our cooperative. If we do not have savings, we would not see


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improvement in our life…. We use our savings when we do not have jobs…. (27 years, Wereda 01, Gulele Sub-city, Addis Ababa).

It is worth noting that cobblestone paving helped to beautify city centres. It also generated local employment opportunities. The recent MUDC (2013b) report shows that in Addis Ababa alone 2,240 MSEs were established and engaged in cobblestone road construction. The sector encouraged the creation of MSEs. Nevertheless, this study shows that establishing personal networks with individuals from the concerned government offices is an important step for finding available employment opportunities. It was indicated that those individuals who have strong personal ties (relatives and friends) increase their chance of accessing information about job opportunities. Many youth end up facing extended periods of unemployment. The CSA (2012) data demonstrated that 31.99 per cent of unemployed young people in urban Ethiopia remain unemployed for up to six months, 26.12 per cent for seven to 12 months, and 15.39 per cent for 13 to 24 months. The CSA data showed that 53.67 per cent and 46.14 per cent of unemployed youth are with work experience and without work experience, respectively. This was true for both males and females. The data indicates that the longer the period of unemployment, the less likely it is that a young individual will find another job. According to the CSA (2012) report, the rate of self-employment among youth in urban Ethiopia decreased from 31.48 per cent to 27.17 per cent between 2009 and 2012. Young females were more prevalent in this sector than young males. During Focus Group Discussion, some participants expressed how they were motivated to start up their own businesses. MSEs require low initial capital. However, the lack of this capital and lack of access to formal credit was identified as the most serious challenge for youth cooperatives. This study shows that a large portion of the respondents in Dire Dawa (65.6 per cent) and Addis Ababa (63.6 per cent) strongly agree that lack of capital and the limited availability of formal credit from the government were barriers for youth wishing to start their own businesses. Nearly a third of the respondents (36. 4 per cent in Addis Ababa and 34.4 per cent in Dire Dawa) believed that lack of capital was the main reason for not engaging in self-employment. The CSA (2011) statistical data further indicates that 55 per cent of the unemployed population said that shortage of finance was one of the problems to establish private business. Interviewees also noted that youth organized in cooperatives face numerous problems such as lack of initial deposit, favouritism, as well as lack of access to credit and material support that would enable them to start a business. The young informants explained the challenge of bringing common interests and abilities together to form cooperatives caused them to have lower motivation to work in cooperatives. In this way, such problems contribute to the inability of youth to participate in the labour market. The following quotation was compiled from a group discussion and that validated by other group participants suggests the challenges to accessing credit as well as completing application procedures:

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The challenges to start up one’s private business are many. First, to get loan from the government youth cooperatives are expected to show [at least] 20 per cent of initial deposit of the total amount that the intended business requires. For example, if the business needs 100,000 birr, we have to show 20,000 birr deposit to get 80,000 birr loan. Besides favouritism through personal networks, our participation in different forums is seen as the [concealed] criterion to get access to credits. We have to be close and show our face to Wereda offices every time. Secondly, lack of a work place has become the main challenge for youth cooperatives to start business. The provided places are usually not conducive for production and particularly for market. One of the loan application requirements is to organize ourselves into cooperatives; we should be at least ten in number. Getting this many members of youth who agree to work together is very difficult. [On the other hand], to get access to credits, the youth cooperatives need to bring a person who has either a house plan or is employed at a government office to act as a guarantor. Let alone other people, our family could not accept such requests in view of the fact that they may not have confidence in us weather the credit will return back. It is difficult for us to fulfil many of the loan application procedures which are too complicated. (Group discussion, Wereda 01, Gulele sub-city, Addis Ababa)

On the government’s side, it is arguable that the criterion of a 20 per cent initial deposit is important to increase a culture of saving and to create a sense of ownership among youth cooperatives. The saving enables youth to transfer to the other productive sector of the economy (MUDC 2013b). It is worth mentioning that saving is one of the primary factors for real GDP growth of the country. Low level of savings among citizens may lead to low levels of investment and low employment creation, thus increasing the urban youth unemployment rate. It is estimated that about 31.7 per cent of urban residents in Ethiopia have low incomes from informal sources. Informality was higher among females (42. 2 per cent) compared with that of males (24.2 per cent) in 2012 (CSA 2012). Parents’ low incomes mean that the youth are unable to borrow capital from their parents to make the initial deposit required for a loan from the government. Moreover, according to MoLSA (2009), there is a limited number of micro-finance institutions (MFIs) in Ethiopia. Most of them are small with limited coverage. The formal financial institutions are unwilling to advance loans to informal sector participants. The data demonstrates that lack of working place is the other cause for unemployment. A significant portion of the respondents in Addis Ababa (95.5 per cent) and Dire Dawa (90.8 per cent) strongly agreed that lack of working place for cooperatives led them to remain with no jobs. In-depth interviews with key informants are consistent with other informants’ claims that many cooperatives could not establish a fixed place of work due to the shortage of space in the cities. A related study on MSEs in Woldiya town has indicated that the lack of a work place hampers the development of MSEs to increase job opportunities (Kefale and Chinnan 2012, 25).


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7.3 Perceptions on the Consequences of Unemployment 7.3.1 Economic Ramifications of Youth Unemployment Table 4 presents the responses on the consequences of unemployment among youth. The costs of unemployment will depend upon all the particular conditions surrounding each person. The main effect of unemployment is poverty. In economic terms, unemployment means no income for an individual, which has the effect of reducing productivity along with living standards (ILO 2012). The unemployment problem has serious consequences for the national economy as a result of the loss of revenue from unemployed groups. The information gathered showed that there was a strong connection between unemployment and youth's financial dependency on families and others. The majority of the respondents in Addis Ababa (77.3 per cent) and in Dire Dawa (68.8 per cent) strongly believed that unemployment increases youth's financial dependency and that it, in turn, affects household savings. A moderate portion of the respondents (20.4 per cent and 27. 9 per cent, respectively) agreed. A total of 97.7 per cent of respondents in Addis Ababa and 96.7 per cent in Dire Dawa agreed that youth unemployment reduces parents’ savings. In other words, youth employment in one way or another impacts the household economic situation. Their unemployment could also cause psychological stress for parents, which in turn affects parent-child relation. Data indicated that many of the youth survive by relying on the meager financial incomes of their parents. In qualitative interviews, young people generally were somber about prospects to secure a job. Low family status was identified by respondents as one of the main factors that limit the chances of youth. This is consistent with other studies (e. g. Morris 2006) on unemployment trends in Asia where there is a direct correlation between family economic status and youth employment. Young people who reside in low-income households have a higher probability of being unemployed (ILO 2010). Participants of the study who were living with their parents stated that living with their parents without work increased their feelings of dependence. In response to the lack of employment opportunities within the formal sector, youth turn to a wide range of income-generating activities, both within and outside of legitimate work sectors within the informal economy. Diversification of income is believed to be the survival strategy for unemployed youth. Since a single type of activity cannot provide youth with sufficient income to survive, unemployed youth depend on a different livelihood portfolios and income sources. Analysis of qualitative interviews suggested that unemployment led youth to become unhappiness, and weakened their social and family relations. Lack of smooth relations between youth and parents make them more vulnerable to feeling of exclusion. The following quotation summarizes the problem well:

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I live with my family. I did not continue my education after Grade 10 examinations. My elder brother has a job and is helping our parents but I do not. My parents [usually] press me to go out and find work…I had started work in cobblestone paving but I found it hard to continue after I injured my hand twice. I am now uncomfortable with my parents… [But] they are right…If you do not have work not only your family members but also the neighbours do not have respect for you. [This is mainly because] my friends and I have spent more time sitting idle, so everyone knows us. (25 years, Wereda 01, Arada Sub-city, Addis Ababa)

The above story demonstrates that unemployment is a cause of youth feeling inferior and anxious. This is supported by the responses of more than half of the respondents in Addis Ababa (56.8 per cent) and in Dire Dawa (54 per cent), who strongly agreed that unemployment increases disagreements between parents and family members. Another important adverse implication of youth unemployment is that jobless youth develop carelessness towards their community. It was observed that young people who became long-term unemployed often developed low confidence and low self-esteem. A large portion of respondents in Dire Dawa (75 per cent) and in Addis Ababa (70.5 per cent) strongly agreed that unemployment deteriorates the self-esteem and confidence of youth.


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Table 4. Percentage distribution of respondents' responses on the effects of unemployment Statements

Conflict with family members Deteriorating self-esteem Rise crime rate Conflict among youth Increased dependency Reduces family saving Increases prostitution Leads to bad habits Increases ill/legal migrants Inability to access basic needs

Addis Ababa (n= 44) SA

A

N

D

56. 8 70. 5 70. 5 56. 8 54. 5 77. 3 38. 6 81. 8 34. 1 75. 0

37. 5 27. 3 29. 5 40. 1 18. 2 20. 4 52. 3 18. 2 59. 6 20. 5

0 0 0 0 0 0 4. 5 0 0 0

6. 3 2. 3 0 3. 1 27. 3 2. 3 4. 5 0 6. 3 4. 5

Dire Dawa (n= 32) SD 0 0 0 0 0 0 0 0 0 0

SOURCE: Field data (2013) Note: SA=strongly agree; A=agree; N=neutral; D=disagree; and SD= strongly disagree

SA

A

54. 0 75. 0 81. 3 62. 5 81. 3 68. 8 50. 0 87. 5 61. 1 65. 6

43. 8 25. 0 18. 8 35. 2 18. 8 27. 9 50. 0 12. 5 34. 4 31. 3

N 0 0 0 0 0 0 0 0 0 0

D 2. 3 0 0 2. 3 0 4. 5 0 0 4. 5 3. 1

SD 0 0 0 0 0 0 0 0 0 0

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7.3.2. Social Ramifications of Youth Unemployment Beyond economic costs, unemployment in urban Ethiopia has social ramifications. The lack of job opportunities in urban areas does not only have economic costs but also social costs to an individual, to an individual's family, and to the community at large. The unemployment of young people is reflected most visibly in the ‘idleness’ that increases the number of youth on the street, which in turn causes conflict among youth. About 56.8 per cent of the respondents in Addis Ababa and 62.5 per cent in Dire Dawa suggest that there is a direct relationship between being without a job and conflict among youth. While the causes of conflict and crime are complex (Shuja 2008), a police female informant (Gulele, Wereda 1) suggested that social problems related to the unemployment rate were common causes of violence and crime. Respondents strongly agreed that crime is connected to the high level of youth unemployment. About 81.3 per cent in Dire Dawa and 70.5 per cent in Addis Ababa strongly agreed that unemployment is a major cause of crime. During fieldwork, I did not find organized evidences from the Police Offices to look at the correlation between crime rate and youth unemployment. However, in my discussion, both youth and key informants identified a direct connection between youth unemployment and the incidence of crime and its social and individual costs. It was evident that the most common forms of crime in Addis Ababa are pickpocketing, snatching and running, robbery, cheating, and other petty crimes. The study informants further identified the increase of these crimes as a phenomenon related to unemployed youth. In contrast, crimes including drug dealing, which is illegal according to Ethiopian law, and crimes involving forging documents were reportedly prevalent among educated youth. To address the problem, the government has introduced several programmes in urban Ethiopia, and officials, community officials, and Wereda justice offices have engaged in a number of activities to eliminate crime. These include, among many others, encouraging youth to form cooperatives, fostering awareness on crime among youth, and giving youth the responsibility to keep the peace where they live and to report emergencies. These positive efforts to prevent crime and conflict among the youth were supported by the continued expansion of education and training courses and fully sponsored by the government and local NGOs. Many unemployed youth with little access to job opportunities develop socially unaccepted habits and deviant behaviour. The analysis reveals that about 87.5 per cent of the respondents in Dire Dawa strongly agreed with the statement that unemployment leads youth to develop bad habits such as stealing. In these sites chewing ‘Chat’ is not seen as a bad habit. Nevertheless,


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unemployed youth chewed ‘Chat’ to pass time. This resonates agrees with the findings of the study done by Cheema et al. (2009) in Pakistan, which revealed that unemployment increases the prevalence of drugs use among youth. In Addis Ababa, 81.8 per cent of respondents strongly agreed with this statement. According to Yusuf et al. (2010), when youth are long-term unemployed, they are more exposed to alcoholism and street life. The data from both study sites further shows that there is a connection between youth unemployment and addiction. According to interviews with representative of Youth Forum Association (March 2013, Dire Dawa), another cost of unemployment is youth seeking opportunities elsewhere and migrating illegally to improve their future. Because of the illegal nature of migration, precise statistical data are not available. However, the Ethiopian news (Ethiopian News Agency, July 11, 2012) reports indicate the growing rate of youth illegal migration overseas in search of jobs. This source indicates that “the business community is among the key stakeholders responsible to deal with illegal trafficking of people.” The study data showed that there were no striking variations regarding respondents’ responses to the statement that unemployment increases the level of youth preference to migrate. The study respondents in Addis Ababa (93.7 per cent) and in Dire Dawa (95.5 per cent) strongly agreed that the increasing level of unemployment leads to increases in legitimate and illegitimate migration. The increasing incidence of youth migration and crime in Dire Dawa is illustrated in the following story. The number of women migrants to different [particularly to Arabian] countries increases from time to time. Women who come from rural Kebeles for passport application formalities but who do not get the chance to finish the process remain in the town… [Finally], most of them are forced to involve in commercial sex work to generate income for a living. And that in turn increases the level of prostitution. [But], now the city authority has been acting to stop street sex workers …but I do not think this can be a solution. Some of them consider travelling illegally via Djibouti and this causes them to pay other costs. [Equally], the crime rate has increased with time because of the minimal job opportunities and the working culture of the society. The situation was not like this before in Dire Dawa. (Representative of Youth Forum Association, 28 years of age, Legehare Kebele 02, Dire Dawa)

Respondents reported a positive relationship between the increasing rates of unemployment and prostitution. The causes of prostitution are complex. However, poverty and unemployment are the causal factors that triggered a high level of prostitution in urban Ethiopia. Similar results are reflected in the ILO (2005), in which it was suggested that a lack of job opportunities as well as few economic options pushed young women into prostitution and exposed

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them to high risk of infection. Studies indicate that youth (15–29 years of age) are the most affected groups in Ethiopia. There were more women living with HIV/AIDS than men. Despite youth showing high levels of awareness of HIV/AIDS (Abebe and Kjørholt 2012), HIV/AIDS in cities such as Dire Dawa is continuing to attack the most productive segment of the society with the majority (57 per cent) being women (UNHSP 2008b). The study of Sommers (2010) on urban young people in Africa also indicates that prostitution could increase their vulnerability to HIV/AIDS. National policies aim to help vulnerable groups, particularly women who remain at a lower position in the labour market than men because of sociocultural factors that conditioned them to stay in the domestic realm. Despite the increased female enrolment trend (MoE 2012), the gender gap in education persists in Ethiopia, and women’s low educational level contributes to their being uninvolved in formal employment. For example, UNHSP (2008b) indicates that in Dire Dawa “only 29 per cent of women have a formal job […] also the higher levels of jobs are usually men’s domain [… due to women’s] high illiteracy rates (66 per cent to 34 per cent among men)” (page 14). Similarly, their participation in the formal sector is lower than men’s (41 per cent) in Addis Ababa. They dominate in the more insecure and lower paid informal sector (UNHSP 2008a). As suggested by a key informant (Wereda official, Dire Dawa, March 2013), gender disparity in terms of access to education and employment in the region as a whole is a cause for young women’s unemployment, which makes them more vulnerable to early marriage and associated problems. In my observation at Sabian TVET School, a good number of female students were attending training programmes such as Accounting, IT, and Secretarial Science. However, gender disparity can be more fully explained by the level of poverty among females, which is higher than the poverty rate of males (MoFED 2013). While detailed empirical evidence is not available, the problem of gender inequality is high in terms of income distribution, access to resources and credits, and access to labour market opportunities (UNIFEM 2009), all of which contribute to women’s high level of unemployment in Ethiopia. CONCLUSION This chapter has examined the nature, causes, and effects of youth unemployment in two urban centres of Ethiopia. The problem of unemployment in urban areas for youth is much more aggravated than for any other population group (CSA 2012). Though there is an increase in youth participation in the economic sectors, the study results indicate that disparities exist between the genders in terms of employment, major employment categories, and level of education. Young females are more affected by the limited availability of sustainable jobs than men are. The empirical data reveals


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that the causes and effects of youth unemployment are complex and compounded by a range of challenges including the availability of jobs, access to credit, training, and possibilities for upward social mobility through employment. Alleviating youth unemployment in Ethiopia requires collective effort and can be done in measured steps towards job creation and inclusive growth and social development. As noted in this chapter, a large portion of Ethiopia’s youth live in rural areas, where agriculture is the main source of livelihood. In contrast to urban areas, underemployment among rural youth is prominent (MoLSA 2009). Youth prefer to migrate to cities to find better employment opportunities, a phenomenon that is aggravating youth unemployment in urban areas. To address this, the World Bank report (2008) calls for a comprehensive model that tackles rural development, rural-urban migration, preparation of young people for the labour market, and investment in agriculture—activities to reduce youth migration to urban areas to search for jobs. Without these considerations, when the number and level of jobs available falls below the demand, there is potential for social tension and conflict (ECA 2002). Feelings of frustration and despair experienced as a result of poor job prospects may lead youth to engage in risky behaviour including alcohol, crime, and unsafe sexual activity. Encouraging small-scale businesses by providing appropriate facilities and mobilizing youth to become involved in blue-collar jobs has multi-faceted benefits. Small-scale business initiatives not only increase the probability of individuals finding employment but also reduce the chance of unemployed youth becoming involved in criminal activities. The ability of youth to generate income will have a positive impact on family income as well as the overall revenue of the country. Young people are a potential resource for growth and social development if gainfully employed and productively engaged (ECA 2002). Supporting youth employment can help break the cycle of poverty. Employment creation programmes in the public and private sectors in urban Ethiopia have been met with some success. However, the limited employment opportunities for young people were a critical challenge both for youth and organizations working for them. Employment creation efforts should not only focus on short-term labourintensive jobs but also long-term opportunities specifically for youth. Most of the formal employment sectors require skills and experiences and labour market knowledge. In addition to increasing the number of technical and vocational training centres, efforts must aim to prepare youth for employment by incorporating skills and enterprise development. In other words, policies must focus on training youth for work related to labour market needs and shift focus from mere job creation to security through employability. It is important to work closely with employers to help youth secure jobs. Training should

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match the demand of industrial needs. Training should also take into account the interests of youth and the skills they think will be vital to them. The government's emphasis on youth employment opportunity interventions needs to target the interest of young people. Promoting self-employment and entrepreneurship among youth would change the negative perception of young people about the informal economic sectors. This is because the promotion of entrepreneurship among young people is a means of youth development, economic empowerment and employment creation. It further enables them to develop skills and acquire valuable life-skills (ECA 2002). As discussed in the discussion section of this chapter, youth have difficulty accessing formal credits because of the problems associated with group collateral arrangements. It is important that individuals, organizations, and the government focus on providing formal credit and work premises in collaboration with city administrators to develop youth inspiration and attitude towards selfemployment. Equally important are strategies to encourage and support innovation among youth. References Abebe, T. and A. T. Kjørholt. 2012. Young people, participation, and sustainable development in an urbanizing world. A Working Paper. United Nations Human Settlement Programmed, Nairobi. African Capacity Building Foundation (ACBF). 2011. Addressing Africa’s youth unemployment challenge – What next steps required? Concept Note. Arusha, Tanzania, September 7. African Development Bank (ADB). 2012. Youth employment: Five challenges for North Africa. African Development Bank Group, Development Centre, United Nations Development Programme, Economic Commission for Africa, OECD, 16 July 2012, Tunis. African Economic Outlook (AEO). 2012. Youth unemployment. Retrieved on March 16, 2013 from: http://www. africaneconomicoutlook. org/en/in-depth/developingtechnical-vocational-skills-in-africa/tvsd-in-specific-contexts/youthunemployment/. Awogbenle, A. C. and K. C. Iwuamadi. 2010. Youth unemployment: Entrepreneurship development programme as an intervention mechanism. African Journal of Business Management, 4(6): 831–835. AYC. 2006. African Youth Charter. Adopted by the Seventh Ordinary Session of the Assembly. Banjul, the Gambia.


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CHAPTER 4 The Role of the Informal Sector in Alleviating Youth Unemployment in Hawassa Town, Ethiopia Tefera Darge Abstract The informal sector plays an important role in reducing urban unemployment, crime and violence, and in serving as a breeding ground for new entrepreneurs. This study is aimed at assessing the role of the informal sector in reducing youth unemployment. Data are gathered from a sample of 264 youth informal sector operators in Hawassa town. Ordinary logistic regression is used to determine the factors that can contribute to the livelihood improvement of the operators. Nearly 90 per cent of the operators have witnessed that their livelihood has improved after they joined the sector. Operators who are more educated, natives to the city, and more profitable, stayed longer in the activity, and have a culture of saving, have shown better livelihood improvement vis-à-vis their counterparts. However, lack of working capital, working premises, adequate market and raw materials were reported as the major impediments for the operators. Given the immense contribution that the sector has made, therefore, the government needs to consider the sector as one of the fundamental pillars to combat youth unemployment. Thus, an enabling environment has to be created to increase productivity, and to facilitate the transition of the sector to the formal sector by simplifying the bureaucracy to get licenses, and subsidizing entry costs such as licensing fees and tax holiday for sometime.

Keywords: Informal sector, formal sector, livelihood, youth, unemployment. INTRODUCTION The global youth unemployment has reached staggering proportions. In 2011, almost 75 million youth were unemployed around the world. Besides, the youth were three times more likely to be unemployed than adults. The youth unemployment rate in sub-Saharan Africa was 11.5 per cent (ILO 2012) while it was about 28 per cent in Ethiopia, and 23 per cent in Hawassa town (CSA 2011). The unemployment rate is higher among urban youth than rural youth in Ethiopia (Nebil, Gezahegn, and Hayat 2012; Guarcello and Rosati 2007). Thus, youth unemployment is a serious threat to the social, economic, and political stability of a nation (ILO 2012).

T. Darge. Role of the Informal Sector in Alleviating Youth Unemployment in Ethiopia 99

Several factors aggravated the high youth unemployment in Africa. Among the notable factors are a high proportion of youth population (slightly more than 20 per cent); underdevelopment of the economies, which leads to low job creation; small private sector to employ the growing youth population; low quality of education contributing to mismatch of skills needed by the labour market; lack of general and job-related skills; high rural-urban migration; and limited formal work experience (Nebil, Gezahegn, and Hayat 2012; Semboja 2007). Unemployment has been driving many African youth to engage in violence and criminal activities; and young women and girls into sex work; sexual violence, substance and drug abuse; and spread of HIV/AIDS. Poverty alleviation occupies a critical position in the development agenda of many developing countries, including Africa (Dhemba 1999). The persistent high rate of youth unemployment is among the critical development challenges facing countries. As a result, it seems that developing countries are giving more emphasis to improve the socioeconomic status of underprivileged groups (including youth) of the society to open up better opportunities for employment and income generation (Asmamaw 2004). Hence, integrating youth employment into the local development plan is crucial (UNDP 2012). It is well documented that the informal sector is the major provider of jobs for the youth in Africa (ILO 2012). For instance, about 38 per cent of youth were engaged in informal sector businesses in urban Ethiopia (CSA 2011). Besides, the informal economy gives youth opportunities for legal work by offering experiences and self-employment opportunities. Thus, understanding the contribution of informal sector employment in reducing youth unemployment is crucial for the success of economic development policies and poverty reduction strategies. However, studies in the area of links between the informal sector youth unemployment are few in Ethiopia. This study is, thus, aimed at assessing the role of the informal sector in reducing youth unemployment in Hawassa town, and suggesting appropriate policy recommendations. The study intended to answer the following questions: i. What are the characteristics of youth informal sector operators in Hawassa town? ii. What are the constraints and challenges facing the youth informal sector operators of Hawassa town? iii. Is there an improvement in the livelihood of youth informal sector operators in Hawassa town? iv. What are the determining factors for livelihood improvement among youth informal sector operators in Hawassa town?

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LITERATURE REVIEW The informal sector refers to a home-based or an individual establishment or an activity operated by the owner with few or no employees. The sector is characterized by family operation of business, reliance on indigenous resources, ease of entry, small-scale operation, labour intensive and adapted technology, skill acquired outside the formal school system, unregulated and competitive market, relatively low level of capital requirement and bypassing of regulations including taxation (Yuki 2007; UNESC 2006; Reddy, Vijay and Manoranjan 2002). Besides, they are not recognized, supported or regulated by the government; and beyond social protection, labour legislation and protective measures at the workplace. On top of that, informal sector operators have little or no access to organized markets, credit institutions, and public services. Further, they do not have a fixed place to work; as a result they often carry out their business in small shops, streets, outlets or home-based activities (CSA 2004). The informal sector is dominated by the most vulnerable groups – unskilled and less educated youth and women (Broussara and Tsegay 2012). In contrast, Palmer (2004) in his work of informal economy in sub-Saharan Africa depicted that the levels of education among informal sector operators and apprentices is rising due to the move towards education for all. Besides, poor people migrate to the urban areas thinking it more beneficial to work in the urban informal sector. But their livelihoods vary according to their level of education and the skills they have (Timalsina 2011). A study by Reddy, Vijay and Manoranjan (2002) showed an important increase in the incomes and assets of informal sector operators after joining the sector. Similarly, a study conducted in Botswana on the role of informal sector and self-employment in poverty alleviation depicted that the income of those who joined the informal sector has improved (Kapunda and Mmolawa 2007). According to Chowa, Rainier and David (2012), saving has the potential to positively influence livelihood of low-income individuals, like informal sector operators, by generating returns, and by reducing a fall back during hard time and emergency situations. A study by Haan (2002) on training for workers in the informal sector shows that most of the termination of an informal sector business occurs in the early years of its establishment. For instance, in Africa over half of the closure of the business took place within the first 3 years of start up; in Kenya and Zimbabwe between the first and second years of operation. This shows that the sector is vulnerable during the early years of establishment. Thus, the longer stay in the activity the lesser the vulnerability, and the better improvement in livelihood. The informal sector plays an important role in urban poverty alleviation by creating jobs and reducing unemployment (Lal and Shiu 2006; Reddy, Vijay


and Manoranjan 2002). In urban areas of Africa, for example, employment in the informal sector is estimated to be 60 per cent (World Bank 2008); this figure is about 37 per cent in Ethiopia, and 26 per cent in Hawassa town (CSA 2011). The sector also provides a wide range of services, and produces a variety of basic goods that can be used by all classes of consumers, especially by the low income groups (Asmamaw 2004). Moreover, the sector can serve as a breeding ground for new entrepreneurs, and absorbs the labour force that is left out of the formal sector employment (UNCHS 2006). In addition, the sector contributes to reducing urban crime and violence by generating employment for the unemployed (Reddy, Vijay and Manoranjan 2002). However, policy makers in the region focused on the expansion of formal sectors for employment creation by ignoring the informal sector (Sparks and Stephen 2010). Consequently, the informal sector has remained neglected and has not been integrated into the development process (Asmamaw 2004). Its persistence and expansion over time show that the sector is not a transitory phenomenon in the development process. Rather, it is normally absorbed by the formal sector (Ruffer and John 2007) and, thus, the sector can be regarded as a transitional stage in the move to formal employment (UNCHS 2006). Therefore, the sector needs support to maintain businesses and to transform it into formal business ventures. 3. METHODOLOGY 3.1 Sampling and Method of Data Collection The study area, Hawassa town, is the capital of the Southern, Nations, Nationalities and People’s (SNNP) region that is located about 275 kilometers South of Addis Ababa, the capital of Ethiopia. It is the main administrative, commercial, industrial and tourist centre in the region. The town is one of the fastest growing urban centres in the country. According to the 2007 Ethiopian Population and Housing Census, the youth population of Hawassa town was 23,116, of which 47.2 per cent were males and 52.8 per cent were females (CSA 2008). Multistage sampling method was employed to identify the informal sectors operated by youths. Hawassa town is subdivided into eight sub-cities. In the first stage eight clusters were formed using the eight sub-cities. Then using simple random sampling method, four of the sub-cities were selected, assuming that there is no discernible difference in the characteristics of youth informal sector operators among sub-cities. The selected sub-cities are: Tabor, Menaheria, Misrak and Haike-dar. The selected sub-cities have twelve kebeles (i. e., smallest administrative units). In the second stage, a sample of nine kebeles was selected from the sub-cities using simple random sampling, with

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the assumption that there is no significant difference in the characteristics of youth informal sector operators among kebeles. Then a central position within a kebele is located and a random direction is then chosen by spinning a pen. Following the direction towards which the sharp end of the pen points, every fifth informal sector activity among the selected activities operated by youth were selected in this manner. The Central Statistics Agency (CSA) of Ethiopia’s definition is used to determine whether the enterprise is an informal sector enterprise or not. Accordingly, the enterprise or business is informal if it does not have a license, and book of accounts that shows the monthly income statement and balance sheet (CSA 2011). The sample size is determined using the formula (Cochran 1977):

 z n    e

2

   

2

p (1 

p )

where e is the level of precision (6 per cent);  is the level of significance (5 per cent); and p is estimated proportion of urban youth in the informal sector. According to an urban employment/unemployment survey of Ethiopia, among currently employed youth population in the urban areas, about 38 per cent are employed in the informal sector (CSA 2011). Hence, p = 0. 38 is used to calculate the sample size. By substituting the values in the above formula and adding 5 per cent contingency, a sample size ( n  264) of informal sectors operated by youth was selected. Following this, the sample size was distributed among the selected kebeles based on the proportion (size) of informal sectors in the kebeles. Finally, data are gathered using a structured questionnaire. The data collection was undertaken during April 11 – 24, 2011. 3.2 Variables and Categorizations Response Variable The response variable of the study is the livelihood improvement of the youth informal sector operators. It is categorized into four ordered responses: no improvement, satisfactory improvement, good improvement, and very good improvement in livelihood. Explanatory Variables The explanatory variables included in the study are: age (adolescents 15–19 years, and young adults 20–24 years), sex (male/female), educational level (no


education, primary level, secondary level, and certificate and above level of education), migration status (migrant/native to Hawassa town), saving status (saver/non-saver) initial capital (grouped into three equal parts: =1000 Birr), monthly profit (grouped into three equal parts: 1008 Birr), marital status (never married/ever married), religion (Orthodox, Protestant, Muslim, and others), and length of stay in the activity (a year and below/more than a year). 3.3 Methods of Data Analysis Before analysis, variables were coded, categorized and labelled accordingly. Then the sample description was made using the mean and standard deviation (SD) or median and inter-quartile range for quantitative variables; and proportions for categorical variables. The ordinal logistic regression method is used to model the relationship between the ordinal response variable and different explanatory variables. Models with terms that reflect ordinal characteristics, such as monotone trend, can improve model parsimony and power (Agresti 2002). Besides, the ordinal regression analysis takes into account the ordinal nature of the dependent variable (Green 2003). The proportional odds model is one of the widely used logistic regression models for ordinal response (Hosmer and Lemeshow 2000). The response variable of this study, the improvement in livelihood, is an ordinal variable and has four categories: no, satisfactory, good, and very good improvement in livelihood. Thus, the study used ordinal logistic regression with proportional odds model to determine factors that affect livelihood improvement of the operators. Multicollinearity, a model adequacy test, was checked using variance inflation factor (VIF); and the proportional odds assumption was checked using the Wald test. Moreover, outliers and influential values were detected by plotting standardized residuals against the predicted probabilities by applying separate binary logistic regression approach (Hosmer and Lemeshow 2000). Age, sex, educational level, migration status, marital status, religion, initial capital, monthly profit, saving status, and length of stay in the activity of operators were included in the model. Then the backward stepwise procedure based on likelihood ratio was used to select the variables included in the final model. Finally, the adjusted odds ratios (OR) and 95 per cent confidence intervals (CI) were reported for each of the variables in the final model. The statistical analysis was performed using STATA/IC 12.1 for Window and SPSS version 19.

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RESULTS AND DISCUSSION 4.1 Sample Characteristics The average age of the operators is 20.5 years with standard deviation (SD) of 2.4 years; a majority of them, about 70 per cent, are young adults (20-24 years) while the remaining 30 per cent are adolescents (15–19 years). Regarding the sex distribution, about 62 per cent are males and the remaining are females. Of the total sample respondents, slightly higher than half of them have primary education, a quarter of them have secondary education, and a tenth of them have certificate and above level of education. This finding suggests that an overwhelming majority (almost 92 per cent) of the operators have basic literacy. This is due to the fact that youth with more education are entering into the sector. Palmer (2004) also found the rising levels of education among informal sector operators and apprentices in sub-Saharan Africa. As to the marital status of the operators, about 79 per cent of them are never married and the remaining 21 per cent are married. The religious affiliation shows that about 48 per cent are Protestants, 40 per cent Orthodox Christians, 10 per cent Muslims, and 2 per cent followers of other faiths. The migration status of respondents indicates that about 70 per cent of the sampled operators were migrants to Hawassa town. The average length of stay in the activity is 2.25 years with SD of 1.85; and about 60 per cent of the operators stayed more than a year in the business (see Table 1).


Table 1. Profile of informal sector operators in Hawassa town, 2011. Characteristics Age group 15–19 20–24 Sex Male Female Educational level No education Primary (1–8 grade) Secondary (9–10 grade) Certificate and above Marital status Never married Ever married Religion Protestant Orthodox Muslim Others Migration status Migrant Natives Length of stay in the activity A year or below More than a year

Number

%

264

Mean (SD) 20. 5 (2. 4)

30. 3 69. 7 264 62. 1 37. 9 264 8 56. 4 26. 1 9. 5 264 79. 2 20. 8 264 48. 1 39. 4 10. 2 2. 3 264 70. 1 29. 9 262

2. 25 (1. 85) 40. 5 59. 5

4.2. Informal Sector Activities Covered in the Survey The informal sector covers a wide range of activities. Some of the activities include selling fruits and vegetables, clothes and shoes, and other consumables, food processing and sale, small manufacturing, production, construction and repair of goods, physical labour, changing money, domestic works, prostitution, drug peddling, handicrafts, hairdressing and shoeshining (UNESC 2006; Yuki 2007; Reddy, Vijay and Manoranjan 2002). In this study, however, seven informal sector activities, the dominant activities in the town, were selected. These include selling cooked food and drinks, selling clothes and shoes, repairing bicycles/motor cycles, vending vegetables

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and fruits, beauty saloon, shoes polishing, and selling various items in kiosks (see Table 2). Table 2. Selected informal sector activities operated by youth in Hawassa town, 2011. Activities Selling cooked foods/drinks Selling clothes/shoes Repairing bicycles/motor cycles Vending vegetables/fruits Beauty saloon Shoes polishing Selling various items in kiosks Total

Number of operators 62 44 43 33 32 29 21 264

% 23. 5 16. 7 16. 3 12. 5 12. 1 11. 0 8. 0 100

Nature of the Informal Sectors 4.3.1 Skills Acquired to Apply in the Job Informal sector workers usually acquire necessary skills through either on the job training or traditional apprenticeship system (UNDP 2012; UNESC 2006; Haan 2002). The survey result shows that the majority of the operators (83 per cent) have self-learned the skills, 11 per cent through apprenticeship or on job training, and 6 per cent from their family (see Figure 1). This clearly indicates that the operators lack formal skills training that supports their activity.

Figure 1. Skills Acquired for the Informal Sector Activities by Youth Operators, 2011

4.3.2. The Length of Working Days and Hours The informal sector activity requires longer working days and hours. The result demonstrates that, on average, the operators work for 10. 71 hours per day with SD of 2. 36 hours. Besides, the median days per week an operator spends is 6. 48 days with Inter Quartile Range (IQR) of 1. 11 days (see Table 3). This is one of the indicators which show that the sector demands extensive labour and time investment, because the marginal profit contribution of labour


productivity is very low. As a result, the operators are needed to invest long hours to maximize their profit. This result is slightly higher than the study finding in Fuji, which showed that urban informal activity workers worked 10 hours a day and 6 days a week (Lal and Shiu 2006). Table 3. Length of working days and hours by youth informal sector operators, 2011 Variables Working hours per day Working days per week

Number 262 264

Mean (SD) or Median (IQR)* 10. 71 (2. 36) 6. 48 (1. 11)

* IQR is the difference between 75th percentile and 25th percentile.

4.3.3 Initial Capital and Its Source Entry barriers into the informal sector are quite negligible for most of the operators because in most cases the business requires low initial capital. This study has found that the median initial capital required for the selected informal sectors was about 514 Birr with large variation, IQR, of 1424 Birr (see Table 4). Shoe-shining business requires the minimum start-up capital of all sectors considered, that is, on average Birr 150. To start a beauty salon, on average Birr 2572 is required, which is the maximum start-up capital of all sectors considered (see Table 6). Sixty seven per cent of the operators indicated that their source of start-up capital came from saving cooperative called “Equb”. While 17 per cent have borrowed from friends or relatives, 13 per cent have obtained assistance from friends or relatives, 2 per cent have borrowed from micro finance institutions, and the rest have utilized inheritance to start their business (see Table 4). This finding clearly indicates that only a slim portion of the operators has got support from formal financial institutions. The result also coincides with the national urban informal sector survey result of Ethiopia (CSA 2004).

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Table 4. Initial capital and its source, 2011 Variables

Number

Initial capital (in Birr) =1000 Source of initial capital Saving cooperative or “Equb” Borrowed from friends/relatives Assistance from friends/relatives Borrowed from micro finance institutions Inherited

%

259

Median (IQR) 513. 6 (1424. 2)

33. 6 31. 3 35. 1 261 67. 0 16. 9 12. 6 1. 9 1. 5

4.3.4 Monthly Profit and Saving Status Profit level in the informal sector is generally low (UNESC 2006). However, in this study the median monthly profit was found to be about Birr 765, which is more than twice the minimum wage in Ethiopia, and almost equal to the monthly salary of a fresh bachelor’s degree graduate in Ethiopia’s civil service salary scale. This finding is in line with the study result of Haan (2002) which concluded that the gross income in informal sector enterprises is 2.5 times higher than the minimum wage. However, there is a large variation in the monthly profit with IQR of 753 Birr. For example, the average profit ranges from Birr 500 for shoeshine workers to Birr 1148 per month for vegetable/fruit vendors (see Table 6). Informal sector operators usually use own saving for starting and expanding their business. The study shows that about 74 per cent of the operators save a portion of their income (see Table 5). Table 5. Monthly profit and saving status of informal sector operators, 2011. Variables Profit per month (in Birr) 1008 Saving status Saver Non-saver

Number

%

262

Median (IQR) 764. 4 (753. 2)

30. 9 36. 6 32. 5 264 73. 5 26. 5


Table 6. Initial capital and monthly profit of the informal sector, 2011 Activities Selling cooked food/drinks Selling clothes/shoes Repairing bicycles/motor cycles Vending vegetables/fruits Beauty salon Shoe polishing Selling various items in kiosks Total

Initial capital (Median/IQR)

Monthly profit Median (IQR) or Mean (SD)

428. 6 (1067. 5) 846. 7 (1075) 371. 4 (278. 6) 716. 7 (1087. 5) 2571. 4 (8500) 150 (106. 7) 2500 (3858. 3) 513. 6 (1424. 2)

609 (822. 5) 826 (837) 818 (338) 1148 (1600. 2) 882 (658) 500 (259) 1058. 4 (1661. 1) 764. 4 (753. 2)

4.3.5 Constraints and Challenges Facing the Operators Informal sector operators are constrained by a myriad of challenges which deter and limit the potential for growth and productivity. The result shows that, about 72 per cent of the operators have been struggling with impediments in their activity. Shortage of working capital is the major obstacle affecting 63.3 per cent of the operators. This result corresponds with the urban informal sector survey result of Ethiopia (CSA 2004). Similarly, lack of working premises (55.3 per cent), inadequate market (43. 6 per cent), and lack of raw materials (39.4 per cent) are the other major challenges operators struggling with. In addition, the operators indicated that bureaucratic bottlenecks to obtain license, lack of credit service, family responsibilities, problem with workers, inadequate skill, social responsibilities, health problems and government regulations are also among the hindrances of their business (see Figure 2).


Percent

110

70 60 50 40 30 20 10 0

63.3 55.3 43.6

39.4 28.7 20.7

14.4 10.6 8.0

5.9

Figure 2: Constraints and Challenges Facing Youth Informal Sector Operators, 2011

4.3.6 Improvements in the Livelihood of Informal Sector Operators The sampled operators were asked to rate their livelihood improvement after they joined the sector. Accordingly, 23.6 per cent of them rated their livelihood improvement as very good, 30.4 per cent as good, 35.4 per cent as satisfactory, and the remaining 10. 6 per cent did not witness any change in their livelihood. In sum, about nine out of ten operators have witnessed that their livelihood improved in one way or another after they joined the sector. In this connection, about 80 per cent of the operators have indicated that they had managed to meet their basic needs, 77 per cent of them said that they had been relieved from unemployment, and 39 per cent of them succeeded in supporting their family. On top of this, operators testified that they had started to fulfil their social obligation that requires them to make financial contributions, resumed their education, and created fixed assets after they joined the sector (see Figure 3). This finding is in agreement with earlier research findings which concluded that the income and asset of those who joined the informal sector have improved (Kapunda and Mmolawa 2007; Reddy, Vijay and Manoranjan 2002), and this has a direct impact on improvement of their livelihood.


Figure 3. Type of improvements in livelihood among informal sector operators, 2011

4.3.7 Determinants of Improvements in Livelihood Ordinal logistic regression analysis is used to identify the determinant factors of livelihood improvements of the youth informal sector operators. Among the variables included in the model, educational level, migration status, monthly profit, saving status, and length of stay in the activity are found to be statistically significant predictors of livelihood improvement as indicated in Table 7. The findings indicate that the odds of attaining better livelihood improvement are 62 per cent less for operators with no education compared to operators with certificate and above level of education. This result suggests that improvement in livelihood goes with the educational level of the operators. Education is more relevant to the modern world of work in which problem-solving and flexibility are required to tackle the market competition (Simon et al. 1994). Besides, educated operators have a better idea for business, know how to deal with their customers, and know the best item for sale to generate more profit. This result also agrees with the conclusions of Wamuthenya (2010) and Adams (2008) that earning increase is proportional to the level of education in the informal sector. Similarly, in a study by Adhikari (2011), highly educated informal sector operators earned twice that of their illiterate counterparts. Migrant operators are 48 per cent less successful in livelihood improvement compared to the native operators of the town. This may be because migrants

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move to the town with high expectation of livelihood improvement. However, they are obviously confronted by a host of challenges and difficulties while struggling to adjust themselves with the lifestyle of the town. Besides, migrants might be treated partially or discriminated when looking for working premises and other support to expand their business. In addition, new migrants may not have strong ‘informal social network’, so that they may not engage in profitable activities as it needs already established relationships in the sector (Palmer 2004). The odds of making better improvement in livelihood are 2.43 and 5.54 times more likely for operators who earn an average monthly profit of 588–1008 Birr, and more than 1008 Birr, respectively, than those operators who earn an average monthly profit of less than 588 Birr. This means operators who are generating more profit are enjoying better livelihood improvement. It is obvious that generating more profit reduces the financial vulnerability of operators, and therefore helps operators increase their welfare and improve their livelihood. Saving can boost the odds of livelihood improvement by over 3 folds when the operators have a saving culture than when they do not have the culture. Saving helps people to plan for future expenses, cope with stochastic crises and cover unanticipated expenses (Bamlaku 2006) which have a positive influence on the livelihood improvement. Besides, savings are particularly important to people living in countries where formal social safety nets are not widely available, as in Ethiopia, to cope with shocks and emergencies (Chowa, Rainier and David 2012). It also helps operators to diversify their activities and generate more profit. The longer the operators stayed in the business, the better improvement the operators have in their livelihood compared to the operators who stayed short in the business. Accordingly, those operators who stayed in the sector for more than a year have shown a chance of improvement in their livelihood by 1.58 times more likely than those operators who stayed in the sector for a year or less. Informal sectors are mostly susceptible for closure during the early years when the operators are still in the process of learning how to operate the business (Haan 2002). However, with longer stay in the business, the operators familiarize themselves with the business environment and generate more profit which helps them to improve their livelihood.


Table 7. Adjusted OR and 95 per cent CI from ordinal logistic regression model for improvement in livelihood of youth informal sector operators in Hawassa town, 2011 Variables Level of Education No education Primary Secondary Certificate and above (ref) Migration status Migrant Native (ref) Monthly profit (in Birr) 1008 Saving status Savers Non savers (ref) Length of stay in the activity A year or less (ref) More than a year

OR

95 % CI

P-value

0. 38 0. 47 0. 92 1. 00

(0. 29; 0. 90) (0. 23; 1. 21) (0. 44; 1. 92)

0. 041 0. 082 0. 672

0. 52 1. 00

(0. 30; 0. 89)

0. 018

(1. 36; 4. 34) (2. 89; 10. 63)

0. 003