Facing the growing unemployment challenges in Africa

In the context of slowing emerging markets and commodity price turmoil, both Northern Africa and sub-Saharan Africa face risks of slowing progress in terms of jobs quality and productive opportunities.

Press release | 20 January 2016
ADDIS ABABA (ILO News) – With high levels of unemployment and vulnerable employment on the rise, the world of work in Africa is still facing tremendous challenges in terms of job creation and sustainability, warns a new ILO report.

Unemployment appears to be on a downward trend in Northern Africa, but labour market distress remains pervasive, particularly among women and youth.
Northern Africa still exhibits the highest unemployment rate globally, at 12.1 per cent in 2015, however this is an improvement from 12.5 per cent a year earlier and marks the first decrease since 2011.

Meanwhile, growth remains too low and not sufficiently inclusive to make a significant impact on youth unemployment. Northern Africa has the highest regional youth unemployment rate in the world, at close to 30 per cent in 2015, with little sign that it will decline in the near future.

In addition, large shares of youth find themselves not in education, employment or training (NEET). Recent data shows that, among those aged 15-29, NEETs account for 32 per cent in Tunisia (reaching some 42 per cent of young women) and 40 per cent in Egypt (64 per cent of young women).

The situation for female labour force participation also remains chronic in Northern Africa, where the female rate of 22.5 per cent is considerably lower than males at 73.8 per cent, bringing the average for both sexes to 48 per cent, the lowest of all regions in the world.

Creating productive jobs remains a key challenge in sub-Saharan Africa

Poor job quality remains a pressing issue worldwide, with over 1.5 billion people in vulnerable employment, representing nearly half the global workforce.
The situation is particularly endemic in Sub-Saharan Africa where over 70 per cent of workers are in vulnerable employment against the global average of 46.3 per cent. These are workers that have limited access to social protection schemes and are often confronted by low and highly volatile earnings.

A large part of vulnerable employment is composed of females classified as contributing family workers.

Further, the informal economy in the region contributes 50-80 per cent of GDP; 60-80 per cent of employment; and 90 per cent of new jobs. What more, 9/10 workers in both rural and urban areas are estimated to hold only informal jobs.

The share of informality varies across the region: informal employment is lower in southern Africa, where it ranges from 32.7 per cent in South Africa to 43.9 per cent in Namibia. In other sub-Saharan African countries, the percentage exceeds 50 per cent and reaches as high as 76.2 per cent in the United Republic of Tanzania, 89.2 per cent in Madagascar and 93.5 per cent in Uganda.

After leaving school, a striking majority of young people enter the informal economy, while many migrate, looking for opportunities elsewhere.

In spite of this, working poverty is gradually declining. The share of workers in poverty – i.e. those living on less than US$1.90 per day, PPP – stood at 64 per cent in 2015 and it is expected to decline slightly over the next two years.

Economic outlook paints a mixed picture for the African region, with clear differences between Northern Africa and Sub-Saharan Africa

Signs of economic recovery are surfacing in Northern Africa, although security and political factors continue to weigh on growth. Meanwhile, growth in sub-Saharan Africa remains solid but highly uneven across countries with commodity price declines weighing negatively on exporters.

In line with the stronger growth outlook, productivity growth in Northern Africa is also projected to pick up in coming years, increasing from 1.1 per cent in 2015 to 2.1 per cent by 2017. Yet, productivity gains remain weak compared to productivity performances in some regions at a similar stage of economic development.

Meanwhile, output per worker in sub-Saharan Africa is expected to have grown by only 0.5 per cent in 2015, picking up to 1.7 per cent by 2017. While above-average productivity growth (3 per cent or higher) was observed in Ethiopia, Kenya and Tanzania, Angola, Cote d’Ivoire and South Africa posted negative productivity growth in 2015.

The current figures highlight the difficulty sub-Saharan Africa has had in increasing agricultural productivity and reducing reliance on natural resources. There is also a high productivity gap between informal and formal enterprises in Africa.

Further, given the prevalence of informality and lack of productive opportunities, sub-Saharan Africa has the highest emigration rate globally. According to UN population statistics, the region has an emigration rate of 1.5 per cent, against a global average of around 1 per cent.

Evidence indicates that lack of decent work opportunities – including high incidence of working poverty and lack of adequate social protection – is a significant determinant of this emigration.

SDGs provide an opportunity to refocus on pressing shortfalls

Core challenges for Northern Africa include the following:
  • High unemployment and youth unemployment rate (SDG targets 8.5, 8 .6 and 8.8): As it stands, the youth unemployment rate in Northern Africa is the highest of all regions, reaching 45 per cent for female youth. Addressing this challenge is of particular importance, as high rates of unemployment have been linked to political instability in the region.
  • Uneven social protection (SDG target 1.3): The coverage of social protection systems including social assistance is uneven and fragmented in the Northern Africa region. Pension coverage varies across the region, reaching 30–40 per cent of the workforce in countries such as Algeria, Egypt, Morocco and Tunisia, but reaching a very small proportion of the population in countries such as Sudan. Furthermore, informal workers are not covered by any social protection scheme.
Core challenges for sub-Saharan Africa include the following:
  • Decent work (SDG target 8.5): Despite relatively low unemployment rates and high labour force participation, underemployment, working poverty and poor job quality remain significant problems.
  •  ILO labour standards: Ratification of the ILO fundamental Conventions is high in the region: only six countries have not ratified one or more of the eight fundamental Conventions. However, countries in the region lack sufficient institutional capacity for enforcement, as evidenced by the widespread breaches of the core standards (SDG target 8.8).
  • Social dialogue and collective bargaining: Effective social dialogue is necessary for inclusive and sustainable growth. While data are not sufficient to comprehensively evaluate the status of social dialogue and collective bargaining in the region, trade union density in general is low (generally below 5 per cent; highest in South Africa at 24.9 per cent (2008)). Collective bargaining coverage is generally at 10 per cent or less of total employment (SDG 9).