The World Bank: Creating good jobs in Africa: demand- and supply-side policies

In Africa people do have jobs: they are simply too poor not to work. Instead, the problem is underemployment; typically 90% (or more) of the labor force is in the informal sector such as subsistence agriculture and urban self-employment in petty services. African labor markets remain marked by large disparities in incomes between a small number of formal public and private employees, and the vast informal sector. For example, in the major cities of Douala and Yaoundé in Cameroon, about 96% of employment is informal. (Golub and Hayat 2014,Benjamin and Mbaye 2014, Mbaye et al 2015).

These informal sector workers have no job security, minimal benefits, very low pay, and often face hazardous working conditions.  So the challenge is to create better jobs, as well as more jobs.

Impediments to both labor demand and supply account for Africa’s lagging performance in creating formal sector jobs: 

1. Lack of demand for labor arising from the product market;
2. Human capital deficiencies due to inadequate education, training and health services.

On the labor demand side, firms emphasize lack of infrastructure, corruption and pervasive red tape as the most significant barriers to investment. On the supply side, while major strides have been made in educational attainment, schooling and training programs often fail to provide the skills that employers seek. 

Read the full article at The World Bank.

Stephen Golub, the Franklin and Betty Barr Professor of Economics, is an expert on international trade and finance, money and banking, U.S.-Japan economic relations, exchange rates, and capital flows. He teaches courses in international economics, macroeconomics, microeconomics, money and banking, development, and introductory economics.