in Sub-Saharan Africa

Transcription

1 Youth Employment in Sub-Saharan Africa Deon Filmer and Louise Fox with Karen Brooks, Aparajita Goyal, Taye Mengistae, Patrick Premand, Dena Ringold, Siddharth Sharma, and Sergiy Zorya A copublication of the Agence Frangaise de Developpement and the World Bank

2 Contents Foreword xix Acknowledgments xxi About the Authors xxiii Acronyms and Abbreviations xxvii Overview Youth Employment in Sub-Saharan Africa 1 Africa's Large Youth Population 2 Growth, Jobs, and Africa's Labor Force Now and in the Future 3 Youth's Transition to Productive Employment 6 Policy Priorities for Addressing Youth Employment 8 Human Capital: The Fundamental Role of Basic Education 10 Raising the Productivity of Smallholder Farmers 11 Increasing the Productivity of Nonfarm Household Enterprises 15 Improving Competitiveness to Boost Modern Sector Wage Jobs 18 Building an EfFective Youth Employment Policy 21 Notes 22 References 22 1 Opportunities and Challenges for Youth Employment in Africa 25 Africa's Working-Age Population: Very Young and Growing Rapidly 25 Can Africa's Youth Bring an Economic Advantage? 26 What Is a Job, and Where Do Most Africans Find One? 28 Growth, Jobs, and Africa's Labor Force Now and in the Future 30 Framework of This Report 41 Notes 41 References 42 Focus Note 1 Jobs: More Than Just Income 43 The Value of Jobs 43 Jobs and Aspirations 44

3 X Contents Jobs and Development 45 References 47 2 Youth: A Time of Transitions 49 Youth's Transition from School 50 Youth's Transition to Work 53 The Parallel Transitions: Choices Influencing Health, Family Formation, and Civic Engagement 60 Challenges for Females Transitioning to Work 62 Facilitating Transitions from School, to Work, and across Sectors of Employment 64 Notes 64 References 64 3 Skills for Productive Employment 67 Schooling, Educational Attainment, and Work 68 Building a Foundation: Cognitive, Socioemotional, and Behavioral Skills 75 Building Skills through Post-School Training 89 Government Interventions and the Post-school Training Market 94 Conclusion: A Skills Agenda for Youth 102 Notes 103 References Agriculture as a Sector of Opportunity for Young Africans 113 Agriculture: Potential Opportunity, Room to Grow 114 Recognizing the Opportunity in Agriculture for Young People 117 Agricultural Career Paths for the Future 120 Lifting Key Constraints on Capital, Land, and Skills 123 Land Policies That Benefit the Young 127 Enhancing Skills and Building a Better Educational Foundation 130 Current Agricultural Programs Deliver Too Little, Too Slowly, to Meet the Needs of Africa s Young People 135 Harnessing Agriculture's Youth Dividend 137 Notes 137 References 138 Focus Note 2 Safety Nets and Pathways to Productive Employment 142 Short-Term Benefits of Safety Net Programs 142 Safety Nets Plus Explicit Productive Components 143 Do Complementary Interventions Open Pathways toward Productive Employment for Youth? 144

4 Contents xi Safety Nets as Vehicles to Deliver Interventions Aimed at Improving Youth Employment Outcomes 145 Notes 146 References Creating Productive Employment for Youth in the Household Enterprise Sector 149 The Household Enterprise Sector Today 152 The Business: Constraints and Opportunities 153 Constraints for Young People to Enter the HE Sector 157 Creating and Sustaining Productive Employment in Household Enterprises 159 What Should Governments Do to Help Equip Youth with Skills for the HE Sector? 167 Market Access and Voice 174 Conclusion 177 Notes 178 References 180 Focus Note 3 Financial Indusion and the Transition to Sustainable Livelihoods for Young People 183 Gaps in Access to Savings and Credit 183 Formal Savings Services: Issues and Options 184 Formal Credit Services: Challenges in Expanding Options for Smallholders, Household Enterprises, and Young People 188 Notes 194 References Raising Productivity in Africa's Modern Wage Enterprises to Foster Job Growth for Youth 197 Africa's Modern Enterprise Sector: An Overview 198 Modern Manufacturing Delivers Little Employment, Few Exports 199 How Competitive Is Modern Manufacturing in Africa? 200 Sources of Productivity Gaps in African Manufacturing 207 Making African Firms Competitive: Priorities for Improving the Business Climate and Workforce Skills 212 Building Skills for the Modern Wage Sector 224 Many Options to Promote Competitive Modern Enterprises 231 Notes 232 References 233

5 xii Contents Focus Note 4 Youth Unemployment in South Africa: Different Configuration, Different Approaches 238 Conventional Perceptions of the Causes of Unemployment 238 The Real Unemployment Problem: Slow Growth 239 Inefficient Job Search and Malching Processes 240 Policies to Reduce Unemployment 240 References Condusion: Building an Effective Youth Employment Policy 243 A Programmatic Approach 243 "Do Now for Now": Address the Constraints Pacing Households and Firms 244 "Do Now for Later": Take Action for Medium-Term Payoffs 246 Appendix A Note on Data 249 Standardized and Harmonized Household and Labor Force Data 249 Demographic and Health Survey Data 249 Boxes O.l What is a "job"? The youth employment challenge in resource-rich and some middle-income countries in Africa What will happen to employment if light manufacturing increases dramatically in Africa? Youth employment versus overall employment Framework for analyzing youth employment Does labor need to move out of agriculture as productivity grows? Youth versus overall employment How are our employment estimates done? The challenge of diversifying Output and employment in resource-rich countries: Examples from Central Africa How are our employment projections done? 36 F1.1 Employment, confhct, and violence: Is there a link? Child labor in Sub-Saharan Africa Intergenerational transmission of occupations in Africa Estimating the returns to education A second chance at education for African youth Northern Ghana's School for Life second-chance education program Returns to behavioral skills in wage employment: Evidence from Peru Developing socioemotional and behavioral skills in postconflict settings Promoting socioemotional and behavioral skills On-the-job training varies by country and type of firm, and it is not for everyone 95

6 Contents xiii 3.8 Kenya's Jua Kali voucher program Can incentives improve training quality and participation? Impact evaluation to build the evidence base on youth employment programs Women and girls: A major force within Africa's agricultural labor force When agriculture is more productive, economies can grow Compromising growth and job creation without improving long-term food security Producer organizations and the transition to modern supply chains Options for establishing or leaving a farm in Kenya High-value agriculture and opportunities for employment off the farm Red Fox Ethiopia: More technically sophisticated wage work Documenting land rights: Encouraging Investment and reducing the cost of land transfers Mexico's program to speed intergenerational land transfers Information and communication technologies: Altering the flow of agricultural Information Vocational agricultural education: A poor Substitute for general education Innovations in agricultural extension: Relying on farmers to improve Service delivery Overview of the Comprehensive African Agriculture Development Programme (CAADP) What is a household enterprise? Why do females earn less? Occupational segregation in the household enterprise sector Small and medium enterprises are not the same as household enterprises Informal training is normal for youths seeking to operate a household enterprise Rwanda: Many programs to Support household enterprises, but little Information onresults Need for a comprehensive approach Ghana's integrated approach to HE development Weakening the local economy by perpetuating the machinga cycle in Dar es Salaam Clustering household enterprises for the beneiit of all Sources of credit used by households to Start a business in Tanzania Rural enterprise projects bolster skills and business development in Ghana and Senegal Taking a household business to the international market: Gahaya Links and Rwanda's peacebaskets Reducing Isolation and exploitation through self-help associations 177 F3.1 Rural banks in Ghana: Reaching clients who are underserved by other banks 185 F3.2 Use of technology: Bringing secure fmancial services to new markets in Kenya and India 186 F3.3 Linking smallholders to supply chains to improve their access to financial services 189

7 xiv Contents F3.4 Shifting from group to individual liability lending as a positive microfinance Innovation: Evidence from the Philippines 190 F3.5 ROSCAs, VSLAs, SHGs, and SACCOs: Examples of informal savings and credit systems 191 F3.6 Village women in Mali: Achieving food and financial security through savings and credit groups Where do young people figure in Africa's wage employment picture? Measurement issues and other limitations of unit labor costs Does Africa really have a labor cost advantage? The high price of inefficiency at the port of Dar es Salaam Improving land transportation through increased international Cooperation and comprehensive procedural reforms: The Malaba border-crossing pilot Who must pay bribes? How much? And does it matter? Knowledge, technology, and the emergence of successful enterprise Clusters in Africa Why have special economic zones failed to thrive in Africa, and what are the lessons for the future? Reforming TVET systems in Africa Does government have a role in on-the-job training? 228 Figures 0.1 The structure of Sub-Saharan Africa's population is different than that in other regions Over the past two decades, agriculture's share in GDP contracted in Africa, but manufacturing did not replace it Where are Africans working? Informal will be normal in The transition from school to work in Sub-Saharan Africa is slow Family formation starts earlier for young women than for young men Education shapes opportunities Young people are unlikely to own land At the same level of income per capita, national policies can produce very different levels of financial inclusion The share of youth in wage employment tracks the share in the general population Africa's population is young and will remain so The structure of Sub-Saharan Africa's population is different than that in other regions Unlike in other regions, the number of young people in Sub-Saharan Africa will increase dramatically in the near future In East Asia, the dependency ratio changed quickly; in Sub-Saharan Africa, it is changing, but slowly The reduction in the total fertility rate has stalled in several African countries 29

8 Contents xv 1.6 Africa's growth miracle, Over the past two decades, agriculture's share in GDP contracted in Africa, but manufacturing did not replace it Exports are a smaller share of GDP in Africa than in East Asia and a larger share than in South Asia, but African countries, even richer ones, export commodities, not manufactured goods The majority of Sub-Saharan Africa's workers in low- and lower-middle-income countries work in agriculture and in nonfarm household enterprises Growth has moved the structure of employment away from agriculture in some countries, but not others Most wage jobs are in the private sector (but not in resource-rich countries) Industrial wage employment has not risen with GDP in Africa the way it has in manufacturing exporters at similar income levels Where will Africa's 125 million new jobs be created? Informal will remain normal in much of Sub-Saharan Africa Even game-changing growth will have limited effects on the distribution of employment in the near term 40 Fl.l Jobs and life satisfaction across regions 44 Fl.2 Jobs drive development Many 18-year-olds in Africa are still in school, but half of them are still in primary school 50 B2.1.1 Percentage of children working School and work are often combined Most Sub-Saharan African youths Start out working for their families and then become self-employed 53 B2.2.1 Intergenerational transmission of employment sector in Ave African countries Youths in urban Tanzania are unlikely to move between employment sectors during their working lives Youth transitions to sector of employment vary across urban and rural areas and between male and female youths Sectoral mobility among urban youth in Uganda In Tanzania, many work in two or more activities Younger people are most often engaged in casual wage employment Personal networks are key to Unding a job Migration increases mobility across sectors of employment Family formation starts earlier for young women than for young men As they get older, young people increasingly engage as Citizens Primary school completion rates have risen substantially in Sub-Saharan Africa, Africa's young people have more education than ever before, but average education attainment is still low Educational attainment in Sub-Saharan Africa is projected to rise substantially Schooling maps to sector of employment 70

9 xvi Contents 3.5 Wage workers with more schooling are more likely to work under contract Relationships between schooling and work vary depending on gender and urbanization Education is associated with higher earnings in household enterprises Education is associated with higher wages The convex relationship between earnings and education: Schooling and earnings in urban West Africa The ability to read in early grades is alarmingly low By the end of primary school, many students have not mastered even basic competencies: 2007 SACMEQ results for math and reading proficiency Secondary school students in Sub-Saharan Africa perform poorly on internationally comparable assessments: TIMSS results for math proficiency, Learning trajectories by age are flat in Guinea-Bissau Learning trajectories by grade are flat: Performance on test scores in selected African countries, by educational achievement 79 B3.2.1 Proportion of 15- to 19-year-olds who have completed each grade Cognitive skills increase slowly, especially for the poorest Behavioral skills take longer to develop than cognitive skills The returns to schooling are higher for those with greater ability: Returns of an additional year of schooling by quantile Many young people, especially in West Africa, have been an apprentice, whereas experience with TVET is less prevalent Apprenticeships are geared toward youths with lower levels of education TVET is geared toward wage work, whereas apprenticeships lead to working in either a household enterprise or wage work Africa has a wide ränge of informal private training providers, B3.7.1 On-the-job training in African firms varies by country 95 B3.7.2 On-the-job training in African firms varies by firm size and export orientation, There are stark differences between rieh and poor in experience with apprenticeships and TVET Men and women take up different types of vocational training in Kenya Training costs and the price paid by partieipants vary by type of training in Kenya Higher total factor produetivity helped U.S. farmers to compensate for declining terms of trade, The young do not typically own land 118 F2.1 Impacts of conditional cash transfers plus business grants or conditional cash transfers plus skills training in Nicaragua 145 B5.1.1 Most people working in the HE sector are owners 150 B Most HEs are family Operations Household enterprises are an important share of nonfarm employment in low- and middle-income countries In Africa, as labor moved out of agriculture, more people moved into the HE sector than into private wage employment 151

10 Contents xvii 5.3 Most HEs are in the trading sector' 152 B5.2.1 Earnings are higher in male-dorriinated subsectors than in female-dominated subsectors Younger HE owners tend to have more education than older ones Household enterprise owners tend to be over 25 years of age 158 F3.1 Percentage of population ages 15 and older who reported saving any amount in the last 12 months, by savings mechanism 184 F3.2 Percentage of individuals with an account at a formal financial Institution Africa has less nonfarm wage employment than other regions Wage employment is growing inconsistently across Africa 200 B6.1.1 The share of youth in wage employment tracks the share in the general population Services form the largest share of nonfarm wage employment; within manufacturing, the food and textile industries dominate Africa's modern wage manufacturing sector continues to have a small share in employment African firms export relatively little China's unit labor costs have remained below those of other emerging economies Growth in manufacturing wage employment has been inconsistent across African countries Based on unit labor costs, some African countries could become competitive with other emerging economies Africa does not have a uniform wage advantage over other developing regions Labor productivity is particularly low in low-income African countries African workers are not as well equipped with fixed capital as their counterparts elsewhere in the world African countries have lower productivity than other regions Africa fares poorly in firm-reported indicators of transport, water, and electricity supply Decomposing textile industry productivity Trading across borders is expensive and slow in Africa African firms use relatively little bank financing Coverage of credit bureaus is generally low in Africa Africa has the highest formal costs of setting up a business Business setup costs are higher in resource-rich African countries 220 F4.1 Patterns in economic and employment growth in South Africa 239 Tables BO.6.1 Increase in crop area harvested, agricultural labor force, and Output per worker in Sub-Saharan Africa, and Priority actions to take now to address the youth employment challenge African countries have less wage employment than high-growth comparator countries 35 Bl.4.1 Growth elasticities of employment 37

11 xviii Contents 1.2 Average annual growth, by sector and country income level, Framework of this report 41 B3.2.1 Costa per pupil in second-chance education programs and formal public schools Developmental tasks, by age Wholesale prices of unprocessed maize and rice in selected countries (average, January-April 2012) 115 B4.2.1 Percentage change in prices of selected food products in the United States, Pathways for agricultural employment and their requirements 120 B4.6.1 Employment in horticultural supply chains in Sub-Saharan Africa Rural versus urban household enterprises Sources of capital for household enterprises: Start-up and credit for Operations Priority actions to take now to address the youth employment challenge 245 A. 1 Standardized and Harmonized Household and Labor Force Surveys used in report analysis 250 A.2 Demographic and Health Survey Data Sets used in report analysis 251