Figure of the week: Supply-side interventions alone cannot solve Africa’s missing jobs problem

Traditionally, the narrative around Africa’s employment challenges has centered around tapping into Africa’s youthfulness as a vehicle for growth. A recent Brookings paper, “Africa’s ‘youth employment’ crisis is actually a ‘missing jobs’ crisis,” however, challenges that narrative, arguing that the unemployment challenge on the continent isn’t just a youth problem, but, rather, a larger structural problem within the region’s economies.

At 36 percent, Africa has the largest youth (those aged 15-24) share of the working-age population, a trend that is projected to continue through 2050. Every other world region has a share below 28 percent, and East Asia has the lowest share at just 17 percent (Figure 1).

Figure 1. Youth (aged 15-24) as a share of working-age population, by world region

Source: Fox et al. (2020), “Africa’s ‘youth employment’ crisis is actually a ‘missing jobs’ crisis.”
Note: Shaded region indicates projections.

When economies in other regions saw their shares of working-age youth peak, they enjoyed a positive shock to their income, which they used to transform their economic and social fabric through expanding education and thereby leading to the creation of new types of jobs. Consequently, say the authors, most interventions have been supply-side in nature, hoping that productive youth would beget productive jobs and that employing youth would beget social cohesion.

However, these interventions have not necessarily led to productive employment for Africa’s youth: Indeed, in the paper, the authors note that the skills such programs seek to cultivate are not always used by those employed. For example, as the authors note, surveys of urban centers in Ghana and Uganda have revealed that 40 percent of those surveyed in the labor force report that their skills were not being used at work. Among these skills, digital expertise was the least likely to be used. As a result, the authors write that “the proposition that young people in sub-Saharan Africa are a generation of digital natives and potential digital entrepreneurs needs critical examination and nuancing in the light of uneven access and still poorly understood patterns of engagement.”

Furthermore, write the authors, low education levels are not always the problem when it comes to employment challenges. In other words, jobs are not always available to even those who are highly educated: In fact, young people in low-income and lower-middle-income countries with the highest education levels are the most likely to be unemployed (Figure 2). The paper notes that while those who are most educated are also those most able to afford weathering long periods of unemployment (rather than take up a “worse” job), this trend too suggests that the problems are more demand-side than supply-side.

The authors also say that a second reason skills-focused interventions have been less effective than hoped is that many of them operate under the assumption that education and training will lead to entrepreneurship that creates jobs for other people. The authors question that assumption, noting that many young entrepreneurs do not prove to be successful, in the sense that they do not move beyond subsistence activities. Yes, some may be constrained by a lack of skills, admit the authors, but many others are constrained by factors not particular to them: poor infrastructure, limited access to finance, and tepid demand for their product.

Figure 2. Youth (aged 15-24) unemployment in Africa by education level

Source: Fox et al. (2020), “Africa’s ‘youth employment’ crisis is actually a ‘missing jobs’ crisis.” Shaded region indicates projections.

In response, the authors suggest changing the focus from a “youth employment” problem to a “missing jobs” problem. They recommend that policymakers consider diverting funds from relatively small youth-targeted interventions to programs that address structural issues that currently stifle job creation. Specifically, they recommend policies that close infrastructure gaps, spur private investment in labor-intensive manufacturing and services, and those that connect domestic markets to regional trade networks.

To read the full analysis, see “Africa’s ‘youth employment’ crisis is actually a ‘missing jobs’ crisis.” To read about sectors in Africa poised for job creation, check out “Industries without smokestacks: Constraints to growth.”