The Challenges of Youth Employment in ACP Countries: A Global Perspective

Brussels Briefings16th June 2010Bruno Losch

Youth and Rural Development in ACP

countries

General Positioning Youth in ACP countries like in many developing countries are

often unemployed and they mainly participate in the informal labor market: they face high economic insecurity and poverty rates

Youth represent around 20% of the total population BUT more than 30% of the active population (EAP or 15-64 group): => 37% in SSA, 32% and 28% in Pacific and Caribbean regions

Answering the youth employment challenge is critical for poverty reduction and the future of DCs

While targeted solutions are useful, they must be part of broad development strategies addressing the structural transformation of economies and societies

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Basics 1: Demographic Transition

ACP countries face a large demographic growth: this is firstly the case of SSA and also of the Pacific while the Caribbean will slow down rapidly

In SSA: from 860 million people today, to 1.3 billion in 2030 and 1.8 billion in 2050 = + 103% = the last demographic transition in the world

In the Pacific: from around 10 million in 2010 and 17 million in 2050 = + 73% with sub-regional differences

In the Caribbean: from 40 million to 47 million in 2050 = +18% (but 80% of the population in Cuba, Haiti, Dominican Rep.)

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Basics 1: Demographic Transition

A rapidly changing demographic structure Activity ratio has remained extremely low throughout the

past decades in SSA This structure weighted heavily on growth

Growth of the economically active population presents a significant opportunity… “the demographic dividend”

… but also a source of significant tensions if economies do not generate sufficient jobs

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6

Basics 1: Demographic Transition

The present tensions on the labor market might intensify with the arrival of growing new cohorts:

A “big push” in SSA: approximately 17 million / year at

present, 24 million in 2025, 31 million in 2050 From 200,000 to 300,000 people between today and

2050 in the Pacific But 700,000 new entrants / year in the Caribbean and

already decreasing

The ability of African economies to absorb this additional workforce is a crucial question

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the World Bankthe World Bank

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The yearly cohort of new entrants in the labor market is 300,000 people today and will be 520,000 in 15 years (240,000 for rural EAP) The Malian economy will have to create 6,2 millions “new jobs”

These new entrants have already been born

The example of Mali

0

3

6

9

12

15

18

21

24

1960 65 70 75 80 85 90 95 2000 05 10 15 20 2025

Totale (NU) (BM) Rurale (NU) (BM)

Source : United Nations 2009 (NU) et Guengant 2010 (BM)

0

100

200

300

400

500

Totale

Rurale

Source : Guengant 2010 et calculs des auteurs

Evolution of Population 1960-2025 (in Millions)

Evolution of Active Population. 1960-2025 (in Thds)

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Basics 2: Economic Transition

Developing countries are at different stages in the structural transformation process characterized by a progressive shift from agriculture to industries and services

Within this process, the role of agriculture in GDP and in employment decreases

The major vehicles of transformation are: The development of the rural non-farm economy Rural depopulation and migrations to cities (or abroad).

The viability of this process implicates employment opportunities.

The Three Worlds of Agriculture (WDR08 )

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AZE

BDI

BEN

BFA

BGD

BGR

BLR

BOLBRA

CHLCHN

CIV

CMR

COL

DOM

ECU

EGY

ETH

GHA

GTM

HND

HUN

IDNIND

IRN

KEN

KHM

LAO

LKAMAR

MDG

MEX

MLIMOZ

MWI

NERNGA

NPL

PAK

PER

PHL

POL

PRY

ROM

RUS

RWA

SEN

SLV

THA

TJK

TUN

TUR

TZA

UGA

UKR

UZB

VEN

VNM

YEM

ZAF

ZMB

AGO

ARG

CZE

DZA

GIN

MYS

PNG

SDN

SVK

SYR

TCD

TGO

ZAR

ZWE

-0.2

0.0

0.2

0.4

0.6

0.8

0.0 0.2 0.4 0.6 0.8 1.0

Ag

ricu

lture

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on

trib

utio

n to

gro

wth

, 19

90-2

005

Rural poor/total poor, 2002

Poverty data from Ravallion et al. 2007

Other predicted poverty data

Dynamic analysis

Urbanized countries

Agriculture-based countries

Transforming countries

70-75

90-96

Indonesia (1970-96)

Brazil (1970-96)

India

China(1981-2001)

The Evolutionary Path

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Basics 2: Economic Transition

For most of the ACP countries the economic transition has been very slow

The population remains broadly rural and will remain rural till the 2030s

Agriculture has often a central role in GDP, trade, and particularly in employment 60-80% of the active population live from agriculture

in SSA

It means that most of the youth are rural and many are involved in agriculture

SSA’s Economic Transition: a Major Challenge

African economies are characterized by a low level of diversification Rapid urbanization with a low

level of industrialization Increased difficulties to develop a

sufficient industrial sector in a context of strong international competition

Consequences: Limited creation of formal

employment vs. absorption by the informal sector

Economic and geopolitical constraints to international migration

For a long time to come agriculture will remain the main employer

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0

10

20

30

40

50

60

1965 1970 1975 1980 1985 1990 1995 2000 2005

China Indonesia Thailand Sub-Saharan Africa

0

10

20

30

40

50

1965 1970 1975 1980 1985 1990 1995 2000 2005

Sub-Saharan Africa

Manufacturing % GDP

Agriculture % GDP

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Agriculture, Transition & Employment

The role of agriculture: Contributes directly to food security, income creation

and poverty reduction Is the major source of employment so far: this is too often forgotten in the existing debates It plays a central role in the economic transition

The lessons learnt from past transitions remind: the decisive role of farm income increase in the

development of a rural demand Rural demand is the necessary step for the emergence

of the rural non-farm economy (RNFE) Both agriculture and RNFE are critical for youth

employment: their development will automatically facilitate the inclusion of young people

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Prioritization, Targeting and Sequencing Many targeted programs can be efficient for

youth employment . However, there is a need for reengaging in development strategies based on long term vision, identification of opportunities and constraints , shared diagnostics and prioritization

the size of the yearly cohorts of young people entering the labor market is a strong reminder

Every country, region has its own development trajectory, comparative advantages and binding constraints, and heterogeneity is the rule: it means tailor-made policies instead of one-size-fits-all

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Prioritization, Targeting and Sequencing Two main issues can be raised:

A recurring binding constraints in many rural areas is risk: risk encourages self-consumption and prevents diversification. Addressing risks is critical.

Many instruments can be finely designed and efficient but have a limited impact in terms of numbers: the objective is to address the big numbers through inclusive policies and programs, selecting options which are employment intensive.

The future of youth is part of this general approach