What do we know about labor
markets in Africa:
Some of the gaps
The big 5
1
Lack of growth of manufacturing
(or even de-industrialization)
1990-2000
Source: Bhorat et al (2015)
2000-2012
2
2 anecdotes from the last few months
• Why aren’t raw materials processed in Africa?
• Cashews from Cote d’Ivoire shipped to Bangladesh or India,
then exported to Europe, traveling back past Africa.
• Why would a t-shirt manufacturer in Accra import cotton bolts
from China than get it from Burkina Faso?
3
Gap 1: Cost of Labor
• Does Poor Mean Cheap? A Comparative Look at Africa’s Industrial
Labor Costs by (Gelb, Meyer, and Ramachandran 2013)..
And others, Benchmarking Africa’s Costs and Competitivenes by G.
Iaroosi
• Gelb et al conclude that industrial labor costs are far higher in Africa
• Sizeable residual “Africa effect” after controlling for other factors
• “… it is not clear that Africa’s low-income level automatically
translates into a comparative advantage in low-wage basic
manufactures.”
• “…without access to competitive labor, African manufacturing firms
face an uphill struggle to be globally competitive.”
4
Figure 4 Model 1 of Gelb et al 2013
5
Why is labor more costly?
6
Why is labor more costly?
• Explanations that don’t seem to work
• Regulation
• Unionization (SA exception)
• High replacement costs: Lack of supply/potential employees
(demographics and LFP)
7
Why is labor more costly?
• Other candidates
• Political equilibrium
• High replacement costs: High search costs
• Higher price level and the price of food particularly
• Preferences?
• A preference for non-wage work (Ethiopia Blattman and
Dercon 2012; Ghana Falco et al 2013)
8
Services, services, services
It dominates non-ag household enterprises
9
…And it dominates wage work
10
Gap 2: The Amalgamation that is “services”
• Can these service jobs grow into “decent work”?
• How to identify what work has potential to grow into a well
paid job or from a household enterprise into a
microenterprise into a small firm (firm growth with a focus on
employment)
[Are we too distracted by the discussion of formalization and
informality?]
• Still lack interventions that work for the household enterprises
• The unimpressive results of skills/business training
11
Little “open” unemployment
12
But for the young, inactivity is to some extent
masked unemployment
2005/06
15-20
21-25
26-30
31+
2012/2013
15-20
21-25
26-30
31+
Ghana
Working and/or ILO unemployed
in school
79
2
71
8
84
5
89
3
88
82
89
92
1
5
3
1
Inactive
19
21
11
9
11
13
8
7
13
Gap 3: The Unemployment rhetoric
• Unemployment or underemployment: does it matter? The
political and public discourse centers around unemployment,
especially youth unemployment.
• Yet, is ‘unemployment’ (in its various forms) worse? Or have
expectations changed as education levels have increased.
14
ILO ICLS 19th New definition of employment
ILO ICLS 19th New definition of employment
Reference concept for
Labour Force statistics
Employment versus work (Any activity to produce goods or provide services
for use by others or for own use)
Source: Elisa Benes, ILO Department of Statistics PPT 2013
excludes own-use production of goods
(subsistence farmers)
Unemployment or underemployment: does it matter?
17
Gap 4: Does the new ICLS matter?
• Mechanically, labor force participation will fall, and fall drastically
in some countries.
• There are unresolved issues which how to define ‘ownproduction of goods” work in household surveys.
• Intended use
• Attaching “mostly for home consumption” to the HH farm or to
individual members? Multiple plots, multiple members
18
Gap 5: How do people “find” their jobs
• Little is known on how workers land in the jobs they have:
• What is the role of networks?
• What is the role of information?
19