Macro Analysis / Global

Youth employment through industries without smokestacks: Workshop 3

On June 18-19, 2020, the Brookings Africa Growth Initiative, alongside the Kenya Institute for Public Policy Research and Analysis (KIPPRA) and the African Economic Research Consortium (AERC), held a two-day virtual workshop that showcased country-level case studies under the Brookings-led project, “Youth Employment in Africa.” This multi-institutional project aims to identify sectors outside of traditional manufacturing poised for sustainable growth in employment and productivity—termed “industries without smokestacks” (IWOSS). These sectors resemble manufacturing in that they are tradeable, can absorb a large number of moderately skilled workers at decent wages, and demonstrate potential for sustained productivity increases. Such sectors include horticulture, tourism, and transport, among others. Notably, one novel characteristic is also the extent of their global value chain linkages and contributions, which adds to the potential for increases in productivity  and income flows. The event is a follow-up to workshops previously held in May 2019 and September 2019.

The workshop started with an overview of African youth employment outcomes that explored how recent trends spell a need for additional employment, and how IWOSS sectors can be a part of the solution. Research teams from nine countries (South Africa, Rwanda, Kenya, Ethiopia, Uganda, Zambia, Ghana, Senegal, and Tunisia) presented the preliminary findings from their case studies, which use survey data to review the role IWOSS plays in their economies and examine their potential for employment and productivity growth there. Notably, nearly every research team reported that employment in IWOSS sectors is growing more rapidly than employment in non-IWOSS sectors, including manufacturing. Where data permitted such analysis, research teams also found that productivity is growing faster in IWOSS sectors than non-IWOSS sectors. The case studies revealed that IWOSS sectors overall can be a significant source of employment for young people and women in particular. For example, the Uganda team found that IWOSS sectors employ more women than men (53 versus 47 percent) in their country, while the South Africa team found that youth aged 15 to 24 constituted nearly 9 percent of IWOSS employment (versus only 5 percent of those employed in non-IWOSS sectors).

The case studies in general recommend that investment in IWOSS sectors can be a useful tool in responding to one of the most salient challenges facing policymakers looking to facilitate large-scale job creation, namely that Africa has created more skills than opportunities. More specifically, supporting investments should be directed at closing the infrastructure gap, which will complement IWOSS sectors by lowering transaction costs and enhancing their profitability.

At the end of the second day, participants discussed the larger significance of the findings and avenues for further research. Participants explored the impact trends such as climate change, the African Continental Free Trade Agreement (AfCFTA), and the likely impact of COVID-19 on the viability of IWOSS employment as a vehicle for growth and structural transformation. Participants also brainstormed how to facilitate policymakers’ engagement with this research.

As next steps, country teams will incorporate the comments received at the workshop and produce the final drafts of the case studies, which will be published over the course of the next months. Country teams will also undertake local dissemination to enhance policy uptake.

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