20-year economic growth has not translated into jobs – NPA

Whereas the economy has been growing over the last 20 years, this has not translated into jobs, which has worsened unemployment.  PHOTO | file

What you need to know:

According to National Planning Authority, growth in the employment sector has been slow to absorb the more than 700,000 young people that enter the job market annually.

A report by National Planning Authority (NPA) has noted that although Uganda has enjoyed steady micro-economic growth in the last 20 years, it has not had a significant impact on the structure of the labour market.

The report, which is contained in the 2021/25 National Development Plan, notes that whereas the economy has been growing at an average of 5.4 percent, it has not resulted into enough gainful jobs to absorb a largely growing skilled youth population.

“The working age population is growing faster than economic growth. Working age population grew from 16.5 million between 2013 to 19.1 million in 2017 as such working population was 15 million people but with total employment estimates at 9.1 million,” the report reads in part.

The report further indicates that currently, a total of 700,000 young people enter the labour market every year of which only about 238,000 or 34 percent are absorbed.

However, the report goes on to say that employment has expanded in lower-productive activities such as agriculture and petty trade as well as the informal sector, which have a lesser distributary   impact, especially in case where there is large demand.

Uganda, according to the World Bank, currently has an annual population growth rate of 3.3 percent, which puts immense pressure on available opportunities.

While launching the report recently, Dr Joseph Muvawala, the NPA executive director, conceded that whereas a number of efforts have been done over time, working age population continues to outstrip available employment thus putting pressure on the real economy.

“The National Development Plan III job creation strategy must focus on expanding and diversifying economic growth while maintaining macro-economic stability in order to create increased demand for labour,” he said, noting that to achieve this, government must increase investment in productive sectors of the economy, enhance foreign direct investment and expand the exports sector.

Additionally, Dr Muvawala said, there is need to put serious emphasis on supporting small and medium enterprises to improve access to export markets while supporting small holders players to grow into large enterprises that have a multiplier effect when it comes to employment.

The NDP III job creation strategy puts focus on specific interventions with the view of creating at least 2.5 million jobs by 2025, with an annual average of 512,000.

Out of the 2.5 million expected jobs, according to the report, 1.313 million are projected to come from the services sector, with the trade subsector contributing the largest portion.

This will be followed by agriculture through ensuring value addition, followed by the industry subsector, whose largest share is expected to come from manufacturing. Construction is also expected to have a large contribution.

Government has been investing in value addition in the last five years boosted by a number of funding opportunities channeled through institutions such as Uganda Development Bank and Uganda Development Corporation, among others.

However, there has been little impact on the rising rate of unemployment, which is currently being mitigated through short-term fixes such as labour eternalisation.

Job creation strategy        

The NDP III job creation strategy will also seek to leverage on the current urbanisation to create better jobs while prioritising regional investment, strengthen local economic growth and accelerate change of agriculture from subsistence to commercial production.

The plan also prioritises the need to streamline and reform youth employment programmes, many of which are scattered on political expedience thus not helping young people to find gainful employment.