Understanding the 3.4% unemployment rate

Armed with academic documents in a brown dusty envelope, he waits patiently outside one of the big corporate firms in town. Though I want to talk to him, I change my mind on seeing the frustration that’s evident all over the young man’s face. I later learn that his is called John. He is hesitant, and his pair of shoes looks like it has ‘seen’ more days than its maker intended. The shoes are worn out, what with moving from office to office searching for a job. The plight of job-seekers, like John, is made worse by weather vagaries, unfriendly receptionists, which threaten to crash the big dreams many a youth leave school harbouring. As the numbers of unemployment increase in the country, especially among the youth, more Johns hit Kigali and other towns’ streets seeking the ever elusive jobs. This, notwithstanding, the statistics body says Rwanda’s unemployment rate is at just 3.4 per cent, a statistic that recently generated heated debate on social media. Some believe the country’s unemployment rate is far higher. So how does the National Institute of Statistics Rwanda (NISR) compute unemployment figures? The 3.4 per cent means that just over 3 people out of 100 are in need of jobs but cannot find one. Arriving at the figures James Byiringiro, a principle statistician at NISR, says the figures were specifically drawn from the 2012 Rwanda Housing and Population Census. During the census any person who had been looking for work in the past seven days prior to the exercise was considered unemployed. “Individuals above the age of 16 who were job-searching (and available at the time of an opening) were considered as unemployed,” Byiringiro explains. NISR officials say they used face-to-face interviews and questionnaires that were distributed among the respondents, to arrive at the figures. Byiringiro adds that most of the employed respondents were doing some kind of subsistence farming, and “they contributed a lot to the final figures”. “Rwanda is an agro-based economy, so we considered people who were doing all sorts of farm work,” Byiringiro says. He explains that because most people with farms live in villages, the rate unemployment was minimal in rural areas compared towns. According to the figures, 7 per cent of the urban dwellers are unemployed compared to only 2 per cent in rural areas. According to the labour force participation report from the 2012 NISR survey, unemployment rate hit an ‘all time high’ of 3.4 per cent from 1.20 per cent in 2006, as compared to a slight 1.87 per cent increase in 2001. “Unemployment is also high among the educated, especially secondary school leavers and graduates,” Byiringiro adds. Byiirigiro says the rate of unemployment increased during the census period compared to previous years because the census was carried out in August, when most people were not working on farm. Experts speak out Prof. Verdian Grace Masanja, a lecturer of Mathematics and director of Research and Postgraduate Studies at the University of Rwanda, says the unemployment issue has been oversimplified, noting it could be quite bigger. “Unemployment is still a huge problem, not only in Rwanda but around the region,” Masanja says. “Graduates are forced to undertake longer internships to acquire skills required by the market, but it doesn’t help much. As long as jobs are not there, even if all graduates get attachments and internships they will not get employed,” Prof. Masanja adds. She notes that unemployment among the local population is largely created by investors who employ foreign labour under the pretext that Rwandans lack necessary skills even as universities are training students to respond to the needs of the labour market. “In Algeria, a petroleum company refused to employ Algerians, arguing they do not have the skills. When terrorists bombed the area and foreign workers left, many Algerian got the jobs almost overnight, and they were later described as ‘well skilled’ workers,” she added. Young entrepreneurs at a recent training in Kigali. Many graduates are opting for self-employment to avoid the unemployment trap that those who prefer white collar jobs face. (File) Who is employed, who is not? According to Byiringiro, Rwanda calculates unemployment using a model similar to that of the International Labour Organisation (ILO) that describes unemployment rate as the percentage of economically active people who are out of work. He said the questionnaire used during the Rwanda Housing and Population Census included a series of questions, which allow unemployment to be defined using the three criteria mentioned or a more relaxed definition using the first two criteria. And during the census in 2002, all persons aged 16 and above who reported that they had not worked during the reference period were considered unemployed. The United States says unemployed people are among those who are able to work and have actively looked for work in the last four weeks, or those who have stopped looking for work for various reasons. These would be expressed as a percentage of the total labour force to determine the unemployment rate. On the contrary, employed people are those with fulltime jobs and may be self-employed or part-time workers. This set also includes those running family businesses for over 15 hours a week, even if it is unpaid, or those on maternity, paternity, sabbatical and vacation leave from work. “If NISR used these definitions, the figures would be totally different from what has been reported,” argues Prof. Masanja. Last month, over 8,000 students graduated from the University of Rwanda; many of them could end up being unemployed for w while, as many others take up jobs that are not commensurate with their capacity. But Dr Marvin Mbassana, a lecture from University of Rwanda’s College of Business and Economics, says it would be wrong to conclude that most new graduates are unemployed, arguing that to consider a person as unemployed requires several parameters. “A person who is not looking for a job or has been fired from one due to incompetence cannot be considered to be unemployed,” he argues. Asked about graduates who fail to find good jobs and resort to ‘small’ jobs, Mbassana blames it on insufficient skills. “Sometimes finding work may not involve academic papers, it’s also about meeting the required skill set,” he adds. However, NISR says it’s planning to implement a new methodology for determining unemployment as discussed by ILO during the 2013 labour conference that will only focus on those who work for a salary or profit. The survey on unemployment will be carried out every year, officials said. Underemployment Meanwhile, statistics show that underemployment stands at one-third of the employable citizens and these work for lesser hours within a week. Underemployment refers to a situation when one does work that is below their skills set and it is believed to be common among graduates, according to research. Research commissioned by the Higher Education Council last year revealed that at least 45 per cent of Master’s degree holders were underemployed. The survey, conducted by LG Consult, a research firm affiliated to Rwanda Association of Local Government Authorities (Ralga), estimated that 32.9 per cent first degree holders were in the same salary bracket as Master’s degree students of between Rwf170,000 to Rwf349,999. business@newtimes.co.rw

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Understanding the 3.4% unemployment rate