We must ease labour-market transition for our youth

Eighteen months ago, I wrote a piece rallying political leaders, business heavyweights, policymakers, and the civil society to prepare Rwanda’s next generation for the journey ahead; after all, today’s young people are the hope of Rwanda of tomorrow. Back then, I insisted that for a country like Rwanda, without considerable commonly traded commodities like gold, oil, or natural gas to rely on (although commodity prices are currently taking a beating), the ambitious goal of becoming a knowledge-based, middle-income economy by the year 2020 (now three years away), requires a commitment both from the public and private sector actors to empower young people with skills, especially employment skills needed to fast-track the economy to such targets. To help you understand why we cannot afford to sleep walk in the next three years, let us for a moment consider the state of the youth on a global scale. Generally speaking, the world now has the largest generation aged 15 to 24 in history, and almost 90 per cent of these young men and women live in developing countries, Rwanda included. Various reports have alluded to the idea that high fertility rates in the developing world mean that their share of the global population is likely to increase over the next 20 years, and that many developing countries are already experiencing a ‘youth bulge’. And yet, analysts also point out that if no immediate action is taken, developing countries in particular risk confronting the dismal legacy of presiding over a ‘lost generation’ – a generation that may live worse-off in comparison to the previous generation. In fact, in the ‘Global Employment Trends for Youth 2013’ report, the International Labour Organisation (ILO) observed that the world is facing a worsening youth employment crisis whereby young people are three times more likely to be unemployed than adults. According to ILO, at present, almost 73 million youths worldwide are actively looking for work, and of those in work, 200 million of them earn less than $2 a day. In Rwanda, although there have been significant success stories in dealing with youth unemployment particularly through TVET initiatives, reducing youth unemployment remains at the forefront of government plans as stated in the second Economic Development and Poverty Reduction Strategy (EDPRS 2013-2018), which highlights key challenges facing Rwanda, such as high levels of underemployment in rural areas, insufficient non-farm jobs being created, high cost, and uncompetitive skilled labour at hand, especially in urban areas. But, aside from what the government has done and intends to do, what measures can other stakeholders take to ensure that we remain on track to become a knowledge-based middle-income country in the next three years? I strongly believe that what is needed is a holistic approach, an approach that brings together macroeconomic policies, employability training, labour market policies, and access to financial services for young people. Below I briefly talk about three useful measures that require a collective approach: Youth employability initiatives A lot has been discussed regarding youth unemployment. Some have argued that youth unemployment is caused by insufficient opportunities, others however, insist that the majority of young people fail to secure employment because they lack the necessary skills required in the workplace. Personally, I believe that both arguments have merit, and going forward, we need to understand that changes in technology, level of service required, and in particular the intense competition out there, all require constant adjustment and the need to address skills mismatches. All concerned stakeholders should, therefore, provide young people with the best opportunity to transition from classroom to the workplace by investing in education and training of the highest possible quality, and providing youth with skills that match labour market demands. Even would-be entrepreneurs require the necessary knowledge to identify opportunities. On the other hand, government needs to ensure that the quality of education provided addresses skills mismatches by being responsive to the needs of the market place when drawing up the national curriculum. Likewise, education institutions should concentrate on the quality and not just the quantity of graduates they churn out of their respective institutions. Youth entrepreneurship Youth entrepreneurship can be a pathway to decent work for many young people around the world. In fact, an enabling environment for starting and successfully operating a business is essential given that young people, especially in developing countries, need training that meets the demands of the market place – both to find and take on jobs, and to create their own businesses. When young people gain the ability to create their own businesses, they add to economic growth and jobs, but also stimulate structural change and innovation by encouraging the development of entrepreneurial skills and attitudes amongst themselves. It is also worth noting that entrepreneurial and technical training must, in turn, be combined with adequate access to financial services to help young people. The private sector should play a leading role in helping young people transform their ideas into real business opportunities. Labour-intensive public and private investment Pro-employment macroeconomic policies such as labour-intensive investment policies that support stronger aggregate demand are crucial. Labour-intensive processes are those where the ratio of labour to other inputs of production is relatively large. In this case, we may also consider public investment in large-scale infrastructure that can generate new decent employment opportunities while meeting social needs and improving infrastructure. Coincidentally, in Rwanda, EDPRS II intends to increase the domestic interconnectivity of the Rwandan economy through investments in hard and soft infrastructure. In summary, first, we need education institutions to remain relevant by offering skills that are required in the workplace. A collaboration with the private sector can go a long way in helping to inform those who set the national curriculum what is needed out there. Secondly, we need employers to understand that bringing young people into their workplaces can build talent pipelines for the future, address social mobility and also bring in new ideas and perspectives that can help grow and strengthen their businesses. Young people with the right skills should be seen as assets, and those without the right skills should be helped. In the end, the message is clear: we must continue to work together to raise aspirations amongst young people to maintain economic growth now and in the future.

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We must ease labour-market transition for our youth