Unlocking Rwanda’s employment puzzle

Every year, 125,000 young Rwandans storm the market in search for jobs; some are lucky and others are left frustrated. Just like in other economies, Rwanda continuously faces the challenge of creating the required quantity and quality of jobs to match market demands. Ivan R. Mugisha examines the magnitude of the challenge and looks at efforts being done to create more jobs in the economy.

Every year, 125,000 young Rwandans storm the market in search for jobs; some are lucky and others are left frustrated. Just like in other economies, Rwanda continuously faces the challenge of creating the required quantity and quality of jobs to match market demands. Ivan R. Mugisha examines the magnitude of the challenge and looks at efforts being done to create more jobs in the economy.

Globally, unemployment figures have been ascending, from 8.2 per cent in 2009 to 9.2 per cent in 2012, while in developing countries, the combined rate of unemployment and underemployment shot to as much as 30 per cent, signifying the severe need for job-creation.

Although no definite figures exist on the rate of unemployment in Rwanda, the Ministry of Labour estimates that about 13 per cent of the population in Kigali and 8 per cent in other urban areas are unemployed.

In 2011, two thirds of the population was underemployed on time-related basis, according to Francois Ngoboka, the director of labour research and employment promotion at the Ministry of labour and Public Service.

By targeting co-operatives for job-creation, the government started plans to reduce unemployment to 4 per cent by 2018 from 8 per cent.

Although the country seeks an answer by shifting from subsistence production to industrial, only 28 per cent of its population is employed in industry and service provision, the rest is in agriculture. With most of the labour being none-mechanised, the Minister of Labour and Public Service, Anastase Murekezi, places much hope on the youth, who comprise 65 per cent of the country’s labour force.

A week after Labour Day, the government is still in the spirit to reflect on its labour aspects, with the theme, “Promote employment through providing seed to startup capital to unemployed”.

“On this occasion, our country takes the opportunity to evaluate progress of different employment and labour initiatives that have contributed to the development of Rwanda. It is the time of sharing information on achievements, challenges and other related experiences in employment promotion,” Murekezi said in his Labour Day speech.

According to the 2012 population Census, labour force participation stands at 5,006,000 (in 2011) against a population of 10,537,222. Majority of employed population are in agriculture, but the number has declined from 80 per cent in 2006 to 72 per cent in 2011, attracted by the growth of the industrial sector or public service.

“Rwandans of working age increased from 4.3 million in 2006 to five million in 2011 and on average, 125,000 new individuals join the labour market each year,” Murekezi told Business Times.

These young men and women coming onto the labour market join the other unemployed individuals. This implies that the country needs to create jobs at a rate exceeding the number of new entrants on the labour market, experts say.

“The EDPRS 2 (Economic Development and Poverty Reduction Strategy), as well as the seven years government programme target the creation of at least 200,000 jobs annually to address the challenge. The capacity of the economy to generate jobs has been on average in last five years 104,000 jobs. This calls for more strategic interventions geared to generate more productive jobs,” Murekezi said.

However, creation of jobs alone is not the answer. A survey conducted by Karisimbi Business Partners, Employment and Compensation Review 2013, shows that business leaders and employers are not content with the general levels of the capability available in the labour market.

The survey found that management, finance and accounting skills scored within the range of satisfactory, while creativity and innovation received the lowest score.

As a result, business owners feel that technical operations are too critical to leave to unqualified and uncreative people and have, thus, turned to expatriates from the region and beyond.

According to the survey, an overwhelming 90 per cent of managers surveyed felt the need to hire an expert often because the required capability was not available locally.

“Managers are convinced that management capability is a major constraint in Rwanda’s further growth and development…If the private sector is key to unlocking the potential of this country, management capability is the key to unlocking the potential of the private sector,” the survey states.

The challenge has not eluded the government, however, which has sought for policies to improve the technical capacity of the local labour force.

Through the creation of countrywide business incubation centres, internship programmes and business advisory centres, fresh graduates have the opportunity to enhance their skills, as well as improve their knowledge to start their own businesses.

“The aim of career advisory centers is to build a Rwandan workforce through student’s career path development that is based on ability, passion and relevant information,” Murekezi said.

“Business incubation centres will facilitate fresh graduates by having easy and cheap access to physical facilities, machinery and equipment in order to start their own small businesses and be able to create their own jobs.”

The minister explained further that internship and apprenticeship programmes provide tangible work experience required by most employers.

“They prepare graduates who have dedicated themselves to complete their studies, but lack opportunities to gain experience and often fail to find productive employment,” he added.

On top of that, a Business Development Fund was initiated to support the youth who have good business ideas, but lack collateral to acquire loans from financial institutions.

Much as these efforts are commendable, a larger problem still dogs government, which is the lack of a minimum wage law.

The government ratified 28 international labour conventions and a range of national employment Acts in order to enable a favourable working environment and protect workers’ interests, but unfortunately, none of those stipulate a minimum wage bill, leaving many casual labourers at the mercy of their bosses.

After several complaints from trade and workers unions, the Ministry of Labour teamed up with the National Institute of Statistics of Rwanda early this year to collect data, which is expected to help government determine a new minimum wage.

“Setting a minimum wage has to be a careful undertaking. Yes, it protects workers, especially those in low-paying jobs, but it has to take into account the productivity of specific factors,” Ngoboka said in an earlier interview with The New Times.

The challenge of setting a minimum wage to protect workers has been previously worked on by government albeit inconclusively and unsatisfactorily.

In previous attempts, a Tanzanian firm was contracted to do research on minimum wage, but its findings were deemed sub-standard, whereas another Kenyan firm proposed a wage that government was not willing to accept.

The latest development, therefore, is expected to give hope to both causal workers and trade unionists, who have consistently complained about the pace at which the government was responding to the need of a minimum wage bill.

 

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