New study highlights stubborn youth informality despite employment gains

More than 92 per cent of employed Rwandans under the age of 30 are still working in the informal economy, with the share remaining virtually unchanged between 2017 and 2024 despite improvements in labour force participation, according to a new political economy analysis by the Institute of Research and Dialogue for Peace (IRDP) and the African Institute for Development Policy (AFIDEP). ALSO READ: Lower House approves Rwf500bn financing to drive job creation The study, launched on Friday, June 26, analysed Rwanda Labour Force Survey data from 2017 to 2024 alongside 50 key informant interviews and five focus group discussions. It found that while more young people are entering the labour market, the country's youth employment challenge is increasingly about the quality of jobs available rather than job creation alone. ALSO READ: Top 10 sectors that contributed to 2024 job creation in Rwanda The findings indicate that Rwanda’s youth employment challenge is increasingly about the quality of available work rather than job creation alone, as gains in labour market participation have not translated into better employment outcomes. Youth labour force participation reached about 55 per cent in 2024, up from a pre-Covid average of around 54 per cent, while the share of young people not in employment, education or training declined from about 35 per cent to 32 per cent. ALSO READ: Job creation up 60% in last ten years – labour ministry However, about one-third of employed youth remain underemployed, and youth unemployment is still 2.76 percentage points above pre-pandemic levels. The study also found that upper secondary graduates recorded the lowest employment rate at 56 per cent, while Technical and Vocational Education and Training (TVET) graduates had a higher rate of vulnerable employment at 39.6 per cent, compared to 28.2 per cent among non-graduates. University graduates earned 5.27 times more than youth with no formal education. The study recommends improving implementation through existing institutions, including embedding youth employment targets in district development plans under the second National Strategy for Transformation (NST2), aligning skills development with verified employment outcomes, expanding industrial development beyond Kigali, and tracking job quality through indicators such as formality, earnings, and underemployment rather than job totals alone. Maurice Mwiseneza, the Employment Services Coordination Specialist at the Ministry of Public Service and Labour (MIFOTRA), acknowledged that challenges remain despite ongoing interventions. He said: We have observed skills mismatches, limited creation of quality jobs, barriers to access to finance, and the continued dominance of informal employment. Mwiseneza said the ministry is promoting demand-driven skills development aligned with labour market needs while strengthening coordination among government institutions, development partners, employers, and youth organisations. We support decent job creation through collaboration with the private sector, he said. The focus is not only on the number of jobs created but also on creating quality jobs. On reducing informality, he said the government's approach prioritises encouraging business registration rather than relying on enforcement. We need institutions and partners to support young people in formalising their businesses through registration with RDB because when businesses operate informally, it becomes difficult to understand their activities and employment contribution, he said. Richard Kubana, the Director General in charge of Community Mobilisation and Youth Volunteers Coordination at the Ministry of Local Government (MINALOC), said government interventions increasingly reflect the educational realities facing many young people. According to him, nearly 69 per cent of Rwanda's youth have only primary or lower secondary education. We realised that many young people require practical, hands-on skills, he said. We worked with the Ministry of Youth and Arts to assess opportunities based on education levels and location, and introduced initiatives such as engaging young people in road maintenance activities. Kubana said another programme supporting youth participation in the maintenance of water supply systems has also been introduced. We cannot move from zero to one hundred immediately. Progress happens step by step, he said. He encouraged young people to remain open to available opportunities. At the National Institute of Statistics of Rwanda (NISR), Labour Force Survey Specialist Pacifique Uwamahoro said new tools under development will improve labour market planning. One initiative is a labour market information system being developed jointly with MIFOTRA, while another is a village-level database of people who are not in employment, which will be updated annually. She said the findings on persons with disabilities also require targeted policy responses. Among persons with disabilities, labour force participation stands at 36 per cent compared with 63.8 per cent nationally. That gap needs to be considered in policy planning, she said. From the private sector perspective, Annet Benegusenga, the head of the Private Sector Federation cluster covering youth, women, and entrepreneurs with disabilities, said business knowledge remains a major challenge for young entrepreneurs. She cited cases where university students launched businesses but later encountered tax-related challenges after failing to formally close their operations. We had to engage relevant institutions to support them because they were only starting out, she said. Young entrepreneurs should not start businesses simply because they have capital. They need foundational business skills. Martin Gasasira, an Exports Development Analyst at Rwanda Development Board (RDB), pointed to improvements in business registration as evidence of progress. When I was finishing school, registering a company would take three months. Today, it can be done within six hours, he said. Gasasira said entrepreneurship should play a greater role in addressing employment pressures. We want young people to think about creating jobs for themselves and for others, he said. The study recommends strengthening implementation through existing institutions rather than creating new structures. Programmes such as Hanga Akazi, which targets the creation of 19,000 jobs with a focus on women and youth, as well as SME support initiatives and EjoHeza's flexible savings model, were identified as immediate opportunities to strengthen social protection and improve employment outcomes for young people.

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New study highlights stubborn youth informality despite employment gains