Africa’s working-age population is projected to increase from 705 million in 2018 to almost 1.0 billion by 2030. As millions of young people join the labor market, the pressure to provide decent jobs will intensify. At the current rate of labor force growth, Africa needs to create about 12 million new jobs every year to prevent unemployment from rising. Strong and sustained economic growth is necessary for generating employment, but that alone is not enough.
The source and nature of growth also matter. Africa has achieved one of the fastest and most sustained growth spurts in the past two decades, yet growth has not been pro-employment. A 1 percent increase in GDP growth over 2000–14 was associated with only 0.41 percent growth in employment, meaning that employment was expanding at a rate of less than 1.8 percent a year, or far below the nearly 3 percent annual growth in the labor force. If this trend continues, 100 million people will join the ranks of the unemployed in the young continent.
Africa by 2030. Without meaningful structural change, most of the jobs generated are likely to be in the informal sector, where productivity and wages are low and work is insecure, making the eradication of extreme poverty by 2030 a difficult task (African Development Bank Report 2019).
One of the most salient features of labor markets in Africa is the high prevalence of informal employment, the default option for a large majority of the growing labor force. On average, developing countries have higher shares of informal employment than developed countries. While data on informal employment are sketchy, it is clear that Africa has the highest rate of estimated informality in the world, at 72 percent of nonagriculture employment and as high as 90 percent in some countries.
Furthermore, there is no evidence that informality is declining in Africa. While evidence from other developing countries shows a fairly competitive labor market structure, Africa has a more segmented labor market. Segmented labor markets tend to improve with economic policies that facilitate labor mobility, a competitive environment for private sector operations, and better skill development programs.