Low quality jobs threaten Zim’s economic growth

The graphic above shows the distribution of employed persons by local currency income band in Zimbabwe. — Source: ZimStat

Zimbabwe is not creating enough jobs and the few that are being created are of low value statistics released by Zimbabwe National Statistics Agency (ZimStat) on Monday revealed.

According to ZimStat the rate of unemployment in the country increased to 21 percent in the 3rd quarter of 2023 compared to 20,1 percent prior year comparative.

Youth unemployment (those aged between 15 and 34 years), increased to 28,7 percent up from 27, 6 percent prior year.

The unemployment rate is the proportion of the labour force, which is unemployed.

This refers to persons who are currently without paid work or business, actively looking for work and available to start work if an opportunity arises.

ZimStat calculates the expanded unemployment rate which includes people discouraged from looking for work. The expanded unemployment rate in the country is 47,8 percent.

However, while the rate of employment at 79 percent and the labour force participation having increased to 44,1 percent from 42,6 percent, the numbers mask the persistence of low-quality jobs.

According to ZimStat, 68,5 percent of the working population earn less than $800 000 (US$133) per month with 52 percent earning less than $200 000 (US$33,33) per month.

When a country is creating low-quality and low-paying jobs, it means that the economy is not shifting towards more productive and higher-value activities. Low-quality jobs are often characterised by low wages, few benefits, and little opportunity for advancement.

The majority of the low-earning workers are in the wholesale and retail trade, sales and repair of motor vehicles and motorcycles where the average income is $197 119 (US$32,85).

The wholesale and retail sector employs 26.6 percent of the country’s employed population.

According to ZimStat manager, Labour Statistics, Clapton Munongerwa, the Agency includes vendors as part of the people that are employed.

With more than half of the labour force earning just above US$1 a day, it shows the quality of jobs being created in the country is very low.

There has been an increase in part-time workers, self-employed individuals and unpaid workers, indicating a shift towards the informal labour market and low-productivity jobs.

ZimStat statistics show that 40, 1 percent of the employed population are own account workers or self-employed.

These are subsistence jobs, a survival mechanism, according to Trigrams Investments analyst Walter Mandeya.

“When a country creates a lot of low-quality and low-paying jobs, it can have a number of negative consequences. First, it can lead to a decline in living standards for workers and their families. Second, it can make it difficult for workers to save for retirement or invest in their children’s education.

“When a country is creating a lot of low-quality and low-paying jobs, it is a sign that the economy is not growing in a healthy way,” according to Mandeya.

Low-wage workers have less money to spend, which can reduce aggregate demand in the economy leading to slower economic growth.

At the same time, low-wage workers pay less in taxes leading to a reduction in Government revenue making it more difficult to fund essential public services.

Responding to questions in Parliament this week, the Minister of Higher and Tertiary Education, Innovation, Science and Technology Development Prof Amon Murwira said Government’s policy was no longer about people seeking employment but creating their own employment.

“We go to school in order to be able to use our knowledge and skills and attitudes to start new enterprises. We go to school not to be used by the ones who are already established in industry. We go to school in order to use ourselves to work for ourselves.

“Sometimes we have been confronted with a question which says, why are you training them when they are going to the streets? They will not go to the street when they have the correct design of education.

“When the education trains them how to be able to make things; how to be able to form industries and how to be able to work for themselves, whereby our duty will be how to provide them with the correct policy environment so that they are able to do so. Also, how to provide them with the venture fund so that they have the finances.

So, it tells us of a whole new philosophy of how we want our country to be today and into the future. We shall not construct people who work for other people. We will construct people who work for their country, for themselves. It means, therefore, that the question of employment and unemployment is going to change completely as we go into the future,” said Minister Murwira.

However, given the poor quality of jobs being created, there is need to introspect.

Murwira spoke about the Government providing the correct policy environment and with the venture fund so that they (entrepreneurs) have the finances, maybe this is not being done at an optimal level.

Prechard Mhako, an entrepreneur and enterprise development consultant, commenting on social media platform (X) said: Making everyone an entrepreneur/business owner is unsustainable.

“Ahead of the African Continental Free Trade Area (AfCFTA), we need solid industrialisation and entrepreneurship policies plus economic incentives tied to a bigger economic agenda. We should be thinking scale, efficiency and most importantly policy harmonisation!!”.

Human Resources expert, Memory Nguwi, said low-level jobs are the ones available because they are largely in SMEs where high-value skills are not required.

“As long as informalisation continues at current rates this situation will continue.”

Nguwi said there are very few new jobs being created by formal industries.

“Even if they are created, the new players take staff from established players as long as they have the capacity to pay competitive salaries.

“Our manufacturing needs to double for us to start talking about jobs. Apprenticeship numbers and graduate trainee numbers give a good indicator. Most companies taking these have reduced the numbers. We are seeing a slowdown in recruitment. It started 18 months ago,” said Nguwi.

Labour expert, Peter Mutasa, said there is need to address all structural problems that are undermining investment in this country.

“What is needed is massive industrialisation and that requires building a conducive environment for investment,” Mutasa said.

The challenge going forward to be an upper-middle-income country is for the economy to create not only jobs, but high-quality jobs in the manufacturing and the high value-added-service sectors,” said Mandeya.

He suggested providing tax breaks and other incentives to businesses that create high-quality jobs.

“This can encourage businesses to invest in their workers and create jobs that pay well,” he said.

Dani Rodrik, Professor of Economics, Harvard University writing in a World Bank blog, said “good jobs need to be productive — but not necessarily the most productive — jobs”.

“They need to be consistent with skill endowments. And they cannot be created by informal, low productivity firms.

“To support the growth of good jobs, growth policy, jobs policy and social policy will need integrating, with complementary interventions for labour supply and demand. Education and skills will remain crucial. But we also need a new industrial policy. We should focus on the middle productivity activities that can produce lots of better jobs,” writes Rodrik.

In a research paper Belgian Sharan Burrow said enhancing job-quality will help to stimulate aggregate demand, strengthen tax revenues and further boost economic growth. – Business Weekly

%d bloggers like this: