The Labour Market in Sub-Saharan Africa

This chapter examines jobs in sub-Saharan Africa (SSA)’s labour market. Analytically, the labour market and capital market work together to produce goods and services in the goods market. If there is low growth of GDP and low technical change, this implies a possible weakness in the labour market. Technical change, given by output per worker, becomes a critical segue from the goods market to the labour market. Output per worker, and its growth over time in SSA, is explained through three caveats. The first is that labour market outcomes in developing countries, and SSA, are not well judged by the quantum metrics of employment and unemployment. Lacking a formal job, the working poor will compulsively seek lower remuneration in the informal economy. Hence, the metrics of unemployment and employment become supply-led rather than demand-led. Better outcome metrics reflecting demand in the labour market emerge as labour productivity and contractual change. The second caveat is that growth of productivity per worker will be determined by productive transformation. However, the hybrid Lewis-Singer-Prebisch-fallacy-of-composition model adapted here expects weak productive transformation from the traditional sectors of agriculture and commodities to manufacturing. With a weakly developed manufacturing sector, it is moot whether it can lead technical change. The third caveat is that a second major metric of job quality is contractual change. Lack of contractual change implies that vulnerable forms of employment such as self-employment and unpaid contributing family labour will persist. More contractual change implies the transformation of vulnerable forms of work to waged employment. Contractual change mostly results from the intersectoral transfer of workers, which also accounts for most of technical change and increase in productivity per worker. Thus, contractual change enables technical change.