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Factsheet February 25, 2020

Uganda: Jobs Strategy for Inclusive Growth

 What is the report about?

This is the World Bank’s second report examining the state of the job market in Uganda and how the country can increase the demand for labor or create jobs for a fast-growing labor force. The report outlines ten facts about the jobs challenges facing Uganda and provides recommendations for how to meet these challenges.

What is the current state of the job market?

Around 700,000 young people reach working age every year in Uganda. This is expected to rise to an average of one million in the decade from 2030-2040, and it is already creating a mismatch between labour demand and supply. While Uganda’s youth are renowned for being highly enterprising, fewer than 4% of Ugandans are employers. 52% are working for themselves only, and 43% are unpaid family workers. About 77% of the population aged 15 – 64 work. Unemployment is negligible at 3.2% for the adult population and 5.3% for youth. The quality of jobs however, is low. Only one in five workers are in waged employment, although outside of agriculture, the share is about half in waged work. Most Ugandans (two thirds) still work for themselves or for their families in agriculture. Among youth, three in five work in unpaid occupations, contributing to household enterprises, which are mostly farms.

The ten challenges the World Bank has identified best describe the current state of the Uganda job market.

  1. Trend (5-year average) economic growth has been slowing
  2. Labor force growth has been speeding up
  3. Access to jobs is deteriorating
  4. The quality of jobs is deteriorating
  5. Inequalities in economic and job opportunities are increasing
  6. Labor has been slow to move out of subsistence agriculture
  7. Urbanisation has been slow despite high population growth
  8. The transformation from self-employment to waged jobs is slow
  9. Private sector demand for wage workers is limited
  10. Within the private sector, most firms are small 

What is the outlook for the future of jobs in Uganda?

Uganda is one of the youngest countries in world, with a median age of 15.9 years. In addition, it has one of the highest fertility rates in the world at 5.91 children per mother. The combination of youthfulness and high fertility means growth in the working age population is rapid.  It was 3.92% growth per annum between 2011 and 2017, faster than GDP growth in 3 of the six years from 2012-2017 (using WDI data). It is estimated that an additional 13 million workers will enter the job market by 2030. This and Uganda’s high dependency rate – of 1.42 dependents per employed person, mean Uganda has to raise labour productivity whilst increasing the number of jobs created in order to match the per capita income growth of other economies with lower dependency. This requires one hand increasing the productivity of agriculture where most people work, while simultaneously increasing the rate of movement of young workers away from agriculture into higher productivity industry and service jobs.

Why is creating more better jobs a pressing issue in Uganda

As fertility rates come down, if Uganda can create enough jobs with higher labour productivity for young workers, the country can take advantage of the “demographic dividend for economic growth”. Secondly, Uganda has a small window in which to trigger a labor-intensive economic transformation based on tradeable goods and services, before oil production begins. Success in creating more waged jobs for young Ugandans would generate a growth dividend. Failure could lead to frustration among youth and challenge social stability.

What can government do?

We recommend coordinating Government policy and investments on the priority of creating jobs and economic transformation for young workers. Policies and investments should facilitate regional trade, encourage private investment, promote urban development, and incentivize commercial agriculture by encouraging value chain linkages. We also suggest that government realigns youth employment programs to prepare graduates for semi-skilled waged work in addition to entrepreneurship.

How is the World Bank positioned to support government of Uganda?

The special theme for the recent IDA19 Replenishment for the World Bank and International Finance Corporation is “Jobs and Economic Transformation”.  The Bank is committed to helping Uganda meet its jobs challenges in all its programs. Under IDA19 we will align our portfolio of projects in support of Government’s programs for connectivity; for example, linking farmers to lead suppliers, to dairies, to aggregators and packing stations for fresh produce. In helping attract more foreign direct investment under the Private Sector Window, IFC will assess how their investment portfolio can best support productive alliances in agribusiness and agro-processing. Importantly, we will continue to support Uganda’s programs for integration in regional trade through technical assistance with trade negotiations, and through support for trade and transport logistics, including warehousing. We recognize the importance Government attaches to value addition in agro-industry. Our support to connectivity (in the roads and electricity sectors) will therefore emphasize the importance of agro-processing in those secondary towns with most potential.