Addressing Angola’s Youth Unemployment Crisis: Comprehensive Policies for Sustainable Job Creation

The World Bank report emphasizes the critical need for Angola to address youth unemployment by enhancing job quality, targeting vulnerable youth, and implementing comprehensive policies that combine short-term job creation with long-term economic reforms. This approach aims to leverage Angola's young population for sustainable economic growth and improved worker welfare.

A World Bank report highlights the dire state of youth employment in Angola and presents policy recommendations to tackle the issues. Despite a high labor force participation rate, the quality of jobs in Angola remains critically low. Between 2009 and 2019, the country created 3.5 million net jobs, averaging 350,000 new jobs annually. However, the vast majority of these jobs over 72% were in family micro-businesses and unskilled occupations in agriculture and commerce. These sectors offer minimal economic growth or worker welfare benefits, with poor productivity, low wages, limited job learning opportunities, and no job-linked social benefits. Women are particularly active in these low-quality job sectors. The more stable and better-paying sectors, such as the extractive industry, employ only a small fraction of the workforce.

Economic Growth Dependent on Expanding Labor Force

Angola’s economic growth heavily depends on an expanding labor force rather than productivity gains, unlike its regional peers like South Africa and Nigeria, which have seen positive productivity growth. This reliance on raw labor is unsustainable, as productivity declines have offset gains from labor force growth, leading to low-quality jobs and economic stagnation. Angola's private sector, dominated by micro-enterprises, contributes minimally to job creation. The formal private sector employs about 650,000 workers, with most firms employing fewer than five workers. Large firms, which represent only 1% of all firms, employ 44% of private sector employees. This skewed distribution indicates that most new jobs are low-quality, non-wage jobs.

Youth Unemployment: A Critical Issue

Youth unemployment in Angola is a critical issue. Young people face higher unemployment rates and longer job searches than adults. Despite being more educated, youth are often in low-quality jobs, earning less and working predominantly in unpaid family labor. Gender disparities exacerbate the situation, with young women achieving lower education levels, earning less, and holding more low-quality jobs than young men. The COVID-19 pandemic has further aggravated these issues, causing increased unemployment and reduced access to vocational training. However, young workers in subsistence and unpaid jobs experienced fewer disruptions compared to older workers. The pandemic underscored the vulnerabilities of educated and urban youth, who were already facing high unemployment rates.

Identifying Constraints to Youth Employment

The report identifies multiple constraints affecting youth employment, including macroeconomic challenges, firm-specific constraints, skills gaps, mobility constraints, and social norms. Most Angolan youth are classified as vulnerable, with a significant portion considered highly vulnerable. These groups face various barriers to employment, necessitating targeted policy interventions. The highly vulnerable youth are predominantly poor, illiterate, and married female NEETs (not in education, employment, or training) living in rural areas. Other vulnerable groups include poor students or unemployed youth in rural areas, young men in urban areas working in various economic sectors, and young women in urban areas working in commerce or unemployed.

Comprehensive Policy Approach for Youth Employment

To address these challenges, the report calls for a comprehensive policy approach that tackles both long-term structural issues and short-term employment needs. It emphasizes the importance of maintaining sound fiscal policies, improving firm productivity, and strengthening labor market institutions. Additionally, it advocates for targeted interventions to enhance job-relevant skills, support young entrepreneurs, and ease youth transitions into the labor market. These policies should aim to alleviate long-term structural constraints while providing short-term support to increase employment opportunities and productivity for the current and future workforce.

Balancing Policies for Immediate and Long-term Benefits

The Angolan government currently implements 57 national labor market programs, but these are generally not well-targeted towards vulnerable youth. The existing portfolio of Angola’s Active Labor Market Programs (ALMPs) is not effectively aligned to support the needs of the large population of vulnerable youth. Youth that are more vulnerable and hard-to-serve represent 55% of all youth in Angola, yet only 24% of ALMPs target this group. In contrast, youth who are less vulnerable and market-ready benefit from a disproportionate share of the ALMP portfolio. Most programs do not provide the comprehensive support that vulnerable youth need to succeed in the labor market. For instance, entrepreneurship programs often provide financial support without complementary training, which is crucial for the success of young entrepreneurs.

The report suggests that a more balanced and holistic strategy is needed, combining policies to address structural constraints with programs to support immediate job creation and skill development. By implementing these recommendations, Angola can better leverage its young population to drive economic growth and development. The government, with private sector partnership, could develop a new National Initiative on Employment that would lay out a roadmap for reform. This initiative would detail targeted actions and structural reforms to ensure that young people get better jobs, identify the responsible actors, and set measurable targets and timelines. By doing so, Angola can create a more inclusive and productive labor market, ultimately improving the economic well-being and future prospects of its youth.