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Poor nations failing to create jobs despite booming growth

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(Globalpost/GlobalPost)

The planet's poorest nations such as Angola and Ethiopia have largely failed to cash in on booming economic growth to create the jobs needed to push their ballooning populations out of poverty, the UN warned Wednesday.

"Economic growth that does not create decent jobs in sufficient quantities is unsustainable," said Mukhisa Kituyi, head of the UN Conference on Trade and Development.

In its tri-annual review of the world's least developed countries, or LDCs, UNCTAD said that the 49 countries on its list had jointly seen strong economic growth over the past decade, but that there were too few decent jobs to show for it.

This is a problem, since these countries, including 34 in Africa, are set to see their already youthful populations double to 1.7 billion by 2050, with an estimated 16 million people forecast to join their labour markets each year until then.

LDCs saw their economies swell on average 7.5 percent per year from 2002 to 2008, but even then, the rate of job creation was only 2.9 percent, with some of the most rapidly growing economies actually seeing their employment rate shrink.

In Africa's second largest oil exporter, Angola, the per capita gross domestic product skyrocket nearly 92 percent during the period, while employment sank 2.3 percent.

Angola is a good example of how many LDCs have focused too narrowly on capital-intense but job-poor sectors like mineral extraction, Kituyi told reporters in Geneva, urging such countries to dramatically shift their growth and investment models.

Oil accounts for nearly 97 percent of Angolan exports, driving the GDP per capita up to around $10,000 and making Luanda the world's most expensive city for expats, even as the official unemployment rate stands at 30 percent.

Ethiopia, by contrast, appears to be investing heavily in creating jobs, although probably not enough to meet the needs of an ever expanding labour force.

The country, which is bracing for the number of new entrants to its labour market each year to jump from 1.4 million in 2005 to 3.2 million in 2050, is rapidly expanding its infrastructure.

It is building some 6,000 kilometres of asphalt roads, 2,000 kilometres of railway lines and building hydroelectric power plants, Kituyi pointed out.

"The whole country is a construction site," he enthused, saying that the public sector was crucial to kick-start job creation.

'The numbers are very frightening'

Many LDCs are not investing enough in areas that generate employment, like manufacturing, technology and upgrading the agriculture sector, warned Taffere Tesfachew, head of the UN agency's LDC programme.

The failure to create enough decent jobs when LDC economies were booming could mark "a lost opportunity," not only to cut unemployment but also to significantly reduce poverty, the UNCTAD report said.

The prospects for job creation in the LDCs certainly appear dimmer now.

Growth has slowed to around five percent and the countries' commodities-dominated exports stalled to just 0.6 percent last year after soaring 25 percent between 2010 and 2011.

"If during that growth they could not create employment, and all projections are that commodity-led growth is (declining), when will they create the jobs?" Kituyi asked.

The question is pressing: about 60 percent of people living in the world's most impoverished countries are currently under the age of 25, meaning that these nations will need to create some 95 million new jobs by 2020, and another 160 million by 2030, to absorb all the new entrants to their labour markets.

The average unemployment rate across the 49 LDCs last year stood at 5.6 percent, but Kituyi said that youth unemployment in many countries was double the official figure.

And many of those considered employed were barely earning enough to survive in the informal sector, with a full 41 percent of those working in 2010 earning under $1.25 a day.

"The numbers are very frightening," Tesfachew said.

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http://www.globalpost.com/dispatch/news/afp/131120/poor-nations-failing-create-jobs-despite-booming-growth