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Southern Africa’s Working-Age Population Presents Potential for Growth

Southern Africa could improve incomes per capita, reduce poverty and increase growth in five of its countries through generating jobs for its increasing number of young workers by 2050, according to a recently released World Bank Group report. But this chance may be hindered by the regions’ already high unemployment rate, if not tackled.

The report: Forever young? Social policies for a changing population in Southern Africa, illustrates how today’s social policies can be shaped to reap benefits presented by the region’s changing population leading to wealthier and more productive future generations, fostering growth and equity. It explores conditions necessary for the region to take full advantage on its growing working-age population.

“Southern Africa has a chance to break intergenerational poverty by promoting social services that invest in the potential of its people from a very young age and by putting its highest number of people to work through harnessing its most valuable resource — having an increasing number of youth present in the next three decades,” said Guangzhe Chen, World Bank Group Country Director for Southern Africa.But this is particularly challenging in an environment that is already plagued by very high joblessness”.

The study which focuses on Botswana, Lesotho, Namibia, South Africa and Swaziland shows that more of the population in these five countries will be of working-age by 2050. It argues that with fewer dependents per worker, fiscal resources will be freed for the promotion of human development and the employment of younger generations and that good social policies can help generate a virtuous cycles of equity and productivity.

Between now and 2050, the working-age population in Botswana will increase by 29 percent, Lesotho by 36 percent, 53 percent in Namibia, and 43 percent in Swaziland. In South Africa the figure will be lower, 28 percent, yet representing an increase of almost 10 million people. By comparison, the report notes that the age structure in the rest of Sub-Saharan Africa will hardly have changed since 1950.

To reap the advantage of this transition, Southern Africa will need to generate jobs for its increasing working-age population, and ensure that potential workers are equipped with the necessary skills and instruments to match the demand for labor. If this does not happen, the transition will add further pressure to already fragile labor markets: unemployment is already high in the region, reaching a staggering 47% among youth.

Just to hold current low employment rates constant, Botswana will need to create an additional 340,000 jobs, Lesotho 400,000, Namibia 580,000, South Africa 7.1 million, and Swaziland 250,000. In addition, the region will at the same time need to bolster the employability of the millions of working-age population that have already completed their education, but lack the skills to work in a sophisticated and growing global economy, with continuous and remedial education, labor insertion programs and social assistance.

The report recommends adjusting social policies to be inclusive and tailoring them towards promoting the human development of younger generations so that when the ratio of working age population peaks to about 70% percent in 2050, these young workers are adequately prepared for jobs that the economy requires to grow. It recommends upgrading the quality of education through all the stages of education from early childhood development to basic and tertiary school which will make this workforce better equipped for skilled jobs in the future.

The report finds that overall, Southern Africa’s generous social assistance systems which have higher fiscal allocations compared to most emerging economies, are mainly geared towards a “protection” role, with the bias towards the elderly. It argues that, they will need to shift to serve a dual objective of protecting the poor and vulnerable from shocks and promoting the human development of the population. This would lead to children that are more likely to be healthy and educated and to grow up to be productive adults. These productive and educated adults in turn will be more likely to raise healthy and educated children, thereby creating a sustainable intergenerational virtuous cycle that would increase incomes per capita, reduce poverty and increase growth.

“Our research shows that a growing, well-educated labor force that is supported by efficient services during all stages in life can set countries on an inclusive and sustained growth path during this window of demographic opportunity. But if policies fail to change, a poorly skilled and unemployed workforce will likely be left to perpetuate the vicious cycle of poverty and inequality, ” said Lucilla Bruni, World Bank economist working on social protection and labor issues and one of the authors of the report.

The study conducted simulation exercises which show that improving educational attainment could raise GDP per capita in 2050 in Swaziland and Lesotho by as much as 18 percent more than if current policies continue. They also show that raising employment ratios up to OECD levels could make South Africa’s GDP per capita quadruple rather than triple in the same time period. In Botswana, policies that stimulate higher productivity through better-quality education and technology could increase per capita income 14 percent more than in the business-as-usual scenario. Simulations also suggest that inclusive growth policies complement each other and that simultaneous implementation could lead to greater impacts than the contribution of each policy alone. It assets that if all policies went into effect at once, South Africa’s GDP per capita would almost quintuple rather than triple by 2050. It would more than triple in Botswana, Lesotho, and Swaziland, and almost triple in Namibia.

The report notes that while good social policies help capitalize on this changing population structure, a sound macroeconomic environment, promotion of private-sector development, and the expansion of labor-intensive sectors are also essential.

Source: The World Bank