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Why unemployment has dropped

By Vision Reporter

Added 7th October 2008 03:00 AM

THE unemployment rate in Uganda has dropped to 1.9%, compared to 3.5% in 2002/03, according to the Uganda Bureau of Statistics (UBOS) report, Labour Market Conditions in Uganda 2007.

THE unemployment rate in Uganda has dropped to 1.9%, compared to 3.5% in 2002/03, according to the Uganda Bureau of Statistics (UBOS) report, Labour Market Conditions in Uganda 2007.

BY VISION REPORTER

THE unemployment rate in Uganda has dropped to 1.9%, compared to 3.5% in 2002/03, according to the Uganda Bureau of Statistics (UBOS) report, Labour Market Conditions in Uganda 2007.

Unemployment is a predominantly urban problem as people in urban areas are six times more likely to be unemployed compared to their rural counterparts.

Considering Uganda’s population, the number of unemployed people is low. “Most Ugandans think employment means earning a salary or being employed by the Government,” says Vincent Ssennono, the UBOS senior labour statistician. “But whether you are in the formal or informal sector, provided you work one hour a week, technically you are employed.”

According to the report, unemployment is measured by the number of people without work. To be considered unemployed, a person must not have worked in the last seven days or sought work in the recent past.

Unemployment rate measures the number of unemployed people as a percentage of the labour force whereas employment measures the number of people who work for an hour or more a week for a pay, profit or unpaid work.

Kampala has the highest unemployment rate of 8%, followed by the North with 3%; while the eastern and western regions had the least with 1%, each. There are many job opportunities in Kampala and the central region compared to other regions — the reason Kampala has most job seekers. Unemployment for women is higher than men’s.

The employment status is broadly categorised into two groups; self-employed and paid employees. A sizeable proportion of self-employed people are generally an indication of low growth in the formal economy and high rate of job creation in the informal economy.

The report reveals that the informal sector comprises small-scale businesses, usually with self-employed activities, with or without hired labour. It operates with low level organisation, low capital, low technology and often temporary premises. The informal sector is not supported by formal financing institutions and is not usually registered with the Government.

According to the 1997 and 1999/2000 Uganda National Household Surveys, about 2.2million households operated informal businesses. Almost 57% of the urban households were operating an informal business compared to about 40% in the rural areas. About half the households in the central region operate an informal business compared to a third in the western region.

The proportion of permanent workers in employment has remained below 5% while that of temporary employees has grown by 12%. Having the majority of employees in temporary employment means they are likely to fall back into the unemployed category anytime. Agriculture is still the dominant sector of employment. Farmers increased from 66% in 2002/03 to 74% in 2005/06.

Statistics suggest that the bulk of the people employed in the agriculture sector are subsistence and fisheries workers. This presents a challenge to the Government to create an environment that will lead to creation of jobs to match the growth in the labour force. Persons employed in the public sector earn five times more than those in the private sector. Abundance of unskilled labour and low levels of human capital are cited as possible explanations for lower wage/salaries in the private sector.

The UNHS 2005/2006 report estimated the number of informal businesses at 2.8 million. This increased by 25% compared to the UNHS 2002/2003 report. The increase is more pronounced in urban areas.

The central region had the highest proportion of informal businesses at 40% while the western region had the least at 19%. But western Uganda has persistently had the smallest share of the informal businesses according to the surveys.

The Uganda Business Inquiry of 2001/2002 revealed that out of the 160,000 businesses registered, 150,000 (87%) were informal.

Peter Kasirye, the director of Kasper Institute of Development Studies, says he has found a way around closing the unemployment gap.

“After their studies, students will rent the institute’s machinery and remit about 5% from their processed juice and wine. This will enable them save money to buy their own equipment,” he says.

Why unemployment has dropped

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