Firmin gets by doing small odd jobs. One day he is a street vendor, the next day a carpenter, and on other days he’s a gardener. He arrived in Abidjan two years ago with high hopes of joining the National Police Academy. His story resembles that of thousands of Ivorians who join the domestic workforce each year. Today, there are about 14 million people of age to work in the country, and by 2025, there will be approximately 22 million - all of whom seek a secure well-paying job.
Today, almost all Ivoirians are employed - they don’t have the luxury not to be. However the difficulty is not finding a job, but rather earning a decent income. An average worker earns 120,000 FCFA or the equivalent of $200 per month, which is lower than the average in Sub-Saharan Africa. The Ivorian labor market is highly segmented with 80% of workers qualifying as self-employed or working in household enterprises or farms, earning less than 70,000 FCFA or $200 per month. Few Ivorians earn more than 300,000 FCFA or $500 per month, and fewer still are those who earn several million FCFA, most of which work in the mining and banking sectors.
Emerging countries such as Malaysia and, more recently India, have been able to provide quality jobs for their growing labor force by expanding fast and by encouraging their workers to move from low to high productive sectors. Cote d'Ivoire seems to be following their footsteps. Since 2012, the country has become one of the fastest growing economies in the world with a GDP increase of almost 50% over the past four years. Concurrently, the share of agriculture in total employment has fallen, while non-agricultural self-employment and wage employment have surged (See figure 1). At the current pace, agricultural employment will count for only 30% of total jobs by 2025, as compared to 62% in 2002 and 50% in 2014.
Ivoirian Employment Shifting Away from Agriculture
Job creation outside of the agriculture sector is good news as it should lead to higher income for most Ivoirians. Today, the wages of a non-farm self-employed worker is 60% higher those of a farmer. The typical employee in a non-farm enterprise earns seven times more than an agricultural worker. Despite significant variations across individuals, these figures clearly demonstrate a positive outcome that is usually associated with a structural transformation of the labor market over time.
By 2025, close to 10 million Ivorians will be either self-employed or working in household enterprises. The problem however is that these jobs are unlikely to provide sustainable decent incomes. One can already observe the growing number of unsettled youth in the streets of Ivoirian cities, selling goods and services, mostly informally or illegally. In spite of the rapid economic recovery, the average revenue associated with informal commerce has declined by 15% between 2012 and 2015.
So what are the next steps? The recently released World Bank Economic Update on Cote d’Ivoire proposes a roadmap going forward. According to the report, the government should provide support to the self-employed by legitimizing their status. As long as these workers remain illegal, it will remain difficult for them to invest in their future. There is also a need to assist them financially, even with modest amounts, and to facilitate their acquisition of basic competencies since few finish primary school. International experiences indicate that programs integrating training (in technical and behavioral skills) and financial assistance are the most successful, especially when they target youth and female entrepreneurs.
The second solution is to encourage wage employment. More hiring by formal enterprises will raise labor revenues. There is a need to accelerate the number of new registered enterprises since, in 2014, it was proportionally five to seven times lower in Côte d’Ivoire than in Nigeria and Rwanda. Emphasis should be placed in improving access to external financing for small businesses and the streamlining of the business environment, which includes labor legislation. This effort should be accompanied by an upgrade of technical and vocational education as there is a strong positive correlation between education levels and the likelihood of securing a salaried position in an enterprise.
The third and last solution lies in agricultural employment. If productive well-paying jobs cannot be found in rural areas, more workers will move to cities. An influx of migrants to large cities will create tension in the urban labor market, which is already under pressure. In addition, an increase in agricultural labor productivity will boost the development of value chains, which are needed to create quality jobs in Côte d’Ivoire. Increasing labor income in agriculture will require a shift from traditional to modern agriculture through further commercialization and diversification.
Implementing this three-pronged strategy is not only important but urgent. Otherwise, Firmin and his friends will not find decent jobs, resulting in frustration and the associated risks of social conflict. It is easier said than done, however if no steps are taken, Côte d’Ivoire will fail to achieve its goal of becoming an emerging economy.