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With employment creation at the heart of the Government Agenda, the transition from the informal to the formal economy is a key ingredient to economic growth
This emerged at the launch of the Zimbabwe Labour Market Diagnostic Analysis (LDMA) And Inception Report for the Formalisation Strategy held today, 8 October 2021 in Harare.
Mr. Simon Masanga, the Permanent Secretary in the Ministry of Public Service, Labour and Social Welfare made the remarks in his keynote address during the launch.
“Ladies and Gentlemen, let me point out from the onset that employment creation is at the heart of the Government Agenda. The government’s commitment to the employment promotion agenda is clearly manifested by the fact that it has prioritised Sustainable Development Goal (SDG) number 8 on decent work and economic growth in its implementation strategy for the sustainable development goals. As you may know, within the economic blueprint National Development Strategy (NDS1), employment promotion has been identified as a cross-cutting issue that has to be mainstreamed in all the initiatives under NDS1.
Let me hasten to say that one of the bold and transformative measures outlined under NDS1 is the need to facilitate the transition from the informal to the formal economy. This underscores the importance of prioritizing the informal economy, identifying interventions to support informal workers, and working towards increasing both incomes and productivity of the informal sector,” Mr. Masanga said.
Ministry of Labour, with the support of the International Labour Organization, and its tripartite constituents conducted the Zimbabwe Labour Market Diagnostic Analysis Report (LMDA).
The findings indicated that increasing living standards and promoting economic and social development in Zimbabwe first requires improving employment opportunities.
Mr. Masanga said economies grow when more people work and when each job in the economy becomes more productive. At the same time, households escape poverty when labour income, the main source of income for most households, increases. This happens when more working-age household members are employed and when the quality of their jobs improves. Better employment opportunities for Zimbabwean workers are a key ingredient to the attainment of an upper-middle-income status by 2030.
The LMDA presents specific recommendations of sectors with potential for employment creation. This will ensure the achievement of Zimbabwe’s set target of 760 000 jobs, as stated in the National Development Strategy and contribute towards the achievement of Vision 2030.
“The results from the diagnostic analysis will therefore inform the design of a national formalization strategy to improve employment opportunities in Zimbabwe and promote inclusive economic growth. It is a fact that the informal sector constitutes a greater percentage of the labour force and has immense potential for growth. The 2019 Labour Force and Child Labour Survey (LFCLS) estimates that 76.5% of workers in Zimbabwe are in the informal economy and they contribute about 48% of the country’s GDP.
“In this regard, therefore, coming up with an excellent formalization strategy is only one side of the coin and the other side rests in having a good implementation plan. It is important that policies be developed in consultation with those that may be affected to ensure policies deliver the intended result of creating an enabling business environment. These include business, workers, informal sector representatives, local authorities, private sector, Parliamentarians etc. It is for this reason that we are gathered together today to present to you the Inception Report which details a clear-cut approach to the formalization strategy, including a work plan with a calendar, and annotated outlines of proposed reports and strategies.”
Hopolang Phororo, the Director of the ILO Country Office for Zimbabwe and Namibia noted that the Zimbabwean economy was on a recovery path from 2009 to 2018, largely due to significant contributions from mining and agriculture. She said despite the positive economic growth, labour productivity did not improve, as jobs shifted from urban to rural areas, from the formal to the informal sector and from industry to agriculture, where labour productivity and incomes are lower.
Labour market conditions have continued to deteriorate over the last two years. In 2019, Zimbabwe’s Gross Domestic Product (GDP) contracted by over 6.5 percent due to fiscal consolidation, Cyclone Idai and the devastating impact of a drought that severely affected agriculture and electricity production.
Prior to the COVID-19 pandemic, about 57 per cent of the working-age population in Zimbabwe was outside of the labour market, the unemployment rate reached 17 per cent and among those working, 80 per cent were in informal employment, with almost 8 million people food insecure. The COVID-19 pandemic and associated containment measures have further aggravated these problems. The impact has been particularly severe among informal economy workers, women and youth.
Phororo said it is against this background, that the International Labour Organization (ILO), supporting its national tripartite constituents and in direct response to a request by the Ministry of Public Service Labour and Social Welfare (MPSLSW), conducted this Labour Market Diagnostic Analysis (LMDA).
The LMDA assessed the current labour market situation and key constraints related to the creation of jobs and access to decent and productive employment. It further identified economic sectors and activities that have the highest potential to create higher productive jobs, including in the informal sector. The analysis has also proposed policy interventions that can stimulate sustainable and inclusive job-rich growth.
Accordingly, the findings of the Labour Market Diagnostic Analysis indicated that increasing living standards and promoting economic and social development in Zimbabwe requires improving employment opportunities. Economies grow, when more working-age household members work and when each job in the economy becomes more productive. At the same time, households escape poverty when labour income, the main source of income for most households, increases. It is also likely that better employment opportunities for Zimbabwean workers will foster social stability and consolidate democracy.
“It is important that the national macro-economic policy framework identifies and deliberately pursues specific employment outcomes. The relevant targets could include raising participation and employment rates, higher earnings, better access to labour regulations and social insurance programs, as well as better enforcement of core labour standards. These targets would then inform policy interventions with three interrelated objectives towards promoting the creation of formal employment; improving the quality of existing informal jobs; and facilitating access to employment, particularly for the most vulnerable workers. To this effect, the ILO is working in collaboration with UNDP and other UN agencies to support this important process in view of incorporating the strategy into a comprehensive National Employment Policy. The launch of this process today is commendable.
“The findings of the LMDA will also contribute towards the development of programmes for the relevant priorities talking to the decent work agenda, including growth and stability; food security and the development of the agricultural sector and value chains development, as articulated in the National Development Strategy (NDS1 (2021- 2025). Job creation is imperative and requires a range of stakeholders, a multi-pronged and integrated approach that ensures all the sectors, particularly those with the highest potential are looked at through ‘employment’ lens. If we are to achieve the 2030 Agenda and to leave no one behind, as the UN has reflected in the results captured, in the soon to be launched UN Sustainable Development Cooperation Framework, this will require collective action. The Ministry of Labour and the tripartite constituents will not achieve this on their own and it is our responsibility to ensure that we share this analytical work broadly,” Ms. Phororo added.