A cursory discussion of policy alternatives for addressing youth unemployment in Botswana

This paper is an adaption of a paper submitted as part of the degree of Master of Public Administration (Public Policy and Administration) by the first author. It has been reworked into publishable form with a significant contribution of the second.

Abstract

There has been growing levels of graduate unemployment in Botswana in the recent past. This is notwithstanding the relatively good performance of the economy. Tertiary institutions are churning out graduates with no corresponding jobs to absorb them. The government has introduced various short-term programmes which the graduates are encourage to take to pass time in. This paper examines the various programmes and policy responses to unemployment in Botswana and gives a broad overview of possible policy alternatives for consideration and adoption by the government of Botswana to help provide more and better-quality jobs for the youth. The paper argues that the rising unemployment is a ticking bomb with the possibility to hampering the peace and stability that the country is reputable of. It further argues that Botswana as a developing state has an obligation to create employment for its citizenry. It is recommended that Botswana should formulate coordinated youth employment strategies according to its comparative advantage over other economies with larger populations. This article concludes that the country should take deliberate steps to address the issue of employability and skills gap that is said to be the main problem amongst youth graduates.

Keywords:

• youth unemployment
• employability
• Botswana
• risks of youth employment
• job creation

Public Interest Statement

A cursory discussion of policy alternatives for addressing youth unemployment in Botswana discusses the problem of youth unemployment generally with specific focus on graduate youth. It outlines the nature of youth unemployment in Botswana and discusses the socio-political risks on youth unemployment and idleness. It argues that the growing rates of unemployment in Botswana is a ticking time bomb of social unrest which will result in economic and politically instability. The main objective of this article is to make policy suggestions to the government of Botswana in addressing youth unemployment through lessons from other countries which dealt with this issue successfully before.

1. Introduction

While Botswana has been praised for sustained economic growth over the last several years since the discovery of diamonds, such growth can rightly be termed as “jobless growth” (Mogalakwe, 2003). The economic growth has consistently been accompanied by growing unemployment, poverty and social inequality (Mogalakwe, 2008). It has been observed that in Botswana’s labour market, men are more likely to be employed than women (Siphambe, 2003). Furthermore, graduate youth unemployment rates have been persistently increasing in recent years (Bosupeng, 2015). Between 2010 and 2013, unemployment among graduates was 18% (Bosupeng, 2015).

In 2013, unemployment among the youth stood at between 35 and 41.4% in Botswana (Motlaleng & Narayana, 2014). In Botswana, the youth make up more than half of the country’s labour force. It is worth noting, however, that there are contradictions in the age-based definitions of the youth. This paper adopts the Revised National Youth Policy definition of youth, wherein the youth are defined as any persons aged between 18 and 35 years (Joseph, 2013).

Unemployment, especially among the youth, is one of the development challenges facing this country (Mathambo, 2016). Graduate youth unemployment in Botswana is high relative to other developing countries with similar income levels accounting to nearly two-thirds of the overall unemployed people (Pheko & Molefhe, 2016). The government has devised several temporary relief strategies aimed at preventing extended graduate youth unemployment and providing the youth with on-the-job experience. Few studies have critically assessed and analysed such government strategies. Even fewer are studies that offer possible policy alternatives aimed at promoting graduate youth employment. The purpose of this paper is to help fill this gap in the literature.

This paper gives a broad overview of possible policy alternatives for consideration and adoption by the government of Botswana in addressing the growing unemployment levels amongst the graduate youths. It gives a bird-eye view of those policies as opposed to a critical analysis and/or critique of each alternative. It seeks to provoke debates amongst bureaucrats and policy makers in Botswana and the developing world at large to explore various options available to them in creating employment for the educated youths.

The paper is organised as follows: the part subsequent to the introduction gives an overview of the nature of youth unemployment in Botswana. The third section is a general discussion of the socio-political risks of growing unemployment. The fourth section discusses data collection methods. The fifth section presents the findings and discussions of the subject matter under various heads of proposed policy alternatives. The last section is the final and concluding section of the paper.

2. Nature of youth of unemployment in Botswana

Motlaleng and Narayana (2014) have noted that there is an inverse relationship between the level of education one has and unemployment. Slightly over a decade ago, unemployment in Botswana was largely structural in nature (Siphambe, 2003). Those who possessed tertiary education qualifications had higher chances of being employed in the formal sector (Siphambe, 2003). However, in the recent past, the country has been challenged with growing numbers of unemployed university graduates. The available statistics reflect that since 2008 to date, a total of 21,284 graduates were registered for absorption into government programmes designed for graduate youth. Only 30.29% of the applicants were absorbed by the public service and the parastatal sector (Baatweng, 2015).

The government’s rhetoric of pursuing balanced economic growth with adequate job creation for those who sufficiently qualify is far from being enough (Siphambe, 2003). In the recent past, the government has not been able to adequately create sustainable employment opportunities for graduates. Instead, it has implemented temporary unemployment relief programmes with short-term span. For instance, the government introduced a programme called Ipelegeng. This programme has been designed for low-skill individuals on self-selection basis.

Another programme introduced by the government of Botswana to combat unemployment is the National Internship Programme. In terms of this programme, unemployed graduates are eligible to be employed as interns for placement in government and/or private sector for a maximum period of two years (Republic of Botswana, 2008). The main aim of this programme is to facilitate the transfer of skills for youth employability and to aid a smooth integration of graduates into the economy (Diraditsile, 2017; Republic of Botswana, 2008). However, a few have been absorbed into the mainstream labour market through this programme, while the majority complete their two year tenure to revert back to their unemployed status (Baatweng, 2015).

In recognition of the general failure and unsuitability of the National Internship Programme, the government introduced yet another programme was introduced. The Graduate Volunteer Scheme was championed as a means to contribute to community projects and to improve the graduates’ employment readiness through provision of on-the-job training and experience (Republic of Botswana, 2015). The graduates enrolled in the Graduate Volunteer Scheme are said to be given priority for placement in the National Internship Programme if they are in the Internship waiting list (Republic of Botswana, 2015).

In their development economics analysis, Sekwati, Narayana, and Raboloko (2012) argue that a wide array of these programmes which have been introduced in place of long-term employment provide only temporary relief which is not sustainable in the long term. These programmes have been criticised because they are now being used by both the government and the private sector for recycling interns without giving them permanent jobs and promoting young graduates’ exploitation through using the graduates as qualified cheap labour (Diraditsile, 2017).

3. The socio-political risks of increasing youth unemployment

Unemployment is dispiriting in the short term, and potentially debilitating in the long term (Neethling, 2016). The most common and concerning consequences of widespread youth unemployment in African and Latin American countries have been associated with insecurity, urban social unrest and political instability (Ahmed, 2014). It is widely recognised that youth unemployment and underemployment are threats to the social, economic and political stability of nations (Urdal, 2006). High levels of youth unemployed are argued to breed rebellion either in protest or as an alternative way of generating an income (Urdal, 2006).

Furthermore, high levels of political risk associated with youth unemployment often result in future social instability. It has been observed in South Africa that youth unemployment results in economic alienation as well as alienation from the political mainstream (Neethling, 2016). This line of reasoning is used to explain the frequency of youth participation in disruptive and sometimes violent street protests (Neethling, 2016). Literature notes that political instability occurs particularly in countries where youth unemployment as well as social inequalities are high (Azeng & Yogo, 2013). Essentially, economic conditions are the most critical determinants triggering political instability in developing countries.

4. Materials and methods

This paper adopted a narrative approach using literature and document analysis. Available and relevant literature sources were systematically identified in electronic databases such as Google Scholar, EBSCO Discovery Service, Applied Social Sciences Index and Abstracts (ASSIA), Scopus among others using keywords such as youth unemployment; employability; Botswana; risks of youth employment; job creation.

A systematic review process designed by Best, Manktelow, and Taylor (2014) was adopted to collate and catalogue available data directly related to the objectives of this study. A systematic database search performed over a period of a month generated 2112 documents. 320 abstracts of documents written in English were subsequently studied. 182 studies were then excluded using a pre-defined exclusion criteria which included grey literature and duplicate studies. About 29 original studies were finally selected to address the objectives of this study. According to Dick et al. (2014), systematic cataloguing of available literature sources is crucial for addressing policy-based questions. The selected papers were then screened and the data were classified, organized and categorized according to the needs of the study.

5. Findings and discussions

5.1. Reconfiguration of the education system

A growing complaint by the private sector is that there exists a mismatch of skills and the needs of the economy (Baatweng, 2015). The sector uses this argument as an explanation for its inability to make considerable absorption of youth within the mainstream working class. An independent private sector-led survey has indicated that the country faces a shortage of specific or technical skills and lack of appropriate work experience which are increasing unemployment amongst the youth (Baatweng, 2015). Often, companies advance two main reasons for being reluctant to hire young people; (i) the youth lack work experience and require on-the-job training, and; (ii) it may be costly to assess how good a worker they are (Groh, Krishnan, McKenzie, & Vishwanath, 2012). Therefore, employers may be reluctant to hire young people because of the additional transaction costs such as the provision of additional bridging courses or restructuring the work place to incorporate the necessary skills. The level of youth unemployment in Botswana indicates that education is not sufficiently preparing school leavers for the practical world of work, whether in terms of skills, attitudes and/or expectations (Pheko & Molefhe, 2016).

As a means of addressing this alleged mismatch, it has been proposed that one of the best way to integrate the youth in the job market is to vigorously pursue vocational training models to equip the youth with the practical skills needed by the industries (Motlaleng & Narayana, 2014). Unemployment policies and programmes should seek to broaden the unemployed youth’s job-search horizons to occupations they may not have previously considered. As argued by Hollywood, Egdell, and McQuaid (2012), programmes that offer the youth a variety of choices tend to be more successful. In line with this approach, specialised training programmes for the youth to equip them with requisite skills to enable them to pursue entrepreneurship in a sustainable manner to have long lasting business ventures are widely required.

The structure of post-mandatory professional education options affects the youth labour market transition. In countries with established vocational education tracks, the youth participating in vocational education tend to experience a faster entry into the labour market than youth entering the labour market after participating in mostly general education (Caliendo & Schmidl, 2016). The South African government has taken commendable steps in an attempt to bridge the practical skills gap that exists in the youth through the establishment of Sector Education and Training Authorities (SETAs). Employers contribute funds through the Skills Development Levy towards workplace training and SETAs are funded from these contributions to provide training programmes that are tailored to the needs of specific sectors (Levinsohn, Rankin, Roberts, & Schöer, 2014). Through this policy intervention, employers can employ workers through a learnership contract in order to train the workers while they receive practical work experience.

There are somewhat similar initiatives of ensuring skills transfer in Botswana such as the Graduate Internship Programme and Tirelo Setshaba. However, their effectiveness has not yet been tested. There have been observations that businesses use the programmes as a source of free labour in that they are not required to pay subsistence allowance to the participants. The payment of allowances is the responsibility of the government.

5.2. Incentivised early retirement

Sechele (2015) has made a proposition which is common among Batswana that maybe the time has arrived to revisit retirement age to make it earlier than it currently is. This will work in such a way that it allows for the sharing of the seemingly rare employment opportunities with the elderly making way for the youth. According to the ‘lump of labour fallacy’ theoretical perspective, an old worker leaving the labour market makes room for a young worker who can perfectly substitute them in their previous positions (Eichhorst et al., 2014). It assumes perfect substitutability between young and elderly workers.

Most economists however argue that the theory is based on the erroneous belief of a fixed amount of work (Jousten, Lefèbvre, Perelman, & Pestieau, 2008). Nonetheless, this strategy worked perfectly in the 1980s and early 1990s in OECD countries were increasingly more generous early retirement schemes were in place and, arguably, attributed to the falling male employment rates for the older population (Kalwij, Kapteyn, & de Vos, 2010). It is thought that an additional benefit of facilitating early retirement will creates employment for the young (Gruber, Milligan, & Wise, 2009).

It is, however, unclear whether job sharing would be addressing the structural deficiencies of Botswana’s job market. The pessimists argue that job sharing or early retirement assumes that forcing elderly workers out of the labour force assumes that the labour market is a zero-sum game (Jousten et al., 2008). However, the labour market is not necessarily a zero-sum game. Therefore, increasing the quantity of jobs should not be viewed as an end on itself but rather as a means to an end (Jousten et al., 2008). It is hence submitted that a policy intervention should be implemented to prohibit the systematic closing out of the youth outside the labour market through unreasonable requirements such as long periods of post-qualification experience.

5.3. Vigorous pursuit of nationalisation

It is our view that Botswana has been paying lip service to nationalisation or giving preference to nationals of Botswana over foreigners in filling vacant positions either within the public service or in the private sector. For instance, in 2015, the Minister of Labour and Home Affairs deliberately misled parliament when asked on the criteria of giving work permits to foreign lawyers (BOPA, 2015). The Minister stated that work permits are only issued to foreigners with specialised skills (BOPA, 2015), while in fact it is not necessarily true (Lekgowe, 2015).

Notwithstanding the importance of importing labour and skills, the government should resort to importing skills only if the unemployed pool does not possess such skills. Preference should be given to the nationals in order to address the challenges of unemployment. Such practice will constitute to strategic nationalisation of jobs. A report by the International Labour Organisation hereinafter (ILO, 2012) states that Botswana is one of the countries with the worst indicators for youth employment interventions in Southern Africa. There is a need, therefore, for the country to design and develop new youth employment intervention strategies (ILO, 2012).

There should be a legal reform in the country’s immigration and labour laws to make it compulsory for the employers to seek for a ministerial waiver before average qualified foreign nationals can be employed. Furthermore, the country has to have formal institutions mandated to strike a balance between promoting flexibility within a strictly regulated economy and protecting the national within the labour market. Economic restructuring to address such issues as critical levels of youth unemployment necessitates state interventionism in social policy (Milner, 2001).

This paper, however, argues that nationalisation is not a panacea for all the country’s unemployment and other developmental challenges. It should be viewed as a strategic position of the state to unlock human resources for development while fully benefitting from investing in the educating and training the citizens.

5.4. International labour migration and international trade

One practical solution of growing unemployment in Botswana is using the country’s comparative advantage - its highly trained young population. It is suggested that the government should engage the public in general and the youth in particular in exploring employment opportunities outside the country. Human capital is a valuable intangible asset to a country, which should be vigorously exported to those in need of trained and educated personnel. The education curriculum must be packaged in such a way that it produces open-minded graduates seeing themselves as part of the globalised world and be willing to seek opportunities everywhere, especially in other African countries which are in dire need of trained manpower.

The considerable differences in income across countries allows individuals and households to escape from poverty through international migration (Gibson, McKenzie, & Stillman, 2011). Human mobility benefits not only migrants and their families, but their countries of origin and destination as well (Sutherland, 2013). The flow of foreign currency to remittance-receiving countries helps support the balance of payments. This makes it easier for countries to pay for critical imports, gain access to capital markets and pay lower interest rates on sovereign debt. Exporting young labour will benefit them as individuals, their families and the national economy.

Further, Golub and Hayat (2014) have interestingly suggested that developing countries, such as Botswana, can leverage on globalisation and/or international trade to generate rapid growth not experienced before in the continent using lessons learnt from the Asian developmental states by engaging in labour intensive export. Botswana, as a country in desperate need to diversify from its mono-commodity based economy, should be open to embrace any sustainable options to mining which can help address unemployment and bring income for the economy in the process.

5.5. Wage subsidy

Due to their desperation to reduce unemployment and its negative consequences, many countries have opted for the strategy of wage subsidies, by either subsidising the payrolls of employers who employ groups of people targeted by the subsidy or by giving tax rebates to such employers as a way of encouraging them to employ more people (Mtembu & Govender, 2015). Wage or employment subsidies have been used in both developed and developing countries to raise employment levels. In a developing country context, where labour market failure is typically characterised by unemployment, a subsidy offered to the firm is more appropriate (Burns, Edwards, & Pauw, 2013).

Wage subsidies lower the cost of labour to an employer while raising the wage a worker receives (Nevondwe & Odeku, 2014). They have long been used to help disadvantaged groups find jobs in developed countries (Dubin & Rivers, 1993). Wage subsidies could be considered when, in their absence, people with no or little work experience might not be able to access jobs that can use and expand their skills (Almeida, Orr, & Robalino, 2014). These type of subsidies can be in the form of deductible taxes administered by the tax authorities (Kasongo, 2013).

In Finland, wage subsidy paid to the employers are implemented through a simple reduction in the payroll tax for the firms that participates in the programme and the revenues are mainly used for funding the employee’s pension and the health insurance (Huttunen, Pirttilä, & Uusitalo, 2013). It has been observed that wage subsidies have the potential to raise youth employment in a given economy by an estimated 20 to 30% (Nevondwe & Odeku, 2014). This type of policy alternative provides incentives, especially to the private sector, to accelerate job creation and raise employment. Further, the wage subsidy has the potential to increase the labour productivity as the employers could use the subsidy to promote training and education opportunities for the young workers to enhance their productivity levels in the long run (Kasongo, 2013).

Wage subsidies may reduce the cost of the marginal new younger worker and encourage firms to hire more workers. The firm may opt to hire younger workers to replace older workers in order to benefit from the subsidy provided by the state (Rankin, Roberts, & Schoer, 2012). By implication, the broader economy will arguably benefit partly because increasing employment opportunities for the youth will in turn contribute to an increase in income tax collected. Unemployment limits the ability of the government to collect the maximum possible taxes. Countries should clearly define theIR policy objectives and expectations when adopting wage subsidies. Without learning effects, wage subsidies are unlikely to be effective (Almeida et al., 2014).

6. Conclusion

This paper noted that the common excuse for graduate unemployment is the non-employability of the graduates. This is attributed to the failure of the education system to give the graduates practical work skills required in the industry. It made various recommendations on what can be done to ensure that the unemployed graduate youths gain practical experience through. This paper further discussed the common socio-political risks associated with unemployment generally, and more specifically youth unemployment. It emphasised the need for the government to play an active role in employment creation.

In light of the foregoing, it is submitted that creative solutions on how best to use Botswana’s comparative advantage over countries with larger populations have to be explored and implemented. The government should implement real and sustainable solutions to growing unemployment and stop focusing on seemingly unsustainable strategies with short-term tenure and low wage rates.The government, contrary to some views, has the responsibility to create and provide jobs to the general populace. Unlike the developed countries, Botswana as a developing country should concern itself with the creation of jobs within the public service in light of the small and heavily public finance reliant private sector. In addition, the government should create an enabling environment for the private sector to empower the sector to help create sustainable employment opportunities.

The paper did not make specific policy choices for the government. It rather provided a menu of policy options for the government to consider for its employment creation drive. This paper also provided general lessons not only to the Botswana government, but also for other governments in the developing world faced with growing unemployment rates among the young graduate.

Additional information

Funding

Funding. The authors received no direct funding for this research.

Notes on contributors

Goemeone E.J. Mogomotsi

Goemeone E.J. Mogomotsi is a legal officer in the Department of Legal Services, Office of the Vice Chancellor, University of Botswana. He holds various multidisciplinary educational qualifications spanning from law to finance which are: (i) LLM in International Trade, Business and Investment Law; (ii) Master of Public Administration (Public Policy); (iii) LLM in Commercial Law; (iv) Master of Financial Management; (v) Bachelor of Financial and Investment Analysis; and (vi) Bachelor of Laws (LLB). His research interests are International Financial Law, Administrative and Constitutional Law, Environmental Law, Public Policy and Development Studies among others.

Patricia Kefilwe Madigele

Patricia Kefilwe Madigele is a research scholar specialising in Natural Resources Economics at the Okavango Research Institute, University of Botswana. She holds the following degrees: (i) Master of Economics (MEcon); (ii) Master of Financial Management; (iii) Bcom (Hons) Economics; and (v) BA (Economics). Her research areas are Development Economics, Environmental Management, Water Resources, Sustainable Development, Resource and Natural Economics.

Notes

This paper is an adaption of a paper submitted as part of the degree of Master of Public Administration (Public Policy and Administration) by the first author. It has been reworked into publishable form with a significant contribution of the second.