By World Bank
Strong economic growth continued in 2014-15, but the drought slowed down Ethiopia’s growth to 8 percent in 2015-16. Exports have had their worst performance in the last decade and the current account balance remained large. Inflation is remarkable stable given the recent drought and even declining; it stood at 5.6 percent in October 2016. Understanding the nature of urban labor markets is important for a successful transition to a manufacturing and service-oriented economy and to further reduce poverty. Many urban labor market trends are moving in the right direction although there has been little change in the structure of urban labor markets over time. Although jobs are being created faster than growth in the urban workforce, not enough jobs are being created for those with primary and secondary education. This economic update offers five policy recommendations to enhance urban labor markets: encourage firm creation and firm growth that creates jobs for non-graduates; increase labor productivity in the low-skill population segment by addressing constraints faced by firms in accessing capital (financial and physical) to ensure that the marginal product of labor increases above the nutrition-based wage; invest further in job training and technical training programs to build the skills of those in the job market: both for low-skilled workers to increase their productivity and for those with higher levels of education to increase their skill base; introduce targeted urban safety nets and labor market programs to invest in skills of low skilled employees and the unemployed, and provide financial support to enable their job search; and enhance the use of information communication and technology (ICT) to provide information on job vacancies throughout the city and reduce the cost of job search.

Full Content: The World Bank