The Zambian 2018 Budget Address, delivered to the National Assembly on Friday, 29th September 2017 cites increasing mechanization in the mining sector, thus limiting the future ability of the mining sector to absorb a large number of youth entering the labour market each year. This fact underscores the need to diversify the economy to labour-intensive sectors such as agriculture and tourism. At TIRA Global we support the Zambian Governments’ assessment and the need to attract and develop a skilled workforce, which aligns with Zambia’s industrialization policy and long-term visionary document, the Vision 2030, of being a prosperous middle-income nation by 2030.
Labour Force Versus GDP Growth
The graph below is a cross comparison between the annual increasing labour force versus the annual percentage growth of GDP (Gross Domestic Product). The lack of a relationship in the long-run between economic growth and labour force, underscores the risk of sustaining an unskilled labour force. The ability of a skilled workforce to contribute meaningfully to economic growth, in diverse sectors requires investment in development of the workforce and industry. Lack of such an investment, in the long run, could weaken Governments’ fiscal position and may put fiscal sustainability at risk.
According to The World Bank: World Development Indicators database, the services industry, which includes value added in wholesale and retail trade (including hotels and restaurants), financial, professional, and personal services such as education, healthcare, and real estate services, has experienced a substantial increase in value addition to GDP (Gross Domestic Product) between 2012 and 2016. Investing is a skilled labour force in the Services sector could produce a meaningful contribution to GDP.
In summary, investment in the development of a skilled Zambian workforce is fundamental to meeting the needs of a growing labour, that is equipped to sufficiently contribute to GDP. TIRA Global applauds the Zambian government for the establishment of the Skills Development Fund, however in view of the K176.6 million budgetary allocation to the Fund, this only amounts to 0.246% of the 2018 Budget. TIRA Global recommends increasing the budgetary allocation for skills development and aligning Zambia’s skills workforce requirements, to the Industrialization and other long-term policies.
By Michelle Morel CEO and Founder of The Institute of Research and Analysis – TIRA