A large population of Ugandans are underemployed i.e. being either highly skilled but working in low paying jobs or working part time. However, in comparison to the unemployment challenge, underemployment does not feature prominently in Uganda’s labour market policy discussion. Underemployment equally disrupts the economy’s development, as many persons out there are unsatisfied with their employment situation. This category of workers is often neglected during national planning and yet for the economy not to leave anyone behind, ensuring that the employed persons are in decent work is vital.
According to the 2012/13 Uganda National Household Survey, about 50 percent of Ugandans were in the working age range (14-64 years) and of these, 84 percent were working i.e. engaged in an economic activity. The question is, how engaged are they? Is it fulfilling in comparison to the time they spend working or in relation to the skills they hold? Is the wage earned satisfactory to meet the minimum requirements? In this article, we illustrate how underemployment is a matter of policy concern as unemployment by examining the causes and consequences of underemployment.
Characteristics of persons in paid employment
Based on the 2012/13 Uganda National Household Survey, the number of paid employees was estimated at 2.29 million in 2012/13. Based on the 2014 national population census-growth rates of 3.0 percent per annum, the estimated population in paid employment was 2.4 million in 2015/16. Among employees, the likelihood that persons who are underemployed and do not have contracts is high and hence cannot obtain employment benefits (medical coverage, pension, gratuity etc.).
Evidence shows that the largest share of paid employees in Uganda only have a verbal agreement (73 percent) regarding their employment i.e. have no written contracts. Furthermore, only a small proportion of paid employees are in permanent and pensionable positions (18 percent).
The majority of paid employees work in private businesses/farms and these account for 73 percent of those in paid employment. On the other hand, government institutions and private households employ the second highest share of paid employees while non-governmental organisations (NGOs) employ only a small proportion—estimated at about 3% of all employees. Usually, the debate is that it is mainly government largely offering decent employment.
Unemployment Vs underemployment
For Uganda, a lot has been said on unemployment especially among the youth. To recap, unemployment is about 9.4 percent for the working age population and 11 percent among the youth (aged 18-30 years). Females are more likely to be unemployed (Figure 1).
Figure 1: Unemployment rate in Uganda-2012/13 (%)
Source: Calculations based on 2012/13 UNHS
While we recognise the unemployment challenge, the silent unaddressed issue is that of underemployment. With a growing population and limited expansion of jobs especially quality of jobs, a growing number of Ugandans are becoming underemployed. Put differently, the labour underutilisation rate termed as underemployment is a growing “itch in the eye”. Underemployment disguises many things that often are mistaken for better wellbeing as long as an individual is seen to be in employment irrespective of its nature. The 2012/13 UNHS surveys shows that labour underutilisation was at 15.5 percent, while the rate among the youth was at 19 percent.
More specifically, Figure 2 shows that at the national level, 9 percent of persons in the working age bracket (14-64 years) in paid employment were having insufficient volume of work to engage them fully (time related under employment). That is the actual hours worked were insufficient in relation to an alternative employment situation in which the person is willing and available to engage.
High levels of time-related underemployment suggest that the economic potential of people is not fully exploited. Time-related underemployment can be compared to the more common measures of involuntary part-time employment and can complement measures of unemployment. In the absence of full-time employment opportunities, people are forced to accept part-time employment, even though they are available to work more. To some extent, these people are thus half-unemployed.
Figure 2: Nature of underemployment in Uganda, 2012/13 (%)
Source: Calculations based on 2012/13 UNHS dataset
Skills related under employment was about 6 percent among the national working age group (Figure 2). This clearly reveals a qualification mismatch among the educated who are forced to accept a job whose qualification requirements are below their educational attainment. With about 300,000 graduates joining the job market per annum, the available space is not expanding fast enough to absorb qualified young people such that a substantial proportion is failing to secure a job that matches their qualification level.
Even worse is the rate of wage-related under employment . About 13 percent of persons who are employed noted to have earned a wage below the minimum requirement. This high wage shortfall equally explains the high share of Ugandans who are working but poor. This applies to the other indicators of underemployment (time and skills). This group is equally vulnerable to an economy aiming to attain a lower middle-income status by 2020 as there are glaring arguments that there is actually no decent employment for Ugandan citizens.
Causes and consequences of underemployment in Uganda
Some of the causes of underemployment culminate from the fact that employment opportunities are few and not expanding. Public sector paid employment opportunities are insufficient to absorb available able working persons-job seekers. Given that majority of persons in paid employment are in the private sector, that is expected to expand to create more jobs but it is not, underemployment is most likely to ensue in whatever form. For Uganda, underemployment is most pronounced among the lower cadre jobs that require lower skills sets. Underemployment rates differ by geographical regions due to the differences in education attainment and opportunities available.
The possible consequences of underemployment vary but are largely similar to those of unemployment. For instance, underemployment increases the dependence levels, which further leads to high poverty levels. It can also leads to political instability as demonstrated by the 2011 Arab Spring uprisings in the North Africa and Middle East. The frequent strikes in the Kampala Capital City can also be partly attributed to significant underemployed within the capital.
Underemployment also has fiscal implications especially leading to lower income taxes as most underemployed persons fall in the lowest income tax brackets. It can also lead to loss in trust in education generally, as underemployment can potentially lead to reduced confidence in education because an only graduate in the village that has searched for a job for 10 years may not be a good motivator to the rest that having a university degree pays off after all.
Policy recommendations
The above analysis has demonstrated that underemployment is equally a big challenge in Uganda as is the case for unemployment. While the article does not advocate for shifting the focus from unemployment to underemployment, it nonetheless urges government to also pay special attention to the underemployed. For instance, ensuring a decent wage and working environment will reduce and provide a lasting solution to the underemployment dilemma faced in the country. Protecting worker’s rights is necessary and will not only reduce underemployment but also prevent the underemployed from becoming unemployed.