Key takeaways
- Headline unemployment misses most informal work.
- Underemployment and earnings say more about labour-market health.
- Household surveys are the analyst’s best friend.
In many African economies, most people work in the informal sector: trading, farming, transport, services. For them, the question “are you employed?” has a simple answer and an unhelpful one. Analysts need better measures.
Why the unemployment rate falls short
Few people can afford to be fully unemployed when there is no unemployment benefit. Most take whatever work is available, so headline unemployment can stay low while living standards fall. The number is accurate, but it answers the wrong question.
Better questions to ask
How many hours do people work, and would they like more? What do they earn, and how stable is it? Do they have a contract, social protection or access to credit? Underemployment and earnings tell you far more about the health of a labour market than unemployment alone.
In an informal economy, the real question is not whether people work, but whether their work is enough.
Where the data lives
Household and labour-force surveys are the richest source, especially those that follow the international definitions of informal employment. Learning to work with these microdata is one of the most useful skills an applied economist can build.
Measure the quality of work, not just its existence, and policy debates about jobs become far more useful.
Photo: Jean Papillon on Unsplash
