IMF Survey: Zambia Needs Fewer Obstacles to Job-intensive Growth

June 21, 2012

  • Zambia has had economic success over past decade, as measured by GDP growth
  • But the record of converting growth into poverty reduction has been mixed
  • Employment growth in formal sector has been sluggish

Zambia faces challenges in ensuring that its mineral-dependent economy achieves inclusive and employment-intensive growth over the medium term.


A recent conference in the Zambian capital, Lusaka, focused on the obstacles encountered in promoting rural development, economic diversification, and faster employment growth in the formal sector of the economy.

Delegates at the May 21–22 event noted the importance of accelerating growth of employment in the formal sector—which encompasses registered companies, enterprises, and institutions that comply with national labor and taxation laws. The conference also discussed the skills mismatch between the output of Zambia’s education system and the current needs of employers, and the objectives of reducing poverty in rural areas and addressing youth unemployment.

“The majority of the labor force in Zambia is employed in the informal sector, which is characterized by lack of social security and precarious work conditions,” said Leonard Hikaumba, president of the Zambia Congress of Trade Unions.

Zambia’s Minister of Information, Broadcasting and Labour, Fackson Shamenda, said employment creation needed to be steered in the right direction. “For that we need coherence and balance across policies, as well as coordination and dialogue among institutions and stakeholders. This conference has marked an important step in that direction.”

Labor productivity

Together with the Zambian government and the International Labour Organization (ILO), the IMF organized the conference with the aim of enhancing social dialogue and building consensus around economic policies targeted at strengthening economic growth, increasing labor productivity, and improving the labor market institutions in Zambia. The event brought together senior representatives from the International Trade Union Confederation, local trade unions, business, government, youth, academia, think tanks, and civil society.

The Zambia conference was part of a joint ILO-IMF initiative to support a broad dialogue on policies, strategies, and programs for employment creation in three pilot countries: Bulgaria, the Dominican Republic, and Zambia. The conferences—an outgrowth of a September 2010 IMF-ILO conference in Oslo, Norway—are intended to promote policy consultation among social partners—government, employers, and labor unions—in each country.

“The government of Zambia is responding to the very real impact of unemployment and underemployment on working people,” said Zambian Vice-President Guy Scott, who delivered the conference’s opening remarks. “This gathering has helped to define the steps that must be taken to bring millions back into the workforce. Tackling the jobs crisis is not only critical for a meaningful Zambian economic recovery, but also for social cohesion and peace.”

Mixed record

Zambia has achieved significant economic success over the past decade, as measured by GDP growth and other macroeconomic indicators, noted Seán Nolan, Deputy Director of the IMF’s African Department. “But the record of converting output growth into poverty reduction and expansion of formal employment has been mixed. Reforms are needed to lay the basis for pro-poor agricultural sector development, to address skills-mismatch issues, and to facilitate employment growth in the formal sector.”

Papers at the conference were presented by ILO and IMF staff, the Zambia Congress of Trade Unions, the Federation of Free Trade Unions in Zambia, the Zambian Federation of Employers, and the Economics Association of Zambia. The presentations addressed aspects of labor market issues in Zambia and possible policy options for economic development strategies that would help generate employment and reduce poverty.

The IMF and the ILO agreed to continue supporting the Zambian government as it seeks to flesh out the measures needed to create the conditions for sustainable and broad-based growth. There was broad agreement among participants on the central role that inclusive and effective social dialogue can play in building the social consensus needed to tackle the challenges of unemployment and diversification of the economy.

Follow-up work on the themes of the Lusaka conference will take place in the coming months.

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