Job Creation in Tanzanian Labour Market: Where &What Types of Jobs Are Being Created?

Abstract

This paper examines the process of job creation in Tanzania by addressing the question: what types of jobs are being created and where? To address these questions the paper’s conceptual framework and strategies consider the interrelation between the number of jobs that can be created in a labour market segment, the quality of jobs in terms of human capacity requirement, productivity and remuneration. The specific method for capturing job creation used by the paper are estimates of the labour market, indexes of job creation and job destruction at sectoral level. The paper findings are that job creation in Tanzania is mostly happening in traditional agricultural sector and urban informal sector, as both employ over 90% of the working population. The absorption capacity in the formal sector jobs is very small and there are indications that it will remain so even in the near future. Large numbers of the jobs created are vulnerable jobs in which earnings are below US$2 a day, which is below the working poverty line. Findings also suggest that the fastest growing sectors such as mining and tourism have low levels of employment. Tourism has the highest total employment effect in the economy than any other sector. The results further show that agriculture has less employment multiplier effect, although it provides the largest direct employment opportunity. The paper concludes that although unemployment in Tanzania is low, the types of jobs created are still not immune to poverty incidence. The earnings level in most of the employing sectors falls below the working poverty line of US$1-5 per day. Therefore, a high rate of growth in modern sector employment can only be generated by high GDP growth, typically spearheaded by industrialization, modern services, finance, business and the related sectors.