The Challenge of Unemployment and Youth Unemployment amidst Fast Economic Growth in Ethiopia

Using a varies of approaches, this study examined the challenge of general and youth unemployment during the fast growth period of Ethiopia, 2000-2021. Apart from describing the recent profile of the labour market, I found a mismatch between the sectors that are the sources of fast growth and the sectors with significant potential for job creation. A simulation exercises carried to examine the employment effect of demand stimulus is not found to change this pattern although it could lead to an increase in output. The unemployment problem is accentuated by lack of structural transformation and low or declining productivity across sectors. The probability of being unemployed is also found to be relatively higher for females and youth, compared to males and adults, respectively. Government effort to address the youth unemployment problem through the establishment of technical and vocational training schools is not helping either. Based on the findings a number of policy implications are deriver. Among this, for instance, redirecting incentives and policy support to sectors with significant employment potential a- the top three identified in the study being agriculture in general and animal husbandry in particular, agro industrial parks and labour-intensive manufacturing - could be important to address the challenge of unemployment.