Urban unemployment rate dropped to 18.9%, according to the 2010 Urban Employment-Unemployment Survey(UEUS) results published last month by the Central Statistics Agency. The Survey was conducted using ‘the current activity status approach’ – which measures the activity status in the seven days prior to the date of the interview.

According to the Survey, the size of unemployed population in urban Ethiopia stands at 1,116,512.

The survey found out 4,7998,467 persons were employed in May 2010, the period when the survey was conducted. This figure is 40.5% higher than that of April 2004, when 2,854,322 persons were at work.

The unemployment rate is lower than the figures obtained in five previous surveys in the last two decades using similar measurement approach. Though a 22% urban unemployment rate was reported by the 1994 Census, the more reliable survey, National Labor Force Survey(NFLS), conducted in 1999 increased the figure to 26.4%. The Urban Employment-Unemployment Surveys conducted in April 2004 and May 2009 reported unemployment rate of rate 22.9 percent and 20.4 percent, respectively.

The 2010 Urban Employment Unemployment Survey (UEUS) comprised ‘all urban parts of the country with some exception of urban areas in non-sedentary population of three zones of Affar and six zones of Somali regions’. The data collection covered 19,800 households which were selected using systematic random sampling method.

The Survey defined unemployment in accordance with the ‘relaxed criteria’ introduced by International Labor Organization(ILO) for developing countries. Though the 1983 ILO manual stipulated that a person must be ‘without work’, ‘currently available for work’ and ‘seeking work’ to be considered as unemployed, the third criterion was later deemed ‘of limited relevance’ in developing countries ‘where the labour market is largely unorganized or of limited scope, where labor absorption is at the time inadequate or where the labour force is largely self employed.’

Thus, following the relaxed definition ILO introduced in 1990, the 2010 Urban Employment-Unemployment Survey(UEUS) states: ‘unemployed persons includes persons without work and those who are available for work, including those who were or were not seeking work or discouraged job seekers. The discouraged job seekers refers to those unemployed persons who want a job but not taking any active step to search for work b because they thought that job was not available in the market.’

Unemployment rate is computed as the proportion of the unemployed persons to that of the total economically active population. The term ‘economically active population’ refers to the population aged ten years and above that are engaged or available to be engaged in productive activities, that is, employed and unemployed population. On the other hand, ‘economically non-active population’ consists those aged ten years and above but not engaged in productive activities due to working in homemaking activities, attending school, old age/pensioned, illness, too young to work or for other similar reasons.

According to the survey, the size of the population aged ten years and above were 9,961,607 or 79.2 percent of the estimated total population 12,572,775 of urban areas in May 2010. Of which, 5,914,979 were reported as economically active population, while 4,046,628 were reported as ‘economically non-active’ during the seven days prior to the May 2010 survey.

Though this report doesn’t explain why the age of ten years is taken as benchmark, the 1999 National Labour Force Survey report states: the lower age limit was fixed at ten years because in the rural areas of the country children start taking part in many types of economic activities at young ages.

It should be noted that a decline in unemployment rate could also result from is a shift from unemployment to employment or economically non-active category. Thus, in this case, it is likely that the surge in the student population seen in the last few years might have contributed, though I couldn’t estimate its share.

Though the national average unemployment rate decreased by 4.4%, at regional level, larger drops were observed in Harari, Afar and Oromia during the same period. Not surprisingly, Dire Dawa tops in unemployment rate, followed by Addis Ababa.

The breakdown of the employed population by occupational groups reveals ‘service, shop market sales & craft workers’ is the largest group comprising 42% of those employed. Though, this is lower than 2004 by 3%. On the contrary, the occupational group ‘skilled agricultural and fishery works’ surged from 4.6% to 8.3% and the ‘professionals, technical and associate professionals’ group increased from 10.6 to 13.2% in the six years.

In terms of industrial division, the ‘manufacturing, mining, quarrying and construction’ sector became the second larger employer beating the ‘retail and whole sale’sector, albeit by a smaller margin. But that was only because, the latter’s share decreased faster – from 21.8% to 19.8% in th years between 2004 and 2010. The employment share of the ‘manufacturing, mining, quarrying and construction’ decreased stood at 20.6% in 2010 as opposed to 21.5% in 2004.

About half of those employed are found in the sector dubbed ‘other service sectors’, however. This category comprises public administration, defense, education, health, hotel and restaurant and related services.

Self-employed(own account workers) account for 37.6% of those currently working, which is about 4% lower than that of 2004. Notably, the size of government employees increased by only 0.4% in the six years since 2004 -i.e, from 21.4% to 21.8%. On the other hand, the share of private organizations increased from 16.5% to 19.3% in the same period.

The Survey indicates ‘literate’ job seekers and youth are faring better in the job market. The unemployment rate for literate persons dropped to 19.2% in 2010 from 25% in 2004.

In the same fashion, the Youth unemployment rate among the youth (age 15-29) decreased to 24.5% in 2010 from 31.5% in 2004.

The 2010 report reveals that first time job seekers are facing increased difficulty to find a job. The unemployment rate of this group surged from 45.6% to 52.2% in the years between 2004 and 2010.

On the other hand, the proportion of those who remained unemployed for more than a year showed huge drops. Of those reported unemployed in 2010 about 30% remained jobless for more than 13 month, while the corresponding figure in the 2004 Survey was about 50%.

The Survey also indicates curious changes in the data concerning how females’ are faring in the labor market.

The aforementioned and other data contained in the survey report, titled ‘Key Findings On The 2010 Urban Employment Unemployment Survey’, are summarized in the two tables post below.

[The explanatory notes below are based on the 2010 report and the 1999 report)

The economic activity rate or labor force participation rate is computed as the percentage of the economically active population over the total population of the economically active plus the non-active population.

Employment -to-population ratio provides information on the extent to which the population is engaged in productive activities. Employment to Population Ratio is calculated as a percentage of total employed persons to that of the total population aged ten years and above. High employment to population ratio means a large proportion of population is employed, while low employment to population ratio means a large share of the population is not involved in productive activities, because they were either unemployed or out of tithe labor force.

Usual status approach vs. Current status approach: The usual status approach refers to the last twelve months proceeding the date of interview, while current approach using moving reference period, referred to the last seven days prior to the date of interview.In the usual status approach that refers to a longer time interval, data was collected about the main or usual economic activity of the population. In the usual status approach, all persons aged ten years and over were asked to report whether they were engaged in productive activities during most of the previous twelve months. Those who were engaged in productive activities during the reference period were classified as usually employed. On the other hand, the current status approach was based on a shorter reference period, and data was collected with reference to the current activity of the population.

The employed population based on the current activity status approach consisted those who were engaged in productive activity at least for four hours during the seven days prior to the date of the interview. Persons who had regular jobs, or business, or holdings to return to but temporarily absent from work (that is, not at work or worked less than four hours) for various reasons were also included as employed persons. For a person to be considered as absent from work, he/she must have formal attachment to the job. Employees who were fully/partly paid during their absence; or who will return to their work when relieved from the problem which is accounted as a reason for absence; or who were not absent for a total of two months are considered to have formal job attachment. Self-employed persons are considered to have formal job attachment, if their place of work/ business is not closed down during their absence from work or they are sure it will be re-opened/continue to function if it is closed down. Whereas, the unemployed population, which will be defined in detail in Chapter VI, consists of persons without work but who are willing /available and ready to work during the one month after the date of the interview if any job was found.

Economic or productive activity in the survey was defined in terms of production of goods and services that fall within the United Nations System of National Accounts (SNA) production boundary (ILO, 1990). Hence, in the 1999 National Labour Force Survey, economic activity or productive activity is defined as work which involves the production of goods and/or services for sale or exchange and production of certain products for own consumption. According to the above general definition, economic activity covers production of goods and services intended for sale on the market, production of other goods and services such as government activities; production and processing of primary products (agriculture, hunting, fishing, forestry and logging; and mining and quarrying) for own consumption, processing of primary products by the producers themselves, production of other commodities where part of it is sold on the market; and own account construction and fixed asset formation (expected life use of one year or more). Such economic activities could be performed for an individual, family or private enterprise, government establishment or public organization. The remuneration may be on daily, weekly, monthly, yearly or contract basis. On the other hand, unpaid household chores such as preparing food, cleaning the house, taking care of children or collecting firewood for own consumption are not considered in the category of economic activity. Similarly, unpaid community and volunteer services and prostitution are classified as non-economic activities.

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