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Poverty, inequality and labour markets in Africa: A descriptive overview

Haroon Bhorat

Development Policy Research Unit - Working Paper 05/92

University of Cape Town

March 2005

SARPN acknowledges the Development Policy Research Unit website as the source of this report:
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This paper examines, through the application of available data, the poverty, inequality and labour market challenges facing Sub-Saharan Africa (SSA). The paper illustrates that apart from levels of poverty and inequality that are inordinately high in SSA, the region is also beset with perhaps the more worrying problem of accounting for almost all of the world’s ultra-poor: namely those individuals living on less than half of the standard $1 a day poverty line. In addition we show that the both the level and nature of economic growth in SSA are not conducive to poverty reduction. In addition, the diluting effect of income redistribution through growth, suggests that much higher levels of income growth are required to maximise the impact on absolute and relative poverty levels in the region.

The labour market analysis alludes to the rapid projected growth of the labour force in the region, hence further raising the importance of improving the character and level of growth rates on the continent. A caricature of the region where the dominant form of employment remains rural-based and at low skill levels, combined with burgeoning, but haphazard urban informal employment – is the underlying labour market descriptor of the welfare challenges faced by the continent.


With the pending challenge of the Millennium Development Goals (MDGs) of the multi-lateral institutions, it is evident that the welfare performance of the African economy looms large in the minds of the global policy community. It is also evident, however, that the continent faces possibly the hardest task in terms of trying to meet some, if not all, of these goals. Within the environment, the intention of this paper is extremely modest. We examine in a compressed empirical form, the poverty, inequality and labour market challenges facing Sub-Saharan Africa (SSA). The approach is to describe the empirical coordinates of these multiple challenges, using available data. Within this context, the specific character of poverty and inequality in SSA is described, with some focus on the role of economic growth in engendering welfare gains for the region. The discussion on SSA labour markets, given significant data problems, is far less ambitious as we focus on the shifts in participation rates and the potential growth points in the region’s labour markets at both the spatial and sectoral levels.

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