Page 22 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.74, # 2, 2017, pp. 4-31

• Somali Labour Force, Employment and Unemployment during the SNDP

Based on Population Estimation Survey of Somalia (PESS) of 2014, the Somali population has
estimated to be 12.3 million. This estimate reflecting a natural growth rate of 2.8 percent per
annum, and over 75 percent of population is of age below 30 years old. Out of this total
population, the working age group population form 6.8 million of the total population. The
economically active population represents the work force that is available in the economy and
that goes within the age group of 15-64 years old. This number of economically active
population of the working age group, and those are looking for work and willing to work, is
usually derived by using a labour participation rate (LPR). This level of the participation rate in
labour market of the working age population indicates the progress towards rich jobs generating
growth of the economy. The economic participation rate in Somalia is driven to be 45.6 percent
in 2014, which is in normal economic standard is a low participation rate. This, by and large, due
to the fragile conditions of the economy and due to evil security situation prevailed in the
country, instability, lack of investment and few or non-existence of new project that required
execution and which generate working opportunities, this is besides, the domination of unskilled
group of the Somali population of economically active age. Accordingly, various reports
circulated by the ILO and also by the UNECA, estimated the number of employment in Somalia
in 2014 as 3.1 million. This would make the unemployment rate in Somali as low as 11.3 percent
e s
[With the level of estimated employment in year t (L t ) and labour supply at the same year (L t
s
), the level and hence the rate of unemployment can be identified and derived as: ROU t = (L t
s
e
- L t )/ L t , Where; ROU t is the unemployment rate in the economy at year t.]. This is, by and
large, quite unrealistic estimated rate of unemployment in today’s Somalia. This, however, has
come about as a result of using quite unreliable statistics, together with bias lower estimate of the
labour participation rate and overestimating of total employment of 2014.

Accordingly, corrected, right adjustment and technical measures being used to derive the labour
force and the employment for the base year of the SNDP, i.e. 2016, by deriving the labour-
output ratio (LOR) in the economy and by main sectors, and assuming more realistic labour
participation rate for Somalia. Such an assumed improvement in the labour participation rate is
driven from the fact that; at the recent years security has improved and various regions of the
Somali are enjoying better security conditions, stability and forward socio-economic
development process, besides such LPR is derived to be compatible with those of other African
countries with similar conditions as of Somalia, as well as using and applying experts’ views
[The simulated labour participation rate (LPR) that used to estimate the labour force (labour
supply) in the economy during the years 2016-2019 is 57.1. While the derived labour-output
ratio (LOR), is 459 works needed to produce and add $1 million worth of output (production) in
the economy.].

Furthermore, and resulting from lack of statistics to derive, separately, labour participation rates one
for male and the other for female, in Somali labour market, the SNDP and in order to bridge the gap
in the composition of the economically active population from a gender [It can be stated, by and

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