Page 25 - Azerbaijan State University of Economics

Hashim Al-Ali: Towards a realistic medium term macroeconomic and fiscal framework and
outlook for the Somali national economy (2017- 2019)

Somalia. Besides high unemployment rate, particularly, amongst the youngest category of the
working age population, would have an exasperating effect on that segment to be violent, unrest
and pushing the youth to adopt ways and means far from being peaceful, and could drifting some
to be part of prevailed terrorism rings. The result, undoubtedly, would be unsafe and instable
environment which would have a negative trickling down effect on the economy, investment,
production and growth. Currently, there is a considerable unemployment among youth and in
particularly high school graduates, which should constitute one of the principle targets for
employment creation during the SNDP. Youth employment, therefore, is critical to government
and its capability to achieve the nation’s objectives of establishing secure and stable country and
economy. Accordingly, an active youth policy is required to ensure that youth of Somalia are fully
integrated into the society at large, and establishing related programme of youth development and
integration through which transformation of the livelihood of youth, boys and girls, in rural and
urban, can be achieved and sustained. The SNDP would, therefore, be the first and constructive
steps in this important direction.

However, the following points highlight the quantitative setting and orientations of the
unemployment in Somalia:

Ø The estimated rate of unemployment in Somali economy for 2014, by few organizations,
reflects the lack of the right data as well as lack of full understanding of the Somali labour
market in totality. That rate has been quoted as 11.3 percent in 2014 which is far below the likely
actual unemployment rate in the economy. Accordingly, this has been estimated and adjusted
upward in the SNDP;

Ø After analyzing variety of data and data sources on population, working age population,
participation rate, labour force and apparent employment, thus the unemployment rate has been
estimated at the year 2016, as the base year of the SNDP, to be around 31.1 percent;

Ø This rate of the apparent unemployment in Somali economy, is expected to be reduced
gradually through the SNDP period. This target is, of course, subject to the development
objectives and related programmes in some leading sectors of the economy, such as;
infrastructure, social and other services and productive sector, that are going to be implemented,
realized, and the availability of required funding and resources to close the development funding
gap, this is in addition to the need of relaxation of the absorptive capacity constraints in the
economy. Accordingly, such planned apparent unemployment rate would be reduced gradually
during the period 2017 to 2019, where expected to reach a rate of 18.5 at the end of the year
2019 [Labour productivity has been derived from the existed output and employment statistics.
During the national development plan (NDP) period, we assumed moderate improvement of
labour productivity, as the main efforts was biased towards planning for more employment
generation and reducing the unemployment rate, particularly, amongst the Somali youth, during
the coming three years.].

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