Policy options to create job opportunities in rural Ethiopia

A recent JRC Science for Policy report finds that rural and agri-food sectors policies in Ethiopia have great job creation potential, particularly in the livestock sector, followed by cash crops, food crops and the agri-food industry.

The study results suggest that increased investment in the agricultural, livestock and food industry sectors and education would greatly help promote job opportunities in rural Ethiopia.

Six policy options for job creation

The report assesses the likely effects of six policy options in terms of jobs creation and key macroeconomic indicators. These scenarios address the development of:

1. industrial agro-processing parks,
2. rural roads and infrastructure,
3. irrigation facilities,
4. livestock extension services,
5. productive safety net programme (PSNP) or labour subsidy, and
6. rural skills enhancement.

All of the simulated scenarios indicate that the Ethiopian agriculture and food industry has great potential to generate job opportunities and improve conditions for workers and their families, particularly under the scenarios supporting industrial agro-processing parks (agroparks) and developing workers’ skills through education.

Policies that foster rural job opportunities have the addition benefits of reducing worker migration towards urban areas and favouring economic growth.

Informing Ethiopia’s Rural Job Opportunity Creation Strategy

The policies were assessed under Ethiopia’s Rural Job Opportunity Creation Strategy (RJOCS), adopted in 2017, which aims to address a lack of job opportunities in rural areas, especially for young people, and related effects such as migration to urban areas and poverty.

About 80% of the Ethiopian population lives in rural areas, but these are increasingly migrating to urban areas due to a lack of job opportunities. However, with unemployment levels at 16.5%, the situation in urban areas offers even fewer possibilities of finding employment.

The RJOCS seeks to address this by improving rural conditions and creating sustainable job opportunities for rural job seekers, primarily unemployed and underemployed women and men over 15 years of age, literate or illiterate, and those without regular and sufficient income.

However, the RJOCS is neither quantified in its objectives, nor has it been accompanied by an impact assessment or cost-benefit analysis for the economy, making it difficult to prioritise government investments and monitor the impacts of the strategy. Furthermore, the strategy has not yet defined its needs in terms of operational policies and specific institutional arrangements.

This report fills the gap by proposing a quantitative analysis of the RJOCS policy options.

The report analysed the policy scenarios using the Dynamic Equilibrium Model for Economic development, Resources and Agriculture (DEMETRA) - a national Computable General Equilibrium model developed by the JRC.

Key conclusions and recommendations

All of the simulated scenarios show potential for job creation in the agricultural and food sectors, particularly if stimulated with investment policies such as the expansion of agroparks.

All of the scenarios (aside from the PSNP one) were also associated with increased household incomes.

The expansion of agroparks was found to benefit food production the most, speeding up the structural transformation of agriculture, and would also improve the trade deficit through a massive increase in food exports and have significant positive impacts on per-capita GDP.

The livestock sector was found to have the greatest potential for generating employment, followed by cash crops, food crops and the agri-food industry, indicating that policies focusing on rural and agri-food sectors have great potential to create job opportunities.

Specific policies to invest in and develop the agricultural sector (particularly the livestock sector and agro-processing industrial parks), skills and education (particularly in Agricultural Technical Vocational Education and Training) are therefore encouraged as the most effective policy options for food and nutrition security.

Further information

• Policy options to support the rural job opportunities creation strategy in Ethiopia

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Policy options to support the rural job opportunities creation strategy in Ethiopia