Trade and the labour market in Africa

International trade is inarguably a crucial factor in reducing poverty and inequality through employment stimulation, yet findings on the relationship between trade (openness) and the labour market are inconclusive, particularly in developing countries. While trade among African countries remain low, available data shows an improvement in recent times. This notwithstanding, unemployment remains high, particularly among young people with advanced education in Africa relative to other regional blocs in the world. This study analyses existing data to establish historical trends and explore options for African countries to harness opportunities of trade through increased diversification, productivity and development of value chains. Findings point to the existence of high unemployment among educated young people in Africa compared to other regions of the world, as a result, AfCFTA offers a great opportunity to create jobs, improve labour market conditions and spur growth in member countries. Consequently, it is concluded that countries must adopt inclusive growth policies to reduce the potential adverse distributional and labour market effects of increased trade. These should include policies to improve the flexibility of markets by easing restrictions to facilitate labour reallocation across sectors while moderating distortions in labour cost to enable seamless transitions. More importantly, countries must invest in education, skills training and retraining to enable the labour force to utilize opportunities associated with trade.