Ghana Priorities: Youth Unemployment
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Integration of the youth (15- to 34-year-olds) in Ghana, who represents 35 percent of the population, into full and productive employment can be an important driver for growth and sustained development. The inability to improve labor productivity in the country continues to limit the performance of firms and enterprises across different economic sectors.
The lower level of productivity has been attributed to low levels of skill resulting from inadequate and low-quality training. Skills development for the labor force and the youth, in particular, has, therefore, become a critical agenda for the country’s development. In addition to the problem of low levels of skill development, Ghana also faces a high youth unemployment rate. A large proportion of the youthful population enters the labor market looking for employment but is unable to find some. Thus, with the teeming youthful population and high unemployment problems, improving the level of their skills and providing them with productive work is critical to taking advantage of the demographic dividend.
The government, over the last decade, has initiated policies aimed at providing skills necessary for productivity growth and sustained development. Central to these initiatives are technical and vocational education and training, apprenticeship programs for the youth, and business support. A good starting point is the introduction of free secondary education including technical and vocational education. There are indications that technical and vocational education outside the Ministry of education will also be free.
The introduction of Competency-Based Training (CBT) in TVET education, especially at the Polytechnic level, aims to improve the quality and relevance of TVET with the ultimate aim of helping to meet the needs of the industry. The Council for Technical and Vocational Education Training (COTVET) has also recently developed a draft National Apprenticeship Policy, which aims among other things, to ensure that an apprenticeship is a compulsory requirement for all students, especially those within the Technical and Vocational Education Training (TVET) schools. Programmes such as National Entrepreneurship Innovation Programme (NEIP) have been initiated to boost the private sector and entrepreneurship development, particularly MSMEs in Ghana. The program has provided training to about 12,000 startups and small businesses to build their capacity to enable them to compete locally and globally.
However, more needs to be done to provide adequate skills for Ghana to position itself well in order to take advantage of its youthful population. There is a commitment from the government to reform technical and vocation education in Ghana that provides an important role for the private sector. It is important for the private sector to participate in designing and delivering TVET that will respond to the skills shortage in Ghana’s priority sectors (World Bank, 2018).
Intervention 1: Vocational Training
Vocational training involves the practical acquisition of skills and knowledge specific to a particular trade, industry, or sector. On the job training forms an integral part of vocational training.
In Ghana, the Council of Technical and Vocational Education Training (COTVET) promotes, coordinates, and oversees all aspects of technical vocational education and training. The council promotes skill developments concerning technical and vocational education across the broad spectrum of pre-tertiary and tertiary education, formal, informal, and non-formal sectors. One of the principal objectives of COTVET is to coordinate the work of sector ministries and their agencies, which are legally mandated to make and implement policies regarding the TVET system, especially that of the Ministry of Education and the Ministry of Manpower, Youth and Employment in the delivery of TVET in Ghana (Ministry of Education, 2009). An improved TVET system is expected to promote manufacturing, construction technology, agro-based industry, and commerce.
The benefit of vocational training is measured by the present value of lifetime earnings of vocational training graduates. After accounting for the expected income growth and unemployment, this study estimates the benefit of vocational education of typical graduates to be GH¢44,009 discounted at an 8% rate across the life cycle (17–59-year-old).
The costs of vocational training include the costs to all parties in delivering vocational training—the cost to the individual in accessing the training and the cost to the government of providing vocational training. The opportunity cost of accessing vocational training (forgone income) is also included as a cost. This study estimates the cost of vocational training to be GH¢34,199. Thus, the benefit-cost ratio of 1.3 is estimated for providing vocational training to the youth.
Intervention 2: Apprenticeship
Apprenticeships combine vocational education with work-based learning for an intermediate occupational skill. An apprenticeship can take place in both formal and informal settings.
The National Vocational Training Institute (NVTI), under the Ministry of Manpower, Youth and Employment, usually provides the formal apprenticeship in Ghana. The Council for Technical and Vocational Education and Training (COTVET) regulates both formal and informal apprenticeship programs. COTVET, which co-ordinates and oversees all aspects of technical and vocational education and training in Ghana, has introduced the National Apprenticeship Program (NAP) intended to train workers to feed various industries. The NAP promotes apprenticeship training to harness the knowledge and experience of firms and entrepreneurs to deliver market-relevant skills to youth in a scalable and potentially cost-effective manner. COTVET, in collaboration with the British Council, has recently developed a draft of the National Apprenticeship Policy that will ensure that apprenticeship is a compulsory requirement for all students, especially those within the Technical and Vocational Education Training (TVET) schools in Ghana.
Apprenticeship programs provide benefits to both the individuals and employers through returns to wages and productive workforce (and hence a higher contribution to revenue and profit), respectively. Across the working ages 17-59, the lifetime apprenticeships provide a benefit equal to GH¢ 13,000 for beneficiaries after adjusting for expected income growth and using an 8% discount rate. The benefit to the employer during the period of apprenticeship is estimated as GH¢1700 at 2018 prices. Thus, the total benefit of each apprenticeship is, therefore, GH¢ 14,700 using an 8% discount rate.
The total cost of providing a typical apprenticeship program for 3 years in Ghana is estimated to be GHC 6,200 using an 8% discount rate. The benefit-cost ratio associated with the apprenticeship program in Ghana is estimated at 2.4 using an 8% discount rate.
Intervention 3: Business Support to MSMEs
One important means to create employment for the teeming youth is to develop business and start-up incubators that can guide early-stage firms through to larger firms. By helping the private sector and individuals start their own companies to employ themselves and others, business and start-up incubators can help reduce the burden of youth employment in Ghana.
Understanding benefit-cost analysis start-up incubators are critical in generating enormous support for more businesses to benefit. However, there is a lack of reliable evidence and data to make a robust cost-benefit analysis of business start-ups and incubators. In particular, because businesses that are chosen by (private sector) incubators are highly unlikely to be representative of the wider universe of startups, using anything but carefully considered experiments or quasi-experiments is likely to lead to biased findings on the impact of this intervention. As of writing, no such studies exist and for reasons outlined in Daziel (2018) there are real constraints to conducting RCTs in this space.
Among government-sponsored programs to support businesses in Ghana is the National Entrepreneurship Innovation Programme (NEIP), the National Board for Small Scale Industries (NBSSI), Microfinance & Small Loans Centre (MASLOC) and the “Presidential Pitch”, which aims to help entrepreneurs to translate business ideas into to real businesses opportunities to fast track business development, create employment and improve the growth of the economy.