Employment across Africa

by Developed Africa 11. April 2014 09:00

It is a known fact that more people work in the informal sector than the formal in Africa, but just why are employment rates so low from the formal sector?

The answer is a fairly obvious one, hiring is expensive. But not just in that it costs more to pay someone than not, its the fact that by having more employees the more expensive in terms of the taxes that need to be paid:

government officials in search of taxes and bribes tend to chase large firms, rather than small ones"

So from the outset, businesses are discouraged from employing, despite the fact that employment is known to lead to stronger and more sustainable development in a country. So a vicious cycle is created, until the problems that cause the restraints on employment are dealt with. 

Commodity-driven export, expanding work-force, and high labour costs all lead to employers from hiring more staff. Structural reform is needed, and the system of taxing businesses for employing needs to be looked at in order to create a system that taxes fairly, whilst allowing businesses to grow and thrive, instead of fearing expansion.


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