Abstract
This paper examines the employment situation in Afghanistan from 2007 to 2014 using unit level micro data from three rounds of the Afghanistan Living Conditions Surveys (ALCS). Afghanistan has one of the youngest populations in the world. Unemployment levels in the country have been rising significantly over time and have nearly doubled during the period under examination. These were over 18 per cent in 2014. Even in rural areas where around 70 per cent of Afghan labour force lives, and where we expect open unemployment to be low, unemployment rates are very high. The country also has one of the lowest participation rates for women in the region. Although women’s participation rates decline at high education levels in Afghanistan the latter category constitutes a very small proportion of women. If unemployment rates have risen by 10 per cent in the period, it is also the case that informal employment shares in total employment have fallen by from around 90 per cent to 80 per cent. These changes are also simultaneous with a decline of over 12 per cent in the labour force participation rates. Although the decline in shares of informal employment can be seen as encouraging, the withdrawal from the labour market, the decline in informal employment and the resulting rising in open unemployment may also be related to safety and security considerations. The corresponding proportionate rise in relatively more formal employment has, in recent years, largely been due to the expansion of government jobs. The main types of jobs within services are in government, defense and community services. The employment challenges the country faces are formidable. In particular, if we expect aid and development funds to decline in the future, good jobs will be difficult to sustain-either with the further expansion of State jobs or with jobs in services that presently rely on expenditures associated with the externally supported parts of the economy. This means that in agriculture and industry, special policy measures will be needed and indeed will have to be financed. The report identifies some growth strategies as well as some supply side measures that could partly address this impending challenge for the country.