ILO/Sida Partnership on Employment Working Paper No. 5

Accelerating structural transformation towards SDG goals: Macroeconomic and sectoral policies for full and productive employment in Rwanda

This study assesses the effectiveness of macroeconomic and sectoral policies that have been implemented in Rwanda over the last 20 years in promoting structural transformation and full and productive employment (SDG 8). Through a qualitative policy analysis we investigate the impact of fiscal, monetary and exchange rate policies on sectoral dynamism in Rwanda as well as the impact of the observed sustained per capita economic growth over the period on job creation and structural transformation. The results show that economic development has been associated with employment generation, making Rwanda an exception to jobless growth commonly experienced in the region. A decomposition of per capita value added over the past 10 years shows that productivity growth explains 88 per cent of economic growth, the rest is shared equally by changes in the employment rate and increase in the share of the working age population.

We use a simple additive method that links changes in a particular component to changes in total per capita GDP to identify high employment and productivity growth sectors which include construction; transport, information, communications and technology (ICT); tourism and recreation; and services. We also review the main constraints to achieving full and productive employment in Rwanda from demand and supply sides as well as their intermediation. Young people with NEET status are particularly disadvantaged and need the support of strengthened employment services to navigate the labour market and effectively transition into employment.