1.

0 Introduction

The youth are undeniably among the most important formidable force and resource a
country can have in order to boost its social economic development. In addition of
being large in number, the youth are energetic, courageous and poses new ideas
that can make changes to the social economic development if they are well
coordinated and involved in economic activities of the country. Regardless such
importance youth have been faced with many challenges one of them being
unemployment problem. Youth unemployment is among the major challenges facing
both developed and developing countries in the world. The problem of youth
unemployment is more
critical to developing countries due to the high poverty levels requiring all people to
work in order to ensure survival (ILO, 2016).

The school-to-work transition represents a long dark tunnel for many young people
all over the world. A large and growing population of young people and increasing
educational attainments make creating youth employment opportunities a challenge
in most countries in Sub-Saharan Africa (Pastore, 2015). In 2011, an estimated 200
million Africans were aged 15 to 24 years of which around 40 per cent had studied
up to the secondary level. Recent job creation efforts have not benefited young
people without job market experience; youth unemployment is also seen as a source
of social unrest and conflicts in society. Only 20 per cent of the 73 million jobs
created by African

Like many other developing countries, due to lack of absorption capacity,

unemployment has been one of the major problems. The excessive rate of
unemployment negatively impacts on economy which causes unstable economic
conditions. This is troublesome because when workers are unemployed, there is an
under-utilization of resources. So the total production of a country is less than its
potential level of output because resources are not fully utilized in these countries.
Long-term unemployment always results in creating financial hardships, poverty,
homelessness, crime, frustration and many other problems like breakdown and
family tension, social isolation, loss of confidence and self-esteem. All these lead to
the erosion of a healthy society.
The determinants of unemployment are often categorised into internal and external
factors. The internal forces are labour market fundamentals affecting labour supply
and demand.. The external forces are macroeconomic policies and institutional
changes related to fiscal and monetary policies and goods market. A number of the
studies have been conducted so far to access the determinants of unemployment.
These studies have not incorporated key macroeconomic variables in model that
may be responsible for change in unemployment. So it is important to identify the
variables that are responsible for unemployment.

1.2: Background of the Study

Over the past decade, a combination of relatively rapid population growth and a slow
decline in the fertility rate has produced an increasingly youthful population in
Zambia. The Zambian labour market is likewise young, and set to remain so for
some time. As an economy that faces a youth-biased labour supply trajectory, and
as a newly graduated middle-income African country, Zambia faces a unique set of
challenges and opportunities in formulating growth and development policy. One of
these challenges is to ensure that the rapidly growing pool of new job seekers
entering the Zambian labour market is able to find decent work.

As with a number of countries in Africa, Zambia has a very youthful population: 80

percent of all Zambians are below the age of 35 years. According to the UN’s World
Population Prospects (2015), youth of working age (15-35) are expected to remain at
close to 34 percent of the population for the next two decades. This would translate
into the Zambian youth labour force almost doubling from the current estimate of 5.5
million in 2015 to 10.1 million by 2035. The young labour market participants face a
dual challenge of unemployment and underemployment. Overall, youth are more
likely than non-youth to be underemployed, in jobs in which the employment
relationship is characterised by temporary and casual employment. More
importantly for Zambia, however, is that fertility rates seem to be declining at a
slower rate than the sub-Saharan Africa (SSA) average, suggesting that the high
number of youth expected to enter the labour market each year will not subside for
some time. As a result, between 2015 and 2020, 922,000 individuals will be added to
the working-age youth category. Similarly, between 2020 and 2025, 2025 and 2030,
and 2030 and 2035, 1 million, 1.2 million, and 1.3 million individuals will be added to
the working-age youth category, respectively. This fast growing working-age
population represents a key part of Zambia’s long-run development challenge:
ensuring that as the economy grows, sufficient jobs are created to provide
opportunities for young people entering the workforce.

Figure 1:
40 Trend of
35 Youth and
30 General
25
20
15
10
5
0
91 93 95 97 99 01 03 05 07 09 11 13 15 17
19 19 19 19 19 20 20 20 20 20 20 20 20 20

Total Unemployment Youth Unemployment

unemployment in Zambia
Source: Author’s own calculation using data from World Bank

Figure 1 depicts the extent to which the youth, particularly those aged 15 to 24, are
prone to unemployment compared to the total unemployment. The figure confirms
that unemployment, whether defined strictly or broadly, is a youth problem. Youth
aged 15 to 24, and those aged 25 to 34, are more likely to be unemployed than the
non-youth, respectively.

1.3 Statement of the problem

A high level of youth unemployment is one of the critical socio-economic problems

facing Zambia (Afrobarometer 2014). While the labour force grows, with an increasing
proportion of youth, employment growth is inadequate to absorb labour market
entrants. As a result, youth are especially affected by unemployment. Moreover,
young people are more likely to be employed in jobs of low quality, working long
hours for low wages, engaged in dangerous work or receive only short term and/or
informal employment arrangements (YouthMap (2014).

A number of the studies have been conducted so far to access the determinants of
unemployment. However, majority of these studies have mainly analysed the supply
and demand side factors of labour market that may cause unemployment and have
not incorporated key macroeconomic variables in their model that may be
responsible for change in youth unemployment. Therefore, this has prompted the
researcher to find the impact of selected macroeconomic variables on youth
unemployment in Zambia.

1.4: Research Objective

1.4.1: General Objective;

The study aims at establishing the determinants of youth unemployment in Zambia.

1.4.2: Specific Objectives

1. To investigate the relationship between selected macroeconomic variables

and youth unemployment in Zambia.
2. Estimate the extent to which each of the identified determinants contributes to
youth unemployment in Zambia.
3. To recommend measures to that may mitigate the effects of macroeconomic
variables on Youth unemployment in Zambia

1.5: Hypothesis statement

The following are the two hypotheses that can be derived and be used by the study from
studying the literature review and the introduction of this proposal.

Null Hypothesis (Ho) = There is no significant relationship between youth unemployment

and its macroeconomic determinants.

Alternative Hypothesis (H1) = There is a significant relationship between youth

unemployment and its macroeconomic determinants.

1.6: Research questions

1. What is the relationship between selected macroeconomic variables and

youth unemployment in Zambia factors?

2. To what extent does each of the identified determinants contributes to youth

unemployment in Zambia?
3. What measures to that may mitigate the effects of macroeconomic variables
on on Youth unemployment in Zambia?
1.7: Significance of the study

The study constitutes an important contribution to the empirical and analytical

literature investigating the relationship between youth unemployment and
macroeconomic variables such as GDP and Inflation.

The findings of this research will recommend measures government may take to
mitigate the effects the macroeconomic variables have on youth unemployment in
Zambia. The findings may help the government together with other stakeholders
formulate schemes and strategies that will ensure that Zambia youth unemployment
rate is brought to sustainable levels.

The findings of this research will estimate to what extent macroeconomic variables
affect youth unemployment. Zambia`s population, which is predominantly a youth
population, is said to double every after ten years. In this regard, the government will
have to know to what extent the population growth rate affects youth unemployment.

1.8: Scope of the study

The study will be carried out in Zambia; the study will mainly focus on the
investigating the determinants of youth unemployment with much emphasis on
Gross Domestic Product, Population, Inflation, lending rates and The study will
cover the periods from 1991 to 2018.

1.9: Definition of key term and concepts

Youth Unemployment: Refers to share of the labour force aged 15 to 35 years

without work but available for and seeking employment. (LFS 2018).

Industry Value Added: It comprises value added in mining, manufacturing,

construction, electricity, water, and gas. Value added is the net output of a sector
after adding up all outputs and subtracting intermediate inputs.

Lending interest rate: Refers to the bank rate that usually meets the short- and
medium-term financing needs of the private sector. This rate is normally
differentiated according to creditworthiness of borrowers and objectives of financing