By KENNEDY MUPESENI –
ZAMBIA’s formal sector labour productivity and the amount of output per worker dropped by three per cent a year on average between 2008 and 2012 due to the growth of the informal sector, research experts have indicated.
In a recent quarterly research analysis, Zambia Institute for Policy Analysis and Research (ZIPAR) research fellow Shebo Nalishebo stated that economy wide productivity increased by an average 4.6 per cent a year, due to improvements in the informal sector.
Mr Nalishebo said the seemingly increased productivity in the informal sector averaging 5.4 per cent per year was due to output growing much faster than employment.
Due to Government’s emphasis on creation of decent jobs, he observed that employment in the formal sector grew much faster than output, hence the decline in productivity.
Boosts in productivity in the informal sector still masked significant differences between the formal and informal sectors.
Mr Nalishebo said informal sector firms produced eight times less output for each worker than formal sector firms.
Despite the overall decline in productivity in the formal sector, the mining sector experienced productivity gains averaging 15.4 percent during the period 2008-2012.
The huge capital investments in the sector in the last few years were largely responsible for the growth in productivity.
He also observed that to maximise future economic growth in Zambia, there was need to better understand productivity puzzles including how they affected different sectors of the economy.
“This study gives us a fresh perspective on the Zambian growth story especially that the data is broken down between the formal and informal economy.
Understanding how to improve productivity is important because it will help Zambia’s economy continue to grow,” he said.
ZIPAR’s new analysis revealed that government needed not just pay attention to improving the welfare of workers but there was also need to consider reducing the cost of doing business for firms to boost output and grow the economy.