LABOUR MARKET INDICATORS PRODUCED BY THE LMIS

The LMIS will cover key indicators of labour market performance in Botswana, employment indicators that are specific to the country’s development objectives such as those being monitored under the NDP11 as well as emerging alternative employment indicators as well as identification of gaps in the labour market information. Labour market indicators are useful for analysing labour market trends and outcomes to determine skill requirements in the economy as well as for making decisions on allocation of resources for education and training. They are used to describe and analyse the supply of labour (a) towards the formulation, implementation and monitoring of macro-economic and micro-economic policies and programmes and (b) in human resource development planning. These indicators provide measures of the supply side of the labour market such as the size and characteristics of the labour force, of labour input into production (marginal product of labour productivity), of the structure and conditions of employment, and of the extent of utilisation of available labour resources.

The 2018 World Bank Study on the Revitalisation of the LMO recommends the selected set of indicators presented as shown below. Their selection was informed by data availability, national development goals and international comparability. Some indicators are available on a regular basis, while others are only on ad-hoc basis.

The Botswana LMIS Indicators

Source: 2018 Botswana LMO Revitalisation Study Report

For practical purpose, the indicators above can be classified and defined into the following broad categories:

Macro economic indicators:
• GDP is the primary indicator used to gauge the health of a country’s economy. It is the Pula (BWP) value of all the goods and services produced over a given time. It can be thought of as the size of the country’s economy. GDP per capita is then the BWP value of goods and services produced divided by the number of people in the country. GDP, GDP per capita, and the growth rate of GDP (and GDP per capita) measure the economic performance of a country, and this can be compared to the performance of other countries. GDP indicators, specifically the GDP growth rate, are the key drivers of employment creation, and examining these, therefore, helps policy makers track the employment-creating potential of the economy.

• The Consumer Price Inflation (CPI) measures the extent to which the price for a basket of goods and services consumed by individuals is rising, and consequently, the purchasing power of a currency is falling. The rate at which inflation rises is monitored by the Central Bank. Rising inflation erodes the purchasing power for consumers, and steadily rising inflation can be a warning sign to governments to keep it in check. The CPI is also used as a measure of purchasing power in the creation of poverty lines, which helps track the progress of the country toward poverty eradication.

• Real interest rate (percentage). Closely related to the CPI is the real interest rate, which is the rate of interest received on investments after allowing for inflation. The real interest rate is approximately the nominal interest rate received less the rate of inflation. The real interest rate is a benchmark for an ROI in an economy. A higher real interest rate signals a more favorable investment climate, which can help boost GDP and, therefore, curb unemployment and poverty.

• FDI, net inflows. Net inflowing FDI measures the extent to which foreign companies or individuals have invested in the local economy in the form of either acquiring business assets, establishing business operations, or establishing a controlling interest in a local company. FDI is a valuable source of capital for growing business. Higher levels of FDI are likely when the real interest rate is high and stable by international standards.

Employment indicators: Provide information on the type of work people are doing, including occupational and sectoral information which can be used for assessing skill needs. Employment indicators can be used to monitor trends in job creation, such as the ‘employment-to-population ratio’ which measures the proportion of the working age population that is gainfully employed, including the share of women in paid employment; unemployment rate which measures the proportion of the working age population who do not work or engage in economic activity for pay or profit; vulnerable employment rate which measures vulnerability in relation to employment status and may be applicable to precarious and insecure employment associated with the informal sector and certain categories of own account workers. Other key employment indicators useful for the LMIS include: labour force participation rate; employment status and by sector; inactivity rate; unemployment rate and by age group, gender and educational attainment; hours of work and time-related to
Underemployment.

Wage and income indicators: Relate to the minimum wage rate, and can also include the wage gap between men and women in the labour market and between urban and rural areas. Existing wage-related labour market indicators include: consumer price indices; occupational wage and earning indices; hourly compensation costs; manufacturing wage indices; labour productivity and unit labour costs.

Education indicators: Relate to educational attainment and skill development of the labour force. These indicators are particularly useful for ascertaining the relevance of existing curricula and training patterns and structures in relation to skills needs in different sectors of the economy. Education indicators can also be used to monitor the situation of vulnerable or disadvantaged groups in the labour market, such as women, youth and people living with disability with respect to accessing employment and income-earning opportunities.

Social indicators of development: Typically, they concern information
on health and education status and overall well-being of the population. Understanding the structure of the population and how it is aging may help the nation reap the demographic dividend (that is, a period with a bulge of working-age individuals can help boost the economy if there are enough jobs to reap the potential rewards thereof). Additionally, concerns around fertility and mortality influence the labour market patterns of an economy. Analysis of returns to different education levels and programs, the results of which are then disseminated, helps policy makers create incentives for people to study in optimal ways. The public can also use this information to make informed choices about what form of education is best for them.