In Korea, only about five per cent of citizens today work in the agriculture sector.”
Manufacturing as a source of employment
Most East Africans work in the agriculture sector, where incomes are still very low, despite being the largest and most lucrative sector of the economy. This leads to the question: How does industrialisation affect availability of jobs?
Industrialisation, because it involves adding value to basic material and producing sophisticated products, requires many levels of skilled workers. This can create a big base for employment, especially in developing nations with low costs of labour. Industrialisation creates both direct and indirect employment.
The increase in employment in the manufacturing sector is a sign of industrialisation and confirmation that the composition of the economy is changing.
An analysis of the evolution of sectoral shares of employment rounds out the analysis on the economic changes of East Africa as compared with South Korea. Sectoral employment is a reflection of the economic structure of a nation. Where a sector is a veritable source of higher incomes, the region’s average incomes should be reflected in that sector’s contribution to employment.
In the 26 years from 1991 to date, Ethiopia’s manufacturing sector employment rose from 2.184 per cent to 9.375 per cent of all employment in that country.
The dramatic changes in employment in Rwanda’s and Ethiopia’s manufacturing sector employment can be partly explained by both nations’ emergence from civil war and the stabilising economic reforms that followed. Both nations were starting from a relatively low manufacturing base.
Kenya’s manufacturing share of employment grew from 15.9 per cent in 1991 to 25.73 per cent in Ethiopia 767.56 1507.81 Rwanda 748.40 Tanzania 908.92 Uganda 62.31 604.04 9.69 Burundi 70.35 320.09 4.55 South Korea 158.24 29,742.84 187.96 *Factor growth: By how many times did the economy grow? Kenya 97.62 40.57 Kenya 15.45 18.45 2017. This partly reflects the primacy of Kenyan manufacturing sector in the region, albeit small when compared with South Korea’s.
In the rest of East Africa, the manufacturing sector share of employment remained stagnant. On the other hand, South Korea’s employment share in manufacturing shrank from a peak of 36 per cent in 1991 to 24.78 per cent in 2017. This calls for a closer look at other sectoral changes.
In East Africa, Kenya’s services sector employs more people than happens in other regional countries. But it is obvious that South Korea’s and Kenya’s services sectors are made up of very different ingredients because the average services sector worker in South Korea earns more than the services sector worker in East Africa. This can be down to the sophistication of products produced by each sector.
A robust manufacturing sector offers higher wages that attract workers from low paying agricultural jobs. This is because the sector has a higher productivity and creates goods of higher value.
Higher incomes then promote demand for more domestic goods and services. This in turn leads to improving the living standards of the people and an increase in the overall productivity of the economy.
So, where Korea’s manufacturing sector’s share of total employment has shrunk in favour of its services sector, East Africa maintains a large agricultural sector, employing a large proportion of the workforce but has an unsophisticated services sector. In Korea, only about five per cent of citizens today work in the agriculture sector. This put together suggests that Korea’s manufacturing industries drove economic growth, raised average incomes and added to total employment.
The opposite is true of East Africa. The agriculture sector is dominant, the manufacturing sector is stunted and produces basic goods and the service sector is not so sophisticated either. This explains the difference in the incomes and welfare of the people of East Africa and South Korea.
Coming back to the reality in East Africa, Kazuri probably works on a farm but desires a job in the manufacturing sector. The case of a Korean of the same age as Kazuri is different. Most probably the Korean’s grandparents were farm labourers and her parents toiled in factories that produced clothing and other textiles, but she is likely to be a lawyer, an accountant or a banker. Her employer owes the existence of the firm to the large local manufacturers to whom it offers services. This is the reality for many Koreans today.
An industry adds value to a basic good. Let’s assume Kazuri owns forestland inherited from her family. Ideally, forests are considered a factor of production for the agro-forestry sector. Kazuri can opt to either sell the land, or harvest the trees and sell timber,