This brief was authored by Theresa Beltramo, Jed Fix and Ibrahima Sarr, UNHCR. The opinions expressed herein are the authors’ own. They do not necessarily represent the views of UNHCR. We would like to thank Lilian Achieng Otiego, Miriam Malmqvist David Githiri, Peter Waita, Stefanie Krause, Damalia Zalwago, Jerry Grants Anyoli, Gerald Peter Emoyo (UNHCR Uganda), Yonatan Araya, Anna Gaunt, Mélina Djre (UNHCR Regional Bureau Nairobi), and Craig Loschmann and Rebecca Ong (UNHCR/DRS).
Between 1992 to 2013, the percentage of Ugandan households living in poverty fell by half. Despite this tremendous progress in poverty reduction, a recent economic slowdown and a sharp increase in youth entering the workforce have contributed to weak growth in the labour market. It is against this backdrop that the country’s more than 1 million refugees seek their livelihoods.
Just 29 percent of refugees in Uganda are actively working, versus 64 percent among host communities.
Even after considering differences in age, gender and education, refugees are 35 percentage points less likely than Ugandan nationals to be employed. By comparison, in Europe, the employment gap between refugees and nationals is 17 percentage points (Fasani, Frattini, and Minale 2018).
Significant gaps also exist for labour force participation and unemployment rates. Working-age refugees are 27 percentage points less likely to participate in the labour market than host community members (42 percent and 69 percent, respectively) and 24 percentage points more likely to be unemployed (31 percent and 7 percent, respectively). This is particularly true among youth (age 14-25 years), where 50 percent of refugee males and 41 percent of females are unemployed, compared to 14 percent of Ugandan males and 16 percent of females.
These trends persist after the initial years of displacement. While employment rates for refugees demonstrate some convergence relative to nationals, significant differences remain a decade after arrival.
Working refugees are more likely than their host community counterparts to be poor – in part due to differences in wages received for similar skilled jobs. Among the working population, refugees are 1.75 times more likely than host community members to fall below the poverty line. They earn on average 32 percent less than Ugandan nationals with similar education.
Many refugees accept employment that is below their skills level, education and pre-displacement occupation. Such professional downgrading is widely visible, especially among those with higher levels of education. Possible reasons include a lack of recognition of refugee qualifications and poor transferability of skills and professional experience. Discrimination, inconsistency and cost of compliance with local regulations as well as employers’ lack of information about the legal status of refugees have also been shown to contribute (Loiacono and Vargas 2019; Chang 2018). This overeducation of refugees is costly to individuals and firms, as well as the Ugandan economy more generally. Implementing policies to address these mismatches can have positive impacts on refugees’ contribution to the Ugandan economy.
Among both groups, younger people face more barriers to employment than older individuals, with refugee youth experiencing more than three times higher unemployment rates than nationals – 44 percent of refugee youth versus 14 percent of national youth are unemployed. Idle unemployed youth can lead to negative societal outcomes such as alcohol and drug abuse, higher rates of teenage pregnancy, and other extremist behaviour including violence. The negative consequences of extended unemployment and inactivity in early career include financial hardship and lower employment as well as lower long-term earnings prospects.
Contrary to established findings on the returns to education in employment, the education level and employment rate are inversely related for both refugees and the host community, a phenomenon known as the puzzle of the educated unemployed. Among host community members, those who have secondary education levels and some tertiary education have the highest unemployment rate of 11 percent and 17 percent, respectively. Like hosts, refugees with secondary and some tertiary education have the highest unemployment rates- at 43 percent and 35 percent, respectively. These findings indicate the importance of economic policies towards encouraging skilled job growth in Uganda to address unemployment for those with secondary and tertiary education.
While refugees with higher education are more likely to be unemployed, they are also more likely to be searching for a job and hence likely to participate in the labour market. Further we find that for both refugees and Ugandans, higher education levels are associated with better employment outcomes. For refugees, paid employment is shown to increase with higher education levels, especially for people who have completed secondary education or higher education. As such, it is essential to address risk factors to completing school and improve the low transition rate from primary to secondary school. The transition is limited by a number of factors, the main ones being poor performance on the primary leaving examination that is required to start secondary school; and additionally, the fact that teachers often hold students back from taking the exam so that they will not fail, which can lead to dropout among students due to declining motivation from lack of advancement. One solution is to assist students in increasing the rigour of exam preparation by providing additional courses and materials. The financial burden of school fees and the opportunity cost of attending school – that youth cannot work to supplement the household income – are additional constraints, especially for refugees. Granting both tuition and conditional cash transfers to families of students who pass the primary leaving exam would help support refugees at risk of not transitioning.
Critical to improving secondary school completion rates is making sure there are enough schools, including in areas that host refugees. Further, existing secondary programmes for refugees have very limited math and science curriculum, which narrows academic choices and in turn, career options and lifetime earnings potential in related fields. There is a need to build infrastructure and facilities that will enable math and science classes and attract teachers to less desired locations by exploring, with the government, the potential for increasing incentives nationally. Likewise, there is a need to advocate for more boarding facilities, especially for girls, to overcome issues relating to distance of school from home and associated threats of violence when walking to and from school.
With COVID-19 causing school closures, specific actions to support the education of girls are needed as families are more likely to ask girls to work or enter into early marriages. Sustained efforts by UNHCR and partners are needed to increase second chance education programmes. Promoting the continued use of radio programmes for classes, even after schools reopen, and expanding online learning will ensure students are able to maximize their learning. Non-financial incentives should be explored for teachers to improve motivation and the quality of teaching in refugee settlements, including potentially room and board and other associated transport, as well as endowments or funds for teachers to design curriculum.
The data suggests that the level of education required differs across economic sectors and job categories, and that few adolescents complete secondary school. This calls for measures to improve education outcomes, which should support future labour market outcomes. To do so, UNHCR and partners should explore programmes that lower or subsidize school fees, create scholarships, and direct cash transfers to low-income refugee families to offset the opportunity cost of the student attending school instead of working to provide for the family. Even those refugees who do not continue on to higher levels of education will benefit from basic literacy, numeracy, language, and soft skills followed by vocational training. Additional labour market linkage programmes should be explored to improve refugee employment outcomes for all education and skill levels.
Assessing refugees’ skills and facilitating jobs matching soon after arrival, as well as providing timely training to improve skills, can help refugees get a better employment start and potentially achieve quicker convergence in wages between refugees and hosts.
In the medium-term, implementing a system of recognizing overseas qualifications, especially those from the region, would facilitate positive employment outcomes for both refugees and hosts. It would allow qualified refugees to be considered for jobs that match their skills set, improve wage equity and limit poverty. It would also facilitate the movement of human capital for Ugandans as well as refugees, which could be particularly important given the country’s large youth population entering the workforce and the comparatively slow growth in employment opportunities.
Encouraging government and development actors to provide targeted support to small firms – including self-employed persons – to grow and increase profitability could increase the demand for skilled jobs.
Enabling policy measures like improving access to financing can help the self-employed expand their businesses, which has potentially outsized positive impacts on the economy. Particularly for refugees’ greater access to financial capital could help account for the loss of assets due to displacement and constitute a form of insurance in low revenue periods.
While Uganda’s generous approach to hosting refugees is well recognized, these labour market conditions demonstrate the challenges in achieving refugees’ self-reliance, even in such a liberal policy environment. Doing so will require additional investments in education, particularly in improving the transition from primary to secondary school and inherently addressing the barriers to quality education for refugees and hosts, particularly in math and science, and barriers to accessing education, particularly for girls. Further, to improve labour market integration, several key activities are needed, including: (i) earlier assessment of refugees’ skills; (ii) matching these skills to the job market by providing training and jobs matching; and (iii) facilitating recognition of certificates and degree equivalence.