Employment Creation Potential, Labor Skills Requirements, and Skill Gaps for Young People: A Senegal Case Study

In this paper, we analyze specific “industries without smokestacks” and their potential contribution to economic growth and job creation in Senegal. Our main finding is that this potential is huge and can be further leveraged by adopting certain policies, both in terms of sectoral reforms and encouraging investments to improve the business environment. Moreover, in doing so, resulting IWOSS growth might further increase the growth trajectory of Senegal in the near future. It would also dramatically increase the number of high-quality jobs that also correspond to a higher level of skills. Our findings, based on assumptions regarding minor reforms to be undertaken by the government in some critical areas of private sector development policy, project that, by 2035, a total of 10,985,000 new jobs will be created in the Senegalese economy, The number of IWOSS is estimated to be as high as 7,435,000, which is roughly two-thirds of total new jobs. Moreover, these IWOSS jobs, which are higher-productivity, are likely to be better quality-jobs than the others. To fully realize the potential of IWOSS to facilitate structural transformation, government will have to address some key constraints. Such policies should aim to remove the many hurdles that exist in Senegal’s regulatory framework and deter private enterprise development, including: a) highly rigid labor regulations; b) a cumbersome and costly tax system; c) a still-inhibiting importing system; d) a weak judicial system and poor contract enforcement environment; and e) infrastructural deficiencies in areas like electricity, transportation, and telecommunications, etc. Our study also underscores significant skills gaps—in terms of hard, digital, and soft skills, that will need to be addressed in order to encourage such transformation.