Abstract:
Unemployment has been a ben of sub-Saharan African countries over the years and its impact on various facets of the economy is glaring. Some of the causes of these high unemployment rates are poor economic performance, civil unrest and unfavourable labour regulations. With the recent interest in leveraging employment laws, this thesis analyses the link between labour regulations and unemployment in sub-Saharan Africa.
Using the Centre for Business Research Labour Regulation Index (CBR-LRI) database, it has been shown that laws regulating different forms of employment have been increasing over the years but at a lower rate as compared to the World’s average. Within the sub-Saharan African block, Francophone countries have higher level of restrictions with regard to different forms of employment than their counterparts. In a similar vein, employment protection laws in sub-Saharan Africa have also seen an increase in their level of protection over the years and are more pronounced than laws regulating different forms of employment.
Using the system generalized method of moments estimation technique on 20 sub-Saharan African countries over the period 2000 to 2013, the study established a positive relationship between unemployment and employment protection laws in sub-Saharan Africa. Also, an insignificant negative relation was found between laws regulating different forms of employment and unemployment.
The study also established a positive link between unemployment and foreign direct investment. However, freedom status of a country and trade openness impact unemployment negatively. Thus, it is imperative for sub-Saharan African countries to put up policies that can mitigate the surge in unemployment through relaxation of employment protection laws.
