Employment creation and labour productivity will be a key priority during HPPII, given the extent of economic disruption experienced due to COVID-19, amongst others. The conventional macro-economic approach that emphasizes the importance of GDP growth as a prerequisite for employment creation, will not necessarily lead to optimal outcomes for the pursuit of an inclusive society. Namibia’s economic structure is a good case in point where high GDP growth does not necessarily translate into low unemployment levels. Mining and quarrying represent 10% of GDP and 56% of exports, but only 2% of employment. At the other extreme, agriculture, forestry and fishing represent 7% of GDP and approximately 30% of employment.

Within that context, it is not surprising that the few opportunities that Namibians have to access gainful employment are either in Government or in the non-tradable sector, closely linked to the evolution of public expenditure. Agriculture, tourism, and wholesale & retail collectively employ 47% of total wage earners in the economy. However, the average wage in these sectors is 44% lower than the mean for the overall economy. The latter can be explained by the fact that over half of the employees in the aggregate of agriculture, tourism, wholesale & retail are in the informal economy, where both productivity and wages are significantly lower. Within the formal economy, the average wage in these sectors is roughly 30%-40% lower than the average private-sector wage in the economy. The aforementioned gap suggests that there may still be room for initiatives to enhance productivity beyond formalization. Such initiatives will include engaging in sector-specific strategies such as those geared towards improving yields in agriculture, or cross-cutting initiatives such as those that enable the scaling up of small businesses with high potential.