This blog is the first in a series of three dedicated to the quest for solutions to coordination failures plaguing the Cameroonian employment market.

As a reminder, since December 2020, the Team of UNDP Cameroon Accelerator Lab has been navigating through its first frontier challenge: improving young people economic inclusion through improved employment opportunities. Over that journey, our understanding of issues undermining youth access to the employment market – one of the dimensions of our challenge - has kept increasing thanks to focus discussion groups, surveys and meetings with the Ministry in charge of Employment and Vocational Training, the National Employment Fund, young job seekers, recruitment agencies, economic operators and private sector associations, universities, among others. After attending one of those meetings, a skills caravan organized in April 2021 by the GIZ on vocational training, strong and pervasive coordination failures undermining the functioning of the job market emerged as one of the main root causes explaining long term unemployment and higher unemployment rate among young people.

Meetings, such as that one with a mechanic during the GIZ skills caravan attended by the AccLab, were opportunities to discover that many small enterprises are not aware of free job intermediation mechanisms. Source: Jean-Paul Mvogo

 

A bit of theory: an introduction to the concept of coordination failures…

Coordination issues are largely documented in the economic literature. Coordination failures arise when an outcome is the result of a complementarity of actions performed by two or several stakeholders. They contradict traditional classical economy thoughts according to which market, guided by Adam Smith invisible hand, automatically adjusts thanks to price.

Depending on whether coordination failures are addressed or not, variations in the level of commitment and intensity of actions by stakeholders can lead to a variety of low, intermediate and high equilibria (see graph). Coordination failures are now considered worldwide as one of the most powerful impediments to development efforts at the macro, meso and micro level.

A quick explanation of a type of coordination failures that may arise on employment markets. Source: Jean-Paul Mvogo, adapted from Rocheteau G. and Tasci, M., Coordination Failures in the Labor Market, Federal Reserve Bank of Cleveland, November 2007

 

… And its implication for the Cameroonian job market 

Far from being a theoretical reality, coordination issues may explain the paradox of the Cameroonian formal job market. Especially, on its sub compartment where the supply is driven by private sector formal corporations.

Taken individually, each  category of market players exhibits a great dynamism and willingness either to look for a job or to create the conditions for recruiting. Yet collectively, intermediation performances are pretty bleak as illustrated by a few statistics. It takes on average 26 months for a young Cameroonian to find a job. And unemployment rate among the Youth is also significantly higher (8.9% vs 5.7% for the general population).

A root cause analysis for each relevant group of stakeholders active on the Cameroonian stakeholders revealed that a variety of factors limit on a daily basis the ability and capacity of stakeholders to fully play their role in the market and contribute to higher equilibria, characterized by more job ads posted and satisfied.

Let’s start first, with young people, our target job seeker group. Those we have been meeting through several selection processes for post-Covid-19 recovery programs mention a job quest that included dozens of applications, years of search and a succession of odd jobs. They generally complained about their not finding the supply and not knowing where job vacancies are. Their willingness to enter the job market was often hindered by several factors: limited knowledge of job search techniques but also the costs related to job search. As an illustration, many job ads are published in newspapers, a source of information that many young Cameroonians cannot afford. Finally, as their job search longs and despair grew, they often admitted translating their frustration into accusations of opaque hiring practices by employers.

The latter reported difficulties in filling their vacancies and challenges reaching job seekers. Once again, size and resources seemed to be a selection factor as small enterprises do not often have real human resources expertise and cannot afford lengthy recruitment process. As I visited several hair salons, mechanics and carpentries during the skills caravan, many small enterprise owners confessed that they had no knowledge of free recruitment platforms and programs operated by public stakeholders. As their scope of opportunities is restricted, managers end up recruiting either the first comer or recommended people, with no thorough vetting process. With often disillusion as an outcome. Large corporations also complain of high costs to find and attract the rare gem, despite their multiplying job posting channels through social networks, publication in newspapers and use of the National Employment Fund platform. 

Finally, actors at the core of the intermediation process, whether private or public, also reported difficulties in finding and matching the supply or demand. That compartment of the market is animated by complex strategies and a myriad of stakeholders. It could be best characterized as a fringe oligopoly led by the public employment agency. Ministries in charge of Employment and Vocational Training, Tertiary Education, Youth, Women Protection and Family and Agriculture, among others, manage several programs aimed at matching their beneficiaries with job opportunities, with often limited coordination and redundances. On the private sector side, competition among a multitude of recruitment agencies paves the way to limited coordination of their profession at the national level, resulting in a weak collective negotiation power, especially when they plea for reforms. As they fail to cooperate, expenditures to build a comprehensive job seeker database, the holy grail, cannot be shared. As a result, many recruitment agencies have to specialize on niche markets, characterized by a specific customer, sector or geographic zone, with most young Cameroonian unable to access their services.

A sketch of labor intermediation stakeholders on the Cameroonian Labor market. Source: Jean-Paul Mvogo

 

For public institutions operating in the job market, scarce resources, to find a job to thousands of young Cameroonians arriving on the job market represent a major impediment to their activity. So do often unfounded thoughts about their intermediation capacity. The latter often prevent many private corporations from using public actor job intermediation services. Public intermediation capacity also suffers from various uncoordinated initiatives and programs by national and international partners that often dilute efforts and prevent the completion of the critical mass. More specifically, as Youth has become a priority in the development agenda, nearly each development partner has developed its cash-for work, internship or placement own program aimed at increasing employment opportunities or employability. But it is difficult to know who does “What”, “When”, “Where” and “For Whom”. As far as coordination is concerned, development partners have so far not been very successful in coordinating themselves and in assisting the stakeholders of the job market to better work together.

All in all, mistrust, domination of sub optimal responses in the realm of cooperative games, and limited mechanisms to exchange both information and job ads among all the stakeholders create the conditions for weak levels of intermediation on the Cameroonian job market.

 

Our next step addressing coordination failures

So, here is the background. From discussions with colleagues of other Accelerator Labs in sub-Saharan countries, the outlook appears to be the same. And from the latter, solutions to coordination failures represent a policy priority, given the stakes. As a matter of fact, youth might be synonymous of a ticking demographic bomb, if no responses are found. And this might be even more relevant as social tensions have been heightened by the Covid-19 crisis. On the other hand, Cameroon and Africa will benefit from the promises of the demographic dividend, provided structural issues hindering the access of young people to the job market are addressed.

This is why strategic stakeholders should encourage coordination efforts around the market. This is why AccLab Cameroon has embarked in two experiments focused on promoting a holistic approach involving the private and public sectors, but also development partners as well as the civil society. The first one aims at improving coordination in the regular compilation of job market statistics, so that all stakeholders may know where the tensions are. The second experiment aims at increasing coordination of systemic stakeholders as they try to provide solutions to those tensions. And the next blog of our series will introduce both experiments. 

Special thanks to Hermann Aurelien Kamougne Ndjampa of UNDP, for the layout and to Yannick Elouga, Euphrasie Kouame and Anna Ojong for their pieces of advice.  

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