Issue 4/10

April 2010 AFGHANISTAN Developments in Economics Stabilization and Infrastructure March 2010 Matthew Hall Economic Stabilization and Infrastructure KM (matthew.hall@cimicweb.org) (www.cimicweb.org)

This document is intended to provide a brief examination of unemployment in Afghanistan and current efforts to reduce it. More comprehensive information is available on the Civil-Military Overview (CMO) at www.cimicweb.org.1 Hyperlinks to original source material are highlighted in blue and underlined in the embedded text.
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Beginning with this issue, this report will focus on topical issues involving both the economic stabilization and infrastructure sectors and will be released on a monthly basis. This issue focuses on unemployment and its effects in Afghanistan as well as on-going efforts to reduce unemployment.

TE OR COMMENT ON THIS PUBLICATION, CLICK HERE Unemployment in Afghanistan: What We Know and What We Dont Unemployment is a major problem in Afghanistan; however, there is very little reliable quantitative data available. For instance, the World Banks Afghanistan Private Sector at a Glance data sheet shows the Afghan unemployment rate for 2000 and 2007 as unavailable. According to IRIN, The issue of unemployment is very serious in Afghanistan as many people lack skills due to more than 20 years of conflict. Given the lack of data, the most commonly provided estimate of unemployment in Afghanistan is 35%, which is the CIAs official estimate for Afghan unemployment in 2008, down from 40% in 2005. Based only on these CIA estimates, unemployment has decreased by 5% in 3 years. However, the Afghan Ministry of Labour has also estimated unemployment at over 40% and the National Workers' Union of Afghanistan (NUWA) claims 70% of Afghans are currently unemployed. The exact definition of unemployed in the context of Afghanistan is undefined. It is unclear, for example, how many Afghans are employed full-time or how many of those unemployed are actively seeking employment.. The legal age of employment in Afghanistan is 15; it appears that enforcement of this restriction is weak, with UNICIF estimating 30% of Afghan children work. It is unclear who is being counted in some of these estimates. Considering the CIAs estimate, there is little other accompanying quantitative data, making it difficult to determine assess the trend and to what extent it continues.

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Extensive resources2 have been applied to solving unemployment and other related issues over the past several years, however there is inadequate or inaccurate aggregate data revealing its scope. Another difficulty is that many programmes have an indirect effect on employment as such, they are not necessarily categorised as employment projects. For instance, the United States Agency for International Development (USAID) spent USD 321 million between 2002 and 2007 on economic growth programmes, many of which were meant to affect employment directly or indirectly. As noted above, data from the CIA suggests there has been a 5% decrease in unemployment over the past 3 years, which is more modest than expected given the immense resources poured into this and related issues. Without more robust evidence, though it is difficult to determine to what extent programmes have really been effective. According to a CSIS analysis of metrics in Afghanistan:

The war is being fought in a country torn by decades of conflict, abject poverty, massive urban refugee problems, intense demographic pressures, and chronic unemployment and underemployment. There is little meaningful reporting on these realities and what is reported tends to be reported in national trends, rather than the problems and needs of specific areas, and in ways that show the level of economic stability and government services in high risk or conflict areas.
The Importance of Reducing Unemployment The United Nations Millennium Development Goals lists achieving full and productive employment and decent work for all, including women and young people as Target 2 under Goal 1, which focuses on eradicating extreme poverty and hunger, in its list of priorities. The Government of Afghanistan certainly recognizes the problem unemployment presents. For instance, the Afghanistan National Development Strategy (ANDS) states that given widespread low productivity employment and the large number of jobless, employment generation will be one of the most important policies for poverty reduction. High-level actors tend to have a strong understanding of the complex relationship between unemployment and other factors and sectors. For example, Kai Eide, the United Nations Assistance Mission in Afghanistan (UNAMA) former Special Representative of the Secretary-General (SRSG), in his strategy for transition to Afghan leadership, discussed the effect of infrastructure projects on employment and the economy in general:

Infrastructure projects create tens of thousands of jobs now and in the future. Completed projects change the economics of private sector investment and can lead to the employment of hundreds of thousands of Afghans. Investments that have been judged to be unprofitable become economically feasible when electricity and access to markets are made available. The implementation of these projects adds hugely to regional employment and the Government tax base.
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Identifying employment programmes is difficult given the sheer number of groups involved. For a description of World Bank development programmes in Afghanistan, most of which have direct or indirect effects on employment, see this World Bank overview.

Varying Approaches While most actors appear to agree on the importance of reducing unemployment, there are a number of differing approaches. The Afghan government, via the Ministry of Labor, Social Affairs, Martyrs and Disabled, has created laws and regulations, programmes and initiatives, all designed to increase employment and aid workers. In particular, they have created a number of centres intended to find employment and provide training for Afghan workers. The Ministrys list of Key Achievements, however, is relatively lacking in evidence of actual increased employment. The World Bank Director for Afghanistan Alastair McKechnie argues that labour-intensive jobs should be given exclusively to Afghan workers with the required skills and that Afghans should receive the education and training necessary for specialised jobs to prevent the need for contractors. The ISAF Commanders Counterinsurgency Guidance takes another approach stating that players should leverage economic initiatives and routine jirgas with community leaders to employ young men and develop peaceful means to resolve outstanding issues; create viable local alternatives to insurgency. This guidance has been put in play recently as efforts to lure young men away from the insurgency with jobs have been implemented both by the Afghan government and international actors. This follows on past efforts of United Nations Disarmament, Demobilization and Reintegration (UNDDR), which has seen limited results, to reintegrate former Taliban soldiers into society. The US government also maintains an Afghan First policy, under which local procurement of Afghan products is encouraged, in part to maximise employment of Afghans. It is unclear, however, how successful they have been in implementing this policy. It should also be noted that many programmes focus on the agricultural sector. According to the United States Agency for International Development (USAID), An estimated 85 percent of Afghans are dependent on agriculture and related agribusinesses for their livelihoods. As such, it makes sense that many employment programmes focus on the agricultural sector and many agricultural programmes may have indirect effects on employment. In the News: Afghan Unemployment A brief and non-exhaustive examination of 2010 employment-related, both direct and indirect, news items can give an idea of the extent to which these projects have become a priority. They also indicate the relative importance of agriculture and the relationship between employment and other factors and sectors, especially governance, infrastructure, gender issues and security. Much focus has been placed on providing farmers with alternatives to poppy production in a way that will not increase unemployment, as reported by The Wall Street Journal. In February, in the areas cleared by Operation Moshtarak, international and local actors announced plans to provide extensive agricultural assistance to provide local farmers with alternatives to poppy production. Similarly, it was reported by the Times Online that cash-for-work programmes were employing 2,000 Afghans in the Nad Ali district of Marjah as part of the clean-up phase of the 3

operation. Pajhwok Afghan News reported in February that the Governor of Helmand, Mohammad Golab Mangal, asked local farmers to register to receive vegetable and fruit seeds and fertilizer as part of his Food Zone Programme, which would benefit 27,000 farmers. Mangal had earlier predicted poppy cultivation would drop by 50% in 2010, as reported by local Tolo TV. He asserted poppy production is down 33% so far this year and credited assistance from the international community for the drop, while he blamed unemployment and poverty for recent insecurity. Some news items point to the increasing importance being placed on providing employment as a means to lure young men away from the insurgency, in line with current veins of thought suggesting that increasing employment is a means of increasing security. In January, the Washington Post reported that Japan and Britain would head up a USD 500 million international fund intended to lure insurgents away from the Taliban with, among other things, the promise of jobs. Similarly, The Guardian reported that President Karzai announced a similar plan to lure insurgents away from the Taliban with jobs, pensions and land. These incentives could have positive effects on Afghan employment specifically, as well as the economy in general. Other news stories highlight the importance of international actors in the ongoing efforts to encourage Afghan development generally, and employment specifically. In March, the World Bank approved a new USD 30 million project the Afghanistan Rural Enterprise Development Project (AREDP) intended to boost rural employment. In January, the UN granted USD 180 million to improve local public administration, which in turn was intended to create jobs locally. On a smaller scale, Pajhwok reports that an international carpet market was inaugurated in Nangarhar. The USAID-funded USD 129,000 market could be followed by a USD 12 million version in the future, under which as many as 4,000 workers could be employed. Several articles emphasize the specific relationship between employment programmes and gender issues. In March, for instance, it was reported by Pajhwok Afghan News that 200 impoverished women in Ghazni province were provided with jobs as painters and tailors as part of a USAIDfunded and Central Asian Development Group (CADG)-implemented project. Earlier in February, Pajhwok reported that 150 women from Baghlan province were to receive USAID-funded training in gabion weaving. Gabions are partially mechanized devices designed to prevent erosion. Media often expose the problematic nature of reducing unemployment in a complex, underdeveloped and war-torn nation like Afghanistan. Some news items reveal the importance of providing and maintaining a secure environment in order to foster economic growth, while others demonstrate the need for good governance. Tolo TV reported that the Taliban, like the US military, were recruiting the unemployed in Badghis province for the insurgency. Badghis officials blamed slow reconstruction efforts for unrest in the province. This indicates the strong two-way relationship between development and security development can lead to improved security as well as vice versa. However, it also shows the need to provide employment for locals in the context of conflict. In February, the Wall Street Journal reported that the US military was struggling to find Afghans willing to accept jobs in Kandahar province. According to the article, residents feared reprisals from the Taliban for their work with the 4

foreign military. Meanwhile, elsewhere in Kandahar, delays caused by insurgent attacks in upgrading the Kajaki dam were in turn leading to delays in electrification in Kandahar province, according to the Associated Press. The lack of electricity in Kandahar means 90 factories which could employ thousands of Afghans are sitting idle. This underlines the close relationship between various sectors in Afghanistan security, economics and infrastructure. The Way Ahead There is reason to believe, given the problematic nature of stabilising and developing Afghanistan in the current operating environment, that progress has indeed been limited. Jeffrey Fleishman of the Los Angeles Times paints this picture well:

Since 2001, Congress has authorized more than $39 billion in humanitarian and reconstruction aid for Afghanistan. But hundreds of millions of dollars that would lead to new factories and dams have been eroded by power shortages, wasteful contractors, security dangers and corruption.
From this, one can see not only the problematic nature of reducing, let alone solving, the unemployment problem in Afghanistan but also the complex inter-dependence involved in the task creating jobs is dependent on creating infrastructure, security and good governance. While it is clear that great effort is being put into solving the unemployment problem in Afghanistan, this brief review of recent news indicates the need for better coordination and metrics. Establishing better metrics and coordination among the various actors in Afghanistan could be both a logical next step and a building block for true economic development in Afghanistan. Please visit our Economic Stabilization and Infrastructure discussion boards.
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