Market Research
The survey was conducted over a two-week period between 25 January 2015 and 5 February 2015 consisting of a sample of 372 respondents in order to identify specialized training courses to offer in our vocational training centers (VTC) that would have the potential of generating the greatest employment opportunities for our graduates.
Labor and Employment
Unemployment and underemployment defines the labor market in Afghanistan. Around 25% of the total workforce (7.2 million) of the country is either unemployed or underemployed – and the female participation rate in the workforce is only 19% compared to 80% for males. Among 1,298 employees who were employed by 372 businesses surveyed in Kandahar, female workers constituted only 1% of the total, while 38% of the employees were relatives of the business owners – exhibiting the strong role of social networks and connections in securing jobs in the Kandahar labor market. On average, employees worked 51 hours per week which is higher than the normal 40 hours as defined by the Afghan Labor law. Employees typically worked on an informal basis as it is common practice not to sign employment contracts with their employees, as reported by 86% of the respondents. A small proportion (1.3%) of business owners acknowledged that they employed children under the age of 15.
The survey identified the top 5 high demanded skills in the market for males are:
- Education
- Sewing/Tailoring
- Tailoring
- Metalwork
- Electrical equipment repair
While for females, business owners reported the top 5 high demanded skills are:
- Sewing/Tailoring
- Embroidery
- Health services
- Education
- Handicrafts
The trend of employment in surveyed areas was such that the majority (70%) of business owners had not hired any employees in the past year, although 57% said they plan to hire employees in the future. In hiring employees, friends and relatives were the main sources of recruitment in the businesses/workshops surveyed.
The amount of salary paid by employers depended on skill level and experience of workers. Unskilled workers usually were not paid for their work, while there seemed to be a positive correlation between the skill level and experience of employees and the amount of salary they were paid per month.
Establishment Of A Business
Establishing a business requires expertise and capital. Respondents’ main sources of capital for establishing a business were their own capital and money that they have taken as loan from their family members or friends. Interestingly our results found only 8% of the respondents reporting to have taken loans through formal channels such as banks or microfinance institutions (MFI). When asked about investment opportunities, promising and profitable businesses were cited as: education, sewing/tailoring, carpentry, metalwork and repairing of electronic and non-electronic equipment. According to business owners the main factors of a successful business were; producing quality products, availability of skilled workers, access to finance and adequate capital, sound bookkeeping and business management.
Financing A Business
Converting a business idea into a profitable venture requires finance among other factors. Financing institutions, including MFIs surveyed reported to have approximately 14,500 clients in Kandahar province, among whom nearly a third (29%) are females. These institutions provide loans against collateral to all population groups irrespective of their social status such as being an IDP or returnee, however the availability of collateral is a significant limiting factor. Financial institutions provide small loans up to 25,000 Afs (390 USD) with terms of repayments on a weekly and monthly basis.
Recommendations
- Based on the findings of the report on types of trades and skills demanded in the market, the top 5 trades were selected to be included as training courses in Mercy Corps’ VTCs - both for males and females. These trades are: i) Education (computer, English language and Kankor), ii) Sewing and tailoring, iii) Metal works, iv) Repairing of consumer electronics and vehicles, and v) Embroidery. Market assessments will be conducted regularly in INVEST, to ensure that the courses provided continue to accurately meet the demands of the market.
- Due to cultural restrictions and the subsequent lack of female business owners in the market, business owner respondents of the initial LMA were all males. Their perceptions about skills in demand for female workers therefore only reflect a limited perspective and not the whole picture. Innovative ways to access female respondents (e.g. in small home-based businesses) should be sought when carrying out future market assessments.
- Due to social stigma attached to displaced persons, 31% of businesses responded that they would not accept new graduates who were IDPs in their workplaces for internships or as employees. Efforts to link graduates to the market should prioritize sectors and businesses receptive to newly graduated IDPs; as these new workers go on to demonstrate their value, so in turn this may help to re-shape attitudes and reduce stigma.
- Work experience featured fairly prominently among the characteristics employers preferred in new employees. Vocational training courses should be practical in nature as far as possible rather than theoretical. The Mercy Corps methodology of employing master craftsmen to train students rather than teachers has demonstrated significant success in making students more prepared for actual employment experience.
- Some businesses are more affordable to establish than others. Students should be made aware of the approximate start-up costs associated with their sector, in order to make an informed decision as to their plans after graduation (e.g. to establish themselves independently, in association with others, or seek employment in an existing business).
- Since the market assessment helped identify key businesses in the targeted areas, Mercy Corps can continue to foster a relationship between these businesses and nearby VTCs in order to promote cross visits for business owners to view the work of potential graduates who may then apply to these businesses to apprenticeships or immediate employment.
- Social networks have proven to be crucial to accessing employment; by assisting future employers to meet graduates we can improve their post-graduation prospects via the implicit trust that familiarity encourages.
- Similarly, the social networks amongst students, which are introduced through attending training together can positively impact the opportunities that graduates have access to. Mercy Corps will build on this through the Ready to Earn Clubs, which will provide graduates with a space to maintain the relationships they have established through attending training; this may lead to direct employment through contacts of their colleagues, or indeed to the encouragement of collaboration among graduates for the purpose of establishing their own business.
- The assessment supports the theory that business management knowledge is important to success in the market place. Vocational training should therefore also connect trainees who are considering establishing their own business to opportunities to develop such skills. Again Mercy Corps plans to meet this recommendation through provision of training in the Ready to Earn Clubs.
