JULY 2021

UGANDA EMPLOYMENT POLICY BRIEF
USING SOCIOECONOMIC EVIDENCE TO PROMOTE SOLUTIONS FORREFUGEES IN UGANDAINTRODUCTION1
With over a million refugees, mainly from South Sudan, Democratic Republic of Congo (DRC),
Burundi and Somalia, Uganda is the third largest refugee-hosting nation in the world and thelargest in Africa. The country has a generous open-door policy towards displaced persons and its
legal and policy framework regarding refugees is considered one of the most progressive in theworld. While refugees have a right to work, access to gainful employment is a concern for all
people living in Uganda. The rural unemployment rate is 9.9 percent and 9.1 percent in urban
areas for nationals (Uganda Bureau of Statistics 2018). The lack of decent employment for
refugees is not only a missed opportunity to contribute to host communities, but also increases therisk of poverty and permanent dependence on humanitarian assistance.
This policy brief complements a wider knowledge piece through a comprehensive analysis ofrefugees and hosts labour market performance (i.e. employment, unemployment and labour force
participation rates2). The analysis utilizes cross-sectional household data from the Uganda
Refugee and Host Communities 2018 Household Survey (RHCS) from across 13 districts in the
primary refugee hosting regions in Uganda (World Bank, 2019). The analysis concludes with acomprehensive set of policy and programmatic recommendations for government anddevelopment partners, respectively.

OVERVIEW OF
NATIONALSREFUGEEEMPLOYMENTOUTCOMESRELATIVE

TO

Despite the favourable policy environment, which grants refugees the right to work, empiricalevidence shows that refugees have worse employment outcomes than nationals. Controlling forage, gender and education, only 29 percent of refugees in Uganda are actively working, versus 64
percent among host communities. These findings are far lower when compared to a recent study
focused on refugees in Europe which found the employment gap between refugees and nationals
to be 17 percentage points- highlighting that the differential in employment rates between refugees
and nationals is more than double that for the same groups in Europe (Fasani, Frattini, and Minale2018).

These differences persist when considering the labour force participation rate. The gap inparticipation rates between refugees and host community members is significant at 27 percentage
points (42 percent for refugees versus 69 percent rate for host community). There is also a genderdimension to the differences in participation in the labour force: the gender gap among refugees isslightly higher than that among nationals (12 percentage points for refugees versus 9 percentage
points for host community). However, the gender gaps for both host and refugees are subject toregional variations with rural areas (West Nile and South West) showing single digit gender gaps
for both host and refugees while Kampala reports the highest gender gap in labour force
participation of 26 percentage points for host (79 percent male versus 53 percent female) and 13
1

This policy brief was authored by the UNHCR global and Uganda country teams including Theresa Beltramo,
Ibrahima Sarr, Charles Data Alemi and Lilian Achieng Otiego. A fuller knowledge brief, author

acknowledgements and disclaimers are available at https://www.unhcr.org/en-us/livelihoods.html
2 The following

are definitions for the different employment measures: employment rate (share of working-age
population in employment or self-employment); labour force participation rate (share of working-age population
employed or seeking employment); and unemployment rate (share of labour force seeking and available for
employment).

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UGANDA: IMPROVING EMPLOYMENT OUTCOMES FOR REFUGEES

percentage points for refugees (70 percent male versus 57 percent female). That said, the gender
gap in Kampala for both communities is still less than the global average gender gap (31percentage points) and is commonly cited as a sizeable macroeconomic loss (Dabla-Norris andKochhar 2019; Blecker and Seguino 2012).
A third component of labour market outcome considered is the unemployment rate. Not only are
refugees less likely than host communities to participate in the labour market, those who do so areless likely to find employment. The refugee unemployment rate is 31 percent, which is 24
percentage points higher than 7 percent for the host community. After taking into considerationage, gender and educational differences, the difference in unemployment rates between refugees
and host communities remains sizeable at 19 percentage points.

Higher education levels are associated with higher employment rates and paid employment
Consistent with the established role education plays in labour markets, the survey data indicatesthat chances of getting hired in the non-agricultural sector increases with higher education levels,
especially for those who have completed secondary education or beyond for both refugee and hostcommunities (Figure 1). Moreover, paid employment is shown to increase with higher educationlevels, especially for people who have completed secondary education or higher education.
Figure 1: Educational attainment by employment sector and receiving wages for employment

While employment rates for refugees demonstrate some convergence relative to nationals,
significant differences remain a decade after arrival
As expected, the employment gap is particularly large for recently arrived refugees. The
employment rate of those with less than one year of residence in the host country is 62 percentage
points lower than the rate of nationals. If these newly arrived are actively searching for a job, they
are 64 percentage points less likely to get hired than a national (Figure 2). While theunemployment gap closes between refugees and nationals as refugees spend more time in
Uganda, differences in employment rates persist. After 10 years, differences in unemployment are
not statistically significant while for employment, refugees in Uganda converge towards nationals
but never reach parity in the labour market. This is similar to what was found in Canada forrefugees (Bevelander and Pendakur 2014).
While refugees face understandable challenges in participating in the labour market upon arrival,
the gap in employment persists over time, suggesting that refugees struggle to eliminate theirinitial labour market disadvantage vis-à-vis Ugandans. Potential explanations of these “refugeegaps” include discrimination as well as the limited recognition of foreign qualifications andrefugees’ limited proficiency in the host country’s official languages (Chang 2018). Additional
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UGANDA: IMPROVING EMPLOYMENT OUTCOMES FOR REFUGEES

explanations include long periods of labour market inactivity resulting from conflict anddisplacement due to a lack of social networks and disproportionate lack of information on labour
markets (Schuettler and Caron 2020). Even if refugees are allowed to work in Uganda, opaqueregulations and the extra burden to comply with them can create a chilling effect on employing
refugees. Research has shown that Ugandan firms are disinclined to hire refugees and seem tolack information about their legal status and specifically their right to work. A recent survey
highlighted that just 21 percent of employers in Uganda reported knowing that refugees areallowed to move freely and 23 percent of employers are aware refugees have the right to work,
respectively (Loiacono and Vargas 2019).
Figure 2: Refugee assimilation over time

While self-employment is high among both populations, being self-employed yields lower
wages than wage employment and working refugees find themselves more likely thannationals to fall below the poverty line
With limited options for formal employment, self-employment is high among both nationals andrefugees in Uganda when compared to neighbouring countries. In Uganda, the self-employment
rate is 76 percent of working nationals, 72 percent of working refugees, and 80 percent among
youth in refugee communities. In Kenya, self-employment makes up 61 percent of the total
employed population, while in Rwanda the share is 68 percent and in the United States 28 percentof Americans are self-employed (Forbes, 2020).
Unfortunately, self-employment in developing economies, including in Uganda, is dominated bylower-skill activities and lower pay. Accordingly, self-employed persons tend to earn less and more
so for refugees who generally earn on average 32 percent less that self-employed Ugandan
nationals with similar education. The data shows that among the working population, refugees are
1.75 times more likely than host community members to fall below the poverty line, with 28 percent
of working refugees being considered impoverished versus 16 percent of the host community.
Furthermore, working refugees who are poor are 10 percentage points more likely to be engaged
in self-employment (less likely to be employed) than non-poor refugees (Figure 3).
Figure 3: Type of work and poor and non-poor refugees

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UGANDA: IMPROVING EMPLOYMENT OUTCOMES FOR REFUGEES

Refugees are systematically under-employed based on skills and work history, with higher
skilled workers experiencing the largest professional downgrade
Evidence shows that refugees are taking jobs that they are overqualified for, a phenomenon
referred to as professional “downgrading”, in order to escape unemployment. This highlights theinherent inequity in the labour market between refugees and hosts. A simple regression analysis
finds that in general, refugees experience drastic professional downgrading upon entry, withintermediate and high-skilled workers experiencing the largest downgrade based on the four
ISCO-08 skills level. Across skill levels measured prior to displacement, 66 percent of low-skilled
refugees downgraded compared to 85 percent of intermediate-skilled and 79 percent of highskilled refugees (see Table 1). This might be due to a lack of recognition of refugee qualifications
and poor transferability of refugee skills and professional experience in Uganda as suggested by
Fasani et al. (2018). Further, some 65 percent of refugees say they would like to be engaged in
the same occupation they were before being displaced, but only 20 percent manage to do so.
Table 1: Refugee labour market trajectories before and after displacement (percent)1
Beforedisplacement
Not working
Very low skilled
Low skilled
IntermediateskilledHigh skilled
Total

After displacement
Not
Very low
workingskilled
67.
6.4
0
69.
19.0
0
59.
7.3
0
83.
0.00
2
46.
8.4
4
62.
7.2
9

Low
skilledIntermediateskilledHighskilled

24.6

0.7

1.3

12.0

0.0

0.0

33.3

0.1

0.2

2.4

8.0

6.4

21.6

2.3

21.3

27.6

0.66

1.7

Total
100.0
0
100.0
0
100.0
0
100.0
0
100.0
0
100.0
0

1

The study focused on refugees who were of working age before displacement (aged 14 years or older
when leaving their country origin).

One way to study qualifications mismatches is to focus on education mismatches using statisticalmethods. This approach is based on the distribution of workers’ education levels within each
occupation or occupational group to determine the modal (or median) education level of all
workers in the occupation or group (Halaby 1994; McGuinness and Sloane 2011). Thus, a personin employment is considered overeducated or undereducated if their level of education is greateror lower than the modal level of education of all employed persons in the same occupation orgroup of occupations.
Using the statistical method, results suggest that 27 percent of host community workers areundereducated and 21 percent overeducated for their current occupation, whereas 14 percent ofworking refugees are undereducated and 36 percent overeducated. The high percentage ofovereducated refugees serves as a barometer to showcase the difficulties refugees face to findrelevant jobs, again a fact that persists even after several years of residence in Uganda.
Being underemployed can have negative impacts on mental health and wellbeing. Hultin et al.
(2016) and Dunlavy et al (2016) show that overeducated jobholders experience more healthproblems and psychological distress. Clark et al. (2014) find that not only is it hard for many
workers to transition out of overeducated employment, but they are also likely to face wage
penalties even after they do so. These results highlight the important work of trying to match
refugees’ skills early upon arrival to the labour market.

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UGANDA: IMPROVING EMPLOYMENT OUTCOMES FOR REFUGEES

In general, refugees experience higher unemployment rates than the nationals, and younger
people face more barriers to employment than older individuals
As Figure 4 shows, refugee youth have the highest average unemployment rate of 44 percent,followed by refugee adults (30 percent for males and 20 percent for females), then Ugandan youth
at an average of 14 percent and finally Ugandan national adults with single digit unemployment
rate for both females and males. While among refugees, males have higher unemployment rates
for both youth and adults, the reverse is true for nationals with females having higher
unemployment rates than males.
Figure 4: Unemployment by refugee and youth status

Controlling for education levels, refugees have between two to three times the unemployment rateof nationals, depending on the education level (Figure 5). For both the host and refugees,
unemployment is highest for those with secondary education and some tertiary education while
those with lower education have lower unemployment rates. This results in an inverse relationshipbetween employment and level of education, a phenomenon known as the puzzle of the educatedunemployed, which is noted to be prevalent in developing countries, in particular in Africa(Ginsberger and Meango 2017; De Vreyer and Roubaud 2013).
Figure 5: Unemployment and education, refugees and host communities(Note: Tertiary indicates some tertiary education attained)

Plausible explanations for the puzzle of the educated unemployed include: failure or absence ofpolicies to create skilled jobs; a consequence of structural adjustment policies that reduced staff in
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UGANDA: IMPROVING EMPLOYMENT OUTCOMES FOR REFUGEES

the civil service, one of the largest employers of higher educated individuals (De Vreyer andRoubaud 2013); low chance of getting a job offer and the lower-skilled activities involved in selfemployment (Ginsberger and Meango 2017); and involuntary educated unemployment by
individuals who aim to work abroad where returns to education are higher (Stark and Fan 2011).
While refugees with higher education are more likely to be unemployed, they are also more likely
to be searching for a job and hence likely to participate in the labour market. For both refugees andUgandans, higher education levels are associated with better employment outcomes in terms ofimproving the chances of getting paid employment for refugees, especially for people who havecompleted secondary education or higher.

Improving secondary school completion is critical to improving employment outcomes for both
refugees and host communities
Notwithstanding the positive relationship between education level and employment outcomes,
secondary school completion rates for refugees (between 19 and 23 years old) remain low at only
11 percent versus 24 percent for host communities. For both refugees and nationals, children are
more likely to complete secondary school education if their own fathers had secondary educationor higher. Indeed, among youth between 19-24 years old whose father did not finish secondary
school, they themselves did not complete secondary school while 52 percent of children withsecondary-educated fathers did.
Other factors affecting transition to and completion of secondary education include: limited supply
and/or quality of education infrastructure especially in refugee-hosting areas; poor performance on
the primary school leaving examination required to start secondary school; teachers holding backstudents from taking the exam, leading to loss of motivation and dropping out; the financial burdenof school fees and the opportunity cost of attending school – that youth cannot work to supplement
the household income – especially for refugees; and existing secondary school programmes forrefugees having limited math and science curriculum, which narrows academic choices and in
turn, career options and lifetime earnings potential in related fields.
Addressing the above challenges will not only improve secondary school completion, but also
improve employment outcomes in the form of increased rates of employment and labour force
participation as highly educated people are more likely to look for a paid skilled job.

POLICY RECOMMENDATIONS FOR THE GOVERNMENT
More investment in education and training is needed to improve labour market outcomes.
The data suggests that the level of education required differs across economic sectors and job
categories; yet few adolescents complete secondary school, which is a critical determinant of
future job quality. This calls for the following measures to improve education outcomes:

As part of the ongoing curriculum review, include the learning of core skills such as
languages and provide for auxiliary introduction to vocational courses to ease the transition
to vocational training for students who may not finish secondary education.
Encourage vocational training institutions to introduce a mix of short and long-term courses
to meet the needs of both older students (16 years and above) who are ready to join thelabour market and younger students who need a combination of general schooling andvocational training.

It is essential to address risk factors at school and improve the low transition rate fromprimary to secondary school. Results from the survey show that for both refugees andUgandans, higher education levels are associated with better employment outcomes. Yet
secondary school completion rates remain the lowest for refugees at 11 percent, though thenational rate is also quite low at 24%. To ensure equal access to quality education for addressing
socioeconomic problems of poverty, unemployment and inequality, include refugee students in the

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UGANDA: IMPROVING EMPLOYMENT OUTCOMES FOR REFUGEES

Education Management Information System (EMIS) to facilitate their eligibility for capitation grants3
for equitable distribution of resources and improved quality of schools and learning environment in
the areas that host refugees.
More specific actions targeting support for girls are needed to address the disproportionate
risk they face in dropping out of school. Girls face exceptionally high risks of dropping out ofschool when families face economic and other hardships. As refugees struggle with all sorts ofchallenges including limited opportunities for employment as well as underemployment and lesspay for those employed, girls are prone to being engaged in multiple responsibilities, competing forthe time they should be focusing on their schoolwork. The outbreak of COVID-19 is likely to makethings worse for girls as many schools have been closed and the economic impact on families
continues to rise. Consequently, this further reinforces gender gaps in education outcomes andleads to increased risk of sexual exploitation, early pregnancy and early and forced marriages. In
addition to critical initiatives such as the use of radio programmes for classes and online learning
to ensure students can maximize educational achievements, government should adopt a policy ofgranting a second chance for girls who become pregnant to continue with their education while
pregnant and/or after giving birth.
There is need to review the administrative provisions of the Immigration Act in relation toissuance of work permits, which presently are costly for refugees in Uganda. Under the
Uganda Refugee Act Section 29(vi), refugees are entitled to access employment opportunities andengage in gainful work. However, the Directorate of Citizenship and Immigration Control (DCIC)
only stamps work permits on refugee Convention Travel Documents (CTDs), which a handful ofrefugees have and limits access to employment for most refugees. Further, only a small minority of
employers (21 percent) know that refugees have a right to work in Uganda. Thus, it is important towork with the Ministry of Internal Affairs to allow the granting of work permits on the basis of otherrecognized refugee documents and to sensitize stakeholders on the same.
Enhanced focus is needed to reduce the gender gap in employment. The analysis reconfirmsthat women face more difficulties than men in accessing education and finding a job. Evidence
suggests that reducing barriers to women in the workplace significantly boosts welfare and growth.
Policy measures should aim at reducing the education gap for women and promoting female
labour force participation through proactive measures encouraging firms to hire women as well as
supporting them to start and run businesses.
More attention should be given towards linking youth to the labour market. The analysis
shows that youth in both host and refugee communities have difficulties finding jobs with significant
negative consequences from extended unemployment and inactivity. As many young people leaveschool early and have no qualifications, second chance programmes can help individuals increase
their formal education, obtain recognized certification and improve their chances of finding a job.
Employment training should also combine institution-based and on-the-job training, as evidence
suggests this combination yields higher positive labour market outcomes for beneficiaries (Fares
and Puerto 2009). Additionally, expand and strengthen Business, Technical and Vocational
Education and Training (BTVET) programmes and accreditation to include refugee support
programmes. It is also important to address issues relating to stigma associated with BTVET,
which in Uganda are perceived as the last option for failures who are not able continue with themainstream education system.

3 Capitation grants are governmental transfers for primary school going children paid to all public and governmentaided schools in lieu of tuition fees for the following school expenditures: instructional and scholastic materials, cocurricular activities, school management, administration, and contingency expenditure. This follows the introductionof Universal Primary Education (UPE) in Uganda in which the government abolished payment of tuition/fees inpublic schools. https://www.iser-uganda.org/news-events/news/236-late-release-of-capitation-grant-crippling-upeschools#:~:text=In%202002%2C%20the%20government%20introduced,the%20various%20district%20local%20governments.

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UGANDA: IMPROVING EMPLOYMENT OUTCOMES FOR REFUGEESIn addition, assessing the skills of refugees early and providing upskilling training can help
refugees get better jobs and wages right from the start. From the analysis, the employmentoutcome gap between hosts and refugees is particularly large upon arrival and becomes
progressively narrower with years of residence in Uganda, though it never achieves equity overtime. Studies show that early investment in skills assessment, training, and labour market
integration activities can help to promote quicker convergence in employment. Using astandardized approach to measuring skills upon registration of refugees can help limit the timeneeded to match labour market skills requirements, in addition to job search assistanceprogrammes (Battisti, Giesing, and Laurentsyeva 2019). Last but not least, as highlighted earlier it
is essential to advocate for a change of mindset so that BTVET is perceived as an option toopportunities that provide employable skills and competencies relevant to the labour market.
In the medium-term, a system that recognizes overseas qualifications, especially thosefrom the region, would facilitate positive employment outcomes for refugees and hosts.
Supporting and implementing regional accreditation and recognition of standards facilitates the
movement of human capital for both Ugandans and refugees. Equating qualifications helps create
a level playing field for refugees in the job market, which will go a long way in addressing many of
the challenges refugees currently face. Fortunately, most of the refugees in Uganda are fromneighbouring South Sudan and DRC, which together with Uganda, are members of regional blocs
such as the East African Community (EAC) and the Inter-Governmental Authority for Development(IGAD), which advocate for regional recognition of educational qualifications. Thus, as a matter ofpolicy, government should implement the Djibouti Declaration on the Regional Conference on
Refugee Education calling member states to recognize and validate qualifications of refugees andreturnees across all levels of education4 and the EAC Common Market Protocol, which requirePartner States to establish a Single Education Area as basis for harmonizing education
qualifications to facilitate free movement of labour.
Encouraging government and development actors to provide targeted support to small
firms and self-employed refugees to grow and generate demand for skilled jobs. The
population in Uganda is very entrepreneurial, as demonstrated by the large share of self-employedworkers among both refugees and host communities. However, enabling policy measures areneeded to improve access to financing for entrepreneurs to help the self-employed expand theirbusinesses. Considering the refugee population in particular, having greater access to financial
capital may help compensate for the loss of assets due to displacement, and constitute a form of
insurance in periods of low revenue (Schuettler and Caron 2020). Evidence shows thatinterventions such as repeated transfers or one-time grants or credits can efficiently improvebusiness profitability (Schuettler and Caron 2020). Moreover, graduation-type programmes that
include cash grants for business and entrepreneurship training, intensive coaching and financial
inclusion hold much promise for supporting sustainable livelihoods among refugees in Uganda(Banerjee et al. 2015; Bedoya et al. 2019).
Lastly, additional macroeconomic and policy analysis is needed to address the puzzle of theeducated unemployed for both refugees and nationals and identify key policy solutions. In theinterim, policies aimed at generating skilled jobs and addressing the high level of informality in the
Ugandan economy can be a step in the right direction.

4

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