Transport, Employment, Unemployment and Their Impact on the Economy
Senior 6 · General and Religious Studies
Transport, Employment, Unemployment and Their Impact on the Economy
Lesson 4 of 4
24 min
In 2025, according to the National Institute of Statistics of Rwanda, 676,340 people in Rwanda were available for work, looking for it, and unable to find it. Suppose, as an illustration only, that each of them could have earned Frw 50,000 a month. Over a year the lost income would be
about a tenth of all the domestic revenue the Government planned to collect in the 2025–26 budget (Frw 4,105.2 billion). That money was never earned, never spent in shops, never saved and never taxed. And the cost of unemployment is not only money.
Definition
Opportunity cost of unemployment: the goods and services that unemployed people could have produced but did not.
Vicious circle: a chain of causes in which each problem makes the next worse, until the first problem returns stronger.
Brain drain: the emigration of educated and skilled people to other countries.
NEET: young people Not in Employment, Education or Training.
Jobs gap (ILO): all people who want paid work but do not have it, including the unemployed and those who have given up searching.
Figure 5 shows why unemployment, once it rises, tends to feed itself. Unemployed people spend less, so firms sell less and hire fewer workers. At the same time the Government collects less tax and may cut investment. Breaking the circle needs action at some point in it: more demand, new investment, or new skills.
| Level | Economic impact | Social and personal impact |
|---|---|---|
| Local (individual, family, community) | Lost income and savings; debt; less spending in local markets; skills fade with time | Poverty and food insecurity; stress, loss of confidence and depression; family conflict; some young people drawn into crime, drug abuse or risky work; migration to towns |
| National | Lost output (lower GDP); lower tax revenue; higher spending on social protection; the public investment in education is wasted when graduates cannot work | Frustration among youth; risk of unrest and of extremist recruitment; brain drain as skilled people emigrate; widening inequality |
| Global | Weaker world demand in global recessions (as in 2008–2009 and in 2020); pressure on wages; lower remittances when migrant workers lose jobs | Irregular and dangerous migration; refugee and migrant tensions; global inequality between regions |
Important
Source A: the world picture, International Labour Organization, Employment and Social Trends 2026 (January 2026)
The world unemployment rate (4.9%) is far lower than Rwanda's (12.4% in 2025), but the two are not directly comparable: in many low-income countries people cannot afford to be unemployed and take any informal work, so unemployment is low but underemployment is high. The jobs gap of 408 million, more than twice the 186 million unemployed, shows how much need for work the unemployment rate leaves out. Youth unemployment is about two and a half times the overall world rate: .
| Measure | Which cause it tackles |
|---|---|
| Expanding technical and vocational education and training (TVET) and work placements | Skills mismatch (structural unemployment) |
| Credit guarantees and loans for small businesses through the Business Development Fund (BDF) and SACCOs | Lack of capital for self-employment |
| Attracting investment through the Rwanda Development Board, special economic zones and the Made in Rwanda policy | Too few formal jobs |
| Labour-intensive public works for poor households, such as those of the Vision 2020 Umurenge Programme | Lack of rural work and income |
| A national target: 1.25 million productive and decent jobs under NST2 (2024–2029) | Commits every sector to job creation |
Warning
Do not stop at "poverty". Weak answers list "unemployment causes poverty" and nothing else. Strong answers show the chain at each level (local, national, global), separate economic from social effects, and use a figure with its year.
Tip
Match measure to cause. When asked to suggest solutions, name the cause first. Training cannot cure cyclical unemployment, and loans cannot cure a lack of skills. The table above pairs each measure with its cause; do the same in your answers.
Important
Discuss. Many young Rwandans say they want a salaried office job. Should schools and families encourage self-employment instead? Use the evidence on informal employment and youth unemployment from this unit.
Practice
Further reading
Sources and credits
Written by Ganzaa: the illustrative calculation, Figure 5, the tables and the exercises.
