Regardless of whether one believes Donald Trump can bring back American manufacturing and mining (I for one am skeptical), it is worth asking the question: How did the US end up with a large forgotten working class? Why did so many former manufacturing workers in states like Ohio, Pennsylvania and Michigan end up in long-term unemployment rather than moving on to other types of work? And more importantly, what can Rwanda learn from this?
The first and most obvious answer as to why this happened is the high cost of education in America. If a worker can’t afford to gain new skills after his current skills are made obsolete, he will end up in long-term unemployment through no fault of his own – something that will understandably make him resentful of the system. When America began to change from an industrial to a post-industrial economy in the 1970’s, it largely failed to introduce subsidized retraining programs (and similar measures) to help those workers who would be hurt by the transition. Such programs do exist today (though they are still insufficient), but just imagine how history might have turned out different if American politicians had acted proactively early on instead of letting the problem grow until it became impossible to ignore.
Obviously as Rwanda has a much lower cost of labor, automation and outsourcing has not affected the labor market to the same extent as in America. However there is no doubt that with the economy growing fast, more or less the same story will take place: New jobs will replace old, and the new jobs will require different skills and training than the old ones did. Without subsidies, retraining will in many cases be prohibitively expensive for many Rwandans. Scholarships and student loans must be available not just to the 18-yearold who is just heading off to university for the first time, but also to the 40-yearold who just lost the job he’s held since he was a teenager.
The existence of retraining programs however will not be enough unless workers realize that they need them. Truth is, many such programs in the US are struggling to fill their classes as the unemployed wait in vain for their old jobs to return, rather than taking the chance to gain new skills and knowledge needed to find other jobs. For too many people their occupation is an intimate part of their self-image: They identify as, for example, a coal miner and simply cannot picture themselves doing anything other than mining coal for a living, even though the mine they used to work in may now be empty. The saddest part is how many unscrupulous politicians have fed false hope to people by telling them that if they only vote for them they will soon be able to go back to their old job, rather than confronting them with the cold harsh truth that the economy has changed forever and they need to change with it.
Likewise as the economy and job market changes in Rwanda, there will inevitably be workers who are resistant to change. One reason for this may be that they feel it’s unfair that they have to retrain and uproot their lives (as some will have to) when it’s not their fault that the work they used to do is no longer available. This is a common sentiment among unemployed manufacturing workers in the US – “It’s not my fault that the factory shut down, I was a good worker, why should I have to change?”. Guess what? They’re right. It’s not their fault, it is unfair, and we need to openly acknowledge that and respond emphatically, while still emphasizing that unfair or not they need to adapt to the circumstances. Furthermore, one way to easier convince people to accept change is to frame it not as a change, but as a way to keep things the same: “You are currently providing for your family. By going through this retraining program you will be able to continue providing for your family, just like you are now”. Regardless of how they choose to do it, Rwandan government officials need to be prepared to have these kinds of tough conversations with those who are rendered unemployed by changes in technology and the economy as a whole over the next decades. Western politicians never had the guts to have those conversations, and now we are all paying the price.
As an economist and foreign observer I am amazed by the progress made by Rwanda in the last 25 years, and I have no doubt that Rwanda has a bright future – in fact I dare say it looks brighter than Europe’s! The benefit of being a developing country is that you can learn from past mistakes of the developed world, and thus hopefully avoid repeating them. I am confident that Rwanda will manage to do this, and I wish you all the best.
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