The assessment of the economic factors contributing to graduate unemployment rate in Uganda

Abstract

This study was done as a result of the increasing graduate unemployment rate in Uganda. Research shows that graduate unemployment is potentially damaging to the economy. If such unemployment persists, it may lead to the erosion and outdating of graduates' skills–bases, which will affect the economy in the long-term. The purpose of the study was to investigate the economic factors contributing to graduate unemployment in Uganda and assessing the impact of Foreign Direct investment, price stability, exchange rate stability and contribution of the system of higher education learning to the unemployment burden of graduates that are released yearly from the different training institutions. The study should also propose possible solutions and policy reforms specifically in the educational sector that will help to mitigate this social problem. The study had specific objectives of establishing the impact of Foreign Direct investment (FDI), inflation rate, real effective exchange rate and the gross enrolment rate on the rate of graduate unemployment in Uganda. The study followed a descriptive time series approach in examining the effect of the stated independent variables on the rate of graduate unemployment. The study findings revealed that the inflation rate and real exchange rates have a negative effect on the level of graduate unemployment while both Foreign Direct Inflow and real GDP growth rate have an insignificant relationship on the graduate unemployment rate. However, the total number of students enrolling to Education and Training Institutions (ETIs) was increasing over time. From the foregoing, the paper recommends that currency depreciation should be undertaken so as to increase the volume of the country’s exports and to increase the competitiveness of the local firms. This will increase the number of job opportunities created and thus curb the increasing graduate unemployment rate.