An economy haemorrhaging jobs
Lewanika Timothy | Wednesday June 3, 2026 15:43
After two consecutive years of economic contraction, researchers at the Bank of Botswana (BoB) are warning that labour market conditions have likely deteriorated further, with the modest employment gains recorded in early 2024 expected to have been wiped out by weakness in the private sector.
The warning is contained in the central bank’s latest Monetary Policy Report, paints a picture of an economy caught between cyclical decline and deeply rooted structural weaknesses. At the centre of the crisis is the prolonged downturn in the diamond industry, a sector that remains the backbone of Botswana’s economy and whose struggles are increasingly spilling over into the rest of the labour market.
“Continued softness in the diamond sector, together with spillover effects to related industries and services, is likely continued to weigh down on labour market conditions. “As such, the modest improvement in formal sector employment observed in early 2024 may not have been sustained through 2025,” BoB researchers noted.
The assessment comes at a time when unemployment has been a leading economic and political challenge for the country. Across the width and breadth of this country, thousands of young people continue to enter the labour market each year, only to find limited opportunities in both the public and private sectors.
According to preliminary results from the 2024-25 Botswana Multi-Topic Household Survey (BMTHS), unemployment now stands at 21%, representing an increase of 3.4 % percentage points from the 17.6% recorded in the last comparable survey conducted nearly a decade ago in 2015/16.
The increase is damming because both the labour force and employment levels have grown over the period. The problem, according to the central bank, is that job creation has failed to keep pace with the growth in the number of people seeking work.
“While both the labour force and total employment expanded over the period, employment growth lagged labour force growth, resulting in persistently high unemployment,” the report states.
Previous data shows that from a total of around one million Batswana who are eligible and actively seeking employment almost a quarter cannot find footing in the local labour market, which is bloated and has no room for new entrants. The figures are part of a larger trend which depicts a decades old sting that has been biting away the success story of Botswana’s diamond-dependent economy.
According to figures from Statistics Botswana’s Quarterly Multi-Topic Survey on labour, unemployment has been on upward motion, quarter on quarter. In 2019 the unemployment numbers stood at just a little under 200,000 but climbed up the ladder to the current 287,000.
Now youth unemployment has risen from 25.1% in 2015-16 to 28.9% in 2024-25, underscoring what the central bank describes as ongoing challenges in labour absorption and the need for employment intensive growth.
According to the first quarter 2024 survey, unemployment rose from 25.9% in the third quarter of 2023 to 27.6% in the first quarter of 2024. Youth unemployment increased even more sharply, climbing from 34.4 % to 38.2%.
On paper, there were some positive developments. Formal sector employment increased by 2.9% to 504,738 workers. However, the central bank cautions that these gains were modest and likely insufficient to offset broader labour market pressures.
Indeed, the report suggests the employment growth recorded at the time may already have disappeared.
“With the economy having contracted in 2024 and 2025, labour market conditions are likely to have deteriorated further in 2025. “The slowdown in the diamond sector, a key driver of national output, export earnings and fiscal revenue, has had major spillover effects on mining-related industries and downstream services. “As a result, the modest gains in formal sector employment observed in early 2024 may have since reversed,” BoB researchers observed.
For decades, diamond revenues have financed public spending, sustained economic growth and supported thousands of jobs both directly and indirectly. When diamond sales weaken, the effects quickly ripple through transport companies, security firms, retailers, hospitality businesses and a range of service providers that depend on mining activity.
The current downturn has therefore exposed the vulnerability of an economy that remains heavily concentrated around a single commodity despite years of efforts to diversify.
What compounds the challenge is the structure of Botswana’s employment market itself. According to the central bank, public administration remains the largest source of formal employment, accounting for 30.3% of all formal sector jobs. This dependence on government employment has long acted as a buffer during periods of economic weakness, but fiscal pressures are increasingly limiting government’s ability to absorb new job seekers.
That reality is particularly concerning given that the private sector, which policymakers have repeatedly identified as the engine of future job creation, is itself under strain.
“Weak domestic demand, subdued profitability in the private sector, and continued uncertainty in the diamond industry are likely to constrain hiring,” the report states. “Firms may respond through hiring freezes or workforce adjustments, while fiscal pressures may limit the government’s capacity to expand employment.” In practical terms, this means fewer opportunities for graduates entering the labour market, fewer vacancies in the private sector and growing competition for the limited jobs that become available. It also means that Botswana’s unemployment challenge is increasingly becoming less about cyclical economic weakness and more about structural shortcomings within the economy itself.
The central bank’s assessment is particularly significant because it comes amid growing debate about the effectiveness of Botswana’s economic model. For years, policymakers have spoken about economic diversification, industrialisation and private sector-led growth. Yet despite these ambitions, employment creation remains heavily concentrated in government while many sectors outside mining continue to struggle to generate jobs at scale.
The result has been a labour market that has become increasingly unable to absorb new entrants, even during periods of economic growth.