Its Chairman, Mathews Phiri, said MFDP, the Botswana Training Authority (BOTA) and the Ministry of Labour and Home Affairs had collaborated in 2003 to establish an LMO.
A committee comprising these organisations was formed and had expanded over time to include other relevant bodies such as the Botswana Institute for Development Policy Analysis (BIDPA), the Botswana National Productivity Centre (BNPC), the Tertiary Education Council (TEC), the Botswana Federation of Trade Unions (BFTU), Botswana Confederation of Commerce, Industry and Manpower (BOCCIM), the Directorate of Public Service Management and the Department of Local Government Service and Management.
In April 2007, the European Union provided financial support to the committee to commission a consultancy and benchmarking exercise on a feasibility study to establish the Botswana LMO. Phiri said the feasibility study had resulted in the project that was being launched.
The key objective of the assignment was to facilitate the establishment and effective functioning of the Botswana LMO.
The terms of reference included establishment of an institutional framework for the LMO; development of a labour market information system; development/implementation of a research strategy; and capacity building and awareness campaign.
Phiri said the LMO would ensure collection of all information regarding the labour market; analysis of information; storage of information in a systematic and easily retrievable manner; updating of information and making forecasts and information dissemination.
The LMO, which involves all stakeholders of the labour market, will be temporarily housed within the MFDP while the Human Resource Development Council is being established.
Speaking at the launch, Matambo said the key functions and roles of the LMO included bringing together different stakeholders to develop a shared vision of the labour market and skills development.
Other roles include; co-ordination of the different actors and institutions that produce and utilise labour market information.
The LMO will also be responsible for analysing existing information, undertaking studies and surveys and disseminating findings about the labour market.
Matambo said the observatory has two critical features, namely, the Labour Market Information System (LMIS) and the LMO website.
He said information from LMIS would facilitate the development of labour market policies geared towards employment creation and poverty eradication.
He recounted how the structure of the Botswana labour force has considerably changed during the post-independence period. Matambo noted that the broad trends have seen a steady decline in the share of the workforce in traditional agriculture, a steady increase in the proportion of the labour force in formal sector employment, and an increasing share of skilled workers in the economy.
The minister said by 2008, 47 percent of the labour force was employed in the formal sector, which is high by African standards.
The fastest-growing sectors by employment were finance and business services, manufacturing, trade, transport, communications and government, all of which grew at an average annual rate of 8.5 percent between 1975 and 2009.
Matambo said the Botswana labour market is faced with challenges such as the dual problem of growing levels of unemployment and the mismatch between labour supply and demand.
Lack of opportunities for the youth poses a challenge to the nation as it increases overall unemployment and dependence on government assistance programmes. Unemployment figures, as reported by the Labour Force Survey of 2005/06, stood at 17 percent with most affected groups being the 20- to 24-year-olds at 34 percent. "It is worth noting that among the unemployed, 16.6 percent were certificate holders, 7.7 percent and 5.5 percent were diploma and degree holders, respectively."
Matambo said lack of requisite skills to meet job requirement of employers had been identified as one of the major reasons attributed to graduate unemployment.
"That is, the problem is more structural with (a) mismatch between the skills produced by tertiary institutions and the skills required by industry," he said.
"The problem is not always unavailability of jobs; but rather, the scarcity of skilled manpower to fill the jobs. It is for this reason that training institutions should endeavour to make their programmes relevant to the industry by forging partnerships with industry in programme design."
Matambo said government has committed itself to establishing a better link between employment and training institutions as outlined in the 10th National Development Plan and the National Human Resource Development Strategy that was approved in 2009 and calls for an explicit, strategically-focused and sustained approach. The strategy proposed the establishment of a new body, the Human Resource Development Council (HRDC), which brings together under one roof, the Tertiary Education Council (TEC), the Botswana Training Authority and the Human Resource Planning function.